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I have been presented with a conundrum and am interested in opinions.

Scenario: We have Cost Reimbursement Contracts to do service in the field. The company receives little notice to travel from the CO's; sometimes airfare is provided on Government conveyance, but it is not known until very late, so we book flights on commercial carriers to meet mission requirements. Some CO's want only to pay for nonrefundable fares, however, if we book nonrefundable fares and then the Government provides transportation, CO's are sayng it is unreasonable to charge the Government for the airfare that we did not use. One airport used frequently operates with one carrier that restricts use of tickets by only the original passenger, so we can't credit the contract and pool the tickets for other use. If we book refundable airfare and end up using it, then the new FAR Travel Cost principle may make the amount of fare in excess of nonrefundable fare unallowable.

Wouldn't this be a situation to justify the use of refundable tickets (provided we document and get justification), so shouldn't we push use of refundable fares with all of our CO's on contracts like this?

Has anyone else had this situation or does anyone else have any recommendations?

The cost principle is excerpted below:

31.205-46 ( b ) "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."

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Has anyone else had this situation or does anyone else have any recommendations?

See "Audit Guidance on Revision to FAR 31.205-46(B) and (c ) ? Limiting Airfare to the Lowest Airfare Available to the Contractor" at: www.dcaa.mil/mmr/10-PAC-010.pdf

"...However, auditors should not question airfare costs claimed in excess of nonrefundable

airfare available during normal business hours if the contractor?s data show that its experience with cancelling

nonrefundable tickets results in increased cost in comparison to the cost of refundable tickets. The contractor

must utilize the lowest airfare so determined as the baseline allowable airfare cost unless substantiating

documentation is maintained for one of the exceptions to the lowest priced airfare requirement in

FAR 31.205-46(B)..."

Also:

"...Costs associated with cancelling or changing restricted or non-refundable tickets should be considered an ordinary and necessary business expense unless the contractor?s data show the costs are the result of a history of inadequate advance travel planning procedures.

Find the document and read it. It seems to cover your situation.

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Thanks Joel. I was aware of the DCAA document. The issue is not so much with DCAA as with individual CO's on several contracts, and this guidance is not addressed to them. They seem to be taking more restrictive interpretations of the cost prinicple than the DCAA guidance, and unfortunately someone has been accommodating them prior to this, so now there is an expectation. And to the best of my knowledge, there are no special contract clauses requiring only nonrefundable tickets.

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Hi govtacct02,

The situation as you describe it is simply a matter of (a) your company making a business decision on how hard it wants to push back, and (B) your ability to negotiate a better outcome with the Contracting Officer(s) who are taking this unsupported position. I'm sure most everybody here agrees that when a CO directs the contractor to book only nonrefundable air fares, then s/he should also expect to pay for unused air fares when circumstances lead to a trip being changed or not taken at all. That's not unreasonable; it's simply common sense.

We could delve further into whether the CO has authority to direct such a thing as you describe, or whether such micromanagement is actually interference and disruption--but why bother?

Either your company will push back or not. Either the CO will back-off the position, or not. If you push back and the CO doesn't start allowing otherwise allowable air fares, then will you be filing a claim for the disallowed costs? If your company is not willing to push back to the point of threatening to file a claim -- and is actually willing to file the claim -- then I'm thinking "move on to another problem".

Hope this helps.

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Hi govtacct02,

The situation as you describe it is simply a matter of (a) your company making a business decision on how hard it wants to push back, and (B) your ability to negotiate a better outcome with the Contracting Officer(s) who are taking this unsupported position. I'm sure most everybody here agrees that when a CO directs the contractor to book only nonrefundable air fares, then s/he should also expect to pay for unused air fares when circumstances lead to a trip being changed or not taken at all. That's not unreasonable; it's simply common sense.

We could delve further into whether the CO has authority to direct such a thing as you describe, or whether such micromanagement is actually interference and disruption--but why bother?

Either your company will push back or not. Either the CO will back-off the position, or not. If you push back and the CO doesn't start allowing otherwise allowable air fares, then will you be filing a claim for the disallowed costs? If your company is not willing to push back to the point of threatening to file a claim -- and is actually willing to file the claim -- then I'm thinking "move on to another problem".

Hope this helps.

That's the most on-the-money response to a question that I have read here in quite a while. Kudos, here_2_help. Five-by-five. No one could have said it better.

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That's the most on-the-money response to a question that I have read here in quite a while. Kudos, here_2_help. Five-by-five. No one could have said it better.

I agree, great answer.

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