Board of Contract Appeals General Services Administration Washington, D.C. 20405 ________________________________ September 23, 1998 ________________________________ GSBCA 13710-RELO(REIN) In the Matter of MICHAEL J. KRELL Michael J. Krell, Andrews Air Force Base, MD, Claimant. R. Michael Imphong, Chief, Allowances Unit, Air Force Personnel Operations Agency, Washington, DC, appearing for Department of the Air Force. HYATT, Board Judge. Michael J. Krell, a civilian employee of the Department of the Air Force, requested the General Accounting Office's (GAO's) review of the Air Force's decision to pay only a portion of his claim for temporary quarters subsistence allowance (TQSA). This allowance was authorized under 5 U.S.C. 5923 (a)(1) (1994) in connection with his permanent change of station (PCS) from Kadena Air Base, Okinawa, Japan to Andrews Air Force Base, Maryland. GAO transferred this matter here when the Board was delegated the authority to decide claims for expenses incurred by federal civilian employees for travel, transportation, and relocation. See 31 U.S.C.A. 3702 (West Supp. 1997).[foot #] 1 As ----------- FOOTNOTE BEGINS --------- [foot #] 1 After reviewing the materials received from GAO, we concluded that TQSA is not an expense of travel, transportation, or relocation within chapter 57 of title 5 of the United States Code, but rather is an allowance authorized under chapter 59 of title 5 of the United States Code. See Susan ___ _____ Drach, GSBCA 13863-RELO (Feb. 13, 1997); Donald E. Guenther, _____ ___________________ GSBCA 14032-RELO, 97-1 BCA 28,795. In accordance with this conclusion, we dismissed the case and transferred it to the Office of Personnel Management (OPM) for resolution. After reviewing the file, OPM took the position that although authorized under chapter 59, TQSA is more comparable to reimbursement of a relocation expense than to an allowance. (continued...) ----------- FOOTNOTE ENDS ----------- explained below, we find that the Air Force had the discretion to reduce the claim submitted by Mr. Krell and that it did not abuse that discretion. Accordingly, Mr. Krell's claim is denied. Background Mr. Krell currently works as a civilian employee of the Air Force Audit Agency at Andrews Air Force Base. Prior to his departure from Kadena Air Base in Okinawa, Japan, he was authorized a temporary quarters subsistence allowance (TQSA) under 5 U.S.C. 5923. Mr. Krell, his spouse, and two children under the age of twelve (a six-year old and an infant), vacated permanent residence quarters for eight and one-half days prior to their return to the United States. For this period, during which claimant and his family occupied temporary quarters at the base, Mr. Krell submitted a claim in the amount of $2178, representing $1974 for food expenses and $204 for the cost of the hotel. The food expenses were itemized[foot #] 2 and ranged from $15-23 per day for breakfast; $71-78 for lunch; and $147-154 for dinner for the eight days when the Krells were on TQSA status at the base. The claim was reviewed and initially rejected by the civilian personnel officer (CPO) at Kadena Air Base. In a letter to claimant, requesting receipts for meal expenses, the CPO explained: The daily meal cost you claimed is notably high considering both your family size and you were in temporary quarters on base. The average daily claim of employees incurring a PCS move from Kadena who reside in temporary quarters, on base, with three dependents, is $37.01; yet, your daily claim averaged $244.37. In response, Mr. Krell pointed out that he had no receipts, since the regulation does not require them. He elaborated that most of the lunch and dinner meal expenses represented costs of dining in off-base restaurants because the on-base facilities were limited and unappealing to him and his family, his spouse in particular. Specifically, his wife was raised in the Pacific ----------- FOOTNOTE BEGINS --------- [foot #] 1 (...continued) Consequently, OPM declined to consider Mr. Krell's claim and returned this matter to the Board. The Chairman of this Board has agreed that this Board will resolve claims such as Mr. Krell's. [foot #] 2 In accordance with instructions on the form, Mr. Krell added together the cost of food for each family member for each meal, and provided a total cost for four for each meal on a daily basis. ----------- FOOTNOTE ENDS ----------- Islands, where fresh seafood is plentiful and constitutes a dietary staple. Thus, to accommodate her preference for fresh seafood, most meals were consumed at off-base restaurants offering a variety of seafood dishes. Claimant acknowledged that the meal costs in these restaurants may have been considerably more expensive than would have been incurred at on-base facilities, but noted that he nonetheless expended considerably less than the authorized maximum per diem. Additionally, Mr. Krell stated that he was told by the staff at Kadena Air Base that the daily maximum per diem for lodging and meals for a family his size was $371.07.[foot #] 3 He further stated that he was not told that his reimbursement would be limited to an amount considered reasonable by the reviewing base personnel or what standards would be used to evaluate the reasonableness of claimed expenses. Given that he was not cautioned that he would not necessarily recover the full cost of meals up to the maximum, Mr. Krell contended that he should be reimbursed the full amount requested. Finally, Mr. Krell asserted that another auditor who returned earlier to the United States also incurred about $250 in expenses per day, for thirty days, for a family of four and was fully reimbursed. No corroborating information setting forth the circumstances of that employee's move was provided, however. In reconsidering Mr. Krell's claim in light of his explanation, the CPO reduced the total payment to $727, stating that, even with the benefit of Mr. Krell's explanation, the meal and food expenses were excessive and unreasonable and, in the case of various snacks, not incidental to occupancy of temporary quarters.[foot #] 4 In specifically addressing Mr. Krell's claim, the CPO stated that based on data collected for ----------- FOOTNOTE BEGINS --------- [foot #] 3 Mr. Krell stated in his submissions that this information was in fact erroneous and that he subsequently learned that the maximum per diem was actually $ 440.91 per day for a family of four. The CPO responded that while claimant was given information concerning the maximum per diem, the CPO's staff does not ordinarily volunteer this information. The maximum per diem rate was provided to Mr. Krell, and noted on his orders, solely because he requested it. Moreover, according to the CPO, no representations were made to Mr. Krell to the effect that he would automatically be entitled to that amount or any portion of it. [foot #] 4 In his response to the CPO, Mr. Krell noted that lunch costs generally included the amount of $15-20 for a box of pastries, such as donuts, purchased for snacking throughout the course of the day. Other amounts were also included for the cost of fresh fruit, which Mr. Krell maintained was necessary while in temporary quarters because he could not buy and store the less expensive frozen alternatives. ----------- FOOTNOTE ENDS ----------- the past year,[foot #] 5 the average daily cost of meals for a family of three on TQSA in Kadena was $37. Since he was not persuaded that the itemized costs provided by claimant were reasonable in light of this data, the CPO adopted an alternative approach to arrive at what he considered to be a reasonable allowance for meals in light of the individual circumstances stated by claimant. The CPO acknowledged that his initial starting amount, of $37 per day for a family of three, did not account for the Krells' six-month old infant; he accordingly adjusted this amount by adding $9 per day for eight days to reimburse reasonable meal costs of the baby. In addition, in recognition of the fact that meals eaten off base were generally more expensive, the personnel officer added an "off-base dining" amount of $17.67 per day for the eight day period of TQSA status. This amount represented a percentage of the foreign post allowance, which is paid to employees while stationed overseas. This allowance ceases when TQSA status is commenced. He approved the amount of $204 for on-base lodging and allowed an adjusted payment of $523 for meals, bringing the approved reimbursement amount to $727. Discussion By statute, TQSA is intended to pay for reasonable subsistence expenses of an employee and immediate family members while occupying temporary quarters when relocating to or from an overseas location. 5 U.S.C. 5923 (1994). This statutory provision is implemented in the Department of State's ----------- FOOTNOTE BEGINS --------- [foot #] 5 The data reviewed by the CPO reflected information for about 15-16 transfers, involving family units ranging from one to five individuals. Based on this data, the lodging expenses incurred by the Krells were comparable to those of similarly-sized families. The claimed per person meal expenses were significantly higher, however. There is no way to determine if the specific auditor referred to by Mr. Krell was included in this data. ----------- FOOTNOTE ENDS ----------- Standardized Regulations (DSSR).[foot #] 6 Section 121 of the DSSR states in pertinent part that: "Temporary quarters subsistence allowance" means an allowance granted to an employee for the reasonable cost of temporary quarters , meals and laundry expenses incurred by the employee/and or family members: . . . . b. for a period not to exceed 30 days immediately preceding final departure from the post subsequent to the necessary vacating of residence quarters. Section 122 of the DSSR, defining the scope of TQSA, states that this allowance is intended to "assist in covering the average cost of adequate but not elaborate or unnecessarily expensive accommodations in a hotel, pension, or other transient-type quarters at the post of assignment, plus reasonable meal and laundry expenses" for brief periods after arrival at a new post in an overseas area and for the period immediately preceding departure from an overseas assignment if it is necessary to vacate permanent quarters. Section 124 of the DSSR addresses TQSA preceding final departure for the United States. Section 124.3 states that the amount which "may be reimbursed shall be the lesser of either the actual amount of allowable expenses incurred by the employee and family members or an amount computed based on percentages of the ----------- FOOTNOTE BEGINS --------- [foot #] 6 The DSSR implements the provisions of the Overseas Differentials and Allowances Act, which is codified in chapter 59 of title 5 of the U.S.C. The purpose of the Act was to improve and strengthen overseas activities of the Government by establishing a uniform system for compensating all Government employees stationed overseas regardless of the agency by which they were employed. The authority to promulgate regulations implementing this Act is delegated to the Secretary of State. Because the allowances permitted under this Act are largely discretionary, the DSSR recognizes that agencies may, but are not required to, authorize payment of the differentials and allowances permitted under the Act. See Charles E. Brookshire, ___ _____________________ B-196809 (May 9, 1980). The payment of TQSA to employees transferring to and from overseas locations has been authorized by the Department of Defense (DoD). Joint Travel Regulations (JTR) C13000. ----------- FOOTNOTE ENDS ----------- applicable per diem rate for the foreign post."[foot #] 7 Section 125 of the DSSR governs determination of the rate at which TQSA may be granted. It provides that the allowance shall be the "total amount of the reasonable and necessary expenses for the employee and family members for meals, including tax, service charges and tips, laundry/dry cleaning and temporary lodging . . . or the total of the maximum rates for such period . . . , whichever is less." This provision further cautions that "[o]nly actual subsistence expenses incurred, which are reasonable in amount and incident to the occupancy of temporary quarters, shall be reimbursed." Receipts are required for lodging and laundry expenses; meal expenses are to be supported by a certified statement of the employee showing "a per meal per day cost." Under the Civilian Personnel Manual (CPM), the Department of Defense (DoD) has delegated the authority to administer payment of overseas allowances and differentials to the local CPO. DoD 1400.25-M, CPM 592. In response to claimant's contention that he is entitled to be fully reimbursed all of his claimed meal expenses, the Air Force states that it "strongly support[s] the CPO's determination that Mr. Krell's reimbursement should be $727." The Air Force notes that the CPO's determination is based on data collected for twelve months for comparable families living in the Kadena Air Base area and represents an amount that the CPO deemed reasonable for the circumstances. Claimant contends that this regulation should be interpreted to permit recovery of actual expenses up to the maximum per diem rate or at least to the amounts available under the formula set forth in DSSR 124.3.[foot #] 8 He argues that his claim is clearly reasonable since he came nowhere close to spending the maximum amounts permitted to be paid. He also maintains that he was never told that his claim could be cut back if it was deemed to be excessive, nor was he given any guidelines as to the level of allowance that would be regarded as reasonable by the CPO. Finally, he disputes the validity of the data relied upon by the CPO, and criticizes the methodology used by the CPO to arrive at an allowable amount of TQSA. In particular, he questions the decision to add a percentage of the foreign post ----------- FOOTNOTE BEGINS --------- [foot #] 7 The formula provides for a daily rate not in excess of seventy-five percent of the applicable per diem rate for the employee; two-thirds of that daily rate for the spouse or other family member over age twelve, and one-half of that rate for each family member under age twelve. [foot #] 8 A comparable formula is described in Part C13000 of the JTR, which jointly addresses reimbursement of temporary quarters subsistence expenses (domestic relocations) and payment of similar allowances to employees transferring to and from a foreign post. ----------- FOOTNOTE ENDS ----------- allowance to compensate for the higher cost of dining at off-base facilities. We agree with Mr. Krell's observation that it would have been helpful if the CPO or his staff had advised him more pointedly that the maximum per diem amount for meals would not automatically be reimbursed, and had informed him as to the average level of meal expenses that would be deemed acceptable. We also acknowledge his argument that as a general proposition eating out in Japan is expensive. This, however, is not enough to compel the agency to reimburse Mr. Krell all of his claimed meal expenses or the amount derived under the formula set forth in DSSR 124.3. Other families on TQSA prior to departing the base apparently recognized the expectation that, as a matter of prudence,[foot #] 9 they should take advantage of less expensive dining facilities on the base for most meals. Although Mr. Krell disputes the validity of the CPO's data, he has not presented independent data of the same nature to enable us to determine that the CPO's information, which in any event was simply used as a rough measure of the reasonableness of the claimed expenditures, is so clearly erroneous that reliance on it was an abuse of discretion. Additionally, the CPO's use of a percentage of the foreign post allowance to calculate reasonable meal costs was not a reinstatement of that allowance but a means of compensating, to a reasonable extent, the added cost of off- base dining. The CPO simply exercised his discretion to reduce the claimed expenses to an allowable level of actual costs appropriate for the circumstances. As the Comptroller General consistently recognized, the granting of the various allowances authorized by the Overseas Differentials and Allowances Act, codified as 5 U.S.C. 5921- 5948, is a discretionary matter. E.g., Charles E. Brookshire, B- 196809 (May 9, 1980). These cost-of-living allowances may be, but are not required to be, paid to civilian employees, and as such, agencies enjoy broad discretion in the implementation of these allowances. With respect to the specific allowance at issue here, as the Air Force points out, the regulation does not explicitly provide entitlement to the maximum per diem amount available, nor does it impose a requirement that the agency automatically reimburse actual expenses up to the maximum per diem amount. Reading the regulation as a whole, the agency is expected to reimburse necessary and reasonable expenses. Expenses in excess of what the agency determines to have been reasonably incurred are not allowable. What is reasonable ----------- FOOTNOTE BEGINS --------- [foot #] 9 Paragraph C1058 of the JTR states the overarching rule that a traveler on official business (whether relocating or performing a temporary duty assignment) shall exercise the same care in incurring expenses that a prudent person would exercise if traveling on personal business. Employees are not entitled to be reimbursed for excess or additional expenses incurred for personal preference or convenience. ----------- FOOTNOTE ENDS ----------- depends on the circumstances prevailing at the particular location where the allowance has been authorized. Although Mr. Krell and his spouse preferred the more expensive meals available at off-base dining establishments, it was not necessary to incur expenses of this nature when less expensive meals could have been purchased at the base cafeteria or at on-base restaurants. Underlying the authorization of this allowance is the expectation that expenditures will be incurred prudently and that agencies may question claimed amounts that appear excessive or unreasonable. See Alan Hurdus, B-256937 (Apr. 27, 1995); JTR C1058. Accordingly, we conclude that the CPO did not abuse his discretion to reduce the amounts claimed by Mr. Krell. This claim is denied. ____________________________ CATHERINE B. HYATT Board Judge