Washington, DC

U.S. Office of Personnel Management
Compensation Claim Decision
Under section 3702 of title 31, United States Code

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Robert D. Hendler
Classification and Pay Claims
Program Manager
Agency Compliance and Evaluation
Merit System Accountability and Compliance


10/21/2016

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Date

The claimant is a Federal civilian employee of the Pacific Air Forces (PACAF), Department of the Air Force, in Yokota, Japan.  He requests the U.S. Office of Personnel Management (OPM) reconsider the agency’s denial of his request for living quarters allowance (LQA).  We received the request from the claimant on July 30, 2015, and the agency’s administrative report (AAR) on November 24, 2015.  For the reasons discussed herein, the claim is denied.

The record shows the claimant retired from active duty military service on January 31, 2009.  On his July 7, 2015, LQA Request Form, the claimant’s employment history included three contractor assignments after his retirement from the U.S. Navy.  From January to December 2009, he was employed as a senior security specialist with DS2 which appears to refer to Defense Support Services, a company that was subsequently acquired by Pacific Architects and Engineers Incorporated (PAE) in November 2011.  He was then employed as a senior security specialist with KBR, Inc. (formerly Kellogg Brown and Root) from December 2009 to July 2013, and as a deputy security screener with PAE from July 2013 to September 2015.  The claimant disclosed none of the duty locations for his contractor work on his LQA Request Form.  We note his resume, although not showing his contractor work with DS2, indicates he was physically assigned by KBR to Iraq and then by PAE to Afghanistan.

While apparently employed with the U.S. firm PAE, the claimant applied for and accepted the tentative job offer for his current Federal service position on June 10, 2015.  Although informed of his ineligibility for LQA, he subsequently accepted the firm job offer on August 6, 2015.  He was appointed to his Federal service position effective September 2, 2015.

The Department of State Standardized Regulations (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.  Thus, Department of Defense Instruction (DoDI) 1400.25-V1250 implements the provisions of the DSSR but may not exceed their scope; i.e., extend benefits that are not otherwise permitted under the DSSR.  Therefore, an LQA applicant must fully meet the relevant provisions of the DSSR before the supplemental requirements of the DoDI; the PACAF Memorandum, dated April 13, 2000; and other agency implementing guidance may be applied.

On July 7, 2015, the Civilian Personnel Section (CPS) in Yokota, Japan, determined the claimant ineligible for LQA, stating:

[The claimant] does NOT meet DSSR 031.12-b.  Based on the LQA Request Form and his resume, [claimant] was employed to two different employers from the time he was employed in Talil/Mosul, Iraq, in 2009…Even if we were to give [claimant] the benefit of the doubt that he was originally recruited from the U.S. and was provided return transportation entitlements from KBR Inc., he fails to meet this provision due to the fact that there is an intervening employment between KBR Inc., and the [General Schedule] position to which he is selected for.

In disagreeing with the CPS’s determination, the claimant asserts his LQA eligibility, stating in his claim request to OPM that he “was not a locally hired applicant nor living in [J]apan.”  Furthermore, as suggested by the claimant, the vacancy announcement for his Federal service position noted that LQA or any other benefits “normally paid to a “Stateside” hire may not be granted to an applicant who does not currently receive these allowances and benefits.”  Appearing to conclude this statement meant the agency intended to exclude granting LQA to “local candidates,” he states he is “not a local candidate, (i.e., eligible applicants already residing in Japan).”  Based on the claimant’s statements, we conclude he believes he cannot be considered a “local hire” for a position in Japan for which he was recruited elsewhere.  The term “local hire” is not used in the DSSR.  Rather, the DSSR provides LQA eligibility criteria either for employees who were recruited in the United States (section 031.11), or for employees who were recruited outside the United States (under the conditions stipulated in section 031.12b)[1].  In the latter case, there is no distinction made between employees who were recruited in the country where the position is located and those recruited in another foreign country.

The claimant states in a September 13, 2015, email to OPM that his Standard Form (SF) 50 appointing him to his Federal service position included a remark that he was recruited from the United States.  We conclude the claimant is asserting he was recruited for Federal employment from the United States.

LQA may be granted to employees recruited in the United States, as stated in DSSR section 031.11:

Quarters allowance prescribed in Chapter 100 may be granted to employees who were recruited by the employing government agency in the United States, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, and the possessions of the United States.

Relative to these criteria, DoDI 1400.25-V1250, defines “U.S. hire” as follows:

A person who resided permanently in the United States, or the Northern Mariana Islands, from the time he or she applied for employment until and including the date he or she accepted a formal offer of employment.

Thus, an employee’s status as a “U.S. hire” is based on physical residency at the time of recruitment for the position in question.

The claimant characterizes himself as a U.S. hire in his LQA Request Form, identifying a Casselberry, Florida, residence as his home address where “presently living.”  On the same request form, his work history includes his PAE employment from July 2013 to September 2015, which his resume shows Afghanistan as duty location.  Other documents support his presence in Afghanistan at the time of recruitment for the Federal service position.  For example, his claim request to OPM states “[m]y current physical location is Kabul, Afghanistan,” which he confirmed in a July 30, 2015, email to OPM.  We regard “residence” in terms of its commonly-understood meaning and usage as to live in a place as one’s usual, customary dwelling place.  Physical residency involves where the employee actually, physically resided regardless of home of record, legal residence, or domicile status.  The record shows the claimant, despite remarks on an SF-50 and his identifying a Florida residence where he was “presently living” on his LQA Request Form, was employed and thus resided in Afghanistan during the recruitment process and was not permanently or physically residing in the United States from the time he applied for employment until and including the date he accepted the formal job offer.  Therefore, he may not be considered a U.S. hire for LQA purposes under DSSR section 031.11 and implementing regulations of the DoDI.  See OPM File Numbers 08-0098, February 16, 2010; 10-0013, June 6, 2011; 12-0019, October 9, 2012; 13-0022, February 25, 2014; and 15-0022, June 29, 2015.

DSSR section 031.12 states, in relevant part, that LQA may be granted to employees recruited outside the United States provided that:

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.  [Italics added.]

The claimant meets section 031.12a because his presence in Japan is attributable to his Federal service employment.

Section 031.12b allows LQA eligibility in those instances where the employee, prior to appointment, had “substantially continuous employment” with one of the entities listed under b(1) through b(4), and which entity (i.e., the singular usage of “such employer”) recruited the employee in and provided return transportation to the United States or its territories or possessions.  Therefore, by extension, an employee who has had more than one “employer” overseas prior to Federal appointment would be disqualified because the initial overseas employer rather than the employer immediately preceding appointment would have recruited the employee in the United States.

Immediately prior to appointment, the record shows the claimant was employed by PAE in Afghanistan.  The claimant mentions no intervening residency in the United States between his employment with PAE and prior employer KBR, during which he may have at some point been recruited there by PAE.  Since his resume also shows no apparent break between employments, we conclude PAE recruited him for employment while employed in Iraq with KBR.  As such, prior to his Federal service appointment, he had not been recruited in the United States or one of its enumerated territories or possessions by a qualifying employer listed at DSSR section 031.12b.  Moreover, the claimant had reported additional contractor work on his LQA Request Form, indicating being employed after his retirement from active duty with DS2 from January to December 2009 although no location, overseas or otherwise, was specified.  Even assuming, arguendo, that KBR had recruited the claimant from the United States, any potential eligibility for LQA under DSSR section 031.12b would have ended upon his leaving the initial (singular) overseas contractor position (in Iraq).  Therefore, the record shows the claimant, immediately prior to appointment, was not recruited in the United States or one of its territories or possessions by a qualifying employer listed at DSSR section 031.12b.

In addition to these initial disqualifying circumstances, the claimant has not established he was in substantially continuous employment by such employer under conditions providing for return transportation to the United States as required by DSSR section 031.12b.  He states in his claim request to OPM that his company (PAE) “will be paying and sending [him] back stateside upon [his] 2 week resignation notification.”  However, on his LQA Request Form, he states “NA” to the agency’s yes/no question, “Did you receive a return travel entitlement from employer?”  Other than the contradictory statements, there is no documentation in the claim record such as an employment contract or relocation agreement showing the contractor, at the time of hire, provided him return transportation benefits to the United States obligating itself to repatriate him to the United States upon the termination of his employment.  Therefore, the claimant does not meet DSSR section 031.12b because there is no evidence he was recruited in the United States or other qualifying location, or provided return transportation to the United States by the contractor.

The claimant also states in his claim request to OPM that “upon military retirement on 31 Jan 2009 [his] previous company (DS2 – gov’t contractor) recruited [him] (in Jan. 2009) and again in Nov. 2009 with (KBR – gov’t contractor)…within one year of “Substantially continuous employment.””  He appears to assert eligibility under the DoDI 1400.25-V1250, under which “former military and civilian members shall be considered to have “substantially continuous employment” for up to 1 year from the date of separation or when transportation entitlement is lost, or until the retired and/or separated member or employee uses any portion of the entitlement for Government transportation back to the United States, whichever comes first.”  However, agency implementing regulations such as DoDI 1400.25 supplement but do not supplant the requirements of the DSSR.  Therefore, the requirements of DSSR section 031.12b must still be met before the DoDI’s “substantially continuous employment” provision may be applied.  Within this context, the DoDI 1400.25 essentially allows former military and civilian employees a period of up to one year of unemployment after separation (or loss of transportation entitlement) to be considered “substantially continuously employed” by the military or civilian employer, but that military or civilian employer is presumed to have recruited the employee in the United States consistent with DSSR section 031.12b.  In the claimant’s case, his intervening employment with various contractors renders the DoDI’s “substantially continuous employment” provision inapplicable to his circumstances.

The DSSR are the governing regulations for allowances, differentials, and defraying of official residence expenses in foreign areas.  However, under section 013, they allow agencies to issue implementing regulations as follows:

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 allowances, 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 and accounting for these payments.

The use of the permissive term “may” in this section as opposed to the mandatory terms “shall” or “will” identifies these allowances as discretionary on the part of the agency.  Further, DoDI 1400.25 articulates the Department of Defense policy on the granting of LQA and provides the following guidance:

Overseas allowances and differentials are not automatic salary supplements, nor are they entitlements.  They are specifically intended to be 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 the foreign area, that inducement is normally unnecessary.  Individuals shall not automatically be granted these benefits simply because they meet eligibility requirements.  [Emphases added.]

In the July 9, 2015, LQA denial letter to the claimant, the PACAF references further implementing regulations, stating:

The PACAF memorandum B&E Memo 00-1, Living Quarters Allowance Para 1 b. Steps in Authorizing Living Quarters Allowance for Applicants Locally Hired Under the Provisions of DSSR 031.12a and b:  (1) states “The [Civilian Personnel Flight] (CPS) determines whether the granting of LQA is necessary as a recruitment or retention incentive for the position being filled.  If this incentive is not necessary, no further determination is made.”  There were 28 qualified candidates referred for this positon.  Of those, 6 reside in the foreign area.  Because granting LQA is not a necessary recruitment incentive to fill this position, you are not eligible for LQA.

DoDI 1400.25-V1250 specifies that 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 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).

In light of LQA as a discretionary allowance, the agency exercised its authority under DoDI 1400.25 to determine the necessity of LQA as a recruitment incentive in this instance.  The DoDI 1400.25 does not specify the conditions under which LQA may or may not be considered a necessary inducement for a person already living in the foreign area, thus the agency’s decision that LQA was an unnecessary inducement in this case is not subject to our review.  Regardless, we found the claimant does not meet the eligibility criteria for LQA in the DSSR.  The agency’s action is not arbitrary, capricious, or unreasonable.  Accordingly, the claim for LQA 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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