Revised Per Diem Cost Principle Effect on Defense Contractors

NSIAD-88-59: Published: Dec 2, 1987. Publicly Released: Dec 2, 1987.

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Pursuant to a congressional request, GAO reviewed Public Law 99-234 to determine whether the law treated defense contractors fairly, focusing on contractors' contention that their employees could not travel within the federal per diem rate, since they did not have access to the hotel and motel room discounts granted government employees on official travel.

GAO found limited data regarding: (1) contractor per diem costs; (2) General Services Administration (GSA) efforts to negotiate discounts for government contractors; and (3) government contractors' efforts to reduce costs. GAO also found that analysis of eight major defense contractors' per diem costs, GSA actions, and the new travel regulations indicated that: (1) the contractors' per diem costs generally did not exceed government per diem limitations; (2) seven contractors attempted to obtain discount rates from hotels and motels; (3) GSA obtained discount rates for government contractors at selected hotels and motels; (4) new acquisition regulations provided more contractor incentives to negotiate favorable rates; (5) five contractors have not changed their travel cost reimbursement policies; and (6) full assessment of the effects of the new regulations required more time and data.

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