TITLE:  Department of Defense—Authority to Impose Pecuniary Liability by, B-280764, May 4, 2000
BNUMBER:  B-280764
DATE:  May 4, 2000
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Department of Defense-Authority to Impose Pecuniary Liability by, B-280764,
May 4, 2000

Decision

Matter of: Department of Defense-Authority to Impose Pecuniary Liability by
Regulation

File: B-280764

Date: May 4, 2000

DIGEST

In the absence of statutory authority, the Department of Defense (DOD) may
not impose pecuniary liability on an employee, designated by a certifying
officer as an "accountable official" pursuant to DOD regulation, for an
erroneous payment resulting from the negligent performance of the employee's
duties. We are aware of no statutory authority that would permit such
action. Any decision inconsistent herewith is overruled.

DECISION

A recent Department of Defense (DOD) regulation authorizes DOD certifying
officers to designate persons who approve time and attendance (T&A) records,
receiving officials, and system administrators as "accountable officials."
DOD Financial Management Regulation, DOD 7000.14-R, Vol. 5, Ch. 33, para.
330505 (August 1998). The regulation provides that these officials shall be
pecuniarily liable for erroneous payments resulting from the negligent
performance of their duties. Id. at para. 3302.

Apparently in response to this regulation, the Chief, Fiscal Management
Division and Administrative Support, Fort Sam Houston, requests an advance
decision pursuant to 31 U.S.C. sect. 3529. In his request letter, he poses three
questions: (1) Is the person who approves the correctness of an individual
employee's T&A record pecuniarily liable for an overpayment made as a result
of erroneous data contained in the record? (2) Is the person who approves
erroneous data in documents supporting a payment voucher, such as a
receiving report or a vendor invoice, pecuniarily liable for improper
payments resulting from a certifying officer's reliance on that approval?
and (3) Is the determination of liability affected by the fact that an
automated system has processed the approved data without the source
documents being available to the certifying officer?

For purposes of this decision, we have consolidated Fort Sam Houston's three
questions into what we think is the one overarching issue. In our opinion,
the issue is whether an agency, in the absence of statutory authority, may
impose pecuniary liability on government employees for the negligent
performance of their duties, as DOD has attempted to do in its regulation.
For the reasons explained below, we think the answer to that question is
"no." We are aware of no statutory authority that would allow DOD to impose
pecuniary liability on designated accountable officials.

BACKGROUND

Accountability for public funds rests primarily, although not exclusively,
with certifying officers. 31 U.S.C. sect. 3528. Certifying officers are
responsible for preparing payment vouchers and for the information contained
in those vouchers. 31 U.S.C.

sect. 3528 (a)(1), (2). Certifying officers also are responsible for the
legality of proposed payments, and are liable for the amount of illegal or
improper payments resulting from their certifications. 31 U.S.C. sect. 3528
(a)(3), (4). Specifically, a certifying officer's pecuniary liability
extends to any payment that (1) is illegal, improper, or incorrect because
of an inaccurate or misleading certificate; (2) is prohibited by

law; or (3) does not represent a legal obligation under the appropriation
involved.

31 U.S.C. sect. 3528 (a)(4). Agency officials who execute approving functions of
the sort that Fort Sam Houston raises here are not certifying officers under
31 U.S.C. sect. 3528, and incur no pecuniary liability under that statute in the
execution of such functions. See, e.g., 65 Comp. Gen. 19, 20-21 (1985);
B-241856.2, Sept. 23, 1992; B-197109,

Mar. 24, 1980.

A disbursing officer is also by statute an accountable officer. 31 U.S.C. sect.
3325. The functions of a disbursing officer are largely self-defining-to
disburse public funds. By statute, a disbursing officer shall only disburse
funds in conformity with a certified voucher. Id. A disbursing officer shall
examine a payment voucher if necessary to decide if it is in proper form,
certified, and computed correctly. Id. Other than for the accuracy of the
computation, the disbursing official is accountable for the funds in his
possession and for their disbursement in conformity with duly certified
vouchers. 31 U.S.C. sect.sect. 3325, 3527. See also 10 U.S.C. sect. 2773 (designation of
deputy disbursing officer as an accountable official).

Fort Sam Houston officials identified several circumstances in which
certifying and disbursing officers may make improper payments as a result of
erroneous supporting documents. For example, neither a certifying nor a
disbursing officer reviews and approves an individual's T&A record to attest
to the accuracy of the data noted therein; yet, they use that data to
calculate, authorize, and make individual biweekly salary payments. Fort Sam
Houston officials explain that designated timekeepers routinely enter
individual employees' T&A data into a DOD system called the Defense Civilian
Personnel System based on pre-approved work schedules and leave and overtime
requests. Each pay period, before the data are "posted" and available to the
payroll offices and disbursing officers, the supervisors responsible for
ensuring the accuracy of T&A data are provided printouts of the data to be
posted and asked to sign the following statement on the printout,
"certifying" the accuracy of the data:

"All hours have been reviewed and are certified correct for the reporting
period. All premium hours have been approved and worked according to the
appropriate laws and regulations."

In other situations, certifying and disbursing officers rely on receiving
reports and vendor invoices, or on data processed and submitted to them
through automated systems.

A recent DOD regulation has imposed pecuniary liability on officials whom it
refers to as "accountable officials" for erroneous payments resulting from
information that they "negligently provide" certifying officers. DOD
7000.14-R, para. 3307 (1998). For purposes of the regulation, DOD defines
"accountable officials" as "DOD military and civilian personnel, who are
designated in writing and not otherwise accountable under applicable law,
who provide source information, data, or service (such as a receiving
official, cardholder, and an automated information system administrator) to
a certifying or disbursing officer in support of the payment process." DOD
7000.14-R, para. 331001 (emphasis added). Personnel are designated
accountable officials by the certifying officer whose certifications are
supported by these personnel. Id. at para. 330505.

DISCUSSION

The Chief of Fort Sam Houston's Fiscal Management Division asks whether
"accountable officials" who "certify," or attest to the accuracy of, data
ultimately used by certifying and disbursing officers to authorize and make
payments are personally liable in the same manner as authorized certifying
officers if errors in that data result in the Army making an erroneous
payment. In our opinion, absent statutory authority, an agency may not
administratively impose pecuniary liability on federal employees for the
negligent performance of their duties. Since we are aware of no statutory
authority in DOD to support this extension of pecuniary liability to
"accountable officials," we would not view such officials as personally
liable for any losses that result from the negligent performance of their
duties.

It is, we think, an unassailable proposition that the federal employment
relationship is primarily governed by statute, not by contract or by common
law master-servant concepts. Shaw v. United States, 640 F.2d 1254, 1260 (Ct.
Cl. 1981); Lee v. United States, 41 Fed. Cl. 36 (1998). Certainly, where a
federal employee holds his position by virtue of appointment, any claims of
entitlement to pay and allowances derive from applicable statutes and
regulations, not from a claimed contract of employment. See Army & Air Force
Exchange Service v. Sheehan, 456 U.S. 728 (1982)(no Tucker Act jurisdiction
over employee's breach of contract claim for wrongful discharge); United
States v. Hopkins, 427 U.S. 123 (1976)(no Tucker Act jurisdiction over Army
employee's claim for breach of employment contract); Chu v. United States,
773 F. 2d 1226, 1229 (Fed. Cir. 1985); Zucker v. United States, 758 F. 2d
637, 640 (Fed. Cir. 1985); Connolly v. United States, 554 F. Supp. 1250,
1253 (Cl. Ct. 1982).

This proposition is equally true where the United States seeks to discharge,
discipline or penalize its employees. In United States v. Gilman, for
example, the United States had been held liable under the Federal Tort
Claims Act for injuries caused by the negligent operation of a government
automobile. 347 U.S. 507 (1954). The United States sought to recover the
amount of its liability from its negligent employee, grounding its right of
recovery not on federal statute or regulations, but on an employer's common
law right of indemnity against an employee whose negligent conduct resulted
in the employer's liability. The Supreme Court refused to create a new form
of liability for government employees, deferring instead to Congress to
balance the personnel and fiscal policy issues presented by the government's
claimed right of indemnity. The Court explicitly recognized that Congress
had dealt with "a myriad of problems" presented by "the relations between
the United States and its employees," including "[t]enure, retirement,
discharge, veterans' preferences, the responsibility of the United States to
some employees for negligent acts of other employees." Id. at 509. The Court
characterized "[t]he right of an employer to sue [for indemnity as] a form
of discipline," id., and pointed out that Congress had not taken any
position on the matter.

"Here a complex of relations between federal agencies and their staffs is
involved. Moreover, the claim now asserted, though the product of a law
Congress passed, is a matter on which Congress has not taken a position. It
presents questions of policy on which Congress has not spoken. The selection
of that policy which is most advantageous to the whole involves a host of
considerations that must be weighed and appraised. That function is more
appropriately for those who write the laws, rather than those who interpret
them." Id. at 512--513. [1]

As one court stated,

"The holding and rationale of Gilman are that a court should not interpret a
statute relating to federal employer-employee relations so as to imply
regulation of an aspect of that relationship where Congress has been silent
on the subject, and this is so because regulation of that relationship
involves complex policy questions more properly the province of the Congress
than the courts." Marion v. United States,

214 F. Supp 320, 323 (D.Md. 1963)

The Court's decision in Gilman is not an isolated holding. The Court
employed much the same reasoning in United States v. Standard Oil Co., 332
U.S. 301 (1947). There the government tried to recover for the loss of a
soldier's services and its medical expenses in treating a soldier injured as
a result of a traffic accident involving a Standard Oil truck. Like in
Gilman, the government's claim had strong common law roots, but, like in
Gilman, the Court declined "to create a new substantive liability without
legislative aid and as at common law." Id. at 314. The government's reliance
on principles developed at common law to adjust the rights and duties
between private parties is misplaced, said the Court, because "the issue
comes down in the final consequence to a question of federal fiscal policy,"
and "[w]hatever the merits of the policy [sought to be established by the
government], its conversion into law is a proper subject for congressional
action." [2] Id. at 314. See also McCullough v. Seamans, 345 F. Supp. 511
(E.D. Cal. 1972) holding that Air Force Academy graduates discharged as
conscientious objectors before completing active duty had no common law
contractual liability to reimburse the Air Force for the cost of their
education. "Whether or not the United States should recoup its loss,
however, is essentially a question of fiscal policy far too involved for
simple contract principles to settle." Id. at 513.

Similarly, the Court has refused "to authorize a new nonstatutory damages
remedy for federal employees." Bush v. Lucas, 462 U.S.367, 368 (1983).
Petitioner Bush, a National Aeronautics and Space Administration (NASA)
employee, claimed that NASA had demoted him for making public statements to
news media critical of NASA's George C. Marshall Space Flight Center. Bush
argued that the demotion violated his First Amendment rights, and sought to
recover damages. The Court concluded that "[b]ecause such claims arise out
of an employment relationship that is governed by comprehensive procedural
and substantive provisions giving meaningful remedies against the United
States, . . . it would be inappropriate for us to supplement that regulatory
scheme with a new judicial remedy." Id. The question, according to the
Court, "is whether an elaborate remedial system that has been constructed
step by step, with careful attention to conflicting policy considerations,
should be augmented by the creation of a new judicial remedy . . . ." Id. at
388. The Court declined to create a remedy, "because we are convinced that
Congress is in a better position to decide whether or not the public
interest would be served by creating it." Id. at 390.

Here, as in the cases noted above, Congress has not spoken to the issue of
the liability of government employees who provide information to certifying
officers that they rely on when performing their statutory function. [3] Yet
Congress has clearly legislated in detail on many features of the certifying
and disbursing function as well as the government's employer-employee
relationship. With respect to the certifying and disbursing function,
Congress has specifically provided for the personal pecuniary liability of
certifying and disbursing officers, but, significantly, has not extended
liability beyond these officers to those governmental employees whose work
supports these functions. [4] Pecuniary liability for negligent conduct,
administratively imposed, is no less a penalty than would be an employee's
judicially created obligation to indemnify the government for losses
resulting from his negligent conduct. As noted above, the Supreme Court
counseled in Gilman, Standard Oil Co. and Bush v. Lucas that these issues
are for Congress to resolve. We think the same holds true for administrative
extensions of personal liability beyond the existing statutory parameters.

We found no authority that would permit DOD to impose pecuniary liability on
those employees whom the DOD regulations identify as "accountable
officials," and DOD has not asserted any. [5] Indeed, in the regulation
itself, DOD describes as potential accountable officials those who are "not
otherwise accountable under applicable law." DOD 7000.14-R, para. 331001.
Consequently, absent a statutory basis, DOD, by regulation, may not impose
liability on those officials. Of course, DOD may respond to negligent
performance of assigned duties either through authorized disciplinary
actions or its performance appraisal process.

Over the years our Office has taken the position in a number of different
contexts that agencies may not hold employees liable for losses caused the
government as a result of errors in judgment or neglect of duty in the
absence of administrative regulations. See, e.g., 52 Comp. Gen. 964, 967
(1973); B-266245, Oct. 24, 1996;

B-194782, Aug. 13, 1979. On one occasion, we concluded that an agency solely
by regulation may establish pecuniary liability for employees supervising a
certifying and disbursing process. 72 Comp. Gen. 49 (1992). This conclusion
was repeated in passing or in dicta in some other decisions. See e.g.,
B-241856, Sept. 23, 1992. Regardless of the 1992 decision, in light of the
Supreme Court decisions discussed above, we believe that an agency may
impose pecuniary liability only with a statutory basis. Accordingly, we will
no longer accept our earlier caselaw in this regard as precedent and any
decision inconsistent herewith is overruled.

Comptroller General
of the United States

Notes

1. In Burks v. United States, 116 F. Supp. 337 (S.D. Tex. 1953), the
district court permitted the United States to recover from its negligent
employee the amount of damages that Burks had recovered from the United
States under the Federal Tort Claims Act. The Supreme Court's decision a
year later in Gilman implicitly overruled the Burks decision.

2. Congress responded to the Court's decision by enacting the Federal
Medical Care Recovery Act, 42 U.S.C. sect. 2651–2653.

3. We do not consider cases such as United States v. Tingey, 30 U.S. 115,
129 (1831) and Moses v. United States, 166 U.S. 571, 585-591 (1897), as
relevant. In both Tingey and Moses, the Supreme Court recognized that the
United States, acting through the proper officers of the government, had a
right to obtain a bond from disbursing officers intrusted with public funds
to secure the faithful performance of the duties of such office even if the
bonds are not statutorily required. Id. In Tingey, the bond was void because
the Navy had required the disbursing officer to give a bond, upon the peril
of losing his office, containing conditions beyond those prescribed by the
statute requiring the bond. In neither Tingey nor Moses did the Court create
a new right; in both cases, the Court addressed only the scope of the
government's right to require a bond to secure the disbursing officer's
existing liability to faithfully expend and honestly account for all public
money in his possession.

4. Congress has recognized pecuniary liability in other circumstances. For
example, Congress has authorized the Secretary of Air Force to prescribe
regulations establishing pecuniary liability for loss, spoilage,
destruction, or damage to property under the control of the Air Force. 10
U.S.C. sect.sect. 9832, 9835 (b). Relying on this authority, we concluded that the
Air Force, acting pursuant to property accountability regulations, could
hold employees pecuniarily liable for loss of 298 pairs of sunglasses.
B-192609, Sep. 18, 1978. See also 10 U.S.C. sect. 2775 (liability of service
members assigned to military housing).

5. The statutes noted earlier explicitly impose pecuniary liability on
federal employees. See, e.g., 31 U.S.C. sect. 3528(a)(4); 10 U.S.C. sect.sect. 9832,
9835(b); 10 U.S.C. sect. 2773. We need not decide here what degree of statutory
specificity is needed to support regulations imposing pecuniary liability.
Cf. Snepp v. United States, 444 U.S. 507 (1980).