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By Steve Kelman

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Getting employees involved in cost cutting

Jim Tisdale, a smart, dedicated contracting legal advisor at an Air Force base in Los Angeles, often sends me emails commenting on my blog posts, asking my opinion on contracting developments, or sharing his thoughts. It's always a pleasure to hear from him.
The other day, responding to something I had sent him, he shared with me a cost-savings idea for the government that, with his permission, I am sharing in this post.

The idea is a simple one. When a federal employees travel, they can use negotiated rates the government has set up with local hotels, that are all priced under the government per diem. (These hotel discounts are not contracts with the government, and have no minimum order to obtain the rate.)  Jim's idea is that employees who can get a lower rate on a hotel -- say, through Priceline -- they should be able to keep half the difference between the published negotiated rate and the rate the employee pays.
I suggested an additional tweak on this to Jim, which he endorsed -- that if the employee bills the government for less than the maximum per diem for meals, the employee similarly be able to keep half the difference.
I raise Jim's example for a bunch of reasons. First, while this proposal would make only the smallest of impacts on the deficit, the cost to the government of getting these savings is zero -- it's pure deficit reduction. Second, I like the idea of putting this cost-saving activity in the hands of employees, because once they start helping save money, it gets them in the spirit to make other efforts as well. Third, Jim's cost-savings idea nicely reflects the cost-saving elements of the contracting culture, which I have urged many times be brought to the fore in the current fiscal environment.
I wonder if anybody can suggest other similar share-in-savings ideas for federal employees. Like all share-in-savings approaches, you need a baseline, and you need to make sure that you don't save money just by making performance worth -- the beauty of Jim's idea is that it passes both of those tests. Feds and others, more suggestions?

Posted on Feb 14, 2012 at 12:09 PM

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Reader comments

Wed, Feb 15, 2012

Ban certification boot camps, and bring vendor in to teacb on site. Less cost, and proven better knowledge retention.

Wed, Feb 15, 2012 "Not a good idea" commenter

Friends: this idea is anti the right culture. Why don't employees work--in every single thing they do--to save money? Unlike much of the private sector, they don't; that's bad. Responsible cost mgt should be a part of public service, but, curiously, it is not. We think we need to incent people with crumbs to save crumbs, while no one, except under Congressional or WH/OMB or some unusual pressure, exerts much downward pressure on everyday spending. (I am not referring to the --needed--effort currently tearing us up to lop whole programs, which is a worthy enterprise.) Again, there is something corrupt about this travel cost-savings idea. Civil servants are adequately paid and, everyone claims, have high ethics and a spirit of public service. Frankly, the idea of letting them keep what they don't spend, or save, for per diem is also corrupt, although it makes sense when you consider how woefully expensive it is to process a travel voucher. Let's try to keep our eyes on the ball, the BIG ball.

Wed, Feb 15, 2012

I always thought this was a good idea, especially when on a trip to DC, I offered to stay with a relative in Maryland and spend nothing for a hotel. My agency wouldn’t reimburse me for roundtrip Metro fare so I stayed at a hotel - they paid for that. Duh.

This was tried in the 1990’s but the program was cancelled, I believe because almost nobody used it.

As for meals, we don’t ‘bill’ for meals anymore but get a flat amount per day and 75% of that for travel days. If we get, say, $60, spend $30 and bill $30, we would get $30 + ½ the savings or $15 totaling $45. If we do nothing, we get $60.

Wed, Feb 15, 2012

Different Agencies have this program. It is probably a Fiscal Process/Program so research in your fiscal departments.

Wed, Feb 15, 2012

To: "Not a good idea, Prof. Kelman" I disagree that it is not a cost savings to the taxpayers. Half of the cost savings would be a benefit. Giving the other half to the employee would encourage participation. If there is no incentive then full cost would be incurred with no additional savings. Although the cost of transportation, lodging, and other travel costs are at a set level, depending on location, there is nothing wrong with using those prices/cost, why not encourage saving.

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