Course Changes Create Confusion


ertainly, 1998 was a year of lots of news for federal travelers and travel managers. The biggest changes came in the form of shifts in the way per diems are calculated, a new travel card contract, and the launch of the Defense Travel System. Whether you think these are positive or negative trends probably depends on where you sit (or fly). The real question is how the new systems are working for federal travelers.

Per Diem Predicament

A change in per diem rates for civilians traveling in the continental United States has caused trouble in many spots around the country. The change took effect Jan. 1.

In the past, a city and its suburbs shared the same lodging rate. This year, the General Services Administration's Office of Governmentwide Policy came up with different rates for cities and their surrounding jurisdictions in 23 major metropolitan areas (such as Washington, Denver and Los Angeles) and 69 "blended" areas (such as Nassau-Suffolk counties in New York and the Virginia Beach-Williamsburg area). "Some markets were enjoying the benefits of proximity to a higher-cost neighbor," says Bill Rivers, acting director of the travel management policy division. His office sought to make the rates better reflect the marketplace.

The change brought large reductions in per diems in some areas, causing problems for travelers and for local agency offices. For example, the Merchant Marine Academy on Long Island, which offers courses on transportation and logistics, saw lodging rates fall $128 in its area. Nassau and Suffolk counties previously had come under the New York lodging rate, which in 1998 was $198. With a 1999 lodging rate of $70, Lt. Cmdr. John Hanus, the academy's associate director, knew his military and civilian trainees wouldn't be able to find places to stay.

"We've been using local hotels for quite some time," says Hanus, "and the GSA rate isn't even close to the going rate" of $150 to $200 or more.

GSA officials say separating the metropolitan areas uncovered a problem the blended rates had masked-the dearth of properties on the Federal Emergency Management Agency's list of fire-safe properties.

The 1990 Hotel and Motel Fire Safety Act requires federal employees traveling on business to stay at fire-safe hotels and motels. When surveying hotels and motels each year to set per diem rates, GSA's contractor calls only those on FEMA's approved list, regardless of where federal travelers actually stay. In some places, properties on the list have much lower rates than those federal travelers frequent.

Susan Kossin, executive director of the New York Federal Executive Board, heard from nine agencies that the rates in the New York metro area were impractical and would prevent them from doing business. "When some local agencies saw the rates," says Kossin, "they said to me, 'We'll never have another meeting.' "

The New York executive board and the Merchant Marine Academy joined forces to solve the problem: They quickly canvassed the hotels and motels feds most often use and got them on the FEMA list. By Feb. 10, GSA had boosted northern Nassau County's lodging rate to $190, retroactive to Jan. 1. Similar efforts are taking place in at least nine other locations around the country.

"In 25 years in government," says Kossin, "this is one of the worst messes I've seen. Anything that requires that much time and trouble to straighten out was a mistake to begin with."

GSA's Rivers says the problems are merely "speed bumps" on the road to getting accurate per diem rates, and the resolution "shows that the system works." His agency and the Office of Personnel Management last year wrote more than 50,000 hotels and motels encouraging them to get on FEMA's list; fewer than 5,000 acted. A letter to state governors asking them to address the issue brought one response.

Rivers and Becky Rhodes, GSA's chief of transportation and personal property, suggest that travelers who can't find lodging within per diem contact their department's travel managers, who can officially request that GSA reconsider a rate. In the meantime, they say, agencies should approve actual expenses up to 300 percent of per diem when necessary.

Agency and executive board representatives say that's not as easy as it sounds: Many managers are reluctant to approve actual expenses, and travelers and managers often avoid the paperwork required. Sean McDonough, legislative director for Rep. Carolyn McCarthy, D-N.Y., who represents Nassau and Suffolk counties in Congress, was called in to help straighten out the problem in her district. McDonough also sees problems with the actual expense option: "I think agencies are hesitant to use it," he says. "No one wants to be seen as going out of their way to spend more money."

And that's not all: Some employees protest that lodging rates aren't high enough in general or actually went down from 1998 to 1999. Frank Bauer, director of the USDA Graduate School Training Center, is among those who have complained. "For at least the past year, our instructors and participants have encountered great difficulty in finding hotel space [in New York City] at any reasonable rate, let alone the government rate," Bauer said in a letter to GSA. Often, Bauer told GSA, out-of-town participants who are unable to find lodging withdraw their registration, forcing some courses to be canceled because of low enrollment.

GSA's lodging rates went up 1.4 percent nationally in 1999, says Rivers; lodging costs increased 4.4 percent nationally last year, according to Smith Travel Research. But the government rates may appear to have decreased in some locations because state and local taxes, once part of the lodging rate, are now a separate reimbursable expense. Many agencies applaud that move, because properties often set their rates exactly at the lodging per diem and charged taxes on top of that, forcing travelers to pay taxes out of their own pockets.

Travelers' biggest remaining per diem problem will probably be finding rooms when attending conferences, Rivers and Rhodes say. By breaking down the metro areas, "we've exposed the conference issue," says Rivers. "It was under the umbrella of the higher cost areas." GSA surveys two- and three-star properties to set rates, but most two-star hotels don't have conference facilities, rendering the rates too low for conference participants. GSA is considering surveying only three-star properties and/or establishing a conference rate to take care of this problem.

Also, within a year or so, GSA probably will contract directly with hotel chains in major markets or piggyback on a successful Army lodging program that bills the government directly. (For more on how GSA sets per diem rates, see "Weary Travelers Search for Rest," October 1998.)

Mid-Air Transition

New travel card contracts took effect at the end of November, and although by all reports the transition was smooth for most federal travelers, those who manage travel and administer the contracts have been feeling some turbulence.

"It's been a rough transition," says Sue McIver, director of GSA's Services Acquisition Center, of the government's switch from American Express to a choice of four travel card vendors (Citibank, First Chicago, NationsBank and U.S. Bank). The shift, says McIver, is like "trying to change the engine in an airplane while in the middle of the flight."

GSA designed the new program to allow agencies to tailor contracts to meet their needs and to take advantage of new technologies and services as they emerge.

"Although GSA is working with the largest card vendors in the country," says McIver, "some [were] not ready exactly for how big the government is-we're bigger than anything in the private sector." Most common difficulties are with programming merchant codes, data management and getting accurate and timely reports.

With 63,000 cardholders, the Agriculture Department is one of government's biggest customers (second only to DoD and ahead of General Motors Corp., which has a reported 50,000 travelers). USDA's fiscal policy director, Richard Guyer, says the department has had problems with the change to the new contract-"I won't pretend we haven't. [Contractor] NationsBank is working very hard on it."

But Guyer remembers the start-up of the two previous card contracts, with Diners Club and American Express, and despite his current headaches, says, "We've had fewer [problems] with NationsBank. I see it as a transition problem and we're working it through." Travelers are getting good service, reports USDA's Ted Miller: "Our first priority is the traveler. These management problems will get resolved."

Travel and financial officers at several agencies contacted are troubled right now, but they're calm about the big picture. "We're only [a few] months into it," says McIver. "Generally, we will be where we want to be. There are good products out there, and we think we have the right approach." (For more on the card contract, see "More Services Are in the Cards," April 1998.)

Kicking the Tires

The Defense Department's new electronic travel system, inaugurated last fall, isn't ready to serve travelers yet, but DoD officials are pleased with its progress.

"We're kicking the tires before we buy it," says Army Col. Albert Arnold, project manager for the Defense Travel System. "We're checking the entire system-not just the TRW product, but the government processes and procedures and internal systems as well. We want to make sure everything works before we turn the switch on." TRW is the lead contractor coordinating a team of vendors providing the system to DoD. When fully functional, the system will use automation to integrate and streamline travel authorization, reservations and claims processing.

Since November, the system has been undergoing tests at Fort Huachucha, Ariz. Starting in April, it moves to Whiteman Air Force Base, Mo., for live testing with actual travelers going on actual trips.

"Is it working? That remains to be seen," says DoD-watcher Paul Taibl at Business Executives for National Security. "Given how long these things have taken in the past, I think their implementation schedule is rather optimistic," says Taibl. "Getting to this point has taken far longer than I think was necessary, but I think eventually they will have a very good travel system."

The system is to be phased in in the 11 states that make up Defense Travel Region 6 (Iowa, Illinois, Indiana, Kentucky, Michigan, Minnesota, Missouri, North Dakota, Nebraska, South Dakota and Wisconsin) starting in July as current contracts expire or come up for renewal. The entire region is expected to be on board by the end of 2000. A request for proposals is in the works for the contracts that will bring DTS to DoD worldwide by the end of 2001. (For more details on how DTS will work, see "DoD Travel System Takes Off," July 1998, and "DoD Goes Paperless," November 1997.)

Lauren Taylor is a Washington-area freelance journalist.

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