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Liability of accountable officers.

DOD Enlists in the Battle Against GAO Authority

By statute, Congress vested the GAO with, among other things, the authority to settle all accounts of the U.S. government, (195) to render advance decisions to assist certifying officers and disbursing officers when they are in doubt as to the legality or propriety of certifying or paying certain questionable expenses, (196) and to relieve accountable officials from liability under certain conditions. (197) Ever since the GAO was established in 1921, (198) however, the DOJ has disputed the Comptroller General's authority to make decisions that are binding on the executive branch. (199) In 1986, the Supreme Court added weight to DOJ's concerns, holding that because the Comptroller General could be removed from office only by Congress, he is subservient to Congress, and that therefore a statute conferring upon him "executive" powers was unconstitutional as a separation of powers violation. (200)

Using similar reasoning, the DOJ, in a 1991 Office of Legal Counsel opinion, (201) concluded that "the statutory mechanism that purports to authorize the [Comptroller General] to relieve Executive Branch Officials from liability (see, 31 U.S.C. [section] 3527, 3528, and 3529) is unconstitutional...." (202) Consistent with that legal conclusion, Attorney General Janet Reno issued a DOJ Order in 1995 advising DOJ accountable officers that "an opinion from the Comptroller General cannot itself absolve such officers from liability for the loss or improper payment of funds for which they are accountable," (203) and that they should instead seek advance decisions from their component general counsel when they question the legality of authorizing an obligation or of making a disbursement. (204) The DOD and other Executive Branch agencies, however, continued to maintain relief procedures consistent with the statutory law, explicitly recognizing the Comptroller General's statutory authority to relieve accountable officers from liability and to render advance decisions that will shield them from liability.

In 2003, the Department of the Treasury revived the issue by requesting DOJ assistance in implementing the DOJ opinions. (205) In response, the DOJ Office of Legal Counsel advised the agency to adopt an internal order based on the 1995 DOJ Order, and provided a draft model. (206) This year, the DOD followed suit. The April and May 2005 revisions to the DOD FMR instruct "accountable officials" (207) to seek the advice of the Office of the Deputy General Counsel (Fiscal), rather than the Comptroller General, when they are in doubt as to the legality of a particular use of appropriated funds. (208) In so doing, the DOD FMR specifically makes clear that this change is based on the DOJ Office of Legal Counsel opinion as to the constitutionality (or lack thereof) of the relevant statutes:</p> <pre> While an opinion of the [Comptroller General] may have persuasive value, it cannot itself absolve an accountable official.... The Department of Justice has concluded as a matter of law that the statutory mechanism that purports to authorize the [Comptroller General] to relieve Executive Branch Officials from liability (i.e., 31 U.S.C. [subsection] 3527, 3528, and 3529) is unconstitutional because the [Comptroller General], as an agent of Congress, may not exercise Executive power, and does not have the legal authority to issue decisions or interpretations of law that are binding on the Executive Branch. (209) </pre> <p>To date, no court has decided on the constitutionality of the relief from liability statutes. (210) In any event, for the DOD, the practical effect of this change may be less significant than it may appear. The pre-2005 version of the DOD FMR had already required that all requests for advance decisions were first to be forwarded to the DOD Deputy General Counsel (Fiscal) before referral to the Comptroller General or other official outside the DOD. (211) Additionally, the GAO had already delegated the authority to issue advance decisions in some instances to the DOD, the Office of Personnel Management, and the General Services Administration Board of Contract Appeals. (212)

With regard to relief from liability, the statute itself treats the DOD differently than other Executive Branch agencies. Under 31 U.S.C. [section] 3527(b), the Comptroller General is required to relieve DOD accountable officials from liability for physical losses when the military department makes the necessary findings, and those findings are "conclusive on the Comptroller General." (213) Because the statute gives the Comptroller General no discretion as to relief from liability in such cases, the GAO had notified the military departments that there is no need to forward those requests for relief to the GAO at all. (214)

GAO Won't Overrule DOD on Relief Decisions for Physical Losses

Regardless of whether the Comptroller General may constitutionally relieve Executive Branch accountable officials from financial liability at all, the GAO normally defers to the DOD on relief decisions. While 31 U.S.C. [section] 3527(b) requires the Comptroller General to relieve DOD accountable officials when the appropriate DOD official finds that the statutory criteria are satisfied, (215) the language of the statute arguably does not preclude the GAO from also granting relief in cases where the DOD makes an adverse determination.

In Decision of Managing Associate General Counsel Poling, (216) however, the GAO reiterated that it defers to the DOD's adverse determinations as well. In that case, a DOD disbursing officer had attempted to deposit funds by mail, but the deposit was never located. (217) After the DFAS found the disbursing officer negligent and denied his request for relief, the disbursing officer appealed to the GAO. The GAO noted that that the disbursing officer had not provided a "basis to suggest that DFAS's decision was improper," (218) and declined to consider the request. The GAO explained that it will not review military physical loss relief requests "where the determinations and the subsequent decision to grant or deny relief appear to be properly considered." (219)

"Departmental Accountable Officials"--DOD Gets Right and VA Gets Schooled

A few years ago, the DOD revised the DOD FMR in an attempt to impose pecuniary liability on "accountable officials," other than certifying and disbursing officers, who negligently provide inaccurate information relied upon by certifying or disbursing officers. (220) The rationale was that it is extremely difficult for any single official to ensure the accuracy, propriety, and legality of every payment, and therefore certifying officers and disbursing officers as a practical matter must rely upon information provided by others in performing this difficult task. (221) However, the GAO held that this was improper because, unlike for certifying and disbursing officers, there was no statutory basis for imposing liability against "accountable officials," and agencies may not impose pecuniary liability on employees in the absence of statutory authority. (222) In response to that decision, the DOD sought the statutory authority, which Congress provided in the 2003 National Defense Authorization Act, (223) codified at 10 U.S.C. [section] 2773a.

The DOD FMR was recently revised to implement this law, (224) and now provides that "[d]epartmental accountable officials shall be pecuniarily liable for illegal, improper or incorrect payments that result from information, data or services they negligently provide to a certifying officer, and upon which, the certifying officer directly relies in accordance with the provisions of 10 U.S.C. 273a." (225) The definition of "departmental accountable officials" itself sheds no further light on this statement. (226)

The revised DOD FMR provides a partial list of functional areas in which departmental accountable officials may have responsibilities, including functions relating to the Government Purchase Card program, temporary duty travel, contract and vendor pay, civilian and military pay, permanent change of station processing, and Centrally Billed Accounts. (227) This can include, but is not limited to, persons such as Agency Program Coordinators, approving officials, authorizing officials, cardholders, resource managers, fund holders, Automated Information System administrators, contracting officers, receiving officials, personnel officers, employees' supervisors, and supervisors of time and attendance clerks. (228)

Departmental accountable officials must be designated as such in writing, and apprised by letter of their potential pecuniary liability for "illegal, improper, or incorrect payments that result from negligent performance of duties." (229) Like DOD certifying officers, departmental accountable officials are appointed on a Department of Defense (DD) Form 577 ("Appointment/Termination Record/Authorized Signature"). (230) The formal written designation is a statutory requirement, (231) and a fair reading of the statute compels a conclusion that a person not formally designated as a "departmental accountable official" cannot be held pecuniarily liable under the statute. (232)

Recently, the Department of Veterans Affairs (VA) learned a similar lesson. In Veterans Affairs--Liability of Alexander Tripp, (233) the GAO considered a request for relief from a VA employee who had approved payment for a "sunset cruise" as part of a staff retreat. (234) The VA held the employee financially liable for the payment of this improper entertainment expense after he had "certified" in writing that the payment was proper. (235) The employee held "a position of senior stature with responsibility for compliance with applicable laws," (236) but had not been formally designated in writing as a certifying officer. (237) Consequently, the GAO held that the employee was not a certifying officer, but was essentially an "approving" official. (238) Citing the DOD's previous unsuccessful attempt to impose pecuniary liability against departmental accountable officials prior to the enactment of 10 U.S.C. [section] 2773a, (239) the GAO explained that agencies may not impose pecuniary liability on employees in the absence of statutory authority, and that there was no statutory basis for holding VA "approving" officials financially liable for improper payments. (240) Accordingly, the GAO found no need to consider the employee's request for relief from liability, because he had no financial liability from which to be relieved. (241) But that doesn't necessarily mean that the employee is completely off the hook. The GAO informed the employee, "Because federal officials are responsible for ensuring that federal funds are not used improperly, VA, within its discretion, may still impose administrative sanctions against you for your role in approving the improper payment." (242)

Major Michael L. Norris

(195) 31 U.S.C.S. [section] 3526(a). Further. the statute provides that "[o]n settling an account of the account of the Government, the balance certified by the Comptroller General is conclusive on the executive branch of the Government." Id. [section] 3526(d).

(196) Id. [section] 3529.

(197) Id. [section] 3527; Id. [section] 3528.

(198) The Budget and Accounting Act of 1921, Pub. L. No. 67-13, 42 Stat. 20 (1921).

(199) See Edward R. Murray. Note, Beyond Bowsher: The Comptroller General's Account Settlement Authority and Separation of Powers, 68 GEO. WASH. L. REV. 161, 162, 169 (1999).

(200) Bowsher v. Synar, 478 U.S. 714, 732 (1986) (invalidating portions of the Balanced Budget and Emergency Deficit Control Act of 1985 (Gramm-Rudman-Hollings Act), 2 U.S.C. [section] 901 (1985)).

(201) Comptroller General's Authority to Relieve Disbursing and Certifying Officials from Liability, 15 Op. Off Legal Counsel 80 (1991).

(202) U.S. Dep't of Justice. DOJ Order 2110.39A, Legality of and Liability for Obligation and Payment of Government Funds by Accountable Officers (Nov. 15, 1995).

(203) Id.

(204) Id.

(205) Letter, Kenneth Schmatzbach, Office of Gen. Counsel, U.S. Dep't of the Treasury, to Office of Gen. Counsel, U.S. Dep't of Justice (May 7, 2003) (cited in Memorandum, Jack L. Goldsmith III, Assistant Attorney General, U.S. Dep't of Justice, to Gen. Counsel, U.S. Dep't of Treasury, subject: Response to Department of Treasury (28 Jan. 2004)).

(206) Memorandum, Jack L. Goldsmith III, Assistant Attorney General, U.S. Dep't of Justice, to Gen. Counsel, U.S. Dep't of Treasury, subject: Response to Department of Treasury (28 Jan. 2004).

(207) "Accountable officials" include "[disbursing officers], certifying officers, cashiers, procurement officers, departmental accountable officials, and other employees who by virtue of their employment are responsible for the obligation, custody and payment of government funds." DOD FMR, supra note 137, at para. 010802.B. "Departmental accountable officials," in turn, are defined as "[i]ndividuals who are responsible in the performance of their duties for providing to a certifying officer information, data, or services that the certifying officer directly relies upon in the certification of vouchers for payment." Id. at vol. 5, ch. 33, para. 330812. The DOD FMR also uses the term "'accountable individuals" as another general term apparently meaning the same thing as "accountable officials."

(208) Id. at vol. 5, ch. 1, para. 010801, and vol. 5, Appendix E.

(209) Id. at vol. 5, ch. 1, para. 010802.E.

(210) In a Department of Veterans Affairs case involving the issue of payment of attorney fees, the U.S. Court of Appeals for Veterans Claims expressly declined to decide whether Comptroller General opinions can be binding on the VA. The VA had argued consistent with the DOJ position and cited the 1991 DOJ Office of Legal Counsel opinion and the 1995 DOJ Order. The court acknowledged that the issue raised "serious separation-of-powers concerns." but stated:</p> <pre> [C]ontrary to the arguments raised by the Secretary, it is not a settled matter that the Comptroller General decisions cited by the Court are not binding on VA. The Supreme Court in Bowsher invalidated legislation that purported to give a particular decision of the Comptroller General the authority to bind the President. The Supreme Court did not, however, state that any decision of the Comptroller General could not have binding authority over an executive agency. Nor is there any authority binding on this Court to support such a conclusion. The only authority that the Secretary offers in this regard are the two Justice Department issuances cited above, both of which concluded that the Comptroller General, as an agent of Congress, does not have the legal authority to issue decisions or interpretations of law that are binding on the Executive Branch. Although these

Justice Department issuances may be instructive, they are not binding on this Court and hence do not settle this issue. </pre> <p>Snyder v. Prinicipi, 15 Vet. App. 285, 290 (2001)(citations omitted)(emphasis in original).

(211) DODFMR, supra note 137, at vol. 5, ch. 25, para. 250302.B.

(212) The GAO delegated the authority to issue advance decisions to the DOD in cases of military pay allowances, travel, transportation costs, survivor benefits, and retired pay; to the Office of Personnel Management in cases regarding civilian employee compensation and leave; and to the General Services Administration Board of Contract Appeals for civilian employee travel, transportation, and relocation allowances. See The General Accounting Act of 1996, Pub. L. 104-316. [section] 204, 110 Star. 3826, 3845-46.

(213) Title 31, section 3527(b) states, in its entirety:

(b) (1) The Comptroller General shall relieve an official of the armed forces referred to in subsection (a) responsible for the physical loss or deficiency of public money, vouchers, or records, or a payment described in section 3528(a)(4)(A) of this title, or shall authorize reimbursement, from an appropriation or fund available for reimbursement, of the amount of the loss or deficiency paid by or for the official as restitution, when--

(A) in the case of a physical loss or deficiency--

(1) the Secretary of Defense or the appropriate Secretary of the military department of the Department of Defense (or the Secretary of Transportation, in the case of a disbursing official of the Coast Guard when the Coast Guard is not operating as a service in the Navy) decides that the official was carrying out official duties when the loss or deficiency occurred;

(ii) the loss or deficiency was not the result of an illegal or incorrect payment; and

(iii) the loss or deficiency was not the result of fault or negligence by the official; or (B) in the case of a payment described in section 3528(a)(4)(A) of this title, the Secretary of Defense or the Secretary of the appropriate military department (or the Secretary of Transportation, in the case of a disbursing official of the Coast Guard when the Coast Guard is not operating as a service in the Navy), after taking a diligent collection action, finds that the criteria of section 3528(b)(1) of this title are satisfied.

(2) The finding of the Secretary involved is conclusive on the Comptroller General.

31 U.S.C.S. [section] 3527(b)(LEXIS 2005).

(214) U.S. GOVT. ACCOUNTABILITY OFF., OGC-91-5, PRINCIPLES OF FEDERAL APPROPRIATIONS LAW 9-34 (2d ed. 1992) (citing circular letter B-198451, Feb. 5, 1981).

(215) The Secretary of Defense has delegated relief authority under that statute to DFAS. DFAS Regulation No. 005, Delegation Statutory Authority, 5 Apr 1991 (cited in Decision of Managing Associate General Counsel Poling, B-303671, 2004 U.S. Comp. Gen. LEXIS 262 (Dec. 3, 2004), at n.2).

(216) Decision of Managing Associate General Counsel Poling, B-303671, 2004 U.S. Comp. Gen. LEXIS 262 (Dec. 3, 2004).

(217) Id. at *4.

(218) Id.

(219) Id. In discussing 31 U.S.C. [section] 3527(b), the GAO first noted that if DFAS had found that the three requirements for relief had been met, then "the granting of relief follows automatically." M. at *3. But "[w]here the Secretary, or DFAS in his behalf, is unable to agree with any one of the three considerations, relief is not available." Id. From this language, it is unclear whether GAO believes it lacks authority to grant relief where DFAS makes an adverse finding. However, the GAO qualified that statement by saying that GAO would not review such requests where the DFAS relief decision is "properly considered," thus suggesting that the GAO would consider the request if the DFAS decision had been improperly considered.

(220) U.S. DEPT. OF DEF., DOD 7000.14-R, DOD FINANCIAL MANAGEMENT REGULATION para. 080301 (Aug. 1998).

(221) Id. para. 330102.

(222) Department of Defense---Authority to Impose Pecuniary Liability by Regulation, B-280764, 2000 U.S. Comp. Gen. LEXIS 159 (May 4, 2000).

(223) Bob Stump National Defense Authorization Act for Fiscal Year 2003, Pub. L. No. 107-314, [section] 1005, 116 Stat. 2458, 2631 (2002).

(224) DOD FMR, supra note 137, at vol. 5, ch. 33.

(225) Id. para. 3307.

(226) The DOD FMR defines "departmental accountable officials" as:</p>

<pre> Individuals who are responsible in the performance of their duties for providing to a certifying officer information, data, or services that the certifying officer directly relies upon in the certification of vouchers for payment. They are pecuniarily liable for erroneous payments resulting from their negligent actions in accordance with section 2773a of title 10, United States Code. </pre> <p>Id. para. 330812.

(227) Id. para. 330302.

(228) Id.

(229) Id. para. 330505.

(230) Id.

(231) 10 U.S.C.S. [section] 2773a(a)(LEXIS 2005).

(232) The statute permits the Secretary of Defense to subject only a "departmental accountable official" to pecuniary liability under certain conditions. 10 U.S.C.S. [section] 2773a(c). Subsection (a) of the statute makes clear that an employee cannot be a "departmental accountable official" unless he is designated in writing:

(a) Designation by Secretary of Defense. The Secretary of Defense may designate any civilian employee of the Department of Defense or member of the armed forces under the Secretary's jurisdiction who is described in subsection (b) as an employee or member who, in addition to any other potential accountability, may be held accountable through personal monetary liability for an illegal, improper, or incorrect payment made [by] the Department of Defense described in subsection (c). Any such designation shall be in writing. Any employee or member who is so designated may be referred to as a "'departmental accountable official."

Id. (emphasis added).

(233) Veterans Affairs--Liability of Alexander Tripp, B-304233, 2005 U.S. Comp. Gen. LEXIS 158 (Aug. 8, 2005).

(234) Id. at *4.

(235) The employee had signed the voucher, which contained the sunset cruise charge and the accompanying statement, "I certify that the articles or services listed hereon ... are proper for payment ..." Id. at *6.

(236) Id. at *10 (quoting a reply to GAO from the Office of Gen. Counsel, Dep't of Veterans Affairs, dated Jan. 28, 2005). The employee served as the director of the Financial Assistance Office of the Veterans Health Administration. Id. at *3.

(237) Id. at *10.

(238) Id. at *7.

(239) Department of Defense--Authority to impose Pecuniary Liability by Regulation, B-280764, 2000 U.S. Comp. Gen. LEXIS 159 (May 4, 2000).

(240) Veterans Affairs--Liability of Alexander Tripp, 2005 U.S. Comp. Gen. LEXIS 158, at *7.

(241) Id. at *10-11.

(242) Id. at *11-12.
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Author:Norris, Michael L.
Publication:Army Lawyer
Date:Jan 1, 2006
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