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enriquem13

Business-class travel for contractor due to medical condition

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Hello,

Is there a set guideline for approving business-class air travel for a contractor, due to medical necessity?  I realize the FTR provides this info. for federal employees and further directs you to agency policy, but what if you can't find that.  I'm being told internally that we can't approve it, but haven't seen anything in writing.  Contractor can provide medical justification and note as back-up documentation.

Thoughts?

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enriquem13,

I'm not sure why the government customer has to "approve" the airfare in advance. The normal course of events is for the contractor to incur a cost and seek reimbursement. If the CO is unsure of the allowability of the cost, it may be challenged--in which case the contractor must support it.

Is the contractor seeking an Advance Agreement regarding cost allowability (not a bad idea)? If not, why is this an issue at this time?

Hope this helps

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I agree with H2H.  However, I have seen situations where DCAA has questioned travel costs where the contractor did not get advance approval from the contracting officer before incurring per diem costs above the standard allowance although a condition authorizing above per diem costs existed.  Here the contractor may have had a similar experience with DCAA regarding air travel.

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This may seem like a dumb question, but does the contract include a promise to reimburse a contractor's travel costs?

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Travel is from the UK to the US.

And yes, the contractor is seeking approval of allowability, prior to purchasing travel, since they are aware of the restrictions.

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The contractor does not need advance approval of allowability. But if you must ...

FAR 31.205-46(b) states: "Airfare costs in excess of the lowest priced airfare available to the contractor during normal business hours are unallowable except when such accommodations require circuitous routing, require travel during unreasonable hours, excessively prolong travel, result in increased cost that would offset transportation savings, are not reasonably adequate for the physical or medical needs of the traveler, or are not reasonably available to meet mission requirements. However, in order for airfare costs in excess of the above standard airfare to be allowable, the applicable condition(s) set forth above must be documented and justified."

Thus, if it is a bona fide medical condition and there is a doctor's note in evidence, the upgrade to business class is allowable. Have the contractor comply with FTR rule 301-10.123 in all respects to ensure the auditors won't disallow the cost after the fact.

Hope this helps

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Even if the cost is allowable, that doesn't mean it is allocable to a specific contract -- it might be allowable in the overhead but not allocable as a direct cost to a specific contract.  Does the contract include a promise to reimburse the contractor's travel costs?

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ji20874, yes, the contract includes travel costs reimbursement.

Thanks here_2_help!  Yes, the contractor has complied with FTR.  This is the FAR reference I was looking for and was having a hard time finding.  Our OGC is telling us that it's not allowed, even with medical justification, but they haven't been able to show us specific internal policy.

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ji20874,

It seems to me that you are reversing the order of things. Allocability is determined independently of allowability. A cost may be allocable to a contract as a direct cost, but not allowable pursuant to a contract term/condition.

In my view, you would be better off having said, "Even if the cost is allocable to a specific contract, that doesn't mean it is allowable."

H2H

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19 minutes ago, enriquem13 said:

Our OGC is telling us that it's not allowed, even with medical justification, but they haven't been able to show us specific internal policy.

This government contracting thing is hard and, even after 30 years, I'm still working on learning it. That said, for an OGC to take that stand is rather difficult for me to understand. It's not like the FAR Part 31 cost principles don't have titles. For example, 31.205-46 is called "Travel Costs".

*Shakes head*

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H2H.

Thanks -- my point is that the cost might not be reimbursable as a direct cost on a contract that does not promise reimbursement for travel costs, but rather, the cost might only be rembursable as an indirect cost through the contractor's overhead.  But now we see that the contract in question does allow for direct reimbursement of travel costs.

enriquem13,

It sounds like your general counsel's office already gave you your answer -- unless your organizational culture allows a contracting officer to act contrary to legal advice, the matter is closed.  Has the contractor submitted an invoice for the cost yet?  If NO, then there is no question yet for you to answer, and I would advise you not to give any answer at all.  You should not promise any decision before the invoice is submitted.  If YES, you can disapprove the invoice based on your legal counsel's advice.  If the contractor disagrees with the disapproval, it can file a claim and make its case, and the contracting officer can reconsider the matter in light of whatever rationale or othe rinformation the contractor provides in the claim.

Maybe your contractor wants an advance agreeement (see FAR 31.109)?  If so, you can say no to the advance agreement based on your legal counsel's advice.  Saying no to the advance agreement does not disallow the cost -- it only means that you won't agree on the answer up front.  The absence of an advance agreement on any cost will not, in itself, affect the rasonableness, allocability, or the allowability of the cost.

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ji20874,

I have to respectfully disagree with part of what you said.  We work very closely with our contractors, due to the nature of our mission.  So with issues like these, we don't just say "submit it in an invoice and we'll see".  We routinely include language in our contracts that direct contractors to submit authorization requests for travel (especially if it's international).  We do this to ensure situations like these are handled with care upfront, so that issues don't come up after the fact.  Additionally, legal advice is just that, advice/opinion; however, we also have close relationships with our OGC, and feel comfortable bringing up references such as what H2H provided.  We have a lot of respect for our OGC, but I trust they don't know the FAR word-for-word...sometimes it takes a reminder. :-)

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Enriquem13, in regard to your statement concerning a specific agency policy on this, note that the issue of allowability of travel costs is set out in the cost principles of FAR Part 31.  Unless there is a statute that requires you to have cost principles that are at variance from what is in the FAR, you would need a deviation from the FAR for a policy that deviates from 31.205-46(b) to be effective.  In this regard, see FAR 1.402 and 31.101.  Also, see 41 U..S.C. 1707.

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On Monday, March 14, 2016 at 4:19 PM, here_2_help said:

The normal course of events is for the contractor to incur a cost and seek reimbursement. If the CO is unsure of the allowability of the cost, it may be challenged--in which case the contractor must support it.

enriquem13,

If what you just said is true, there is no disagreement. Apparently, you are not bound by your legal counsel's advice and you can provide advance approval of the travel cost in spite of their non-concurrence. Some agencies do not allow their contracting officers that flexibility. Hopefully, you will appreciate that you are effectively doing an advance agreement under FAR 31.109 -- an advance agreement provides an "an advance agreement on the treatment of special or unusual costs." In particular, see FAR 31.109( h )( 8 ). You should be complying with FAR 31.109 for your advance agreements, because it sounds like you're not simply giving authorization for the trip, but you are actually agreeing on the treatment of particular costs in advance of their incurrence.

Sometimes, when the Government is pressed to agree up-front and based on generalities, the contractor can take advantage of the Government. Sometimes, it is good to require the contractor to make its case for entitlement. But you can let the contractor off the hook and provide the advance agreement without making the contractor prove its case. The contractor will appreciate your cooperation in this matter.  But the normal course of events is as H2H described in the quote above.

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20 minutes ago, ji20874 said:

If the CO is unsure of the allowability of the cost, it may be challenged--in which case the contractor must support it.

While H2H was correct as far as this quote went, a little more clarity needs to be provided.   If the CO is unsure as to whether a cost is allowable, the CO may challenge it and have the contractor try to convince the CO the cost is allowable.  However, if the CO disallows the cost as unallowable and it goes to dispute, the government has the burden of proving that the cost is unallowable.

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Regardless of the nits and picks in this thread, apparently everybody here is okay with an agency policy that says the CO has to follow OGC direction regardless of their judgment in the matter. That's okay with everybody?

Whatever happened to the CO's role as independent decision-maker? Should the contractor just submit all claims to the OGC, as that's the real decision-making authority at some agencies?

H2H

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I'm with you H2H...the Contracting Officer is the final decision...OGC provides advice/opinions.  I've been told, by counsel at both agencies I've worked for, that unless OGC states that they cannot defend your position in a court of law, the CO may proceed...as long as he/she has sufficient documentation/back-up/justification for the decision.  So, in my opinion, it never hurts to go back to OGC and request that they take a second look...like I said before, unlikely that any attorney knows the FAR word-for-word, and some are very unfamiliar with cost principles.

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On 3/14/2016 at 3:19 PM, here_2_help said:

enriquem13,

I'm not sure why the government customer has to "approve" the airfare in advance. The normal course of events is for the contractor to incur a cost and seek reimbursement. If the CO is unsure of the allowability of the cost, it may be challenged--in which case the contractor must support it.

Is the contractor seeking an Advance Agreement regarding cost allowability (not a bad idea)? If not, why is this an issue at this time?

Hope this helps

As you also said,  FAR 31.205-46(b) states in part

Quote

...However, in order for airfare costs in excess of the above standard airfare to be allowable, the applicable condition(s) set forth above must be documented and justified.

If "(t)he normal course of events is for the contractor to incur a cost and seek reimbursement", when the cost would apparently deviate from a cost principle and specifically requires documentation and justification, that's a poor course of events to take.  As enrequim13 and others have commented, it's more prudent for both parties to act proactively than sticking their heads in the sand and having to REACT to each other, later.

It would appear obvious that the proposed justification and documentation are available before the travel.  I generally have to justify any proposed deviation from "normal" travel arrangements prior to SATO finalizing the reservations and before travel orders are issued.  That makes perfect sense.

The general standards of allowability and reasonableness are set forth in FAR 31.201-2 -- Determining Allowability and 31.201-3 -- Determining Reasonableness. Here, it would appear that the KO(?) or other government official appears to consider the justification to be reasonable and allowable. I would suggest establishing an advance agreement or some other agreement concerning the instant trip and demanding that the OGC specifically justify WHY "it's not allowed".

 

 

 

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No, Joel, you are wrong here. There is nothing in the cost principle that requires an Advance Agreement or even advance approval as a condition of cost allowability. It may be prudent but it is not required.

As you well know, payments made on cost-type contracts are interim payments, subject to audit and review--often years after the costs have been incurred. The cost principle is clearly stating that it is not enough to meet the exception conditions listed, but that the contractor must also document the exceptions to the satisfaction of the contracting officer. The CO may require the contractor's documentation as part of the normal invoice review process or as part of an after-the-fact audit/review. But there is no requirement for a pre-travel review/approval.

A savvy contractor will require an employee seeking to take advantage of a travel exception to submit documentation and obtain approval from their management before the employee travels. But that is fundamentally different from requiring the employee to submit documentation and obtain approval from the contracting officer before the employee travels.

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help, I never said that anything in the cost principle requires an Advance Agreement or even advance approval as a condition of cost allowability.

1. I said "...it's more prudent for both parties to act proactively than sticking their heads in the sand and having to REACT to each other, later." **

2. I SUGGESTED establishing an advance agreement or some other agreement concerning the instant trip and demanding that the OGC specifically justify WHY "it's not allowed".

(** when the cost would apparently deviate from a cost principle and specifically requires documentation and justification)

That's all.

EDIT:  Sorry if I wasn't clear enough.

 

 

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Guess its my background as a construction contract negotiator and contract administrator to see the advantages of pro-active discussion and agreement.  I have been involved in many discussions of before the fact contract actions as well as settlements of claims - after the fact..  

We were able to examine proposed actions, and sometimes suggest or have the other party come up with acceptable alternatives that might be more practical or less expensive and still satisfy the need. Sometimes we said no to proposed courses of actions.  Other times the contractors convinced us.

 

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