B-157665, SEPT. 23, 1965, 45 COMP. GEN. 164

B-157665, SEPT. 23, 1965, 45 COMP. GEN. 164

COMPENSATION - DOUBLE - CONCURRENT MILITARY RETIRED AND CIVILIAN SERVICE PAY - RETIRED PAY COST OF LIVING INCREASES - DUAL COMPENSATION ACT REDUCTION FORMULA THE IMMEDIATE COST OF LIVING INCREASE IN THE RETIRED AND RETAINER PAY OF MEMBERS AND FORMER MEMBERS OF THE UNIFORMED SERVICES THAT IS AUTHORIZED BY SECTION 5 (A) OF THE ACT OF AUGUST 21, 1965 TO REFLECT CHANGES SINCE 1962 IN THE CONSUMER PRICE INDEX IS AN INCREASE WITHIN THE CONTEMPLATION OF SECTION 201 (A) OF THE DUAL COMPENSATION ACT AND AFFECTS THE OPERATION OF THE FORMULA CONTAINED IN THE SECTION TO PROPORTIONATELY INCREASE THE BASIC $2,000 OF RETIRED PAY THAT IS NOT SUBJECT TO REDUCTION WHEN A RETIRED REGULAR OFFICER HOLDS A CIVILIAN POSITION, THE REFERENCE TO 10 U.S.C. 1401A (B), PRESCRIBING PROCEDURE FOR A PRICE INDEX INCREASE ON A CALENDAR YEAR BASIS MERELY DESCRIBING THE CHANGES CONTEMPLATED TO KEEP PACE WITH THE RISING COST OF LIVING; THEREFORE, ALTHOUGH THE IMMEDIATE COST OF LIVING INCREASE AUTHORIZED BY SECTION 5 (A) OF THE 1965 PAY ACT IS NOT AN INCREASE PURSUANT TO SECTION 1401A (B), IT NEVERTHELESS IS AN INCREASE AUTHORIZED TO REFLECT CHANGES IN THE CONSUMER PRICE INDEX AND COMES WITHIN THE MEANING OF THE DUAL COMPENSATION ACT. COMPENSATION - DOUBLE - CONCURRENT MILITARY RETIRED AND CIVILIAN SERVICE PAY - RETIRED PAY COST OF LIVING INCREASES - DUAL COMPENSATION ACT REDUCTION FORMULA THE LIMITATION IN THE APPLICATION OF THE IMMEDIATE COST OF LIVING INCREASE PROVIDED IN SECTION 5 (A) OF THE ACT OF AUGUST 21, 1965 TO MEMBERS OR FORMER MEMBERS OF THE UNIFORMED SERVICES WHO ARE ENTITLED TO RETIRED PAY OR RETAINER PAY COMPUTED UNDER RATES OF BASIC PAY IN EFFECT BEFORE THE EFFECTIVE DATE OF THE ACT, SEPTEMBER 1, 1965, HAVING NO EFFECT ON RETIRED OR RETAINER PAY COMPUTED UNDER THE RATES OF BASIC PAY ESTABLISHED BY THE 1965 ACT, A FUTURE COST OF LIVING INCREASE IN ACCORDANCE WITH 10 U.S.C. 1401A (B), AS AMENDED BY SECTION 5 (B) OF THE 1965 ACT, WOULD AFFECT THE OPERATION OF THE FORMULA CONTAINED IN SECTION 201 (A) OF THE DUAL COMPENSATION ACT TO CAUSE A PROPORTIONATE INCREASE IN THE BASIC $2,000 OF RETIRED PAY THAT IS NOT SUBJECT TO REDUCTION WHEN A RETIRED REGULAR OFFICER HOLDS A CIVILIAN POSITION.

TO THE SECRETARY OF DEFENSE, SEPTEMBER 23, 1965:

REFERENCE IS MADE TO LETTER OF SEPTEMBER 13, 1965, FROM THE ASSISTANT SECRETARY OF DEFENSE (COMPTROLLER), PRESENTING FOR DECISION UNDER DEPARTMENT OF DEFENSE MILITARY PAY AND ALLOWANCE COMMITTEE ACTION NO. 366 THE FOLLOWING QUESTIONS:

1. DOES THE COST OF LIVING INCREASE IN RETIRED AND RETAINER PAY OF MEMBERS AND FORMER MEMBERS OF THE UNIFORMED SERVICES, EFFECTIVE 1 SEPTEMBER 1965, AUTHORIZED UNDER SECTION 5 (A) OF PUBLIC LAW 89-132, APPROVED 21 AUGUST 1965, AFFECT THE OPERATION OF THE FORMULA CONTAINED IN SECTION 201 (A) OF THE "DUAL COMPENSATION ACT" SO AS TO INCREASE THE AMOUNT OF $2000 AS PROVIDED THEREIN TO REFLECT CHANGES IN THE CONSUMER PRICE INDEX?

2. IF THE ANSWER TO QUESTION 1, IS AFFIRMATIVE, MAY IT BE CONSIDERED THAT THE OPERATION OF THE FORMULA CONTAINED IN SECTION 201 (A) OF THE "DUAL COMPENSATION ACT" IS AFFECTED ALSO AS TO ANY OFFICER OF ANY REGULAR COMPONENT OF THE UNIFORMED SERVICES WHO IS OR BECOMES ENTITLED TO RETIRED PAY COMPUTED UNDER RATES OF BASIC PAY IN EFFECT ON OR AFTER THE EFFECTIVE DATE OF PUBLIC LAW 89-132?

SECTION 201 (A) OF THE DUAL COMPENSATION ACT, APPROVED AUGUST 19, 1964, PUBLIC LAW 88-448, 78 STAT. 484, 5 U.S.C. 3102, IS AS FOLLOWS:

(A) EXCEPT AS PROVIDED BY SUBSECTIONS (B), (C), AND (E) OF THIS SECTION, A RETIRED OFFICER OF ANY REGULAR COMPONENT OF THE UNIFORMED SERVICES SHALL RECEIVE THE FULL SALARY OF ANY CIVILIAN OFFICE WHICH HE HOLDS, BUT DURING A PERIOD FOR WHICH HE RECEIVES SALARY, HIS RETIRED OR RETIREMENT PAY SHALL BE REDUCED TO AN ANNUAL RATE EQUAL TO THE FIRST $2,000 OF SUCH PAY PLUS ONE-HALF OF THE REMAINDER, IF ANY. IN THE OPERATION OF THE FORMULA FOR REDUCTION OF SUCH PAY UNDER THIS SUBSECTION, SUCH AMOUNT OF $2,000 SHALL BE INCREASED, FROM TIME TO TIME, BY APPROPRIATE PERCENTAGE, IN DIRECT PROPORTION TO EACH INCREASE IN SUCH PAY EFFECTED PURSUANT TO THE PROVISIONS OF SECTION 1401A (B) OF TITLE 10, UNITED STATES CODE, TO REFLECT CHANGES IN THE CONSUMER PRICE INDEX.

SECTION 1401A OF TITLE 10, U.S. CODE, WHICH WAS ADDED BY SECTION 5 (G) OF THE UNIFORMED SERVICES PAY ACT OF 1963, APPROVED OCTOBER 2, 1963, PUBLIC LAW 88-132, 77 STAT. 213, PRESCRIBED THE PROCEDURE TO BE FOLLOWED THEREAFTER IN EFFECTING INCREASES IN RETIRED PAY. THAT PROCEDURE WAS BASED ON THE CONSUMER PRICE INDEX PUBLISHED BY THE BUREAU OF LABOR STATISTICS AND PROVIDED THAT WHEN SUCH PRICE INDEX INCREASED BY 3 PERCENT OR MORE FOR A CALENDAR YEAR THE RETIRED PAY OR RETAINER PAY OF MEMBERS AND FORMER MEMBERS OF THE MILITARY SERVICES SHOULD BE INCREASED BY THE SAME PERCENTAGE IN ORDER THAT SUCH RETIRED PAY OR RETAINER PAY MIGHT KEEP PACE WITH THE RISING COST OF LIVING.

THE LEGISLATIVE HISTORY OF THE ACT OF AUGUST 21, 1965, PUBLIC LAW 89-132, 79 STAT. 545, SHOWS THAT ALTHOUGH THE PRICE INDEX HAS RISEN BY MORE THAN 3 PERCENT BEFORE THAT ACT WAS PASSED, THE FORMULA PROVIDED IN 10 U.S.C. 1401A (B), REQUIRING THAT ANY INCREASE BE MADE ON THE BASIS OF AN ANNUAL DETERMINATION, WOULD PREVENT ANY INCREASE IN RETIRED PAY BEFORE APRIL 1966. THEREFORE, THE FORMULA PRESCRIBED IN 10 U.S.C. 1401A (B) WAS CHANGED BY SECTION 5 OF THE ACT OF AUGUST 21, 1965, SUBSECTION (A) PROVIDING FOR AN IMMEDIATE INCREASE IN RETIRED PAY BASED ON THE INCREASE IN COST OF LIVING SINCE 1962 AS REFLECTED IN THE CONSUMER PRICE INDEX FOR AUGUST 1965 AND SUBSECTION (B) AUTHORIZING RETIRED PAY INCREASES THEREAFTER ON THE BASIS OF AN INCREASE OF AT LEAST 3 PERCENT IN THE PRICE INDEX OVER A 3-MONTH PERIOD RATHER THAN A 1-YEAR PERIOD.

SECTION 201 (A) OF THE DUAL COMPENSATION ACT, QUOTED ABOVE, PROVIDES THAT THE BASIC AMOUNT OF RETIRED PAY ($2,000) WHICH A RETIRED REGULAR OFFICER SHALL RECEIVE BEFORE DEDUCTION ON ACCOUNT OF RECEIPT OF CIVILIAN SALARY SHALL BE INCREASED PROPORTIONATELY WHENEVER AN INCREASE IN RETIRED PAY IS EFFECTED "PURSUANT TO THE PROVISIONS OF SECTION 1401A (B) OF TITLE 10, U.S.C. TO REFLECT CHANGES IN THE CONSUMER PRICE INDEX.' THE LEGISLATIVE HISTORY OF SECTION 201 (A) INDICATES THAT THERE WAS SOME DIFFICULTY IN WORKING OUT THE FORMULA BY WHICH THE RETIRED PAY OF A RETIRED OFFICER OF A REGULAR COMPONENT WHO HOLDS A CIVILIAN OFFICE IN THE GOVERNMENT SHOULD BE REDUCED. THE FIGURE OF $2,000 (PLUS ONE-HALF OF THE REMAINDER) WAS THE RESULT OF A COMPROMISE. IT APPARENTLY WAS INTENDED THAT AS RETIRED PAY WAS INCREASED AS PROVIDED BY LAW TO REFLECT CHANGES IN THE CONSUMER PRICE INDEX, THE $2,000 AMOUNT WAS TO BE INCREASED PROPORTIONATELY. SINCE THE ONLY PROVISIONS RELATING TO AN INCREASE IN RETIRED PAY ON THAT BASIS WERE CONTAINED IN 10 U.S.C. 1401A (B), SUCH PROVISIONS WERE MENTIONED IN SECTION 201 (A) OF THE DUAL COMPENSATION ACT AS PART OF THE DESCRIPTIVE LANGUAGE RELATING TO THE CHANGES IN RETIRED PAY THE CONGRESS HAD IN MIND, I.E., INCREASES REFLECTING CHANGES IN THE CONSUMER PRICE INDEX. WHILE THE INCREASE AUTHORIZED BY SECTION 5 (A) OF THE 1965 PAY ACT IS NOT AN INCREASE PURSUANT TO THE PROVISIONS OF 10 U.S.C. 1401A (B), IT NEVERTHELESS IS AN INCREASE AUTHORIZED BY CONGRESS AND ITS OBVIOUS PURPOSE IS TO REFLECT CHANGES IN THE CONSUMER PRICE INDEX. HENCE, IT APPEARS THAT SUCH INCREASE COMES WITHIN THE MEANING AND PURPOSE OF SECTION 201 (A) OF THE DUAL COMPENSATION ACT. QUESTION 1 IS ANSWERED IN THE AFFIRMATIVE.

SUBSECTION 5 (A) OF THE 1965 ACT, 10 U.S.C. 1401 NOTE, IS AS FOLLOWS:

THE RETIRED PAY OR RETAINER PAY OF A MEMBER OR FORMER MEMBER OF A UNIFORMED SERVICE WHO IS ENTITLED TO THAT PAY COMPUTED UNDER RATES OF BASIC PAY IN EFFECT BEFORE THE EFFECTIVE DATE OF THIS ACT SHALL BE INCREASED, EFFECTIVE THAT DATE, BY THE PERCENTUM (ADJUSTED TO THE NEAREST ONE-TENTH OF 1 PERCENTUM) THAT THE CONSUMER PRICE INDEX (ALL ITEMS--- UNITED STATES CITY AVERAGE), PUBLISHED BY THE BUREAU OF LABOR STATISTICS, FOR THE CALENDAR MONTH IMMEDIATELY PRECEDING THE EFFECTIVE DATE OF THIS ACT HAS INCREASED OVER THE AVERAGE MONTHLY INDEX FOR CALENDAR YEAR 1962.

SINCE THE INCREASE AUTHORIZED BY THE ABOVE-QUOTED SUBSECTION IS LIMITED IN APPLICATION TO RETIRED PAY OR RETAINER PAY "COMPUTED UNDER RATES OF BASIC PAY IN EFFECT BEFORE THE EFFECTIVE DATE OF THIS ACT," THAT PROVISION COULD HAVE NO EFFECT ON RETIRED PAY OR RETAINER PAY COMPUTED UNDER THE RATES OF BASIC PAY ESTABLISHED BY THE 1965 ACT. PERSONS WHO ARE OR WHO BECOME ENTITLED TO RETIRED PAY OR RETAINER PAY COMPUTED UNDER THE 1965 PAY RATES MAY IN THE FUTURE BECOME ENTITLED TO AN INCREASE IN SUCH PAY IN ACCORDANCE WITH 10 U.S.C. 1401A (B) AS AMENDED BY SUBSECTION 5 (B) OF THE 1965 ACT, IN WHICH CASE THE INCREASE IN PAY WOULD CAUSE A PROPORTIONATE INCREASE IN THE BASIC AMOUNT OF RETIRED PAY REFERRED TO IN THE FORMULA CONTAINED IN SECTION 201 (A) OF THE DUAL COMPENSATION ACT. QUESTION 2 IS ANSWERED ACCORDINGLY.