B-199549, APR 22, 1987

B-199549, APR 22, 1987

CIVILIAN PERSONNEL - RELOCATION - RESIDENCE TRANSACTION EXPENSES - OVERSEAS PERSONNEL DIGEST: THIS IS A LETTER TO THE CHAIRWOMAN, SUBCOMMITTEE ON GOVERNMENT ACTIVITIES AND TRANSPORTATION, COMMITTEE ON GOVERNMENT OPERATIONS, HOUSE OF REPRESENTATIVES, CONTAINING COMMENTS BY GAO ON H.R. 987, 100TH CONG., 1ST SESS. THE BILL WOULD AMEND 5 U.S.C. SEC. 5724(A)(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 THOSE 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 CHANGES TO THE SPECIFIC LANGUAGE OF H.R. 987 AND RECOMMENDED FAVORABLE CONSIDERATION OF THE BILL BY THE SUBCOMMITTEE.

THE HONORABLE CARDISS COLLINS:

THIS IS IN RESPONSE TO YOUR LETTER OF MARCH 18, 1987, REQUESTING OUR COMMENTS ON H.R. 987, 100TH CONG., 1ST SESS., A BILL WHICH WOULD AMEND TITLE 5, U.S.C. TO LIBERALIZE CERTAIN PROVISIONS AUTHORIZING REIMBURSEMENT FOR EXPENSES OF SALE AND PURCHASE OF A RESIDENCE UPON THE TRANSFER OF A FEDERAL EMPLOYEE.

THE GENERAL ACCOUNTING OFFICE STRONGLY SUPPORTS H.R. 987, WHICH WOULD 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. OUR OFFICE HAS RECOMMENDED ENACTMENT OF SUCH LEGISLATION OVER THE PAST 7 YEARS, AND WE BELIEVE THAT H.R. 987, WITH CERTAIN MODIFICATIONS DISCUSSED BELOW, WOULD CARRY OUT OUR RECOMMENDATION.

CONCERN OF GAO

WE AGREE WITH THE PURPOSE OF H.R. 987, WHICH IS TO PROVIDE REIMBURSEMENT OF REAL ESTATE EXPENSES TO CIVILIAN EMPLOYEES OF FEDERAL AGENCIES WHO 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. 5724(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 WERE 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 CONG., 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 THESE CIRCUMSTANCES 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 WISH TO POINT OUT THAT BY LETTER DATED MARCH 30, 1987, WE AGAIN RECOMMENDED PROPOSED LEGISLATION TO THE SPEAKER OF THE HOUSE AND PRESIDENT OF THE SENATE TO AMEND SECTION 5724A(A)(4)(A). WE HAVE ENCLOSED A COPY OF OUR LETTER TO THE SPEAKER OF THE HOUSE, WITH OUR PROPOSED LEGISLATIVE LANGUAGE, FOR YOUR INFORMATION.

SUGGESTED CHANGES TO H.R. 987

WITH RESPECT TO THE SPECIFIC LANGUAGE OF H.R. 987, WE SUGGEST THAT IN THOSE INSTANCES WHERE THE WORDS "CANAL ZONE" APPEAR IN THE BILL, THE FOLLOWING LANGUAGE BE SUBSTITUTED:

"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)."

THIS CHANGE IS NECESSARY IN ORDER TO COINCIDE WITH SECTION 1213(D) OF THE PANAMA CANAL ACT OF 1979, PUBLIC LAW 96-70, SEPTEMBER 27, 1979, 93 STAT. 452, AND WITH THE LANGUAGE PRESENTLY CONTAINED IN 5 U.S.C. SEC. 5724A(A)(4)(A) (1982).

WE WOULD ALSO POINT OUT THAT IN SUBSECTION 1, SECTION 1, OF H.R. 987, THE PROVISO, COMMENCING ON PAGE 2, LINE 6, COULD BE CONSTRUED TO BE APPLICABLE ONLY TO (B) WHICH INVOLVES THE PURCHASE OF A RESIDENCE WHEN, IN FACT, IT IS ALSO APPLICABLE TO (A) WHICH INVOLVES THE SALE OF THE EMPLOYEE'S RESIDENCE. THEREFORE, WE RECOMMEND THAT THE LANGUAGE IN QUESTION BE CHANGED TO MAKE IT CLEAR THAT ALL THREE CONDITIONS, I.E., (1) THE TRANSFER MUST BE IN THE INTEREST OF THE GOVERNMENT, (2) THE TRANSFER MUST BE FROM A POST OF DUTY LOCATED OUTSIDE THE UNITED STATES OR SPECIFIED AREA, AND (3) THE TRANSFER MUST BE TO A NEW OFFICIAL STATION AT A DIFFERENT LOCALITY IN THE UNITED STATES, ARE APPLICABLE TO BOTH THE SALE AND PURCHASE OF RESIDENCES BY AN EMPLOYEE IN THE CIRCUMSTANCES DESCRIBED THEREIN.

IN REGARD TO SECTION 2 OF THE BILL, WE ARE NOT CERTAIN AS TO THE BASIS FOR THE ESTABLISHMENT OF JANUARY 1, 1979, AS THE EFFECTIVE DATE OF THE AMENDMENTS. IT IS THE POSITION OF THIS OFFICE THAT THE AMENDMENTS MADE BY THE FIRST SECTION OF THE ACT SHOULD BE PROSPECTIVE ONLY. WE WOULD POINT OUT THAT THE SELECTION OF A RETROACTIVE DATE WOULD BE ARBITRARY AND MIGHT CAUSE ADMINISTRATIVE PROBLEMS. FURTHER, THE COST THEREOF WOULD BE HIGHLY CONJECTURAL. IF THE SECTION IS RETAINED, WE RECOMMEND THE DELETION OF THE WORDS "TO OR" WHICH FOLLOW THE WORD "TRANSFERRED," SINCE THE LEGISLATION WOULD APPLY ONLY WHEN THE EMPLOYEE IS TRANSFERRED FROM AN OVERSEAS POST OF DUTY.

SUMMARY

FOR THE REASONS STATED ABOVE, WE BELIEVE THAT THE DESIRABILITY OF THE PROPOSED AMENDMENT TO SECTION 5724A(A)(4)(A) IS COMPELLING. ACCORDINGLY, WE URGE THAT THE SUBCOMMITTEE GIVE FAVORABLE CONSIDERATION TO H.R. 987.