Understanding Federal Travel Regulations is crucial for contractors working with the U.S. government. These regulations dictate what travel expenses are considered allowable costs under government contracts. Non-compliance can lead to disallowed costs and financial repercussions. This guide breaks down the key aspects of federal travel regulations that contractors need to know to ensure compliance and proper reimbursement.
Understanding Allowable Travel Costs
Federal Acquisition Regulation (FAR) Subpart 31.2 outlines the principles for determining allowable costs in government contracts. When it comes to travel, the core principle is reasonableness. Contractors must ensure that travel costs charged to the government are reasonable and comply with specific guidelines. These guidelines primarily revolve around the Federal Travel Regulations (FTR), Joint Travel Regulations (JTR), and Standardized Regulations for government civilians in foreign areas.
Per Diem Rates and Federal Travel Regulations
For lodging, meals, and incidental expenses (M&IE), the regulations often refer to per diem rates. These rates are pre-determined amounts considered sufficient to cover daily living expenses in different locations. The specific per diem rates applicable to a contract are generally those stipulated in:
- Federal Travel Regulations (FTR): These are prescribed by the General Services Administration (GSA) and apply to travel within the contiguous United States.
- Joint Travel Regulation (JTR), Volume 2, DoD Civilian Personnel, Appendix A: Issued by the Department of Defense (DoD), these regulations cover travel in Alaska, Hawaii, and outlying areas of the United States.
- Standardized Regulations (Government Civilians, Foreign Areas), Section 925: Established by the Department of State, these regulations apply to travel in areas outside the contiguous United States, Alaska, Hawaii, and outlying US territories.
These regulations are continuously updated, so contractors must refer to the most current versions at the time of travel. Staying updated with these regulations is a key aspect of compliant expense reporting.
Actual Costs vs. Per Diem
While per diem rates provide a benchmark for reasonable costs, contractors have options in how they claim expenses. They can utilize per diem rates, actual expenses, or a combination of both, provided the method results in a reasonable charge. Using per diem simplifies expense reporting, as it eliminates the need for detailed receipts for M&IE up to the per diem limit. However, actual costs may be necessary or more appropriate in certain situations.
Special Circumstances and Higher Actual Costs
In special or unusual situations, actual costs exceeding the standard per diem rates may be allowable. This is permissible only if these amounts do not surpass the higher rates authorized for federal civilian employees as outlined in the FTR, JTR, or Standardized Regulations. To claim these higher actual costs, stringent conditions must be met:
- Justification: A valid reason for using the actual expense method as defined in the relevant travel regulations must exist.
- Written Approval: A written justification detailing the circumstances must be approved by a designated officer within the contractor’s organization. This ensures proper oversight and prevents misuse.
- Advance Approval for Repetitive Use: If the higher actual expense method becomes necessary repeatedly or continuously in a particular location, advance approval from the contracting officer is mandatory.
- Documentation: Detailed documentation supporting all actual costs is required, following the contractor’s established practices. Receipts are mandatory for expenditures of $75.00 or more. The approved justification must also be retained.
Specific Travel Expense Categories
Beyond the general principles and per diem rates, federal travel regulations address specific categories of travel expenses.
Transportation Costs
Transportation costs, including airfare and ground transportation, are allowable. For air travel, contractors are generally expected to utilize the lowest priced airfare available during normal business hours. Exceptions are made only under specific, documented circumstances such as:
- Circuitous routing
- Travel during unreasonable hours
- Excessively prolonged travel time
- Increased overall cost despite transportation savings
- Inadequate accommodations for traveler’s physical or medical needs
- Unavailability of reasonable airfare to meet mission requirements
Any airfare exceeding the lowest priced option must be thoroughly documented and justified. For ground transportation, costs can be based on mileage rates, actual costs, or a combination, provided the method yields a reasonable charge.
Lodging, Meals, and Incidental Expenses
As previously mentioned, lodging, meals, and incidental expenses are typically governed by per diem rates. Contractors can claim per diem or actual expenses, ensuring reasonableness in either case. It’s important to note that per diem rates may need downward adjustments in situations such as:
- When no lodging costs are incurred (e.g., staying with family).
- On partial travel days, like the days of departure and return.
While strict adherence to FTR or JTR calculations for these adjustments isn’t mandatory, the resulting charge must be reasonable.
Airfare for Contractor-Owned Aircraft
Travel using contractor-owned, -leased, or -chartered aircraft introduces additional complexities. The allowable cost is generally limited to the lowest priced airfare available for commercial airlines to the same destination. Higher costs may be justified and approved by the contracting officer under specific conditions, such as those applicable to standard airfare exceptions or when using such aircraft is a contractual requirement.
Regardless, all use of contractor-owned aircraft for business purposes charged to a government contract must be fully documented. Flight manifests or logs are mandatory, including:
- Date, time, and departure points
- Destination, date, and arrival time
- Passenger names and their relationship to the contractor
- Trip authorization
- Trip purpose
Contractor-Owned Automobiles
Costs associated with contractor-owned or -leased automobiles are allowable to the extent they are used for company business and are deemed reasonable. However, the portion of automobile costs related to personal use by employees, including commuting, is considered unallowable as it’s classified as compensation for personal services.
Documentation and Compliance
Meticulous documentation is paramount for demonstrating compliance with federal travel regulations. For all travel expenses, the following information must be documented:
- Date and location of expenses (city, town, etc.)
- Purpose of the trip
- Name of the person traveling and their title or relationship to the contractor
Maintaining accurate and complete records is crucial for passing audits and ensuring cost allowability.
Advance Agreements
For contractors anticipating frequent or complex travel expense scenarios, establishing an advance agreement with the contracting officer can be beneficial. This agreement can clarify the application of travel regulations and pre-approve certain practices, streamlining the expense reporting process and minimizing potential disputes.
Conclusion
Navigating federal travel regulations requires careful attention to detail and a thorough understanding of the applicable rules. By adhering to the principles of reasonableness, utilizing per diem rates appropriately, documenting expenses meticulously, and seeking clarification when needed, contractors can ensure compliance and successful reimbursement of travel costs under government contracts. Staying informed about the latest updates to FTR, JTR, and related regulations is an ongoing responsibility for any contractor engaged in federal projects.
