TITLE: B-305919, Department of Defense Accountable Officials--Local Nationals Abroad, March 27, 2006
BNUMBER: B-305919
DATE: March 27, 2006
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B-305919, Department of Defense Accountable Officials--Local Nationals Abroad, March 27, 2006
Decision
Matter of: Department of Defense Accountable Officials--Local Nationals
Abroad
File: B-305919
Date: March 27, 2006
DIGEST
The Department of Defense may use appropriated funds to employ foreign
local nationals as Departmental Accountable Officials under 10 U.S.C.
sect. 2773a even though foreign local nationals may not be subject to
pecuniary liability under United States law. The Department of Defense
should formulate a written policy addressing the consideration and
circumstances under which local nationals may serve as Departmental
Accountable Officials.
DECISION
A certifying officer at the headquarters of U.S. Army Materiel Command
Europe has requested an advance decision under 31 U.S.C. sect. 3529
regarding the propriety of using appropriated funds to employ foreign
local nationals as Departmental Accountable Officials[1] under 10 U.S.C.
sect. 2773a. E-mail from Jerome J. Markiewicz to U.S. Government
Accountability Office Redbook Queries, June 6, 2005 (Markiewicz e-mail).
The certifying officer's inquiry stems from the fact that under treaties
and other agreements between the United States and foreign governments,
foreign local nationals employed by the United States abroad may not be
subject to United States law that might otherwise pertain to their
employment. One such law is 10 U.S.C. sect. 2773a, which authorizes the
Secretary of Defense to designate civilian employees of the Department of
Defense (DOD) as Departmental Accountable Officials. Employees so
designated are liable for fiscal irregularities in the same manner as
certifying and disbursing officers. 10 U.S.C. sect. 2773a(c)(2).
In light of the possibility that foreign local nationals' employment
abroad might not be subject to section 2773a and the accountability it
imposes, the certifying officer asks whether DOD may use appropriated
funds to employ foreign local nationals as Departmental Accountable
Officials. We conclude that even though foreign local nationals serving as
Departmental Accountable Officials may not be subject to the
accountability normally coupled with such positions, DOD may use
appropriated funds to employ foreign local nationals as Departmental
Accountable Officials abroad. We caution, however, that DOD should craft a
written policy detailing the circumstances, if any, under which local
nationals should be placed in positions of accountability.
BACKGROUND
An accountable officer is any government officer or employee who by reason
of his or her employment is responsible for government funds. B-304233,
Aug. 8, 2005. Accountable officers are strictly liable for fiscal
irregularities associated with the funds for which they are responsible.
62 Comp. Gen. 476, 479-80 (1983). The ranks of accountable officers
include certifying officers, disbursing officers, collecting
officers, and other employees having custody of government funds.[2]
In 2002, Congress authorized the Secretary of Defense to create another
accountable position by adding section 2773a to title 10 of the United
States Code.[3] Bob Stump National Defense Authorization Act for Fiscal
Year 2003, Pub. L. No. 107-314, div. A, title X, sect. 1005(a), 116 Stat.
2458, 2631 (Dec. 2, 2002). Under section 2773a, the Secretary of Defense
may designate those civilian employees of DOD as Departmental Accountable
Officials who provide to DOD certifying officers "information, data, or
services that are directly relied upon by the certifying official in the
certification of vouchers for payment." 10 U.S.C. sect. 2773a(b)(1). DOD's
Financial Management Regulation (FMR) lists functions that are to be
performed by Departmental Accountable Officials. Department of Defense
Financial Management Regulation 7000.14-R, vol. 5, ch. 33, Departmental
Accountable Officials, Certifying Officers and Review Officials (April
2005). These include execution of purchase card programs, authorization of
travel orders, and preparation of contract modifications. Id. The FMR
notes that the list of functions is not exhaustive. Id.
The Secretary of Defense may not designate as Departmental Accountable
Officials individuals who are otherwise accountable, such as certifying or
disbursing officers. 10 U.S.C. sect. 2773a(b)(2). Departmental Accountable
Officials are pecuniarily liable for illegal, improper, or incorrect
payments resulting from their fault or negligence. 10 U.S.C. sect.
2773a(c). The FMR directs that individuals designated as Departmental
Accountable Officials sign DOD Form 577, which acknowledges their personal
pecuniary liability to the United States. DOD-FMR 7000.14-R. Such
liability is joint and several with the certifying or disbursing officer
who makes a payment based on the Departmental Accountable Official's
erroneous information, 10 U.S.C. sect. 2773a(c)(3), and is the same as
that incurred by certifying and disbursing officers government-wide under
subtitle III of title 31 of the United States Code. Thus, even though
Departmental Accountable Officials under section 2773a do not handle
government funds or certify their payment, they share personal liability
with certifying or disbursing officers of DOD for improper payments if
their negligence or fault is a contributing factor.
Agencies of the federal government are generally authorized to hire
nationals of foreign countries to staff their operations in those
countries. 22 U.S.C. sect. 3968(b). DOD entrusts local national labor at
its facilities overseas with various duties, including budgetary and
accounting functions. Markiewicz e-mail. Many of these duties are of such
a nature that the Secretary of Defense could properly designate those who
fulfill them as Departmental Accountable Officials under section 2773a and
the FMR. Id. See DOD-FMR 7000.14-R. As discussed above, Departmental
Accountable Officials are personally liable under section 2773a for
improper payments resulting from their fault or negligence.
ANALYSIS
The policy underlying the concept of pecuniary liability for accountable
officers is almost as old as our republic. As the Supreme Court stated in
1845, those responsible for the public purse must be strictly liable for
losses occurring on their watch, and "[a]ny relaxation of this condition
would open a door to frauds, which might be practised [sic] with impunity.
. . . [W]hat losses might not be anticipated by the public?" United States
v. Prescott, 44 U.S. (3 How.) 578, 588-89 (1845) (a depositary of public
money is pecuniarily liable for funds stolen from his possession through
no fault or negligence of his own). DOD imposes pecuniary liability on
Departmental Accountable Officials so that they share responsibility for
erroneous payments with certifying officers, who may make such payments
based on the Departmental Accountable Officials' negligent furnishing of
information. DOD-FMR 7000.14-R.
Employing local nationals as Departmental Accountable Officials under
section 2773a involves these policy matters. While United States citizens'
employment overseas is subject to United States law, local nationals'
employment often is not. See Department of Defense Manual 1400.25-M, para.
SC1231.4.1.1 (December 1996). The law that applies to United States
employment of local nationals abroad is determined by agreements
negotiated between the Department of State and the government of the
nation hosting the United States operation. See Manual 1400.25-M, para.
SC1231.3.1. Such agreements often provide that the employment of local
nationals is subject to the law of the host country, rather than United
States law. For example, by international agreement with Germany,[4]
United States employment of German nationals is governed by German law, as
opposed to United States law. Supplementary Agreement to the NATO Status
of Forces Agreement with Respect to Forces Stationed in the Federal
Republic of Germany, art. 56, July 1, 1963, 14 U.S.T. 531. See United
States Army Europe, Reg. 690-60, Employment of Local National Personnel in
Germany, para. 8 (Sept. 29, 1987) ("[Local National] employment in
[Germany] is governed by [German] labor law. . . ). Thus, whether a German
national employed by the United States as a Departmental Accountable
Official is subject to the accountability imposed by section 2773a is
itself a matter to be determined by German law.
A United States citizen designated a Departmental Accountable Official
could act in such a manner as to incur pecuniary liability under section
2773a, yet because of the Status of Forces Agreement and German law, a
German local national in the same position acting in an identical manner
may not be held accountable. For instance, section 2773a permits the
Secretary of Defense to impose pecuniary liability for acts of simple
negligence, while German law, in fact, may impose a higher standard of
culpability.[5] Memorandum from Michael J. Litak, Military and Civil Law
division, to
Ralf Schoenstein, Civil Personnel Directorate, G1, HQ, USAREUR and 7^th
Army 5, para. 10a (Aug. 27, 2005) (Schoenstein Memo). Thus, while a local
national Departmental Accountable Official might act in a manner that
would subject a United States citizen in the same position to pecuniary
liability, the local national might be legally unaccountable. Id.
The possibility that DOD may not be able to enforce accountability against
a local national employed by the United States as a Departmental
Accountable Official although a United States citizen in identical
circumstances would be pecuniarily liable is troubling. However, we are
unaware of any legal authority prohibiting DOD from hiring local nationals
to serve as Departmental Accountable Officials under section 2773a.
Whether or not to hire local nationals for such positions is a policy
matter to be decided by DOD.
According to section 2773a, the Secretary of Defense may designate "any
civilian employee of the Department of Defense" a Departmental Accountable
Official. The FMR defines "employee" as a "current or retired civilian[]
paid from appropriated funds." DOD-FMR 7000.14-R, Definition 58 (May
2005). Local national employees are not members of the United States
military; they are civilians.[6] In addition, most, if not all, local
nationals working in positions that could be designated Departmental
Accountable Officials are paid with appropriated funds. See Mike Litak,
U.S. and Them: Citizenship Issues in Department of Defense Civilian
Employment Overseas, Army Law., June 2005, at 1, 5-8 (2005). As stated
above, we are aware of no specific authority barring such employment. Thus
DOD, consistent with section 2773a and DOD policy, may properly employ
local nationals as Departmental Accountable Officials.
Nevertheless, we suggest that DOD consider the wisdom of hiring local
nationals as Departmental Accountable Officials in countries where by
agreement local law applies to the employment, and local law may not
subject the local national to the same accountability as other DOD
employees.[7] B-188715, Jan. 31, 1978 (concluding that when local national
employees in accountable positions, not subject to United States law,
cannot be held liable under law of host nation, United States should
"reconsider its policy of appointing to accountable officer positions . .
. citizens" of the host nation). Section 2773a is available only to DOD
and was meant to give DOD power to subject to fiscal accountability those
employees whose exercise of discretion and judgment in the performance of
their duties DOD certifying officers rely on when certifying payment
vouchers. See H.R. Rep. No. 107-436, at 340. It is somewhat anomalous that
DOD would choose to hire potentially unaccountable individuals as
Departmental Accountable Officials.
To clarify these responsibilities, DOD should draft a policy addressing
the practice of employing local nationals as Departmental Accountable
Officials. Such a policy should offer clear guidance regarding the
advisability of hiring local nationals as Departmental Accountable
Officials. The policy should include consideration of the law of the host
nation before appointing a local national as a Departmental Accountable
Official.
In making these suggestions, we remain cognizant that local national
employees are important to DOD installations overseas and that they have
occupied accountable positions for many years. Schoenstein Memo at 5,
para. 11. We are also aware of the possibility that under section 2773a,
individuals, including local nationals, could perform functions that the
FMR identifies as functions of Departmental Accountable Officials, yet not
be designated as Departmental Accountable Officials. We are confident that
any policy put forth by DOD would adequately address these circumstances
while minimizing the number of Departmental Accountable Officials
who may not be held accountable.
CONCLUSION
While employing local nationals as Departmental Accountable Officials
under section 2773a may undermine the policies behind placing pecuniary
liability on Departmental Accountable Officials, we are aware of no legal
authority prohibiting the practice. We recommend that DOD craft a policy
regarding employment of local
nationals as Departmental Accountable Officials, to address the
consideration and circumstances under which foreign local nationals may
serve as Departmental
Accountable Officials.
Anthony H. Gamboa
General Counsel
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[1] This decision uses the term "Departmental Accountable Officials" to
mean those employees designated as such under 10 U.S.C. sect. 2773a, and
uses the term "accountable officers" to mean government employees who are
otherwise responsible for government funds under Title 31 of the United
States Code, such as disbursing and certifying officers.
[2] For further discussion of the role of accountable officers, see U.S.
Government Accountability Office, Principles of Federal Appropriations
Law, vol. 2, 3rd ed., ch. 9, GAO-06-382SP (Washington, D.C.: February
2006).
[3] In 2000, we concluded that a DOD regulation authorizing agency
certifying officials to designate DOD employees as "accountable officials"
was impermissible, as only Congress, by statute, may impose pecuniary
liability. B-280764, May 4, 2000. Subsequent to our decision, Congress
enacted section 2773a. The House Committee on Armed Services reported that
section 2773a would allow DOD "to enforce responsibilities . . . [in]
areas where personnel are required to review and submit data that the
Department [of Defense] will rely on to make payments." H.R. Rep.
No. 107-436, at 340 (2002).
[4] The request for decision here does not ask that we focus our analysis
on Germany or any one country. Nevertheless, because of the myriad
agreements between the United States and foreign governments regarding
United States employment of local nationals, we use one country's
agreement with the United States--the Federal Republic of Germany--as an
illustration.
[5] Liability under German law is restricted when the work being performed
is "damage-prone," defined as "work . . . that includes a very high
probability of an occasional oversight, even by an employee who generally
uses required care." United States Army Europe, Reg. 690-62, U.S. Forces
Claims Against Local National Employees in Germany, para. 5b (Oct. 30,
1984).
[6] Department of Defense Manual 1400.25-M, Subchapter 1231 addresses
employment of local nationals in general. It does not discuss the hiring
of local nationals as Departmental Accountable Officials. Because
Departmental Accountable Officials exercise judgment and discretion in
providing information upon which certifying officers rely, we assume for
purposes of this decision that local nationals in Departmental Accountable
Official positions are direct rather than indirect hires of the United
States, and are therefore employees of the United States. See Manual
1400.25-M, paras.1231.4.2.1-1231.4.2.2.4. See also Schoenstein Memo at 4,
para. 5c ("It is well established that [local national] employees in
Germany are legally the employees of the U.S. Government").
[7] The State Department follows a similar policy in its hiring of foreign
local nationals overseas. Department of State Foreign Affairs Handbook,
vol. 4, H-113.2, FSN Direct Hire Employees (June 21, 2005). Before hiring
a local national as a disbursing officer (an accountable officer position
under Title 31 of the United States Code), the State Department considers
"[t]he recourses available to the United States in the event the [local
national] misappropriates funds and the extent that host country laws
and/or the courts aid in the prosecution of their citizens and the
recovery of the misappropriated funds." Id.