General.Zhukov Posted February 20, 2024 Report Share Posted February 20, 2024 Scenario: The common scenario in my agency is a fixed-price order for commercial services. Let's say it's for on-site installation and calibration of scientific equipment. This is a contract directly with an OEM, not using any acquisition vehicles which have their own procedures and rules about travel. We will have the new instrument installed in four labs around the country. OEM technicians must plug it in and get it working in person. The labs and the OEM both insist on using reimbursable travel to cover the travel costs. Time on site is unpredictable - could be a few days, maybe much longer if things go bad. The labs don't want to 'overpay' for fixed price travel. The OEM, after a bad experience with another agency during COVID, also insists on reimbursable travel. They are firm on this. Conservative estimated total travel cost is $80,000 on a multi-million-dollar contract, so not worth negotiation with a vendor who's already said they aren't negotiating on this. As the CO, I shake my head, insert FAR 52.212-4 Alt 1, follow the procedures, get all the approvals, etc. and now have travel as a reimbursable ODC on a T&M Line Item. Question What, if any, other regulations or laws must apply to travel in this scenario. As its commercial, I'm uncertain if 31.205-46 Travel costs applies "automatically." How about the Joint Travel Regulation? Let's say the tech always travels business class - and has the receipts from previous non-governmental customers to prove it - is that okay, as that's the 'commercial market practice?' Quote Link to comment Share on other sites More sharing options...
C Culham Posted February 20, 2024 Report Share Posted February 20, 2024 18 hours ago, General.Zhukov said: What, if any, other regulations or laws must apply to travel in this scenario. As its commercial, I'm uncertain if 31.205-46 Travel costs applies "automatically." How about the Joint Travel Regulation? Using your limited facts does this FAR reference apply as the facts of the procurement are peeled away? FAR 31.102. Think price analysis. 18 hours ago, General.Zhukov said: Let's say the tech always travels business class - and has the receipts from previous non-governmental customers to prove it - is that okay, as that's the 'commercial market practice?' I will take a swing. If what I will call no exception of FAR 31.102 applies to the specific instance (no cost analysis) and noting that the "Payments" paragraph of 52.212-4 inclusive of the Alt 1 can not be tailored here is my view. By a literal read the travel as a Other Direct Cost shall be paid to the contractor at "actual cost" paragraph (i)(1)(ii)(B) and paragraph and (i)(1)(ii)(D)(1). I see nothing that says such cost shall be in accord with FAR part 31, the JTR's etc. My view is limited to the FAR and does not consider what an agency might supplement the FAR with. Conclusion - The applicatioin of FAR part 31 contract cost principles depends on the facts of a fixed price commercial service instant procurement. Quote Link to comment Share on other sites More sharing options...
formerfed Posted February 21, 2024 Report Share Posted February 21, 2024 I prepared a response yesterday but got sidetracked before sending. I see Carl already answered your question but I’ll just add the practice of reimbursing travel for technicians at actual cost is fairly common for scientific and lab equipment work. This is normally done without regard to FAR 31 principles. Quote 31.000 Scope of part. This part contains cost principles and procedures for- (a) The pricing of contracts, subcontracts, and modifications to contracts and subcontracts whenever cost analysis is performed (see 15.404-1(c)); and (b) The determination, negotiation, or allowance of costs when required by a contract clause. So unless your contract clause contains restrictive language, you are fine. Quote Link to comment Share on other sites More sharing options...
here_2_help Posted February 21, 2024 Report Share Posted February 21, 2024 In other words, if the technician travels business class--and assuming the contractor's policies permit that--then that would be a reimbursable expense, since there is no applicable limitation. Quote Link to comment Share on other sites More sharing options...
Retreadfed Posted February 21, 2024 Report Share Posted February 21, 2024 Zhukov, you said you include 52.212-4 ALT I in the contract. In regard to travel, ALT I says "The Government will reimburse the Contractor on the basis of actual cost for the following, provided such costs comply with the requirements in paragraph (i)(1)(ii)(B) of this clause." That should answer your question as it states what requirements the travel cost must meet in order for it to be reimbursable. In accordance with ALT I, travel costs are not governed by the cost principles or any of the travel regs. Quote Link to comment Share on other sites More sharing options...
General.Zhukov Posted February 22, 2024 Author Report Share Posted February 22, 2024 This was very helpful and reassuring to me, as your responses agree with my understanding. The flying business class case is real too - although what happened is the GVT refused, thinking (wrongly, IMO) that it was prohibited, and the OEM agreed that $$ over economy class wouldn't be reimbursed. Apparently, highly-skilled technicians - especially those willing to travel to remote locations and be responsible for very expensive and delicate machines - can demand perks, and their employers are eager to pass those costs on to customers. Quote Link to comment Share on other sites More sharing options...
joel hoffman Posted February 23, 2024 Report Share Posted February 23, 2024 18 hours ago, General.Zhukov said: This was very helpful and reassuring to me, as your responses agree with my understanding. The flying business class case is real too - although what happened is the GVT refused, thinking (wrongly, IMO) that it was prohibited, and the OEM agreed that $$ over economy class wouldn't be reimbursed. Apparently, highly-skilled technicians - especially those willing to travel to remote locations and be responsible for very expensive and delicate machines - can demand perks, and their employers are eager to pass those costs on to customers. So, is it reasonable for the taxpayers to pay extra costs for contractor employee “perks”? I flew on several flights that AL Senator Shelby was also on, between Washington DC and Huntsville, AL. Richard Shelby is a very tall man. He flew in a coach, non-exit row, window seat each time. Quote Link to comment Share on other sites More sharing options...
here_2_help Posted February 23, 2024 Report Share Posted February 23, 2024 3 hours ago, joel hoffman said: So, is it reasonable for the taxpayers to pay extra costs for contractor employee “perks”? Joel, with respect, I think you miss the thrust of the conversation. When the government enters the commercial marketplace to acquire commercial goods and services, it should be prepared to accept costs that are customary in relation to what is being acquired. That is why I worded my response the way I did. If the contractor's policies permit business class travel and business class travel is provided to all employees in similar circumstances--regardless of customer and/or contract type--then it is, almost by definition, reasonable. Quote 31.201-3 Determining reasonableness. (a) A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person in the conduct of competitive business. Reasonableness of specific costs must be examined with particular care in connection with firms or their separate divisions that may not be subject to effective competitive restraints. No presumption of reasonableness shall be attached to the incurrence of costs by a contractor. If an initial review of the facts results in a challenge of a specific cost by the contracting officer or the contracting officer’s representative, the burden of proof shall be upon the contractor to establish that such cost is reasonable. (b) What is reasonable depends upon a variety of considerations and circumstances, including- (1) Whether it is the type of cost generally recognized as ordinary and necessary for the conduct of the contractor’s business or the contract performance; (2) Generally accepted sound business practices, arm’s-length bargaining, and Federal and State laws and regulations; (3) The contractor’s responsibilities to the Government, other customers, the owners of the business, employees, and the public at large; and (4) Any significant deviations from the contractor’s established practices. Quote Link to comment Share on other sites More sharing options...
C Culham Posted February 23, 2024 Report Share Posted February 23, 2024 @joel hoffman @here_2_help I had this additional thought. It probably has no nexus to travel, and I do not want to open another can of worms, so I will offer my thought as quickly and concisely as possible. Application of Service Contract Act. Again no conncection to travel but it is interesting to me that those that calibrate equipment can be exempted from SCA. FAR 52.222-51. Same basis of thought as expressed by here-2-help or just some labor thing that has made its way into the USDOL regulation, I did not research so who knows. Yet extending the line of thinking to travel if business travel is a market or catalog thing could not the ideal of 52.222-51 help justify as to why, if I was still a CO, a contractor's travel policies, especially if a stipulated catalog price or a confirmed market price , help support the business travel. Dumb comparison or not it would not stop me from putting this conclusion in a fair and reasonable price determination and then leave it to higher up legal or court of opinion to decide it it was dumb or not. Quote Link to comment Share on other sites More sharing options...
Don Mansfield Posted February 23, 2024 Report Share Posted February 23, 2024 If the purpose of the trip is business, then one should fly business class. Anything else would not make logical sense. This should apply to Government, too. Quote Link to comment Share on other sites More sharing options...
Voyager Posted February 23, 2024 Report Share Posted February 23, 2024 2 hours ago, Don Mansfield said: This should apply to Government, too. No thanks! I hope you were kidding. Quote Link to comment Share on other sites More sharing options...
joel hoffman Posted February 23, 2024 Report Share Posted February 23, 2024 5 hours ago, Don Mansfield said: This should apply to Government, too. Do you mean government travelers too, performing official business? Fat chance. Or government contractors performing business for the government? If it’s a commercial services contract, especially a quote, it should be negotiable. But I forget…that’s too much effort and one might actually have to speak to the vendor. Quote Link to comment Share on other sites More sharing options...
Jamaal Valentine Posted February 24, 2024 Report Share Posted February 24, 2024 12 hours ago, Voyager said: No thanks! I hope you were kidding. Why? Quote Link to comment Share on other sites More sharing options...
C Culham Posted February 24, 2024 Report Share Posted February 24, 2024 Well as the thread has departed from the original post I might as well respond to @Don Mansfield lastest comment on business class travel. I find it interesting that the lead sentence of the regualtion (Title 41 CFR 301-10.103) regarding other than coach applies a "prudent person" standard yet the following paragraphs to the sentence do not support such a standard. Afterall I as a prudent person in doing personal business do consider comfort on any flight I take. Comfort is not allowed in bureaucratic terms it seems. "301-10.103 When may I use other than coach class accommodations? You are required to exercise the same care in incurring expenses that a prudent person would exercise if traveling on personal business when making official travel arrangements. ..." Quote Link to comment Share on other sites More sharing options...
Voyager Posted February 24, 2024 Report Share Posted February 24, 2024 8 hours ago, Jamaal Valentine said: Why? Because I and the majority of people that travel view the 3x pricing of business class to be imprudent as a general rule, and Don is speaking in generalities. The “majority” is evident by the fact that a majority of tickets sold are coach. Now, what is really imprudent, though, was something I witnessed the last time I traveled on a 3-hour flight. A man in front of me, not in uniform and who I did not know, opened his laptop and revealed it said “UNCLASSIFIED” at the top on a green header. He started working on a scope document in MS Word. It was logged in and thus gave his full name and office routing symbol in the header of Word. I knew from my experience at that base that he was contracting. They are trained in information security there, and this was a breach. So under the current prudence standard, should he have been granted an exception to go business class to work? Or could he have printed his document as a prudent way to avoid burdening the taxpayers with 3x airfare? Change the law from a prudence standard to a conducting-business-on-the-flight standard, and I would agree with Don. Without that clarity though, we would have a lot of loafers sleeping and drinking on Uncle Sam’s dime. Quote Link to comment Share on other sites More sharing options...
joel hoffman Posted February 24, 2024 Report Share Posted February 24, 2024 @General.Zhukov, Did I miss where you asked how travel costs were treated on the contractor’s other government (DoD?) commercial and non-commercial contracts? Did your market analysis of government contracts show that reimbursable business class travel for similar services was predominant ? If there are examples of the same or similar type of government travel that didn’t allow the additional cost of business class fares, then it would appear that, even if they didn’t like it, they still performed their jobs. Since travel costs and travel policies affecting the eventual contract cost are significant enough for you to inquire about here, I would think that a prudent KO or acquisition professional would evaluate the proposed basis for employee travel especially If it varies from the otherwise predominant government travel policies Quote Link to comment Share on other sites More sharing options...
Retreadfed Posted February 24, 2024 Report Share Posted February 24, 2024 4 hours ago, C Culham said: "301-10.103 When may I use other than coach class accommodations? Carl, what is the relevance of this to travel under a contract for commercial services? Quote Link to comment Share on other sites More sharing options...
joel hoffman Posted February 24, 2024 Report Share Posted February 24, 2024 On 2/22/2024 at 1:37 PM, General.Zhukov said: The flying business class case is real too - although what happened is the GVT refused, thinking (wrongly, IMO) that it was prohibited, and the OEM agreed that $$ over economy class wouldn't be reimbursed. So, as it turned out the government didn’t agree that business class fare was reasonable. And the job still got accomplished, I assume. Im guessing that the proposal or quote described the basis of travel. Thus - you or somebody else analyzed that COST aspect of the proposal. Was this agreement made during the contract negotiations? Edit - added: Or was it after a contract award? Was this a competitive or was it non-competitive acquisition? “Cost analysis” can extend to evaluating the basis of reimbursable travel costs… Edit: Whether competitive or non-competitive its a negotiable aspect. If the government doesn’t want to pay for upgraded travel it has the right to negotiate it. Quote Link to comment Share on other sites More sharing options...
Retreadfed Posted February 24, 2024 Report Share Posted February 24, 2024 On 2/22/2024 at 2:37 PM, General.Zhukov said: The flying business class case is real too - although what happened is the GVT refused, thinking (wrongly, IMO) that it was prohibited, and the OEM agreed that $$ over economy class wouldn't be reimbursed. Was this under a contract for commercial services? Quote Link to comment Share on other sites More sharing options...
C Culham Posted February 24, 2024 Report Share Posted February 24, 2024 1 hour ago, Retreadfed said: Carl, what is the relevance of this to travel under a contract for commercial services? None. Reread it it please. It was a offhand remark to Don's post that Government folks should be allowed to fly business class. Quote Link to comment Share on other sites More sharing options...
formerfed Posted February 24, 2024 Report Share Posted February 24, 2024 3 hours ago, joel hoffman said: Edit: Whether competitive or non-competitive its a negotiable aspect. If the government doesn’t want to pay for upgraded travel it has the right to negotiate it. This is the crux of the issue. Under the situation in the original post, the contracting officer can include upgraded travel. But is it wise to do so? As Joel said, it’s negotiable. There may be valid reasons for or it could be just a perk the contractor is providing their employees at government expense. It’s gets down to the contractor and the contracting officer reaching agreement. Quote Link to comment Share on other sites More sharing options...
joel hoffman Posted February 25, 2024 Report Share Posted February 25, 2024 2 hours ago, formerfed said: This is the crux of the issue. Under the situation in the original post, the contracting officer can include upgraded travel. But is it wise to do so? As Joel said, it’s negotiable. There may be valid reasons for or it could be just a perk the contractor is providing their employees at government expense. It’s gets down to the contractor and the contracting officer reaching agreement. And one should realize that non-government customers might not have any or have fewer policy restrictions on travel. The government has an established policy for travel for its employees and for many government contract personnel. The government doesn’t have to simply accept paying for upgraded travel status for contractor employees. This may sound like a broken record. The government can define conditions for travel reimbursement and/or can negotiate terms if a vendor includes upgraded travel as the basis for other direct costs or otherwise for travel. Quote Link to comment Share on other sites More sharing options...
Voyager Posted February 25, 2024 Report Share Posted February 25, 2024 Could an intrepid CO write into the contract a conducting-business-on-the-flight requirement for business class to be allowable? I am asking if that would confuse potential bidders to see that in the travel CLIN description on a commercial contract. As a practitioner myself, I feel this potential confusion over what is a standard commercial T&C scares COs out of the commercial market. Quote Link to comment Share on other sites More sharing options...
formerfed Posted February 25, 2024 Report Share Posted February 25, 2024 That’s overly complicating things. I wouldn’t even bring that issue up in a solicitation. If travel is involved, request estimated travel costs and a brief explanation of the company’s travel policy. Should an offeror propose business class, discuss the subject with them. But I’m sure just about every company says coach for employees. Quote Link to comment Share on other sites More sharing options...
joel hoffman Posted February 25, 2024 Report Share Posted February 25, 2024 1 hour ago, formerfed said: That’s overly complicating things. I wouldn’t even bring that issue up in a solicitation. If travel is involved, request estimated travel costs and a brief explanation of the company’s travel policy. Should an offeror propose business class, discuss the subject with them. But I’m sure just about every company says coach for employees. “LIKE”👍 Quote Link to comment Share on other sites More sharing options...
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