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Lodging and Per Diem: a thorough analysis.

Title 5 Section 5702 of the United States Code [Public Law 99-234 (1986)] authorizes the General Services Administration (GSA) to establish allowance rates (lodging, meals, and incidental expenses) for travel within the Continental United States. All individuals traveling on behalf of the Federal government, including civilian government employees, Department of Defense (DoD) personnel, and persons on invitational travel orders must adhere to these rates. These rates also apply to cost reimbursable contractors in most situations.

Questions have been raised concerning the appropriateness of the per diem rates, the methodology used to calculate the allowances, and whether the current processes and programs are the most suitable. To address these questions, the Administrator of GSA established the Governmentwide Per Diem Advisory Board (the Board) with a scope to review the current process and methodology used to establish the Federal per diem rates within the Continental United States (CONUS). In addition, the Board was established to provide advice regarding best practices for a governmentwide lodging program. In conducting its work, the Board has been subject to the Federal Advisory Committee Act (FACA), as outlined in its Charter, filed with Congress on May 13, 2002. The Board focused on issues related to transient and extended-stay travel within the Continental United States. Travel associated with relocation or Permanent Change of Station (PCS) was not evaluated because a separate group is addressing it. The Board's membership consists of both government and industry experts who have applied their knowledge and engaged in research with other individuals and industry organizations to examine topics related to government-wide per diems and lodging programs.

To assist in achieving its objectives, the Board created two subcommittees to conduct research and provide advice, ensuring that all activities of the subgroups complied with FACA. The subgroups' deliverables were:

* The Governmentwide Per Diem Subcommittee presented recommendations for improvements to the per diem rate-setting process and methodology for meals, lodging, and incidental expenses within CONUS.

* The Governmentwide Lodging Program Subcommittee presented recommendations for a nationwide government lodging program that provides government travelers with properties appropriate to mission requirements, provides the government with the best price value, and is commercially viable to the industry.

The Board also established four specific goals to ensure it achieved its mission:

* Fully understand the methodology and process of the current CONUS per diem rates as well as the current lodging programs in place in the Federal government.

* Review foreign government(s), state governments, and corporate per diem and lodging programs to determine best practices. Present best practices to GSA.

* Determine criteria for a successful CONUS per diem and a governmentwide lodging program.

* Make recommendations to GSA for future CONUS per diem and a government-wide lodging program, which will provide the most benefit for key stakeholders.

To ensure thorough understanding of both the current processes and methodology of the per diem and government lodging programs, the Board consulted with government personnel tasked with managing these programs. The Board also researched the impact of the current programs as used by government agencies and travelers through interviews with government representatives including Federal Executive Boards (FEB's). Additionally, the Board conducted a survey on traveler satisfaction with the current per diem rates, which resulted in over 12,000 responses. Further, the Board reviewed pertinent published articles and comments in GSA's "No-Vacancy" website to evaluate satisfaction levels. To obtain information regarding "Best Practices" for per diem and lodging programs, the Board surveyed officials with state governments, Canadian provinces, travel agencies, and corporations, including cost-reimbursable contractors. The Board also obtained assistance from the National Business Travel Association (NBTA) and industry consultants to identify common and best practices. Throughout this process, the Board worked closely with government entities, including GSA, DoD, and various other government agencies.

Based on research analysis and industry expertise, the Board established criteria for a) setting appropriate per diem rates and b) developing an effective government-wide lodging program. After extensive review of other alternatives, the Board endorsed use of the current per diem reimbursement structure (lodging at actual expense up to the GSA-established maximum and a fixed M&IE allowance). The Board has developed recommendations that include a total revision of the current lodging per diem methodology, which will cause per diem rates to be set based on substantiated market data. Revision of the incidental expense model and a more regular benchmarking of Federal meal rates are also recommended. In addition, the lodging best practice recommendations provide a streamlined approach to a government-wide lodging program, which will realize savings for the Federal government while providing Federal travelers with appropriate accommodations, within per diem, and are viable to all stakeholders. The Board concluded that lodging programs, which are effectively managed, are most successful and recommends that GSA take appropriate action to establish and manage one government-wide program for all Federal government travelers.

The Board recognizes that only one organizational entity within the Federal government should be responsible for the management of a government-wide lodging program and the per diem process. This entity should serve as a forum for development, education, training, and information sharing among Federal travel officials with significant carryover to Federal travelers. To carry out these duties effectively, this entity's role among Federal travel officials must be strong by implementing training resources, feedback forums, appropriately setting per diem rates, and establishing a successful government-wide lodging program.

When evaluating recommendations, the Board considered all stakeholders including Federal travelers, taxpayers, and industry as well as Federal budgets. With these stakeholders in mind, the Board identified and supports these fundamental changes in Federal travel management. Although the Board considers the recommendations specified in the report to be most appropriate for resolving the questions that have been raised, it has not examined in detail the implications of implementation. Consequently, the Board recommends a pilot program be established to measure the impact of these recommendations. In addition, the Board recognizes the probable need to adjust statutory regulations and policies. Therefore, the Board recommends that GSA establish a time-line, in coordination with the impacted government agencies, for implementation. GSA estimates that 93,000 Federal travelers are affected by its established per diem rates on any given business day. Implementation of these recommendations will yield significant but needed changes in the methodology for Federal per diem rates and government lodging programs.

A summary of the recommendations is available at

by Ms. Lori Leffler Brooks Chair, Governmentwide Per Diem Advisory Board/Chair NDTA Lodging Committee
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Author:Brooks, Lori Leffler
Publication:Defense Transportation Journal
Geographic Code:1USA
Date:Aug 1, 2003
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