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GSA: Per diem rates to be frozen for 2013

Aug. 14, 2012 - 03:02PM   |  
By SARAH CHACKO   |   Comments
The Office of Management and Budget directed agencies to decrease all travel spending in fiscal 2013 by 30 percent compared with fiscal 2010.
The Office of Management and Budget directed agencies to decrease all travel spending in fiscal 2013 by 30 percent compared with fiscal 2010. (Paul J. Richards / AFP via Getty Images)

The General Services Administration will freeze per diem rates at current levels for 2013, with only a few exceptions.

Freezing the reimbursement rates for lodging, meals and incidentals will avoid an estimated $20 million in costs in 2013 and help agencies meet the Obama administration’s directives to reduce travel costs government-wide, GSA said in a news release last week.

The Office of Management and Budget directed agencies to decrease all travel spending in fiscal 2013 by 30 percent compared with fiscal 2010.

“GSA is undergoing a rigorous review process to find ways in which we can streamline agency operations and save money across the government,” said acting GSA Administrator Dan Tangherlini in a statement. “By keeping per diem rates at current levels, we are supporting federal agencies in controlling costs and ensuring that taxpayer dollars are used wisely.”

Industry experts say the freeze is essentially a rate decrease for hotels because the federal per diem rate is not keeping up with commercial rates. “We know that travel demand and hotel room prices are going up, so a freeze is essentially a cut,” said Erik Hansen, director of domestic policy for the U.S. Travel Association.

Commercial rates are up about 5 percent over last year, said Shawn McBurney, senior vice president of governmental affairs at American Hotel and Lodging Association. Since the government’s per diem rate is already 5 percent under commercial rates, the freeze essentially comes to a 10 percent discount for the federal traveler, he said.

There will be a few exceptions to the freeze on per diem rates.

Ten regions now covered by the standard per diem rate of $123 — which provides $77 for lodging and $46 for meals and incidental expenses — will get their own higher rates in Oct. 1. They are:

• Bakersfield/Ridgecrest, Calif. — $86 for lodging; $51 for meals.

• Stockton, Calif. — $83 for lodging; $56 for meals.

• Hancock and Pearl River counties, Miss. — $82 for lodging; $56 for meals.

• Sidney/Glendive, Mont. — $90-$96 for lodging; $56 for meals.

• Dickinson/Beulah, N.D. — $104-$118 for lodging; $56 for meals.

• Minot, N.D. — $100-$112 for lodging; $56 for meals.

• Williston, N.D. — $90-$96 for lodging; $56 for meals.

• Carlsbad, N.M. — $89 for lodging; $51 for meals.

• Watertown, N.Y. — $99 for lodging; $56 for meals.

• Pasco, Wash. — $93 for lodging; $46 for meals.

GSA’s decision to freeze all but a handful of per diems rates appears to signal that the agency has dropped, for now, a controversial proposal to adopt a new methodology for calculating per diems that would have resulted in large decreases.

“By their freezing the rates, we’re not thrilled, but it’s a much less harmful option that they took instead of changing the methodology,” McBurney said.

Travel industry sources told Federal Times last month that GSA was looking at removing costly hotels from the sampling of lodging rates it analyzes each year when calculating per diems. The proposed method would have led to per diems as much as 30 percent lower in some places than current rates, sources familiar with the proposal said.

Some hotels may not have accepted lower federal per diem rates, which means federal travelers would have had to either pay out of pocket or pick hotels farther away from urban areas where federal facilities and conference centers are typically located, industry experts said.

“We recognized that this could be devastating to not only the hotel industry, but also to the federal travel system,” McBurney said. “That would just throw things into complete disarray.”

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