BNUMBER:  B-270327
DATE:  March 12, 1997
TITLE:  Defense Reutilization and Marketing Service Awards
Ceremonies

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Matter of:Defense Reutilization and Marketing Service Awards 
          Ceremonies

File:     B-270327

Date:     March 12, 1997

DIGEST

Vouchers for luncheon expenses incurred by the Defense Reutilization 
and Marketing Service (DRMS) for employees attending worldwide DRMS 
awards ceremonies may be paid.  We have approved the payment of 
reasonable ceremonial expenses, including food, incurred in connection 
with the presentation of awards under the Government Employees' 
Incentive Awards Act.  65 Comp. Gen. 738 (1986).  The $20 per employee 
expense limitation set by DRMS in connection with presentation of the 
awards is not inconsistent with the Incentive Awards Act or 
implementing regulations.

DECISION

Mr. Richard F. Keevey, Director of the Defense Finance and Accounting 
Service (DFAS), requests an advance decision regarding the propriety 
of paying certain vouchers for the expenses of luncheons provided to 
Defense Reutilization and Marketing Service (DRMS) employees attending 
awards ceremonies recognizing the accomplishments of DRMS employees 
around the world.  For the reasons set forth below, DFAS may pay these 
vouchers.  

BACKGROUND

DRMS is a field activity of the Defense Logistics Agency (DLA), whose 
primary mission is to redistribute or sell surplus personal property 
generated by the Department of Defense.  Prior to fiscal year 1994, 
DRMS consumed substantially more funds than it generated.  For 
example, in fiscal year 1993, DRMS' expenditures exceeded its deposits 
by $91.7 million.  In an effort to reduce DRMS' operating cost, the 
Department of Defense designated DRMS as a "Re-invention Laboratory" 
with a charter to explore new and more business-like practices.  For 
fiscal year 1994, DRMS deposits exceeded its expenditures by $17 
million, a swing of nearly $109 million.  

In recognition of this performance, DRMS granted awards to each of its 
employees, designated each Defense Reutilization and Marketing Office 
(DRMO) as "DRMO of the Year," and authorized each DRMO to host 
luncheons to recognize the accomplishments of its employees.  The 
December 7, 1994 message from the Commander of DRMS announcing the 
"DRMS Celebration Day" states, in part, as follows:

     "Since every person on the world-wide DRMS team deserves 
     recognition for these spectacular achievements, 13 January 1995 
     has been formally designated as 'DRMS Celebration Day.'  On that 
     date, DRMS will host luncheons for all its employees around the 
     world and will provide each employee a specially designed 'Bucks 
     Bunny' and 'Reut Rabbit' t-shirt.  Upon conclusion of these 
     luncheons, I want each of you to enjoy a well deserved four hours 
     of administrative leave."

In addition to the luncheon, tee-shirts, and leave, DRMS paid out over 
$4.1 million in monetary awards agencywide.  Nearly all of DRMS' 
employees received a monetary award.

A December 9, 1994 DRMS message provided guidance for the January 13, 
1995 "Awards Recognition Ceremony."  The message, which cited our 
decision at 65 Comp. Gen. 738 (1986), authorized each DRMS location to 
spend up to $20 per person for accommodations and "incidental 
refreshments" in connection with the award ceremonies.

DFAS described the vouchers submitted to it by DRMS as follows:

     "In almost all cases, the vouchers are annotated as being for 
     refreshments incident to an awards ceremony.  The vouchers 
     generally contain no information concerning the awards ceremony.  
     The receipts supporting the vouchers, however, typically reflect 
     the fact that groups of DRMS employees went to a local 
     restaurant, hotel, or other party establishment for the luncheon 
     that was described by the DRMS Commander in his December letter.  
     In one case, the voucher and supporting receipts is for a 
     luncheon cruise for 135 employees.  In another case, DRMS entered 
     into a contract with a Golf Club to host the luncheon for all the 
     employees of the DRMS headquarters."

DRMS takes the position that the luncheon expenditures were 
appropriate "incidental expenditures" to the presentation of awards, 
and as such are authorized by the Government Employees' Incentive 
Awards Act (GEIAA or the Act), 5 U.S.C.  sec.  4501-4507 (1994).  In its 
submission to us, DFAS notes that "what constitutes refreshments has 
not been clearly defined."  Accordingly, DFAS asks whether it may 
consider "payment of full meals for every employee of the agency . . . 
as a necessary expense under the Incentive Awards Act if done in 
conjunction with the presentation of monetary and nonmonetary awards 
recognition to all the employees of the agency."

DISCUSSION

The GEIAA authorizes an agency head to pay a cash award or grant time 
off to an employee who "by his suggestion, invention, superior 
accomplishment, or other personal effort contributes to the 
efficiency, economy, or other improvement of government operations or 
achieves a significant reduction in paperwork," or "performs a special 
act or service in the public interest in connection with or related to 
his official employment."  5 U.S.C.  sec.  4503.  The Act authorizes an 
agency to use its operating appropriations to cover the "necessary 
expense for the honorary recognition of" the employee or employees 
receiving the awards.  Id.  The Act directs the Office of Personnel 
Management to prescribe regulations and instructions to govern agency 
awards programs.  5 U.S.C.  sec.  4506. 
 
The provision of food or refreshments at an awards ceremony is an 
exception to the general rule prohibiting an agency from feeding its 
employees at taxpayer expense.  65 Comp. Gen. 738 (1986) (buffet 
luncheon incident to Social Security Administration (SSA) annual 
awards ceremony).  As noted in 65 Comp. Gen. 738, the prohibition is 
premised on the notion that since "[f]eeding oneself is a personal 
expense," statutory authority is needed to utilize appropriated funds 
to provide food to employees at their permanent duty station.  Id. at 
739.  We have interpreted the authority in the GEIAA to incur expenses 
necessary to honor the awardees to include refreshments where the 
agency determines that a reception with refreshments would materially 
enhance the effectiveness of its awards ceremony.  5 U.S.C.  sec.  4503; 66 
Comp. Gen. 536 (1987) (reception honoring an IRS employee's 
promotion); 65 Comp. Gen. 738 (1986) (buffet luncheon incident to SSA 
annual awards ceremony); and B-167835, Nov. 18, 1969 (awards banquet 
honoring Apollo 11 astronauts).  

OPM's regulations issued to implement the Act, 5 C.F.R. Part 451, 
purposely leave it up to the agencies to design their award programs 
and make their own award decisions.  In its supplementary information 
accompanying the latest revision to its awards regulations, OPM 
characterized the rules presently in effect as providing "a few basic 
requirements with which agencies can design award programs to meet 
their individual cultures and needs."  60 Federal Register 5544 
(January 27, 1995).  For purposes of our role in investigating and 
settling the use of appropriated funds, we must respect and defer to 
OPM's regulatory decisions and the implicit delegation of authority to 
agencies to make implementing decisions vis-a-vis their incentive 
awards programs so long as such decisions are consistent with the 
essential requirements of the Act.

With the foregoing context in mind, the issue is whether DRMS has 
exceeded the authority Congress has provided agencies in the GEIAA.  
Although the employee coverage provided in connection with the "DRMS 
Celebration Day" is broader than we have typically encountered in our 
prior decisions, unless arbitrary and capricious, differences in 
degree do not invalidate the decisions made.  

With respect to the payment of meals for every employee in connection 
with the presentation of awards recognition to all DRMS employees, the 
record indicates that the actual practice of DRMS installations 
varied.  The sites of the luncheons covered the entire spectrum.  Some 
of the smaller installations purchased sandwiches from local 
delicatessens and held the award ceremony at DRMS installations.  
Others held the awards ceremony at non-federal locations.  One 
installation contracted for a luncheon cruise. Regardless of the 
location, there is no evidence that any of the awards ceremonies 
exceeded the $20 per person authorized by the commander of DRMS. 

Agencies have reasonable discretion to decide how to spend their 
operating appropriations to satisfy their statutory duties, B-235163, 
B-235163.11, February 13, 1996, including how to conduct their awards 
programs.  Cf. 66 Comp. Gen. 536, 537 (1987).  In the context of the 
Act, determining whether an expense is a "necessary" one requires 
measurement "not by reference to an expenditure in a vacuum, but by 
assessing the relationship of the expenditure to the specific 
appropriation to be charged."  65 Comp. Gen. at 740.  For example, 
when President Nixon awarded the Medal of Freedom to the three Apollo 
11 astronauts, the National Aeronautics and Space Administration 
charged its Research and Program Management appropriation for $60,000 
to cover its share of the cost of the banquet.  In commenting on 
NASA's discretion to use appropriated funds for an awards ceremony 
under the Act, we observed that the "act does not establish a dollar 
limitation nor does the legislative history indicate that such a 
limitation was considered."  B-167835, Nov. 18, 1969.  In this case, 
we cannot say that the $20 per person maximum set in the December 9, 
1994 DRMS message is inconsistent either with the dollar value of 
expenditures or the type of ceremonial expenses previously considered 
by this Office.  Nor does it offend any OPM regulatory guidance or 
express provisions of the Act.  Accordingly, the vouchers submitted to 
DFAS may be paid.

/s/Robert P. Murphy
for Comptroller General
of the United States