Number: 

DAO 203-17

SECTION 1. PURPOSE.

.01 This Order prescribes guidelines and procedures for administrative settlement and payment of claims against the United States made by an employee of the Department of Commerce (the Department) for damage to, or loss of, personal property incident to his or her service.

.02 This revision includes a provision for settlement of claims exceeding $40,000 but not exceeding $100,000 when the claim arises from an emergency evacuation or from extraordinary circumstances. This revision also updates the general language of this order and provides a process for approving exceptions to the limitations established for awards.

SECTION 2. DEFINITIONS.

For purposes of this Order:

a. Agency means the Department of Commerce, but does not include any contractor with the United States;

b. Employee means a civilian officer or employee of the Department of Commerce or a member of the uniformed services under the jurisdiction of the Department of Commerce;

c. Uniformed Service means the commissioned officers of the National Oceanic and Atmospheric Administration;

d. Settle means consider, ascertain, adjust, determine, and dispose of any claim, whether by full or partial allowance or disallowance; and

e. Claimant means the persons identified in Section 6. of this Order.

SECTION 3. LEGAL AUTHORITY.

The Act of August 31, 1964, Public Law 88-558, 78 Stat. 767, as amended, (31 U.S.C. 3721-33) (the Military Personnel and Civilian Employees' Claims Act of 1964, referred to in this Order as the "Act"), provides that subject to any policies the President may prescribe, and under such regulations as the Secretary or his/her designee may prescribe, the Secretary or a designee may settle and pay an allowable claim against the United States for not more than $40,000 made by an employee of the Department or his/her survivor for damage to, or loss of, personal property incident to the employee's service. The Act further provides that the Secretary or a designee may settle and pay an allowable claim against the United States for more than $40,000, but not exceeding $100,000, if the claim arose from an emergency evacuation or from extraordinary circumstances.

SECTION 4. SETTLEMENT AUTHORITY.

.01 This order delegates settlement authority under the Act to the heads of operating units for claims submitted on behalf of employees of their respective units. This order delegates settlement authority under the Act to the Chief Financial Officer and Assistant Secretary for Administration for claims brought on behalf of employees of the Office of the Secretary.

.02 The settlement authority delegated to the heads of operating units and the Chief Financial Officer and Assistant Secretary for Administration may be redelegated to one or more employees who must be designated in writing as claims officers.

.03 No claim may be settled with a payment of $5,000 or more without prior review by program counsel for the relevant primary operating unit or the Assistant General Counsel for Employment, Litigation, and Information, as provided in Appendix A of this Order.

SECTION 5. POLICY.

The purpose of the authority provided by the Act (Section 3. of this Order) is to make possible administrative settlement and payment of meritorious claims. The general purpose is to make it possible for Government agencies, subject to the requirements contained in the Act, to reimburse employees for unusual and unforeseen loss of, or damage to, personal property that is not covered by insurance, indemnity, or other contracts and that is sustained by employees, through no fault of their own, as an incident of their employment, and under circumstances in which it is only fair that the Government as their employer should provide compensation (See Section 11. of this Order for procedures involving insurance, indemnity, or contract recovery from third parties).

SECTION 6. CLAIMANTS.

.01 A claim may be filed by any employee or his/her duly authorized representative. If the employee is deceased, a claim may be filed by the duly appointed executor or administrator of the employee's estate. If no administrator or executor exists, then a claim may be filed by the employee's (a) spouse, (b) children, (c) parent or parents, or (d) sibling or siblings, who must attest that no appointed administrator or executor exists to represent the deceased employee's estate. Upon submission of a proper claim by a survivor, settlement and payment will be made to survivors in the order listed in the preceding sentence.

.02 No payment will be made to a survivor who has submitted a claim if higher priority survivors have not been notified. The claims officer must notify higher priority survivors that a claim has been filed for an alleged loss suffered by the deceased employee. A reasonable period should be permitted higher priority survivors to respond to the notification.

.03 Department of Commerce employees who are also covered by the terms of an agreement with a non-Department of Commerce agency must submit their claim to that other agency.

SECTION 7. STATUTORY PROVISIONS.

.01 A claim is allowable under the Act only if it meets all the following conditions:

a. It arose after the effective date of the Act (August 31, 1964);

b. The damage to, or loss of, personal property was incident to the employee's service;

c. The claim is presented in writing within two years after it accrues, except that if the claim accrues in time of war or in time of armed conflict in which any armed force of the United States is engaged or if such a war or armed conflict intervenes within two years after it accrues, and if good cause is shown, the claim may be presented not later than two years after that cause ceases to exist, or two years after the war or armed conflict is terminated, whichever is earlier;

d. If the loss or damage occurred at quarters occupied by the claimant within the fifty States or the District of Columbia, such quarters must have been assigned to him/her or otherwise provided in kind by the United States;

e. The loss or damage was not caused wholly or partly by the negligent, willful, or wrongful act of the employee or other claimant, or the agent or employee of either of them. The claimant must affirmatively demonstrate to the satisfaction of the Department that this essential requirement is fulfilled;

f. The claim is substantiated as set forth in Section 10. of this Order; and

g. The possession of the property by the employee is determined to have been reasonable, useful, or proper under the attendant circumstances at the time of the loss or damage.

.02 The maximum allowance on any claim not arising from an emergency evacuation or from extraordinary circumstances is $40,000 and property may be replaced in kind at the option of the Government. The claimant must furnish satisfactory proof of the value of the property.

.03 The maximum allowance on any claim arising from an emergency evacuation or from extraordinary circumstances is $100,000. The claimant must furnish satisfactory proof of the emergency evacuation or other extraordinary circumstance giving rise to a claim for more than $40,000.

.04 The settlement of a claim under the provisions of the Act and implementing Department of Commerce orders is final and conclusive. Final disposition of a claim submitted under the provisions of the Act is not subject to judicial review.

.05 No more than 10 percent of the amount paid in settlement of each individual claim may be paid or delivered to, or received by, any agent or attorney on account of services rendered in connection with that claim and payments to an agent or attorney exceeding this limit are unlawful, despite any contract to the contrary. As provided in the Act, any person violating the provisions of this Act will be fined not more than $1,000.

SECTION 8. ADMINISTRATIVE POLICY - ALLOWABLE CLAIMS.

Section 5. of this Order sets forth the general policy basis for the Act. The requirements contained in the Act for allowable claims are enumerated in Section 7. of this Order. Examples of the types of damages and losses of personal property which, subject to those requirements, would be allowable are:

a. Losses or damages when employees are compelled by circumstances to evacuate from the transportation in which they were traveling on official business;

b. Losses or damages in situations where the employee's property is used for the benefit of the Government at the direction, or with the approval of a superior. This includes theft of personally owned hand tools used on the job and stored in space provided by the Government;

c. Loss of, or damage to, personal belongings caused by natural disasters, fire, water, ice, or wind while stored in Government buildings;

d. Losses or damages suffered by employees stationed at a remote location due to damage caused by natural disasters;

e. Losses or damages as a direct result of extraordinary risks to which the employee or his/her property has necessarily been subjected to in the performance of official duties, such as in connection with a civil disturbance, public disorder, or public disaster, or efforts to save Government property or human life where the situation was such that the employee could have saved his or her own property had he or she not so acted;

f. Abandonment or destruction of property by reason of a military emergency, or by the order of a superior authority;

g. Losses or damages occurring as a result of the unpredictable behavior of animals;

h. Losses or damages occurring in shipments provided by the Government, e.g., via Government vessels, Government charter of commercial vessels, or by Government bills of lading on commercial vessels, including storage, on-loading, and off-loading incidents;

i. Loss of, or damage to, personal and household goods (including motor vehicles and trailers) moved or shipped incident to the requirements of the employee's Government service, subject to Section 9, of this Order and the Depreciation Guide (Appendix B);

j. Losses or damages where the proximate cause of such damage or loss was the negligent act or omission of agents or employees of the Government acting within the scope of their employment, absent any negligence of the claimant; and

k. Loss of, or damage to, motor vehicles and trailers will be paid, where appropriate, only for an amount covering an insurance deductible, up to a maximum of $1,000. If the employee has no insurance on the vehicle, the limit allowable is still $1,000.

SECTION 9. UNALLOWABLE CLAIMS.

.01 The following types of claims will not ordinarily be payable (in addition to those which do not meet the conditions contained in Section 7. of this Order):

a. Claims for theft of the property of an employee are unallowable unless there exists positive evidence establishing the theft. It must also be established that the employee or his/her agents took all reasonable and practicable protection and security measures;

b. Claims for articles of extraordinary value or which may be easily pilferable, such as jewelry, cameras and accessories, lap-top computers, pagers, cellular phones, binoculars, watches, furs, valuable articles of gold, silver, other precious materials, painting, antiques (other than bulky furnishing), relics, when shipped or stored with household goods or as unaccompanied baggage. Claims for loss of or damage to such articles when properly checked or in the personal custody of the employee may be allowed, provided that all reasonable and practicable protection and security measures have been taken. The employee must furnish satisfactory proof that such measures have been taken;

c. Claims for loss of money, currency, or intangible property, such as bank books, checks, notes, stock certificates, bonds, money orders, credit cards, and travelers' checks, except when deposited for safekeeping with an authorized Government agent, or when lost incident to a marine, rail, aircraft, or other public transportation disaster, public disorder, or natural disaster such as fire, flood, hurricane, etc., or when lost under other circumstances such as larceny or burglary, when it is clearly shown that the employee had taken all reasonable and practicable protection and security measures. Where the theft occurred from the employee's living quarters, and such loss is not excluded by subparagraphs 7.01d. of this Order, or .01k. of this Section, the employee must show, among other things, that the property was in a locked container and that the quarters themselves were secured;

d. Claims for worn-out or unserviceable property;

e. Claims for loss or damage to the extent recovered by reason of insurance, indemnity, subrogation, assignment, or other contracts, or torts of third parties;

f. Claims for any losses of insurers or other subrogees;

g. Claims for property owned by the United States unless the employee is financially responsible for it;

h. Claims for property normally used for private business or profit;

i. Claims for fees for obtaining estimates of the cost of repair of the property damaged, except when approved by the claims officer concerned as (1) necessary and unavoidable expenses of submitting a claim, (2) reasonable in relation to the value of the property and cost of repairs, and (3) not deductible from the cost of repairs if the work is accomplished by the estimator;

j. Claims for property acquired, possessed, or transported in violation of law, regulations, or orders of competent authority; and

k. Claims of employees outside the United States for property located in their quarters when the employee is a local inhabitant.

.02 Employees are encouraged to carry private insurance against damage to, or loss of, their personal property. Such insurance is desirable to cover risks specifically excluded or limited by these, or other, regulations. Employee motor vehicles are expected to be insured by the employee.

SECTION 10. SUBSTANTIATION OF CLAIMS.

Each claim must be accompanied by statements of any witnesses and by relevant and material documentation or other evidence available relating to the claim, including the value of the property lost or damaged (See Appendix A).

SECTION 11. RECOVERY FROM THIRD PARTIES AND ASSIGNMENT OF CLAIMS.

.01 When it appears that property has been damaged or lost under circumstances in which an insurer, carrier, warehouseman, contractor, or other party may be responsible, the claimant must promptly make a written and timely demand or claim to that third party. No such demand need be made if in the opinion of the claims officer or legal counsel it would be impracticable, or recovery insignificant, or circumstances precluded making timely demand, and the claim appears to be allowable under these rules.

.02 If the claimant has submitted, or intends to submit, a claim under these rules, a copy of the demand to the third party and any related correspondence must be submitted to the claims officer. The claimant must also promptly notify the claims officer of any action, or proposed action, by the third party, including offers of settlement, partial settlement, or denial of liability. In addition, before accepting any settlement, the claimant must obtain the approval of the claims officer.

.03 When the claimant recovers from third parties a sum greater than, or equal to, the claimant's total loss determined to be allowable under these rules, the agency will make no further payment(s) to the claimant. When the amount recovered from third parties is less than the total loss determined to be allowable by the agency, then the agency may compensate the claimant for the difference, which may not exceed $40,000.

.04 When a third party is responsible for the loss or damage to an employee's property, and the agency compensates the claimant in advance of payment by the third party, the claimant must assign to the agency (the United States Government) the claimant's right, title, and interest in the claim against the third party to the extent the agency makes payment to the claimant. The claimant must also furnish the agency all evidence and relevant documentation to assist the agency in pursuing the claim against the third party. The claimant must also promptly notify the claims officer of any payments the claimant receives from a third party and repay the agency the amount due it from any payments received from a third party.

SECTION 12. COMPUTATION OF AWARDS.

.01 The amount normally payable for property lost, or damaged beyond economical repair, is found by determining the property's depreciated replacement cost, less any salvage value. If the cost of repair is less than the depreciated value, it will be considered repairable, and only the cost of repair will be allowed. As used in this Order, cost of repair means cost of restoring the property to the condition it was in at the time of the damage (See Depreciation Guide, Appendix B).

.02 When, at the option of the agency, settlement of a claim is made by replacement of property in kind, such replacement must be made with property of equivalent nature, quality, and quantity, as determined by the agency.

.03 Claims will be payable only for such types and quantities of personal property the possession of which are determined to have been reasonable, useful, or proper under the circumstances at the time of the loss or damage, taking into consideration, among other factors, the danger of harm occurring to the property.

.04 Claims for antiques, relics, heirlooms, and items purchased at unreasonably high prices may, if otherwise allowable, be allowed only for the reasonable purchase price of substitute articles of a similar functional nature, quality, and quantity, disregarding the nonintrinsic value of the articles (See Depreciation Guide, Appendix B).

SECTION 13. INTERNAL PROCEDURES.

.01 Officials having settlement authority, as prescribed in Section 4. of this Order, may establish internal procedures for prompt and efficient receipt, investigation, and settlement of claims.

.02 The Chief Financial Officer and Assistant Secretary for Administration, or his/her designee, has authority to approve exceptions to the limitations on scope and amount for awards made under this order, but may not approve any award that exceeds $40,000 for claims under ordinary circumstances or $100,000 if the claim arose from an emergency evacuation or from extraordinary circumstances.

.03 Appendix A includes suggested procedures and policies that may be adapted for use in settling personal property claims, and Form CD-224, Employee Claim for Loss of or Damage to Personal Property.

.04 Appendix B is the Depreciation Guide to be used in the processing of claims. This Guide is the same as used by the Department of Defense and the Armed Forces.

SECTION 14. EFFECT ON OTHER ORDERS.

This Order supersedes Department Administrative Order 203-17, dated July 11, 1997.

Signed by: Acting Chief Financial Officer and Assistant Secretary for Administration

Approved by: Secretary of Commerce

Office of Primary Interest: Office of the General Counsel
 

APPENDIX A

EXAMPLE CLAIMS PROCEDURES

A. SUBMISSION OF CLAIM.

.01 Claim Form. Claimants must submit to the operating unit's claims officer Form CD-224, "Employee Claim for Loss of or Damage to Personal Property," together with supporting evidence as indicated in paragraph .02 of this section. The claimant's careful compliance with the requirements regarding the preparation of a claim will expedite adjudication by avoiding delays arising from the need to obtain additional information from the claimant.

.02 Evidence in Support of Claim. In addition to the information required on the claims form, the following evidence should be submitted when applicable, or a statement indicating why such evidence is not available or practicable to obtain:

a. General. (applicable to all claims)

1. Corroborating statements from a person or persons who have personal knowledge of the facts regarding the claim.

2. Statement of property recovered or replaced in kind.

3. Itemized bill of repair for any damaged property which has been already repaired.

4. At least one written estimate of the cost of repairs from a competent person, sufficiently identified, who is experienced or knowledgeable in the cost of the needed repairs in the current market.

5. Proof of original cost or current value in the form of purchase receipts or similar documents.

6. A claim filed by an agent or survivor must be supported by a power of attorney or other satisfactory evidence of authority and standing to file (see paragraph 6.01 of this Order.).

7. Statement concerning any insurance coverage or any warehouseman, carrier or other third party responsibility, and any reimbursement or recovery obtained from such insurer or third party. The identity of the insurer or other third party, the type of insurance or other coverage, and any claim or demand by the claimant upon such party should be described and copies of correspondence attached. If the claimant has insurance or a basis for a claim or demand upon such third party, and has not submitted a claim or demand, the claimant's failure to do so should be explained (see Section 11. of this Order.).

8. Copy of orders or other evidence that establishes the claimant's right or propriety to have the property located at the place of loss or damage.

b. Thefts or Losses in Allowable Quarters or at Other Authorized Places.

1. Geographical location of the loss.

2. If in quarters, whether they were assigned or provided in kind by the Government and by whom, and whether they were regularly occupied by the claimant or, if in storage, the name of the authority, if any, who designated such place.

3. Security measures or precautions taken to protect the property involved. Attention will be given to the degree of care normally exercised in the locale of the loss because of any unusual risks of theft or other loss that may be associated with that location.

4. Facts and circumstances surrounding the loss or theft, including how the larceny or burglary occurred, capture of the thief, property recovered, reports made at the time to police or others, and such related information.

c. Transportation Losses.

1. Copy of order authorizing the travel, transportation or shipment, or statement explaining their absence and setting forth their substance.

2. All bills of lading, and inventories of property shipped.

3. Description of action taken to locate missing property.

4. Where property was turned over to a transportation or supply officer or contract packer or shipper, a statement indicating the identity and designation of such party, the date and place where the property was turned over and its condition, the date of shipment and reshipment and copies of all manifests, bills of lading and contracts, the date and place of delivery, statements of disinterested witnesses regarding the property's condition when received, whether damage was caused by negligence of a Government employee acting within the scope of his/her employment, and whether the last carrier was given a clean receipt.

d. Money, Intangibles or Other Property Deposited for Safekeeping, Transmittal of Other Authorized Disposition.

1. Identity of the person or persons who received the property and any others involved, and the disposition requested;

2. Identity of the individual who authorized such person or persons to accept the property;

3. Receipts and written statements explaining the failure to account for the property and an explanation regarding why it was not returned to the claimant.

e. Property Used for Benefit of Government. In addition to items listed in subparagraph a. of this paragraph, a statement from the proper authority that the property was required to be supplied by the claimant in the performance of his/her official duty at the request or direction, or with the approval of a superior.

f. Waiver of Required Evidence. Any of the evidence required above may be waived by the claims officer or agency legal counsel in instances where the claim appears otherwise reasonable and proper and the obtaining and submission of such evidence would be unduly costly or time-consuming in relation to the amount of the claim.

.03 Where the employee's supervisor has knowledge of the incident which is the basis for the claim, the employee should submit the claim form with its supporting evidence to the supervisor. The supervisor must attach to the claim a brief statement regarding knowledge of the incident and the claim, before the claim is submitted to the claims officer.

B. CLAIMS OFFICER AND LEGAL COUNSEL PROCEDURES.

.01 The claims officer will receive, review, examine, and investigate claims. Employees, in addition to the claimant, must cooperate in providing information about a claim to the claims officer, who may also consult with program counsel for the relevant primary operating unit as needed.

.02 The claims officer will prepare a brief memorandum commenting on the merits of the claim, its denial or acceptance, and determining what amount, if any, should be paid to settle the claim.

.03 Program counsel for the relevant primary operating unit or the Assistant General Counsel for Employment, Litigation, and Information will review the claims officer's file and memorandum on each claim, and investigate further if necessary. Program counsel for the relevant primary operating unit must indicate approvals, partial disapprovals, and disapprovals via notation and signature on the claims officer's determination memorandum and return the file and notations to the claims officer. In the event of an unresolved conflict between program counsel for the relevant primary operating unit and the claims officer, the claim with the appropriate file and legal memoranda must be forwarded to the Assistant General Counsel for Employment, Litigation, and Information for final determination of denial or settlement.

.04 Claims to be paid in excess of $5,000 must be forwarded to the Assistant General Counsel for Employment, Litigation, and Information for review.

.05 The claims officer will process claims as follows:

a. Payment of Claim. The original of the claim form (without supporting evidence), the SF-1034, along with the original of the determination memorandum and approval notations including any legal determinations and opinions will be sent to the accounting office for certification and payment. Claims are paid from the organizational unit's appropriated funds;

a claim is not approved for payment or is approved only for partial payment, the claims officer will advise the claimant in writing of the action taken and the reasons for it as stated in the supporting memoranda. Claimants must be advised that they may request a reconsideration of the determination upon establishing an error in the settlement or presenting new evidence not available at the time of settlement. Such request for reconsideration must be made in writing and submitted to the claims officer within six months from the date of mailing (by certified mail) of the claim notification letter;

c. Disputed Claim. If, after a claimant requests a reconsideration of the claims officer's initial determination, a dispute still exists, the claims officer will prepare a transmittal memorandum outlining his/her position and forward this and the claim file to the Assistant General Counsel for Employment, Litigation, and Information for final adjudication. Such adjudication by the Assistant General Counsel for Employment, Litigation, and Information will be final and conclusive for the Department. There is no judicial remedy regarding this determination; and

d. Related Documents. The claims officer must retain all documents relating to the claim other than those required by the accounting officer, subject to disposal as may be provided by record retirement rules.