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If a contract is CAS-covered, is it in accordance with CAS 401 for a defense contractor to propose the maximum per diem rate for hotel (which is estimated to be 50-75% more than expected actual cost) when the defense contractor will only bill/voucher the DoD for actual cost? Assume that there is a current proposal for a contract modification over TINA for a cost-reimbursement CLIN. Also, assume that the defense contractor's disclosure statement and travel policies both say lodging cost will be reimbursed at the lower of actual cost or per diem. Is there any materiality threshold applicable to CAS 401 besides "significant cost" and "reasonable"? It looks like proposing lodging at the maximum per diem rate simply inflates the NTE ceiling. If the cost reimbursable CLIN is only for travel, there seems to be a low risk of the defense contractor billing the DoD for "unnecessary" costs to cover its fixed expenses.