Screen grab from the Defense Finance and Accounting Service website with information on how to request a debt waiver for erroneous payment of LQA. (DFAS)

Screen grab from the Defense Finance and Accounting Service website with information on how to request a debt waiver for erroneous payment of LQA. (DFAS)

Retired Marine Chris Garcia, seen here with his wife, Natalie, and their 5 children, was promised housing allowance when he was offered a job on Okinawa. After more than 2 years on the job, Garcia has been notified that he was given the benefit in error and that he would be responsible for refunding more than $100,000 in back rent and utilities. ()

STUTTGART, Germany — First, nearly 700 overseas Defense Department employees discovered in May that their local housing allowances would be cut off and that they would have to reimburse the Army for payments they had already received. DOD blamed bureaucratic errors for the snafu.

Then some overseas Army reservists were snared in a similar net. The government said they had mistakenly received housing allowances for troops mobilized for unaccompanied tours within Germany.

Meanwhile, another Army civilian, recruited to work in Grafenwöhr, Germany, with the promise of a housing allowance, learned once she arrived that the Army changed its position and decided to renege on that offer. The Army blamed its action on its misunderstanding of DOD regulations. That worker — Brooke Hamilton — eventually got her benefits back when the DOD rewrote a confused policy, paving the way for Hamilton to receive the allowance and not be saddled with debt.

In each of the three scenarios, the circumstances differ. But one similarity is that the military says the workers in almost all cases were not at fault. Nonetheless, the loss of allowances and the burden of seeking special waivers to be relieved of debt that, in some cases rises well into the six figures, fell squarely on the workers.

“DOD has become a toxic employer,” said Jeff Wolff, a doctor at Landsthul Regional Medical Center, who was among the nearly 700 civilians deemed by DOD to be receiving his housing allowance in error.

At a time when the Pentagon is scrounging for every dollar as it confronts the sharpest budget crunch in a decade, many overseas personnel say they feel a cutthroat atmosphere in which bureaucratic errors and mismanagement result in debts being thrust upon unsuspecting employees.

While DOD says it will support efforts by workers to obtain debt waivers — roughly 300 have been granted so far — it has stopped short of allowing them to continue under their original terms.

Overseas employees and senior military commanders, who say staffers should not be punished for clerical mistakes, argue that DOD should institute an exception to policy that would allow workers to continue receiving benefits that will keep them on the job. They have failed to persuade Pentagon leadership to take such action.

The dispute over civilian housing allowances goes back to a 2011 decision by the Office of Personnel Management on a claim filed by a Stuttgart-based DOD worker. That decision, based on State Department rules, led officials at U.S. European Command to worry that it contradicted previous interpretations of the State Department rules governing local hires, and created a potentially widespread problem.

DOD launched an audit in 2012. In May 2013, DOD determined that roughly 700 families were receiving housing allowances “erroneously,” and it asked them to pay back the LQA or obtain waivers from the Defense Office of Hearings and Appeals.

The workers, however, have been engaged in an ongoing battle with DOD that is likely to carry over into 2014.

About 10 Germany-based Army Reservists are in a similar situation.

For years, Army Reserve troops in Germany have received housing allowances to cover the rent at their homes of record when they are called up to active duty at locations too far away to make the daily commute.

Army personnel officials say the decision to cut off those allowances is based on a Joint Federal Travel Regulations vicinity rule, which had been misinterpreted in the past. Now, about 10 soldiers in Germany have been issued debt notices and must obtain special waivers to be relieved of their debts.

The Army is yet to fully explain how it is enforcing the policy or spell out the effect it will have on troops worldwide. Affected Army reservists in Germany say they have filed debt relief waivers and continue to wait for a decision from the Army.

vandiver.john@stripes.com