§ 40.735-1 Purpose and objectives.

(a) This part prescribes the standards of conduct, relating to possible conflict between private interests and official duties, required of all Department of Defense personnel,1 regardless of assignment.

Close adherence to these principles will insure compliance with the high ethical standards demanded of all public servants. Violations of this part may be cause for appropriate disciplinary action which may be in addition to any penalty provided by law.

(b) This part is in implementation of (1) Executive Order 11222 of May 8, 1965, prescribing Standards of Ethical Conduct for Government Officers and Employees and (2) the Civil Service Commission regulations of October 1, 1965 (5 CFR Part 735). It is in consonance with the Code of Ethics for Government Service contained in House Concurrent Resolution 175, 85th Congress, which applies to all Government personnel. (See Appendix A to this part.)

(c) This part includes standards of conduct based on the revisions of the conflict of interest laws enacted in 1962 (P.L. 87-777 and P.L. 87-849). (See Appendix B to this part.)

§ 40.735-2 Applicability.

This part applies to all components of the DoD.

§ 40.735-3 Ethical standards of conduct.

(a) General. DoD personnel are bound to refrain from any private business or professional activity or from having any direct or indirect financial interest which would place them in a position where there is a conflict between their private interests and the public interests of the United States, particularly those related to their duties and responsibilities as DoD personnel. Even though a technical conflict, as set forth in the statutes cited in this part, may not exist, DoD personnel must avoid the appearance of such a conflict from a public confidence point of view. DoD personnel

1 DoD personnel, as used in this part, unless the context indicates otherwise, means all civilian officers and employees, including special Government employees, of all the offices, agencies, and departments in the Department of Defense (including nonappropriated fund activities) and all active duty officers and enlisted members of the Army, Navy, Air Force, and Marine Corps (officers includes commissioned and warrant).

will not engage in any private business or professional activity or enter into any financial transaction which involves the direct or indirect use, or the appearance of use, of inside information gained through a DoD position to further a private interest or for private gain for themselves or another person or entity, particularly one with whom they have family, business, or financial ties. DoD personnel must not use their DoD positions in any way to induce or coerce, or give the appearance of inducing or coercing, any person (including subordinates) or entity to provide any financial benefit to themselves or another person or entity, particularly one with whom they have family, business, or financial ties. For the purpose of this paragraph, "inside information" means information obtained under Government authority which has not become part of the body of public information. This paragraph does not preclude DoD personnel from teaching, lecturing, and writing as authorized by § 40.735-9 (d), nor does it preclude DoD personnel from having financial interests or engaging in financial transactions to the same extent as private citizens not employed by the Government so long as they are not prohibited by law or the regulations in this part.

(b) Dealing with present and former military and civilian personnel. DOD personnel will not knowingly deal with military or civilian personnel, or former military or civilian personnel, of the Government, if such action will result in a violation of a statute or policy set forth in this part.

(c) Membership in associations. All DoD personnel who are members or offcers of nongovernmental associations or organizations must avoid activities on behalf of the association or organization that are incompatible with their official government positions.

(d) Commercial soliciting by active duty members of the military. Military personnel on active duty are prohibited from personal commercial solicitation and sale to military personnel junior in rank or grade, at any time, on or off duty, in or out of uniform. This limitation includes, but is not limited to, the personal solicitation and sale of life and automobile insurance, stocks, mutual funds, real estate or any other commodities, goods or services. As used in this paragraph, "personal commercial solicitation" refers to those situations where

a military member is employed as a sales agent on commission or salary, and contacts prospective purchasers suggesting they buy the commodity, real or intangible, that he is offering for sale. This prohibition is not applicable to the one-time sale by an individual of his own personal property or privately owned dwelling. It is not the intent of this paragraph to discourage the offduty employment of military personnel, but it is the intent to eliminate any and all instances where it would appear that coercion, intimidation, or pressure was used based on rank, grade, or position. (e) Assignment of reserves for training. DoD personnel who are responsible for assigning Reserves for training should make an effort to assign them when they are on active duty for training to duties in which they will not obtain information that could be used by them or their employers to give them an unfair advantage over their civilian competitors.

(f) Conduct prejudicial to the Government. DoD personnel shall not engage in criminal, infamous, dishonest, immoral, or notoriously disgraceful conduct, or other conduct prejudicial to the Government. Moreover, DoD personnel shall avoid any action whether or not specifically prohibited by this part, which might result in, or create the appearance of:

(1) Using public office for private gain;

(2) Giving preferential treatment to any person;

(3) Impeding Government efficiency or economy;

(4) Losing complete independence or impartiality;

(5) Making a Government decision outside official channels; or

(6) Affecting adversely the confidence of the public in the integrity of the Government.

§ 40.735-4 Bribery and graft.

In general, DoD personnel may be subject to criminal penalties if they solicit, accept, or agree to accept anything of value in return for performing or refraining from performing an official act (see 18 U.S.C.201).

thing of monetary value either directly or indirectly from any person, firm, corporation, or other entity which:

(1) Is engaged or is endeavoring to engage in procurement activities or business or financial transactions of any sort with any agency of the DoD;

(2) Conducts operations or activities that are regulated by any agency of the DoD; or

(3) Has interests that may be substantially affected by the performance or nonperformance of the official duty of the DoD personnel concerned. Gifts, gratuities, favors, entertainment, etc., bestowed upon members of the immediate families of DoD personnel are viewed in the same light as those bestowed upon DoD personnel. Acceptance of gifts, gratuities, favors, entertainment, etc., no matter how innocently tendered and received, from those who have or seek business with the Department of Defense may be a source of embarrassment to the department and the personnel involved, may affect the objective judgment of the recipient and impair public confidence in the integrity of the business relations between the department and industry.

(b) For the purpose of this section, a gift, gratuity, favor, entertainment, etc., includes any tangible item, intangible benefits, discounts, tickets, passes, transportation, and accommodations or hospitality given or extended to or on behalf of the recipient. However, the

restrictions in paragraph (a) of this section do not apply to the following:

(1) Instances in which the interests of the Government are served by participation of DoD personnel in widely attended luncheons, dinners, and similar gatherings sponsored by industrial, technical, and professional associations for the discussion of matters of mutual interest to Government and industry. Participation by DoD personnel is appropriate when the host is the association and not an individual contractor. Acceptance of gratuities, or hospitality from private companies in connection with such association's activities is prohibited.

(2) Situations in which the interests of the Government are served by participation of DoD personnel in activities at the expense of individual defense contractors when the invitation is addressed to and approved by the employing agency of DoD. These activities include public

ceremonies of mutual interest to industry, local communities, and the department, such as the launching of ships or the unveiling of new weapons systems, industrial activities which are sponsored by or encouraged by the Government as a matter of U.S. defense or economic policy, such as sales meetings to promote off-shore sales involving foreign industrial groups or governments.

(3) Luncheons or dinners at a contractor's plant, on an infrequent basis, when the conduct of official business within the plant will be facilitated and when no provisions can be made for individual payment.

(4) Situations in which, in the judgment of the individual concerned, the Government's interest will be served by participation by DoD personnel in activities at the expense of a defense contractor. In any such case in which DoD personnel accepts any gratuity, favor, entertainment, etc., either directly or indirectly from any person, firm, corporation, or any other entity which is engaged or is endeavoring to engage in business transactions of any sort with the department, a report of the circumstances will be made within 48 hours by the individual to the designee of the Secretary of the military department concerned or the designee of the Secretary of Defense in the case of DoD personnel not within one of the military departments.

(5) Speciality advertising items of trivial intrinsic value.

(6) Customary exchange of social amenities between personal friends and relatives when motivated by such relationship and extended on a personal basis.

(7) Things available impersonally to the general public or classes of the general public such as a free exhibition by a defense contractor at a world's fair.

(8) Trophies, entertainment, rewards, prizes, given to competitors in contests which are open to the public generally or which are officially approved for participation in by DoD personnel.

(9) Transactions between and among relatives which are personal and consistent with the relationship.

(10) The acceptance of loans from banks or other financial institutions on customary terms to finance proper and usual activities of employees such as home mortgage loans.

(11) Social activities engaged in by officials of the department and officers

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in command or their representatives with local civilian leaders as part of community relations programs.

(12) Contractor-provided local transportation while on official business and when alternative arrangements are clearly impracticable.

(13) Participation in civic and community activities by DoD personnel when the relationship with the defense contractor can reasonably be characterized as remote, for example, participation in a little league or Combined Federal Campaign luncheon which is subsidized by a concern doing business with a defense activity.

(14) Receipt of bona fide reimbursement, not prohibited by law, from other than defense contractors for actual expenses for travel and such other necessary subsistance for which no Government payment or reimbursement is made. However, an employee may not be reimbursed, and payment may not be made on his behalf, for excessive personal living expenses, gifts, entertainment, or other personal benefits.

(c) Except as provided in paragraph (b) (12) of this section, personnel on official business may not accept contractor-provided transportation, meals or overnight accommodations in connection with such official business so long as Government or commercial transportation or quarters are reasonably available. Where, however, the over-all Government interest would be served by acceptance by DoD members of such transportation or accommodations in specific cases, the order issuing authority may authorize it.

(d) Procedures with respect to gifts from foreign governments are set forth in DoD Directive 1005.3.

(e) Procedures with respect to ROTC Staff Members are set forth in DoD Directive 5500.12.

§ 40.735-6 Prohibition of contributions or presents to superiors.

No officer or employee in the U.S. Government employ shall at any time solicit contributions from other officers or employees in the Government service for a gift or present to those in a superior official position; nor shall any such officials or superiors receive any gift or present offered or presented to them as a contribution from persons in Government employ receiving a salary in an amount smaller than their own; nor shall any officer or employee make any donation