March 20, 1997
                                                  


                             GSBCA 13795-RELO


                      In the Matter of GUY E. MERCIER


     Guy E. Mercier, San Diego, CA, Claimant.

     Deborah A. Osipchak, Manager, Financial Services Branch,
Federal Aviation Administration, Washington, DC, appearing for
Department of Transportation.

DANIELS, Board Judge (Chairman).

     Guy E. Mercier, an employee of the Federal Aviation
Administration (FAA), seeks review of a determination of the
General Accounting Office (GAO) denying his claim for temporary
quarters subsistence expenses (TQSE).  We conclude that the
claimant has demonstrated entitlement to reimbursement of most of
the amount he seeks.

                                Background

     In 1994, the FAA directed Mr. Mercier to make a permanent
change of station from Santa Ana, California, to San Diego,
California, and authorized the payment of TQSE incident to the
move.

     On June 4, 1994, Mr. Mercier signed an agreement to rent a
furnished bedroom, with adjoining living area and a bathroom (as
well as a parking space), from Mrs. Janice Leah Diehl.  The lease
covered space in Mrs. Diehl's home which was rented both
immediately before and immediately after the time Mr. Mercier lived
there.  The lease was on a month-to-month basis.  It involved
payment of $1,150 per month and provided that the premises would be
occupied by no more than two adults.

     On June 13, Mr. Mercier and Mrs. Diehl's daughter Brandy, who
also lived in the house, eloped to Las Vegas, Nevada, where they
were married.  According to Mr. Mercier, he and Brandy had
"spontaneously [fallen] in love."  He had known Brandy for only two
weeks at the time of their marriage, and when he moved into the
Diehls' home, he had no intention of marrying her and had never met
her mother.

     On July 4, Mr. and Mrs. Mercier signed a month-to-month lease
with Mrs. Diehl for continued rental of the space.  The new lease
was at the rate of $1,300 per month.  Mr. Mercier says that the
additional charge was to compensate Mrs. Diehl for expenses
resulting from his new wife's occupying the space with him.

     Mr. Mercier submitted to the FAA a voucher in the amount of
$2,450 for temporary lodging during the period from June 4 to
August 2.  The agency reimbursed him in this amount.  Later,
however, the FAA learned that Mr. Mercier's landlady had become his
mother-in-law during this period.  The agency decided that the
lodging expense should have been allowed only for the period of
time prior to the marriage which created this relationship.  It
calculated this amount as $383.30 (ten days at a daily rate of
$38.33 -- the monthly rent of $1,150 divided by thirty) and
demanded repayment of the remaining amount.

     Mr. Mercier objected to making the repayment.  His claim for
the amount in dispute was sent to GAO, which denied it.  Guy E.
Mercier, Z-2869743 (Apr. 26, 1996).  Mr. Mercier asked GAO to
reconsider its ruling.  Before GAO took action on this request,
however, its authority to settle claims by or against the
Government was transferred to the Office of Management and Budget. 
Legislative Branch Appropriations Act, 1996, Pub. L. No. 104-53,
 211, 109 Stat. 514, 535 (1995).  Successive delegations by the
Acting Director of that Office and the Acting Administrator of
General Services vested in this Board the authority to settle
claims by federal civilian employees for relocation expenses
incurred incident to transfers.  Mr. Mercier's case was
consequently transferred to us for resolution.

                                Discussion

     Generally, an employee for whom a permanent change of station
is authorized or approved shall be allowed TQSE for a period of not
more than sixty days when occupancy of temporary quarters is
determined to be necessary and the new official station is located
within the United States or other specified locations.  41 CFR
302-5.2(a) (1994); see also 5 U.S.C.  5724a(a)(3) (1994). 
Allowable subsistence expenses include lodging.  41 CFR 302-5.4(a). 
"Reimbursement shall be made only for actual subsistence expenses
incurred provided these are incident to occupancy of temporary
quarters and are reasonable in amount."  Id.

     When an employee secures temporary lodgings in a private
residence, questions may arise as to whether the expenses claimed
were actually spent for the lodgings, or were merely transfers of
money arranged for the purpose of supporting a claim against the
Government and thereby enriching both the employee and the host. 
If the employee can show that payment was for the use of quarters
which were furnished as a business proposition, however, GAO
concluded, reimbursement is appropriate (assuming the
reasonableness test is also met).  The best evidence that a
business arrangement is involved, GAO explained, is the
demonstration of a continuing practice of the homeowner renting the
room for an established price.  Jerome R. Serie, 65 Comp. Gen. 287
(1986); Constance A. Hackathorn, B-205579 (June 21, 1982).  We
consider this guidance to be reasonable and will follow it.

     The FAA, in allowing reimbursement for the period of time
before the Merciers were married and denying it for subsequent
days, pointed to Department of Transportation (DOT) Order 1500.6A,
paragraph 4-0304, as justification.  This paragraph includes the
sentence: "When an employee obtains lodging from friends or
relatives . . . with or without charge, no part of the per diem
allowance will be allowed for lodging unless the host actually
incurs additional costs in accommodating the traveler and these
costs are substantiated."  This sentence is virtually identical to
the first sentence of 41 CFR 301-7.9(c)(3), which pertains to
expenses of lodging incurred by employees who are on official
travel away from their official stations, and it is included in a
part of the DOT order which concerns such travel.  It is not
applicable to claims by employees for relocation expenses incident
to a permanent change of station.  The Federal Travel Regulation
provision which governs these claims does not include such a
restriction.  It simply limits reimbursement to expenses which were
actually and reasonably incurred and which, for some items
(including lodging), are substantiated by receipts.  See 41 CFR
302-5.4(a), (b).

     Where GAO went astray in applying its guidance to this case
was in concluding that Mrs. Diehl was not in the business of
renting the space in question on a regular basis.  We think the
evidence is to the contrary.  Although Mr. Mercier appears to have
known Mrs. Diehl's daughter briefly before he moved into the house,
there is no indication that the rental of the space was anything
other than an arm's-length business proposition; the only
relationship Mr. Mercier and Mrs. Diehl had when they signed the
lease was that of lessor and lessee.  Mrs. Diehl also rented the
space both before and after Mr. Mercier lived there.  In the
absence of additional information about the extent of Mrs. Diehl's
rentals of this part of her house, we find that this evidence is
sufficient to show a regular rental business.

     The record does not show that Mrs. Diehl had an established
price for the rental of the space; she charged the other tenants
for whom we have lease agreements $750 and $875 per month.  The
agency has agreed that $1,150 was a reasonable price for one
month's rent, however, and the lower rents may have resulted from
unique circumstances.  Thus, we have no basis for concluding that
the rental price for the month of June was anything other than
reasonable.

     The Government should not reimburse Mr. Mercier, however, for
the additional $150 he paid for the month of July, consequent to
his new wife's living in the rented space with him.  The June
rental amount covered occupancy by up to two adults, and Mrs.
Mercier's living in the space did not cause that number to be
exceeded.  Furthermore, relocation allowances may be paid only for
members of an employee's household at the time he or she reports
for duty at the new permanent duty station, 41 CFR 302-4(f)(1), and
Mrs. Mercier was not a member of Mr. Mercier's household when he
reported for duty in San Diego.  Therefore, the reasonable rent for
the month of July is the amount which is reasonable for rental for
the month of June -- $1,150.

     The FAA correctly observes that the information contained in
the rental receipts and the checks written by Mr. Mercier to Mrs.
Diehl do not match in either date or amount.  Nevertheless, the
checks do show that Mr. Mercier paid Mrs. Diehl, during the rental
period, more than the $2,300 we consider reasonable rent for the
sixty days in question.

                                 Decision

     The FAA may recover from Mr. Mercier only the amount of
reimbursement which is attributable to the incremental rental
charge for July -- $150.





                                   _________________________
                                   STEPHEN M. DANIELS
                                   Board Judge