APPENDIX II
STANDARDS OF CONDUCT
This appendix was developed using the information already in appendix E of NAVSUP P-487 on the standards of conduct. The material was developed into a training format to make it easier for you to read and understand. Appendix E of NAVSUP P-487 was developed to emphasize the requirement that all ship's store personnel adhere to the standards of conduct contained in DOD Directive 5500.7 and SECNAVINST 5370.2. This appendix is not intended to replace or modify the above instructions or material.

DEPARTMENT OF DEFENSE STANDARDS OF CONDUCT
The Department of Defense (DOD) standards of conduct describes the relationship between ship's store personnel and vendors. All ship's store personnel must observe the highest ethical standards when dealing with vendors. In all areas of the ship's store operation, equal treatment must be given to all vendors and suppliers. Ship's store personnel should be aware that it is strictly forbidden to accept gratuities, gifts, prizes, and so forth, from vendors or to give preferential treatment to vendors in regard to procurement, distribution, stocking, display, or resale of their products. As a Ship's Serviceman, you must understand that your actions and the decisions you make are closely watched by people in and out of the government. Even though a conflict of interest does not exist in your dealings, you must avoid even the appearance of such a conflict existing in the public's eyes. For example, being hospitable to a friend may be inappropriate if the friend is a contractor's representative and the contractor is involved in an official matter with your command or an official matter that is expected to arise on which you may have to make a decision. This is an example of conflict of interest because your decision on this official matter may be swayed by your friendship with the contractor's representative.

SHIP'S STORE POLICY
Ship's store policy is firm and to the point. Any ship's store personnel who solicit, accept, or agree to accept gratuities in any form from vendors or suppliers or anyone else who deals with the ship's store either directly or indirectly is subject to disciplinary action or, in some cases, criminal prosecution.
Ship's store personnel will also not give preferential treatment to vendors, suppliers, or anyone else in any area including procurement, distribution, stocking, display, or resale of products under any circumstances.
ACTIONS BY NAVRESSO
NAVRESSO has advised all Ship's Store Afloat Catalog vendors and all contractors of the policy and prohibitions. NAVRESSO prepared and developed various signs for display in the ship's store to advise and remind all personnel and vendors of the policy. The ship's store officer must make sure these signs are posted in the ship's store office and any other appropriate area for observance by all ship's store personnel and vendors. Semiannually, the ship's store officer must review DOD standards of conduct with all ship's store personnel and remind local vendors and suppliers of these policies.

SECNAVINST 5370.2
SECNAVINST 5370.2 implements and sup-plements DOD Directive 5500.7 of 15 Jan 1977 regarding the standards of conduct of personnel in the Department of Defense. This instruction prescribes required standards of ethical conduct governing all personnel of the Department of the Navy; related requirements that apply to all personnel in understanding and executing the standards of conduct; and responsibilities and procedures for monitoring and enforcing compliance with the standards of conduct and related requirements within the Department of the Navy.
The contents of this instruction apply to all naval personnel and, when applicable, to retired naval personnel and members of the Reserve components. Noncompliance with this instruction may result in disciplinary or punitive action. Appropriate administrative measures must be taken to prevent and correct noncompliance to this instruction in a timely manner. You should become familiar with the following terms because they are mentioned often during our discussion.

Naval personnel- All civilian officers and employees and all active duty military personnel of the Department of the Navy, including special government employees and personnel of nonappropriated fund instrumentalities.

Gratuity- Any gift, favor, entertainment, hospitality, transportation, loan, any other tangible item, and any intangible benefit; for example, discounts, passes, and promotional vendor training given or extended to, or on behalf of, naval personnel or their spouses, minor children, or households, for which a fair market value is not paid by the recipient or the U. S. Government.

Appropriate Supervisor- Superior within the chain of command who knows the duties of the naval personnel concerned and can best determine whether a conflict of interest exists for such personnel. This person will ordinarily be the immediate superior of the person concerned. Each commanding officer and department head should make sure all personnel know who their appropriate supervisor is.

POLICIES GOVERNING THE CONDUCT OF NAVAL PERSONNEL

Naval personnel must become familiar with the range of their authority and the limitations placed on them concerning activities for which they have responsibility. To do this, they must direct their attention to the prohibitions that apply to the conduct of naval personnel. Naval personnel are prohibited from making or recommending any expenditures of funds or taking or recommending any action that is known to be a violation of U. S. laws, Executive orders, or applicable directives, instructions, or regulations. If you are in doubt whether your proposed actions or decisions comply to the terms of regulation or law, you should consult legal counsel or, if appropriate, a standards of conduct counselor or deputy counselor to make sure your actions or decisions are the proper and lawful conduct of Navy programs and activities.

Conduct Prejudicial to the Government
Conduct that is prejudicial to the government tends to injure or impair the attitude of the public toward the government. Whether specifically prohibited or not in this instruction, you should avoid any action that may be prejudicial to the government. Conduct prejudicial to the govern-ment might result in or reasonably be expected to create the appearance of the following:

Using public office for private gains
Giving preferential treatment to any person or entity

Impeding government efficiency or economy

Losing complete independence or impartiality

Making a government decision outside official channels

Adversely affecting the confidence of the public in the integrity of the government

Personal Judgment
As stated earlier, all naval personnel must adhere strictly to the standards of conduct and related requirements. In some instances, standards are imposed that require you to exercise your own personal judgment. You must consider each of these instances carefully and prepare to account for the manner in which you judged the situation. This is particularly important in a situation that involves acceptance of hospitality or favors from another seeking to do person or entity who do or are business with the Department of Defense.

Dealing with Business and Industry Representatives
No matter where you work or what position you hold, sooner or later you will deal with business or industrial representatives. You must remember when doing so that you are representing the government in these business dealings, and you must make sure that while you handle them, you observe the highest ethical standards. Practices that may be acceptable in the business world may not be acceptable for naval personnel. Avoid placing yourself in the position in which a conflict of interest might arise or be suspected. Such a conflict of interest may arise or appear to arise when you accept gratuities or engage in any activity that would influence or reasonably be interpreted as influencing the strict impartiality that must be maintained in all business relationships involving the government. When these business relations become personal, it becomes difficult for you to maintain the impartiality required in your relations with business or industrial representatives. You should at all times make sure any person doing business or attempting to do business with the DOD, or representing such entities, does not try to gain favor or favorable acceptance from you. You should deny any offers for special treatment from such persons; follow the rule of strict impartiality when dealing with such persons in an official capacity. When you accept gratuities or favors from those who have or seek business dealings with the DOD, it may result in embarrassment to the department and to the naval personnel involved. It may also affect your judgment as the recipient and impair the judgment of the public on the way the government handles its business dealings. It must be stressed that prohibited conflicts and apparent conflicts of interest may sometimes arise even with relationships and transactions that the personnel involved may perceive as unimportant. When in doubt about the propriety of accepting gratuities, attending functions, or accepting other invitations of a hospitable nature, you must refrain.

Preferential Treatment
In all your business dealings with other individuals or firms, special treatment must not be given unless equivalent treatment is also given to other individuals or firms who are justifiably entitled to such treatment.

ACQUIRING CONFLICTING FINANCIAL INTERESTS
Naval personnel must avoid acquiring or retaining financial interest that would disqualify them from performing their duties or responsibili-ties.
The following are some of the more likely situations in which conflicts of interest might arise. Naval personnel have government duties or responsibilities related to business entities-

. with which they, their spouse, their minor children, or household members are associated with employees, officers, owners, directors, members, trustees, partners, advisors, or consultants;

. with which they, their spouse, minor children, or household members are negotiating or have arrangements for prospective employment; and

. in which they, their spouse, minor children, or household members have interest through ownership of stocks, bonds, securities, or other financial arrangements, such as trusts, or through participation in pension or retirement plans.

Membership in Associations
Naval personnel who are members or officers of nongovernmental associations or organizations must avoid activities on behalf of the association or organization that are incompatible with their official government positions. SECNAVINST 5760.4 sets policy for the Department of the Navy regarding participation by naval activities and naval personnel in the activities of private associations.

Equal Opportunity
Naval personnel should scrupulously adhere to the DOD program of equal opportunity regardless of race, color, religion, sex, age, or national origin, according to equal opportunity directives.
Reporting Suspected Violations
Naval personnel who have information that causes them to believe someone has violated the standards of conduct should report such information to their appropriate supervisor. The matter will then be brought to the attention of the person concerned for a possible resolution without further command action unless the command determines that such communication is not likely to resolve the problem or will adversely affect a proper investigation of the matter.

Resolving Violations
The resolution of standards of conduct violations must be accomplished promptly by one or more measures, such as divestiture of conflicting interests, disqualification for particular assignments, changes in assigned duties, termination, or other appropriate action, as provided by statute or administrative procedures. Disciplinary actions must be taken according to established personnel procedures.