B-202039, APR 3, 1981

B-202039, APR 3, 1981

DIGEST: TWO ARMY EMPLOYEES WANT THEIR CASH AWARD (RECEIVED IN DECEMBER 1980 FOR A COST-SAVING SUGGESTION IMPLEMENTED IN JANUARY OF 1977) TO BE ADJUSTED FOR LOSS OF INTEREST AND INVESTMENT EARNINGS, INCREASED TAX LIABILITY, AND INFLATION. INTEREST MAY NOT BE PAID, SINCE IT HAS BEEN NEITHER EXPRESSLY PROVIDED FOR BY CONTRACT NOR SPECIFICALLY DIRECTED BY STATUTE. FURTHERMORE, SINCE AWARD PROGRAM FOR COST-SAVING SUGGESTIONS IS DISCRETIONARY WITH EACH AGENCY AND AWARD IS IN ADDITION TO REGULAR PAY, COMPENSATION FOR INCREASED TAX LIABILITY, LOSS OF INVESTMENT EARNINGS, AND INFLATION WOULD NOT BE APPROPRIATE.

SUGGESTION AWARD - CLAIM FOR LOSS TO SUGGESTORS FROM DELAY OF AWARD:

A CASH AWARD FOR A MONEY-SAVING SUGGESTION OF TWO ARMY EMPLOYEES, VERNON J. LAHAY AND DELMAR J. ROCKEMANN, WAS PAID IN DECEMBER 1980 BY THE DEPARTMENT OF THE ARMY. BECAUSE THE ARMY PUT THEIR SUGGESTION INTO EFFECT SEVERAL YEARS AGO, MR. LAHAY AND MR. ROCKEMANN BELIEVE THAT THEY HAVE BEEN FINANCIALLY PENALIZED BY THE DELAY IN RECEIVING THE AWARD.

THE JOINT SUGGESTION, INVOLVING DATA PROCESSING, WAS SUBMITTED FOR EVALUATION ON AUGUST 25, 1976, AND WAS PUT INTO EFFECT ON JANUARY 1, 1977. ON OCTOBER 9, 1980, AN AWARD OF $3,085 FOR TANGIBLE BENEFITS RESULTING FROM THE SUGGESTION WAS APPROVED. MR. LAHAY AND MR. ROCKEMANN RECEIVED THE AWARD IN DECEMBER, 1980. THEY NOW SEEK ADDITIONAL PAYMENT TO COMPENSATE THEM FOR LOSSES WHICH THEY ATTRIBUTE TO IMPUTED INVESTMENT EARNINGS, AS WELL AS INFLATION, FOR THE THREE YEAR PERIOD, 1977-1980. THEY ALSO SEEK INTEREST ON THE AWARD AND COMPENSATION TO COVER THE LOSSES SUFFERED WHEN THEY PAID HIGHER PERSONAL INCOME TAX IN 1980. (THEY CONTEND THAT, HAD THE AWARD BEEN RECEIVED IN 1977, THEY WOULD HAVE PAID LESS TAXES ON IT DUE TO THEIR LOWER BASE INCOME FOR THAT YEAR.)

MR. LAHAY AND MR. ROCKEMANN CANNOT RECOVER INTEREST, EVEN ASSUMING THAT THE ARMY UNREASONABLY DELAYED IN GIVING THEM THE CASH AWARD, UNLESS THE INTEREST IS EXPRESSLY PROVIDED FOR BY CONTRACT OR ITS ALLOWANCE IS SPECIFICALLY DIRECTED BY STATUTE. SEE B-189181, JUNE 20, 1978; B-193346, MARCH 20, 1979. THE CASES CITED INVOLVE CLAIMS FOR INTEREST (WHICH WERE DENIED) ON UNDERLYING DEBTS OF THE UNITED STATES THAT WERE FOUND OWING THE CLAIMANTS. IN THE INSTANT CASE, THERE IS NO SUCH UNDERLYING DEBT; THE ARMY SUGGESTION PROGRAM (AR 672-20 (CH. 2), BASED ON 5 U.S.C. SECS. 4501- 4506 (1976 AND SUPP. III (1979)), IS DISCRETIONARY. SECTION 4503 OF TITLE 5, U.S.C. STATES IN PERTINENT PART:

"THE HEAD OF AN AGENCY MAY PAY A CASH AWARD TO, AND INCUR NECESSARY EXPENSES FOR THE HONORARY RECOGNITION OF, AN EMPLOYEE WHO -

"(1) BY HIS SUGGESTION, INVENTION, SUPERIOR ACCOMPLISHMENT, OR OTHER PERSONAL EFFORT CONTRIBUTES TO THE EFFICIENCY, ECONOMY, OR OTHER IMPROVEMENT OF GOVERNMENT OPERATIONS; OR ACHIEVES A SIGNIFICANT REDUCTION IN PAPERWORK."

WE BELIEVE THE RULE STATED ABOVE IS THUS EVEN MORE APPLICABLE IN THE INSTANT CASE. IF NOT BOUND BY CONTRACT OR STATUTE, THE ARMY SHOULD NOT HAVE TO GIVE INTEREST ON A DISCRETIONARY AWARD. WE ARE AWARE OF NO CONTRACT BETWEEN MR. LAHAY AND MR. ROCKEMANN AND THE ARMY. MOREOVER, THE STATUTORY PROVISIONS, 5 U.S.C. SECS. 4501-4506, MAKE NO ALLOWANCE FOR INTEREST.

WE MUST ALSO DENY MR. LAHAY'S AND MR. ROCKEMANN'S CLAIM FOR INCREASED MONIES TO OFFSET THE EFFECTS OF INFLATION. SOME COURTS HAVE ADJUSTED JUDGMENTS RENDERED AGAINST THE UNITED STATES FOR INFLATION. SEE, E.G., STECKLER V. UNITED STATES, 549 F.2D 1372 (10TH CIR. 1977) (JUDGMENT PURSUANT TO FEDERAL TORT CLAIMS ACT, 28 U.S.C. SECS. 1346, 2671 ET SEQ. (1976), TO BE ADJUSTED FOR INFLATION BETWEEN THE DATE OF LOSS AND THE DATE OF THE TRIAL); PAYNE V. PANAMA CANAL CO., 428 SUPP. 997 (CANAL ZONE D. C. 1977) (AWARD MADE PURSUANT TO BACK PAY ACT, 5 U.S.C. SEC. 5596 (1976), TO BE ADJUSTED FOR INFLATION). THE AMOUNTS AWARDED IN THE CITED CASES, HOWEVER, WERE MEANT TO COMPENSATE CLAIMANTS FOR MONIES THEY WOULD HAVE EARNED HAD THEY NOT BEEN INJURED OR WRONGFULLY FIRED, RESPECTIVELY. THE INSTANT CASE, THE CASH AWARD IS A GRATUITY, IN ADDITION TO MR. LAHAY'S AND MR. ROCKEMANN'S REGULAR PAY. SEE 5 U.S.C. SECS. 4502(C). THEREFORE, WE DO NOT BELIEVE THAT THE ARMY MUST COMPENSATE THE TWO MEN FOR INFLATION.

SINCE, AS POINTED OUT ABOVE, THE AWARD PROGRAM IS DISCRETIONARY, WE DO NOT BELIEVE THAT MR. LAHAY AND MR. ROCKEMANN MUST BE GIVEN AN AMOUNT EQUIVALENT TO THE LOSS OF INVESTMENT EARNINGS. FURTHERMORE, ANY ATTEMPT TO ASCERTAIN SUCH AN AMOUNT WOULD BE SPECULATIVE. SEE B-195558, DECEMBER 14, 1979. THE SAME CONSIDERATIONS APPLY TO ANY TAX SAVINGS WHICH WOULD HAVE RESULTED HAD MR. LAHAY AND MR. ROCKEMANN RECEIVED THE AWARD IN 1977.

IN CONCLUSION, WHILE THE AMOUNT OF ANY INCENTIVE AWARD IS DISCRETIONARY WITH THE ARMY (WITHIN THE LIMITS SET BY REGULATION) AND THE AWARD TO MR. LAHAY AND MR. ROCKEMANN WAS DELAYED, THERE IS NO LEGAL BASIS FOR THIS OFFICE TO ALLOW A CLAIM FOR ANY AMOUNT IN EXCESS OF THE AWARD.