B-159212, JUN. 6, 1966, 45 COMP. GEN. 760

B-159212, JUN. 6, 1966, 45 COMP. GEN. 760

QUARTERS ALLOWANCE - CIVILIAN OVERSEAS EMPLOYEES - LOCALLY HIRED EMPLOYEES - ELIGIBILITY DETERMINATION ERRONEOUS A CIVILIAN EMPLOYEE LOCALLY HIRED BY THE AIR FORCE, MARRIED TO A FOREIGN NATIONAL DURING A PERIOD OF PRIOR EMPLOYMENT BY A DEFENSE CONTRACTOR, WHO IS ERRONEOUSLY DETERMINED TO BE ELIGIBLE TO RECEIVE A LIVING QUARTERS ALLOWANCE MAY NOT HAVE HER INDEBTEDNESS WAIVED UNDER SECTION 202 OF THE OVERSEAS DIFFERENTIALS AND ALLOWANCES ACT (50 U.S.C. 3034) ON THE BASIS THAT RECOVERY OF THE OVERPAYMENT WOULD BE AGAINST EQUITY AND GOOD CONSCIENCE, SECTION 113 OF THE STANDARDIZED REGULATIONS, IMPLEMENTING SECTION 202, PRESCRIBING WAIVER ONLY IN CASES OF EMERGENCY TRANSFERS OR INVOLUNTARY SEPARATIONS TO RELIEVE EMPLOYEES FROM THE OBLIGATION OF REPAYING A RENT ADVANCE THAT CANNOT BE RECOVERED FROM A THIRD PARTY LESSOR UPON TERMINATION OF A LEASE, AND AS A GENERAL POLICY OF WAIVER OF RECOVERY OF IMPROPER QUARTERS ALLOWANCE PAYMENTS CANNOT BE BASED ON THE NARROW STANDARD OF RECOVERY WAIVER IN SECTION 202, NOR ON THE BASIS OF SPECIFIC WAIVER PROVISIONS IN OTHER ACTS, EVEN THOUGH THE CRITERIA OF BEING AGAINST EQUITY AND GOOD CONSCIENCE IS PRESENT, THE IMPROPER PAYMENTS TO THE LOCALLY HIRED EMPLOYEE MAY NOT BE WAIVED.

TO THE SECRETARY OF DEFENSE, JUNE 6, 1966:

THIS IS IN REPLY TO YOUR ASSISTANT SECRETARY'S LETTER OF MAY 16, 1966, RELATING TO WAIVER OF RECOVERY OF UNAUTHORIZED QUARTERS ALLOWANCE IN THE CASE OF MARRIED WOMEN EMPLOYEES SERVING OVERSEAS AS BEING AGAINST EQUITY AND GOOD CONSCIENCE ON THE BASIS OF THE INTENT EXPRESSED BY CONGRESS IN SECTION 202 OF THE "OVERSEAS DIFFERENTIALS AND ALLOWANCES ACT," PUBLIC LAW 86-707, 74 STAT. 792, 5 U.S.C. 3034.

IN HIS LETTER THE ASSISTANT SECRETARY GIVES AN EXAMPLE OF THE TYPE OF CASE WHICH ILLUSTRATES THE QUESTION RAISED. HIS LETTER SUMS UP THE CASE AS FOLLOWS:

* * * AN EMPLOYEE WAS LOCALLY HIRED IN SPAIN BY A DEFENSE CONTRACTOR UNDER AN AGREEMENT WHICH PROVIDED FOR HER RETURN TRANSPORTATION TO THE UNITED STATES UPON SEPARATION, DURING THIS PERIOD OF EMPLOYMENT, SHE MARRIED A CITIZEN OF A THIRD COUNTRY. SUBSEQUENTLY, IN JUNE 1961, DURING THE PHASE OUT OF THE CONTRACTOR'S OPERATION, SHE WAS EMPLOYED AS A LOCAL HIRE BY THE AIR FORCE. WHEN THE CHANGE TO THE STANDARDIZED REGULATIONS REFERRED TO ABOVE WAS ISSUED IN OCTOBER 1963, THE EMPLOYEE MADE A CLAIM FOR THE QUARTERS ALLOWANCE AND A DECISION WAS MADE BY THE APPROPRIATE OPERATING OFFICIALS THAT SHE QUALIFIED. IN SEPTEMBER 1965, AS A RESULT OF A REVIEW OF THE ELIGIBILITY OF PERSONS RECEIVING THE QUARTERS ALLOWANCE, IT WAS DETERMINED THAT THE EMPLOYEE DID NOT MEET ALL REQUIREMENTS CONTAINED IN THE STANDARDIZED REGULATIONS AND PAYMENT OF THE QUARTERS ALLOWANCE WAS DISCONTINUED.

THE DEPARTMENT OF DEFENSE HAS CONDUCTED A TECHNICAL REVIEW OF THE DECISION AND HAS CONFIRMED THE DECISION THAT SHE IS NOT ELIGIBLE TO RECEIVE THE QUARTERS ALLOWANCE. HOWEVER, WE ARE SERIOUSLY CONCERNED ABOUT THE EQUITY IN ATTEMPTING A RECOVERY OF THE QUARTERS ALLOWANCE THAT WAS PAID IN GOOD FAITH AND ACCEPTED IN GOOD FAITH BY THE EMPLOYEE FOR A PERIOD OF APPROXIMATELY A YEAR AND A HALF.

SECTIONS 202 AND 203 OF THE OVERSEAS DIFFERENTIALS AND ALLOWANCES ACT (5 U.S.C. 3034, 3035) PROVIDE AS FOLLOWS:

SEC. 202. ALLOWANCES GRANTED UNDER THIS TITLE MAY BE PAID IN ADVANCE, OR ADVANCE OF FUNDS MAY BE MADE THEREFORE, THROUGH THE PROPER DISBURSING OFFICER IN SUCH SUMS AS MAY BE DEEMED ADVISABLE IN CONSIDERATION OF THE NEED AND THE PERIOD OF TIME DURING WHICH EXPENDITURES MUST BE MADE IN ADVANCE BY THE EMPLOYEE OR EMPLOYEES. ANY ADVANCE OF FUNDS NOT SUBSEQUENTLY COVERED BY ALLOWANCES ACCRUED TO THE EMPLOYEE OR EMPLOYEES UNDER THIS TITLE SHALL BE RECOVERABLE BY THE GOVERNMENT BY SETOFF AGAINST ACCRUED SALARY, PAY, COMPENSATION, AMOUNT OF RETIREMENT CREDIT, OR OTHER AMOUNT DUE FROM THE GOVERNMENT TO SUCH EMPLOYEE OR EMPLOYEES AND BY SUCH OTHER METHOD AS MAY BE PROVIDED BY LAW FOR THE RECOVERY OF AMOUNTS OWING TO THE GOVERNMENT.

THE HEAD OF THE GOVERNMENT AGENCY CONCERNED MAY, IN ACCORDANCE WITH REGULATIONS OF THE PRESIDENT, WAIVE IN WHOLE OR IN PART ANY RIGHT OF RECOVERY UNDER THIS SECTION, IF IT IS SHOWN THAT SUCH RECOVERY WOULD BE AGAINST EQUITY AND GOOD CONSCIENCE OR AGAINST THE PUBLIC INTEREST.

SEC. 203. THE ALLOWANCES AND DIFFERENTIALS AUTHORIZED BY THIS TITLE SHALL BE PAID IN ACCORDANCE WITH REGULATIONS PRESCRIBED BY THE PRESIDENT ESTABLISHING RULES GOVERNING PAYMENTS THEREOF AND THE RESPECTIVE RATES AT WHICH SUCH PAYMENTS SHALL BE MADE, THE FOREIGN AREAS, THE GROUPS OF POSITIONS, AND THE CATEGORIES OF EMPLOYEES TO WHICH SUCH RATES SHALL APPLY, AND OTHER RELATED MATTERS.

IN EXECUTIVE ORDER NO. 10903, DATED JANUARY 9, 1961, 26 FEDERAL REGISTER 217, THE PRESIDENT DELEGATED TO THE SECRETARY OF STATE HIS AUTHORITY TO ISSUE REGULATIONS CONCERNING THE WAIVERS AUTHORIZED UNDER SECTION 202 OF THE ACT AND TO ISSUE REGULATIONS GOVERNING PAYMENT AND ALLOWANCES PRESCRIBED IN SECTION 203. IN IMPLEMENTATION OF THIS AUTHORITY THE SECRETARY OF STATE ISSUED REGULATIONS RELATING TO ADVANCE PAYMENTS OF LIVING QUARTERS ALLOWANCE AND RECOVERY OF UNPAID BALANCE OF PAYMENTS IN SECTION 113, STANDARDIZED REGULATIONS (GOVERNMENT CIVILIANS, FOREIGN AREAS), PERTINENT PORTIONS OF WHICH PROVIDE AS FOLLOWS:

113.1 GENERAL

IN ACCORDANCE WITH THE CRITERIA AND RESTRICTIONS SET FORTH IN SECTION 113.2 AND 113.3, QUARTERS ALLOWANCES MAY BE PAID IN ADVANCE, OR IN ADVANCE OF FUNDS MAY BE MADE THEREFOR, THROUGH THE PROPER DISBURSING OFFICER.

113.2 ADVANCE PAYMENT OF TEMPORARY LODGING ALLOWANCE

ADVANCE PAYMENT OF TEMPORARY LODGING ALLOWANCE MAY BE MADE ONLY WHERE ADVANCE RENTAL PAYMENT FOR TEMPORARY QUARTERS IS REQUIRED BY THE LESSOR.

113.3 ADVANCE PAYMENT OF LIVING QUARTERS ALLOWANCE

ADVANCE PAYMENT OF LIVING QUARTERS ALLOWANCES MAY BE MADE ONLY IN LOCALITIES WHERE LOCAL CUSTOM NECESSITATES SUCH ADVANCE PAYMENTS FOR PERIODS OF AT LEAST 3 MONTHS AND WHERE THE INDIVIDUAL LESSOR REQUIRES THE CUSTOMARY ADVANCE PAYMENT OF RENT.

113.4 RECOVERY OF UNPAID BALANCE OF ADVANCE PAYMENT

UPON TRANSFER OR SEPARATION OF THE EMPLOYEE, ANY BALANCE OF AN ADVANCE PAYMENT FOR A TEMPORARY LODGING ALLOWANCE OR A LIVING QUARTERS ALLOWANCE WHICH HAS NOT BEEN REPAID TO THE GOVERNMENT SHALL BE RECOVERABLE IN U.S. DOLLARS BY THE GOVERNMENT EXCEPT AS PROVIDED HEREINAFTER. THE RECOVERY MAY BE MADE BY SETOFF AGAINST ACCRUED ALLOWANCES, SALARY, PAY, COMPENSATION CREDIT, OR OTHER AMOUNT DUE FROM THE GOVERNMENT TO THE EMPLOYEE, AND BY SUCH OTHER METHOD AS MAY BE PROVIDED BY LAW FOR THE RECOVERY OF AMOUNTS OWING TO THE GOVERNMENT. IN UNUSUAL CIRCUMSTANCES WHEN IT IS SHOWN THAT THE ADVANCE RENT PAID HAS NOT BEEN RECOVERED BY THE EMPLOYEE AFTER ALL REASONABLE STEPS HAVE BEEN TAKEN FOR SUCH RECOVERY AND THAT RECOVERY FROM THE EMPLOYEE WOULD BE AGAINST EQUITY AND GOOD CONSCIENCE OR AGAINST THE PUBLIC INTEREST, THE HEAD OF THE AGENCY MAY WAIVE, IN WHOLE OR IN PART, ANY RIGHT OF RECOVERY UNDER THIS SUBSECTION. SHOWINGS THAT MERIT EXERCISE OF THIS WAIVER INCLUDE CIRCUMSTANCES WHERE THE EMPLOYEE (1) IS TRANSFERRED IN EMERGENCY SITUATIONS SUCH AS EVACUATION, OR A GOVERNMENT AGENCY HAS DIRECTED HIS TRANSFER ON EXCEPTIONALLY SHORT NOTICE OWING TO URGENT NEED FOR HIS SERVICES AT ANOTHER POST ON A CONTINUING BASIS; OR (2) HAS LEFT THE POST AFTER RECEIVING A NOTICE OF INVOLUNTARY SEPARATION. IN EXERCISING THE AUTHORITY TO WAIVE REPAYMENT IN THE ABOVE OR EQUALLY UNUSUAL CIRCUMSTANCES THE HEAD OF AGENCY IS EXPECTED TO SATISFY HIMSELF THAT THE EMPLOYEE HAS TAKEN ALL REASONABLE STEPS TO DISPOSE OF HIS QUARTERS TO OTHERS, INCLUDING EFFORTS TO SUBLEASE OR ASSIGN EVEN AT A FINANCIAL SACRIFICE, AND THAT THE UNPAID BALANCE DID NOT RESULT FROM ANY ACTION WITHIN THE CONTROL OF THE EMPLOYEE. ANY WAIVER GRANTED UNDER THIS SECTION SHALL BE REPORTED PROMPTLY TO THE SECRETARY OF STATE, CITING THESE REGULATIONS AND DESCRIBING THE CIRCUMSTANCES.

AS YOUR ASSISTANT SECRETARY POINTS OUT IN HIS LETTER THE LAW AND REGULATIONS RELATE ONLY TO RELIEF FROM RECOVERY OF ADVANCE PAYMENT OF ALLOWANCES. HOWEVER HE SUGGESTS THAT THIS SPECIFIC WAIVER, AND WAIVER AUTHORITY IN OTHER STATUTES IN AN INDICATION OF A CLEAR INTENT ON THE PART OF CONGRESS TO EXTEND SUCH RELIEF TO SITUATIONS WHICH ARE BEYOND THE EMPLOYEE'S CONTROL AND IN WHICH RECOVERY WOULD BE AGAINST EQUITY AND GOOD CONSCIENCE.

AS THE OVERSEAS DIFFERENTIALS AND ALLOWANCES ACT PASSED THE HOUSE IT DID NOT CONTAIN ANY PROVISION FOR RELIEF OF THE UNLIQUIDATED PORTION OF THE ADVANCE AND APPEARED TO PRECLUDE RELIEF IN THE FORM OF SPECIAL ALLOWANCES THAT THE STATE DEPARTMENT HAD PREVIOUSLY PROVIDED IN UNUSUAL CASES. ORDER "TO PROVIDE NEEDED FLEXIBILITY AND TO PREVENT UNWARRANTED HARDSHIP" THE WAIVER AUTHORITY WAS RECOMMENDED BY THE SENATE COMMITTEE TO RELIEVE THE EMPLOYEE FROM REFUNDING THE ADVANCE OF QUARTERS ALLOWANCE WHEN HE IS PREVENTED THROUGH NO FAULT OF HIS OWN FROM HAVING THE OPPORTUNITY TO EARN SUCH ALLOWANCE. S.REP. NO. 1647, 86TH CONG., 2D SESS. 5.

THE REGULATIONS, ABOVE, CONTEMPLATE THE ISSUANCE OF ADVANCE ALLOWANCES ONLY WHERE LOCAL CUSTOM REQUIRES ADVANCE PAYMENTS OF RENT OF AT LEAST 3 MONTHS. THE EMPLOYEE IS REQUIRED TO KEEP THE ADVANCE TO A MINIMUM, TO MAKE PROVISION WHENEVER POSSIBLE FOR CANCELLATION OF THE LEASE ON 30 DAYS' NOTICE, AND TO PROVIDE FOR SUBLETTING.

ONLY UNDER UNUSUAL CIRCUMSTANCES WHEN ALL REASONABLE STEPS HAVE BEEN TAKEN BY AN EMPLOYEE TO EFFECT RECOVERY OF THE ADVANCE PAYMENT OF RENT FROM THE LESSOR MAY RECOVERY AGAINST HIM BE WAIVED. THE EXAMPLES CITED IN SECTION 113.4, STANDARDIZED REGULATIONS, THAT WOULD SUPPORT SUCH A WAIVER ARE AN EMERGENCY TRANSFER OR AN INVOLUNTARY SEPARATION. THE WAIVER OF RECOVERY UNDER THESE CIRCUMSTANCES IS AIMED AT FREEING AN EMPLOYEE FROM THE OBLIGATION OF PAYING BACK THE ADVANCE RENT WHICH HE IS UNABLE TO RECOVER FROM A THIRD PARTY LESSOR UPON TERMINATION OF A LEASE. HOWEVER, IN THESE CASES THERE IS NO RECEIPT OF ALLOWANCES BY THE EMPLOYEE TO WHICH HE IS NOT ENTITLED AS DISTINGUISHED FROM OVERPAYMENT OR NONENTITLEMENT CASES IN WHICH THE EMPLOYEE HIMSELF IS THE RECIPIENT OF AN IMPROPER PAYMENT.

A GENERAL POLICY OF WAIVER OF RECOVERY IN ALL CASES OF IMPROPER PAYMENTS OF QUARTERS ALLOWANCES CANNOT BE BASED ON THE NARROW STANDARD OF WAIVER OF RECOVERY OF UNPAID BALANCES SET FORTH IN SECTION 202 OF THE OVERSEAS DIFFERENTIALS AND ALLOWANCES ACT, OR ON THE BASIS OF SPECIFIC WAIVER PROVISIONS IN OTHER ACTS, EVEN THOUGH THE CRITERIA OF BEING AGAINST EQUITY AND GOOD CONSCIENCE MAY BE PRESENT. ACCORDINGLY, WE FIND NO AUTHORITY TO WAIVER RECOVERY OF THE OVERPAYMENTS OF ALLOWANCES SET FORTH IN YOUR LETTER.