Letterhead of the OASMRA
May 21, 1998

SUBJECT: Eligibility to Continue Living Quarters Allowance for Appropriated Fund Employees Who Have Transferred From Nonappropriated Fund

The purpose of this memorandum is to clarify the eligibility for Living Quarters Allowance (LQA) when a nonappropriated fund (NAF) employee transfers to an appropriated fund (AF) position.

In section 1042 of the National Defense Authorization Act, Fiscal Year 1996, Congress stipulated that the LQA paid to NAF employees may not exceed the LQA paid to similarly situated AF employees. The Office of Secretary of Defense (OSD) notified components of this policy change of foreign allowances by memorandum dated September 25,1995. The policy requires application of the eligibility criteria and delegation of authority restrictions in DOD 1400.25-M, Subchapter 1250, formerly Chapter 592.

The continuance of LQA for AF employees converted from NAF employment, who were eligible for LQA upon their initial hire as NAF employees is specifically authorized in DOD regulations and Comptroller General decision. However, this authority is subordinate to the section 1042 limitation which makes it clear that both AF and NAF employees are now subject to the same LQA standards. Therefore, it is clear that LQA cannot be continued for AF, NAF, or converted NAF employees whenever it is determined that they (whether AF or NAF) do not meet the standards in Subchapter 1250.

Prompt action should be taken to terminate the LQA of any employees, whether AF or NAF, who do not meet these eligibility requirements. This may include a 60-day grace period to give affected employees time to make any necessary adjustments. See Matter of Borja, B-182517 (Comp. Gen 1975).

For additional information, point of contact is Ms. Nancy Sutman, the current Travel and Transportation Action Officer.   She can reached at Commercial (703) 325-9986 or Email: Nancy.Sutman@(email address expired).

//original signed//
Carol Ashby Smith
Deputy Assistant Secretary
(Civilian Personnel Policy)