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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: July 26, 2000

FROM: Barry McVay, CPCM

SUBJECT: Department of Defense; Class Deviation Extension Regarding Maximum Per Diem Rates

SOURCE: Department of Defense Memorandum, dated July 24, 2000

AGENCIES: Department of Defense (DOD)

ACTION: Federal Acquisition Regulation (FAR) Deviation

SYNOPSIS: On July 24, 2000, Director of Defense Procurement Deidre Lee issued a memorandum to the directors of defense agencies and the services' deputies for acquisition extending until September 30, 2001, the DOD FAR deviation originally issued December 23, 1998, in which all DOD contracting activities were authorized to deviate from the requirements in paragraph (a)(2)(i) of FAR 31.205-46, Travel Costs, and defense contractors were allowed to satisfy the limitation on allowable travel costs by either continuing to use the Federal Travel Regulations (FTR) maximum per diem rates and definitions in effect on December 31, 1998, or by using the current FTR rates and definitions.

EFFECTIVE DATE: This deviation is extended to September 30, 2001, or until the FAR is revised, whichever occurs first.

FOR MORE INFORMATION CONTACT: Office of the Director of Defense Procurement, 3000 Defense Pentagon, Washington, DC 20301-3000. Refer to DAR Tracking Number 2000-O0005 when referring to this deviation.

SUPPLEMENTAL INFORMATION: FAR 31.205-46(a)(2) limits allowable costs for contractor employee lodging, meals, and incidental expenses to the maximum per diem rates in effect at the time of travel that are in the FTR (paragraph (a)(2)(i)), the Joint Travel Regulations (paragraph (a)(2)(ii)), or the Standardized Regulations (paragraph (a)(2)(iii)).

On December 2, 1998, the General Services Administration issued a final rule amending the FTR effective January 1, 1999. Besides revising the per diem rates for particular localities, the final rule made significant changes to how the FTR maximum per diem rate limitations are computed, particularly the extraction of lodging taxes from the per diem rates and allowing the payment of those lodging taxes as miscellaneous expenses instead.

On December 23, 1998, Director of Defense Procurement Eleanor Spector issued a DOD FAR class deviation permitting the use of either the FTR rates and definitions effective on December 31, 1998, or the revised FTR rates and definitions that went into effect on January 1, 1999. The class deviation was to remain in effect until September 30, 1999, or until FAR 31.205-46 was revised, whichever occurred first.

On September 16, 1999, Ms. Spector extended the DOD FAR class deviation until September 30, 2000, or until FAR 31.205-46 was revised, whichever occurred first. Also, she authorized the use of either the FTR rates and definitions effective on December 31, 1998, or the current FTR rates and definitions.

On July 24, 2000, Ms. Spector's successor, Deidre Lee, extended the DOD FAR class deviation until September 30, 2001, or until FAR 31.205-46 is revised, whichever occurs first.

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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