PROCEEDINGS

	IN THE CASE OF:      

	BOARD DATE:           4 November 2003
	DOCKET NUMBER:  AR2003087388

	I certify that hereinafter is recorded the true and complete record of the proceedings of the Army Board for Correction of Military Records in the case of the above-named individual.  

	Mr. Carl W. S. Chun		Director	
	Mr. Jessie B. Strickland		Analyst	

The following members, a quorum, were present:

	Mr. Fred N. Eichorn		Chairperson	
	Ms. Gail J. Wire		Member	
	Mr. Antonio Uribe		Member	

	The applicant and counsel if any, did not appear before the Board.

	The Board considered the following evidence:

	Exhibit A - Application for correction of military 
            records
	Exhibit B - Military Personnel Records (including
	            advisory opinion, if any)

FINDINGS:

1.  The applicant has exhausted or the Board has waived the requirement for exhaustion of all administrative remedies afforded by existing law or regulations.

2.  The applicant requests, in effect, the reversal of a Report of Survey (ROS) finding that found him liable in the amount of $2,200.00 and refund any monies collected to date.

3.  The applicant states, in effect, that a laptop computer issued to him in October 2000 was stolen from his privately owned vehicle outside of his office at Fort McPherson, Georgia.  A ROS was conducted by his local command and he was found not to be responsible for its loss.  However, when the ROS was forwarded to the approval authority in Maryland, the finding was reversed and he was found liable for the amount of $2,573.00, based on 5% depreciation of the original purchase price.  He goes on to state that he appealed the decision contending that the cost assessed should have been based on fair market value (FMV).  His appeal was finally granted; however, his command used the wrong approach in determining FMV, in that his command contacted a sales representative and asked casually what he (the representative) thought the computer would be worth.  The representative estimated the price at $2,200.00 without any knowledge of the condition of the computer or what the market was for used computers.  The representative only deals with new computers.  However, his estimate was accepted and he was assessed liability for $2,200.00.  However, he provided information to show that the FMV for the computer was between $600 and $1,000, with $800 being the mean value.  He continues by stating that he bought a replacement for the laptop that is better than the one lost and it only cost him $1,138.00.  He continues by stating that if the Board does not reverse the findings of the ROS, he desires a FMV be assessed by the Board and that any monies above the assessment that has been paid be refunded to him and collection actions stopped.  In support of his application he submits a copy of the ROS (Number 01-01), copies of his appeals and copies of documents related to FMV of the computer in question.

4.  The applicant is a general schedule (GS) civilian employee at Fort McPherson, Georgia.  The records pertaining to this case were provided by the applicant with his application.

5.  On 12 June 2001, a ROS was conducted to ascertain the circumstances surrounding the loss of a Dell Inspiron laptop computer on 8 June 2001, that had been issued to the applicant and which the applicant claimed was stolen from his POV.  The survey officer found that the computer had been lost through theft (vehicle break-in) and recommended that the applicant not be found liable for the loss of the property.  The original cost of the computer was determined to be $3,864.33.

6.  The appointing officer concurred with the recommendations of the survey officer and forwarded the ROS to the approval authority in Maryland.  The approval authority rejected the findings and recommendation on 18 September 2001 citing that the investigation demonstrates that the loss resulted from negligent actions by the applicant leaving a government computer in an unattended vehicle.  He recommended that the applicant be held pecuniary liable in the amount of $2,573.00.

7.  On 27 September 2001, a memorandum was dispatched to the applicant notifying him that he was being recommended for charges of financial liability to the United States Government in the amount of $2,573.00, for the loss of the computer.  He was advised of his rights and options, one of which was his right to rebut the findings of the ROS recommendations. 

8.  On 12 October 2001, the applicant submitted a rebuttal to the financial liability of the ROS recommendations.  He contended that the survey and appointing officer were correct in their original determination that he was not at fault and should not be held liable.  He also asserted that the financial liability was incorrect, that it was not a FMV and should not be considered for possible liability.  He provided documents to show that the same manufacturer had made a recent quote of $1,471.14.  He recommended that he not be held financially liable for the computer.

9.  On 2 November 2001, a memorandum was dispatched to the applicant notifying him that he had been assessed financial liability in the amount of $2,573.00, for the loss of the computer.  He was again advised of his rights and options.

10.  On 29 November 2001, the applicant submitted a request for reconsideration of the financial liability assessed against him.  In his request he again asserted that he was not negligent or careless in safeguarding the property issued to him and that the regulation cited by the command's legal advisor was not applicable to his case and amounted to legal error.  He also indicated that the agency routinely left such equipment in government vehicles that had no trunks and to imply that by leaving the computer in his truck was any different was not reasonable.  On 5 December 2001, his request for reconsideration was denied.

11.  On 5 March 2002, the Defense Finance and Accounting Service (DFAS), Rock Island, Illinois, notified the applicant that he was indebted to the government in the amount of $2,573.00.  He was also advised that he could appeal the decision and that he must contact DFAS officials within 30 days if he desired to do so.

12.  On 8 April 2002, he submitted a request for a hearing to contest the validity of the debt and the amount of the debt assessed.  He contended that the finding of negligence by the approval authority was inconsistent with the survey and appointing officers findings and that the approval authority had failed to follow the applicable regulation which provided that FMV be used to assess the proper liability.

13.  In July 2002, a hearing was held by DFAS officials and a determination was made that the debt was valid.

14.  The applicant submitted a request on 12 August 2002, to re-open the ROS and he requested that he be allowed to replace the stolen/lost computer in kind.  The approval authority responded to his request on 12 September 2002 indicating that the provisions cited in the applicable regulation did not apply to Federal employees, but only to private parties.  However, he did state that fixing a FMV value to the computer was possible and equitable under the circumstances.  He further indicated that an email response from a computer company estimated the FMV at $2,200.00 and that the ROS would be amended to reflect that he was being held liable for $2,200.00.

15.  On 3 September 2002, the applicant purchased a new laptop computer of the same brand, only more powerful and a new improved version of the lost computer, for $1,260.00.

16.  Army Regulation 735-5 provides basic policies and procedures for accounting for United States Army property and accounting for lost, damaged or destroyed property.  Appendix B of that regulation provides instruction for computing the actual loss to the government when property is lost damaged or destroyed.  It provides that the value of lost property will be the actual value of the property at the time of the loss.  Actual value at the time of loss may be computed in one of three ways, FMV, Depreciated Value and Standard Rebuild Cost (not applicable in this case).

17   Fair Market Value, the preferred method of fixing the value of the property at the time of loss or damage is by a qualified technician's two-stage appraisal of its FMV.  First a technician determines the condition of the item at the time of the loss or damage through personal knowledge, review of maintenance records, conversations with using personnel, and any other means available.  Second, the commercial market will be reviewed to determine the price that similar items in similar condition have sold for in commercial transactions within the last 6 months.  Appraisal guides accepted in the commercial market, such as the "NADA Official Used Car Guide" or the "NACD Computer Blue Book" may be used for this purpose. 

18.  Depreciated Value.  When determination of FMV is not possible or equitable, the value at the time of loss or destruction may be computed by subtracting depreciation from the current Army Master Data File (AMDF) or other standard price of a new item.  Depreciation is not deducted on loss or damage to new property.  Depreciation for electronic equipment and office furniture will be computed at 5% per year of service up to 50%. 

CONCLUSIONS:

1.  After reviewing the ROS, the Board agrees with the decision of the approval authority to hold the applicant pecuniarily liable for the cost of the computer.  

2.  However, the Board does not agree with the method used by the approval authority in determining the FMV of the computer or the amount being charged to the applicant for the computer.

3.  The Board also finds that the applicant has provided sufficient evidence to show that the FMV of a used computer was on average $800.00 and that a new computer, that is of the same brand and better, costs only $1,260.00.  

4.  Accordingly, the Board finds that it is unjust to require the applicant to pay $2,200.00 for a used computer that can be replaced for approximately half the cost he is being charged.

5.  The Board also finds, in the absence of evidence as to the computer's condition, that the reasonable approach to determining the costs to the applicant should be to take the average FMV of $800.00, an amount the Board finds is a fair and equitable amount for all parties concerned.

6.  In view of the foregoing, the applicant’s records should be corrected as recommended below.

RECOMMENDATION:

1.  That all of the Department of the Army records related to this case be corrected by amending ROS Number 01-01, pertaining to the individual concerned, to show that he is held pecuniarily liable in the amount of $800.00 instead of $2,200.00 and that any funds already paid by him, in excess of $800.00, be returned to him. 

2.  That so much of the application as is in excess of the foregoing as pertains to his request to be released from liability, be denied.

BOARD VOTE:  

__gw____  ___fe ___  ___au___  GRANT AS STATED IN RECOMMENDATION

________  ________  ________  GRANT FORMAL HEARING

________  ________  ________  DENY APPLICATION

		____Fred N. Eichorn _____
		        CHAIRPERSON

INDEX

CASE ID	AR2003087388	
SUFFIX		
RECON	YYYYMMDD	
DATE BOARDED	2003/11/04	
TYPE OF DISCHARGE		
DATE OF DISCHARGE		
DISCHARGE AUTHORITY		
DISCHARGE REASON		
BOARD DECISION	GRANT PARTIAL	
REVIEW AUTHORITY		
ISSUES         1.  1024	116.0100/Rpt of survey	
2.		
3.		
4.		
5.		
6.