Senate Bill Would Allow Services to Restore Full Per Diem Rates for Defense Travelers

House and Senate versions of NDAA contain changes to a controversial Pentagon policy that reduced per diems for those on extended travel.

Service members and Defense civilian employees on extended government travel moved closer on Thursday to getting relief from a controversial 2014 department policy that reduced their per diem rates.

The individual military services would have the authority to pay the full per diem available for long-term government travel for Defense employees if they choose to, under language included in the fiscal 2017 National Defense Authorization Act approved by the Senate Armed Services Committee on May 12.

The service secretaries also would have the discretion to delegate that authority down to the “three-star component” level, according to a Senate Republican aide who worked on the language. So, for instance, the Navy secretary could delegate authority to the head of NAVSEA to provide workers with the full per diem for long-term TDY (temporary duty). The legislation also would allow the services to waive a requirement to keep and process per diem receipts in cases where it would be costly and burdensome to do so.

The Defense secretary would not be able to override that authority under the Senate bill. The committee will release the text of the NDAA and its report next week.

A November 2014 Pentagon policy resulted in lower reimbursement rates for lodging, meals and other expenses for service members and civilian employees on extended TDY.  

The policy reduced the reimbursement rates by 25 percent for long-term TDY of 31 to 180 days, and by 45 percent for travel exceeding 180 days. So for long-term TDY of 31 to 180 days, the reimbursement rate is up to 75 percent of the locality rate (lodging plus meals and incidentals) for each full day during that time frame; for travel lasting more than 180 days, it drops to 55 percent of the locality rate for each full day under the policy. The governmentwide standard lodging per diem rate for fiscal 2016, which took effect on Oct. 1, 2015, is $89, a $6 increase from the previous fiscal year. Meals and incidental expenses range from $54-$74 per day. So the Pentagon’s reimbursement rates for long-term TDY are below those figures, depending on the length of the stay.

The House Armed Services Committee approved language in its NDAA in late April that would repeal the policy altogether. The two chambers will have to work out those differences, but the outcome likely will favor employees, given the language in the Senate bill.

Congress and the Obama administration told agencies they needed to slash travel costs, and the 2014 Pentagon policy on long-term TDY per diems was part of that savings plan. But, Republicans and Democrats on Capitol Hill, as well as several unions, believed those changes have eroded morale and caused an undue burden on government travelers. The 2014 policy is simply unrealistic, given the increased rates of rental housing and many hotels, they have argued. The movement to repeal the policy has broad and diverse support, including the International Federation of Professional & Technical Engineers, the American Federation of Government Employees, the American Hotel & Lodging Association, Marriott International, and Hilton Worldwide.

Sen. Kelly Ayotte, R-N.H., along with several other senators with shipyards in their states, repeatedly pushed to get a waiver from the per diem cuts for shipyard workers. Ayotte introduced a stand-alone bill seeking a waiver for those workers in April, which she tried to get included in the Senate NDAA. Instead, the committee opted for the broader language and discretion for each service to choose whether to grant the full per diem or not.

“We’re not saying have caviar every night,” the Senate Republican aide said, of restoring the per diem reimbursement rates for those on long-term travel, adding that if employees go over the full per diem amount, then they have to pay out-of-pocket.

The aide said the Navy has committed to restoring the full per diem rate for shipyard workers on long-term TDY, if the language becomes law.

Jan. 19 letter from the head of the Naval Sea Systems Command asked the Pentagon for an immediate waiver for shipyard workers from the new reduced reimbursement rates.

“This is jeopardizing the successful execution of off-station availabilities and costing the Navy more than the intended savings,” wrote Adm. William Hilarides to Anthony Kurta, the per diem, travel, and transportation allowance committee charter chair. “Reduced travel allowances have introduced inefficiencies and hardships for shipyard workers on long-term TDY.”

Hilarides cited several factors related to the reduced per diems for long-term TDY that could adversely affect the command’s mission, including “undesirable” turnover among staff because various bargaining unit agreements restrict the amount of forced travel the agency can impose on workers, and difficulty in finding adequate housing. The policy, Hilarides said, “has already had a negative impact on the naval shipyards’ ability to effectively and efficiently conduct Navy ship maintenance.”

The policy also has hurt local business owners. Steve Ehrhardt runs several hotels that service military personnel on long-term work assignments near the Fort Leonard Wood Army base in Missouri. He said the Pentagon’s policy change on per diems “dramatically affected our business model” and has forced him to turn away government travelers. Ehrhardt, owner of Ehrhardt Properties, said his business took a 20 percent top-line hit over the course of the first year that the policy was in effect.

“It’s been very difficult to recover because we are in a military market,” Ehrhardt said. “It’s pretty much a one-horse town here at Ft. Leonard Wood.” Ehrhardt said he imposed a hiring freeze for a few months, and reduced employees’ work hours, and “luckily” didn’t have to lay anyone off.

The business owner said the policy’s one-size-fits all approach doesn’t make much sense for Defense personnel, or for businesses that can’t effectively operate on such low daily rates. “I understand the desire to create efficiency and save money [but] again, not all markets are equal, and you don’t get a lot for your money at a $67, $66 rate.”