B-153172, APR. 9, 1964

B-153172, APR. 9, 1964

TO THE SECRETARY OF THE TREASURY:

IN A LETTER OF DECEMBER 10, 1963, WITH ENCLOSURES, COPIES ENCLOSED, WE WERE PRESENTED A QUESTION FOR DECISION BY THE U.S. STUDY COMMISSION, SOUTHEAST RIVER BASINS, WHICH EXPIRED ON DECEMBER 23, 1963. WE UNDERSTAND THAT THE FISCAL SERVICE, BUREAU OF ACCOUNTS, TREASURY DEPARTMENT, IS THE LIQUIDATING AGENCY FOR THE COMMISSION.

THE QUESTION PRESENTED TO US IS WHETHER AN AMOUNT EQUIVALENT TO THE CIVIL SERVICE RETIREMENT ANNUITY RECEIVED WAS PROPERLY DEDUCTED FROM PAYMENTS MADE TO MR. ALBERT S. FRY, AN ENGINEER, FOR HIS SERVICES AS A CONSULTANT FROM FEBRUARY 1962 TO AUGUST 1963. THE PURPOSE OF OBTAINING MR. FRY'S SERVICES WAS TO OBTAIN AN INDEPENDENT APPRAISAL AND OPINION OF THE REPORT TO BE ISSUED BY THE COMMISSION AS THE WORK ON THE REPORT PROGRESSED.

THE TERMS OF THE AGREEMENT FOR THESE SERVICES WERE SET OUT IN A LETTER OF FEBRUARY 13, 1962, SIGNED BY THE CHAIRMAN OF THE U.S. STUDY COMMISSION AND ALSO SIGNED BY MR. FRY TO INDICATE HIS ACCEPTANCE. THIS LETTER, WHICH CONSTITUTES THE ORIGINAL CONTRACT, SPECIFIES THAT THE COMMISSION WOULD REIMBURSE MR. FRY FOR TRANSPORTATION EXPENSES AND ALLOW $16 PER DIEM IN ACCORDANCE WITH THE STANDARDIZED GOVERNMENT TRAVEL REGULATIONS; AND, ALSO, THAT HE WOULD BE PAID FOR HIS SERVICES AT THE RATE OF $100 FOR EACH DAY WORKED, WITH REDUCTION TO ALLOW FOR RECEIPT OF ANNUITY UNDER THE CIVIL SERVICE RETIREMENT ACT. THE REDUCTION OF ANNUITY WAS TO APPLY TO THE NORMAL 5-DAY WORKWEEK WITH THE FULL DAILY RATE TO BE PAID FOR EACH DAY WORKED IN EXCESS OF THE NORMAL WORKWEEK. THE LETTER SPECIFIED THAT HIS SERVICES WERE DESIRED FOR AN APPROXIMATE PERIOD OF 2 WEEKS. ANOTHER LETTER DATED JUNE 5, 1962, SHOWS THAT FURTHER ARRANGEMENTS WERE MADE AT THAT TIME FOR PROCURING MR. FRY'S SERVICES FOR AN APPROXIMATE PERIOD OF 30 DAYS. THIS LETTER INCORPORATED THE TERMS OF THE FEBRUARY 13, 1962, LETTER. IN ADDITION TO THOSE TERMS, MR. FRY WAS TO BE REIMBURSED FOR STENOGRAPHIC WORK. THESE LETTERS INDICATE THAT IT WAS DESIRED THAT MR. FRY COME TO THE COMMISSION'S ATLANTA OFFICE ON OCCASION, BUT THAT HIS WORK WOULD OTHERWISE BE PERFORMED AT HIS HOME OR OFFICE, OR ELSEWHERE.

MR. FRY HAS REQUESTED PAYMENT FOR THE AMOUNTS DEDUCTED ON THE BASIS OF THE HOLDING OF THE COURT OF CLAIMS IN BOYLE V. UNITED STATES, 309 F.2D 399 (1962). THAT CASE HELD IN EFFECT, THAT MR. BOYLE WAS NOT AN EMPLOYEE OF THE UNITED STATES (REEMPLOYED ANNUITANT) BUT AN INDEPENDENT CONTRACTOR AND THAT CONSEQUENTLY, THE DEDUCTION OF HIS RETIREMENT ANNUITY FROM HIS COMPENSATION UNDER HIS CONTRACT FOR CONSULTING SERVICES WAS IMPROPER. DO NOT VIEW THAT DECISION AS HOLDING THAT ALL RETIRED EMPLOYEES ENGAGED BY THE GOVERNMENT BY MEANS OF A CONTRACT ARE EXEMPT FROM THE PROVISIONS OF SECTION 13 (B) OF THE CIVIL SERVICE RETIREMENT ACT, AS AMENDED, 5 U.S.C. 2263 (B), WHICH CONTAINS THE PROVISIONS CONCERNING THE DEDUCTION OF ANNUITIES FROM THE COMPENSATION OF REEMPLOYED ANNUITANTS. THEREFORE, WE MUST STILL LOOK TO THE RELATIONSHIP CREATED BY THE CONTRACT WITH THE RETIRED ANNUITANT IN THIS PARTICULAR CASE TO DETERMINE WHETHER AN EMPLOYER -EMPLOYEE RELATIONSHIP EXISTED SO AS TO REQUIRE A DEDUCTION UNDER SECTION 13 (B).

ONE FACTOR IN DETERMINING WHICH RELATIONSHIP EXISTED IS THE METHOD OF PAYMENT. GENERALLY, WHEN PAYMENT IS BASED ON THE TIME ACTUALLY WORKED (AS DISTINGUISHED FROM AN AGREED LUMP SUM FOR PREPARING A REPORT OR COMPLETING A PROJECT OR A FEE FOR A GIVEN SERVICE WITHOUT REGARD FOR THE TIME ELEMENT) THE SERVICES OF THE INDIVIDUAL GENERALLY ARE REGARDED AS CREATING AN EMPLOYER-EMPLOYEE RELATIONSHIP. B-134899, FEBRUARY 4, 1959. HOWEVER, OTHER FACTORS ARE ALSO TO BE CONSIDERED IN DETERMINING THE RELATIONSHIP, SUCH AS THE DEGREE OF SUPERVISION RECEIVED, AND THE FURNISHING OF EQUIPMENT, SUPPLIES, AND OFFICE WORKING SPACE BY THE INDIVIDUAL PERFORMING THE SERVICES.

WHILE THE CONTRACT HERE SPECIFIED PAYMENT ON A TIME BASIS AND REIMBURSEMENT WAS MADE FOR STENOGRAPHIC SERVICES, OFFICE SPACE WAS NOT FURNISHED. FURTHER, WE UNDERSTAND THAT PAYMENT WAS MADE ON A TIME BASIS RATHER THAN ON A FIXED-FEE BASIS BECAUSE IT WAS UNCERTAIN HOW MUCH TIME WOULD BE NECESSARY FOR MR. FRY TO DEVOTE TO THE PROJECT, AND THAT THERE WAS NO INTENT TO HIRE MR. FRY AS AN EMPLOYEE, THE ANNUITY DEDUCTIONS HAVING BEEN MADE ON THE ADVICE OF THE CORPS OF ENGINEERS. MR. FRY RECEIVED NO SUPERVISION, BUT RATHER, WAS ENGAGED TO WORK INDEPENDENTLY AND GIVE AN INDEPENDENT APPRAISAL AND OPINION OF THE REPORT TO BE ISSUED BY THE COMMISSION. IN VIEW OF THESE FACTS WE FEEL THAT THE RECORD ESTABLISHES THAT THE RELATIONSHIP CREATED WAS THAT OF AN INDEPENDENT CONTRACTOR AND NOT ONE OF EMPLOYER-EMPLOYEE. ALSO, WHILE WE BELIEVE THE AGREEMENT COULD HAVE SET A BASIC RATE OF "$100 LESS THE ANNUITY," TO APPLY IRRESPECTIVE OF WHETHER AN EMPLOYER EMPLOYEE RELATIONSHIP EXISTED, WE DO NOT FEET THIS WAS INTENDED. WE BELIEVE THE "BASIC RATE" WAS UNDERSTOOD TO BE $100 FOR EACH DAY WORKED.

THEREFORE, PAYMENT MAY PROPERLY BE MADE TO MR. FRY FOR THE AMOUNT OF THE ANNUITY DEDUCTIONS, IF OTHERWISE PROPER.