DOD explores changes to 5-year rule, LQA


By JOHN VANDIVER | STARS AND STRIPES Published: March 17, 2015

STUTTGART, Germany — The Defense Department is considering new limits to housing allowances for civilian employees as it reviews a benefit that costs the government about $500 million annually.

One potential new measure would take aim at the Pentagon’s five year rule, which restricts how long government service employees can remain overseas.

Generally, overseas government service workers who want to stay beyond five years must receive an extension from their respective command. Under the current policy, Living Quarters Allowances continue when the extension is granted.

RELATED: More Stars and Stripes coverage of civilian LQA

Under the Pentagon’s proposed policy change, LQA would no longer be guaranteed upon extension of a tour. To continue receiving LQA on an extended tour, the worker would then need special higher-level approval.

“LQA for an additional 2 years beyond the 5-year limit must be approved by the Head of the DoD Component or an official at the major command or equivalent,” says the DOD policy proposal, dated February 2015. “Any subsequent extension of LQA after an initial extension beyond 5 years requires the approval of the Head of the DoD Component.”

Other potential changes would limit when LQA can be used to make a mortgage payment on a personally owned home overseas. Currently, the allowance can be used toward homes in as many areas as a person is assigned, but the proposed changes would curtail that to a one-time deal.

Also under the recommendations, employees who return to the U.S. would have to remain stateside for two years before being eligible for a return overseas with housing allowance benefits. Waiver for early return could only be granted by component secretaries, according to the recommendations.

“The proposed changes aim to eliminate confusion, simplify the rules, ensure greater consistency and equity in application, mitigate the potential for erroneous approvals of LQA ... and increase oversight,” Lt. Cmdr. Nate Christensen, a Pentagon spokesman, said in an email.

A final decision on the proposed changes has not yet been made, and the measures are currently in the comment-and -review phase, Christensen said.

“As part of the review process, the Department will evaluate the informal comments, adjust the draft instruction as appropriate, and will then submit the draft for formal coordination. The formal coordination to publication period is typically an eight-month process,” he said.

In recent years, rules governing LQA — which covers rental and utility costs — have been cause for much confusion, resulting in hundreds of disputes between DOD and overseas civilians. The most notable case was in 2013, when DOD told about 700 overseas workers in Europe and the Pacific that they erroneously received housing allowances.

The employees were given debt notices for past payments received, which in some cases added up to more than $100,000. In most cases, however, those debts were waived by the government, which stated that bureaucratic mistakes were the cause of the problem.

Housing allowances were not restored for those employees, and the issue continues to anger those affected, who argue that DOD was misapplying regulations and should reinstate the benefits.

In the policy changes under consideration, the Pentagon proposes to clarify past points of dispute, spelling out in greater detail what disqualifies employees from receiving housing allowances.

For example, DOD maintains that employees who enter government civilian service while overseas must have been initially recruited from the U.S. and can only work for that one employer before joining government service.

In the past, it was not unusual for an employee to be recruited overseas as a defense contractor and bounce between contracts before picking up a government service job with housing benefits. It also was not unusual for a separating servicemember to take a nonappropriated fund job, such as an AAFES position without housing benefits, while waiting for a government service position with a housing allowance. DOD maintains such cases violated existing rules, but regulations at the time were vague, resulting in many disputes over what was permissible. The proposed guidelines would make the single-employer rule more explicit.


Recommended LQA changes

Current Proposed

LQA continues during entire overseas tour for employees recruited from CONUS

Continue authorization of LQA for current Federal employees recruited from CONUS to correspond with the 5-year limit; Approval of LQA beyond 5-year limit linked to tour extensions and level of approval


LQA approved locally for those recruited outside of the U.S.

No LQA authorized for local hires or those on time-limited appointments unless a Service Secretary or equivalent exception is granted; Parameters for exceptions limited to those identified in DSSR 031.12

Employees who return to the U.S. after an LQA eligible assignment are LQA eligible if they immediately get another overseas job 

No LQA authorized when an employee in a non-foreign area has been granted a waiver to return to a foreign area after less than two years of physical residency in the U.S. , unless a Service Secretary or equivalent exception is granted

Employees are allowed LQA for  privately-owned quarters (POQ) in as many areas as they are assigned

Limit authorization of LQA for privately-owned quarters to 1 instance per employee and only when certified by housing office and budget office that it is in the best interests of the government

Heads of Components conduct ongoing quality assurance reviews to verify that allowances are proper

Each fiscal year, Heads of DoD Components submit a report to USD(P&R) covering the lesser of 50 or five percent of overseas employees receiving any allowance

Military members and civilian employees separating overseas are LQA eligible for up to 1 year if they do not use their return transportation

Up to 1 year reduced to up to 6 months; Language clarified – in order to retain LQA eligibility, military members are not permitted to accept any non-Federal employment overseas during this up to 6 month period before onboarding



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