DOD Budget Sequestration Furlough in 2013 Affirmed

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By on August 8, 2017 in Court Cases with 0 Comments

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Many appeals apparently were brought by DOD employees furloughed as the result of the budget sequestration requirement adopted by Congress and triggered in Fiscal Year 2013. In this recent appeals decision (Snyder v Department of the Navy (CAFC No. 2016-1940, 4/26/17) ), the court affirms one employee’s furlough. Here’s how the court explains what happened.

The 2013 Defense budget took a $37 billion hit about halfway through that fiscal year, resulting in, among other things, furlough of many civilians. The DOD Secretary ordered preparations to furlough most agency civilians up to eleven workdays in FY 2013 due to the sequestration. Exceptions were narrow and included those deployed to combat zones, those necessary to protect life and property, shipyard employees, intelligence employees, et al.

Several in Congress raised a concern about applying the furlough to employees funded by WCFs (working capital funds) , which are funded from fees charged to their customers. Those customers are mostly other DOD groups that “purchase” from WCFs using funds appropriated to those groups. The agency responded that by furloughing all civilians, including WCFs, the agency would save around $2 billion in the last half of the fiscal year. That would include some $500 million in the WCF activities. The agency went on to explain that this provided it with needed flexibility “to adjust maintenance funding downward to meet higher-priority needs.” (Opinion pp. 2-4).

Snyder worked at the Naval Surface Warfare Center at Dahlgren, a WCF entity when the sequestration hit. She and her co-workers received a notice of proposed furlough up to eleven workdays due to the sequester. Ms. Snyder at the time worked full time on a Lockheed Martin project under which Lockheed Martin was the sole funder of the project payable to the Treasurer of the United States. (This was a “CRADA,” a Cooperative Research and Development Agreement.) Lockheed Martin requested of Navy management that all civilians assigned to this project be exempted from the furlough, arguing that since it was third party funded like Foreign Military Sales, which had been exempted from the furlough. (p. 5)

Snyder and her co-workers on the CRADA nevertheless were furloughed and she appealed to the Merit Systems Protection Board (MSPB). Some forty cases involving Dahlgren were consolidated for hearing before an Administrative Judge (AJ). Snyder argued among other things that since she was paid out of Lockheed Martin CRADA funds she should have been exempted as her furlough would have no impact on fixing the Department’s budget shortfall. Department witnesses testified that WCF employees like Snyder are not paid directly by the customer, but rather are paid by the government, and that her furlough did in fact help with the budget shortfall at that point in time.

The AJ ruled for the Department, finding Snyder’s furlough was “a reasonable management solution to the shortage of funds caused by sequestration and therefore promoted the efficiency of the service.” (p. 7)

The full Board had only two members at the time and could not agree on disposition of Snyder’s appeal, so the decision of the AJ became the MSPB’s final decision.

Snyder turned to the federal appeals court, which has now ruled in support of the MSPB and the Navy’s furlough decision in her case. The court disagrees with Snyder that the funding source for her salary “is dispositive. …Agencies have broad discretion to take actions to control spending, preserve flexibility, and adjust priorities in response to sequestration.” (pp. 11-12) The court went on to say that the Navy “derived a benefit” by not paying Snyder in the middle of “the critical time period.” (p. 13)

Finding no error in the MSPB’s decision, the appeals court has now affirmed it.

Snyder v. Navy (2016-1940)

© 2017 Susan McGuire Smith. All rights reserved. This article may not be reproduced without express written consent from Susan McGuire Smith.

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About the Author

Susan McGuire Smith spent most of her federal legal career with NASA, serving as Chief Counsel at Marshall Space Flight Center for 14 years. Her expertise is in government contracts, ethics, and personnel law.

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