Rather quietly at the end of June, Jeffrey Neely, the former regional commissioner for the federal General Services Administration's Pacific Rim real-estate portfolio, was sentenced to three months in jail, three months of house arrest and a $10,000 fine. Neely had pleaded guilty in April to one count of fraud against the government for billing the GSA for a night at the M Resort Spa Casino in 2010, also admitting he had abused his position in numerous ways. (It didn't help that an embarrassing video of Neely in a hot tub at the resort had gone viral.)
The incident, related to a training event held by the General Services Administration that cost more than $800,000, was one of several examples of excess within the federal government that caused a clampdown on travel and meetings spending. In May 2012, a memorandum from the White House Office of Management and Budget specified that beginning in fiscal year 2013, each agency would be required to spend at least 30 percent less on travel than in FY2010; agencies were required to maintain the reduced spending level through FY2016.
The memorandum also addressed government conferences, requiring senior-level review and approval of spreadsheets for all meetings sponsored or hosted by federal agencies that would exceed $100,000, and prohibiting expenses of more than $500,000 on any single conference.
Since then there has been a slight loosening of these vise grips, as even the White House has realized that the conference rules, as well as measures that have made it more difficult for government employees to travel to conferences not federally sponsored, are too tight. The layers of authorization needed for some of the most mundane travel -- even to get vital training -- have proven onerous.
In January 2015, new instructions were issued by the OMB that eased some of the bureaucracy, but the language of the directive clearly keeps the budget in the forefront: "Each agency is responsible for implementing its own internal travel and conference policies, and each agency needs to achieve the right balance between reducing spending and meeting mission-critical needs.... To prevent lengthy and cumbersome review processes that could hinder an agency's ability to carry out their mission in an efficient and effective manner, agencies should preapprove known recurring conferences and attendance at nongovernment-sponsored conferences. Preapproving an event does not exclude it from annual reporting requirements."
The tightening of government funds caused distress in the meeting planning world. Paul Trapp, CEO of Dumfries, Va.-based FederalConference.com, which plans reintegration events for servicepeople returning to the United States, as well as meetings for the Department of Defense, the Army and more, had to lay off staff members in the past few years. But he has finally started hiring again.
"We're coming out of a dark 2014 to a pretty good place," says Trapp. "A lot of contracts are being won. The government has clamped down on what the meeting spend can be, but they still need to meet and are hiring meeting planners to take care of that process." This year, his 61-person company will handle 5,000 meetings, including a record 240 held over the last weekend in September.
The new normal
In 2012, when M&C wrote about the then-recent scandals and the subsequent calls for budget cuts ("GSA Fallout"), government planners had to make a lot of adjustments, including canceling events at a cost almost equal to that of holding the events in the first place. Three years later, all proposed federal meetings must go through an approval process that can take a few months.
At the National Institutes of Health, for example, executives with immediate higher-up approval generally can OK events costing below the $100,000 threshold. For sponsored conferences that cost between $100,000 and $500,000, NIH principal deputy director Dr. Lawrence Tabak has signing privileges. Above that, director Dr. Francis Collins must personally sign off on the event. (The NIH's annual budget is more than $30 billion.)
These approval processes have led to one of the biggest changes for government planners: truncated lead time. In the past, arranging a government event was a three- to four-month process. Today, with approvals eating up so much time, planners often have just a month to get the details in place.
"With that $100,000 threshold requiring a secretary or assistant secretary to approve, agencies have to come up with a justification package first," says Chip Smith, vice president of government markets for Experient, a third-party event management company. "This can put pressure on the planner to get the meeting done in a compressed time period."
For Trapp of FederalConference.com, this means from the time he is awarded a contract to the actual meeting is about 30 days, and space availability is tight.
The hotels themselves have noticed, also, that government meetings business has gone down. "What we have seen year to date is that government groups have been declining in actual room nights," says Maria McGuire, director of strategic accounts, Americas, for Hyatt Hotels & Resorts. "We believe this is a result of more meetings taking place on agency campuses due to the changing travel and meeting budgets. In addition, and as the market is starting to turn around for the meetings industry, the government per diem makes it increasingly difficult to find availability in first- and second-tier cities."
Indeed, today's tough hotel market, with high rates and occupancy, is particularly challenging. In this seller's market, government meetings, with their tight budgets, are not a priority for properties. "Planners need to have real flexibility in location and dates, and play into the seasonality of their locations," says Smith. "It's always been that way unless there's a significant downturn; that's when everybody chases a government meeting." He cautions hoteliers not to abandon these meetings, but to look to where they can engage with federal groups as best they can.
McGuire of Hyatt echoes the need for flexibility and the importance of building relationships that weather ebbs and flows of the economy. "We strive to create, enhance and maintain our government partnerships to be the meeting planner's top choice," she says.
Smith adds that the explosion of mid-price properties is good news for government meetings. "New brands are helping a great deal," he says. "It's easier for agencies to get smaller meetings approved, so the mid-level brands have a great opportunity to help their overall occupancy."
Along with budget constraints and food prohibitions are travel strictures that keep federal attendees from escaping their cubicles to begin with, especially when it comes to exchanging findings, best practices and more with colleagues outside the government. The approval process for such travel can be lengthy, requests are often denied, and the process itself is costing taxpayer money.
In February, Betsy Shatzer, who oversees utility contracts for the Army at Maryland's Fort Meade, told the Washington Post how difficult it has become for her to become recertified for her job. Rather than attending a one-week, $500 training conference, a government requirement that she give three months' notice to attend such events stymied her, because the group running the training announces its programs only two months in advance. So she has had to drive around the state for daylong courses, wasting time and incurring additional costs for rental cars, hotel rooms and meals.
Officials at the National Institutes of Health concur that such requirements are hindering the agency's work. NIH employees attended 7,460 conferences in calendar year 2014. In that time, the NIH spent approximately $14.5 million in processing costs associated with the collection, routing, reviewing, approving, tracking and reporting the activities of these attendees.
Similar to the approval process for agency-sponsored meetings, attendees must get approval to travel to nonsponsored events. First, however, the NIH has to aggregate all attendance at each such event, to see how many NIH employees are asking to go and how much their participation would cost the agency. Then the same cumbersome approval process is begun, with the total cost of the event dictating the level of authority necessary.
NIH director Dr. Francis Collins spoke about the costs during a recent Senate hearing: "An incredibly vexing situation and terribly wasteful of our scientists' time is the current various rigorous oversight of attendance of scientists at scientific meetings. This applies to both the NIH and the FDA. We're currently spending about $15 million and using hundreds of employees to go through a process, which as far as I can say, has relatively little, if any, added value. All of this triggered by some misadventures by other agencies who convened conferences in places like Las Vegas, for which we are now all paying a price. But scientists going to conferences is a critical part of how we move things forward, how new ideas emerge, and it is very much being inhibited by this very heavy-handed oversight, and we could much benefit from your help there." - S.B.
The F&B question
In the corporate world, when a group comes to a hotel, there is the expectation that a certain amount of money will be spent on breakfast, lunch and dinner events, a key source of revenue for the property.
Not so with government meetings. Planners are not permitted to provide F&B for government-sponsored conferences. The reasoning? Federal employees attending a meeting are receiving a per diem for the city to which they have traveled, covering the hotel as well as meals and incidental expenses. Having a meal provided during a government-sponsored event is considered double-dipping.
"There's a disconnect here," says Chip Smith. "The hospitality industry could be more transparent with those costs." Hotels currently don't break down meal costs when F&B is quoted; doing this could help federal employees show that their per diem for meals is included in the conference price.
Trapp of FederalConference.com has seen some agencies unbundle the costs so travelers can show they are getting one benefit. "If they do supply a meal at a meeting, they backtrack with the attendees to make sure they claim it properly," he says.
What the future holds
Will this meetings segment ever grow again? Insiders are optimistic. In a recent survey of 432 members of the Society of Government Meeting Professionals, most respondents said they believe the negative direction for their market is finally reversing. Executive director Rob Bergeron, CAE, CGMP, reports that some key hotel partners are seeing an uptick in government events. "We are encouraged," he says. "There are signs that some of the knee-jerk reactions have not come to pass in the current Congress."
Chip Smith of Experient believes a paradigm shift has occurred: "I think the question should be, are government meetings sustainable? And I say yes." He thinks government agencies should start applying meeting-management standards that many private-sector organizations use, implementing software that allows for analysis of meeting spend or hiring third-party services to implement and guide that process.
Paul Trapp says it's a matter of centralizing meetings management, a process the Veterans Administration has gone through. "They were very decentralized; you might have had one conference policy and 25 interpretations of it," he notes. The agency ultimately put its meetings out to bid, and Federal Conference.com was one of five companies that won the business for the next five years. Any V.A. event will go through those firms. "It's called a blanket purchase agreement," adds Trapp. "If you're not one of the five companies, you don't know there are any events taking place."
These approaches, which would allow agencies to track spending more easily, could save taxpayer money while allowing government planners to access the facts required to justify their meetings and events.
Big City Per Diems
This past August, the General Services Administration established the 2016 per-diem rates for the lower 48 continental United States, the maximum allowances for which federal employees are reimbursed for official travel expenses. The standard hotel rate rose to $89 for fiscal year 2016, which began Oct. 1, up from $83 in FY2015. Below are the nonstandard-area rates for 10 top convention destinations for April 2016; rates for some cities change by the season.