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Office of Merit Systems Oversight and Effectiveness

Date: March 25, 2002
File Number: [01-0051]
Matter of: [Claimant]

OPM Contact: Deborah Y. McKissick

The claimant is a Senior Information Management Advisor, GS-0301-14, in [city, country]. She is requesting an exception to policy to allow her to receive back pay for living quarters allowance (LQA) and to continue receiving payment for personally owned quarters (POQ) from September 2000 until February 2003. The POQ payments were terminated in September 2000 and the claimant's tour expires in February 2003. The Office of Personnel Management (OPM) received the claim on August 27, 2001, and we accepted the claim on September 6, 2001. An agency representative notified OPM, by letter, dated October 12, 2001, that it would not provide an agency administrative report, which we received on December 10, 2001. For the reasons discussed herein, the claim is denied.

The claimant stated that she was offered and accepted a Senior Information Management Advisor position in November 1997. At that time, she informed the agency that she owned her home in [city, country], and inquired about authorized entitlements that she would receive. The claimant stated that she was concerned because she received POQ payments for the same property during her last tour in [city, country]. The POQ payments started on August 20, 1985 and were suspended on March 5, 1995 when the claimant returned to the United States. On February 10, 1998, the claimant met with agency representatives at the [agency personnel office, location], and was told that she would receive POQ payments for her [city] residence for a new ten-year recovery period. She was informed at that time that the agency did not give written statements for entitlements. The claimant also requested and received confirmation regarding the POQ status from the [agency personnel office] because they were the "final approval and processing authority."

The claimant began working in [city, country] in February 1998. On August 26, 2000, the claimant received an email from the agency terminating her POQ from the date she arrived in Germany. On September 1, 2000, the claimant met with the Deputy Director of [agency personnel office] to discuss the termination of her POQ. On September 15, 2000, the claimant received a memorandum from the agency informing her that she was not entitled to a second ten-year POQ period, but entitled to POQ in February 1998 for the remainder of the ten-year period, which began in 1985. The memorandum also stated that the rental portion of the claimant's POQ should have changed July 25, 1998, to utilities only.

The agency confirms that the claimant was erroneously informed about her LQA and POQ eligibility in [country]. The agency referenced Title 28, United States Code, Section 2860, "which absolves the government of any responsibility for misstatements or unauthorized acts of its agents."

When the claimant was offered the Senior Information Management Advisor position, and when she began to work in February 1998, the agency's November 1994 interim change to the USAREUR regulation 690-592 was in effect, which read,

Prior to an [agency] review, we had interpreted ref b [Dod CPM 592, para 2-3b(4)(c)] to mean that an employee who changed duty stations was entitled to begin a new 10-year cost recovery period, even if the employee remained in the same set of personally owned quarters. This change in interpretation means that no employee will receive the rental portion of LQA for POQ for more than 10 years for the same set of POQ. As changes in reference b have historically been applied prospectively, the change addressed in para li, reference a, will go into effect on 5 Feb 95.

If employees who have changed duty stations decide to rent new quarters, they would be entitled to receive the rental portion of the living quarters allowance. If they decide to purchase and move to new quarters, a new 10-year cost recovery period would begin.

The March 1, 1999 edition of the USAREUR Regulation 690-500.592, section 6b states,

b.   Privately Owned Quarters. Employees eligible to receive LQA who purchase a home in the overseas area are entitled to receive the rental portion of the LQA equal to 10 percent of the purchase price for a maximum of 10 years.

  • After the 10-year period, no further rental portion is appropriate and the employee is entitled to receive reimbursement of utility costs only.
  • An employee who owns or is buying a local residence who moves out but keeps the property, is not eligible for additional LQA to rent another residence under a rental contract if the owned residence is within the employee's local area of work.
  • An employee who sells a local residence, which had been purchased as described above, and then rents a residence is eligible for LQA under a rental contract, regardless of the location of the rental property. However, employees who purchase another privately owned quarters within the local area of work are not entitled to receive the rental portion of the LQA for an additional 10-year period.
  • When a move is determined to be in the best interest of the Army, such as a geographic move due to functional transfer, base closure, or reduction-in-force, a new eligibility may result if the employee buys a local residence.
  • Determinations will be made on a case-by-case basis. Approval authority rests with the Director, CPD.

The March 1, 1999 edition included the interim changes made by the agency in November 1994. The June 2, 1998 and the March 1, 1999 editions of the USAREUR Regulation 690-500.592 include "grandfather provisions" for locally hired employees who receive LQA. However, the March 1, 1999 edition states that the grandfather provision "will not extend or reinstate payment of LQA when termination of payment has been directed by law or regulation."

The Civilian Personnel Manual of the Department of Defense, DoD 1400.25M, Subchapter 1250, section Ea(4) states,

Employees who own, or are purchasing a POQ, are not eligible for additional quarters allowances under a rental contract if the POQ is within the employee's local area of work.

The Department of State's Standardized Regulations (DSSR), Section 136 states,

Payment for utilities and (if necessary) land rent may be continued beyond the ten-year period.

The Overseas Differentials and Allowances Act, Pub. L. 86-707 74 Sat. 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 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 DoD has issued further implementing regulations through its requirements for DoD civilian employment overseas, DoD 1400.25-M, CPM 592. DOD 1400.25-M, DoD issued Subchapter 1250 in December 1996, but not implemented by USAREUR until April 1997.

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. 378 (1979).

It is well settled that the erroneous advice of agency officials may not form the basis for the payment of a claim otherwise barred by law. OPM v. Richmond, 496 U.S. 414 (1990). The Civilian Personnel Law Manual states, "[t]he erroneous payment, in the nature of a housing allowance, may be waived." B-186238, February 8, 1977. Therefore, the claimant's agency has the discretion to waive the claimant's indebtedness.1

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. In view of the language in the applicable statutes and regulations, as noted above., we do not find that the agency's actions were arbitrary or capricious. Therefore, the claimant is not entitled to receive POQ after July 25, 1998, when the ten-year period on her POQ expired. 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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