Proposal would lift per diem caps for contractors

Government contractors should not have to operate under federal per diem restrictions when traveling, the Clinton administration said Thursday.

In the May 20 Federal Register, the acquisition councils for civilian agencies and the Defense Department announced a proposed rule that would free contractor personnel from the maximum per diem rates for federal employees.

The councils "are proposing to amend the Federal Acquisition Regulation 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" for federal employees, the proposed rule said.

Before 1994, a provision of the Office of Federal Procurement Policy Act required that contractor employees follow federal per diem rates. But the 1994 Federal Acquisition Streamlining Act repealed that provision.

Contractors have complained that the discounted lodging rates hotels give to government personnel are often not available to them. They also say reporting requirements for travel expenses are burdensome.

Removing the per diem limitation for contractors will reduce the government's administrative costs, the proposed rule says.

"For example, removal of the per diem limitation will lead to a reduction of the government's auditing and contract administration effort," the rule suggests.

Some people in the government worry that giving contractors free reign over travel expenses will boost the government's costs, the proposal says. The acquisition councils are giving contractors and government personnel until July 19 to comment on the proposal.