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When Prime requests Subcontractor travel receipts on Cost Plus contract

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Is a prime contractor required to retrieve and retain detailed travel receipts from subcontractors on a cost plus contract?  If not specific in the contract does a subcontractor need to provide the detailed receipts to prove compliance with 31.205-46 and JTF, FTRs?

In this scenario, this particular request comes from a prime request to start submitting travel documentation to assure compliance with 31.205-46.  The subcontractor pushed back since it is a cost plus contract, the subcontractor does not believe it's a reasonable request to provide the actual cost which further reveals indirect rate, fee and other proprietary details. We could one day compete against them in the same market space.  The subcontractor per the contract is required to provide a summary of travel costs with monthly invoicing and to have available original receipts etc. etc should they be requested.  This language developed out of pushback to the prime who wasn't sure what they were really required to do on retainment, so they felt safe even though we explained we would not be in agreement to submit actuals that are revealing of indirect rates, fess, and other proprietary business details such as our own internal travel reimbursement policies an practices. 

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Sub-contractor receipt requirements may or may not be in the Prime contract with the Government.  If it is a requirement, did the Prime  flow that down to the contract with the sub-contractor?  Even if there is no mention of sub-contractor receipt requirements in the Prime contract, the Prime could have placed it in the subcontract.  

Is the Prime able to justify the costs in any other way without the receipts?

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In my experience with major subcontracts, there has never been a general "retrieve and retain" process or clause included in a subcontract. However, a cost reimbursement contractor should be retaining documentation of claimed costs. There might be reasons why a prime might do that in a specific situation. However, the post does not indicate any details about what is going on. The poster might receive better comments if the situation was explained.  

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From a different view than FAR part 31 you may want to consider FAR subpart 4.7 and FAR clause 52.215-2 if included in the prime and hopefully subcontracts below the prime level.

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CFO, you said the subcontract requires the subcontractor to have available receipts in case they are requested.  If this is in the subcontract, what is the beef about complying with the terms of the subcontract?  Any sidebar agreements between the prime and sub concerning receipts do not mean anything if the subcontract is an integrated contract.

It is not clear whether the request for receipts relates to travel charged as a direct cost or travel charged as an indirect cost.   We have not seen the exact language of the subcontract, but does the requirement for receipts apply to all travel or just travel that is charged as a direct cost?

Finally, what is the subcontractor's policy in regard to paying travel costs.  Many contractors merely pay a flat rate for lodging and per diem when employees are on travel.  As long as the flat rate is within the maximum allowed by the travel regs for the location, this is an acceptable method of reimbursing employees for travel expenses and does not require any receipts for justification.

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In response to Retreadfed:

When it was written in "available in case they are requested" it was accepted to satisfy the "small business" prime who wasn't sure what their duty of collecting receipts really was.  We made it clear that meant they would be retained and available for any DCAA request and audit.  WE do supply travel details which does show employees name, vendors, travel dates, to/from airfare and the fully burdened cost amount.  We disagreed with providing them copies of receipt details as under cost plus this is a competitive disadvantage to have all detail cost breakdowns, actuals, indirect rate percentages applied and fee known to companies we also compete for business against.  The specific costs they are asking for are direct travel costs primarily lodging and meal perdiem that is within the cost regs.  Agreed, we shouldn't have to supply them within the cost regs of 31.205-46.  Part of their reasoning is they want to make sure the rate is applied right for the particular locale the employees are being paid perdiem.  On this particular contract its only one work location, but if we choose to pay a perdiem that meets or is even less than the allowed locale perdiem, it's our opinion we do not need to supply that.

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4 hours ago, CFO said:

We made it clear that meant they would be retained and available for any DCAA request and audit. 

Was this stated in the subcontract?  If not, it likely means nothing under the parol evidence rule.

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Sounds like your company would be in breach of contract if it fails to provide the records. Suggest you involve an attorney with your situation and provide the written contract.

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In a cost reimbursement contract, it is the responsibility of the contractor to be able to justify any claimed (requested) entitlement to reimbursement of costs, including reimbursing subcontractor expenses. It would be extremely unwise not to write subcontracts accordingly. 

See, 31.201-2   Determining allowability, see all paragraphs, including (d). See also paragraphs regarding reasonableness, etc. ( e.g., no presumption of reasonableness, etc.). Even if not specifically stated in the prime contract, these principles apply to the prime contract. 

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