Washington, DC

U.S. Office of Personnel Management
Compensation and Leave 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


02/20/2018

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Date

The claimant is a Federal civilian employee of the Department of the Army (DA) in Kaiserslautern, Germany.  He requests the U.S. Office of Personnel Management (OPM) reconsider the agency’s denial of his request to adjust the amount of living quarters allowance (LQA) he was granted for his personally owned quarters (POQ).  We received the claim on February 14, 2017, the agency administrative report (AAR) on June 2, 2017, and the claimant’s comments on the AAR on June 14, 2017.  For the reasons discussed herein, the claim is denied.

In August 2011, while serving in the military, the claimant purchased POQ in the amount of € (Euro) 225,000.  Thereafter, he received an Overseas Housing Allowance (OHA) towards the POQ from August 2011, until he retired from the military in October 2015.  Upon his retirement from the military, the total amount received towards the POQ was €102,610.[1] 

On July 11, 2016, the claimant was appointed to the Federal service as a Logistics Management Specialist, GS-0346-11, with DA in Kaiserslautern, Germany.  Upon his appointment, he requested LQA for POQ under the provisions of section 136(a) of the Department of State Standardized Regulations (DSSR).  He was determined eligible for LQA under the DSSR section 031.12, whereby LQA may be granted to employees recruited outside the United States by the employing agency.  However, in granting the claimant LQA for POQ, DA deducted the amount of OHA previously received for payment towards the POQ from the original purchase price to calculate his LQA for POQ.  As a result, the final purchase amount was determined to be €122,390 (i.e., €225,000 – €102,610), resulting in an LQA for POQ annual rate of $17,595.  The claimant asserts that his agency applied “invalid” internal policy guidance, thereby resulting in the miscalculation of his LQA for POQ annual rate.  According to the claimant, had the agency set his LQA for POQ in accordance with established regulation, the specific annual rate would be $33,562^[2] versus the $17,595 determined by the agency. 

The DSSR contains the governing regulations for allowances, differentials, and defraying of official residence expenses in foreign areas.  It sets forth the basic eligibility criteria for the granting of LQA for POQ. 

Section 136(a) of the DSSR provides LQA for POQ.  It states:

When quarters occupied by an employee are owned by the employee or the spouse, or both, or by the employee or the domestic partner, or both, an amount up to 10 percent of original purchase price (converted to U.S. dollars at original exchange rate) of such quarters shall be considered the annual rate of his/her estimated expenses for rent.

In the claimant’s view, the agency should have determined his LQA for POQ annual rate by calculating 10 percent of the original purchase price (i.e., €225,000), and as described in DSSR section 136(a), instead of the €122,390.

However, the agency explains:

While the DSSR Section 136 allows for LQA-eligible employees to receive an annual amount of up to 10 percent of the original purchase price, converted to U.S. dollars at the exchange rate in force at the time of the purchase for 10 years, we must also consider the provisions of the DSSR Section 132.5 that only allows the reimbursement of actual costs. 

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To authorize the original purchase price for the quarters that he occupied, presumably since August 2011 (or shortly thereafter) until five years later when he became eligible for LQA, would be ignoring the payments he already made against the purchase and the allowance he received for the use of the payment.  In other words, Mr. Daigle effectively requests the agency to consider the purchase of the quarters as of the date he became employed in his current position, if only for the purpose of determining the amount of LQA that he may receive for the dwelling.  However, in doing so, he also effectively asks the U.S. government to twice grant him an allowance, albeit each governed by distinct and separate statutes, for the same purpose, his residence quarters.  We believe this to be problematic.  Therefore, while we are not reducing the number of years Mr. Daigle may receive the full LQA (rental and utilities portion), we are reducing the allowance to the actual costs he still incurs residing in those quarters and while employed as a federal civilian employee eligible for LQA. 

DSSR section 136(a) provides that an amount up to 10 percent of original purchase price shall be considered the annual rate of rent expenses.  By stating that an amount “up to” 10 percent shall be considered, DSSR section 136(a) provides a maximum amount allowable but does not automatically provide for the grant of the maximum amount to eligible employees.

Moreover, section 132.5 of the DSSR provides for LQA cost requirements.  It states:

Employees shall submit written estimates of costs, or actual costs if they are known, to the head of agency on Section 960 LQA Annual/Interim Expenditures Worksheet attached to the SF-1190, Foreign Allowances Application, Grant, and Report, whenever an LQA grant commences.  Thereafter, each employee shall show the actual annual expenses of rent and utilities, supported by receipts or other satisfactory evidence, whenever requested by the officer designated to grant allowances, the Department of State, or other responsible authority.  (See also Sections 077.2 and 134.16.)

The agency is thus required to determine the original purchase price to provide for the “actual costs” and “actual annual expenses,” as provided for in DSSR section 132.5.    

Within the scope of DSSR regulations, the head of an agency may issue further implementing instructions for the guidance of the agency with regard to the granting of and accounting for these payments.  Section 013 of the DSSR, addressing the authority delegated to the heads of agencies, states in part:

When authorized by law, the head of an agency may defray official residence expenses for, and grant post differential, difficult to staff incentive differential, danger pay allowance, quarters, cost-of-living, representation allowances, compensatory time off at certain posts and advances of pay to an employee of his/her agency and require an accounting thereof, subject to the provisions of these regulations and the availability of funds.  Within the scope of these regulations, the head of an agency may issue such further implementing regulations as he/she may deem necessary for the guidance of his/her agency with regard to the granting of and accounting for these payments. [Italics added.]

Thus, Department of Defense Instruction (DODI) 1400.25, Volume 1250, dated February 23, 2012, and Army in Europe Regulation (AER) 690-500.592, dated November 18, 2005, in effect during the period in question, may impose additional requirements to further restrict LQA eligibility, but may not exceed the scope of the DSSR; i.e., allow for the granting of LQA in cases not otherwise permitted under the DSSR.

AER 690-500.592, with associated “[LQA] Allowable Costs” guidance dated May 23, 2016, states in relevant part under paragraph 1.b.(4)(a): 

Any prior payments for POQ made by the employee (e.g., during military service, contractor employment, as private individual, etc.) that reduce the original purchase price, reduce the actual cost used for LQA calculation.  Failure to provide this information will result in LQA denial.  The actual cost will be prorated as the rental portion of POQ LQA and may continue for up to the DSSR 10-year period. 

Therefore, under DA’s further implementing guidance, prior payments received for POQ made by the employee during military service will be deducted from the actual cost used for LQA calculation.  Although the claimant challenges DA policy and believes “the agency has overstepped and/or overstated authority that does not exist to reduce or limit POQ annual rate calculations as prescribed in DSSR”, we find the guidance at paragraph 1.b.(4)(a) does not exceed the scope of the DSSR and is in direct accordance with the “actual costs” requirements in section 132.5.  Thus, we find no reason to disturb the agency’s decision and the claimant’s request for additional monies is denied.  

The claimant additionally states “the exchange rate used when calculating the original purchase price of [his] POQ was incorrect and the rate should come from an official DoD source.”  Into the record he submitted an OHA monthly allowance calculation for an E1[3] with dependents for the location of Kaiserslautern Military Community taken from the Defense Travel Management Office website, providing a “Rate of Exchange (ROE)” of 0.6706, effective July 16, 2011. 

Contrary to the claimant’s assertions that exchange rates from an “official DoD source” are to be applied, DoDI 1400.25-V1250 provides the following instruction:

The annual rate payable for [POQ] is based on the purchase price or appraised value of the property, converted to U.S. dollars at the exchange rate in effect at the time of purchase.

Implicit in the provisions of DSSR section 136(a) (i.e., of “converted to U.S. dollars at original exchange rate”) and DoDI 1400.25-V1250 is the understanding that only the original exchange rate is applied by the governing regulations.  The record includes a “Checklist for [POQ]” dated October 25, 2016, provided to the claimant from an agency official, indicating that 0.69555 was the official currency exchange rate in effect on the date of the purchase agreement.  Thus, only that exchange rate is applicable and no provision in regulations provides for using exchange rates taken from DoD sources used to calculate OHA to determine POQ and adjustments.

The claimant makes statements regarding his agency’s recruitment and hiring practices requesting in his claim to OPM a “review of USAREUR/G1 recruitment and hiring practice,” and stating:  

I contend offering LQA as a hiring incentive based on standard State Department rates, validating eligibility during the onboarding and hiring processes, providing validation on the date of hiring using the standard rates, and then reducing that incentive rate months later based on local policy, does not meet the spirit and intent of the DSSR and is a misrepresentation of LQA as a hiring incentive altogether.

The claims jurisdiction authority of OPM is limited to consideration of statutory and regulatory liability.  OPM adjudicates compensation claims by determining whether controlling statute, regulations, policy, and other written guidance were correctly applied to the facts of the case.  Therefore, the claimant’s assertions concerning his agency’s recruitment and hiring practices are not subject to review under OPM’s claims adjudication authority of 31 U.S.C. 3702(a)(2) and will not be addressed further. 

The claimant references OPM decision number 09-0039 to support his LQA for POQ request.  He contends the decision supports his assertion that OHA is not equivalent to LQA.  However, the referenced decision involved a claimant attempting to qualify for LQA “continuance” based on his military OHA. Thus, the decision has no relevance to the instant case, as the claimant’s request is LQA for POQ reviewed under different controlling regulations, policies and case facts than those described in that decision.  Therefore, the claimant’s interpretation of that decision is misplaced and has no applicability to our claim settlement determination.

The statutory and regulatory languages are permissive and give agency heads considerable discretion in determining whether to grant LQAs to agency employees.  Wesley L. Goecker, 58 Comp. Gen. 738 (1979).  Thus, an agency may withhold LQA payments from an employee when it finds that the circumstances justify such action, and the agency’s action will not be questioned unless it is determined that the agency’s action was arbitrary, capricious, or unreasonable.  Under 5 CFR 178.105, the burden is upon the claimant to establish the liability of the United States and the claimant’s right to payment.  Joseph P. Carrigan, 60 Comp. Gen. 243, 247 (1981); Wesley L. Goecker, 58 Comp. Gen. 738 (1979).   Since an agency decision made in accordance with established regulations as is evident in the present case cannot be considered arbitrary, capricious, or unreasonable, there is no basis upon which to reverse the decision. 

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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