B-161180, SEP 8, 1969

B-161180, SEP 8, 1969

MILITARY - HOUSING AND COST-OF-LIVING ALLOWANCES - ADMINISTRATIVE DELAY IN IMPLEMENTING DECISION DECISION TO SECRETARY OF AIR FORCE REGARDING CONTINUED DELAY IN IMPLEMENTING DECISION 47 COMP. GEN. 333 RELATING TO METHOD OF COMPUTING OVERSEAS STATION ALLOWANCE. IN VIEW OF FACT THAT UNDER 37 U.S.C. 405 SEPARATE HOUSING AND COST-OF LIVING ALLOWANCES ARE NOT AUTHORIZED THE PRACTICE OF DETERMINING HOUSING AND COST-OF-LIVING ALLOWANCES AS SEPARATE ENTITLEMENTS IS NOT PROPER. THE REASONS FOR FURTHER DELAY IN IMPLEMENTING THE DECISION ARE NOT JUSTIFIED AND ACTION SHOULD BE TAKEN TO ADJUST THE RATES.

TO MR. SECRETARY:

REFERENCE IS MADE TO LETTER OF JULY 31, 1969, FROM THE ASSISTANT SECRETARY OF THE AIR FORCE RELATIVE TO THE CONTINUED DELAY OF THE PER DIEM, TRAVEL AND TRANSPORTATION ALLOWANCE COMMITTEE IN IMPLEMENTING OUR DECISION B-161180 OF DECEMBER 11, 1967, 47 COMP. GEN. 333, COPY ENCLOSED, REQUIRING A REVISION IN THE METHOD OF COMPUTING OVERSEAS STATION ALLOWANCES AUTHORIZED FOR MEMBERS OF THE UNIFORMED SERVICES.

UNDER THE PROCEDURE WHICH HAS BEEN IN EFFECT FOR SOME YEARS THE STATION ALLOWANCE IS AUTHORIZED IN TWO PARTS, A STATION HOUSING ALLOWANCE AND A COST-OF-LIVING ALLOWANCE. EACH OF THESE ALLOWANCES HAS BEEN TREATED AS A SEPARATE ENTITLEMENT. EACH HAS BEEN COMPUTED WITHOUT REGARD TO THE OTHER. ALSO, THE STATION HOUSING ALLOWANCE HAS BEEN DETERMINED BY COMPARING OVERSEAS HOUSING COST WITH THE BASIC ALLOWANCE FOR QUARTERS AUTHORIZED FOR THE MEMBER CONCERNED RATHER THAN THE HOUSING COST OF LIVING IN THE UNITED STATES.

THE STATUTE UNDER WHICH THE STATION ALLOWANCES ARE PROVIDED, HOWEVER, 37 U.S.C. 405, DOES NOT AUTHORIZE SEPARATE HOUSING AND COST-OF-LIVING ALLOWANCES, BUT AUTHORIZES A PER DIEM CONSIDERING ALL ELEMENTS OF COST OF LIVING; AND ITS PURPOSE IS A PARTIAL REIMBURSEMENT OF ANY INCREASED LIVING COSTS INCURRED BY MEMBERS ON DUTY IN OVERSEAS AREAS. IN THE DECISION OF DECEMBER 11, 1967, WE CONCLUDED THAT NEITHER THE PRACTICE OF DETERMINING HOUSING AND COST-OF-LIVING ALLOWANCES AS SEPARATE ENTITLEMENTS, NOR THE BASIS FOR DETERMINING THE HOUSING ALLOWANCE (WITHOUT RELATION TO HOUSING COSTS IN THE UNITED STATES) WAS CONSISTENT WITH THE LANGUAGE OR PURPOSE OF THE STATUTE.

THE DECISION DID NOT REQUIRE THAT THE CONCLUSIONS REACHED THEREIN BE IMPLEMENTED IMMEDIATELY BUT STATED THAT:

"WE RECOGNIZE *** THAT THE PRESENT METHOD OF COMPUTING THE HOUSING ALLOWANCE HAS BEEN IN EFFECT WITHOUT QUESTION FOR A NUMBER OF YEARS AND THAT A REASONABLE TIME WILL BE NECESSARY TO EFFECT THE INDICATED CHANGES IN THAT METHOD. ACCORDINGLY, UNTIL SUCH TIME AS THE FORMULA FOR COMPUTING THE ALLOWANCES CAN BE REVISED AS INDICATED AND ALLOWANCES COMPUTED ON THE BASIS OF THE REVISED FORMULA PROMULGATED FOR EACH OVERSEAS LOCATION ON AN ORDERLY BASIS, WE WILL NOT OBJECT TO COMPUTATION AND PAYMENT OF REGULAR HOUSING ALLOWANCES AND COST-OF LIVING ALLOWANCES ON THE PRESENT BASIS."

AS A CONSEQUENCE OF OUR DECISION A STUDY TEAM WAS APPOINTED BY THE PER DIEM, TRAVEL AND TRANSPORTATION ALLOWANCE COMMITTEE TO DETERMINE THE COURSE OF ACTION TO BE TAKEN BY THE COMMITTEE. WE UNDERSTAND THAT THIS TEAM CONCURRED WITH THE CONCLUSIONS REACHED IN THE DECISION AND PROCEEDED TO DEVELOP A NEW BASIS FOR COMPUTING THE OVERSEAS STATION ALLOWANCE. FURTHER UNDERSTAND THAT THE STUDY TEAM REPORT WAS AVAILABLE TO THE COMMITTEE STAFF FOR REVIEW BY THE LATTER PART OF OCTOBER 1968, AND THAT FOLLOWING THAT REVIEW IT WAS FORWARDED TO THE VARIOUS SERVICES FOR FURTHER REVIEW AND COMMENT.

BY LETTER DATED MARCH 10, 1969, THE ASSISTANT SECRETARY OF THE ARMY (M&RA) ADVISED US THAT THE COMMITTEE EXPECTED TO HAVE THE PROPOSED NEW ALLOWANCE RATES BEFORE THE SECRETARY OF DEFENSE FOR APPROVAL WITH A VIEW TOWARDS ISSUANCE ON JULY 1, 1969. THIS ADVICE PRESUMABLY WAS BASED UPON THE FACT THAT ALL COMMITTEE AND SERVICE CONSIDERATIONS AND REVIEWS WERE COMPLETE AND ALL THAT REMAINED TO BE DONE WAS THE PROMULGATION OF THE NEW ALLOWANCE RATES.

IN THE LETTER OF JULY 31, 1969, THE ASSISTANT SECRETARY REFERS TO THE ADVICE CONTAINED IN THE LETTER OF MARCH 10, 1969, AND SAYS THAT AFTER CONSIDERABLE DISCUSSION, THE COMMITTEE AGREED THAT PROMULGATION OF THE REVISED ALLOWANCES EFFECTIVE JULY 1, 1969, WAS IMPRACTICABLE FOR THE FOLLOWING REASONS:

"A. THE PUBLICITY NECESSARY TO PERMIT EVEN MINIMAL ACCEPTANCE OF THE CHANGE BY THE RECIPIENTS COULD NOT BE ACCOMPLISHED IN SUCH A SHORT PERIOD OF TIME.

"B. THE SERVICES, WHICH WOULD BEAR THE BRUNT OF COMPLAINTS OVER THE REDUCTIONS IN ALLOWANCES, HAD NOT HAD AN OPPORTUNITY TO STUDY THE CHANGES AND TO SUGGEST METHODS OF IMPLEMENTATION.

"C. THE CONCURRENT NEUTRALIZATION OF THE MUCH - HERALDED AND LONG - AWAITED PAY RAISE ON JULY 1, 1969, IN FULL OR IN PART, WAS CONSIDERED TO BE SHATTERING TO MORALE, WOULD WORK ADVERSELY ON THE FINANCIAL WELL BEING OF MEMBERS WHO HAD PRECOMMITTED THE SORELY NEEDED PAY INCREASE WITHOUT KNOWLEDGE OF THE IMPENDING REDUCTION IN STATION ALLOWANCES, WOULD PRECIPITATE A FLOOD OF CONGRESSIONAL COMPLAINTS, AND WOULD PROBABLY BE LOOKED UPON BY THE CONGRESS AS UNTIMELY.

"D. THE FULL-WORLD CHANGEOVER ON A FIXED DATE WOULD HAVE THE EFFECT OF DOWNWARDLY ADJUSTING ALLOWANCES BY FORMULA BUT BASED ON DATA AS MUCH AS ONE YEAR OLD THUS PRODUCING ALLOWANCES WHICH, UNLESS PRICE RISES EXPERIENCED SINCE THE LAST REPORT COULD BE CONSIDERED, WOULD BE INSUFFICIENT TO DEFRAY CURRENT COSTS.

"IN VIEW OF THE ABOVE REASONS, AMONG OTHERS, THE COMMITTEE AGREED TO REQUEST SERVICE VIEWPOINTS AND RECOMMENDATIONS FOR IMPLEMENTATION TO BE FURNISHED BY AUGUST 1, 1969, AND THEN SEEK APPROVAL OF THE SECRETARY OF DEFENSE. WHEREAS PROGNOSTICATION OF AN INTENDED IMPLEMENTATION DATE HAS ALREADY BEEN PROVEN TO BE UNRELIABLE, IMPLEMENTATION BEFORE JANUARY 1, 1970, NOW APPEARS TO BE IMPRACTICABLE AND MAY BE ON THE BASIS OF CHANGING EACH STATION THEREAFTER AS IT IS RECOMPUTED BASED ON CURRENT REPORTS. THIS METHOD OF ADJUSTING ALLOWANCES APPEARS BEST SUITED TO AVOID MOST COMPLAINTS AND INJUSTICES WHICH WOULD OTHERWISE OCCUR. ***"

THE JUSTIFICATION FOR AUTHORIZING A DELAY IN IMPLEMENTING THE DECISION OF DECEMBER 11, 1967, WAS THE NEED FOR DEVELOPING A NEW FORMULA FOR COMPUTING THE ALLOWANCE. THE REASONS SET FORTH AS JUSTIFYING A FURTHER DELAY IN PROMULGATING THE NEW RATES, HOWEVER, DO NOT RELATE TO DEVISING A FORMULA FOR COMPUTING THE RATES BUT ARE CONCERNED WITH ANTICIPATED MORALE PROBLEMS.

WITH RESPECT TO REASONS A AND B, ABOVE, IT SEEMS APPARENT FROM THE ASSISTANT SECRETARY'S LETTER THAT CONVERSION FROM NON-COMPLIANCE TO COMPLIANCE WITH THE STATUTORY AUTHORIZATION FOR "A PER DIEM CONSIDERING ALL ELEMENTS OF COST OF LIVING" WILL GENERALLY RESULT IN REDUCTION IN THE AMOUNTS OF THE ALLOWANCES.

THAT FACT, HOWEVER, DOUBTLESS WAS KNOWN IN OCTOBER 1968 WHEN THE STUDY TEAM MADE ITS REPORT TO THE COMMITTEE AND IF THERE WAS A NEED TO PUBLICIZE THE FACT AND PREPARE THE SERVICES FOR COMPLAINTS OVER THE REDUCTIONS, IT WOULD SEEM THERE HAS BEEN AMPLE TIME TO DO THAT. ALSO, SINCE THE STUDY TEAM REPORT AND THE PROPOSED NEW RATES HAVE ALREADY BEEN CONSIDERED BY THE SERVICES, IT IS NOT APPARENT WHY FURTHER STUDY OF THE PROPOSED CHANGES IS NECESSARY. IN ANY EVENT MEMBER DISSATISFACTION WITH ANY REDUCTION IN THE ALLOWANCES, DOES NOT, IN OUR OPINION, AFFORD ANY LEGAL BASIS FOR CONTINUING THE PAYMENT OF ALLOWANCES WHICH ARE INCONSISTENT WITH THE LAW.

AS TO REASON C, IT IS CLEAR THAT THE PER DIEM ALLOWANCE AUTHORIZED BY 37 U.S.C. 405 IS NOT INTENDED TO SERVE AS A CONCEALED PAY DIFFERENTIAL FOR MEMBERS ON DUTY IN OVERSEAS AREAS IN ADDITION TO A REIMBURSEMENT OF THE INCREASES IN COST OF LIVING IN THOSE AREAS. WHILE A CORRECT COMPUTATION OF THE OVERSEAS STATION PER DIEM MAY SERVE, IN MANY CASES, TO REDUCE THE OVERALL AMOUNT OF TAKE HOME PAY AND RESULT IN COMPLAINTS BY MEMBERS, THE REDUCTION WILL REPRESENT ONLY THE AMOUNT WHICH IS NOT AUTHORIZED FOR PAYMENT BY CONGRESS IN EITHER THE PAY LAWS OR 37 U.S.C. 405.

WE DO NOT, THEREFORE, REGARD THE REASONS CONTAINED IN A, B, AND C, ABOVE, AS A SUFFICIENT JUSTIFICATION FOR APPROVAL BY US OF FURTHER DELAY IN IMPLEMENTING THE DECISION OF DECEMBER 11, 1967. FOR THE REASONS SET OUT IN D, HOWEVER, WE WILL NOT INSIST UPON AN IMMEDIATE SIMULTANEOUS WORLD- WIDE ADJUSTMENT OF THE ALLOWANCES. AS SUGGESTED IN THE ASSISTANT SECRETARY'S LETTER, THEY MAY BE ADJUSTED ON A STATION-TO STATION BASIS AS THE STATIONS' CURRENT REPORTS ARE REVIEWED BEGINNING WITH THE NEXT STATION REVIEW. IN THE MEANTIME, THERE SHOULD BE NO FURTHER INCREASE IN ANY ALLOWANCE UNLESS THE INCREASE RESULTS FROM THE APPLICATION OF THE NEW FORMULA.

A COPY OF THIS LETTER IS BEING SENT TO THE SECRETARY OF DEFENSE.