Federal Register / Vol. 62, No. 55 / Friday, March 21, 1997 / Rules and Regulations 13765

41 CFR Parts 302–6 and 302–12

[FTR Amendment 62]

RIN 3090–AG37

Federal Travel Regulation;

Modification of Residence Transaction

Expenses Allowance and Use of

Relocation Services Companies

AGENCY: Office of Governmentwide

Policy, GSA.

ACTION: Final rule.

SUMMARY: This final rule amends the

Federal Travel Regulation (FTR) to

eliminate the fixed dollar caps on

residence transaction expenses

reimbursement and to modify the

regulations governing the use of

relocation services companies. This

amendment will save the Government

money by offering agencies options to

more effectively use relocation services

companies.

DATES: This final rule is effective March

22, 1997, and applies to an employee

whose effective date of transfer (date the

employee reports for duty at the new

official station) is on or after March 22,

1997.

FOR FURTHER INFORMATION CONTACT:

Robert A. Clauson, Travel and

Transportation Management Policy

Division (MTT), Washington, DC 20405,

telephone 202–501–0299.

SUPPLEMENTARY INFORMATION: A multiagency travel reinvention task force was

organized in August 1994 under the

auspices of the Joint Financial

Management Improvement Program

(JFMIP) to reengineer Federal travel

rules and procedures. The task force

developed 25 recommended travel

management improvements published

in a JFMIP report entitled Improving

Travel Management Governmentwide,

dated December 1995. On September 23,

1996, the President signed into law the

Federal Employee Travel Reform Act of

1996 (Pub. L. 104–201), which included

8 legislative changes recommended by

the JFMIP to improve travel and the

delivery of relocation services.

This amendment implements section

1713 of the Act which eliminates the

fixed dollar caps on residence

transaction expenses reimbursement

and modifies the rules governing use of

relocation services companies. This

amendment is written in the ‘‘plain

English’’ style of regulation writing as a

continuation of the General Services

Administration’s (GSA’s) effort to make

the FTR easier to understand and to use.

How does eliminating the fixed dollar

caps affect reimbursement for residence

transaction expenses?

It eliminates previous fixed dollar

caps but continues to cap residence sale

reimbursement at 10 percent of the sales

price of the residence, and residence

purchase reimbursement at 5 percent of

the purchase price of a residence.

How does this amendment modify the

use of relocation services companies?

It provides agencies explicit authority

to pay fees to a relocation services

company. It also facilitates the use of

cost-reimbursable contracting by

incorporating the new authority to pay

for losses incurred by a relocation

services company. It eliminates the

existing regulatory preference for fixed

fee contracts contained in FTR part 302–

12, and implements two regulatory

improvements recommended by the

JFMIP—explicit authority for agencies

to establish a cap on the value of

residences entered in a homesale

program and authority for agencies to

separately contract for (unbundle)

individual relocation services.

What is the ‘‘plain English’’ style of

regulation writing?

The ‘‘plain English’’ style of

regulation writing is a new, simpler to

read and understand, question and

answer regulatory format. Questions are

in the first person, and answers are in

the second person. GSA uses a ‘‘we’’

question when referring to an agency,

and an ‘‘I’’ question when referring to

the employee.

How does the plain English style of

regulation writing affect employees?

A question and its answer combine to

establish a rule. The employee and the

agency must follow the language

contained in both the question and its

answer.

GSA has determined that this rule is

not a significant regulatory action for

the purposes of Executive Order 12866

of September 30, 1993. This final rule is

not required to be published in the

Federal Register for notice and

comment. Therefore, the Regulatory

Flexibility Act does not apply. This rule

also is exempt from Congressional

review prescribed under 5 U.S.C. 801

since it relates solely to agency

management and personnel.

List of Subjects in 41 CFR Parts 302–6

and 302–12

Government employees, travel and

transportation expenses.

For the reasons set out in the

preamble, 41 CFR chapter 302 is

amended as follows:

PART 302–6—ALLOWANCE FOR

EXPENSES INCURRED IN

CONNECTION WITH RESIDENCE

TRANSACTIONS

1. The authority citation for part 302–

6 is revised to read as follows:

Authority: 5 U.S.C. 5738 and 20 U.S.C.

905(c).

2. Section 302–6.1 is amended by

revising the introductory text of

paragraph (f)(2) to read as follows:

§ 302–6.1 Conditions and requirements

under which allowances are payable.

* * * * *

(f) Reimbursement of expenses. * * *

(2) Pro rata reimbursement. When the

title possessed by an employee and/or a

member(s) of his/her immediate family

is not full title to the residence, or when

an employee is deemed to have a title

interest under paragraph (c)(3) of this

section, the employee shall be

reimbursed on a pro rata basis to the

extent of his/her actual title interest

plus his/her deemed title interest in the

residence. Additionally, an employee

shall be reimbursed on a pro rata basis

in the situations listed in paragraphs

(f)(2) (i) and (ii) of this section.

* * * * *

3. Section 302–6.2 is amended by

revising paragraphs (e) and (g) to read as

follows:

§ 302–6.2 Reimbursable and

nonreimbursable expenses.

* * * * *

(e) Losses due to prices or market

conditions at the old and new posts of

duty. Losses are not reimbursable when

they are incurred by an employee:

(1) Due to failure to sell a residence

at the old official station at the price

asked, or at its current appraised value,

or at its original cost;

(2) Due to failure to buy a dwelling at

the new official station at a price

comparable to the selling price of the

residence at the old official station; or

(3) Any similar losses.

* * * * *

(g) Overall limitations—(1) Sale of the

residence at the old official station. The

total amount of expenses that an agency

may reimburse in connection with the

sale of the residence at the old official

station shall not exceed 10 percent of

the actual sales price of the residence.

(2) Purchase of a residence at the new

official station. The total amount of

expenses that an agency may reimburse

in connection with the purchase of a

residence at the new official station

shall not exceed 5 percent of the actual

purchase price of the residence.

* * * * *
13766 Federal Register / Vol. 62, No. 55 / Friday, March 21, 1997 / Rules and Regulations

4. Part 302–12 is revised to read as

follows:

PART 302–12—USE OF A

RELOCATION SERVICES COMPANY

Subpart A—Agency’s Use of a Relocation

Services Company

Sec.

302–12.1 What are ‘‘relocation services’’?

302–12.2 May we enter into a contract with

a relocation services company for the

company to provide relocation services?

302–12.3 What contracted relocation

services may we provide at Government

expense?

302–12.4 May we separately contract for

each type of relocation service?

302–12.5 What is the purpose of contracting

for relocation services?

302–12.6 How must we administer a

relocation services contract?

302–12.7 What policies must we establish

when offering our employees the

services of a relocation services

company?

302–12.8 What rules must we follow when

contracting for relocation services?

302–12.9 What are the income tax

consequences that we must consider

when offering relocation services?

302–12.10 What must we consider in

deciding whether to use the fixed-fee or

cost-reimbursable contracting method?

302–12.11 May we take title to an

employee’s residence?

302–12.12 Under a homesale program, may

we establish a maximum home value

above which we will not pay for

homesale services?

302–12.13 Under a homesale program, may

we pay an employee for losses he/she

incurs on the sale of a residence?

302–12.14 Under a homesale program, may

we direct the relocation services

company to pay an employee more than

the fair market value of his/her

residence?

302–12.15 May we use a relocation services

contract for services which we are

contractually bound to obtain under

another travel services contract?

Subpart B—Employee’s Use of a Relocation

Services Company

302–12.100 Am I eligible to use a relocation

services company?

302–12.101 Must my agency allow me to

use a relocation services company?

302–12.102 Under what conditions may I

use a relocation services company?

302–12.103 For what relocation services

expenses will my agency pay?

302–12.104 If I use a contracted-for

relocation service that is a substitute for

reimbursable relocation allowance, will I

be reimbursed for the relocation

allowance as well?

302–12.105 What expenses will my agency

pay if I use a relocation services

company to ship household goods in

excess of the maximum weight

allowance?

302–12.106 What expenses will my agency

pay if I use a relocation services

company to sell or purchase a residence

for which I and/or a member(s) of my

immediate family do not have full title?

302–12.107 If my agency authorizes me to

enter a homesale program, must I accept

a buyout offer from the relocation

services company?

302–12.108 What are the income tax

consequences if I use a relocation

services company?

Authority: 5 U.S.C. 5738 and 20 U.S.C.

905(c).

Subpart A—Agency’s Use of a

Relocation Services Company

Note to subpart A: Use of the pronouns

‘‘we’’ and ‘‘you’’ throughout this subpart

refers to the agency.

§ 302–12.1 What are ‘‘relocation

services’’?

‘‘Relocation services’’ are services

provided by a private company under a

contract with an agency to assist a

transferred employee in relocating to the

new official station. Examples include

homesale programs, home marketing

assistance, home finding assistance, and

property management services.

§ 302–12.2 May we enter into a contract

with a relocation services company for the

company to provide relocation services?

Yes.

§ 302–12.3 What contracted relocation

services may we provide at Government

expense?

You may pay for contracted relocation

services that are a substitute for

reimbursable relocation allowances

authorized throughout this chapter. For

example, you may pay for homesale

services as a substitute for residence

sale expenses, or household goods

management services as a substitute for

transportation of household goods.

§ 302–12.4 May we separately contract for

each type of relocation service?

Yes, or you may combine several

types of relocation services in a single

contract.

§ 302–12.5 What is the purpose of

contracting for relocation services?

To improve the treatment of

employees who are directed to relocate

to facilitate the retention of a wellqualified workforce.

§ 302–12.6 How must we administer a

relocation services contract?

You must balance the positive effects

that availability of relocation services

has on employee mobility and morale

with any increased costs your agency

may experience as a result of providing

relocation services.

§ 302–12.7 What policies must we

establish when offering our employees the

services of a relocation services company?

You must establish policies governing:

(a) The conditions under which you

will authorize an employee to use a

relocation services company;

(b) Which employees you will allow

to use a relocation services company;

(c) What relocation services you will

offer an employee; and

(d) Who will determine in each case

if an employee may use a relocation

services company and what services

will be offered.

§ 302–12.8 What rules must we follow

when contracting for relocation services?

The rules contained in the Federal

Acquisition Regulations (FAR) (48 CFR)

and/or other procurement regulations

applicable to you.

§ 302–12.9 What are the income tax

consequences that we must consider when

offering relocation services?

Amounts you pay to a relocation

services company on behalf of an

employee may be taxable to the

employee. In some cases, such as with

certain homesale programs, the amounts

may not be taxable. You must determine

the taxability of such payments, and pay

a relocation income tax (RIT) allowance

in accordance with part 302–11 of this

chapter on payments you determine to

be taxable to the employee. You may

contact the Assistant Chief Counsel

(Income Tax & Accounting), Internal

Revenue Service, 1111 Constitution

Avenue, NW., Room 5501, Washington,

DC 20224, for information on the

income tax consequences of payments

you make to a relocation services

company.

§ 302–12.10 What must we consider in

deciding whether to use the fixed-fee or

cost-reimbursable contracting method?

You must consider the following

factors in deciding which contracting

method to use:

(a) Risk of alternative methods. Under

a fixed fee contract, the relocation

services company bears all risks not

expressly contained in the contract.

Under a cost-reimbursable contract, you

must assume some or all risks and,

therefore, must assume some

management responsibilities under the

contract as well. For example, under a

fixed fee homesale program you are not

directly liable for losses incurred if a

residence does not sell immediately,

while under a cost-reimbursable

homesale program you assume some or

all risks of selling the residence.

(b) Cost of alternative methods. Under

the fixed fee method of contracting, the

fee includes a cost component for risk
Federal Register / Vol. 62, No. 55 / Friday, March 21, 1997 / Rules and Regulations 13767

assumed by the relocation services

company. Under the cost-reimbursable

method of contracting, you are directly

responsible for some or all of the costs

associated with management of the

contract. In deciding whether to use

cost-reimbursable contracting you,

therefore, must consider the cost of

resources you would require (including

personnel costs) to manage a costreimbursable relocation services

contract.

(c) Effect on the obligation of funds.

You must obligate funds for a relocation

in the fiscal year in which the purchase

order is awarded under the contract.

Under the fixed fee contracting method,

the amount of the relocation services fee

is fixed and you have a basis for

determining the amount of funds to

obligate. Under the cost-reimbursable

contracting method, you must obligate

funds based on an estimate of the costs

that will be incurred. When opting for

cost-reimbursable contracting you,

therefore, should establish a reliable

method of computing fund obligation

estimates.

§ 302–12.11 May we take title to an

employee s residence?

No, you may not take title to an

employee’s residence except as

specifically provided by statute. The

statutes which form the basis for the

provisions of this part do not provide

such authority.

§ 302–12.12 Under a homesale program,

may we establish a maximum home value

above which we will not pay for homesale

services?

Yes. If a home exceeding the

maximum value is sold under your

homesale program, the employee will be

responsible for any additional costs.

You must establish a maximum amount

commensurate with your agency’s

experience. You may consider, among

other factors, budgetary constraints, the

value range of homes in areas where you

have offices, and the value range of

homes previously entered in your

program.

§ 302–12.13 Under a homesale program,

may we pay an employee for losses he/she

incurs on the sale of a residence?

No. But, this does not preclude your

reimbursing a relocation services

company for losses incurred while the

contractor holds the property.

§ 302–12.14 Under a homesale program,

may we direct the relocation services

company to pay an employee more than the

fair market value of his/her residence?

No. Under a homesale program you

may not direct the relocation services

company to pay an employee more than

the fair market value (as determined by

the residence appraisal process) of his/

her home.

§ 302–12.15 May we use a relocation

services contract for services which we are

contractually bound to obtain under

another travel services contract?

No. For example, you may not use a

relocation services contract to

circumvent the travel and transportation

expense payment system contract if you

are a user of that contract.

Subpart B—Employee’s Use of a

Relocation Services Company

Note to subpart B: Use of the pronouns ‘‘I’’

and ‘‘you’’ throughout this subpart refers to

the employee.

§ 302–12.100 Am I eligible to use a

relocation services company?

Yes, if you are an employee who is

authorized to transfer.

§ 302–12.101 Must my agency allow me to

use a relocation services company?

No. Your agency determines if you

may use a relocation services company.

§ 302–12.102 Under what conditions may I

use a relocation services company?

You may use a relocation services

company if:

(a) You meet all conditions required

for you to be eligible for an allowance

contained in this chapter for which a

service provided by the relocation

services company would serve as a

substitute, and you are authorized to use

a specific relocation service provided by

the company as a substitute;

(b) You have signed a service

agreement; and

(c) You meet any specific conditions

your agency has established.

§ 302–12.103 For what relocation services

expenses will my agency pay?

Your agency will pay the relocation

services company s fees/expenses for

the services you are authorized to use.

If your agency pays the relocation

services company for actual expenses

the company incurs on your behalf,

payment to the company is limited to

what you would have received under

the direct reimbursement provisions of

this chapter.

§ 302–12.104 If I use a contracted-for

relocation service that is a substitute for

reimbursable relocation allowance, will I be

reimbursed for the relocation allowance as

well?

No.

§ 302–12.105 What expenses will my

agency pay if I use a relocation services

company to ship household goods in

excess of the maximum weight allowance?

Your agency will pay the portion of

the fee attributable to 18,000 pounds net

weight. You must pay the rest.

§ 302–12.106 What expenses will my

agency pay if I use a relocation services

company to sell or purchase a residence for

which I and/or a member(s) of my

immediate family do not have full title?

Your agency will pay the portion of

the relocation services company’s fee

attributable to your pro rata share of the

residence, as determined in accordance

with § 302–6.1(f) of this chapter. You

must pay any portion of the fee

attributable to other than your pro rata

share of the residence.

§ 302–12.107 If my agency authorizes me

to enter a homesale program, must I accept

a buyout offer from the relocation services

company?

No. Your agency must give you the

option to accept or reject an offer from

the relocation services company.

§ 302–12.108 What are the income tax

consequences if I use a relocation services

company?

You may incur income taxes on

relocation services provided by a

relocation services company and paid

for by your agency. Section 82 of the

Internal Revenue Code states there shall

be included in gross income (as

compensation for services) any amount

received or accrued, directly or

indirectly, by an individual as a

payment for or reimbursement of

expenses of moving from one residence

to another residence which is

attributable to employment. You will

receive a relocation income tax (RIT)

allowance if your agency determines

that such expenses are taxable. The

Government does not assume

responsibility for payment of your taxes,

however, and you may wish to consult

a tax professional on income tax

reporting.

Dated: March 17, 1997.

Thurman M. Davis, Sr.,

Acting Administrator of General Services.

[FR Doc. 97–7186 Filed 3–20–97; 8:45 am]

BILLING CODE 6820–34–P