Sign In
  • Question

    1. How do I determine the allowable cost? 2. Commercial flight prices one day before departure are much higher than reserving them a week or 2 in advance, so I'm thinking I can write a MOU stating that the contractor must submit a screen shot of flight comparisons when it first knows the travel is unavoidable and only for the legs of the trip related to the contract. Will this fly, or does a price quote one day before departure follow the regulation, and I'm forced to accept it? 3. Could I use GSA city pairs to establish flight cost after the fact in lieu of acceptable submissions from the contractor?


    Answer

    Answer Q1. The Federal Acquisition Regulation (FAR) identifies five requirements that must be met in order for a cost to be allowable (FAR 31.201-2(a)). To be allowable, the cost must be: (1) reasonable, (2) allocable to the contract, (3) compliant with Cost Accounting Standards (as applicable, otherwise generally accepted accounting principles), (4) compliant with the terms of the contract, and (5) compliant with any specific limitations set forth in FAR subpart 31.2.
    All five of the above requirements must be met in order for any claimed contractor-owned aircraft costs to be allowable.  The last of the above five requirements is of most concern in answering this question.  Specifically, the limitations provided in FAR subpart 31.2, as follows:


    (1) FAR 31.205-46 (c) (1) --  “’Cost of travel by contractor-owned, -leased, or –chartered aircraft,’ . . . includes the cost of lease, charter, operation (including personnel), maintenance, depreciation, insurance, and other related costs.”
    (2) FAR  31.205-46 (c) (2) -- “The costs of travel by contractor-owned, - leased, or –chartered aircraft are limited to the allowable airfare described in paragraph (b) of this subsection for the flight destination unless travel by such aircraft is specifically required by contract specification, term, or condition, or a higher amount is approved by the contracting officer.” [quoted in part]
    (3) FAR 31.205-46 (b) – “Airfare costs in excess of the lowest priced airfare available to the contractor during normal business hours are unallowable except when such accommodations require circuitous routing, require travel during unreasonable hours, excessively prolong travel, result in increased cost that would offset transportation savings, are not reasonably adequate for the physical or medical needs of the traveler, or are not reasonably available to meet mission requirements.”  [quoted in part]

    Answer Q2. 
    As stated above, the costs of contractor-owned aircraft must meet the five requirements including the specific provision that limits the cost to “the lowest priced airfare available to the contractor.”  For purposes of determining allowability, the contracting officer is not confined to use of only airfares available one day before departure, if other lower airfares such as those reasonably available to the contractor a week or two prior to departure are available, these may be used. 
     
    A MOU is a consideration as FAR 31.109 provides that advance agreements may be utilized to “avoid possible subsequent disallowance or dispute based on unreasonableness, unallocability, or allowability.”  However, it also provides, “an advance agreement is not an absolute requirement and the absence of an advance agreement on any cost will not, in itself, affect the reasonableness, allocability or the allowability” of that cost. 

     Although not regulatory, the Defense Contract Audit Agency (DCAA) has issued audit guidance to its auditors (10-PAC-101(R), dated March 22, 2010) that may be instructive.  That memo addressing FAC 2005-38 effective January 11, 2010 (current version of
    FAR 31.205-46) includes this statement:
     
    “To comply with the revised rule, the contractor’s policies and procedures should provide for advance planning of travel to assure that the lowest priced airfare available to the contractor for flights during normal business hours is documented and utilized as the baseline allowable airfare cost.”
     
    Answer Q3. The FAR 31.205-46(b) limit on contractor-owned aircraft costs, as described above, is the lowest priced airfare available to the contractor and generally the GSA City Pair Program (CPP) fares are not available for contractor employee travel.  Thus, if the CPP fares are used as a measure of allowability, it would be only to the extent that they are found by the contracting officer to be representative surrogates for the lowest airfare actually available to the contractor.

    Open full Question Details