Defense Civilian Compensation:

DOD and OPM Could Improve the Consistency of DOD's Eligibility Determinations for Living Quarters Allowances

GAO-15-511: Published: Jun 16, 2015. Publicly Released: Jun 16, 2015.

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What GAO Found

The Department of Defense (DOD) and its components have taken steps to clarify living quarters allowance (LQA) eligibility requirements for civilian employees overseas, but DOD has not monitored its components' LQA eligibility determinations. DOD and its components are to make LQA eligibility determinations in accordance with Department of State (State) Standardized Regulations (DSSR) as well as department-wide and component-level guidance. However, after conducting an audit in 2013, DOD determined that 680 of its civilian employees had erroneously received LQA. Most erroneous LQA payments were attributed to misinterpretations of eligibility requirements. This determination was based in part on a 2011 interpretation of a DSSR eligibility requirement for LQA by the Office of Personnel Management (OPM), which settles federal employee compensation claims. After the audit, DOD issued a memorandum and point paper to implement OPM's interpretation and clarify LQA eligibility requirements. DOD is also updating its LQA Instruction, DOD Instruction 1400.25, Volume 1250, to incorporate OPM's 2011 interpretation. Some DOD components also issued clarifying guidance and adopted new procedures for making LQA eligibility determinations. For example, U.S. Air Forces in Europe developed a flow chart to help human resource specialists determine whether overseas job applicants are eligible for LQA. DOD's LQA Instruction directs DOD components to conduct periodic quality assurance reviews of LQA eligibility and payments, but according to DOD and component officials, they have not consistently done so. Further, the Deputy Assistant Secretary of Defense for Civilian Personnel Policy is responsible for monitoring the implementation and effectiveness of DOD's LQA Instruction and administers this responsibility through the Defense Civilian Personnel Advisory Service. However, this office has not monitored its components' reviews of LQA eligibility determinations. Without such monitoring, DOD cannot ensure that LQA eligibility determinations are being made in accordance with applicable regulations and policies.

Agencies have missed opportunities to ensure consistent interpretation of LQA eligibility requirements.

  • DOD components have raised concerns that some DSSR LQA eligibility requirements are ambiguous or outdated, but DOD has not discussed these concerns with State to determine whether the DSSR should be revised. State officials told GAO that they have collaborated with DOD and other agencies on eligibility issues for other allowances in the past and would be open to future discussions. Without communicating its concerns to State, DOD cannot ensure that State has the information it needs to make any adjustments to the DSSR, if appropriate.
  • Until recently, OPM had not made its compensation claim decisions widely available to federal agencies, including DOD, and the public because of limited funding. OPM is implementing a new web application for posting compensation claim decisions to its website, but has not established timeframes to routinely post individual decisions. In the absence of doing so, OPM cannot ensure that agencies will have timely access to the most up-to-date information on LQA eligibility issues.

Why GAO Did This Study

DOD provides LQA as an incentive to recruit eligible individuals for civilian employee assignments overseas. In 2014 DOD spent almost $504 million on LQA for about 16,500 civilian employees to help defray overseas living expenses, such as rent and utilities. GAO was asked to review DOD's implementation of LQA policies for overseas employees. This report evaluates the extent to which (1) DOD has clarified its LQA eligibility requirements and is monitoring its components' LQA eligibility determinations; and (2) DOD, State, and OPM have helped ensure consistency in the interpretation of LQA eligibility requirements.

GAO reviewed the DSSR, DOD's LQA Instruction, and OPM compensation claim decisions. GAO interviewed DOD, State, and OPM officials responsible for overseeing, implementing, or interpreting LQA eligibility requirements, including a nongeneralizable sample of 15 DOD local human resource offices in the U.S. European Command and U.S. Pacific Command areas of responsibility selected based on the number of employees determined to have been erroneously paid LQA in DOD's 2013 LQA audit.

What GAO Recommends

GAO recommends DOD monitor components' reviews of LQA eligibility determinations and discuss concerns about DSSR LQA eligibility requirements with State. GAO also recommends that OPM develop timeframes for the timely web posting of its decisions. DOD and OPM concurred with GAO's recommendations.

For more information, contact Johana Ayers at (202) 512-5741 or ayersj@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: On February 11, 2016, the Deputy Assistant Secretary of Defense for Civilian Personnel Policy issued a memorandum to conduct a review of overseas allowances and differentials (including Living Quarters Allowance (LQA)) paid to civilian employees. This memorandum orders DOD components to review 5 percent of their employees who received LQA during the calendar year 2015. These reports are to identify the employees locations, the annual amount of each allowance each employee receives, the laws and regulations authorizing the allowance, and confirmation that supporting documents used to determine employee eligibility for the allowance were reviewed and found acceptable. The February 2016 memorandum states that these reviews should be completed within 90 days of its issuance. However, the memorandum does not require the monitoring of these reviews by the Defense Civilian Personnel Advisory Service. In the absence of such a requirement, Defense Civilian Personnel Advisory Service officials told us in May 2016 that they had started receiving the results of these reviews and would assess them as soon as possible for any inconsistencies. These officials have not yet provided any documents demonstrating their monitoring of these reviews.

    Recommendation: To ensure that the Defense Civilian Personnel Advisory Service (DCPAS) and DOD components are determining LQA eligibility consistently with DOD's LQA Instruction, the DSSR, and OPM compensation claim decisions, the Secretary of Defense should direct the Under Secretary of Defense for Personnel and Readiness to require the Deputy Assistant Secretary of Defense for Civilian Personnel Policy or DCPAS, as delegated, to monitor reviews of LQA eligibility determinations conducted by DOD components.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: In GAO-15-511, we found that the Department of Defense (DOD) had not discussed with the Department of State (State) its concerns related to outdated or ambiguous Living Quarters Allowance (LQA) eligibility requirements found in the Department of State Standardized Regulations (DSSR). State officials told us that they have collaborated with DOD and other agencies on eligibility issues for other allowances in the past and would be open to future discussions. We recommended that DOD discuss with State its concerns related to the DSSR to determine whether LQA eligibility requirements should be revised and then request that State make revisions, particularly with regard to requirement for substantially continuous employment by such employer and the definition of a U.S. hire. In December 2015, Defense Civilian Personnel Advisory Service officials told us that they had collaborated with the Department of State about changes to the DSSR regarding the definition of a U.S. hire. Specifically, they stated that they would like State to add a section to the DSSR so that deployed DOD employees would still be considered U.S. hires, and thus would be eligible to receive allowances such as LQA. In May 2016, we reviewed the DSSR and it contained an April 3, 2016 update with a provision titled Employees Deployed to or Employed in Combat Zones. This addition to the DSSR will help clarify LQA eligibility requirements for DOD civilians who are U.S. hires but were not physically residing in the U.S. at the time of recruitment.

    Recommendation: To ensure that DCPAS and DOD components are determining LQA eligibility consistently with DOD's LQA Instruction, the DSSR, and OPM compensation claim decisions, the Secretary of Defense should direct the Under Secretary of Defense for Personnel and Readiness to discuss with State its concerns related to the DSSR to determine whether LQA eligibility requirements should be revised and then, as appropriate based on those discussions, request that State make any revisions deemed necessary, particularly with regard to the requirement for "substantially continuous employment by such employer" and the definition of a U.S. hire.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: In GAO-15-511, we found that the U.S. Office of Personnel Management (OPM) did not make its compensation claim decisions including those related to the Living Quarters Allowance (LQA)widely available to federal agencies and the public in a timely fashion. OPM maintains a public website on which it posts compensation claim decisions. Since OPM officials told us that compensation claim decisions usually have been provided only to the claimant and federal agency involved in a specific OPM compensation claim, this website is the primary means by which other federal agencies could learn of compensation claim decisions that could have implications for their agency-level guidance on compensation matters, including LQA eligibility determinations. However, OPM did not post compensation claim decisions on its website for the years 2003 through 2012. According to OPM officials, this was because OPM lacked the funds needed during that 10-year period to comply with the statutory requirement that federal agencies make their electronic and information technology accessible to individuals with disabilities. We recommended that the director of OPM develop timeframes for posting compensation claim decisions on OPM's public website. OPM concurred with our recommendation. In October 2015, OPM provided us documentary evidence that it had implemented our recommendation. For example, OPM provided a standard operating procedure for posting compensation claim decisions. The OPM standard operating procedure states that the decision will be submitted for posting to OPM.gov typically within 10 days (and a maximum of 30 days to allow for slippage due to leave or other work demands) of its issuance to the claimant and federal agency involved in a specific OPM compensation claim. Moreover, OPM provided documentary evidence that it completed testing of the web application tool for posting compensation claim decisions in June 2015 and that it posted online a backlog of 31 decisions in August 2015. By implementing our recommendation, OPM can ensure that all federal agencies have access to the most up-to-date information to provide accurate guidance on compensation matters, including LQA eligibility determinations, to their employees.

    Recommendation: To ensure that agencies have access to recent OPM compensation claim decisions online, including those related to LQA, the Director of OPM should develop timeframes for posting its compensation claim decisions on OPM's public website.

    Agency Affected: Office of Personnel Management

 

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