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


12/18/2018

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Date

The claimant is a Federal civilian employee of the Department of the Navy (Navy), in Manama, Bahrain.  He seeks a relocation incentive of $32,406.50, instead of $16,203.25, as determined by his agency.  We received the claim on May 7, 2018, the agency administrative report (AAR) on July 31, 2018, and the claimant’s response to the AAR on August 23, 2018.  For the reasons discussed herein, the claim is denied.

On March 7, 2017, the claimant signed a written relocation incentive service agreement agreeing to complete 24 months of employment with Navy in Bahrain.  The service agreement specified he would receive a relocation incentive of 25 percent of basic pay to be paid in monthly installments.  Navy determined the total amount of relocation incentive to be $16,203.25, or 25 percent of a year’s basic salary ($64,813.00 x 25%).

The claimant believes his agency did not follow statutory and regulatory requirements in calculating his relocation incentive.  He believes section 575.209(b)(1) of title 5, Code of Federal Regulations (CFR), provides a required formula for determining relocation incentives and that his agency “skipped the last portion of the formula.”  In the claimant’s view, 5 CFR 575.209(b)(1) requires his agency to multiply 25 percent of his basic pay by the number of service years agreed to in the service agreement.  He states, “When my base pay is plugged into the formula as stated on the OPM website and in the references it looks like this:  $64,813 x 25% x 2 = $32,406.50.”  

In its AAR, the agency responds to the claimant’s assertion as follows:

….The statute and regulation do not contain a formula the agency must use to determine the amount of the relocation incentive.  Rather, they contain a formula that tells the agency the maximum amount that it may not exceed when paying an employee a relocation incentive. 

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. 

Specifically, 5 CFR 575.209, in relevant part, provides as follows:

(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).

(c)(1) An authorized agency official may request that OPM waive the limitation in paragraph (b)(1) of this section for an employee based on a critical agency need…[1]

In accordance with 5 CFR 575.209, implementing guidance in the Naval Supply System Command Instructions 12575.1, dated November 18, 2002.  Section C, “Relocation Bonus” states in relevant part:

Payment of Bonuses.  A relocation bonus shall be calculated as a percentage of the employee’s rate of basic pay.  The bonus shall be the minimum necessary to meet the activity’s requirement and shall in no event exceed 25 percent of basic pay.  It will be paid in the same manner and at the same time as basic pay (biweekly).  The total compensation amount for the calendar year, including the allowance, cannot exceed the aggregate limitation of pay.  The aggregate limitation on pay is the combination of regular salaries plus any overtime pay, bonus pay, cost of living pay, etc., which cannot exceed level 1 of the Executive schedule.  Allowances shall not be considered as part of an employee’s rate of basic pay for any purpose. 

Section 575.209(b)(1) of title 5, CFR, 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.  See OPM File Number 16-0003, March 2, 2017.  Therefore, that the claimant misinterprets 5 CFR 575.209(b)(1) to mean the incentive should have been 25 percent of his basic pay multiplied by 2 years does not require Navy to pay that amount.

The agency’s decision to grant $16,203.25, as a relocation incentive complies with 5 CFR 575.209(b)(1) in that the amount does not exceed the maximum incentive amount payable.  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.  The claimant has failed to meet his burden of proving his right to payment as required by 5 CFR 178.105.  Therefore, the 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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