Don't change travel regs

Five senators, including all four from Virginia and Maryland, recently sent a letter opposing a proposed revision to the government's rules for reimbursing contractors for hotel and meal expenses charged to cost-based contracts. The senators are right to oppose the changes.

What's the issue? When federal employees travel, the amount for which they are reimbursed is limited to a maximum amount per day provided for hotel and meals. The maximum is set out in the Federal Travel Regulation and varies by city. Daily reimbursement levels are in turn established based on a large commercial survey conducted by Runzheimer International. Federal employee maximums track the average cost of "moderate" accommodations and meals that appear in the survey.

When Runzheimer says moderate, it means moderate. When I was in government, moderate for me meant a Holiday Inn or Sheraton and dinner at a Chinese joint or Bennigan's.

In 1985, Congress required that the maximum the government pays for hotel and meal expenses to contractors that are billing the government under cost-based contracts must heed the limits for federal employees. (For competitive, fixed-price contracts, the government doesn't care about a contractor's costs.) Contractors can, of course, offer employees better accommodations, but they can't bill the government for them.

In 1994, with urging from contractors, the Federal Acquisition Streamlining Act repealed the 1985 requirement, meaning that the limits no longer appeared in law. After the repeal, defense contractor associations requested that the cost principles in the Federal Acquisition Regulation be changed to allow contractors to be reimbursed for any "reasonable" hotel and meal expenses.

The idea has now reappeared and has been proposed as a change to the FAR. It is this proposed change that the five senators have written to oppose.

The amount of money at stake here is not chump change. If contractor reimbursement for hotels and meals increases 10 percent because of a change to a "reasonableness" standard, the annual cost to the government would be about $250 million.

Nobody is proposing that travel reimbursement for government employees be moved to a similar "reasonableness" standard. So a change for contractors would establish a gap between the amounts for which government folks and contractors can be reimbursed.

That's a slap in the face of the federal employee. I believe that those contractors pushing for this change are therefore being penny-wise and pound foolish. There are already enough stereotypes about "Beltway bandits" living high on the hog. In the interests of better co-operation and person-to-person relationships between feds and vendors, we shouldn't create a two-class travel system.

The proposed change to the Federal Acquisition Regulation should be withdrawn. I'm interested in reactions from feds and vendors — send me an e-mail at Steve_Kelman@harvard.edu.

— Kelman was the administrator of the Office of Federal Procurement Policy from 1993 to 1997. He is now Weatherhead Professor of Public Management at Harvard's Kennedy School of Government.

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