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Teat6351

JTR and FAR 31 business meals

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My company was awarded a competitive contract under our Federal Supply Schedule from GSA.  The predominance of the work is to provide services under our established T&M Rates, also line items were established for Travel/ODCs and material, both are considered reimbursable with no fee.  The contract includes a term that our company is required to follow the Joint Travel Regulations, our company took no exception to the terms during the solicitation. 

Recently, we have incurred business meals against task orders and the government questions their allowability to the contract, stating the cost would be an indirect expense and should have been considered in our T&M rates (which of course our FSS does not assume).  And later, stated that our contract does not deal with business meals as we don't have a cost line item to recoup such costs. In order to defend the cost I immediately went to evaluate FAR 31 (specifically the sections dealing with business meals).  Since we are able to meet the requirements provided in FAR 31 (meaning costs can be allocable, are accounted for, do not represent an entertainment cost, have a specific purpose, 100% related to the direct efforts of the contract, and are not unallowable per FAR 31.2), I assumed we would just negotiate with the customer what are a reasonable expense for the business meals, and that would be it.

However, I realized that there are no part 31 clauses are in our FSS, and no other terms exist in our BPA associated with this work.  Is it a leap of faith to assume FAR 31 would be considered when discussing business meals as the contract does not address business meals, nor does the JTRs?   

 

Advice is appreciated.

 

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Teat6351,

I assume "business meals" are company-paid meals that involve more than one employee and which take place independently of whether personnel are in TDY travel status. If so, to answer your question requires a look at your company's Disclosure Statement or, if there is no D/S, then its policies and procedures. What document establishes that certain meetings will have company-hosted food/drink? What circumstances control whether the cost of food/beverages consumed at such meetings are directly charged to a customer contract?

Basically, what I'm driving at is that there are meetings that take place during working hours. Some of them may involve food and beverages and others may just be meetings. Some of the meetings that have hosted food/drink may be directly charged to a contract and others to overhead/G&A. What does your company policies/procedures have to say about those meals?

Once you identify which meals are legitimate direct charges, then you need to tell us if they were proposed in your bid. Can we find the costs of those meals in the Travel/ODC CLIN? If not, why not?

Finally, in answer to your question, if your contract does not have 52.216-7 then FAR Part 31 is likely to be not applicable to this discussion. However, you may be able to negotiate something with the contracting officer if you have a consistent, and well-documented, practice of charging such meals direct and you included an estimated cost for those meals in your cost proposal.

Hope this helps.

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Thoughts…. FAR Part 31 may actually be referenced in the FSS

Does your FSS contain SCP-FS-001 which contains this paragraph…..

Travel will be handled in accordance with clause C-FSS-370 Contractor

Tasks/Special Requirements. Costs for transportation, lodging, meals and incidental

expenses are allowable subject to the limitations contained in the Federal Travel

Regulations and/or Joint Travel Regulations. These costs should not be included in

proposed prices, as they are to be coordinated at the order level.

And C-FSS-370 which states…

Travel: The Contractor may be required to travel in performance of orders issued under this

contract. Allowable travel and per diem charges are governed by Pub .L. 99-234 and FAR Part 31, and

are reimbursable by the ordering agency or can be priced as a fixed price item on orders placed under

the Multiple Award Schedule. Travel in performance of a task order will only be reimbursable to the

extent authorized by the ordering agency. The Industrial Funding Fee does NOT apply to travel and per

diem charges.

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Oh, that's a good catch Mr. Culham. Well done.

H2H

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I reviewed our business meal policy and it discusses what constitutes a business meal in fair detail, as well as distinguishes the difference between a travel meal.  The policy also dictates the terms of what the employee must provide to support the meal as a qualifying expense (e.g. individuals involves, nature of business discusses, receipts, etc.).  Now moving to our disclosure statement, its not as specific, but does discuss costs that are direct attributable to meetings specific to a contract (specific final cost objective) are a direct expense.

Now completely separately is the timing of these meetings, which sometimes happen during non-business hours (after 5 PM).  Even though the meetings are specific to a final cost objective, I find it difficult to bill the associated meals seeing that the customer may not be being charged for the time the employees spent at the meeting... and entirely different topic, yet I believe because we are not on a total time keeping system that puts us in a bit of a quandary.

This is were I believe we may have screwed up.  The task orders that may have associated business meals were not priced in anticipation with business meals.  Something to remedy going forward. Of course, if the government agrees these costs are associated with the travel CLIN we have.  Now if its a non-travel business meal seems like it would be considerd an ODC.  But again we would need agreement from the KO at this point.  Of course the BPA that was associated with this competitive solicitation does not address anything specific about business meals, nor did the sample task orders that were provided with the solicitation. 

So FAR 52.216-7 is not in our contract - unfortunately. So that leaves a bit of the gray area, and subsequently I tried to read in a clause that is not present.

 

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1 hour ago, C Culham said:

Thoughts…. FAR Part 31 may actually be referenced in the FSS

Does your FSS contain SCP-FS-001 which contains this paragraph…..

Travel will be handled in accordance with clause C-FSS-370 Contractor

Tasks/Special Requirements. Costs for transportation, lodging, meals and incidental

expenses are allowable subject to the limitations contained in the Federal Travel

Regulations and/or Joint Travel Regulations. These costs should not be included in

proposed prices, as they are to be coordinated at the order level.

And C-FSS-370 which states…

Travel: The Contractor may be required to travel in performance of orders issued under this

contract. Allowable travel and per diem charges are governed by Pub .L. 99-234 and FAR Part 31, and

are reimbursable by the ordering agency or can be priced as a fixed price item on orders placed under

the Multiple Award Schedule. Travel in performance of a task order will only be reimbursable to the

extent authorized by the ordering agency. The Industrial Funding Fee does NOT apply to travel and per

diem charges.

BINGO... C-FSS-370 is in there.... Ill need to review this more.... VERY HELPFUL!!!!!

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I am a little confused by the facts here.  You say you were awarded a "contract" against your FSS contract.  You later said you were awarded a BPA.  You also said whatever you were awarded was priced on a T&M basis.  FSS contracts are supposed to be for commercial items.  Therefore, FSS contracts that authorize T&M orders are to contain FAR 52.212-4, Alt I which addresses travel costs, but does not invoke FAR Part 31.  You need to check your contract to see if 52.212-4 Alt I is in it.  If it is, I think it would take precedence over C-FSS-370 because it is specifically directed toward T&M orders or BPAs.  In any event, meals provided in a non-travel status may not be allowable.  See FAR 31.205-14.  I know this is a constant battle with DCAA which frequently questions non-travel meal costs as being unallowable gifts.

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I think FAR Part 31 and disclosure statements and all that are irrelevant. 

I assume this is a commercial item contract.

What is important is here_2_help's question:  Were the costs included in the proposal before award?  If the answer is NO, then they are not reimbursable, period.  If the answer is YES, then the costs will be listed in the fill-in for para. ( i )( 1 )( ii )( D )( 1 ) of FAR 52.212-4 Alt. I, and they are reimbursable.  Apparently, from my reading of the original posting, the answer is NO, so they are not reimbursable, period.

In this regard, the rule for ODCs for commercial item contracts using FAR 52.212-4 Alt. I differs from the rule for ODCs for non-commercial item contracts using FAR 52.232-7.

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ji20874,

To a certain extent, I agree with you that the contract clause language is important. On the other hand, if a contractor's allowable cost were limited only to what it had included in its initial proposal, then we would never need equitable adjustments. So I think you are taking things a bit too far with you flat declaration that if the costs were not included in the proposal before award, then they are absolutely "not reimbursable, period."

H2H

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For a commercial item T&M contract, we don't want to turn it into a cost-reimbursement contract.  There is a fill-in for para. ( i )( 1 )( ii )( D )( 1 ) of FAR 52.212-4 Alt. I for a reason.  There is also a fill-in for para. ( i )( 1 )( ii )( D )( 2 ) for a reason.  Commercial item T&M using FAR 52.212-4 Alt. I is supposed to be different than non-commercial T&M using 52.232-7.  However, it seems that many practitioners are unaware of these fill-ins, and want to treat commercial item T&M contracts like non-commercial item T&M contracts by using the 52.232-7 approach for both.

Besides, in no case should a contractor's cost experience (or mistake) cause an equitable adjustment in a contract -- equitable adjustments are only for circumstances where contract clauses allow for such -- no contract clause allows for an equitable adjustment because a contractor forgot to include certain costs in its proposal.  Even in a cost-reimbusement contract, a contractor's cost experience (or mistake) might cause an overrun, and the Government might choose to fund the overrun, but that is not an equitable adjustment.

But back to the subject -- para. ( i )( 1 )( ii )( D ) of 52.212-4 Alt. I says that "other costs" are not reimbursable unless listed in ( 1 ) or ( 2 ).  Since the meal costs are apparently not listed in the original poster's contract, that's why I wrote, "they are not reimbursable, period."  Here's the text:

FAR 52.212-4 Alt. I, para. ( i )( 1 )( ii )( D ):  "Unless listed below, other direct and indirect costs will not be reimbursed." (my emphasis)

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Ji, I think H2H's comments were directed toward your statement that costs had to be included in a contractor's proposal to be recoverable under 52.212-4 Alt I.  I think you latest post corrected that by stating that the costs had to be listed in the contract to be recoverable.  That is an accurate statement whereas your earlier statement was not.

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Okay -- but they would not be included in the contract/order unless they were first included in the proposal -- if they were included in the proposal but omitted in the contract/order, there might be a basis for discussion -- but if they were not included in the proposal at all, then there is no basis for discussion.

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On February 16, 2016 at 6:28 PM, Teat6351 said:

Is it a leap of faith to assume FAR 31 would be considered when discussing business meals as the contract does not address business meals, nor does the JTRs?

That was the only question asked in the opening post. It hasn't been answered, so I'll answer it now.

If you haven't read your contract and thought long and hard about it, and if you don't know the rules, then the answer is yes.

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In the general interest of education and development, let me add:

When discussing whether a direct cost is allowable or not, the pre-FAR acronym RTFC should always be part of any answer. It should be inferred as part of any response, but of course it often needs to be written as well.

RTFC = Read The F'n Contract

To which Vern adds, correctly, TLAHAWYR.

TLAHAWYR = Think Long And Hard About What You Read

H2H

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On Wednesday, February 17, 2016 at 7:24 PM, here_2_help said:

However, you may be able to negotiate something with the contracting officer if you have a consistent, and well-documented, practice of charging such meals direct and you included an estimated cost for those meals in your cost proposal.

That's right.

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I am confused by the several posts as I am reminded that what applies to an ORDER under a GSA FSS are FAR 8.4, the guidance of GSA, the specific GSA FSS contract itself and the ORDER.

As GSA FSS it is a commercial item but the discussion on 52.212-4 in my view is misplaced.   52.212-4 is in most if not all GSA-FSS but without Alternate No. 1 that addresses T/M arrangements.  Note as well the 52.212-4 in most, if not all GSA FSS contracts carries the wording “Deviation”. 

GSA provides two specific clauses (as already referenced in my previous post) in the awarded contract regarding T/M should an  ORDER be placed that is  T/M.    By experience some misguided CO’s include Alternate 1 in an ORDER but there is no requirement I know of to do so.  Rather the agency should follow the clauses of the GSA FSS on the matter and the GSA FSS ordering guidelines for the ORDER if T/M which are found here…http://www.gsa.gov/portal/content/203021

Stated another way there is nothing in FAR 8.404 that requires the inclusion of 52.212-4- Alt 1 but there are requirements of what the ordering activity must do per FAR 8.404, the specific GSA FSS contract and GSA guidance when the ORDER is a T/M.

Also what is all the discussion on “cost” it is a price proposal for a GSA FSS ORDER is it not?   I know of no authority that allows an ORDER on a GSA FSS to be of a cost reimbursable type.   Again the applicable clauses of the GSA FSS state it -  travel is to be handled is either as a fixed price or a not to exceed based on a pricing guideline (the JTRs). 

In the end the answer to the OP is this - You should have addressed how the travel would be handled in total before agreeing to the ORDER.  Remember the GSA FSS contract says this …Travel in performance of a task order will only be reimbursable to the extent authorized by the ordering agency...and I would add, as stated in the ORDER.

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Mr. Culham,

If you go back to the original question, it has nothing at all to do with travel. It is for meals that are provided to employees who are not in TDY travel status.

That is not to say that your other points/questions/comments lack validity. But this has nothing at all to do with travel.

H2H

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