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Office of Merit Systems Oversight and Effectiveness

Date: November 15, 2001
File Number: [01-0014]
Matter of: [Claimant]

OPM Contact: Deborah Y. McKissick

The claimant is a former military member hired locally overseas, who is requesting reconsideration of his agency's decision regarding his entitlement to receive a living quarters allowance (LQA). We accepted the claim on June 15, 2001 and the agency provided information, dated August 16, 2001, which we received on October 10, 2001. For the reasons discussed herein, the claim is denied.

The claimant retired from active duty with the [agency] on February 28, 1999, while he was stationed in [city, country]. In early August 1999, the claimant applied for a Sports Specialist, GS-0030-7 position at [installation, city, country]. He accepted the offer of employment on December 13, 1999, and the appointment was effected December 27, 1999. On December 28, 1999, the claimant submitted his request for an LQA to his supervisor. The request was disapproved on May 3, 2000. Management reconsidered the claimant's second request for an LQA, and approved the request on June 27, 2000. The [agency personnel office] reversed the approval on July 13, 2000.

In its response, the agency states that the claimant was offered the position on December 13, 1999, and he accepted the offer on December 17, 1999. The [agency personnel office] received the claimant's request for an LQA on March 7, 2000. The [agency personnel office] determined that the claimant would have met the eligibility requirements based on the Department of State Standardized Regulations (DSSR) Sections 031.12a and b, and the Department of Defense (DoD) Regulation 1400.25-M, Dec. 96, Subchapter 1250E1a(2)(a), if management had authorized the payment of LQA as an incentive to fill the position. However, the Personnel Action Request (PAR), received from the command, did not authorize LQA for the position.

The agency response references DoD Regulation 1400.25-M, Dec 96, Subchapter 1250 D1 which states, "allowances are not automatic salary supplements nor are they entitlements. If a person is already living in a foreign area, that inducement is normally unnecessary." The agency response also references DoD Regulation 140025-M, Dec 96, Subchapter 1250 D3 which states, "individuals shall not automatically be granted these benefits simply because they meet eligibility requirements."

The Overseas Differentials and Allowances Act, Pub. L. 86-707, 74 Stat. 793, 794 (Sept. 6, 1960), as amended and codified at 5 U.S.C. §§ 5922-5924 provides that, under regulations prescribed by the President, LQAs "may" be paid to federal employees in foreign areas. The President, by executive order, delegated this authority to the Secretary of State, who issued Standardized Regulations concerning eligibility to receive, and payment of, LQAs. Section 013 of the Department of State Standardized Regulations (DSSR) further delegates to the heads of federal agencies the authority to grant LQAs to agency employees. Section 013 of the DSSR specifies that the head of an agency "may" grant quarters allowances and issue further implementing regulations, as he or she may deem necessary for the guidance of the agency in granting such allowances. The Department of Defense (DoD) has issued further implementing regulations through its requirements for DoD civilian employment overseas, DoD 1400.25-M, CPM 592.

Section 031.12 of the DSSR provides that quarters allowances "may" be granted to employees recruited outside the United States, when:

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

b. prior to appointment, the employee was recruited in the United States . . by the United States Government, including its armed forces, . . . and has been in substantially continuous employment by such employer under conditions which provided for his/her return transportation to the United States . . .*

The DSSR further provides that the head of the agency upon determination that unusual circumstances in an individual case justify such action "may" waive Section 031.12b. Thus, the DSSR authorizes, but does not require, agency officials to grant an LQA when an employee fulfills the basic eligibility requirements in the DSSR.

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. Joseph P. Carrigan, 60 Comp. Gen. 243, 247 (1981); Wesley L. Goecker, 58 Comp. Gen. 738 (1979).

Even though the claimant meets the criteria in section 013.12 of the DSSR, the DoD regulation specifies further that, except in unusual circumstances, an LQA is to be used as an incentive to persuade employees in the United States to apply for overseas positions. Subchapter 1-1b of D0D 1400.25-M, CPM 592 provides in relevant part:

The foreign post differential and the foreign area allowances (except the post allowance) are not automatic salary supplements attached to all positions in the foreign area. They are intended to be recruitment and/or retention 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 in the foreign area, that inducement normally is unnecessary. The specific circumstances under which an employee who is hired in a foreign area may be granted the allowances provided in section 031.12 of the DSSR, as supplemented by this chapter. (Emphasis added).

In view of the permissive rather than mandatory language in the applicable statutes and regulations, as noted above, the degree of discretion that heads of agencies have in determining whether to authorize these allowances, and the facts of this claim, we cannot say the agency's application of the DoD regulation in this case was arbitrary or capricious.

Where the agency's factual 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. The claimant was hired locally and was not living in the United States at the time of his appointment to the civilian position. At the time the claimant was hired, management did not grant an LQA as an incentive for the position. Even though the agency delayed making its determination, regulations do not require agency officials to grant an LQA, even though an employee fulfills the basic eligibility requirements. Accordingly, the claim is denied.

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

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