[Response to Request for Advance Decision Concerning Army Liability for Loss of or Damage to Employee-Owned Tooling]

The Army requested a decision as to whether it should: (1) assume the risk of loss of or damage to employee-owned tools at one of its arsenals by charging the losses to the arsenal's industrial fund overhead account; and (2) purchase private insurance to pay for loss or damage claims and charge the cost of the premiums to the industrial fund. GAO noted that: (1) in the past, the arsenal required some of its shop employees to provide their own tools to perform their duties; and (2) the Army processed claims for lost, stolen, or damaged employee-owned tools used in the performance of official duties under the Military Personnel and Civilian Employees' Claims Act of 1964 until the Army Claims Service determined that payment of such claims was improper. GAO found that charging losses or premium costs to the arsenal's industrial fund overhead account would result in an improper use of appropriated funds. GAO recommended that the arsenal request a review of the Army Claims Service's position since it involved the Army's refusal to hear an entire class of claims based upon a policy determination that the Army never officially adopted. Accordingly, the Army may not use the industrial fund to cover claims for loss of private property or to pay for insurance to cover such losses.