[Federal Register Volume 64, Number 97 (Thursday, May 20, 1999)]
[Proposed Rules]
[Pages 27654-27655]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-12739]



[[Page 27653]]

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Part IV





Department of Defense





General Services Administration





National Aeronautics and Space Administration





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48 CFR Part 31



Federal Acquisition Regulations; Travel Costs; Proposed Rule

  Federal Register / Vol. 64, No. 97 / Thursday, May 20, 1999 / 
Proposed Rules  

[[Page 27654]]



DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 31

[FAR Case 94-753]
RIN 9000-AG27


Federal Acquisition Regulations; Travel Costs

AGENCIES: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Proposed rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council are proposing to amend the Federal 
Acquisition Regulation (FAR) to remove the limitation that costs 
incurred by contractor personnel for lodging, meals, and incidental 
expenses be considered reasonable and allowable only to the extent that 
they do not exceed the maximum per diem rates set forth in the Federal 
Travel Regulation (FTR), the Joint Travel Regulations (JTR), or the 
Standardized Regulations (SR).

DATES: Comments should be submitted on or before July 19, 1999 to be 
considered in the formulation of a final rule.

ADDRESSES: Interested parties should submit written comments to: 
General Services Administration, FAR Secretariat (MVR), Attn: Laurie 
Duarte, 1800 F Street, NW, Room 4035, Washington, DC 20405.
    E-mail comments submitted over Internet should be addressed to: 
[email protected].
    Please cite FAR case 94-753 in all correspondence related to this 
case.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS 
Building, Washington, DC 20405, (202) 501-4755, for information 
pertaining to status or publication schedules. For clarification of 
content, contact Ms. Linda Nelson, Procurement Analyst, at (202) 501-
1900. Please cite FAR case 94-753.

SUPPLEMENTARY INFORMATION:

A. Background

    Section 24 of the Office of Federal Procurement Policy (OFPP) Act 
(41 U.S.C. 420) previously required that travel costs incurred by 
contractor personnel be considered reasonable and allowable only to the 
extent that they did not exceed the maximum per diem rates for Federal 
employees set by subchapter I of 5 U.S.C. 57, the Administrator of 
General Services, or the President (or his designee). FAR 31.205-46, 
Travel costs, implemented Section 24 of the OFPP Act by limiting 
allowable contractor costs for lodging, meals, and incidental expenses 
to the maximum per diem rates set forth in the FTR, JTR, or SR. 
However, Section 2191 of the Federal Acquisition Streamlining Act 
(FASA) of 1994 (Pub. L. 103-355) repealed Section 24 of the OFPP Act.
    A proposed FAR rule was published in the Federal Register at 59 FR 
64542, December 14, 1994. That rule proposed revising FAR 31.205-46(a) 
to stipulate that the FTR, JTR, or SR rates should be used as a 
baseline, but allowed contractors to propose alternative maximum per 
diem rates, and contracting officers to approve the alternative rates 
if certain conditions were met. Public comments were received from 63 
sources. Based on a review of those public comments, the FASA Cost 
Principles Team preliminarily decided to recommend withdrawal of the 
proposed rule and retention of the current cost principle language at 
FAR 31.205-46 without change.
    The notice published in the Federal Register at 60 FR 27471, May 
24, 1995, announced a public meeting, that was subsequently held on 
June 14, 1995. The purpose of this meeting was to permit the public to 
present its views concerning the recommendation to withdraw the 
proposed rule. At the public meeting, industry representatives 
expressed concern that contractors may be unable to obtain the 
discounted lodging rates afforded to Government personnel, that the 
current process was burdensome and costly to both contractors and the 
Government, and that the standard should be revised to one of 
reasonableness. Subsequent to the public meeting, the issue was 
discussed at length but no agreement was reached on publication of a 
final rule.
    As a result of further analysis of this issue, the Civilian Agency 
Acquisition Council and the Defense Acquisition Regulations Council are 
now proposing a rule that differs significantly from the proposed rule 
that was published on December 14, 1994. This second proposed rule 
deletes in its entirety the per diem rate limitation at FAR 31.205-
46(a)(2) through (6).
    The councils are proposing this change for a number of reasons. 
First, GSA promulgates FTR per diem rates for the purpose of providing 
sufficient allowance for Government travelers while on official 
business for the Government. Section 24 of the OFPP Act applied the FTR 
rates to reimburse Government contractor employees travel costs. Since 
Section 2191 of FASA repealed Section 24 of the OFPP Act, it is no 
longer necessary to apply rates designed for Government employee travel 
to Government contractors. Generally, FTR rates appear to be lower than 
the actual corporate rates available to contractors.
    Second, it is anticipated that removal of the per diem limitation 
will generate savings by reducing administrative costs for both 
contractors and the Government. The Government expects the 
administrative cost savings to lessen any increased costs resulting 
from this rule change. For example, removal of the per diem rate 
limitation will lead to a reduction of the Government's auditing and 
contract administration effort. Another example of the administrative 
cost savings is that contractors would no longer need to maintain two 
travel systems--their own and the FTR/JTR/SR systems. Also, contractors 
would no longer need to continuously monitor changes to the JTR, FTR, 
and SR, and adjust their accounting systems accordingly.
    The third reason for removing the per diem rate limitation is to 
permit the Government to adopt an allowability standard that is more 
consistent with the commercial marketplace. Many contractors already 
have detailed travel reimbursement systems, rooted in commercially 
generated survey data, to manage their costs.
    However, there is some concern within the Government about the 
potential for increased costs as a result of this proposed change. 
Therefore, to help estimate the potential costs and benefits to the 
Government, the councils invite respondents to provide the following 
information together with their comments. Note that public comments 
provided in response to this notice will be available in their entirety 
to any requester, including any requester under the Freedom of 
Information Act (5 U.S.C. 552). Therefore, we caution respondents not 
to provide proprietary or other business sensitive information. Under 
no circumstances should respondents provide any information unless they 
do so with a clear understanding that it will be made available to the 
public.
    1. For industry respondents--
    (a) Provide a description of how you will treat lodging, meals, and 
incidental expenses if the councils eliminate the FTR/JTR/SR limits 
(i.e., how will you ensure the costs charged to the

[[Page 27655]]

Government are reasonable?) For example, does your policy address the 
classes of hotels or the average costs of lodging in a city, etc.? 
(Under no circumstances should respondents provide any information 
unless they do so with a clear understanding that it will be made 
available to the public.)
    (b) Provide data on the percentage of total costs for lodging, 
meals, and incidental expenses that were unallowable in the most recent 
fiscal year. (Under no circumstances should respondents provide any 
information unless they do so with a clear understanding that it will 
be made available to the public.)
    (c) That have both Government and commercial business, provide the 
percentage differential in the average cost per day for lodging, meals, 
and incidental expenses between the two types of business. If you had 
charged the commercial business average cost per day to the Government, 
by what percentage would the costs charged to the Government have 
changed. (Under no circumstances should respondents provide any 
information unless they do so with a clear understanding that it will 
be made available to the public.)
    (d) Identify the types of savings that would result for your firm 
if the councils eliminate the FTR/JTR/SR limits. To what extent would 
the savings offset any increased costs to the Government? (Under no 
circumstances should respondents provide any information unless they do 
so with a clear understanding that it will be made available to the 
public.)
    2. For Government respondents, identify the types and amounts of 
costs, savings, advantages or disadvantages to your agency if the 
councils eliminate the FTR/JTR/SR limits.
    This regulatory action was not subject to Office of Management and 
Budget review under Executive Order 12866, dated September 30, 1993, 
and is not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

    This proposed rule is not expected to have a significant economic 
impact on a substantial number of small entities within the meaning of 
the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because most 
contracts awarded to small entities use simplified acquisition 
procedures or are awarded on a competitive, fixed-price basis, and do 
not require application of the cost principle contained in this rule. 
An Initial Regulatory Flexibility Analysis has, therefore, not been 
performed. Comments from small entities concerning the affected FAR 
subpart will be considered in accordance with 5 U.S.C. 610 of the Act. 
Such comments must be submitted separately and should cite 5 U.S.C. 
601, et seq. (FAR case 94-753), in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the changes to 
the FAR do not impose information collection requirements that require 
the approval of the Office of Management and Budget under 44 U.S.C. 
3501, et seq.

List of Subjects in 48 CFR Part 31

    Government procurement.

    Dated: May 17, 1999.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.

    Therefore, it is proposed that 48 CFR Part 31 be amended as set 
forth below:

PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES

    1. The authority citation for 48 CFR Part 31 continues to read as 
follows:

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).


31.205-6  [Amended]

    2. Section 31.205-6 is amended in paragraph (m)(2) by revising the 
reference ``(see 31.205-46(f))'' to read as ``(see 31.205-46(g))''.


31.205-46  [Amended]

    3. Section 31.205-46 is amended in paragraph (a) by removing 
paragraphs (a)(2) through (a)(6) and by redesignating paragraphs (a)(1) 
as (a), (a)(7) as (b), and (b) through (f) as (c) through (g), 
respectively; in the newly designated (a) by removing the paragraph 
heading; and in the newly designated paragraph (f)(2) by revising 
``paragraph (d)'' to read ``paragraph (e)'' both times it appears, and 
``paragraph (e)(3)'' to read ``subparagraph (f)(3)''.

[FR Doc. 99-12739 Filed 5-19-99; 8:45 am]
BILLING CODE 6820-EP-P