Pushed to make changes after its own misdeeds, GSA is considering big alterations of the per-diem formula.
In a move that could be bad news for buyers and suppliers alike, the U.S. General Services Administration is about to overhaul its methodology for calculating federal per-diem rates. The changes come in the wake of this spending scandal at the GSA, which prompted several elected leaders to demand shifts in government employee travel and meetings.
The GSA is looking at a number of potential options that would result in per-diem decreases in most markets. While the federal oversight organization maintains it is looking to responsibly trim budget costs like any corporation would, some hoteliers fear dramatic per-diem decreases would cripple business and come with numerous unintended consequences.
According to sources, the following options are on the table: freeze current per-diem rates and keep them the same for fiscal year 2013; eliminate a 25 percent flexibility federal employees have when they can’t find a room at the per-diem rate; and changing the per-diem rate calculation equation by eliminating upper-upscale hotels from the formula.
In a presentation to members of the hotel industry prepared by the GSA, an example of the new methodology showed the federal standard per-diem rate decreasing from $136 to $107.
Multiple sources said the GSA expects to announce its methodology changes very soon.