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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: December 11, 2003

SUBJECT: Federal Acquisition Regulation (FAR); Reimbursement of Relocation Costs on a Lump-Sum Basis

SOURCE: Federal Register, December 11, 2003, Vol. 68, No. 238 page 69263

AGENCIES: Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA)

ACTION: Proposed Rule

SYNOPSIS: It is proposed that FAR 31.205-35, Relocation Costs, be amended to expand the use of lump-sum reimbursement to certain types of employee relocation costs.

EDITOR'S NOTE: For more on the original request for comments, see the October 24, 2002, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Regulation (FAR); Reimbursement of Relocation Costs on a Lump-Sum Basis."

For more on the notice of public meeting, see the January 27, 2003, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Regulation (FAR); Reimbursement of Relocation Costs on a Lump-Sum Basis."

DATES: Comments are due on or before February 9, 2004.

ADDRESSES: Submit comments to General Services Administration, FAR Secretariat (MVP), 1800 F Street, NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405, or by e-mail to farcase.2003-002@gsa.gov. Cite "FAR Case 2003-002" in all correspondence related to this proposed rule.

FOR FURTHER INFORMATION CONTACT: Edward Loeb, 202-501-0650.

SUPPLEMENTAL INFORMATION: FAR 31.205-35 requires the government to reimburse a contractor up to an employee's actual expenses with one exception: the miscellaneous costs identified in FAR 31.205-35(a)(5) (such as disconnecting and connecting appliances, automobile registration, forfeited utility fees and deposits) may be reimbursed a flat, or lump-sum, amount up to $5,000 (there is no ceiling for miscellaneous expenses when reimbursement is based on actual expenses).

On October 24, 2002, a request for public comments was published inviting parties to provide information on the potential costs and benefits of the lump-sum reimbursement approach. Nine respondents submitted comments. After reviewing the comments, a public meeting was held on February 6, 2003, to further explore the views of the commenters. Representatives from an industry association, a travel and relocation management firm, and a defense contractor presented their views at the meeting.

It is apparent from the comments and the discussions at the public meeting that it is now common commercial practice to reimburse relocating employees on a lump-sum basis for their house-hunting, final move, and temporary lodging expenses. Therefore, it is proposed that FAR 31.205-35(b)(4) be amended to permit contractors the option of being reimbursed on a lump-sum basis for three types of employee relocation costs: (1) costs of finding a new home, (2) costs of travel to the new location, and (3) costs of temporary lodging. These three types of costs are in addition to the miscellaneous relocation costs for which lump-sum reimbursements are already permitted (the $5,000 limitation would be retained for lump-sum reimbursements of miscellaneous relocation costs). While individual receipts are not required with a lump-sum approach, contractors would still have to demonstrate that amounts paid are reasonable and appropriate for the circumstances of each relocating employee.

The introduction to the proposed rule says, "The proposed rule is expected to reduce the accounting and administrative burden of the relocation cost principle on contractors and lead to faster relocations. Costs to the government are not expected to increase significantly as a result of this revision."

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

Copyright 2003 by Panoptic Enterprises. All Rights Reserved.

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