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    Unable to locate in searches an actual reference specifically stating this is not allowed. Basic business sense states this is not in the best interest of Government. Active Duty Personnel sent to theater for short tours of duty (remote assignments) are not authorized to be accompanied by dependants at Government expense. Is there an actual FAR or other reference that calls out this as an unallowable expense?


    Answer

    1. The FAR references quoted below in pertinent part are applicable to this response.
     
    FAR 31.103 -- Contracts with Commercial Organizations
    (a) The cost principles and procedures in Subpart 31.2 and agency supplements shall be used in pricing negotiated supply, service, experimental, developmental, and research contracts and contract modifications with commercial organizations whenever cost analysis is performed as required by 15.404-1.

    (b) In addition, the contracting officer shall incorporate the cost principles and procedures in Subpart 31.2 and agency supplements by reference in contracts with commercial organizations as the basis for --
      (1) Determining reimbursable costs under -- (i) Cost-reimbursement contracts and cost-reimbursement subcontracts under these contracts performed by commercial organizations; and (ii) The cost-reimbursement portion of time-and-materials contracts except when material is priced on a basis other than at cost (see 16.601(c)(3));

    FAR Subpart 31.2 -- Contracts With Commercial Organizations
    FAR 31.204 -- Application of Principles and Procedures
    (a) Costs are allowable to the extent they are reasonable, allocable, and determined to be allowable under … 31.205. These criteria apply to all of the selected items that follow, even if particular guidance is provided for certain items for emphasis or clarity.

    (d) Section 31.205 does not cover every element of cost. Failure to include any item of cost does not imply that it is either allowable or unallowable. The determination of allowability shall be based on the principles and standards in this subpart and the treatment of similar or related selected items.

    FAR 31.205-35 -- Relocation Costs
    (a) Relocation costs are costs incident to the permanent change of assigned work location (for a period of 12 months or more) of an existing employee or upon recruitment of a new employee. The following types of relocation costs are allowable as noted, subject to paragraphs (b) and (f) of this subsection:
      (1) Cost of travel of the employee and members of the immediate family (see 31.205-46) and transportation of the household and personal effects to the new location.

    (e) Subject to the requirements of paragraphs (a) through (d) of this section, the costs of family movements and of personnel movements of a special or mass nature are allowable. The cost, however, should be assigned on the basis of work (contracts) or time period benefited.

    (f) Relocation costs (both outgoing and return) of employees who are hired for performance on specific contracts or long-term field projects are allowable if --
      (1) The term of employment is 12 months or more;
      (2) The employment agreement specifically limits the duration of employment to the time spent on the contract or field project for which the employee is hired;
      (3) The employment agreement provides for return relocation to the employee’s permanent and principal home immediately prior to the outgoing relocation, or other location of equal or lesser cost; and
      (4) The relocation costs are determined under the rules of paragraphs (a) through (d) of this section. However, the costs to return employees, who are released from employment upon completion of field assignments pursuant to their employment agreements, are not subject to the refund or credit requirement of paragraph (d).

    2. The Background statement mentions relocation costs for the employee and family, as well as school, commissary and BX privileges for family. This response excludes any discussion of school, commissary and BX privileges because the granting of such privileges would be determined by Service policy and because the employee would bear the expense to use the services provided. The Background statement also makes reference to regulations applicable to active duty personnel as a basis for denying the costs of dependant relocation. Pursuant to FAR 31.103, the cost principles and procedures in FAR Subpart 31.2 shall be used in pricing negotiated supply, service, experimental, developmental, and research contracts and contract modifications with commercial organizations.  Therefore in our opinion, pursuant to FAR 31.204(a), the only criteria to determine whether any relocation costs are allowable for commercial organizations, as is the case here, would be to the extent that such costs are reasonable, allocable, and determined to be allowable under FAR 31.205.

    3. The Background statement indicates that the contractor employee will be in Turkey for eleven to twelve months and then return to United States. Pursuant to FAR 31.205-35(a) and (f)(1), the term of employment at the assigned work location must be for a period of 12 months or more to permit the allowability of any relocation costs as described in FAR 31.205-35. Therefore, if the expected term of employment will be less than 12 months, then any relocation costs would be deemed to be unallowable.

    4. Furthermore, we believe that FAR 31.205-35 makes a distinction between relocation costs allowed for a “permanent” change of the assigned work location (i.e., FAR 31.205-35(a)) and relocation costs (both outgoing and return) of employees who are hired for performance on specific contracts or long-term field projects (i.e., FAR 31.205-35(f)). Under FAR 31.205-35(a)(1) and FAR 31.205-35(e), relocation costs for the employee’s family are allowable for permanent change of the assigned work location. Because the assignment in question represents a long-term field project with the employee returning to the United States after completion of the assignment, versus a permanent change in the assigned work location, then relocation costs for the employee’s family members would not appear to be allowable because such costs are not included in FAR 31.205-35(f), either directly or by reference to paragraphs (a) through (d). Based on the above, we would recommend that the Contracting Officer make this argument to exclude such costs from the negotiated price and billable anounts.

    5. In response to the above analysis, the contractor may argue that, in accordance with FAR 31.204(d), the relocation costs for the employee’s family should be allowed for a long-term field assignment because “the determination of allowability shall be based on the principles and standards in this subpart and the treatment of similar or related selected items”. Therefore, there is really no actual FAR reference that calls out the family relocation costs that the contractor is proposing as an expressly unallowable expense.

    6. Consequently, we believe that this issue will ultimately be resolved through negotiation of the actual contractor personnel to be assigned to perform the work under the task order. If the costs of providing reimbursement of family relocation costs are unaffordable or otherwise not determined to be in the best interests of the Government, then the only solution would appear to be for the parties to agree upon the assignment of different personnel who do not have the need to have any family members with them, or for the Government to award the task order to another contractor who can better accommodate the Government’s need, in order to minimize costs in this tough budget environment.


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