DOD’s lodging programs are classified as either permanent- change-of-station (PCS) or temporary duty (TDY). In addition, they can serve military personnel and their families who are changing permanent duty stations. Proposed Policy Change Impacts the Marine Corps’ MWR Program

Except for the Marine Corps, DOD’s proposed policy change will not impact the services’ MWR programs. This practice violates department and Army regulations. If these lodging earnings are no longer available to the MWR programs, Marine Corps officials said that they would have to make changes to their MWR programs, such as reducing the quality-of-life services, raising rates, or seeking additional appropriations to compensate for lost revenues. Proposed Policy Change Based on Resolving a Perceived Regulatory Conflict and Achieving Other Management Objectives

DOD officials provided two primary reasons for changing the PCS lodging policy. In DOD’s view, resolution of the conflict required separation of lodging revenues from those used for MWR purposes. The PCS Policy Change Intended to Resolve a Perceived Conflict with Travel Regulation

In its May 2001 report to Congress, DOD based the proposed policy change on a determination that its current PCS policy is in conflict with requirements of the Joint Federal Travel Regulation. Therefore, the policy change, by itself, will not allow DOD to accomplish them. While the proposed policy will prevent the Marine Corps from using PCS lodging revenues to support MWR programs, it does not change the guidance relating to the construction of PCS lodges. DOD Guidance Allows Services to Build PCS Lodges in Excess of Official Traveler Needs

The services’ plans for building new PCS lodges are consistent with department guidance. This surcharge generated about $100 million from fiscal years 1996 through 2000. Regardless of whether the proposed policy is implemented, the assistant secretary of defense for force management policy should:   Provide the military services with a policy framework including improved lodging guidance to help achieve DOD’s desired lodging-program management objectives, including consistent lodging policy and operations, reduced room rates, improved lodging facilities, and limitations on new construction not focused on official PCS and TDY travelers; and   Require the Army to adhere to DOD’s and its own regulations by discontinuing the transfer of lodging revenues (unofficial-traveler surcharge) to installation MWR funds and returning the proceeds collected thus far to the Army’s lodging fund.
What GAO Found

The military services primarily operate two types of hotels, or lodges, to support official travelers. The first, called permanent-change-of-station (PCS) lodges, support military personnel and their families moving to new duty stations. These are intended to provide military travelers and their families with a clean, affordable place to stay while they prepare to move and while they wait for permanent quarters at their new station. The second type, called temporary duty (TDY) lodges, support military and civilians temporarily traveling on official business. PCS lodges are the subject of a proposed policy change by the Department of Defense (DOD). DOD's current policy permits PCS lodges to be managed as part of morale, welfare, and recreation (MWR) programs. The proposed policy would change this practice by requiring separation of lodge revenues from those used for MWR purposes. Except for the Marine Corps, the proposed policy change will not impact the services' MWR programs. Only the Marine Corps currently uses PCS lodge earnings to support its MWR programs. From fiscal years 1996 through 2000, the net profits reported by the Marine Corps' lodges steadily increased from $1.8 million to $5.1 million. Marine Corps officials do not believe the policy change is required and said that, if implemented, the Corps would have to make changes, such as reducing quality-of-life programs at some installations or seeking additional appropriations to compensate for the loss of this revenue. The proposed policy is predicated on resolving a perceived regulatory conflict and achieving other management objectives. DOD officials believe separation of PCS lodging funds from MWR funds is required to resolve a conflict with the Joint Federal Travel Regulation. However, the regulation does not apply to lodging management, and the policy change, by itself, is likely to have little direct effect on DOD's broader management objectives. The services' plans for building new PCS lodges are consistent with department guidance. The proposed change will not, by itself, change that guidance.