Board of Contract Appeals General Services Administration Washington, D.C. 20405 April 8, 1999 GSBCA 14914-RELO In the Matter of BEVERLY D. SCOTT Beverly D. Scott, Vista, CA, Claimant. Ronald L. Page, Manager, Management Programs Division Branch, APF-200, Federal Aviation Administration, Washington, DC, appearing for Department of Transportation. DANIELS, Board Judge (Chairman). After the Federal Aviation Administration (FAA) transferred Mr. Beverly D. Scott from California to New York, Mr. Scott and his wife sold the house in which they and their children had been residing in California. The sale was made through a relocation services contractor, and the agency paid the contractor for its services. Later, the FAA learned that shortly after selling this home, the Scotts had purchased a nearby residence, and that Mrs. Scott and the children were living there. The agency demanded that Mr. Scott pay to it the amount it had paid to the contractor. Mr. Scott asks us to review this decision.[foot #] 1 Background The transfer to New York occurred in July 1996. According to Mr. Scott, the family's plan at that time was for Mrs. Scott and the children to remain in California for the 1996-1997 school year and follow him to New York in the summer of 1997. By January 1997, however, Mrs. Scott refused to move. The couple put their house up for sale, and on March 3, they sold it. ----------- FOOTNOTE BEGINS --------- [foot #] 1 The agency also demanded that Mr. Scott repay part of the money it had paid him as temporary quarters subsistence expenses (TQSE). The employee states that he had requested the total amount of TQSE on advice of his supervisors; he has repaid the sum in question and does not challenge the agency's right to it. ----------- FOOTNOTE ENDS ----------- Also on March 3, they agreed to buy the nearby house. They purchased that residence a month later. The new home was twenty- five percent smaller than the old one and its price was twenty- one percent less. From the time that Mrs. Scott and the children left the first house until the couple purchased the second dwelling, the family (excluding Mr. Scott) resided in the latter place, paying rent for the privilege of doing so. Mr. Scott retired from the FAA in December 1998. From the date of his transfer until the date of his retirement, aside from periods when he was on temporary duty assignments and occasions when he visited his family in California, he lived and worked in New York. Discussion Statute provides that agencies are to make certain payments to employees they transfer in the interest of the Government from one official station to another for permanent duty. Among those payments are "[e]xpenses of the sale of the residence . . . of the employee at the old station . . . required to be paid by him when the old and new official stations are located within the United States [or certain other defined geographic areas]." 5 U.S.C. 5724, 5724a(a)(4)(A) (1994).[foot #] 2 Agencies are permitted to enter into contracts with private companies to provide relocation services to transferred employees; those services may include arranging for the purchase of an employee's residence. Id. 5724c. The Federal Travel Regulation (FTR) requires that payments to relocation services companies be made consistent with the limitations and restrictions established elsewhere in that regulation. 41 CFR 302-12.5(b)(2) (1996). The FTR prescribes six conditions which must be met for residence transaction expenses to be payable. Id. 302-6.1. They are: (1) "A permanent change of station is authorized or approved," and the employee has signed an agreement "to remain in the service of the Government for 12 months following the effective date of the transfer, unless separated for reasons beyond his/her control that are acceptable to the agency concerned." Id. 302-6.1(a) (referencing id. 302-1.5(a)). (2) The residence is the one "from which the employee regularly commuted to and from work." Id. 302-6.1(b) (referencing id. 302-1.4(k)). (3) The title to the residence is "in the name of the employee alone, or in the joint names of the employee and ----------- FOOTNOTE BEGINS --------- [foot #] 2 We cite to the version of the statute which was in effect when Mr. Scott was transferred. This provision is now codified at 5 U.S.C. 5724a(d)(1) (Supp. III 1997). ----------- FOOTNOTE ENDS ----------- one or more members of his/her immediate family, or solely in the name of one or more members of his/her immediate family." Id. 302-6.1(c). (4) "The dwelling . . . was . . . the employee's residence at the time he/she was first officially notified by competent authority of his/her transfer to the new official station." Id. 302-6.1(d). (5) The settlement date of the sale is "not later than 2 years after the date that the employee reported for duty at the new official station." Id. 302-6.1(e)(1). (Under certain circumstances, this time limitation may be extended for as much as one additional year. Id. 302-6.1(e)(2).) (6) The expenses were "actually incurred and paid by the employee or a member of the employee's immediate family." Id. 302-6.1(f)(1). The record contains evidence that every one of these conditions was met for the sale of the Scotts' old residence.[foot #] 3 Thus, Mr. Scott is presumptively entitled to the payments which were made on his behalf. The FAA appears to be concerned that the expenses of selling the old residence should not be paid by the Government because the family's move from that home was not incident to Mr. Scott's transfer to New York. The phrase "incident to transfer" does not appear in the statute or regulations relevant to payment for Mr. Scott's real estate transactions.[foot #] 4 Nevertheless, because the statute is "designed to authorize payment of [real estate transaction] expenses 'incident to transfer from the old to the new station,'" George S. Lu, GSBCA 13659-RELO, 97-1 BCA 28,797 (quoting S. Rep. No. 89-1357 (1966), reprinted in 1966 U.S.C.C.A.N. 2564, 2565), we have interpreted the regulation to deny payment when it would be inconsistent with this objective. In Lu, for example, we rejected a claim for expenses which were incurred for a reason other than the agency's transfer of the employee from one duty station to another. The employee was reassigned from Albuquerque to Las Vegas, but his family remained behind in its old ----------- FOOTNOTE BEGINS --------- [foot #] 3 One small exception to this statement: The record does not contain evidence that Mr. Scott signed an agreement to remain in Government service for twelve months following the effective date of his transfer. Even if Mr. Scott did not sign such an agreement, however, he is still eligible for reimbursement of the expenses because he actually remained in service for more than the requisite period of time. [foot #] 4 The phrase "incident to transfer" is used in another portion of the FTR, 41 CFR 302-1.7(a). See Cheryl A. ___ __________ Cadwell, GSBCA 14148-RELO, 97-2 BCA 29,066. _______ ----------- FOOTNOTE ENDS ----------- residence. Several months later, the employee was reassigned back to Albuquerque. He then sold the residence and sought reimbursement of expenses incurred in so doing. We concluded that the expenses were not incurred incident to the transfer. Similarly, where an employee was reassigned to a location where he already owned a house, within three years of having moved away, we denied a claim for the expenses of purchasing a new residence there because the costs were "unnecessary and avoidable" -- incurred for reasons of personal desire, rather than incident to the transfer. D. Larry Fraser, GSBCA 14034-RELO, 97-2 BCA 29,221. We do not think that Mr. Scott's situation is similar to these. He explains that he had to move his family into a smaller and less expensive dwelling as a result of his transfer to New York because he could not afford the cost of maintaining the old residence in California at the same time that he was paying rent in New York. This is sufficient justification for considering the sale incident to the transfer, even though the family did not follow the usual path of moving with the employee to his new duty station.[foot #] 5 Decision The FAA may not require Mr. Scott to repay the sum previously paid to the relocation services contractor. _________________________ STEPHEN M. DANIELS Board Judge ----------- FOOTNOTE BEGINS --------- [foot #] 5 The fact that Mr. Scott ultimately moved back to his family's abode does not invalidate the conclusion that the sale of the old house, and the family's move to a less expensive home, was an economic consequence of the agency's having transferred the employee. But for the transfer, Mr. Scott would not have had to support two residences, and he did so for considerably longer than the requisite twelve months after being sent east.