Washington, DC

U.S. Office of Personnel Management
Compensation Claim Decision
Under section 3702 of title 31, United States Code

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Damon B. Ford
Compensation and Leave Claims
Program Manager
Agency Compliance and Evaluation
Merit System Accountability and Compliance


03/02/2017

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Date

The claimant is a former employee of the Navy Forces Surveillance Support Center (FSSC), Department of the Navy (Navy), in Chesapeake, Virginia.  He seeks an additional $10,002.77 in connection with a relocation incentive.  The claim was transferred to OPM by the U.S. Civilian Board of Contract Appeals, where the claimant originally sent his claim request.  We received the claim on October 1, 2015, and the agency administrative report (AAR) on November 17, 2015.  For the reasons discussed herein, the claim is denied.

In May 2014, Navy extended an offer of employment to the claimant, which was accepted, for the position of Engineering Technician, GS-802-12, located at the FSSC.  At the time of the offer, the claimant was employed by the Naval Facilities Engineering and Support Command Far East, Department of Navy, in Atsugi, Japan.  In accordance with title 5, Code of Federal Regulations (CFR) section 575.201, Navy decided to offer the claimant a relocation incentive after determining that the position in Chesapeake, Virginia, was likely to be difficult to fill in the absence of an incentive and the claimant was relocating from Japan.  In connection with this relocation incentive, and as required by 5 CFR 575.210, on May 7, 2014, the claimant signed a Recruitment/Relocation/Retention Incentive Service Agreement.  Among other things, the agreement specified that he agreed to remain in the employ of FSSC for a minimum period of 24 months and that the amount of the relocation incentive was 12.7 percent of his basic pay.  Navy paid the claimant a single lump-sum payment of $10,000.00 representing 12.7 percent of his basic salary of $78,762.00.  The formula used to calculate the incentive amount was $78,762.00 x 12.7% = $10,002.77 (rounded down to $10,000.00).                  

The claimant believes that Navy misinterpreted regulatory guidance in calculating his relocation incentive.  He believes that 5 CFR 575.209(b)(1) “provides a procedure for calculating a relocation incentive” which Navy failed to follow.  He asserts that because the service agreement was for a minimum period of twenty-four months, the bonus should have been 12.7 percent of his basic pay multiplied by two years rather than one year.  He states: “It is my argument that correctly performing the calculation of the Relocation Incentive as described in the Recruitment/Relocation/Retention Incentive Service Agreement that I signed, would result in a total Relocation Incentive of $20,005.55.  I expected to get paid this total amount in a single, lump sum payment." 

The agency contends that “the intent of the command was to authorize an incentive in the amount of $10,000.00” only, and that “the monetary obligation of [the service agreement] was met with the single $10,000.00 payment.”       

Chapter 57, subchapter IV, of title 5, United States Code (U.S.C.), and 5 CFR part 575, subpart B, establish the conditions for, and authorize the payment of relocation incentives to eligible Federal employees. 

5 CFR 575.209, in pertinent part, provides as follows:

(a) An authorized agency official must establish the criteria for determining the amount of a relocation incentive. An agency may pay a relocation incentive— (1) As an initial lump-sum payment at the commencement of the service period required by the service agreement;(2) In installments throughout the service period required by the service agreement;(3) As a final lump-sum payment upon the completion of the full service period required by the service agreement; or (4) In a combination of these payment methods.

(b)(1) Except as provided in paragraph (c) of this section, the total amount of relocation incentive payments paid to an employee in a service period may not exceed 25 percent of the annual rate of basic pay of the employee at the beginning of the service period multiplied by the number of years (including fractions of a year) in the service period (not to exceed 4 years).

Referring to 5 CFR 575.209(b)(1) in his claim, the claimant writes:  “Notice the part… multiplied by the number of years in the service period… this part of the formula is not being performed under the [agency] method, in conflict with 5 CFR 575.”  The claimant evidently believes that section 575.209(b)(1) requires Navy to multiply the 12.7% (percentage of basic pay) by 2 (the number of years in the service period) to calculate his relocation incentive amount.  However, section 575.209(b)(1) effectively provides a calculation method for the maximum incentive amount that may be offered and paid to an employee as a relocation incentive.  It does not provide that a payment must be multiplied by the numbers of years in the service period in order to calculate an incentive amount.  This is a misreading and misinterpretation of the regulation.  The words in the regulation “the total amount of relocation incentive payments paid…may not exceed…” make clear that the section provides for calculating a maximum incentive amount.   

The claimant further asserts that “the agreement [he] signed and agreed to is what the Navy is contractually required to pay [him].  [The agreement] was not a mere verbal statement made in error, this is a written and legally binding agreement, essentially a contract, that the Navy is required to fulfill…”  However, the service agreement does not require Navy to pay the claimant the amount he seeks.  The agreement which, as stated above, the claimant acknowledges he signed and agreed to, contains the plain clause:  “I understand that the incentive will be 12.7% of my basic pay (to include either locality pay or special rate supplement.)”  It does not clearly state that such percentage payment will be for each year of the service period.  Further, this reading is reinforced by the written approval documentation required by 5 CFR 575.208(a) which states: “I recommend approval of a relocation incentive in the amount of $10,000, which is equivalent to 12.7% of the candidate’s basic salary and proportionate to the length of the service period and does not exceed 25 percent of the annual rate of basic pay (inclusive of locality pay or special rate supplement).”  Therefore, that the claimant misinterprets 5 CFR 575.209(b)(1) to mean the bonus should have been 12.7 percent of his basic pay multiplied by two years rather than one year does not require Navy to pay that amount.

We find the agency’s decision to grant no more than $10,000.00 as a relocation incentive complies with 5 CFR 575.209(b)(1) in that the amount does not exceed the maximum incentive amount payable.[1]  Where, as in this case, the agency’s determination is reasonable, we will not substitute our judgment for that of the agency.  See, e.g., Jimmie D. Brewer, B-205452, Mar. 15, 1982, as cited in Philip M. Brey, B-261517, December 26, 1995.  We are, therefore, unable to find a basis for disturbing Navy’s decision and this claim is denied.      

This settlement is final.  No further administrative review is available within OPM.  Nothing in this settlement limits the claimant’s right to bring an action in an appropriate United States court.

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