B-201703.OM, JUN 8, 1981

B-201703.OM: Jun 8, 1981

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HACHTEN CLAIM: OFFICE OF GENERAL COUNSEL: THIS MEMORANDUM IS TO REQUEST AN O.M. THIS ORDER IS DATED AUGUST 26. PRIOR TO AUGUST 1980 THE GOVERNING GAO POLICY WAS COMPTROLLER GENERAL ORDERS 1.39 AND 3.15 DATED AUGUST 18. THE WORK WAS SUBSTATIALLY COMPLETED AND THE ORDER WAS SUBMITTED TO THE OFFICE OF GENERAL COUNSEL FOR REVIEW DURING THE EARLY SUMMER OF THAT YEAR. THE APPARENT RATIONALE FOR USING THE DRAFT ORDER WAS THAT IT MORE EQUITABLY COMPENSATED EMPLOYEES FOR THEIR LOSSES BECAUSE IT INCLUDED A FACTOR FOR INFLATION. STEPHEN HACHTEN INVOLVES BOTH DAMAGES TO AND LOSS OF PERSONAL PROPERTY IN 1979 - THE INTERIM PERIOD WHEN OBFM WAS USING THE DRAFT TO REVIEW DAMAGE CLAIMS. HACHTEN WILL BE MORE EQUITABLY COMPENSATED FOR THE LOSS OR DAMAGE TO THE MAJORITY OF THE ITEMS IN HIS CLAIM AND OUR ACTION IN HIS CASE WILL BE CONSISTENT WITH ALL SIMILAR DAMAGE CLAIM ACTIONS DURING THAT PERIOD.

B-201703.OM, JUN 8, 1981

SUBJECT: REQUEST FOR O.M. - STEPHEN W. HACHTEN CLAIM:

OFFICE OF GENERAL COUNSEL:

THIS MEMORANDUM IS TO REQUEST AN O.M. RELATING TO THE CLAIM (ATTACHMENT 1) OF STEPHEN HACHTEN, A GAO EMPLOYEE WHO TRANSFERRED FROM OUR EUROPEAN BRANCH IN FRANKFURT, GERMANY TO WASHINGTON, D. C. IN 1979. BECAUSE OF THE SIZE OF THE CLAIM AND THE LAPSED TIME SINCE HIS MOVE AND SUBSEQUENT RECEIPT OF DATA NEEDED TO FILE HIS CLAIM, I WOULD LIKE TO REQUEST AS EXPEDITIOUS PROCESSING AS POSSIBLE.

MY REQUEST CONCERNS TWO ISSUES: WHICH GAO ORDER TO USE IN DETERMINING THE ALLOWABLE ITEMS; AND THE SPECIFIC ALLOWABILITY OF THE CLAIM RELATING TO THE LOSS OF STERLING SILVER FLATWARE PURCHASED IN 1979 FOR $3,440.

MR. HACHTEN SHIPPED HIS FLATWARE AND OTHER ITEMS SUCH AS JEWLERY, PHOTOGRAPHIC EQUIPMENT, LIMOGES CHINA AND LLARDO PORCELAIN FIGURINES WITH HIS HOUSEHOLD GOODS; HE DID NOT OBTAIN ADDITIONAL INSURANCE ABOVE THE NOMINAL AMOUNT ORDINARILY SUPPLIED BY THE CARRIER, AND HE STATES HE HAS NO INSURANCE ON THE STOLEN ITEMS (ATTACHMENT 2).

GAO ORDER 0267.1 CURRENTLY SETS OUR POLICY IN REGARD TO CLAIMS UNDER THE MILITARY PERSONNEL AND CIVILIAN EMPLOYEES' CLAIMS ACT OF 1964, AS AMENDED, 31 U.S.C. 240-243. THIS ORDER IS DATED AUGUST 26, 1980. PRIOR TO AUGUST 1980 THE GOVERNING GAO POLICY WAS COMPTROLLER GENERAL ORDERS 1.39 AND 3.15 DATED AUGUST 18, 1971 AND FEBRUARY 12, 1969 RESPECTIVELY.

IN 1978 THE NOW OFFICE OF BUDGET AND FINANCIAL MANAGEMENT BEGAN A COMPREHENSIVE REWRITE OF THE 1969 AND 1971 POLICIES CITED ABOVE. THE WORK WAS SUBSTATIALLY COMPLETED AND THE ORDER WAS SUBMITTED TO THE OFFICE OF GENERAL COUNSEL FOR REVIEW DURING THE EARLY SUMMER OF THAT YEAR. DURING THE LATE SUMMER OF 1978 AND UNTIL AUGUST 1980 THIS OFFICE REVIEWED CLAIMS AND MADE PAYMENTS USING THE GUIDELINES SET FORTH IN THE DRAFT ORDER. THE APPARENT RATIONALE FOR USING THE DRAFT ORDER WAS THAT IT MORE EQUITABLY COMPENSATED EMPLOYEES FOR THEIR LOSSES BECAUSE IT INCLUDED A FACTOR FOR INFLATION. THIS DRAFT ORDER ALLOWED THE APPROVING OFFICIAL TO TAKE THE ORIGINAL PURCHASE PRICE AND ADJUST IT BY A FACTOR TO REFLECT THE CHANGE IN PURCHASE PRICE OF THE U. S. DOLLAR BEFORE APPLYING ANY INDICATED DEPRECIATION OR SALVAGE VALUE. WHEN I BECAME CHIEF, ADMINISTRATIVE FINANCE IN EARLY 1979 I CONTINUED USING THIS DRAFT ORDER WHEN REVIEWING CLAIMS FOR LOSSES/DAMAGES.

THE CLAIM OF MR. STEPHEN HACHTEN INVOLVES BOTH DAMAGES TO AND LOSS OF PERSONAL PROPERTY IN 1979 - THE INTERIM PERIOD WHEN OBFM WAS USING THE DRAFT TO REVIEW DAMAGE CLAIMS. HIS LENGTHY CLAIM, HOWEVER, PLACES US IN A PECULIAR SITUATION AND I NEED GUIDANCE IN THIS MATTER.

IF WE USE THE DRAFT ORDER, AS WE DID FOR ALL OTHER CLAIMS IN THIS TIME PERIOD, I BELIEVE MR. HACHTEN WILL BE MORE EQUITABLY COMPENSATED FOR THE LOSS OR DAMAGE TO THE MAJORITY OF THE ITEMS IN HIS CLAIM AND OUR ACTION IN HIS CASE WILL BE CONSISTENT WITH ALL SIMILAR DAMAGE CLAIM ACTIONS DURING THAT PERIOD.

A POSSIBLE PROBLEM ARISES, HOWEVER IN REGARD TO THE PORTION OF THE CLAIM RELATING TO HIS STERLING SILVER FLATWARE. UNDER THE PROVISIONS OF THE THEN DRAFT AND NOW IN FORCE GAO ORDER 0267.1 SECTION 4, PARAGRAPH 6 I AM UNCERTAIN WHETHER WE CAN ALLOW HIS CLAIM FOR THE LOSS OF THE STERLING SILVER FLATWARE AND DO NOT KNOW WHETHER THIS ITEM MEETS THE DEFINITION OF EITHER "SUBSTANTIAL VALUE" OR "EXTRAORDINARY VALUE" DEFINED IN APPENDIX 1 TO ORDER 0267.1.

PLEASE PROVIDE ME WITH GUIDANCE ON THE FOLLOWING QUESTIONS:

- WHICH ORDER SHOULD BE USED IN REVIEWING MR. HACHTEN'S CLAIM

- DOES SECTION 4, PARAGRAPH 6 OF GAO ORDER 0267.1 PRECLUDE REIMBURSEMENT FOR THE STOLEN SILVER BECAUSE SILVER IS OF "SUBSTANTIAL OR EXTRAORDINARY VALUE" AND,

- SHOULD THE CLAIM FOR LOSS OF SILVER BE DISALLOWED UNDER THE PROVISIONS OF GAO ORDER 0267.1, SECTION 3, PARAGRAPH 5K?

YOUR ASSISTANCE IN THIS MATTER WILL BE GREATLY APPRECIATED. INDORSEMENT

ACTING CHIEF, ADMINISTRATIVE FINANCE - JUDITH B. CZARSTY RETURNED.

CONCERNING YOUR FIRST QUESTION, GAO ORDER 0267.1 IS DATED AUGUST 26, 1980. HOWEVER, IT HAD BEEN IN EFFECT, IN PRACTICE, SINCE 1978, AT LEAST TO THE EXTENT THAT IT ALLOWED CLAIM SETTLEMENTS TO TAKE INFLATION INTO ACCOUNT. MR. HACHTEN FILED HIS CLAIM ON OCTOBER 10, 1980, 1 1/2 MONTHS AFTER THE EFFECTIVE DATE OF THE NEW ORDER.

GIVEN THAT THESE PROCEDURES ARE ENTIRELY FOR USE WITHIN GAO, THAT THE USE OF THE DRAFT REGULATION DID NOT PREJUDICE ANYONE'S RIGHTS (IT WAS IN FACT MORE FAVORABLE TO CLAIMANTS THAN THE PREDECESSOR ORDERS), AND THAT THE DRAFT WAS APPLIED UNIFORMLY, WE SEE NO REASON NOT TO APPLY THE DRAFT TO MR. HACHTEN'S CLAIM. IN ANY EVENT, FROM A LEGAL STANDPOINT, A CLAIM ARISING UNDER A SUPERSEDED RULE CAN BE ADJUDICATED BASED ON THE RULE IN EFFECT WHEN IT IS FILED. SEE 58 COMP.GEN. 738 (1979). THEREFORE, YOU ARE CORRECT IN APPLYING ORDER 0267.1 TO THE HATCHEN CLAIM.

WITH REGARD TO WHETHER CHAPTER 2, SECTION 4, PARAGRAPH 6, OF GAO ORDER 0267.1 WOULD PRECLUDE REIMBURSEMENT FOR THE STERLING SILVER FLATWARE BECAUSE IT IS OF "*** SUBSTANTIAL OR EXTRAORDINARY VALUE ***," THAT SECTION STATES THAT "CLAIMS MAY NOT BE ALLOWED FOR VALUABLE ARTICLES (SUCH AS CAMERAS, WATCHES, JEWELRY, FURS OR OTHER ARTICLES OF SUBSTANTIAL OR EXTRAORDINARY VALUE) WHEN SHIPPED WITH HOUSEHOLD GOODS OR AS UNACCOMPANIED BAGGAGE. ***" ORDER 0267.1 (IN APPENDIX 1, PARAGRAPH 8) FURTHER DEFINES ITEMS OF SUBSTANTIAL VALUE AS "EASILY PILFERABLE ITEMS USUALLY WORN OR CARRIED COSTING OVER $100 ***." EXAMPLES ARE WATCHES, JEWELRY, AND SMALL COIN AND STAMP COLLECTIONS. THIS DEFINITION OF ITEMS OF SUBSTANTIAL VALUE APPEARS TO APPLY TO PERSONAL EFFECTS AND COLLECTIONS WHICH CAN CONVENIENTLY BE CARRIED ON OR WITH THE PERSON, AND TO EXCLUDE HOUSEHOLD GOODS OR FURNISHINGS THAT ARE TOO LARGE TO BE WORN OR CARRIED. THE SILVER FLATWARE, THUS, WOULD NOT FIT THIS DEFINITION OF ITEMS OF SUBSTANTIAL VALUE.

LIKEWISE, ITEMS OF EXTRAORDINARY VALUE ARE DEFINED IN APPENDIX 1, PARAGRAPH 9, AS POSSESSING "*** A VALUE FAR BEYOND THE USUAL VALUE OF AN ITEM OF LIKE NATURE. ***" PARAGRAPH 9 STATES ALSO THAT "THE TERM 'ITEM OF EXTRAORDINARY VALUE' NORMALLY SHOULD BE LIMITED TO ITEMS WHICH PRIMARILY SERVE AN ARTISTIC OR DECORATIVE PURPOSE, OR WHICH ARE COLLECTOR'S ITEMS." THIS LANGUAGE IMPLIES THAT ITEMS OF EXTRAORDINARY VALUE MIGHT BE ANTIGUES, FIRST EDITIONS, PRINTS OR OTHER WORKS OF ART, OR CRAFTWORKS LIKE PORCELAIN OR CRYSTAL. SILVER FLATWARE HAS A PRACTICAL USE AND APPLICATION AND THE VALUE OF THIS SILVER FLATWARE IS COMPARABLE TO THE USUAL VALUE OF SILVER FLATWARE OF LIKE NATURE.

THE GAO ORDER, WHILE IT DOES NOT BAR RECOVERY FOR STERLING SILVER FLATWARE, DOES (IN APPENDIX 1) LIMIT THE GOVERNMENT'S PAYMENT TO $2,000, PRESUMABLY BECAUSE MORE IS NOT DEEMED "*** REASONABLE, USEFUL, OR PROPER UNDER THE CIRCUMSTANCES ***." 31 U.S.C. SEC. 241(A)(1); ORDER 0267.1, CHAPTER 2, SECTION 3(5).

AS TO WHETHER THE CLAIM FOR LOSS OF SILVER SHOULD BE DISALLOWED UNDER THE PROVISIONS OF ORDER 0267.1, CHAPTER 2, SECTION 3, PARAGRAPH 5K, THAT SECTION PRECLUDES RECOVERY IF THE CLAIMANT ACTED IN A MANNER THAT CONTRIBUTED TO THE THEFT OF HIS PROPERTY BY FAILING TO EXERCISE REASONABLE CARE TO PROTECT AND SECURE THE PROPERTY. SECTION 3(5)(K) DEALS WITH THEFT FROM THE EMPLOYEE AND IS NOT APPLICABLE HERE BECAUSE THERE IS NO EVIDENCE OF THEFT.

ASIDE FROM THE ISSUE OF THEFT, IT IS GENERALLY TRUE THAT CLAIMS ARE NOT ALLOWABLE FOR LOSS CAUSED WHOLLY OR PARTLY BY THE CLAIMANT'S NEGLIGENCE. GAO ORDER 0267.1, CHAPTER 2, SECTION 4, PARAGRAPH 11(A). FURTHER, THE MILITARY PERSONNEL AND CIVILIAN EMPLOYEES' CLAIMS ACT OF 1964, 31 U.S.C. SECS. 240-243 (1976) PROVIDES THAT CLAIMS MUST BE SUBSTANTIATED.

IN OUR OPINION, THE FACTS PRESENTED DO NOT ADEQUATELY DEMONSTRATE A LACK OF NEGLIGENCE ON THE PART OF THE CLAIMANT CONCERNING THE CLAIMED LOSS OF THE STERLING SILVER FLATWARE OR OF A 78 PIECE STAINLESS FLATWARE SET. ADDITION, THE RECORD DOES NOT SUBSTANTIATE THE CLAIM THAT A LOSS OF THESE ITEMS EVER TOOK PLACE. NONE OF THE FLATWARE WAS INCLUDED IN THE HOUSEHOLD GOODS DESCRIPTIVE INVENTORY PREPARED BY THE SHIPPER AT ORIGIN AND SIGNED BY THE CLAIMANT BEFORE SHIPMENT.

IN THIS REGARD, THE CLAIMANT STATES, IN AN ADDENDUM TO HIS GAO FORM 287, CLAIM FOR PERSONAL PROPERTY, THAT THE STERLING SILVER WAS "PUT IN A KITCHEN DRAWER" ON "THE DAY BEFORE THE PACKERS FINISHED" AND THAT THE DRAWER ALSO CONTAINED THE STAINLESS STEEL FLATWARE. ALTHOUGH THE HOUSEHOLD GOODS DESCRIPTIVE INVENTORY LISTS TWO BARRELS OF WHAT APPEARS TO BE "KITCHENWARE," NEITHER SET OF FLATWARE IS SPECIFICALLY LISTED, NOR ARE OTHER ITEMS FOR WHICH LOSS IS CLAIMED, ALTHOUGH MANY OTHER ITEMS OF MINIMAL VALUE ARE LISTED. THUS, IT CANNOT BE DETERMINED FROM THE CLAIMANT'S STATEMENT WHETHER THE ITEMS LEFT IN THE DRAWER WERE, IN FACT, LATER PACKED AND SHIPPED. IF THEY WERE NOT, IT WOULD APPEAR THAT THE CLAIMANT WAS NEGLIGENT IN LEAVING THEM BEHIND, AND THAT HIS CLAIM FOR THESE PARTICULAR ITEMS SHOULD BE DENIED. IN ANY EVENT, WE CONCLUDE THAT THE CLAIM FOR LOST ITEMS NOT LISTED IN THE SHIPPING DOCUMENTS HAS NOT BEEN ADEQUATELY SUBSTANTIATED AS REQUIRED BY THE ACT.