IN THE CASE OF:	  

		BOARD DATE:  29 January 2013

		DOCKET NUMBER:  AR20120011590 


THE BOARD CONSIDERED THE FOLLOWING EVIDENCE:

1.  Application for correction of military records (with supporting documents provided, if any).

2.  Military Personnel Records and advisory opinions (if any).


THE APPLICANT'S REQUEST, STATEMENT, AND EVIDENCE:

1.  The applicant requests payment of a $20,000 critical skill retention bonus (CSRB) or in the alternative, 2/3rd of the bonus.

2.  The applicant states the National Guard Bureau (NGB) has determined he was ineligible for the CSRB.  The NGB is seeking to recoup the first $10,000 CSRB payment and it failed to pay the second $10,000 CSRB payment.  He also states:

	a.  In November of 2008, while deployed as the Commander, Company A, 1st Battalion, 161st Infantry, he was approached by Staff Sergeant (SSG) JW, the battalion retention noncommissioned officer (NCO) about participating in the CSRB.  The applicant informed SSG JW that he had received a previous bonus upon entry into the Washington Army National Guard (WAARNG) and asked if this precluded him from receiving the CSRB.  SSG JW told him that he would look into it and verify his eligibility.  Shortly thereafter, the retention NCO told the applicant that he was in his "window" to extend through another bonus, but his
3-year commitment from the CSRB would not begin until August of 2009—when his current bonus commitment expired.  He agreed to those terms and they both signed the paperwork affirming his eligibility based on SSG JW's inquiry.  SSG JW submitted a declaration to that effect.

	b.  He was later informed that his CRSB packet was approved.  Subsequently, he received the first $10,000 pursuant to his contract.  While he expected his second payment in August 2012, at the end his 3-year commitment, he was informed in March 2012 that his bonus had been denied because he was under a previous bonus program at the time he signed the CSRB contract, which he had fully disclosed prior to and at the time of his application for the CSRB.  He submitted a request for an exception to policy, which was denied by a letter dated 21 March 2012.  This same letter informed him that the military would begin recouping his pay.

	c.  He believes that recouping $10,000 from his monthly drill pay over the next year would be unjust and violate principles of contract law.  He expressly disclosed the issue of his previous bonus with the proper authorities, SSG JW and his chain of command (the state incentive manager).  Had SSG JW informed him that he was not eligible, he would not have signed the CSRB contract. Further, subsequent to the completion of his deployment, he went back and finished law school and started a challenging career as an attorney, while raising a family of three young boys.  He believes that if he had not been subject to the service obligation of the CSRB, he would have left the ARNG.  If he had put the same number of hours into his law practice as he had put into his ARNG commitment, he would have made more financially.  Therefore, he believes it is unjust that after he has substantially completed his entire end of the bargain (his 3-year commitment), the NGB should be able to rescind its part--his payment.  

	d.  The refusal of the Army to perform its end of the bargain invokes constitutional issues.  United States v. Larionoff, 431 U.S. 864, 879 (U.S. 1977) (denying United States' attempt to "deprive a service member of [bonus] pay due for services already performed, but still owing)."  In Larionoff, the Court concluded that the benefit rights of service members are fixed at the time of the original contract and that the service branches cannot terminate that entitlement later. Id. at 877.  Also, the Court considered whether benefits entitlements can be terminated by Congress once a service member already earned them and was approved to receive them. Id. at 878-79.  The Court indicated that Congress lacked the power to withdraw the vested rights based on constitutional restraints. Id. at 881-82.  The same result should be reached here.  It has also been held that even when a contract violates a statutory provision, a contract cannot be voided where performance has been rendered by one side.

	e.  In AT&T Co. v. United States, 177 F.3d 1368, 1373-74 (Fed. Cir. 1999), the Federal Circuit considered a fixed-price contract for research and development between AT&T and the United States, the terms of which violated a statutory prohibition against fixed-price contracts in excess of $10 million.  AT&T sought to have the contract declared void for violating the statute.  The Federal Circuit refused to do so, reasoning that the agency's noncompliance with the statute did not require invalidation.  Id. at 1373-74.  The Federal Circuit relied on United States v. Mississippi Valley Generating Co., 364 U.S. 520, 563 (1961), where the Supreme Court explained that when a statute "does not specifically provide for the invalidation of contracts which are made in violation of [a statute's provisions]," a court shall determine "whether the sanction on nonenforcement is consistent with and essential to effectuating the public policy embodied in [the statute]."  After analyzing the applicable statute and legislative history, the Federal Circuit determined that Congress did not intend for the statute to "terminate fully performed contracts because of flawed compliance" by an agency. 177 F.3d at 1375.  Although the AT&T court refused to void the contract, it left open the question of what the appropriate remedy would be:  "When a contract or a provision thereof is in violation of law but has been fully performed, the courts have variously sustained the contract, reformed it to correct the illegal term, or allowed recovery under an implied contract theory; the courts have not, however, simply declared the contract void ab initio."  Gengler v. United States, 453 F. Supp. 2d 1217, 1235 (E.D. Cal. 2006).  Here, even if the contract should not have been entered into given applicable statutes or regulations, it has been performed, and thus the United States should be required to perform. 

	f.  Further, even according to the terms of the CSRB regulation--a recoupment may only be initiated for the portion of the service obligation not completed satisfactorily. 37 U.S.C. § 303A(e)(1)(A).  In accordance with the NGB's denial of his eligibility, he was only ineligible for 8 months of his 3 years.  Thus, he should only have a 1/3 reduction of his $20,000 incentive, not a 100 percent recoupment.  He therefore asks that the Board find him eligible to have received the CSRB, or in the alternative, eligible for 2/3rd of the bonus.

3.  The applicant provides:

* CSRB contract
* Notification incentive discrepancy letter
* Denial of an exception to policy
* Declaration by SSG JW

CONSIDERATION OF EVIDENCE:

1.  The applicant was appointed as a Reserve commissioned officer of the Army and executed an oath of office on 16 December 2001.  He entered active duty on this date.

2.  He served in a variety of stateside or overseas assignments, including Mosul, Iraq from September 2004 to September 2005 and he attained the rank/grade of captain (CPT).  He was honorably released from active duty on 1 August 2006.  

3.  He was appointed as a CPT in the WAARNG and he executed an oath of office on 2 August 2006.  He was assigned to the 81st Brigade Combat Team.
4.  On 18 August 2008, he was ordered to active duty and subsequently served in Iraq from 26 October 2008 to 2 August 2009.  He was assigned to Company A, 1st Battalion, 161st Infantry.  

5.  While on active duty, on 25 November 2008, the applicant executed a CSRB Officer Agreement - Army Reserve Components wherein he agreed that in connection with his assignment to the 1st Battalion, 161st Infantry, a unit of the Selected Reserve and in an area of concentration (AOC) designated as critical for a CSRB, he acknowledged:

* He was not currently under contract for any bonus in the Selected Reserve
* Understood he must satisfactorily serve for 3 years and he was eligible for a $20,000 CSRB by agreeing to serve in the critical AOC 11A (Infantry)
* Payment for the CSRB would not be made before the start of the service period for which the CSRB was being awarded
* Payment would be in accordance with current Selected Reserve (SELRES) guidance 
* If entitlement was terminated, he may be subject to recoupment action

6.  The applicant, SSG JW, and a witnessing officer signed this agreement on
25 November 2008.

7.  On 2 October 2009, the applicant was honorably released from active duty and transferred to the control of the state.  He was promoted to major on 14 April 2011.  

8.  On 21 February 2012, by memorandum, the WAARNG State Incentive Manager notified the applicant that a discrepancy had been discovered with his bonus incentive contract that must be resolved to avoid eligibility termination.  His bonus payment was denied by the NGB because he was still under a service obligation until 3 August 2009 for his Officer Accession Bonus (OAB) when he signed his CSRB agreement on 25 November 2008.  The memorandum further advised him that he could submit an exception to policy to the NGB.

9.  On 21 March 2012, an official in the WAARNG notified him that he was still under a service obligation for the OAB on the day he executed his CSRB.  The NGB denied his request for an exception to policy to retain the $20,000 CSRB and ordered collection of the amount originally paid.

10.  The applicant submitted a declaration written by SSG JW who served as the retention NCO for the 1st Battalion, 161st Infantry.  He states that he briefed the applicant regarding the CSRB and that the applicant did in fact inform him of his 3-year obligation under the OAB.  He, the retention NCO, then contacted the State incentive manager at the time as well as others in theater, and he was assured that the applicant was eligible for the CSRB.  The CSRB contract was reviewed and approved by the WAARNG and the NGB.  The applicant should not be held accountable or have any money recouped. 

11.  An advisory opinion was obtained on 10 September 2012 in the processing of this case.  An official at the Office of the Deputy Chief of Staff, G-1 recommended disapproval of the applicant's request.  The official stated:

	a.  The CSRB is authorized for ARNG officers by the Principal Deputy Under Secretary of Defense for Personnel and Readiness from 12 December 2007 to 11 December 2010.  In order to have been eligible for the CSRB, the applicant must have met the Headquarters, Department of the Army (HQDA) criteria established in All Army Activities (ALARACT) Message 007/2008, and paragraph 6 of the 1 February 2008 NGB implementation guidance memorandum.  

	b.  One of the eligibility criteria was that the officer had to have completed any current contractual obligation for the Officer Accession or Affiliation Bonus (OAB). He had only completed 2 years, 3 months, and 23 days of his 3-year contractual service obligation (he was obligated from 3 August 2006 to 2 August 2009).

	c.  Despite the declaration of the service representative who offered the CSRB to him, the applicant was ineligible for the CSRB when he signed the agreement and would not otherwise be eligible until 3 August 2009.  The agreement was improperly presented to the applicant by the service representative since there was no prior exception to HQDA policy approved by the Assistant Secretary of the Army (Manpower and Reserve Affairs).

	d.  In view of these facts the Office of the Deputy Chief of Staff, G-1, considers the applicant's CSRB agreement null and void.  Furthermore, the NGB suspended the CSRB indefinitely on 1 March 2009.  This means even if the applicant had completed his contractual service obligations for the OAB and afterwards properly signed a CSRB agreement, the CSRB was no longer being offered to ARNG officers after 28 February 2009.  

12.  The applicant responded with a rebuttal on 17 October 2012.  He stated: 

	a.  The G-1 opinion focuses on the technical language of the ALARACT Message and overlooks the underlying contractual issue.  As in all contracts there was a bargain for exchange of value.  He promised to serve 3 years in exchange for the Army's agreement to pay $20,000.  He did not take this decision lightly.  He made various life decisions around this obligation.  
	b.  The Army initiated this program for a reason, to induce officers to obligate themselves for 3 years and he did that.  He also honored his commitment.  Despite doing so, not only is the Army telling him it will not fulfill the final obligation (payment of the second $10,000), it wants its initial $10,000 paid at the start of the contract, back. 

	c.  If he had been informed he was ineligibiley from the beginning or if the Army had refused to pay the original $10,000, he would not have protested.  However, the Army did not.  It waited until he had performed his obligation.  This not only offends underlying principles of fairness, but violates well established contract laws.  

13.  Department of Defense Instruction (DODI) 1304.29 dated 15 December 2004 prescribes the administration of the CSRB.  It provides, in pertinent part, that the CSRB for CPT's in a critical AOC is up to $20,000.00 for a 3-year commitment.

14.  On 1 February 2008, the NGB published implementation guidance for the ARNG CSRB.  The guidance stated that, among other requirements, eligible officers must have completed any current contractual obligation or bonus contract obligation incurred as a result of participation in the officer affiliation bonus and must have been fully qualified and serving in a designated critical skill AOC in a qualifying unit.  A list of the CSRB program's critical AOCs included AOC 11A.  

15.  ALARACT Message 007/2008, date/time group 182327Z January 2008:

* provided policy guidance for implementing new CSRB for ARNG officers;
* stated the purpose of the policy was to retain qualified commissioned officers who possessed critical skills, including AOC 11A
* required officers to hold the rank of CPT, pay grade O-3
* required officers to have not less than 6 years, or more than 12 years of commissioned service

16.  U.S. Army Reserve Memorandum, Subject:  Army Reserve Implementation Guidance for the CSRB – Army Reserve for CPT's, dated 29 February 2008, shows the purpose of the program was to retain qualified CPT's possessing the 

critical skills to meet critical manpower shortages in the Army Reserve.  It shows Army Reserve CPT's eligible under the CSRB must:

* not be under an agreement for an OAB
* have completed their Statutory Military Service Obligation
* not attain or exceed 25 years of service during the bonus agreement period
* possess a critical skill on the OSD approved list
* be AOC qualified and assigned against a valid position vacancy on the Unit Manning Report
* agree to waive a stabilization period and mobilize with their current unit, if required, regardless of previous mobilization or deployments

17.  Department of Defense, Financial Management Regulation 7000.14-R, Volume 7A (Military Pay Policy and Procedures - Active Duty and Reserve Pay), Chapter 56 (Selected Reserve Accession, Affiliation, Enlistment, and Reenlistment Bonuses) states:

	a.  Paragraph 560102 (OAB) provides the conditions of entitlement and shows the Secretary concerned may pay an affiliation bonus to an eligible officer who enters into an agreement with the Secretary to serve for a specified period in the Selected Reserve of the Ready Reserve.  The officer must enter into an agreement: (1)  to serve in a critical officer skill designated by the Secretary concerned; and (2)  to meet a manpower shortage in a unit of that Selected Reserve; and particular pay grade in that Military Department.

	b.  An officer is eligible for an affiliation bonus under this section if the officer either: serves on active duty for a period of more than 30 days; is a member of a Reserve Component (RC) not on active duty, and if the member formerly served on active duty, then was released from active duty under honorable conditions; and is not entitled to retired or retainer pay.

	c.  The Secretary concerned will designate for an Armed Force under their jurisdiction the critical officer skills to which the bonus authority under this subsection is to be applied.  A skill may be designated as a critical officer skill for an Armed Force if it is critical for that Armed Force to have a sufficient number of officers who are qualified in that skill. 

	d.  Paragraph 560103 provides that an agreement entered into with the Secretary concerned under this paragraph will require the person entering into that agreement to serve in the Selected Reserve for a specified period.  The period specified in the agreement will be any period not less than 3 years that the Secretary concerned determines appropriate to meet the needs of the RC in which the service is to be performed.

18.  Title 37, U.S. Code, section 373(b), states that pursuant to the regulations prescribed to administer this section, the Secretary concerned may grant an exception to the repayment requirement and requirement to terminate the payment of unpaid amounts of a bonus, incentive pay, or similar benefit if the Secretary concerned determines that the imposition of the repayment and termination requirements with regard to a member of the Uniformed Services would be contrary to a personnel policy or management objective, would be against equity and good conscience, or would be contrary to the best interests of the United States.

19.  United States v. Larionoff:

	a.  On 23 June 1969, plaintiff Larionoff enlisted in the U.S. Navy for 4 years.  Shortly thereafter, he underwent a series of tests and interviews to determine his appropriate duty assignment.  During the course of those interviews with Navy personnel, Larionoff decided to participate in the Advanced Electronic Field (AEF) training program, successful completion of which would place him in the Communications Technician-Maintenance (CTM) service rating.  At the time he decided to enter the AEF program, Larionoff was aware that the CTM rating was classified as a "critical military skill" qualifying for a Variable Reenlistment Bonus equal to four times the amount of an enlisted member's Regular Reenlistment Bonus.  Under applicable Navy regulations, the AEF program involved a 6-year service obligation, and the plaintiff Larionoff consequently executed the "Agreement to Extend Enlistment":

	b.  On 9 March1970, Larionoff successfully completed the AEF training program and was advanced to the CTM rating and the E-4 pay grade.  He executed a document on that date attesting to his advancement to the E-4 pay grade.  Up to this point in time, neither the Navy nor plaintiff Larionoff had reason to complain about the events that had transpired.  The complicating factor, however, was that Larionoff still expected to receive a Variable Reenlistment Bonus once he entered into his period of extended service on 23 June 1973.  The Navy cast some doubt on that expectation when it announced on 24 March 1972 that effective 1 July 1972 the CTM rating would no longer be designated as a "critical military skill" eligible for the VRB award.  After realizing that the Navy considered him ineligible for a VRB, Larionoff had his elected representatives in Congress communicate with the Bureau of Naval Personnel concerning his eligibility for the VRB.  These efforts were unsuccessful; the Bureau asserted that the CTM service rating had been removed from the list of eligible service ratings, thus precluding payment of a VRB to the plaintiff Larionoff.

DISCUSSION AND CONCLUSIONS:

1.  Although not available for review with this case, it appears when the applicant was appointed in the ARNG on 2 August 2006, he received an OAB for a 3-year commitment from 3 August 2006 to 2 August 2009.  This prevented him from receiving any other incentive while contractually obligated during this period.  

2.  Despite that knowledge, and while still contractually obligated, the applicant signed a $20,000 CSRB contractual agreement on 25 November 2008, with a service representative and a witnessing officer.  One of the clauses of this contract states "I am not under contract for any bonus in the Selected Reserve."

3.  He was paid the first installment of $10,000.  However, it appears at some stage the WAARNG notified him that he had been found indebted to the Government for termination of his CSRB, in accordance with the DOD Financial Management Regulation.  He subsequently submitted a request to the NGB requesting as an exception to policy that the termination of the CSRB occur without recoupment.  His request was denied and he was notified the bonus was terminated and that funds dispersed would be recouped.

4.  One of the eligibility criteria for the CSRB was that the officer had to have completed any current contractual obligation for the OAB.  The applicant in this case had only completed 2 years, 3 months, and 23 days of his 3-year contractual service obligation.  The applicant was ineligible for the CSRB when he signed the agreement and he would not be eligible until 3 August 2009. 

5.  The applicant and the service representative misrepresented a material term. They made no pen and ink amendment correctly stating applicant's current obligation or his proposed start date with respect to the running of his CSRB obligation.  This sub-rosa change to the offer rendered the CSRB agreement null and void. 

6.  Further, even if the applicant had completed his contractual service obligations for the OAB and the Board accepted his argument and were to recommend correction of his records to show he properly signed a CSRB agreement at the conclusion of his original contractual agreement, the CSRB was no longer being offered to ARNG officers after 28 February 2009, so applicant could not have entered into such an agreement. 

7.  The applicant's actions, albeit in concert with a Government representative, created a facially-valid acceptance of the Government's standard CSRB offer by misstating one of its terms.  This prevented review and approval officials from discovering his ineligibility and induced the improper payment.  Further, to allow the applicant to essentially write his own contract in the manner he proposes is to eviscerate the Secretary's authority and ability to manage personnel matters and makes program adjustments when and as he deems fit.  The applicant's citations to case law simply so not apply under the facts of the case.  

8.  The applicant's service and commitment to the ARNG are not in question.  However, he knowingly executed an invalid contract.  While it is unfortunate that the applicant and the retention NCO may have been misinformed as to his CSRB entitlement, payment of the CSRB to the applicant would constitute preferential treatment, especially where the applicant's own conduct and plain misrepresentation contributed to the errors and confusion that existed.  He should not receive a benefit that is not available to others.  Given that the bonus is no longer authorized as of 28 February 2009, there is no effective relief that can or should be given by the Board, this includes the alternative request.

BOARD VOTE:

________  ________  ________  GRANT FULL RELIEF 

________  ________  ________  GRANT PARTIAL RELIEF 

________  ________  ________  GRANT FORMAL HEARING

____X___  ____X___  ___X__ _  DENY APPLICATION

BOARD DETERMINATION/RECOMMENDATION:

The evidence presented does not demonstrate the existence of a probable error or injustice.  Therefore, the Board determined that the overall merits of this case are insufficient as a basis for correction of the records of the individual concerned.



      _______ _  X ______   ___
               CHAIRPERSON
      
I certify that herein is recorded the true and complete record of the proceedings of the Army Board for Correction of Military Records in this case.

ABCMR Record of Proceedings (cont)                                         AR20120011590



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ABCMR Record of Proceedings (cont)                                         AR20120011590



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