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B-215273, JUN 28, 1984

B-215273 Jun 28, 1984
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IN WHICH YOU REQUEST OUR OPINION AS TO WHETHER THE INTER-AMERICAN FOUNDATION (IAF) IS AUTHORIZED TO GRANT SEVERANCE PAY TO ITS FORMER PRESIDENT. IT IS OUR OPINION. THAT SINCE THE POSITION OF THE PRESIDENT OF THE IAF IS SPECIFICALLY EXCLUDED FROM THE SEVERANCE PAY STATUTE. BACKGROUND THE IAF WAS CREATED AS A FEDERAL NON-PROFIT CORPORATION WITH NO CAPITAL STOCK. 22 U.S.C. IN WHOM THE MANAGEMENT OF THE FOUNDATION IS VESTED. BELL WAS COMPENSATED AT THE RATE PROVIDED FOR LEVEL IV OF THE EXECUTIVE SCHEDULE AS IS REQUIRED BY 22 U.S.C. THE EVENTS THAT NEXT OCCURRED AND WHICH PRECIPITATED YOUR QUESTION ARE SUMMARIZED IN THE MEMORANDUM WHICH YOU ATTACHED AS FOLLOWS: "AT A BOARD OF DIRECTORS MEETING HELD ON DECEMBER 5 AND 6.

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B-215273, JUN 28, 1984

PRECIS-UNAVAILABLE

THE HONORABLE DANTE B. FASCELL, CHAIRMAN COMMITTEE ON FOREIGN AFFAIRS, U. S. HOUSE OF REPRESENTATIVES:

DEAR MR. CHAIRMAN:

THIS REPLIES TO YOUR LETTER OF MAY 8, 1984, JOINTLY SIGNED BY THE CHAIRMAN, SUBCOMMITTEE ON WESTERN HEMISPHERE AFFAIRS, IN WHICH YOU REQUEST OUR OPINION AS TO WHETHER THE INTER-AMERICAN FOUNDATION (IAF) IS AUTHORIZED TO GRANT SEVERANCE PAY TO ITS FORMER PRESIDENT, MR. PETER D. BELL. YOU ENCLOSED A MEMORANDUM IN SUPPORT OF YOUR VIEW THAT THE IAF COULD MAKE A SEVERANCE PAYMENT TO MR. BELL. IT IS OUR OPINION, HOWEVER, THAT SINCE THE POSITION OF THE PRESIDENT OF THE IAF IS SPECIFICALLY EXCLUDED FROM THE SEVERANCE PAY STATUTE, 5 U.S.C. SEC. 5595 (1982), AND SINCE IAF HAS NO INDEPENDENT STATUTORY AUTHORIZATION TO IMPLEMENT ITS OWN SEVERANCE PAY SCHEME, THE FORMER PRESIDENT OF IAF MAY NOT BE GRANTED SEVERANCE PAY INCIDENT TO HIS SEPARATION FROM THAT AGENCY. A DETAILED ANALYSIS OF OUR REASONING FOLLOWS.

BACKGROUND

THE IAF WAS CREATED AS A FEDERAL NON-PROFIT CORPORATION WITH NO CAPITAL STOCK. 22 U.S.C. SEC. 290F(N). THE IAF'S BOARD OF DIRECTORS, IN WHOM THE MANAGEMENT OF THE FOUNDATION IS VESTED, 22 U.S.C. SEC. 290F(G), APPOINTED MR. BELL TO THE POSITION OF PRESIDENT OF THE IAF ON MAY 14, 1980. MR. BELL WAS COMPENSATED AT THE RATE PROVIDED FOR LEVEL IV OF THE EXECUTIVE SCHEDULE AS IS REQUIRED BY 22 U.S.C. SEC. 290F(1)(1).

THE EVENTS THAT NEXT OCCURRED AND WHICH PRECIPITATED YOUR QUESTION ARE SUMMARIZED IN THE MEMORANDUM WHICH YOU ATTACHED AS FOLLOWS:

"AT A BOARD OF DIRECTORS MEETING HELD ON DECEMBER 5 AND 6, 1983, A MAJORITY OF THE DIRECTORS VOTED TO DIRECT THE RESIGNATION OF MR. BELL FROM HIS POSITION AS PRESIDENT. THE BOARD RESOLUTION AUTHORIZED NEGOTIATIONS WITH MR. BELL REGARDING EITHER SEVERANCE PAY OR A CONSULTING CONTRACT WITH THE FOUNDATION, FOR A REASONABLE PERIOD AND TO THE EXTENT CONSISTENT WITH LAW AND REGULATION.

ON DECEMBER 9, 1983, MR. BELL SUBMITTED A LETTER OF RESIGNATION TO THE FOUNDATION. ON DECEMBER , 1983, THE FOUNDATION AND MR. BELL ENTERED INTO AN AGREEMENT UNDER WHICH THE FOUNDATION WILL GRANT MR. BELL SEVERANCE PAY UPON FORMAL APPROVAL BY THE GENERAL ACCOUNTING OFFICE (GAO). UNTIL SUCH TIME AS FORMAL GAO APPROVAL MAY BE GRANTED FOR SEVERANCE PAY, THE FOUNDATION HAS AGREED TO RETAIN MR. BELL ON A CONSULTANCY OR PROJECT CONTRACT."

APPLICABILITY OF THE SEVERANCE PAY STATUTE

THE AUTHORITY FOR PROVIDING SEVERANCE PAY TO FEDERAL EMPLOYEES IS CONTAINED IN 5 U.S.C. SEC. 5595 (1982). THAT PROVISION, BY ITS TERMS, GOVERNS EMPLOYEES IN EXECUTIVE AGENCIES. 5 U.S.C. SEC. 5595(A)(1)(A). THE IAF IS AN EXECUTIVE AGENCY UNDER THE SEVERANCE PAY STATUTE BECAUSE THE IAF IS A GOVERNMENT CORPORATION OWNED OR CONTROLLED BY THE GOVERNMENT OF THE UNITED STATES AND GOVERNMENT CORPORATIONS ARE INCLUDED WITHIN THE DEFINITION OF EXECUTIVE AGENCY. 5 U.S.C. SECS. 103, 105. HOWEVER, THE SEVERANCE PAY STATUTE EXCLUDES:

"AN EMPLOYEE OTHER THAN A MEMBER OF THE SENIOR EXECUTIVE SERVICE WHOSE RATE OF BASIC PAY IS FIXED AT A RATE PROVIDED FOR ONE OF THE LEVELS OF THE EXECUTIVE SCHEDULE OR IS IN EXCESS OF THE MAXIMUM RATE FOR GS-18."

5 U.S.C. SEC. 5595(A)(2)(I).

EMPLOYEES OF GOVERNMENT CORPORATIONS, SUCH AS IAF, ARE NOT INCLUDED WITHIN THE PROVISIONS OF TITLE 5 PERTAINING TO THE SENIOR EXECUTIVE SERVICE. 5 U.S.C. SECS. 3132(A)(1) AND (2). ACCORDINGLY, THE PRESIDENT OF THE IAF IS EXCLUDED FROM THE BENEFITS PROVIDED BY THE SEVERANCE PAY LAW QUOTED ABOVE SINCE HE IS COMPENSATED "AT THE RATE PROVIDED FOR LEVEL IV OF THE EXECUTIVE SCHEDULE," AND THE POSITION OF PRESIDENT OF A GOVERNMENT CORPORATION IS NOT IN THE SENIOR EXECUTIVE SERVICE.

ARGUMENTS IN FAVOR OF IAF'S AUTHORITY TO GRANT SEVERANCE PAY

THE MEMORANDUM IN SUPPORT OF THE IAF'S AUTHORITY TO GRANT MR. BELL SEVERANCE PAY FORWARDS TWO REASONS FOR SUCH A CONCLUSION.

THE FIRST REASON IS THAT THERE IS NO INDICATION IN THE LEGISLATIVE HISTORY THAT CONGRESS INTENDED TO DEPRIVE ANY FEDERAL EMPLOYEE OF SEVERANCE PAYMENTS AFFIRMATIVELY APPROVED AND DETERMINED TO BE IN THE PUBLIC INTEREST BY THE MANAGEMENT OF AN EXECUTIVE AGENCY SUCH AS THE IAF. THE ENTIRE FOCUS OF 5 U.S.C. SEC. 5595 IS UPON ESTABLISHING THE CLASS OF INDIVIDUALS WHO MAY CLAIM SEVERANCE PAY AS OF RIGHT. FURTHER, THE SEVERANCE PAY LAW AND IMPLEMENTING REGULATIONS OF THE OFFICE OF PERSONNEL MANAGEMENT SHOULD NOT BE CONSTRUED TO LIMIT THE AUTHORITY OF AN EXECUTIVE AGENCY TO GRANT SEVERANCE PAY TO A FORMER EMPLOYEE WHERE THAT EXECUTIVE AGENCY IS GRANTED THE POWER BY CONGRESS TO EXERCISE SUCH AUTHORITY.

SECONDLY, IT IS ARGUED THAT THE LAW GIVES THE IAF A NUMBER OF INDEPENDENT POWERS AND FUNCTIONS WITHIN WHICH THE AUTHORITY TO ADMINISTRATIVELY GRANT SEVERANCE PAY MAY BE ASSUMED. AMONG THESE POWERS IS THE POWER TO "MAKE AND PERFORM CONTRACTS AND OTHER AGREEMENTS WITH ANY INDIVIDUAL ...," THE POWER TO "DETERMINE AND PRESCRIBE THE MANNER IN WHICH ITS OBLIGATIONS SHALL BE INCURRED AND ITS EXPENSES ... ALLOWED AND PAID," AND "SUCH OTHER POWERS AS MAY BE NECESSARY AND INCIDENT TO CARRYING OUT ITS POWERS AND DUTIES." 22 U.S.C. SEC. 290F(E)(3), (4) AND (11). THE ENABLING STATUTE ESTABLISHED THAT "THE BOARD SHALL DIRECT THE EXERCISE OF ALL THE POWERS OF THE FOUNDATION," 22 U.S.C. SEC. 290F(I), INCLUDING THE APPOINTMENT OF THE PRESIDENT OF THE IAF "ON SUCH TERMS AS THE BOARD MAY DETERMINE." U.S.C. SEC. 290F(1)(1).

ANALYSIS AND OPINION

PRIOR TO THE ENACTMENT OF THE SEVERANCE PAY PROVISION IN 1965, NO EMPLOYEE OF THE UNITED STATES WAS AUTHORIZED TO BE PAID SEVERANCE PAY AFTER HIS SEPARATION FROM THE FEDERAL SERVICE, B-93074, MARCH 2, 1950. THE REASON BEHIND THE ENACTMENT OF THE SEVERANCE PAY PROVISION WAS TO GRANT FOR THE FIRST TIME A FAIR AND REASONABLE SEVERANCE PAY ALLOWANCE TO FEDERAL EMPLOYEES WHO ARE SEPARATED FROM THE SERVICE THROUGH NO FAULT OF THEIR OWN AND HAVE NOT YET BECOME ELIGIBLE FOR IMMEDIATE CIVIL SERVICE RETIREMENT BENEFITS. THE SEVERANCE PAY PROVISIONS WERE BASED ON AN OFFICIAL RECOMMENDATION OF THE PRESIDENT. H.R. REP. NO. 792, 89TH CONG., 1ST SESS. 258, AUGUST 16, 1965.

IN HIS STATEMENT OF PURPOSE AND JUSTIFICATION WHICH ACCOMPANIED THE PROPOSED SEVERANCE PAY BILL, THE CHAIRMAN OF THE THEN CIVIL SERVICE COMMISSION (NOW OFFICE OF PERSONNEL MANAGEMENT) DESCRIBED THE BILL AS FOLLOWS.

"THE PROPOSED BILL WOULD PROVIDE SEVERANCE PAY BENEFITS FOR FEDERAL CAREER-LEVEL CIVILIAN EMPLOYEES GENERALLY. IT WOULD NOT COVER SUCH GROUPS AS TOP EXECUTIVES, PERSONS SERVING UNDER APPOINTMENTS WITH A TIME LIMITATION, OR ALIEN EMPLOYEES ABROAD."

H.R. REP. NO. 792. 89TH CONG., 1ST SESS. 286. CONSISTENT WITH THIS, INDIVIDUALS BEING PAID AT THE EXECUTIVE SCHEDULE LEVEL WERE NOT PROVIDED THE BENEFITS OF THE SEVERANCE PAY LAW. 5 U.S.C. SEC. 5595(A)(2)(I). CONGRESS EVIDENTLY DID NOT INTEND TO EXTEND THIS NEW BENEFIT TO ALL CLASSES OF EMPLOYEES.

IT IS ARGUED THAT EVEN THOUGH THE POSITION OF PRESIDENT OF THE IAF IS CLEARLY EXCLUDED FROM THE COVERAGE AND BENEFITS OF THE SEVERANCE PAY LAW, THE IAF HAS SEPARATE AUTHORITY TO PROVIDE THE PRESIDENT WITH SEVERANCE PAY. IT IS A GENERAL PRINCIPLE OF LAW, HOWEVER, THAT THE SALARIES OF FEDERAL EMPLOYEES ARE FIXED BY STATUTE AND IT IS IMPROPER TO PAY ADDITIONAL COMPENSATION FOR WHICH NO STATUTORY AUTHORITY EXISTS. EDGAR T. CALLAHAN, B-210657, MAY 25, 1984. WE DO NOT THINK THAT THE GENERAL AUTHORITY QUOTED ABOVE, WHICH GRANTS THE IAF BOARD POWER TO CARRY OUT ITS DUTIES, ALSO GIVES THE BOARD AUTHORITY TO PROVIDE SEVERANCE PAY TO THE PRESIDENT WHEN THE POSITION OF THE PRESIDENT HAS BEEN SPECIFICALLY EXCLUDED FROM THE BENEFITS OF THE SEVERANCE PAY LAW. THE IAF AS AN AGENCY IS GOVERNED BY 5 U.S.C. SEC. 5595 AND THE POSITION OF PRESIDENT OF THE IAF IS EXCLUDED FROM THAT LAW. IT WOULD BE INCONSISTENT WITH THIS OBVIOUS LEGISLATIVE SCHEME, THEREFORE, FOR THE BOARD OF THE IAF TO PROVIDE A BENEFIT TO ITS PRESIDENT WHERE CONGRESS HAD DELIBERATELY DENIED THE BENEFIT. THE POWERS OF THE IAF BOARD IN THIS MATTER ARE LIMITED BY THE PROVISIONS IN THE SEVERANCE PAY STATUTE. SEE CALAHAN, ABOVE AT 9.

WE HAVE HELD IN THE CASE OF THE UNITED STATES - PUERTO RICO COMMISSION, THAT SINCE THAT COMMISSION WAS BROADLY AUTHORIZED TO "APPOINT AND FIX THE COMPENSATION *** AND CARRY OUT ITS FUNCTIONS WITHOUT REGARD TO THE CIVIL SERVICE LAWS, RULES, AND REGULATIONS ***" WITH RESPECT TO THE COMMISSION'S EMPLOYEES, THE COMMISSION HAD AUTHORITY TO ADMINISTRATIVELY PROVIDE FOR SEVERANCE PAY. B-153178, APRIL 3, 1967. IN THAT CASE, HOWEVER, THE COMMISSION'S POWERS WERE UNRESTRICTED AS TO THE COMPENSATION OF ITS EMPLOYEES, IT WAS EXEMPTED FROM THE PURVIEW OF THE CIVIL SERVICE COMPENSATION LAWS, INCLUDING THE SEVERANCE PAY LAW, AND THE COMMISSION ITSELF WAS NOT AN AGENCY WITHIN THE MEANING OF THE SEVERANCE PAY LAW AND THUS WAS NOT COVERED BY THAT LAW. HERE, THE IAF COMES UNDER THE SEVERANCE PAY LAW, THE PRESIDENT'S POSITION IS EXCLUDED FROM THE BENEFITS OF THE SEVERANCE PAY LAW, AND THE BOARD OF THE IAF DOES NOT HAVE THE UNRESTRICTED AUTHORITY TO COMPENSATE THE PRESIDENT WITHOUT REGARD TO THE CIVIL SERVICE LAWS AND REGULATIONS AS DID THE UNITED STATES - PUERTO RICO COMMISSION.

FOR THESE REASONS, THEREFORE, WE FIND THAT THE BOARD OF THE IAF LACKS STATUTORY AUTHORITY TO PROVIDE SEVERANCE PAY TO ITS FORMER PRESIDENT AND ACCORDINGLY, IT MAY NOT PROVIDE FOR SEVERANCE PAY ADMINISTRATIVELY. THIS LETTER IS ALSO BEING SENT TO THE CHAIRMAN, SUBCOMMITTEE ON WESTERN HEMISPHERE AFFAIRS.

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