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Home 9 Federal Legal Corner 9 Regulation Violates Veterans Preference

Regulation Violates Veterans Preference

In Gingery v. U.S. Department of Defense, Opinion No. 2007-3292 (Fed Cir. 2008), the United States Court of Appeals for the Federal Circuit reversed a Merit Systems Protection Board (MSPB) decision ruling that the Department of Defense did not violate the petitioner’s rights under the Veterans Employment Opportunities Act (VEOA) of 1998. The court held invalid a regulation enacted by the Office of Personnel Management (OPM), establishing lesser protections than a controlling statute for veterans who are at least 30 percent disabled.

Petitioner Stephen Gingery is a preference-eligible veteran with a service-connected disability rated at 30 percent or more. He applied for two auditor positions posted by the Defense Contractor Audit Agency (DCAA). The DCAA used a category rating system to fill the auditor positions. Gingery was the only candidate placed in the highest available preference category due to being a preference-eligible veteran. The DCAA passed over him and filled the two auditor positions with nonpreference eligible candidates from a lower category. The DCAA selecting official did not notify the petitioner of the proposed passover, of the reasons for the proposed passover, or of his right to respond to the proposed passover. He filed a complaint alleging that the DCAA violated his rights under the VEOA.

The President or his designees possesses the authority to except certain positions from the competitive service paradigm when deemed “necessary” to do so. In 2000, President Clinton created the Federal Career Intern Program (FCIP) through Executive Order 13,162, which was designed to except positions from competitive service. The President delegated the responsibility of promulgating regulations for the FCIP to the OPM, which in turn issued regulations requiring agencies to follow 5 CFR Part 302 when making appointments under the FCIP. Under 5 CFR § 302.401, the OPM required different passover procedures for excepted service appointments involving 30 percent rated disabled preference-eligible candidates than from those for competitive service appointments. Pursuant to 5 USC § 3318, where an appointment is made under the competitive service using the category rating system and a preference eligible has a compensable service-connected disability of 30 percent or more, then before the hiring agency could select a nonpreference eligible candidate, then it would be required to file written reasons with the OPM, notify the preference eligible candidate of the proposed passover, the reasons thereof of the preference eligible’s right to respond to the proposed passover and obtain permission from the OPM for the passover. However, under 5 CFR § 302.401, where a similar situation occurred, but with the only difference being that the appointment is made under the excepted service, then the hiring agency merely needs to record its reasons for the passover and furnish a copy of those reasons to the preference eligible applicant upon request.

Before the Federal Circuit were two main issues: 1) the validity of the FCIP in relation to the statutory requirements for excepting positions from competitive service; and 2) the validity of the OPM’s passover regulations for excepted service appointments involving a preference eligible candidate with a compensable service-connected disability of at least 30 percent and a category rating system is used.

The Gingery court concluded that because Congress had clearly and unambiguously stated that the statutory requirements in § 3318 should apply to the excepted service in the same manner it applies to the competitive service and because OPM’s regulation is at odds with the VEOA by establishing lesser protections for veterans who are at least 30 percent disabled, then OPM’s regulation at 5 CFR § 302.401 is invalid. In a concurring opinion, Circuit Judge Newman criticized the court’s decision to not address the issue of whether the petitioner was deprived of veterans preference rights that apply to competitive service positions because the DCAA used the FCIP as a mechanism for excepting the auditor position out of its normal place in the competitive service without showing that such exception was necessary.

The Gingery decision emphasizes the clear and unambiguous intent of Congress with regard to the procedures for hiring agencies to use when attempting to pass over a 30 percent disabled preference-eligible candidate in an excepted service appointment using a category rating system. However, the Gingery court leaves unsettled, as suggested by the concurring opinion, the issue of whether the FCIP satisfied the statutory requirements for excepting positions from competitive service. Thus, the court’s inaction neither curtailed nor legitimized the recent trend of hiring agencies classifying vacant positions as excepted service for the purpose of having more flexibility and less restrictions in the hiring process.