Can a Prime and/or Subcontractor include profit on travel (hotel, per diem, rental car, fuel for rental car & vehicles)?
FAR 31.205-4(a)(2) states: Except as provided in subparagraph (a)(3) of this subsection, costs incurred for lodging, meals, and incidental expenses (as defined in the regulations cited in paragraphs (a)(2)(i) through (iii) of this section) shall be considered to be reasonable and allowable only to the extent that they DO NOT exceed on a daily basis the maximum per diem rates in effect at the time of travel set forth in the ---
(i) Federal Travel Regulation….
(ii) JTR, DoD Civilian Personnel, Appendix A, prescribed by the DoD, for travel in Alaska, Hawaii, and outlying areas of the U.S…..
(3) In special or unusual situations, actual costs in excess of the above-referenced max per diem rates are allowable provided that such amounts do not exceed the higher amounts authorized for Federal civilian employees…
Based on the above, if you add profit to the travel, it would exceed the higher amounts authorized for Federal civilian employees.
Can a contractor claim profit on a travel CLIN? We immediately want to scream "No," but look at how your contract is written.
Is you travel on a FFP CLIN or a cost-reimbursement type CLIN? If it is on a FFP CLIN, there is really no way for you to determine how much profit they applied to the CLIN. Profit is applied after total costs. And for a FFP type contract, we generally perform a price analysis, which does not examine each element's cost. If you are using a DCAA office, during their audits, they may refuse to accept profit on travel.
Contractor perspective: If we put travel on a FFP, and say, like today, the price of fuel goes exponentially through the roof, they are stuck paying the negative balance.
FEE?? If your CLIN is a cost-reimbursement, you would want to apply the claues FAR 52.216-11, Cost Contract -- No Fee and FAR 52.216-7, Allowable cost and payment. Administratively for the government, this creates more oversight.
Contractor Perspective: On a cost-reimbursable contract, the Travel Regs say that reimbursement is at cost not to exceed the daily maximum per diem rate. There is a special circumstances condition where it may exceed per diem rates. In many instances, the government negotiated rate is not extended to contractor employees, so the contractor suffers a loss by having to pay more than the per diem rates. Just fodder for thought on how we want to encourage contractors to do business with the government. Also, when we add the CLIN as a cost-type CLIN the administrative burden for that CLIN become heavy (especially for a small business) because of the requirements of FAR 16.301 and, of course, FAR 52.216-7.
As always, it is wise to consult the FAR, DFARS, your agency supplements, and the travel regulations.