DATE: October 24, 2002

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

SOURCE: Federal Register, Ocotber 24, 2002, Vol. 67, No. 206, page 65467

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

ACTION: Request for Comments

SYNOPSIS: Comments are being sought from industry on whether FAR 31.205-35, Relocation Costs, should be revised to expand the use of lump-sum payments to reimburse contractors for relocation expenses.

EDITOR'S NOTE: Recently, FAR 31.205-35(b)(4) was amended to increase, from $1,000 to $5,000, the ceiling for miscellaneous relocation expenses when the contractor uses the lump-sum payment method. For more on this change, see the June 27, 2002, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Circular (FAC) 2001-08, Miscellaneous Amendments."

DATES: Comments are due on or before December 23, 2002.

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 farnotice.relocationcosts@gsa.gov. Cite "FAR Notice on Reimbursement of Relocation Costs on a Lump-Sum Basis" in all correspondence related to this request for comments.

FOR FURTHER INFORMATION CONTACT: Jeremy Olson, 202-501-3221.

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.

The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council are considering revising FAR 31.205-35 to permit contractors the option of claiming employee relocation costs based on actual costs, an appropriate lump-sum basis, or a combination of the two approaches.

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 Councils anticipate that this change may achieve overall benefits by reducing administrative costs for contractors and by improving employee morale. However, there is concern that permitting lump-sum payments may increase costs to the government. Therefore, the Councils are inviting industry to provide the following information to help the assess the potential costs and benefits of the lump-sum reimbursement approach:

  1. Commercial practice. What has been your company's experience in using a lump-sum approach instead of an actual cost method for reimbursement of employee relocation expenses? If used, is the practice to use the lump-sum approach for total costs of relocating employees, or only certain types of costs? If so, which types?

  2. Reasonableness. How would your company ensure that relocation costs charged to the Government using a lump-sum approach are reasonable?

  3. Limits. Does your company now use commercially available data, such as that developed by the Employee Relocation Council, in order to establish reimbursement limits on relocation costs? If so, what sources of commercially available data do you use, and how do you use the data? If not, what other criteria or standards could be (or are being) used to assess reasonableness?

  4. Benefits. What are the types and amounts of savings or other benefits that you anticipate would result if reimbursement on a lump-sum basis were permitted?

  5. Costs. What are the types and amounts of costs or other disadvantages that you anticipate would result if reimbursement on a lump-sum basis were permitted?

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

Copyright 2002 by Panoptic Enterprises. All Rights Reserved.

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