Normally I would say you have full rights to the previous rate, but since you mentioned govt rate, it may be a bit different. They probably changed their rates since the govt rate in the area went up for the 2004 Per Diem year, which starts in October 2003. So from the hotel's point of view you had booked the maximum govt per diem rate, which per the govt just changed to $106.

I'm not sure if it makes a difference legally, but it is difference than a one-sided hotel change to your rate -- in this case, an outside body sets the max rates that these hotels can charge.