Board of Contract Appeals General Services Administration Washington, D.C. 20405 December 9, 1999 GSBCA 14935-RELO In the Matter of SYNITA REVELS Synita Revels, Frankfort, NY, Claimant. Judy Hughes, Travel Policy, and James L. Swift, Associate General Counsel, Defense Finance and Accounting Service, Columbus Center, Columbus, OH, appearing for Department of Defense. DANIELS, Board Judge (Chairman). Ms. Synita Revels was transferred from the United States Military Academy in West Point, New York, to the Defense Finance and Accounting Service (DFAS) in Rome, New York, in March 1997. Although Ms. Revels' travel orders authorized reimbursement of real estate transaction expenses she incurred in connection with this move, and in August 1997 she submitted a voucher for payment of those expenses, DFAS did not reimburse her for the costs at that time. In March 1999, Ms. Revels asked us to direct DFAS to make good the promise contained in the orders. In response to the filing of this case, the agency requested information in support of the claim. Once the employee provided the information, the agency paid the amount in dispute. Ms. Revels contends that this payment is insufficient, however, because it was made so long after her voucher was submitted. She maintains that she is entitled to not only the amount in dispute, but also interest on that amount. DFAS asserts, to the contrary, that no authority exists for the payment of interest on the reimbursement of real estate transaction expenses.[foot #] 1 ----------- FOOTNOTE BEGINS --------- [foot #] 1 The claimant's position is presented by her union representative. In a letter written while Ms. Revels' entitlement to real estate transaction expenses was in dispute, the representative mentioned a collective bargaining agreement between the union and the agency. Ordinarily, if a claim (continued...) ----------- FOOTNOTE ENDS ----------- On three previous occasions, claimants have asked us to include interest in our settlement of claims. On each of these occasions, we declined the invitation, stating that we knew of no authority which would permit us to award interest on delayed reimbursements of travel or relocation expenses, and the claimant had identified none. Sabah A. Issa, GSBCA 14140-TRAV-R, 98-2 BCA 29,761; Jerry Jolly, GSBCA 14158-RELO, 98-1 BCA 29,518 (1997); Michael A. Dilligan, GSBCA 13644-TRAV, 97-2 BCA 29,045. In one of these cases, we cited a decision of the General ----------- FOOTNOTE BEGINS --------- [foot #] 1 (...continued) concerning travel or relocation expenses of a Government employee is subject to resolution under the terms of a grievance procedure mandated within such an agreement, we lack authority to settle the claim. See, e.g., Gail Favela, GSBCA 14727-TRAV, 99-2 BCA ___ ____ ___________ 30,432; Bernadette Hastak, GSBCA 13938-TRAV, et al., 97-2 BCA _________________ 29,092. We asked the claimant and the agency whether this rule applied to the claim in this case. Neither party ever addressed this matter. Instead, they settled the real estate expense issue themselves and proceeded to disagree about, and to brief, Ms. Revels' entitlement to interest on the agreed-upon amount. The parties have not advised us as to the scope of the collective bargaining agreement involved here. Even if the issue initially presented would have been required to be submitted for resolution under the terms of that agreement's grievance procedure, it is far from clear that the request for a ruling on the interest question alone would be similarly subject to resolution. Whether the claim for interest may be segregated from the underlying claim for relocation benefits and, if so, whether such a claim must be made through the grievance procedure contained in a collective bargaining agreement are issues that are difficult to resolve. See 1 Charles J. Morris, et al. ___ (eds.), The Developing Labor Law 863-69 (ABA Sec. on Labor and _________________________ Employment Law & Bureau of Nat'l Affairs, Inc. 2d ed. 1983) (parties cannot agree through collective bargaining agreement to take unlawful action); 48 Am. Jur. 2d, Labor & Labor Relations ___________ 410 (1994) (matters specifically governed by federal statute not susceptible to federal employee collective bargaining agreement). The question now posed by the claimant, however, has been extensively briefed and is readily susceptible of resolution. In the interest of judicial economy, and in the belief that our analysis will be helpful not only to the parties but also to other readers of this opinion, we proceed to address this question. We could not take this approach if we were acting in our quasi-judicial capacity, 41 U.S.C. 607(d) (1994), but have the ability to do so here because we are settling a claim administratively, 31 U.S.C. 3702(a)(3) (Supp. III 1997). Cf. ___ Virgin Islands Housing Authority v. Coastal General Construction ----------- FOOTNOTE BEGINS --------- Services Corp., 27 F.3d 911, 916 (3d Cir. 1994) (resolving cases ______________ in interest of judicial economy, even where jurisdiction is not clearly established, can be beneficial, though it is not permissible in federal courts). ----------- FOOTNOTE ENDS ----------- Accounting Office (GAO), David W. Eubank, B-219526 (May 25, 1988), which came to the same conclusion. Eubank is the only case (to the best of our knowledge) in which a claimant has provided a theory to GAO or us on the basis of which interest could be awarded. There, the claimant suggested that the Prompt Payment Act, 31 U.S.C. 3901-3906 (Supp. III 1985), should apply to his situation. That Act requires, under certain circumstances, payment of interest to vendors of goods and services to the Government. GAO rejected the claimant's theory on the ground that the Prompt Payment Act applies to acquisitions from "business concerns," and a federal employee is not such an entity.[foot #] 2 The brief presented on behalf of Ms. Revels makes a far more ingenious argument than the one put forward by the claimant in Eubank. This argument is keyed to the Back Pay Act, 5 U.S.C. 5596 (1994).[foot #] 3 The Back Pay Act provides that amounts payable under one portion of that law "shall be payable with interest." Id. 5596(b)(2)(A). The portion in question states: An employee of an agency who, on the basis of a timely appeal or an administrative determination (including a decision relating to an unfair labor practice or a ----------- FOOTNOTE BEGINS --------- [foot #] 2 GAO could also have distinguished Prompt Payment Act beneficiaries from Government employees on the ground that the former group's relationship with the Government is founded on contract, while the latter group's relationship is not. The courts have consistently held that there is a "well-established principle that, absent specific legislation, federal employees derive the benefits and emoluments of their positions from appointment rather than from any contractual or quasi-contractual relationship with the government." Chu v. United States, 773 ______________________ F.2d 1226, 1229 (Fed. Cir. 1985). In other words, "public employment does not . . . give rise to a contractual relationship in the conventional sense." Shaw v. United States, 640 F.2d ______________________ 1254, 1260 (Ct. Cl. 1981) (quoting Urbina v. United States, 428 ________________________ F.2d 1280, 1284 (Ct. Cl. 1970)); see also Hamlet v. United _________ _________________ States, 63 F.3d 1097, 1101 (Fed. Cir. 1995) (quoting Chu); Chin ______ ___ ____ v. United States, 890 F.2d 1143, 1146 (Fed. Cir. 1989) (same); _________________ Zucker v. United States, 758 F.2d 637, 640 (Fed. Cir.), cert. ________________________ _____ denied, 474 U.S. 842 (1985); United States v. Larionoff, 431 U.S. ______ __________________________ 864, 869 (1977); Crenshaw v. United States, 134 U.S. 99 (1890). _________________________ [foot #] 3 This law has been amended twice since 1994. Pub. L. No. 105-275, 112 Stat. 2452, 2454, 308(a), 309(a) (1998); Pub. L. No. 105-55, 111 Stat. 1199, 310(a) (1997). Nevertheless, we cite to the earlier version because it was the one in effect at the time Ms. Revels' claim accrued. See ___ American Permac, Inc. v. United States, 191 F.3d 1380 (Fed. Cir. _______________________________________ 1999). The amendments do not alter the law in any way which would affect this case. ----------- FOOTNOTE ENDS ----------- grievance) is found by appropriate authority under applicable law, rule, regulation, or collective bargaining agreement, to have been affected by an unjustified or unwarranted personnel action which has resulted in the withdrawal or reduction of all or part of the pay, allowances, or differentials of the employee -- is entitled, on correction of the personnel action, to receive for the period for which the personnel action was in effect -- an amount equal to all or any part of the pay, allowances, or differentials, as applicable which the employee normally would have earned or received during the period if the personnel action had not occurred. Id. 5596(b)(1)(A)(i). Under the Act, the term "personnel action" "includes the omission or failure to take an action or confer a benefit." Id. 5596(b)(5). The Back Pay Act provides that regulations implementing that law will be prescribed by the Office of Personnel Management. 5 U.S.C. 5596(c). Regulations issued by that Office define the term "unjustified or unwarranted personnel action" to mean -- an act of commission or an act of omission (i.e., failure to take an action or confer a benefit) that an appropriate authority subsequently determines, on the basis of substantive or procedural defects, to have been unjustified or unwarranted under applicable law, Executive order, rule, regulation, or mandatory personnel policy established by an agency or through a collective bargaining agreement. Such actions include personnel actions (alone or in combination). 5 CFR 550.803 (1997). The regulations define the term "pay, allowances, and differentials" to mean "monetary and employment benefits to which an employee is entitled by statute or regulation by virtue of the performance of a Federal function." Id.[foot #] 4 ----------- FOOTNOTE BEGINS --------- [foot #] 4 The brief cites to similar provisions in the Federal Personnel Manual (Supp. 990-2, Inst. 73 (Apr. 20, 1984), S8-3), rather than the regulations. We mention the provisions in the regulation, rather than those in the manual, because the manual was retired by the Office of Personnel Management in 1995 and consequently was not good law at the time Ms. Revels' claim accrued. See Federal Personnel Manual Sunset Notice (available ___ on Internet at http://www.opm.gov/rif/html/fpm.htm). ----------- FOOTNOTE ENDS ----------- The claimant's brief, relying on these provisions of statute and regulation, makes the following argument: The claimant was affected by an unjustified or unwarranted personnel action -- the failure of the agency to make prompt reimbursement of real estate transaction expenses she incurred pursuant to an agency-directed permanent change of station. This personnel action was unjustified or unwarranted because the reimbursement is mandated by statute and regulation.[foot #] 5 The action resulted in the withdrawal of monetary benefits to which the claimant was entitled by law by virtue of her performing a federal function -- transferring from one duty station to another on orders from her agency. The withdrawal therefore affected the c l a i m a n t ' s " p a y , a l l o w a n c e s , a n d differentials."[foot #] 6 An authorized official of the agency has determined that the failure to reimburse earlier was unjustified or unwarranted. The claimant, now that the erroneous personnel action has been corrected, is entitled to receive the amount of reimbursement she would have received if the action had not occurred. Because the Back Pay Act provides that this sort of payment should be made with interest, interest is due here. Although this argument is clever and may technically fit within a strained reading of the statutes and regulations it references, we conclude, based on our reading of court decisions, that the argument cannot prevail. We begin with the Supreme Court's decision in Library of Congress v. Shaw, 478 U.S. 310 (1986). There, the Court held that "interest cannot be recovered in a suit against the Government in the absence of an express waiver of sovereign immunity from an award of interest." Id. at 311. The Court explained, "In analyzing whether Congress has waived the immunity ----------- FOOTNOTE BEGINS --------- [foot #] 5 5 U.S.C. 5724a(d)(1) (Supp. III 1997) provides, "An agency shall pay to or on behalf of an employee who transfers in the interest of the Government, expenses of the sale of the residence (or the settlement of an unexpired lease) of the employee at the old official station and purchase of a residence at the new official station that are required to be paid by the employee, when the old and new official stations are located within the United States." The Federal Travel Regulation, at 41 CFR pt. 302-6 (1996), and the Department of Defense's Joint Travel Regulations, at ch. 14, implement this statute. [foot #] 6 The brief-writer has advanced two arguments as to why reimbursement of a transferred employee's real estate transaction expenses constitute "pay, allowances, or differentials." The first is the one stated in the body of this paragraph, made with reference to the regulatory definition of the term. The second is that such reimbursement is "included in gross income (as compensation for services)" for purposes of the Internal Revenue Code. See 26 U.S.C. 61(a)(1), 82 (1994); 26 ___ CFR 1.82-1(a)(4) (1997). ----------- FOOTNOTE ENDS ----------- of the United States, we must construe waivers strictly in favor of the sovereign and not enlarge the waiver beyond what the language requires. The no-interest rule provides an added gloss of strictness upon these usual rules." Id. at 318 (citations omitted). The Court then quoted the following passage from United States v. N.Y. Rayon Importing Co., 329 U.S. 654, 659 (1947): "[T]here can be no consent by implication or by use of ambiguous language. Nor can an intent on the part of the framers of a statute or contract to permit the recovery of interest suffice where the intent is not translated into affirmative statutory or contractual terms. The consent necessary to waive the traditional immunity must be express, and it must be strictly construed." 478 U.S. at 318. Elsewhere in the opinion, the Court made these statements: "[I]nterest cannot be recovered unless the award of interest was affirmatively and separately contemplated by Congress." Id. at 316. "[C]ongressional silence does not permit us to read the provision as the requisite waiver of the Government's immunity with respect to interest." Id. at 319. "The Court consistently has refused to impute an intent to waive immunity from interest into the ambiguous use of a particular word or phrase in a statute." Id. at 320. The claimant's greatest difficulty in attempting to squeeze a relocating employee's real estate transaction expense reimbursement within the confines of the Back Pay Act is persuading that Congress expressly and affirmatively -- and not by silence, implication, or the ambiguous use of a particular phrase -- included this sort of reimbursement within the term "pay, allowances, or differentials." We do not think Congress did this. The Supreme Court, in United States v. Testan, 424 U.S. 392 (1975), stated that "the Back Pay Act, as its words so clearly indicate, was intended to grant a monetary cause of action only to those who were subjected to a reduction in their duly appointed emoluments or position." Id. at 407. The Court of Appeals for the District of Columbia, minding Shaw's admonition to construe narrowly waivers of sovereign immunity, similarly viewed restrictively the application of the Act to varieties of "emoluments" provided by the Government to its employees. Brown v. Secretary of the Army, 918 F.2d 214 (D.C. Cir. 1990), cert. denied, 502 U.S. 810 (1991); see also Spagnola v. Stockman, 732 F.2d 908, 912 (Fed. Cir. 1984). The Senate Report accompanying the Back Pay Act says that the bill "would consolidate and liberalize existing law." S. Rep. No. 1062, 89th Cong., 2d Sess., reprinted in 1966 U.S.C.C.A.N. 2097. The consolidation applied to laws dealing with separation, suspension, and demotion. 1966 U.S.C.C.A.N. at 2098. The liberalization was to "allow[] credit for pay increases and accumulation of annual leave." Id. at 2097. In either event, the law was supposed to pertain only to "the restoration of an employee to his position after an adverse action against him has been found." Id. Concluding that reimbursement of a relocating employee's expenses results from "the restoration of [that] employee to his position" would be a real stretch, and such stretches are impermissible under the law as explained in Shaw, Testan, and Brown. Other courts have held that reimbursement of a category of expenses so closely allied with relocation benefits that they are covered by the same chapter of the United States Code (5 U.S.C. ch. 57) -- travel costs -- are not encompassed within the Back Pay Act. Hurley v. United States, 624 F.2d 93 (10th Cir. 1980); Morris v. United States, 595 F.2d 591 (Ct. Cl. 1979). No matter how reimbursements of relocation expenses are treated for tax purposes, we cannot find any evidence that Congress made them "pay, allowances, or differentials," as that term is used in the Back Pay Act -- or even that Congress intended these reimbursements to fall within that category.[foot #] 7 The claimant's brief essays two other theories in an attempt to justify payment of interest on the reimbursement in question. Like the principal theory advanced, neither of these is persuasive. The first notion is to equity: The claimant suggests that because 31 U.S.C. 3717 (1994 & Supp. III 1997) directs the head of a Government agency to charge interest on "an outstanding debt on a United States Government claim owed by a person," and the Supreme Court has held that some laws have "reverse consequences" (referencing the treatment by Regents of the University of California v. Bakke, 438 U.S. 265 (1978), of title VI of the Civil Rights Act of 1964), the Government must be required to pay interest on an outstanding debt owed by it to a person. The courts have made clear that recourse to equity is inappropriate in this situation. "Federal sovereign immunity is an area in which lower courts have been admonished to construe waivers ----------- FOOTNOTE BEGINS --------- [foot #] 7 We note in this regard that in 1998 -- after Ms. Revels' claim accrued -- Congress required that whenever an agency fails within thirty days to reimburse an employee who has submitted a proper voucher for allowable travel expenses, the agency must pay a late fee to the employee. Pub. L. No. 105-264, 112 Stat. 2350, 2352, 2(g) (1998). In doing this, the legislature explained that "[t]he purpose of this amendment is to provide some incentive for agencies to reimburse employees in a timely fashion." S. Rep. No. 105-295, at 4 (1998). At least as to travel expenses, this amendment would have been unnecessary if preexisting law (such as the Back Pay Act) provided for the payment of interest on delayed reimbursements. Though relocation benefits are not identical to travel expenses, and thus might possibly be subject to different rules regarding interest payments, the two types of expenditures are, as noted, closely allied. Congress' recent amendment to the travel expense law makes even less tenable the argument that interest on delayed relocation payments was required to be paid at the time Ms. Revels' claim accrued. ----------- FOOTNOTE ENDS ----------- tightly, despite doubts sparked by contemporary conditions and equitable conditions." Brown, 918 F.2d at 219. "[T]he immunity of the United States from liability for interest is not to be waived by policy arguments. . . . Courts lack the power to award interest against the United States on the basis of what they think is or is not sound policy." Shaw, 478 U.S. at 321 (quoting N.Y. Rayon Importing Co., 329 U.S. at 663). As plainly as Congress established a general rule imposing interest on debts owed to the Government, it has not established a general, reciprocal rule. Whether we think a reciprocal rule would be fair or not, it does not exist. The claimant's final argument is founded on a contract theory: The employee signed an agreement to remain in Government service for a minimum period of twelve months after her reassignment (see 5 U.S.C. 5724(i) (1994)), and she fulfilled her part of the bargain; in return, the Government must live up to its obligation, making the employee whole. In support of this thesis, the brief cites Ridenour v. United States, 44 Fed. Cl. 202 (1999). There, the Court of Federal Claims held that an agency suggestion program "is an invitation to submit offers which, if accepted by the agency, entitle the offeror to recognition that may include a cash award determined in accordance with published guidelines. An exchange of this character, occurring under the sponsorship of a formal program that holds out a commitment to award, gives rise to enforceable expectations correctly described as an implied-in-fact contract." Id. at 207. Whatever merits Ridenour may have with regard to agency suggestion programs, that case does not affect the long line of decisions cited in footnote two which hold that employees' benefits and emoluments are not governed by a contractual or quasi-contractual relationship with the Government. We decline to consider any contractual theory of recovery here. Despite the efforts made in the brief presented by the claimant in this case, we still have not heard a convincing argument that interest on delayed payments of relocation benefits is authorized by law. Ms. Revels' claim for interest on the delayed reimbursement made to her by DFAS for the real estate transaction expenses she incurred as a result of her reassignment to Rome, New York, is denied. _________________________ STEPHEN M. DANIELS Board Judge