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Snyder v. Department of Navy

United States Court of Appeals, Federal Circuit

April 26, 2017


          Petition for review of the Merit Systems Protection Board in No. DC-0752-13-6201-I-1.

          MICHAEL Graham, Fredericksburg, VA, argued for petitioner.

          HILLARY Stern, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for respondent. Also represented by Benjamin C. Mizer, Robert E. Kirschman, Jr., Allison Kidd-Miller.

          Before Reyna, Linn, and Chen, Circuit Judges.

          Chen, Circuit Judge.

          Victoria Snyder appeals the Final Decision of the Merit Systems Protection Board (Board) affirming the decision of the Department of the Navy (Navy) to furlough her for six days between July and September of 2013 as a result of the federal government sequestration of 2013. Because we find no reversible error in the Board's decision, we affirm.



         This case is one of many that arise from the sequestration legislation adopted by Congress (i.e., the Budget Control Act of 2011 and the American Taxpayer Relief Act of 2012).[1] See, e.g., Calhoun v. Dep't of the Army, 845 F.3d 1176, 1177 (Fed. Cir. 2017); Natl Fed'n of Fed. Emps., Local 1442 v. Dep't of the Army, 810 F.3d 1272, 1273-75 (Fed. Cir. 2015) (NFFE); Einboden v. Dep't of the Navy, 802 F.3d 1321, 1323 (Fed. Cir. 2015). As a result of this legislation, the 2013 budget of the Department of Defense (DOD) was cut by $37 billion approximately halfway through Fiscal Year 2013. DOD took a number of steps to address the dramatic budgetary shortfall for the fiscal year, including reprogramming funds, reducing facility maintenance, and eliminating some military training exercises.

         On May 14, 2013, the Secretary of Defense (SECDEF) issued a memorandum directing DOD managers to prepare to furlough[2] most DOD civilian employees for up to eleven workdays in fiscal year 2013. As explained in the SECDEF memorandum, sequestration reduced DOD operation and maintenance (O&M) accounts that pay many civilian DOD employees, and although DOD considered and implemented various actions to reduce the budgetary shortfall, a shortfall nevertheless remained which would be addressed through furloughs of civilian employees. The memorandum provided that "[f]urloughs will be imposed in every military department as well as almost every agency and in our working capital funds." J.A. 183. In an attachment to the memorandum, the SECDEF provided a list of approved furlough exceptions, which included employees deployed to a combat zone, those whose jobs are necessary to protect safety of life and property, Navy Shipyard employees, National Intelligence Program employees, Foreign Military Sales employees, political appointees, non-appropriated fund instrumentality (NAF) employees, foreign national employees, and various types of employees not paid directly by DOD-Military accounts.

          Subsequently, on June 21, 2013, a bipartisan group of thirty-one members of Congress sent a letter to the Secretary of Defense expressing concern about the determination that civilian workers at entities funded through Defense working capital funds (WCFs) would also be subject to furlough. WCFs are created and controlled by the Office of the SECDEF. 10 U.S.C. § 2208(a), (b), (e). They function "entirely from the fees charged for the services [provided] consistent with [its] statutory authority." Einboden, 802 F.3d at 1323 (citing U.S. Gov't Accountability Office, GAO-05-734SP, A Glossary of Terms Used in the Federal Budget Process 101 (2005)). After receiving initial working capital through appropriation, WCF entities are self-supporting and function from the fees charged for the services they provide to their customers. NFFE, 810 F.3d at 1274. The primary customers of WCF entities are other DOD entities that transfer their own congressionally-appropriated funds to make "purchases" from WCFs. Id. Robert Hale, Under Secretary of Defense (Comptroller), on behalf of the SECDEF, responded to the congressional inquiry regarding WCFs in a July 2013 statement to Congress, explaining that "furloughs of all DOD civilians will save about $2 billion in fiscal year 2013, including more than $500 million associated with reduced personnel costs in working capital fund activities. These working capital fund personnel savings provide us the flexibility to adjust maintenance funding downward to meet higher-priority needs." J.A. 85-86. Thus, in accordance with the SECDEF directive, implementation of the furloughs generally proceeded across DOD, including WCF entities.


         Ms. Snyder was a civilian mechanical engineer at the Naval Surface Warfare Center, Dahlgren Division (Dahlgren) at the time of the sequestration. Dahlgren is a Navy WCF entity. See Einboden, 802 F.3d at 1323. On May 28, 2013, Ms. Snyder-as well as numerous other Dahlgren employees-received a Notice of Proposed Furlough indicating that the Navy planned to furlough her for a period of up to eleven workdays days because of "the extraordinary and serious budgetary challenges[, ] . . . the most serious of which is the sequester." J.A. 834.

         At that time, Ms. Snyder worked full-time on a Lockheed Martin Advanced Shipboard Weapons Control (ASWC) project to modify existing weapons control software. The ASWC project was governed by a Cooperative Research and Development Agreement (CRADA) between Dahlgren and Lockheed Martin, signed in September 2012. Pursuant to the ASWC CRADA, both parties would provide expertise and engineering support. Lockheed Martin was solely responsible for funding the project, providing $2.6 million in 2012, paid to the Treasurer of the United States. According to the CRADAs terms, any unused funds remaining at the completion of the project in 2015 were to be remitted to Lockheed Martin following Dahlgren's submission of a final fiscal report.

         On May 30, 2013, Lockheed Martin sent a letter to the Navy requesting that the Dahlgren employees supporting the ASWC CRADA-including Ms. Snyder-be exempt from furlough. The letter argued that the project was fully funded by Lockheed Martin Independent and Research Development (IRAD) funds and not Federal appropriations, and therefore, it "should be viewed as third-party funding like Foreign Military Sales (FMS) funding [one of the express exceptions identified in the SECDEF memorandum]." J.A. 933. Ms. Snyder filed a written reply on June 10, 2013, to the proposed furlough, echoing Lockheed Martin's view that her work for the Lockheed Martin-funded ASWC CRADA should be exempted from furlough like the listed SECDEF exceptions. In a letter dated June 24, 2013, the Navy deciding official responded to Ms. Snyder, denying her request.[3]


         Ms. Snyder petitioned the Board for review, asserting that the Navy had improperly furloughed her. Her case was consolidated with thirty-nine other furloughed Dahlgren employees. An administrative judge (AJ) conducted a consolidated hearing on July 8, 2015.

         For her part, Ms. Snyder argued that, because she was working full-time in support of the Lockheed Martin-funded ASWC CRADA, her situation was akin to those exceptions identified by the SECDEF. In support of her argument, Ms. Snyder requested the AJ take official notice of the Federal Technology Transfer Act of 1986, codified at 15 U.S.C. §§ 3701 et seq., as well as DOD Instruction 5535.8, "DOD Technology Transfer (T2) Program, " May 14, 1999, which prescribes procedures for implementing technology transfer programs, including CRADAs. She argued that these provisions collectively (i) prohibit the federal government from providing funds to a non-government CRADA participant; and (ii) obligate the government to maintain separate and distinct accounts to track CRADA funds. Thus, she argued that she was not paid out of government-appropriated funds, like typical WCF employees, and her work should have been exempted from the furlough because her furlough could not have assisted in reducing DOD's budgetary shortfall.

          Ms. Snyder also argued that the Navy improperly provided some, but not all, furloughed employees assigned to work on the ASWC CRADA with an opportunity to earn overtime pay to mitigate the economic impact of the furlough. In support, she offered the testimony of Mr. Larry Fontenot, a fellow ASWC CRADA employee. Mr. Fontenot testified that he and others working on the project were permitted to work overtime during the furlough time period and that he believed this was a result of a compromise struck by management to make up for ...

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