July 23, 1997 GSBCA 13849-RELO In the Matter of DAVID P. FULTON David P. Fulton, Winfield, WV, Claimant. John F. Wallace, Director of Resource Management, Corps of Engineers, Washington, DC, appearing for Department of the Army. GOODMAN, Board Judge. Mr. David P. Fulton is a civilian employee of the United States Army Corps of Engineers. In 1993 he moved as the result of a permanent change of station. He submitted a claim for funds in addition to those which he received as payment for movement of household goods (HHG). The agency denied his claim, and by letter dated July 31, 1995, Mr. Fulton requested review of the agency s decision by the General Accounting Office (GAO). Mr. Fulton moved from Rice Landing, Pennsylvania, to a new duty station in Dongola, Illinois. This required that his HHG be shipped and temporarily stored until he moved into his permanent quarters. His original travel orders, issued August 31, 1993, stated: Shipment of HHG auth[orized] via Commuted Rate N[ot]T[o]E[xceed] GBL [Government Bill of Lading] estimate of $6,500 for 18,000 pounds. Storage of HHG s authorized at new duty station for 90 days, if becomes necessary. The agency has not suggested that it made a cost comparison between the commuted rate and GBL rate prior to issuing these orders. On the record, we conclude that the agency failed to make the necessary calculations. On December 23, 1993, amendment #2 to his travel orders was issued. It stated, in relevant part: "Authorize additional Storage of HHG s for a total of 65 days, estimated increase $540." On September 14, 1994, amendment #3 to Mr. Fulton s travel orders was issued. It stated, in relevant part: "AMEND to correct GBL estimate of $6,500 to include the estimated amount of $3,700 for 90 days storage charge or a total of $10,200 for moving and storage of HHG s." Mr. Fulton shipped his HHG on the basis of the commuted rate. He has been reimbursed a total of $7,142 for movement and storage of HHG. Payments totalling this amount were made as follows: $6,500 - Reimbursement for movement of HHG to place of temporary storage (18,000 lbs. @ 701 miles), based upon the commuted rate of $7,624 which the agency alleges was limited to a GBL estimate of $6,500 (claimed October 20, 1993; paid November 19, 1993). $160 - Temporary storage of HHG. Reimbursement based on actual cost. Two months at $80 each (claimed February 9, 1994; paid March 15, 1994). $482 - Movement of HHG from temporary storage to permanent residence (forty-one miles). Reimbursement based upon actual cost of common carrier (claimed April 15, 1994; paid February 24, 1995). $7,142 - Total Reimbursement for movement and storage of HHG. Mr. Fulton believes that he has not been fully reimbursed for moving his HHG. He states in his request for review to the GAO: I am neither a travel expert nor an attorney, and it would be inappropriate for me to specify the exact dollar amount that I am seeking. . . . However, I do feel strongly that I am entitled to the Commuted Rate, not to exceed the GBL estimate of $10,200. As a minimum, therefore, I am asking for the difference between the Commuted Rate and the amount . . . paid, computed as follows: Commuted Rate: 18,000 lb., 743 miles: $9,139.60 F&A payment: $6,500.00 Difference: $2,639.60 Mr. Fulton contends that the amendment increased the GBL estimate to include both movement and storage of HHG to establish a limit of $10,200. He states that the original GBL limit of $6,500 on his travel orders for movement of HHG was based on 600 miles, and the amendment was the result of consideration of the actual mileage of 743 miles (the total of the transportation from the original destination to temporary storage and from temporary storage to the permanent residence), which increased the total limit to $10,200. Thus, Mr. Fulton claims the difference between what he computes to be the commuted rate for movement of the goods for a total of 743 miles (from his origin to temporary storage and from temporary storage to his permanent residence) and the previous payment of $6,500 (from his origin to temporary storage). The agency's disbursing officer interprets amendment #3 to Mr. Fulton's travel orders to provide an additional $3,700 for storage of HHG, not an increase to the GBL estimate for movement of HHG. The disbursing officer s position is confirmed in a memorandum issued by the transportation officer dated March 5, 1996, which reads, in relevant part: This is to clarify our intentions of the amendment of Mr. Fulton's PCS orders (Amendment #3 to Travel Order #4611). We amended the PCS orders because we were told that the Commuted Rate Schedule (CRS) payment was limited to the GBL estimate and that the GBL estimate is a total of both estimated charges (Line Haul and Temporary Storage (SIT)). We increased the GBL estimate to increase the total estimate to $10,200. We are not increasing the Line Haul charges, just adding the SIT to the total estimate. The initial estimate for the . . . HHG move was prepared using 600 miles from Pittsburgh, PA . . . origination to Paducah, Ky . . . destination. After Mr. Fulton moved, he informed us that he actually moved from Rices Landing, PA . . . to Dongola, Il . . . which proved to be 143 miles more than the original estimated mileage. Mr. Fulton thought that perhaps the additional distance would increase the estimated GBL costs. In November 1994, Mr. Don Lee contacted Ms. Carla Young (GSA Freight Services) requesting a Cost Estimate using rates that would have been effective for a shipment in August 1993. That estimate was somewhat less so we did not amend the travel orders to reflect this estimate. Now we understand that CRS is paid up to estimated Line Haul Charges and that SIT is paid only for actual expenses. Thus the $6500 limitation for Line Haul charges is correct. Even though the agency knew at the time amendment #3 was issued that Mr. Fulton had only incurred $160 for temporary storage, it contends that it had increased the GBL limit in the travel orders by $3,700 for storage before it realized that it was only required to pay actual cost for storage. In response to the Board's inquiry dated February 21, 1997, the agency responded: It was later understood [by the agency] that the Commuted Rate Schedule is paid only up to the line haul charges and that the Temporary Storage is paid only for the traveler's actual expense. . . . The amount of $3700 used for storage as an addition to the $6500 [GBL limit] was derived from the GSA Household Goods Automated Routing . . . . Factors used were a weight of 18,000 lbs., 600 miles and 90 days. The amount came to $3669.41 and was rounded to $3700. Discussion Statute provides that under such regulations as the President may prescribe, an agency shall pay from Government funds the expenses of transporting, packing, crating, temporarily storing, draying, and unpacking the household goods of an employee moving to a permanent duty station. The same statute also provides that for moves within the continental United States (CONUS), instead of being paid for the actual expenses of transporting, packing, crating, storing, and unpacking of household goods, an employee shall be reimbursed on a "commuted basis" at rates per 100 pounds that are fixed by zones in the regulations. The statute does, however, permit agencies to pay actual expenses in lieu of the commuted rate if a determination is made that payment of actual expenses is more economical to the Government. 5 U.S.C.  5724(c) (1994). In Executive Order 11609 (July 22, 1971), the President delegated to the Administrator of General Services the authority to issue regulations implementing 5 U.S.C.  5724 and related statutes concerning relocation of Government employees. This delegated authority underlies the Federal Travel Regulation (FTR) issued by the Administrator, 41 CFR chs. 301-304 (1996). The FTR applies to all civilian employees of Government agencies, except for employees of the judicial branch, including civilian employees of the Department of Defense. 41 CFR 301-1.2(a). In resolving this claim, therefore, we will look to the FTR as the primary regulation and to the Joint Travel Regulations (JTR) of the Department of Defense (DOD) as an official agency integration of and supplement to the FTR. Following a scheme similar to that in 5 U.S.C.  5724, the FTR provision on transportation of household goods states that two methods are available. One method is referred to as the "commuted rate system." Under this system the employee assumes the risks associated with transportation of his or her household goods and assumes the burden of making all necessary arrangements for transportation of the goods between points within CONUS. The employee selects and pays the carrier or else transports the goods by noncommercial means and is thereafter reimbursed by the Government in accordance with schedules of commuted rates published by GSA. The other method of transporting goods within CONUS is referred to in the FTR as the "actual expense method." Under this method, the Government assumes full responsibility for transporting the goods which are shipped under a GBL. 41 CFR 302-8.3. The FTR, like the statute it implements, expresses an initial preference for use of the commuted rate system. For individual moves, as opposed to multiple or mass moves where groups of employees are moved from one station to another at approximately the same time, the FTR states: The general policy is that commuted rates shall be used for transportation of employees' household goods when individual transfers are involved . . . . 41 CFR 302-8.3(c)(3). The principal reason for this preference would appear to be that, when the commuted rate system is used, the Government is spared the administrative expense of selecting carriers, arranging for carrier services and for packing and crating, preparing the GBL, paying charges incurred, and processing any loss and damage claims. Instead, the employee bears these burdens and risks. The FTR, like the statute it implements, however, does not preclude an agency from using the actual expense method for an individual move. It states that the actual expense method "may" be used in lieu of the commuted rate system if it is determined that the former would be the more economical. 41 CFR 302-8.3(c)(4)(i). The FTR, however, points out that the cost comparison leading to such a conclusion must be made carefully. It is not enough to compare a simple line haul transportation charge for a specified weight and distance to a corresponding commuted rate. The cost of using the actual expense method must reflect an accurate estimate of (i) the administrative expense of selecting and dealing with carriers and making other arrangements for transporting the employee's household goods, (ii) the expected accessorial and packing charges, and (iii) the actual line haul transportation charge. 41 CFR 302-8(c)(2). In its agency supplement to the FTR, the DOD has chosen to make the FTR's discretionary use of the actual expense method for individual moves mandatory whenever this method is found, upon completion of a cost comparison, to be more economical. The JTR states: A cost comparison will be made between the actual expense (GBL) and commuted rate methods of shipping HHG [household goods]. In the event the estimated cost under one method exceeds the estimated cost under the other method by more than $100, the more economical method will be used. JTR C8001-D.3.c. This same provision of the JTR also provides that if, after it is determined that the actual expense method will be used, an employee still wishes to do a self-move, he or she will be paid only actual expenses not to exceed what the Government would have paid if the goods were transported by GBL. In authorizing the commuted rate for Mr. Fulton but limiting it to an estimated GBL rate, the agency has effectively circumvented the JTR and the regulatory preference for commuted rate in the FTR. Under the JTR, the agency is required to make a realistic cost comparison between actual expense (GBL) and commuted rate methods of shipping HHG. The agency's first error was that it did not properly calculate the actual expenses (GBL rate). The agency merely calculated a simple line haul transportation charge for a specified weight and distance and did nothing more. It did not consider any of the other costs which the JTR requires to be included in the estimate of the actual expenses (GBL rate). Having failed to properly calculate the actual expenses, the agency made what is here its dispositive error. It failed to calculate the commuted rate for the expected move, and, therefore, failed to make a cost comparison of the estimated actual expenses (GBL rate) to the estimated commuted rate. The agency ignored the requirement in the JTR to use the more economical method if the estimated cost of one exceeds the estimated cost of the other by more than $100. Instead, it authorized commuted rate subject to the estimated actual expense of the GBL. The result of the agency's action was to secure for the agency the maximum benefits associated with each of the two methods for transporting HHG while leaving the employee with considerably less than he deserves. By authorizing commuted rate, the agency shifts to the employee total responsibility for his move. By limiting reimbursement to that permissible under the actual cost method, the agency ensures that it will pay the lowest estimated cost--in this case, it further ensured that the agency would pay even less than what it should rightfully pay under this presumably less costly method. Clearly, the agency cannot proceed in this manner. Under the JTR, if one method of transporting an employee's goods is realistically estimated to cost $100 more than the other, then the most economical one should be chosen. If, however, this comparison is not made, as in this case, then the regulatory preference of the FTR for commuted rate must be followed. Jeffrey P. Herman, 97-1 BCA  28,704 (1996); Russel E. Padgett, GSBCA 13821-RELO, 97-1 BCA  28,705 (1996). The agency must, therefore, determine the proper commuted rate and reimburse Mr. Fulton any amounts in excess of those already paid. _______________________ ALLAN H. GOODMAN Board Judge