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The Navy requested a decision regarding the applicability of the Dual Compensation Act to two retired officers employed by the Panama Canal Commission (PCC). The claimants contended that the Navy improperly reduced their retired pay, since PCC was a nonappropriated fund instrumentality. GAO held that the claimants': (1) employment qualified as positions subject to the retired pay deductions; and (2) retired pay should be further reduced if the combination of salary and retired pay exceeded the rate payable for Level V of the Executive Schedule. Accordingly, the claims were denied.

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