Can the Government legally require a long distance contractor on extended TDY to find a more cost effective arrangement (such as a long term rental) for lodging rather than charging the Government the local per diem charges? Also, there appears to be some long term rent options for Government employees on TDY. Could the Government allow a contractor employee to avail his/herself those same services?
The contractor is required to meet the guidance in FAR 31.205-46 -- Travel Costs. The guidance required the contractor to stay within the costs allowed by the FTR or JTR as applicable. We have no comment on the allowances granted by the FTR/JTR.
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As to the question of allowing a contractor employee to avail his/herself long term rent options available to Government employees; that is a decision for the person/company that is offering those rates. The rate was created by the person/company, not the Government; therefore we have no right to offer it to a contractor without permission. For them to do so means they are willing to forego profit.
As to having the contractor use long term lodging; that is a point for negotiation, not a FAR compliance issue.
Should your team decide to negotiate a long term, you may want to weigh the amount to be saved versus the disruption to the SME's plans; particularly if this is the only SME able to do what you need.