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


05/18/2021

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Date

The claimant is a Federal civilian employee of the U.S. Army Installation Management Command, Department of the Army (DA), in Livorno, Italy.  He requests the U.S. Office of Personnel Management (OPM) reconsider his agency’s denial of a living quarters allowance (LQA) grant.  We received the claim on September 10, 2020, and the agency administrative report (AAR) on December 3, 2020.  For the reasons discussed herein, the claim is denied.

The claimant retired from active duty military service in Germany in September 2016, and was employed with a U.S. firm until April 2017.  He resided in the U.S. briefly before returning to Germany in March 2018.  While working for a local German company, the claimant applied for a Federal position with DA in Vicenza, Italy.  He was appointed into the Federal civilian service on November 26, 2018, as an Emergency Operations Center Specialist, GS-0301-09, in Vicenza, Italy.  Upon the appointment, the agency determined that as a locally hired employee, he was not eligible to receive LQA.  On January 19, 2020, the claimant was reassigned to his current Physical Security Specialist, GS-0080-11, position duty stationed in Livorno, Italy under a management-directed reassignment (MDR).  Because the reassignment was a MDR, involving a permanent-change-of-station move from Vicenza to Livorno, the claimant believed he was eligible to receive LQA.  However, the agency denied LQA based on the claimant’s ineligibility to receive it.      

The claimant contends that he should receive LQA based on his interpretation of the Department of Defense Instruction (DoDI) NUMBER 1400.25, Volume 1250.  He states:

In my particular case the MDR meets all of the requirements to award the allowance based upon the fact that:

1)  Employment may be ended if the employee fails to accept relocation.

2)  The relocation caused by a management-generated action.
3)  Management requested an employee not now in receipt of LQA relocate to another area.

Furthermore DOD NUMBER 1400.25, Volume 1250 February 23, 2012, states that: If the management-generated action would not cause employment to end if the employee fails to accept relocation, the DoD Component may approve LQA if a determination is made that there is no choice but to move the employee for official reasons (e.g., mobility is inherent in the functional area).  This also applies in my case, since accepting the position my employment obviously did not end, however it was stated in the MDR memorandum.

The claimant also asserts he meets the intent of Army in Europe Regulation (AER) 690-500.592, Civilian Personnel Overseas Allowances, paragraph 7f, which describes situations under which employees being relocated due to an MDR may be granted LQA.  He states the list of situations “is not all inclusive” but does not identify any conditions precluding approval.  The claimant further states “[t]he precedent is not established to deny based solely on the fact that I did not meet one of the examples listed.”

The agency determined that as a locally hired employee, the claimant’s hiring circumstances in 2018 rendered him ineligible for LQA for not meeting the provisions of the Department of State Standardized Regulations (DSSR) sections 031.12a and b.  Further, as it relates to the January 19, 2020 MDR, the agency determined the claimant did not meet LQA eligibility requirements under AER 690-500.592.  In its administrative report to OPM, the agency states, in part:

…Because the reassignment was a management-directed action, associated with a permanent-change-of-station (PCS) move from Vicenza to Livorno, [the claimant] requested to be granted LQA under the provisions of the Department of Defense Instruction (DODI) 1400.25-V1250, paragraph E2.2g and h. and adopted by Army in Europe Regulation (AER) 690-500.592, paragraph 7.f.  We denied his request based on the circumstance that his management-directed reassignment did not meet the additional stipulations imposed for the grant in AER 690-500.592.

The DSSR contain the governing regulations for allowances, differentials, and defraying of official residence expenses in foreign areas.  Within the scope of these 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.  Therefore, an LQA applicant must fully meet the relevant provisions of the DSSR before the supplemental requirements of the DoDI 1400.25-V1250, AER 690-500.592, or other agency implementing guidance may be applied.

Section 031.12 of the DSSR provides the following guidance relative to employees recruited outside the United States:

a. the employee's actual place of residence in the place to which the quarters allowance applies at the time of receipt thereof shall be fairly attributable to his/her employment by the United States Government; and

b. prior to appointment, the employee was recruited in the United States, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, the former Canal Zone, or a possession of the United States, by:

(1) the United States Government, including its Armed Forces;
(2) a United States firm, organization, or interest;
(3) an international organization in which the United States Government participates; or
(4) a foreign government

and had been in substantially continuous employment by such employer under conditions which provided for his/her return transportation to the United States, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, the former Canal Zone, or a possession of the United States; or

c. as a condition of employment by a Government agency, the employee was required by that agency to move to another area, in cases specifically authorized by the head of the agency.

DoDI 1400.25-V1250, which implements the provisions of the DSSR for DoD civilian employees, provides the following supplemental guidance relative to LQA and DSSR section 031.12c:

E2.2.g.  The designated official shall determine whether or not an employee requires LQA under section 031.12c of Reference (c) when the assignment is within or between countries.  Section 031.12c of Reference (c) provides that LQA may be given to an employee recruited outside the United States if, as a condition of employment by a Government agency, the employee was required by that agency to move to another area in cases specifically authorized by the head of the agency.  A condition of employment, if not fulfilled, results in failure to gain or retain employment.  Section 031.12c of Reference (c) shall be applied when an employee is relocated to another area by a management-generated action.  It shall also be applied when management requests that an employee not now eligible for LQA relocate to another area.  A management request that an employee relocate is considered a management-generated action.  A move through a voluntary reassignment program is not considered a management-generated action.  To make a determination under Section 031.12c of Reference (c), the following tests must be applied:

2.g.(1).  Will employment be ended if the employee fails to accept relocation?

2.g.(2).  Is the relocation caused by a management-generated action?

2.g.(3).  Must management request an employee not now in receipt of LQA to relocate to another area?

E2.2.h.  To grant an allowance under Section 031.12c of Reference (c) and its implementing guidance, the answer must be affirmative to questions in subparagraphs 2.g.(1) through 2.g.(3) of this enclosure  Selecting a person to be relocated is based on regulatory guidance, leaving management little option to recruit a new employee or select an employee receiving LQA.  There are also certain common sense considerations.  If an employee’s new duty station is within the local area of work of the previously established residence, no LQA will be authorized.  If the employee is joining a spouse or domestic partner at a new duty station who is eligible for LQA, the reassigned employee shall not be given the allowance.  If the management-generated action would not cause employment to end if the employee fails to accept relocation, the DoD Component may approve LQA if a determination is made that there is no choice but to move the employee for official reasons (e.g., mobility is inherent in the functional area).

AER 690-500.592, paragraph 7f, used in connection with the provisions of DoDI 1400.25-V1250, E2.2.g. and E2.2.h., supplements the requirements for granting LQA under an MDR.  AER 690-500.592, 7f states, in part:

Generally, LQA under an MDR will not be granted.  In extraordinary cases where an LQA-ineligible employee must relocate to another area under a management-generated action in accordance with DODI 1400.25, volume 1250, commands may request [Civilian Personnel Division] CPD approval in advance.  The MDR must result from actions such as a major organizational move, a reduction in force, base transformation, or base closure, and never executed solely to extend LQA.  In all cases, an actual [Permanent Change of Station] PCS move under Government travel orders must occur.  The DOD [Joint Travel Regulation] JTR provisions on authorization and approval of PCS travel, including the distance test, must be met, and the employee’s new permanent residence must be located closer to the new duty location than to the duty station from which reassigned.

The claimant meets section 031.12a because his presence in Italy is attributable to his employment with the DA.  The DSSR makes clear that eligibility is established at the time of appointment, i.e., based on circumstances existing prior to the employee’s initial appointment to Federal service.  However, prior to appointment as Emergency Operations Center Specialist, the claimant was employed in Germany by a local company.  The company recruited him in 2018 from Germany and there is no indication the company provided for his return transportation to the United States or its territories or possessions.  As such, the claimant lacks status as having been recruited in the United States or one of the enumerated territories or possessions as required by section 031.12.  Thus, the claimant does not meet section 031.12b.  Additionally, the claimant does not meet DSSR section 031.12c because although he had accepted his MDR and moved to another area, the action was not specifically authorized by the head of the agency.

If the relevant provisions of the DSSR are not fully met, then there is no need to discuss other regulations.  However, since the claimant bases his LQA request on supplemental requirements of the DoDI 1400.25-V1250 and AER 690-500.592, we will briefly address them.

The DoDI 1400.25-V1250 makes clear that LQA may be granted to an employee recruited outside the United States if, the employee was required by that agency to move to another area in cases specifically authorized by the head of the agency.  Nothing in the record suggests that this was a case where the reassignment was specifically authorized by the head of the agency.  By contrast, the claimant’s MDR memorandum was signed by the Director of Emergency Services, not the head of the agency.  Furthermore, nothing in the record indicates that if the claimant declined to accept the MDR in Livorno, it would result in failure to gain or retain employment if not fulfilled.  Based on these circumstances, relevant DoDI 1400.25-V1250 requirements are not met for the grant of LQA.       

Finally, by its plain terms, AER 690-500.592 requires that “The MDR must result from actions such as a major organizational move, a reduction in force, base transformation, or base closure, and never executed solely to extend LQA.”  Here, the reassignment action was not the result of a major organizational move, a reduction in force, base transformation, or base closure.  The purpose of the claimant’s reassignment was to fill a vacant position.  In view of the foregoing, the agency properly found the claimant ineligible for LQA.  For all the reasons stated above, the claim is denied.

Overseas allowances are not automatic salary supplements, nor are they entitlements.  They are specifically intended as recruitment incentives for U.S. citizen civilian employees living in the United States to accept Federal employment in a foreign area.  If a person is already living in a foreign area, that inducement is normally unnecessary.  Furthermore, 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 Code of Federal Regulations (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).  As discussed previously, the claimant has failed to do so.  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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