Board of Contract Appeals General Services Administration Washington, D.C. 20405 __________________ July 13, 1999 __________________ GSBCA 14898-RELO In the Matter of DOUGLAS J. PALMERI Douglas J. Palmeri, Fairfax, VA, Claimant. Douglas M. Browning, Assistant Commissioner, Office of International Affairs, United States Customs Service, Washington, DC, appearing for Department of the Treasury. HYATT, Board Judge. Claimant, Douglas J. Palmeri, a computer specialist, was hired by the Customs Service in Saudi Arabia. At the time of his hire, Mr. Palmeri was working in Saudi Arabia for a commercial contractor and was scheduled to be relocated to the United States by his private sector employer. Rather than returning to the United States and then relocating back to Saudi Arabia, claimant simply remained in Riyadh. He declared Miami, Florida as his home of record. Six years later he accepted a transfer back to the United States to the Washington, D.C. area, expecting that part of his relocation package would include reimbursement of real estate expenses. When he applied for this benefit, however, he was told by the agency's accounting services division in Indianapolis, Indiana that there was no authority to reimburse real estate expenses in his circumstances. His office within the Customs Service has asked the Board to review this determination and, if possible, overturn the Treasury Department decision that claimant is not eligible for reimbursement of real estate expenses. For the reasons stated herein, we conclude that the accounting services division is correct and that there is no authority to reimburse the expenses in issue. Background In 1984, Mr. Palmeri, who then resided in Illinois, was hired by Sysorex International to work on a contract basis in Riyadh, Saudi Arabia. Sysorex relocated claimant and his family to Saudi Arabia, where he worked for the next eight years for various private sector companies. In 1992, claimant applied for a position with the Customs Service, also in Riyadh, and was selected. He joined the Customs Service in June 1992 at the completion of his contract with his last private employer. He was scheduled at that time to be relocated to the United States by his private sector employer, but instead remained in Riyadh with his family to avoid the unnecessary relocation expenses associated with returning to the United States and then relocating back to Saudi Arabia. At the time of his hire by the Customs Service, Mr. Palmeri identified Miami, Florida as his home of record, and he was scheduled to return there at the conclusion of his tour. Prior to his return, he was selected for a position as a computer specialist in the Customs Service Office of International Affairs in Washington, D.C. Accordingly, the travel orders issued at the conclusion of claimant's tour in Saudi Arabia relocated him to the new duty station in Washington, D.C., rather than to Miami, Florida. These orders authorized reimbursement of real estate expenses incurred in the purchase of a home in the Washington, D.C. area. Mr. Palmeri has submitted a claim for such expenses in the amount of $4539.50. The Customs Service's Accounting Services Division concluded that the agency had no authority to reimburse real estate expenses in these circumstances. Both Mr. Palmeri and the agency's Office of International Affairs have objected to this decision and requested the Board's review. The Office of International Affairs argues in its submission that the agency saved some $30,000 in costs of relocating Mr. Palmeri and his family from the United States back to Saudi Arabia. The decision to leave Mr. Palmeri in Saudi Arabia, rather than to have his private sector employer return him to the United States to be hired domestically and then relocated to Saudi Arabia, was thus cost effective. The Office of International Affairs thus urges that the accounting service's decision is unjust. Discussion Under the applicable statute and the implementing provision of the Federal Travel Regulation (FTR), reimbursement of real estate expenses incurred incident to a permanent change of station from an overseas location is authorized when a federal employee was stationed first in the United States or other nonforeign area, transferred overseas in the interest of the Government, and then returned to a different nonforeign area or location in the United States. 5 U.S.C. 5724a(d)(2) (Supp. III 1997); 41 CFR 302-6.1(g) (1998); Marcia A. DeVine, GSBCA 14878-RELO (July 12, 1999); Theresa F. Zuber, GSBCA 13851-RELO, 97-1 BCA 28,878.[foot #] 1 Because he was initially hired by the Federal Government in an overseas location, claimant is not covered by these provisions and is not eligible to be reimbursed for the expenses of purchasing a home upon being transferred by the Customs Service to the United States. The language of the statute is not sufficiently broad to permit compensation for real estate expenses when an employee was hired overseas and subsequently returned to the United States. Mr. Palmeri argues that since his designated home of record was Miami, Florida, this should be treated as his nonforeign home for purposes of his hire and that the relocation from Saudi Arabia to the Washington, D.C. area should thus be regarded as a transfer to a different non-foreign area than the one he was located at when hired by Customs. The difficulty with this analysis is that both the statute and the regulation contemplate that the employee be transferred initially from an official duty station located in the United States to an overseas location. Mr. Palmeri was not previously employed by the Customs Service in Miami or at any other nonforeign location. We understand the logic of the arguments made by the Office of International Affairs and by claimant. Certainly, hiring Mr. Palmeri in Saudi Arabia, and avoiding the expense of relocating an employee from the United States to an overseas post of duty, was cost effective. Nonetheless, there is no statutory or regulatory authority that would permit either the agency or the Board to authorize reimbursement of the expenses claimed. A change in the relevant statute would be required for the Government to have the authority to pay these expenses. __________________________________ CATHERINE B. HYATT Board Judge ----------- FOOTNOTE BEGINS --------- [foot #] 1 As we explained in Zuber, at one time real estate _____ expenses were only reimbursed for employees who transferred from an official duty station in the United States to another duty station in the United States. Employees who were transferred overseas for a tour of duty were generally returned to the old duty station and were not authorized to recoup expenses associated with selling or buying a residence. In 1987, the statute was amended to permit reimbursement of such expenses where an employee was returned to a duty station in the United States other than the one from which the employee had been transferred. 97-1 BCA at 144,017.