B-199549, MAR 30, 1987

B-199549, MAR 30, 1987

CIVILIAN PERSONNEL - RELOCATION - RESIDENCE TRANSACTION EXPENSES - OVERSEAS PERSONNEL DIGEST: THIS IS A FORMAL LEGISLATIVE PROPOSAL BY GAO TO THE PRESIDENT OF THE SENATE AND THE SPEAKER OF THE HOUSE OF REPRESENTATIVES IN SUPPORT OF THE AMENDMENT OF 5 U.S.C. SEC. 5724A(4)(A) (1982) TO PERMIT FEDERAL AGENCIES TO REIMBURSE THEIR EMPLOYEES FOR RESIDENCE SALE AND PURCHASE EXPENSES INCURRED UPON TRANSFER FROM AN OVERSEAS POST TO A DUTY STATION IN THE UNITED STATES OTHER THAN THE ONE FROM WHICH THEY TRANSFERRED OVERSEAS. UNDER THE PRESENT LAW, REIMBURSEMENT OF THESE EXPENSES IS ALLOWED ONLY WHEN BOTH THE OLD AND NEW DUTY STATIONS ARE LOCATED WITHIN THE UNITED STATES. THUS, IN THESE INSTANCES WHERE FEDERAL CIVILIAN EMPLOYEES ARE REASSIGNED FROM THEIR OVERSEAS POSTS TO A DIFFERENT DUTY STATION IN THE UNITED STATES, THE CURRENT LAW AND IMPLEMENTING REGULATIONS, THE FTR AND THE JTR, AS WELL AS OUR DECISIONS, PROHIBIT SUCH REIMBURSEMENT, RESULTING IN SEVERE ECONOMIC IMPACT UPON THE AFFECTED EMPLOYEES. WE HAVE INCLUDED SUGGESTED LANGUAGE FOR A BILL WHICH WOULD CARRY OUT OUR PROPOSAL.

THE HONORABLE GEORGE H. W. BUSH:

THE GENERAL ACCOUNTING OFFICE STRONGLY SUPPORTS AND AGAIN WISHES TO RECOMMEND LEGISLATION TO PERMIT FEDERAL AGENCIES TO REIMBURSE THEIR EMPLOYEES FOR RESIDENCE SALE AND PURCHASE EXPENSES UPON TRANSFER FROM AN OVERSEAS POST TO A NEW DUTY STATION IN THE UNITED STATES. A DRAFT BILL TO ACCOMPLISH THIS PURPOSE IS ENCLOSED.

CONCERN OF GAO

WE ARE CONCERNED WITH THE SITUATION IN WHICH CIVILIAN EMPLOYEES OF VARIOUS FEDERAL AGENCIES MAY FIND THEMSELVES, THAT IS, WHERE THE EMPLOYEES ARE ASSIGNED TO AN OVERSEAS POST OF DUTY, RETAIN THEIR RESIDENCES IN THE UNITED STATES WITH THE EXPECTATION OF RETURNING THERETO, AND ARE THEN TRANSFERRED BACK TO A DIFFERENT DUTY POST IN THE UNITED STATES.

UNDER THE PRESENT LAW, RESIDENCE SALE AND PURCHASE EXPENSES INCURRED BY CIVILIAN EMPLOYEES TRANSFERRING FROM AN OVERSEAS POST TO A NEW DUTY STATION IN THE UNITED STATES ARE NOT REIMBURSABLE BY VIRTUE OF A STATUTORY PROVISION, 5 U.S.C. SEC. 5724A(A)(4)(A). SECTION 5724A(A)(4)(A) PROVIDES FOR REIMBURSEMENT OF THE EXPENSES INCURRED IN THE SALE OF A RESIDENCE AT THE OLD DUTY STATION AND THE PURCHASE OF A RESIDENCE AT THE NEW DUTY STATION ONLY WHEN BOTH THE OLD AND NEW DUTY STATIONS ARE LOCATED WITHIN THE UNITED STATES, ITS TERRITORIES OR POSSESSIONS, THE COMMONWEALTH OF PUERTO RICO, OR THE AREAS AND INSTALLATIONS IN THE REPUBLIC OF PANAMA MADE AVAILABLE TO THE UNITED STATES PURSUANT TO THE PANAMA CANAL TREATY OF 1977 AND RELATED AGREEMENTS (AS DESCRIBED IN SECTION 3(A) OF THE PANAMA CANAL ACT OF 1979). CONSISTENT WITH THE LIMITING LANGUAGE OF THIS SECTION, PARAGRAPH 2-6.1 OF THE FEDERAL TRAVEL REGULATIONS, FPMR 101-7 (SUPP. 4, AUGUST 1982), AND AGENCY REGULATIONS SUCH AS PARAGRAPH C14000-1 OF THE JOINT TRAVEL REGULATIONS, VOLUME 2, PROHIBIT SUCH PAYMENTS TO EMPLOYEES WHO ARE TRANSFERRED TO OR FROM A POST OF DUTY OUTSIDE THE UNITED STATES.

WE FEEL THAT THIS STATUTORY PROVISION IS UNDULY HARSH AND OFTEN RESULTS IN SERIOUS FINANCIAL HARDSHIPS FOR FEDERAL EMPLOYEES WHO ARE RECRUITED TO PERFORM OVERSEAS TOURS OF DUTY AND WHO, UPON COMPLETION OF SUCH TOURS OF DUTY, ARE REASSIGNED TO DUTY STATIONS IN THE UNITED STATES OTHER THAN THE ONES FROM WHICH THEY ARE TRANSFERRED TO THE OVERSEAS POSTS OF DUTY.

IN THIS SITUATION, THE EMPLOYEE'S DECISION TO RETAIN HIS OR HER RESIDENCE AT THE OLD DUTY STATION IN THE UNITED STATES, WHILE PERSONAL IN NATURE, IS CLEARLY INCIDENT TO HIS OR HER OVERSEAS ASSIGNMENT. UPON RETURN TO THE CONTINENTAL UNITED STATES, A REASSIGNMENT TO A NEW OFFICIAL STATION IN THE UNITED STATES IN A DIFFERENT LOCATION IS A DETERMINATION MADE BY THE GOVERNMENT, OVER WHICH THE EMPLOYEE HAS NO CONTROL. FACED WITH THIS SITUATION, THE EMPLOYEE IS UNABLE TO USE THE RESIDENCE AT HIS OR HER FORMER DUTY STATION IN THE UNITED STATES AND IN MOST INSTANCES MUST SELL THE OLD RESIDENCE IN ORDER TO PURCHASE A NEW RESIDENCE AT HIS OR HER NEW DUTY STATION. WE COMPARE THIS SITUATION TO THE USUAL DOMESTIC TRANSFER WHERE THE EMPLOYEE IS ENTITLED TO REIMBURSEMENT OF REAL ESTATE EXPENSES. WE DO NOT FEEL THAT FEDERAL CIVILIAN EMPLOYEES WHO HAVE AN INTERVENING OVERSEAS TOUR OF DUTY SHOULD BE DEPRIVED OF THE NORMAL REIMBURSEMENT OF EXPENSES INCURRED IN CONNECTION WITH RESIDENCE TRANSACTIONS.

SEVERE IMPACT OF PRESENT LAW

THE SEVERE IMPACT OF SECTION 5724A(A)(4)(A) WAS VIVIDLY DEMONSTRATED IN OUR DECISION, ARMY CORPS OF ENGINEERS, B-194423, MARCH 31, 1980, IN WHICH WE HELD THAT APPROXIMATELY 50 EMPLOYEES OF THE UNITED STATES ARMY CORPS OF ENGINEERS WERE NOT ENTITLED TO REIMBURSEMENT OF REAL ESTATE EXPENSES INCURRED INCIDENT TO A MASS TRANSFER FROM LIVORNO, ITALY, TO BERRYVILLE, VIRGINIA, IN 1976. YOU WILL NOTE THAT PRIOR TO THE TRANSFER, THE EMPLOYEES WERE SERIOUSLY CONCERNED WITH WHETHER THEY WOULD BE REIMBURSED FOR THE REAL ESTATE EXPENSES THEY WOULD INCUR IN TRANSFERRING DIRECTLY TO BERRYVILLE. IN ORDER TO INSURE THAT THE CONTINUITY OF THE FUNCTION BEING PERFORMED IN ITALY WOULD BE MAINTAINED, HIGH-LEVEL OFFICIALS OF THE CORPS OF ENGINEERS ASSURED THE EMPLOYEES THAT THEIR PROBLEMS "WOULD BE TAKEN CARE OF." THE ADMINISTRATIVE REPORT OF THE AGENCY STATED THE POSITION OF THE 50 EMPLOYEES AS FOLLOWS:

"ACTING IN GOOD FAITH AND IN RELIANCE UPON THOSE ASSURANCES, THE EMPLOYEES INVOLVED ELECTED TO TRANSFER DIRECTLY TO BERRYVILLE, RATHER THAN TAKE THE ALTERNATIVE THAT WOULD ASSURE THEM OF REIMBURSEMENT FOR REAL ESTATE EXPENSES BUT COULD ALSO ADVERSELY AFFECT THE MISSION. DUE TO THE CIRCUMSTANCES SURROUNDING THE MOVE, BOTH IN ITALY AND IN BERRYVILLE, MANY PEOPLE SUFFERED CONSIDERABLE FINANCIAL LOSSES. ONE OF THE FACTORS THAT CAUSED THE GREATEST FINANCIAL IMPACT WAS THAT, CONTRARY TO THE ASSURANCES OF FAVORABLE TREATMENT, NO REIMBURSEMENT OF REAL ESTATE EXPENSES WAS ALLOWED."

IN ADDITION TO THE CLAIMS OF THESE 50 EMPLOYEES OF THE CORPS OF ENGINEERS, WE HAVE CONSISTENTLY DENIED THE REIMBURSEMENT OF REAL ESTATE EXPENSES TO OTHER FEDERAL EMPLOYEES WHO, UPON COMPLETION OF OVERSEAS TOURS OF DUTY, HAVE BEEN REASSIGNED TO DUTY STATIONS IN THE UNITED STATES OTHER THAN THOSE FROM WHICH THEY WERE TRANSFERRED WHEN ASSIGNED TO THE OVERSEAS POSTS OF DUTY. WE ARE ENCLOSING COPIES OF A REPRESENTATIVE SAMPLING OF THE DECISIONS OF THIS OFFICE WHICH ILLUSTRATE THE SEVERE ADVERSE FINANCIAL IMPACT OF SECTION 5724A(A)(4)(A) ON FEDERAL EMPLOYEES.

IN ORDER TO AVOID THE HARSH CONSEQUENCES OF SECTION 5724A(4)(A), FEDERAL AGENCIES HAVE CONSIDERED CIRCUMVENTING THE REQUIREMENT THAT BOTH THE OLD AND NEW DUTY STATIONS BE LOCATED IN THE UNITED STATES BY REASSIGNING THE EMPLOYEE TO PERFORM A SHORT TOUR OF DUTY AT THE OLD DUTY STATION IN THE UNITED STATES AFTER THE OVERSEAS TOUR AND BEFORE ASSIGNMENT TO THE NEW DUTY STATION. WE HAVE OBJECTED TO THIS PRACTICE AND HAVE HELD THAT EMPLOYEES MAY NOT BE REIMBURSED FOR REAL ESTATE EXPENSES IF THEY ARE TRANSFERRED FROM OVERSEAS TO THEIR OLD STATION AND SHORTLY THEREAFTER TRANSFERRED TO ANOTHER DUTY STATION. B-172594, MARCH 27, 1974. WE HAVE NO RELIABLE INFORMATION OR DATA AS TO THE SPECIFIC NUMBER OF INSTANCES IN WHICH AGENCIES HAVE OR ARE CIRCUMVENTING THE STATUTORY REQUIREMENT, BUT THE GENERAL SERVICES ADMINISTRATION (GSA) SUSPECTS THAT A VERY LARGE PERCENTAGE OF FEDERAL EMPLOYEES, WHO WOULD OTHERWISE BE IMMEDIATELY ASSIGNED TO A NEW POST OF DUTY IN THE UNITED STATES UPON RETURN FROM OVERSEAS DUTY, ARE RETURNED TO THE OLD DUTY POST AND SUBSEQUENTLY REASSIGNED TO A NEW DUTY STATION. UNDER THOSE CIRCUMSTANCES, REIMBURSEMENT OF RELOCATION EXPENSES IS THEN HANDLED AS A DOMESTIC TRANSFER. IF THE SUSPICION BY GSA IS TRUE, THEN THE AMOUNT OF INCREASED COSTS ATTRIBUTED TO THIS AMENDMENT AND ITS IMPACT UPON THE OVERALL FEDERAL BUDGET MAY NOT BE TOO SUBSTANTIAL.

LEGISLATIVE BACKGROUND

OUR INITIAL RECOMMENDATION TO AMEND SECTION 5724A(A)(4)(A), TITLE 5, U.S.C. TO AUTHORIZE REIMBURSEMENT OF RESIDENCE SALE AND PURCHASE EXPENSES IN THE DESCRIBED CIRCUMSTANCES, WAS MADE TO THE CONGRESS OF THE UNITED STATES ON MARCH 31, 1980. A BILL, S. 2652, 96TH CONGRESS., 2D SESS., WAS INTRODUCED IN THE UNITED STATES SENATE ON MAY 5, 1980, AND WAS REFERRED TO THE COMMITTEE ON GOVERNMENTAL AFFAIRS. ANOTHER BILL, H.R. 6761, 97TH CONG., 2D SESS., WAS INTRODUCED IN THE HOUSE OF REPRESENTATIVES ON JULY 14, 1982, AND WAS REFERRED TO THE COMMITTEE ON GOVERNMENT OPERATIONS. THIRD BILL, H.R. 2607, 98TH CONG., 1ST SESS., WAS INTRODUCED IN THE HOUSE OF REPRESENTATIVES ON APRIL 19, 1983, AND WAS REFERRED TO THE COMMITTEE ON GOVERNMENT OPERATIONS. ANOTHER BILL, H.R. 1166, 99TH CONG., 1ST SESS., WAS INTRODUCED IN THE HOUSE OF REPRESENTATIVES ON FEBRUARY 20, 1985, AND WAS AGAIN REFERRED TO THE COMMITTEE ON GOVERNMENT OPERATIONS. NO ACTION WAS TAKEN ON THESE BILLS.

A MORE RECENT ATTEMPT BY THE CONGRESS TO PROVIDE FOR REIMBURSEMENT OF REAL ESTATE EXPENSES IN THE CIRCUMSTANCES UNDER CONSIDERATION WAS INCLUDED BY THE SENATE AS AMENDMENT 284 TO A SUPPLEMENTAL APPROPRIATIONS BILL, H.R. 2577, 99TH CONG., 1ST SESS., JUNE 20, 1985. HOWEVER, IN CONFERENCE REPORT 99-236, DATED JULY 2, 1985, THE CONFERENCE COMMITTEE RECOMMENDED THAT THE LANGUAGE PROPOSED BY THE SENATE IN AMENDMENT 284 BE DELETED. THE CONFEREES ALSO RECOMMENDED THAT THE APPROPRIATE LEGISLATIVE COMMITTEES PROMPTLY CONSIDER THE MATTER AND TAKE APPROPRIATE ACTION.

FINALLY, WE NOTE THAT H.R. 987 WAS INTRODUCED IN THE 100TH CONGRESS ON FEBRUARY 4, 1987, BY THE HONORABLE WILLIAM J. HUGHES. THIS PENDING BILL, H.R. 987, WITH THE MODIFICATIONS DISCUSSED BELOW, WOULD CARRY OUT OUR RECOMMENDATION.

RECOMMENDATION

FOR THE REASONS STATED ABOVE, WE BELIEVE THAT THE DESIRABILITY OF THE PROPOSED AMENDMENT TO SECTION 5724A(A)(4)(A), TITLE 5, U.S.C. IS COMPELLING AND WARRANTS THE CONSIDERATION OF THE SENATE. WE ALSO FEEL THAT CONSIDERATION OF THE PROPOSED LEGISLATION BY THE APPROPRIATE LEGISLATIVE COMMITTEES WOULD CARRY OUT THE RECOMMENDATION MADE BY THE CONFERENCE COMMITTEE IN CONFERENCE REPORT 99-236, SUPRA. IF THE SENATE CONCURS IN OUR RECOMMENDATION, IT IS OUR OPINION THAT AMENDMENT OF SECTION 5724A(A)(4)(A) IN SUBSTANTIALLY THE LANGUAGE CONTAINED IN THE PROPOSED DRAFT BILL WILL ACCOMPLISH THE RELIEF RECOMMENDED.

WITH REGARD TO THE PROVISIONS OF H.R. 987 AS INTRODUCED IN THE 100TH CONGRESS, WE SUGGEST THE FOLLOWING CHANGES. FIRST, THE REFERENCES TO THE "CANAL ZONE" SHOULD INSTEAD REFER TO CERTAIN AREAS IN THE REPUBLIC OF PANAMA AS THE LANGUAGE CURRENTLY APPEARS IN SECTION 5724A(A)(4)(A). NEXT, WE BELIEVE THE LANGUAGE OF SECTION 1 OF H.R. 987 SHOULD BE MODIFIED TO MAKE CLEAR THAT (1) BOTH OF THE TRANSFERS TO AND FROM THE OVERSEAS DUTY POST MUST BE IN THE INTERESTS OF THE GOVERNMENT, AND (2) THAT NEITHER SALE NOR PURCHASE EXPENSES ARE AUTHORIZED UNLESS THE EMPLOYEE IS TRANSFERRED TO A DIFFERENT DUTY STATION IN THE UNITED STATES. FINALLY, WE SUGGEST THE AMENDMENTS BE MADE PROSPECTIVE ONLY AND NOT RETROACTIVE TO JANUARY 1, 1979, SINCE SELECTION OF A RETROACTIVE DATE WOULD BE ARBITRARY AND MAY CAUSE SIGNIFICANT ADMINISTRATIVE PROBLEMS IN SETTLING OTHER CLAIMS.

WE ALSO WISH TO POINT OUT THAT THE PROPOSED LEGISLATION WOULD NOT APPLY TO THE FOREIGN SERVICE WHICH, BECAUSE OF THE SPECIAL NATURE OF ITS MISSION AND RESPONSIBILITIES, OPERATES UNDER DIFFERENT STATUTES AND REGULATIONS. SEE 22 U.S.C. SECS. 3901-4226 (1982).

WE WOULD APPRECIATE YOUR ASSISTANCE IN SECURING ENACTMENT OF THE PROPOSED LEGISLATION IN THE SENATE. AN IDENTICAL LETTER AND RECOMMENDATION FOR ENACTMENT OF LEGISLATION IS BEING TRANSMITTED TO THE SPEAKER OF THE HOUSE.

A BILL

"TO AMEND 5 U.S.C. SEC. 5724A(A)(4)(A) TO LIBERALIZE CERTAIN PROVISIONS WHICH AUTHORIZE REIMBURSEMENT FOR THE EXPENSES OF THE SALE AND PURCHASE OF A RESIDENCE UPON TRANSFER OF AN EMPLOYEE.

"BE IT ENACTED BY THE SENATE AND HOUSE OF REPRESENTATIVES OF THE UNITED STATES OF AMERICA IN CONGRESS ASSEMBLED, THAT 5 U.S.C. SEC. 5724A(A)(4)(A) IS HEREBY AMENDED AS FOLLOWS:

"(A) BY DELETING THE PERIOD AT THE END OF THE FIRST SENTENCE AND ADDING A SEMICOLON AND THE FOLLOWING: 'AND EXPENSES OF THE SALE OF THE RESIDENCE (OR THE SETTLEMENT OF AN UNEXPIRED LEASE) OF THE EMPLOYEE AT THE OFFICIAL STATION FROM WHICH THE EMPLOYEE WAS TRANSFERRED WHEN HE WAS ASSIGNED TO A POST OF DUTY LOCATED OUTSIDE THE UNITED STATES, ITS TERRITORIES OR POSSESSIONS, THE COMMONWEALTH OF PUERTO RICO, OR THE AREAS AND INSTALLATIONS IN THE REPUBLIC OF PANAMA MADE AVAILABLE TO THE UNITED STATES PURSUANT TO THE PANAMA CANAL TREATY OF 1977 AND RELATED AGREEMENTS (AS DESCRIBED IN SECTION 3(A) OF THE PANAMA CANAL ACT OF 1979), AND THE PURCHASE OF A RESIDENCE AT THE NEW OFFICIAL STATION WHEN THE EMPLOYEE IS TRANSFERRED IN THE INTEREST OF THE GOVERNMENT FROM A POST OF DUTY LOCATED OUTSIDE THE UNITED STATES, ITS TERRITORIES OR POSSESSIONS, THE COMMONWEALTH OF PUERTO RICO, OR THE AREAS AND INSTALLATIONS IN THE REPUBLIC OF PANAMA MADE AVAILABLE TO THE UNITED STATES PURSUANT TO THE PANAMA CANAL TREATY OF 1977 AND RELATED AGREEMENTS (AS DESCRIBED IN SECTION 3(A) OF THE PANAMA CANAL ACT OF 1979), TO AN OFFICIAL STATION (OTHER THAN THE OFFICIAL STATION FROM WHICH HE WAS TRANSFERRED WHEN ASSIGNED TO THE FOREIGN TOUR OF DUTY) WITHIN THE UNITED STATES, ITS TERRITORIES OR POSSESSIONS, THE COMMONWEALTH OF PUERTO RICO, OR THE AREAS AND INSTALLATIONS IN THE REPUBLIC OF PANAMA MADE AVAILABLE TO THE UNITED STATES PURSUANT TO THE PANAMA CANAL TREATY OF 1977 AND RELATED AGREEMENTS (AS DESCRIBED IN SECTION 3(A) OF THE PANAMA CANAL ACT OF 1979).'

"(B) BY ADDING THE FOLLOWING AFTER THE LAST SENTENCE: 'REIMBURSEMENT OF EXPENSES PRESCRIBED UNDER THIS PARAGRAPH IN CONNECTION WITH TRANSFERS FROM A POST OF DUTY LOCATED OUTSIDE THE UNITED STATES, ITS TERRITORIES OR POSSESSIONS, THE COMMONWEALTH OF PUERTO RICO, OR THE AREAS AND INSTALLATIONS IN THE REPUBLIC OF PANAMA MADE AVAILABLE TO THE UNITED STATES PURSUANT TO THE PANAMA CANAL TREATY OF 1977 AND RELATED AGREEMENTS (AS DESCRIBED IN SECTION 3(A) OF THE PANAMA CANAL ACT OF 1979), SHALL NOT BE ALLOWED FOR ANY SALE OR SETTLEMENT OF UNEXPIRED LEASE OR PURCHASE TRANSACTION THAT OCCURS PRIOR TO OFFICIAL NOTIFICATION THAT THE EMPLOYEE'S RETURN TO THE UNITED STATES WOULD BE TO AN OFFICIAL STATION OTHER THAN THE OFFICIAL STATION FROM WHICH THE EMPLOYEE WAS TRANSFERRED WHEN ASSIGNED TO THE FOREIGN POST OF DUTY.'"