Board of Contract Appeals General Services Administration Washington, D.C. 20405 _______________________________________________ July 13, 1998 _______________________________________________ GSBCA 14334-TRAV In the Matter of DAVID K. LEONARD David K. Leonard, Manila, Philippines, Claimant. Wallace J. Eustis, Budget & Fiscal Officer, Embassy of the United States of America, Manila, Philippines, appearing for Department of State. BORWICK, Board Judge. Claimant, David K. Leonard, seeks reimbursement of his meal and incidental expenses (M&IE) at the established per diem rate for official authorized temporary duty (TDY) travel. The United States Embassy in Manila, Philippines (the embassy) denied his request for reimbursement on a per diem basis, maintaining he was entitled only to reimbursement of itemized M&IE on an actual expense basis. Under the circumstances presented, we conclude that claimant is entitled to reimbursement of M&IE on a per diem basis. Background Claimant is a civilian employee of the United States Information Agency, assigned to the embassy in Manila, Philippines. While assigned to the embassy, for travel purposes, claimant is subject to the embassy's administrative authority. Claimant, a construction manager, travels extensively within the Philippines on what is known as "in-country" travel. Embassy policy By Administrative Circular 94-28, dated September 2, 1994, the embassy established per diem rates for in-country travel, consisting of a maximum lodging amount and set rates for M&IE. This circular established rates for ten named sites, plus an "other" category. The sum of the maximum lodging amount and the set M&IE rate provided the maximum per diem rate for each site. The circular further advised that lodging receipts were required of all travelers and that if a traveler did not provide such receipts, lodging would not be reimbursed. The circular also advised that "the M&IE amount is fixed for each locality and does not require itemization for reimbursement." This reimbursement method is called the "lodgings-plus" system. The embassy then issued circular 94-34 (Nov. 2, 1994), which provided: SUBJECT: TRAVEL: ACTUAL EXPENSES IN LIEU OF PER DIEM 6 FAM 154.1 states that travel authorizations should permit only per diem allowances that are justified by the circumstances surrounding the travel. Accordingly, effective November 14, actual expenses not to exceed the per diem rate will be authorized for in-country travel. Under this system, receipts for lodging will be required and each meal cost must be listed separately, with receipts required for meals costing more than the equivalent of $25. In circular 94-34, the agency did not establish a per diem rate for M&IE reimbursement. On March 31, 1995, the embassy issued circular 95-09, which reaffirmed circular 94-34: FMC and Section Supervisors have observed and believe that travel claims submitted by some travelers do not reflect the correct amounts that were incurred during official in-country travel. The attention of all travelers is directed to the following: 1. 6 FAM 114 states that "Foreign Service employees and the members of their families are entitled only to actual and necessary expenses incurred in the performance of official travel. Travelers are expected to make a conscientious effort to minimize costs of official travel and to assume costs of a personal nature and any additional expenses incurred for personal convenience." Moreover, travelers are expected to exercise the same care in incurring expenses that a prudent person would exercise if traveling on personal business and expending personal funds. 2. The purpose of the M&IE is to cover expenses incurred by the traveler while on TDY. It was never intended to be compensation or a bonus for travel. Therefore, actual expenses are all that can be submitted for reimbursement. . . . . Please be reminded that the reimbursement of actual subsistence for official in-country travel was imposed as a saving measure due to budget constraints. We, therefore, expect all travelers to submit factual travel reimbursement claims. Failure to do so could result in an investigation, reprimand, or even termination and prosecution due to submission of fraudulent claims.[[foot #] 1] Claimant's travel and claim On October 12, 1994, the embassy issued claimant a blanket travel authorization--valid from October 3, 1994, through September 30, 1995--for travel from Manila to any point within the Philippines with per diem authorized in accordance with circular 94-28. On October 2, 1995, the embassy issued a similar blanket authorization valid from October 1, 1995, through September 30, 1996, with per diem authorized in accordance with circular 94-34. This authorization required claimant to obtain management's approval for each trip and an obligation of funds from the Budget and Fiscal Office. Between January 10, 1995, and September 25, 1996, claimant took many in-country trips and submitted vouchers for each of them. For each trip he claimed reimbursement of lodging based on actual receipts up to the maximum per diem rate allowed for lodging and the daily rate for M&IE expenses, without further itemization. The agency denied his claims for reimbursement of unitemized M&IE expenses: Administrative Circular [94-34 (Nov. 2, 1994)[foot #] 2] authorizes actual expenses in lieu of per diem for in-country travel only. Thus effective November 14, 1995[sic], actual travel expense claims are reimbursed to all travelers within the Philippines. The lodgings-plus system, now in effect is for international travel. ----------- FOOTNOTE BEGINS --------- [foot #] 1 On October 23, 1996, the embassy rescinded circular 94-34 and returned to the lodgings-plus system of Administrative Circular 94-28. [foot #] 2 The writer of this memorandum referred to Administrative Circular 94-28, which set the per diem rates; he obviously meant to refer to Administrative Circular 94-34, which established the subsistence expense policy. ----------- FOOTNOTE ENDS ----------- . . . . The itemization of expenses (lodgings, meals and other items of subsistence expenses) is required as stated in 6 FAM 157.4. Discussion The Federal Travel Regulation (FTR) in effect during the time of claimant's trips, applies to official travel of civilian employees of all agencies of the executive branch of Government-- including, of course, the Department of State. 41 CFR 301- 1.2(a) (1995); 5 U.S.C. 5701(1)(A), 5707(a) (1994). The FTR provided that per diem allowances "shall be paid as prescribed in this part" for official travel away from the official station, "except when actual subsistence expense reimbursement is authorized or approved as provided in part 301-8." 41 CFR 301- 7.1(a) (1995). The per diem allowance is a "daily payment instead of actual expenses for lodging, meals and related incidental expenses." 41 CFR 301-7.1(b)(6). Per diem rates include a maximum amount for lodging expenses and a "fixed allowance" for M&IE expenses. 41 CFR 301-7.3. Per diem allowances for all official travel "shall be computed under the lodgings-plus per diem system, except as otherwise provided in [part 301-7]." 41 CFR 301-7.6. Under the lodgings-plus system, the agency establishes the per diem allowance on the basis of the actual amount the traveler pays for lodging plus the allowance of M&IE, the total not to exceed the applicable maximum per diem rate for the location concerned. The M&IE allowance is "a fixed allowance for meals and for incidental expenses" and "is payable to the traveler without itemization of expenses or receipts." 41 CFR 301-7.6(b)(2). An agency may determine that the lodgings-plus per diem system is not appropriate for certain travel assignment situations, such as when quarters or meals are provided at no cost or nominal cost by the Government or when for some other reason the per diem costs to be incurred by the employee can be determined in advance. When the agency has made that determination, it may establish "a specific per diem rate within the maximum per diem otherwise applicable to the travel situation," and may make any appropriate reductions, provided the exception and the specific rate are authorized in advance by the appropriate official. 41 CFR 301-7.10. The specific per diem rate "shall be the per diem rate payable on the travel voucher without receipts and/or itemization by the employee." 41 CFR 301-7.10. An agency may, in individual cases or situations authorize a reduced per diem rate such as when lodgings or meals are obtained by the employee at a reduced cost or furnished to the employee at no cost or at a nominal cost by the Government. 41 CFR 301-7.12. The agency should consider known factors that will cause the traveler's per diem expenses in specific situations to be less than the applicable maximum rates prescribed as authorized by another provision of the FTR. Id. An agency may authorize travel on a subsistence expense basis for travel assignments "when the applicable maximum per diem rate is inadequate due to special or unusual circumstances." 41 CFR 301-8.2(a). See 41 CFR 301-8.1(a). One circumstance provided in the regulation is when "the maximum per diem rate . . . may be insufficient for a particular travel assignment because the actual and necessary subsistence expenses are unusually high due to special duties or because subsistence costs have escalated due to special or unforeseen events." A second circumstance in when "due to special or unusual circumstances, the lodging costs absorb all or nearly all of the applicable maximum per diem allowance." Id. [foot #] 3 Here, the embassy did not determine that the maximum per diem rate was inadequate. The General Accounting Office (GAO), construing an earlier, but similar, version of the FTR, concluded that the United States Forest Service could not, for reasons of administrative convenience, order firefighters on authorized TDY to be paid only actual subsistence expenses instead of per diem: The plain meaning of this regulation is that the term unusual circumstances covers only certain situations where the authorized per diem is not sufficient to cover expected expenses. Reducing administrative costs is not one of the examples listed as an unusual circumstance. . . . . On the basis of the above analysis, we find that the regulations do not provide and the statute does not contemplate reimbursement of actual subsistence expenses where the expected expenses would be far less than the otherwise authorized per diem. Accordingly, the Forest Service may not authorize reimbursement of actual subsistence expenses under [the applicable FTR paragraph] in this situation. Frank C. Sanders, 64 Comp. Gen. 825, 826-27 (1985). The GAO precedent is well-reasoned and is applicable to the present claim. We will follow it. In circulars 94-34 and 95-09 the embassy placed all in-country TDY travel on an actual expense basis for budgetary reasons, which is not the unusual circumstance contemplated by the FTR. Administrative Circulars 94-34 and 95-09 were not in accord with the FTR. The language of 6 FAM 157.4, relied upon by the agency, does not justify those ----------- FOOTNOTE BEGINS --------- [foot #] 3 The supplemental regulation for the Department of State, United States Agency for International Development and United States Information Agency is substantially the same. See ___ 6 FAM 157.1 (1987). ----------- FOOTNOTE ENDS ----------- circulars. That provision merely states that all travelers are required to submit with their travel vouchers an itemized listing of the amount spent daily for expenses incurred on an actual expense basis. It does not define the conditions under which the embassy may require employees to seek reimbursement of M&IE while on TDY on an actual expense basis. If the embassy was concerned that the established in-country per diem rates were too high and were providing its employees on TDY with a bonus for travel, it could have reduced those rates in advance of travel in accordance with section 301-7 of the FTR.[foot #] 4 Timothy P. Twigg, GSBCA 14379-TRAV, 98-1 BCA 29,552. Claimant is entitled to his M&IE at the per diem rates established by Administrative Circular 94-28 for the applicable localities. The matter is returned to the embassy for calculation and payment of the amount due. __________________________ ANTHONY S. BORWICK Board Judge ----------- FOOTNOTE BEGINS --------- [foot #] 4 The FTR places on the agency head or his or her designee the responsibility for authorizing or approving only those per diem allowances that are justified by the circumstances affecting the travel and which are allowable under the specific rules in part 301-7. 41 CFR 301-7.2(b)(1). This provision does not authorize the embassy to convert the reimbursement basis of M&IE from per diem to actual expense.