Sign In
  • Question

    Is incurred lodging costs in excess of daily GSA lodging maximums expressly unallowable costs subject to FAR 42.709 Penalty?


    There are a few things you will need to check in your contract: Does the contract specifically say the contractor will not be reimbursed for lodging costs over the GSA schedule lodging maximum for the location?  In the contract are lodging costs a separate cost CLIN?

    How did you make the determination the cost over the lodging maximum was unreasonable?

    FAR 42.709 only covers the assessment of penalties against contractors which include unallowable indirect costs. If lodging costs are a separate cost CLIN they would not be an indirect cost.

    FAR 42.709-2(a)(1) states- If the indirect cost is expressly unallowable under a cost principle in the FAR, or an executive agency supplement to the FAR, so you would need to look in FAR 31 and DFARS 231 to see if your cost is expressly unallowable.

    FAR 31.205-46(a)(3) states-In special or unusual situations, actual costs in excess of the above-referenced maximum per diem rates are allowable provided that such amounts do not exceed the higher amounts authorized for Federal civilian employees as permitted in the regulations referenced in (a)(2)(i), (ii), or (iii) of this section. For such higher amounts to be allowable, all of the following conditions must be met:

                    (i) One of the conditions warranting approval of the actual expense method, as set forth in the regulations referenced in paragraphs (a)(2)(i), (ii), or (iii) of this section, must exist.

                    (ii) A written justification for use of the higher amounts must be approved by an officer of the contractor’s organization or designee to ensure that the authority is properly administered and controlled to prevent abuse.

                    (iii) If it becomes necessary to exercise the authority to use the higher actual expense method repetitively or on a continuing basis in a particular area, the contractor must obtain advance approval from the contracting officer.

                    (iv) Documentation to support actual costs incurred shall be in accordance with the contractor’s established practices, subject to paragraph (a)(7) of this section, and provided that a receipt is required for each expenditure of $75.00 or more. The approved justification required by paragraph (a)(3)(ii) of this section and, if applicable, paragraph (a)(3)(iii) of this section must be retained.

               (4) Paragraphs (a)(2) and (3) of this section do not incorporate the regulations cited in paragraphs (a)(2)(i), (ii), and (iii) of this section in their entirety. Only the maximum per diem rates, the definitions of lodging, meals, and incidental expenses, and the regulatory coverage dealing with special or unusual situations are incorporated herein.

               (5) An advance agreement (see 31.109) with respect to compliance with paragraphs (a)(2) and (3) of this subsection may be useful and desirable.

               (6) The maximum per diem rates referenced in paragraph (a)(2) of this subsection generally would not constitute a reasonable daily charge-

                    (i) When no lodging costs are incurred; and/or

                    (ii) On partial travel days (e.g., day of departure and return).

                   Appropriate downward adjustments from the maximum per diem rates would normally be required under these circumstances. While these adjustments need not be calculated in accordance with the Federal Travel Regulation or Joint Travel Regulations, they must result in a reasonable charge.

               (7) Costs shall be allowable only if the following information is documented-

                    (i) Date and place (city, town, or other similar designation) of the expenses;

                    (ii) Purpose of the trip; and

                    (iii) Name of person on trip and that person’s title or relationship to the contractor.

    From the GSA website FAQ:

    How much per diem can I pay a contractor?

    GSA establishes per diem rates and related policies for federal travelers on official travel only, and cannot address specific inquiries concerning the payment of contractors. If the contractor is on a federal contract, check with the contracting officer to see what is stated in their contract. Contractors should also check the travel regulations of their company.

    What do I do if there are no hotels available at per diem?

    You may ask your agency to authorize the actual expense allowance provision. The Federal Travel Regulation (FTR) §§301-11.300 through 306 notes that if lodging is not available at your temporary duty location, your agency may authorize or approve the maximum per diem rate of up to 300% of per diem for the location where lodging is obtained. You should also ensure you have checked to confirm there are no rooms available at per diem in the area where you need to travel.

    I do not see it as being expressly unallowable, but you should contact your legal to receive their opinion.

    Open full Question Details
Chat with DAU Assistant
Bot Image