[Federal Register Volume 62, Number 55 (Friday, March 21, 1997)]
[Rules and Regulations]
[Pages 13765-13767]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-7186]



[[Page 13765]]

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GENERAL SERVICES ADMINISTRATION
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.

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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 multi-agency 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:


Sec. 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:


Sec. 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.
* * * * *

[[Page 13766]]

    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.


Sec. 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.


Sec. 302-12.2  May we enter into a contract with a relocation services 
company for the company to provide relocation services?

    Yes.


Sec. 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.


Sec. 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.


Sec. 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 well-qualified workforce.


Sec. 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.


Sec. 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.


Sec. 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.


Sec. 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.


Sec. 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

[[Page 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 cost-reimbursable 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.


Sec. 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.


Sec. 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.


Sec. 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.


Sec. 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.


Sec. 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.


Sec. 302-12.100  Am I eligible to use a relocation services company?

    Yes, if you are an employee who is authorized to transfer.


Sec. 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.


Sec. 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.


Sec. 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.


Sec. 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.


Sec. 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.


Sec. 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 Sec. 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.


Sec. 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.


Sec. 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