Calvin Turner v. Department of Agriculture

UNITED STATES OF AMERICA
MERIT SYSTEMS PROTECTION BOARD
2023 MSPB 25Docket No. DC-1221-21-0292-W-2
Calvin Wesley Turner, Jr.,
Appellant,
v.
Department of Agriculture,
Agency.
August 30, 2023
Janel Quinn, Esquire, Nicholas Woodfield, Esquire, and R. Scott Oswald,
Esquire, Washington, D.C., for the appellant.
Christian E. Pagan, Esquire, and Stephanie Ramjohn Moore, Esquire,
Washington, D.C., for the agency.
BEFORE
Cathy A. Harris, Vice Chairman
Raymond A. Limon, Member
OPINION AND ORDER
¶1 The appellant has filed a petition for review of the initial decision, which
denied corrective action in his individual right of action (IRA) appeal. For the
reasons discussed below, we GRANT the appellant’s petition for review,
VACATE the initial decision, and REMAND this matter to the regional office for
further adjudication in accordance with this Remand Order .
BACKGROUND
¶2 The appellant was the Director of the National Finance Center (NFC) , a
component of the Office of the Chief Financial Officer of the U.S. Department of
2
Agriculture (USDA). Turner v. Department of Agriculture, MSPB Docket
No. DC-1221-21-0292-W-2, Appeal File (W-2 AF), Tab 8 at 7, 14. 1 NFC is a
nonappropriated fund (NAF) instrumentality, meaning that its budget is solely
derived from the fees it charges its customers for the services it provides. W-2
AF, Hearing Transcript, Sept. 27, 2021 (HT 1), at 16 (testimony of the appellant).
Specifically, NFC provides human resource management and administrative
services, such as payroll, billing, collections, recordkeeping, and financial
information management, to other components of USDA and other Federal
entities. W-2 AF, Tab 8 at 8. NFC and its customers enter into contracts, known
as Interagency Agreements (IAs), which set forth the anticipated cost of NFC’s
services based on an estimation of direct costs attributable to the individual
customer, as well as indirect costs, i.e., administrative or overhead expenses,
which are distributed across all NFC customers using a cost allocation
methodology. 2 HT 1 at 16-19 (testimony of the appellant).
¶3 In or around January 2017, NFC provided an IA to the Associate Chief
Financial Officer (CFO) for USDA’s Financial Management Services (FMS),
which estimated the cost of NFC’s administrative services for FMS at
$10.2 million. Id. at 21-22, 31 (testimony of the appellant). The proposed FMS
IA encompassed the same level of administrative services that NFC had provided
to FMS during the previous fiscal year (FY), i.e., FY16, which had cost
1
The appellant resigned from his position on January 29, 2021. W -2 AF, Tab 8
at 14-17. There is no evidence that the appellant raised his resignation to the Office of
Special Counsel. Furthermore, his resignation is not identified as a personnel action at
issue in this appeal in the administrative judge’s prehearing order, and, despite being
afforded the opportunity, the appellant did not raise any objection to the order’s
characterization of his claim. W-2 AF, Tab 11. The appellant also did not object on
review to the administrative judge not addressing his resignation in her initial decision.
Thus, we do not address his resignation.
2
The background regarding the agency’s operations is largely drawn from the
appellant’s hearing testimony. The agency does not contest this testimony.
3
$8.7 million, but for which FMS was only charged $5.4 million. Id. at 150-52
(testimony of the appellant); W-2 AF, Tab 10 at 40-41. FMS objected to the
$10.2 million IA, asserting that the rates were too high, and stating that it only
had approximately $5.9 million available to pay for NFC’s services in 2017. Id.
at 21-22 (testimony of the appellant). Therefore, the appellant worked with his
supervisor, the Acting Deputy CFO at the time, as well as the Associate CFO for
FMS, to determine what services could be pared back so that the IA’s cost could
be lowered. Id. at 23-24, 26-29 (testimony of the appellant).
¶4 However, on April 19, 2017, NFC’s CFO emailed the appellant, requesting
that he sign an IA for FMS for FY17, which had an estimated cost of
$5.9 million, with no reduction in services. Id. at 31-32 (testimony of the
appellant); W-2 AF, Tab 10 at 74-75. The appellant forwarded the email to his
supervisor, explaining his concerns that, by reducing the overall cost but not the
services provided to FMS, NFC would not be able to recover the actual cost of its
services, and “[NFC would be] subsidizing FMS operations with a combination of
4% profit and other customers’ money.” 3 HT 1 at 32-33 (testimony of the
appellant); W-2 AF, Tab 10 at 74.
¶5 The appellant continued to express concerns about the $5.9 million FMS IA,
requesting that his supervisor confirm that the parties agreed that $5.9 million
was only a portion of the $10.2 million that NFC’s services would cost, and that
NFC would provide FMS with a modified IA for the remaining balance . W-2 AF,
Tab 10 at 73-74. His supervisor agreed that the $5.9 million was only a part of
the total cost of services, but claimed that NFC should recalculate its cost
methodology to determine the remaining balance. Id. at 73. Nevertheless, she
still urged the appellant to sign the IA, stating, among other things, that “[w]e
3
The appellant explained in his testimony that NFC is allowed to retain a 4% profit,
which is intended to be used for capital investments. HT 1 at 19-20 (testimony of the
appellant).
4
need to move past this barrier, so that we can get to the next one. If you do not
sign [the IA], there is no executable agreement or funds for [NFC] to repay [its]
capital expenses.” Id. at 72. The appellant also emailed the NFC’s Working
Capital Fund Director about his concerns, stating that signing the $5.9 million
FMS IA was “not only unethical and illegal, but it [would] further cripple NFC’s
financial position,” and that he believed he was being “pressured to do something
illegal.” 4 W-2 AF, Tab 4 at 10-13.
¶6 Several years later, on October 19, 2020, the appellant filed a complaint
with the Office of Special Counsel (OSC) alleging that the agency retaliated
against him for his disclosures regarding the $5.9 million FMS IA by taking
certain personnel actions, including: (1) revoking his authority to sign IAs over
$5 million in September 2017; (2) lowering his rating to exceeds fully successful 5
in October 2017; (3) issuing him a letter of counseling in October 2019;
(4) lowering his rating to exceeds fully successful in October 2019; (5) subjecting
him to a random drug test in November 2019; (6) placing him on administrative
leave in June 2020; and (7) issuing him a letter of reprimand in July 2020.
Turner v. Department of Agriculture, MSPB Docket No. DC-1221-21-0292-W-1,
Initial Appeal File (IAF), Tab 1 at 7, Tab 12 at 10-39. After OSC notified the
appellant that it had concluded its investigation, the appellant filed an IRA appeal
with the Board, asserting the same claims he raised before OSC. IAF, Tab 1. The
4
Eventually, in August 2017, the appellant signed a $6.3 million FMS IA, which
contained modified language setting forth the exact services provided to FMS, when
those services would terminate, and stating that anything outside of those services
would be subject to a new agreement. HT 1 at 59-61, 179-80 (testimony of the
appellant).
5
Although the appellant alleges that he received a “superior” rating on his FY17 and
FY19 performance evaluations, IAF, Tab 6 at 7-9, 11-12, the agency’s performance
management system does not have a “superior” rating, but instead, the second from the
top rating is an “exceeds fully successful” rating, W -2 AF, Tab 4 at 50. We will use the
terminology reflected in the agency’s performance management system.
5
administrative judge issued a jurisdictional order in which she apprised the
appellant of the applicable law and burden of proof requirements for an IRA
appeal and ordered him to submit evidence and argument establishing Board
jurisdiction. IAF, Tab 3. The appellant responded to the order, IAF, Tabs 6-12,
and the administrative judge found that the appellant exhausted his administrative
remedies and made a nonfrivolous allegation of jurisdiction, IAF, Tab 26.
¶7 After holding a hearing, the administrative judge issued an initial decision
denying the appellant’s request for corrective action. W-2 AF, Tab 23, Initial
Decision (ID). Specifically, the administrative judge found that the appellant
failed to establish that he held a reasonable belief that his disclosures about the
$5.9 million FMS IA evidenced a violation of law, rule, or regulation. ID
at 10-12. Thus, she found that the appellant failed to establish by preponderant
evidence that he made a protected disclosure and denied his request for corrective
action. 6 ID at 12-13.
¶8 The appellant has filed a petition for review, arguing that his disclosures
regarding the $5.9 million FMS IA were protected because he held a reasonable
belief that they evidenced a violation of the Antideficiency Act, which governs
the expenditure of Federal funds. Petition for Review (PFR) File, Tab 1 at 6-27.
The appellant also asserts that the reasonableness of his belief is supported by the
6
The appellant also alleged to OSC and before the administrative judge that he made
protected disclosures when, from August 2017 through 2019, he raised concerns that
NFC’s computer systems were not secure and that the agency needed to fill critical
information technology positions. IAF, Tab 1 at 22, Tab 26 at 1-2. However, the
appellant seemingly abandoned this disclosure prior to the hearing, as he did not object
to the prehearing order which did not include the disclosure, the disclosure is not
addressed in the initial decision, and the appellant has not raised it as an issue on
review. See Thurman v. U.S. Postal Service, 2022 MSPB 21, ¶ 18 (summarizing factors
to be considered when determining whether an appellant waived or abandoned an
affirmative defense, to include the degree to which the appellant pursued the defense
after raising it, and whether the appellant objected to the defense ’s exclusion from the
summary of issues to be decided). Accordingly, we do not address it.
6
testimony of three witnesses, which the administrative judge failed to consider .
Id. at 10-18, 26-27. The agency responded in opposition to the appellant’s
petition for review, and the appellant replied to the agency’s response. PFR File,
Tabs 3-4.
ANALYSIS
NAF employees of non-military instrumentalities meet the definition of employee
under 5 U.S.C. § 2105(a) and therefore can file IRA appeals.
¶9 First, because we are presented with the unique situation of a n NAF
employee who is not employed by a military exchange or instrumentality, we t ake
this opportunity to clarify that NAF employees of non-military instrumentalities
may file IRA appeals. The Board’s jurisdiction is not plenary; it is limited to
those matters over which it has been given jurisdiction by law, rule , or regulation.
Maddox v. Merit Systems Protection Board, 759 F.2d 9, 10 (Fed. Cir. 1985). The
Board, as well as the U.S. Court of Appeals for the Federal Circuit (Federal
Circuit), broadly have held that NAF employees have no right to file IRA appeals
with the Board. See Clark v. Merit Systems Protection Board, 361 F.3d 647,
650-51 (Fed. Cir. 2004) (finding that employees serving in NAF positions have
no right to file IRA appeals); DeGrella v. Department of the Air Force,
2022 MSPB 44, ¶¶ 9-15 (same); Clark v. Army and Air Force Exchange Service,
57 M.S.P.R. 43, 44-46 (1993) (same). However, the cases cited address the
Board’s jurisdiction over IRA appeals filed by NAF employees of military
exchanges or instrumentalities. It does not appear that the Board has ever made a
pronouncement in a precedential decision as to its jurisdiction when, as here, the
NAF employee does not work for a military exchange or instrumentality.
Accordingly, although neither party disputes the Board’s jurisdiction, we take the
opportunity to address the basis of the jurisdiction here.
¶10 The right to file an IRA appeal with the Board derives from 5 U.S.C.
§ 1221(a), which provides a right to seek corrective action from the Board to “an
employee, former employee, or applicant for employment.” Maloney v. Executive
7
Office of the President, 2022 MSPB 26, ¶ 33. To be an employee under
section 1221(a), an individual must meet the definition of employee under
5 U.S.C. § 2105. Id. Under 5 U.S.C. § 2105(a), an “employee” is an officer and
an individual: (1) who is appointed in the civil service by one of the types of
individuals enumerated in the statute acting in their official capacity; (2) engaged
in the performance of a Federal function under authority of law or an Executive
act; and (3) subject to the supervision of an authorized official while engaged in
the performance of the duties of his position. Id.¶11 As relevant to our discussion here, section 2105 also excludes certain
categories of individuals from the definition of employee. For instance, pursuant
to 5 U.S.C. § 2105(c), an NAF employee of “the Army and Air Force Exchange
Service, Navy Ships Stores Program, Navy exchanges, Marine Corps exchanges,
Coast Guard exchanges, and other instrumentalities of the United States under the
jurisdiction of the armed forces conducted for the comfort, pleasure, contentment,
and mental and physical improvement of personnel of the armed forces ,” with
certain exceptions not applicable here, are excluded from the definition of
“employee” for the purpose of laws administered by the Office of Personnel
Management. 7 The Board and the Federal Circuit have held that, for the purpose
of laws administered by the Office of Personnel Management , NAF employees of
military instrumentalities cannot file IRA appeals because they do not meet the
definition of employee under 5 U.S.C. § 2105. Clark, 361 F.3d at 650-51;
DeGrella, 2022 MSPB 44, ¶¶ 9-15; Clark, 57 M.S.P.R. at 44-46. However, when,
as here, an appellant is an NAF employee of a non-military instrumentality, the
exclusion set forth in 5 U.S.C. § 2105(c) does not apply. Thus, the Board has
7
The Board and the Federal Circuit have found that the statutory provisions that allow
an employee to seek corrective action from the Board by filing an IRA appeal, 5 U.S.C.
§§ 1214(a)(3) and 1221(a), make them applicable to “employees” as defined in 5 U.S.C.
§ 2105. DeGrella, 2022 MSPB 44, ¶¶ 9-15; Clark, 57 M.S.P.R. at 44-46; see Clark,
361 F.3d at 650-51.
8
jurisdiction over appeals filed by NAF employees of non-military
instrumentalities.
The appellant established that he held a reasonable belief that his disclosures
evidenced a violation of law.
¶12 Under the Whistleblower Protection Enhancement Act (WPEA), at the
merits stage of the appeal, the appellant must prove by preponderant evidence
that he made a protected disclosure under 5 U.S.C. § 2302(b)(8), or engaged in an
activity protected by 5 U.S.C. § 2302(b)(9)(A)(i), (B), (C), or (D), and that such
disclosure or activity was a contributing factor in an agency’s personnel action.
Smith v. Department of the Army, 2022 MSPB 4, ¶ 13. If the appellant meets that
burden, the agency is given an opportunity to prove by clear and convincing
evidence that it would have taken the same personnel action absent the protected
disclosure or activity. Id.; see 5 U.S.C. § 1221(e)(1)-(2).
¶13 The administrative judge found that the appellant did not hold a reasonable
belief that his disclosures regarding the $5.9 million FMS IA evidenced a
violation of law, rule, or regulation, finding that: (1) NFC charges were not
established by law and could be changed; (2) the appellant and his supervisor
worked together to ensure that NFC would fully recover its costs from FMS; and
(3) IAs were part of a negotiation process that “inherently involve[d] estimating
costs” which could be modified later. ID at 10-12. On review, the appellant
disputes these findings, contending that his disclosures about the $5.9 million
FMS IA evidenced a violation of law, rule, or regulation , 8 pointing to the
Antideficiency Act as an example of such a law. PFR File, Tab 1 at 6-19, 23-28.
8
Although the subheading in the appellant’s petition for review states that his
disclosures about the $5.9 million FMS IA evidenced a substantial and specific danger
to public safety, both on review and before the administrative judge, the appellant has
only argued that his disclosures evidenced a violation of law, rule, or regulation. PFR
File, Tab 1 at 23-26; W-2 AF, Tab 3 at 13-14. As this appears to be a typographical
error, we do not address it further.
9
¶14 A protected disclosure is a disclosure that an appellant reasonably believes
evidences a violation of any law, rule, or regulation, gross mismanagement, a
gross waste of funds, an abuse of authority, or a substantial and specific danger to
public health or safety. 5 U.S.C. § 2302(b)(8)(A); Smith, 2022 MSPB 4, ¶ 14. A
reasonable belief exists if a disinterested observer with knowledge of the essential
facts known to and readily ascertainable by the appellant could reasonably
conclude that the actions of the Government evidence one of the categories of
wrongdoing listed in section 2302(b)(8)(A). Smith, 2022 MSPB 4, ¶ 14. The
appellant need not prove that the matter disclosed actually established one of the
types of wrongdoing listed under section 2302(b)(8)(A); rather, he must only
show that the matter disclosed was one that a reasonable person in his position
would believe evidenced any of the situations specified in section 2302(b)(8)(A).
Id. Furthermore, the Board has found that an employee need not wait until an
actual violation of law occurs for his disclosure to be protected under
whistleblower protection statutes. Covington v. Department of the Interior,
2023 MSPB 5, ¶ 38. 9
¶15 We find that a disinterested observer could reasonably conclude that the
appellant’s disclosures regarding the $5.9 million FMS IA evidenced a violation
of a law, rule, or regulation. While it is expected that IAs include only an
estimate of the cost of services, which can be modified if needed, the initial
estimation should nevertheless be based on actual projections of the anticipated
9
When, as here, a disclosure concerns a potential violation of law, as opposed to an
event that has already taken place, an appellant must prove that he reasonably believed
the potential wrongdoing was real and immediate. Covington, 2023 MSPB 5, ¶ 38. In
order to strike a balance between preventing Government wrongdoing on the one hand
and encouraging “healthy and normal” discussions of “possible courses of action” that
may avoid such wrongdoing on the other hand, the determination of whether the
disclosure is protected “depends on the facts.” Id. (quoting Reid v. Merit Systems
Protection Board, 508 F.3d 674, 678 (Fed. Cir. 2007)). Under the circumstances present
here, we find that the potential for wrongdoing was real and immediate.
10
cost of services. Here, NFC knew that $5.9 million was not representative of the
actual cost of the services being provided to FMS when it requested the appellant
sign the IA. HT 1 at 20-23 (testimony of the appellant), 270 (testimony of the
appellant’s supervisor); W-2 AF, Tab 4 at 10-13, Tab 10 at 72-74. Thus, it
appears that NFC was capitulating to what FMS was willing or able to pay for
those services. HT 1 at 21-22 (testimony of the appellant); W-2 AF, Tab 4
at 10-13.
¶16 The appellant’s concerns are further supported by the fact that, according to
the appellant, FMS had a history of not paying fully for the actual cost of NFC’s
services. For instance, according to the appellant, in FY16, FMS only paid
$5.4 million for administrative services which, in reality, cost $8.7 million. 10
HT 1 at 150-51 (testimony of the appellant); W-2 AF, Tab 10 at 40-41.
Additionally, the appellant testified that, although FMS had stated that it would
remove certain services, i.e., human resource servicing, from NFC’s purview to
reduce the cost, FMS never did so. HT 1 at 34-36 (testimony of the appellant).
Therefore, according to the appellant, NFC continued to provide the same level of
service even though FMS was unwilling to compensate NFC for that level of
service. Id. at 21-23, 34-36 (testimony of the appellant).
¶17 The appellant has testified without dispute that NFC is a business center,
which derives its budget solely from the fees it charges to its customers. HT 1
at 16 (testimony of the appellant). Using those fees, NFC must cover its own
administrative and overhead expenses, and ideally obtain up to a 4% profit
margin, which it can then use for capital investments. Id. at 16-20 (testimony of
the appellant). Should FMS not pay the actual cost of NFC’s services, then NFC
would have to subsidize FMS’s failure either by (1) reallocating funds from other
10
The appellant was not Director of NFC at the time the FY16 FMS IA was negotiated ,
and he testified that he did not know how FMS was able to pay less than $8.7 million.
HT 1 at 147.
11
Federal agency customers (thus potentially increasing the cost of services for
other agencies); (2) by covering the loss with its own profit margin; or
(3) a combination thereof. Id. at 32-33, 41-42 (testimony of the appellant); IAF,
Tab 6 at 37-38; W-2 AF, Tab 10 at 74.
¶18 The appellant claimed that allowing FMS to only pay $5.9 million would be
illegal because other customers, which were funded by appropriated funds, would
have to pay more than services to them cost in order to subsidize the discount to
FMS. IAF, Tab 6 at 37-38; W-2 AF, Tab 10 at 74; HT 1 at 32-33, 41-42
(testimony of the appellant). Three witnesses, all of whom had knowledge of the
FMS IA negotiation process, testified, among other things, that they would not
have signed an IA under similar circumstances because it would violate the
Antideficiency Act. Hearing Transcript, Sept. 28, 2021, at 11-12, 32, 35
(testimony of the agency’s former Deputy Director of the Government Employees
Services Division), 80-82, 90-91 (testimony of the agency’s former Director of
Information Technology Services Division), 144-45 (testimony of the agency’s
Acting Director of NFC). Although not dispositive, the fact that other
knowledgeable agency employees and former employees shared the appellant’s
concerns lends some support to the reasonableness of his belief. See Lachance v.
White, 174 F.3d 1378, 1381 (Fed. Cir. 1999) (explaining the fact that other
similarly situated employees shared the same belief “may be of some relevance”
in determining whether an appellant’s belief was reasonable). Furthermore, on its
face, it is not unreasonable to believe charging a customer $5.9 million for
services worth $10.2 million, which would cause NFC to experience financial
strain and/or lead to overcharging other Federal clients, violates a law, rule, or
regulation. See HT 1 at 150-52 (testimony of the appellant); W-2 AF, Tab 10
at 40-41. Accordingly, we find that the appellant proved by preponderant
evidence that his $5.9 million FMS IA disclosures were protected because he held
12
a reasonable belief that his disclosures evidenced a violation of law , rule, or
regulation. 11
The appeal must be remanded for further proceedings.
¶19 The administrative judge made no findings beyond finding that the
appellant did not prove that he made a protected disclosure. Although the record
is well developed, the administrative judge, as the hearing officer, is in the best
position to make factual findings and credibility determinations. Salazar v.
Department of Veterans Affairs, 2022 MSPB 42, ¶ 35. Therefore, we find it
appropriate to remand this matter for the administrative judge to determine
whether the appellant established that his protected disclosures were a
contributing factor in the identified personnel actions, 12 and, if so, whether the
agency proved by clear and convincing evidence that it would have taken the
same actions in the absence of the protected disclosures . 13 5 U.S.C.
§ 1221(e)(1)-(2).
11
One part of the whistleblower protection statutory scheme makes it a prohibited
personnel practice to take an action against an employee for “refusing to obey an order
that would require the individual to violate a law, rule, or regulation.” 5 U.S.C.
§ 2302(b)(9)(D); see Fisher v. Department of the Interior, 2023 MSPB 11, ¶¶ 11-12.
Although the events set forth by the appellant could implicate this provision, the
appellant, who has been represented by counsel throughout these proceedings, has not
argued that this provision applies. Thus, we need not consider it.
12
The administrative judge should also consider whether the fifth accepted personnel
action, selection for random drug testing, is, in fact, a personnel action under 5 U.S.C.
§ 2302(a)(2)(A)(xii), i.e., a significant change in duties, responsibilities, or working
conditions. W-2 AF, Tab 11 at 4.
13
An issue that the administrative judge may need to address on remand is whether the
appellant’s disclosures were made during the normal course of his duties. In a prior
version of the statute enacted in the WPEA, 5 U.S.C. § 2302(f)(2) provided that
disclosures “made during the course of duties of an employee” are protected if the
appellant shows that the agency took a personnel action “in reprisal for” the
disclosures. Salazar, 2022 MSPB 42, ¶ 10 (citing 5 U.S.C. § 2302(f)(2)). The National
Defense Authorization Act for Fiscal Year 2018 (2018 NDAA) amended
section 2302(f)(2), adding language that the provision applies to employees whose
“principal job function . . . is to regularly investigate and disclose wrongdoing.” Pub.
13
ORDER
¶20 For the reasons discussed above, we remand this case to the administrative
judge for further adjudication in accordance with this Remand Order.
FOR THE BOARD:
/s/
Jennifer Everling
Acting Clerk of the Board
Washington, D.C.
L. No. 115-91, § 1097(c)(1)(B)(ii), 131 Stat. 1283, 1618 (2017). As the Board held in
Salazar, 2022 MSPB 42, ¶¶ 15-21, the 2018 NDAA clarified the intent of 5 U.S.C.
§ 2302(f)(2), and therefore, the language of that subsection, as amended by the 2018
NDAA, applies retroactively to all pending cases, even if the events at issued occurred
before the 2018 NDAA was enacted.