Travel is surprisingly complicated - what regs apply to 'commercial travel'?

[C Culham]

9 hours 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.

Yes!

9 hours ago, formerfed said:

But I’m sure just about every company says coach for employees.

I hope no one uses this statement as market research as I would suggest it really depends on the company, and even for a individual company it might depend on the employee and purpose of travel.  

[joel hoffman]

On 2/25/2024 at 7:35 AM, C Culham said:

Yes!

I hope no one uses this statement as market research as I would suggest it really depends on the company, and even for a individual company it might depend on the employee and purpose of travel.  

it also depends upon who the customer is. A commercial customer may have other priorities than quibbling about the cost of travel and/or may not have strict travel protocols/policies.

Many commercial customers place priorities on getting their products and services to the market with less emphasis on the initial cost of associated services or development costs. There may or may not be competition involved in providing services to non-government, commercial customers.

The government generally does have policies and is mindful of travel costs. Has been at least since 1980, when I joined the Civil Service. Travel costs comprise a major Federal cost.

The federal government isn’t necessarily bound to adopt every commercial practice, as some here have suggested.

It is important to consider some principles regarding reasonableness of costs or prices, including commercial products and services. Such as the definition of commercial services in 2.101 and whether they were priced competitively,  31.201-3 Determining reasonableness and 15.4 regarding commercial services.

In addition, many companies have direct,  overhead or G&A rates that may include costs that are not necessarily illegal, but unallowable on Government contracts.

[General.Zhukov]

Final comment.  I don't know the details of the fly business class but charge economy class case.  I do, however, know that Business Class jumped of the screen when the CO looked at the proposal's travel cost estimates, and was never going to get into the contract.  At least in my office, it's the only case I know of where an offeror was like "yeah, we are proposing to fly business class and you are going to pay for it."  In fairness, the PhDs in the labs want/need this exact model of instrument made by this one company (whose sales reps maybe or probably have been chatting about it to the PhDs for months before contracting got involved), and everyone knows this and negotiates accordingly.

Thanks for the thoughtful responses.

 

[joel hoffman]

4 hours ago, General.Zhukov said:

when the CO looked at the proposal's travel cost estimates, and was never going to get into the contract. 

Thanks for the clarifications, General Z. So, some costs were indeed analyzed (“cost analysis”) for the reimbursable aspects of the Time and Materials portion.

See 31.103 Contracts with commercial organizations.

“…(b) In addition, the contracting officer shall incorporate the cost principles and procedures in subpart  31.2 and agency supplements by reference in contracts with commercial organizations as the basis for-

(1) Determining reimbursable costs under-

…(ii) The cost-reimbursement portion of time-and-materials contracts except when material is priced on a basis other than at cost (see  16.601(c)(3));”

Edit: However, see also 12.301:

“…(d) Other required provisions and clauses. Notwithstanding prescriptions contained elsewhere in the FAR, when acquiring commercial products or commercial services, contracting officers shall be required to use only those provisions and clauses prescribed in this part. The provisions and clauses prescribed in this part shall be revised, as necessary, to reflect the applicability of statutes and executive orders to the acquisition of commercial products or commercial services.“

But also:

12.213 Other commercial practices.

“It is a common practice in the commercial marketplace for both the buyer and seller to propose terms and conditions written from their particular perspectives. The terms and conditions prescribed in this part seek to balance the interests of both the buyer and seller. These terms and conditions are generally appropriate for use in a wide range of acquisitions. However, market research may indicate other commercial practices that are appropriate for the acquisition of the particular item. These practices should be considered for incorporation into the solicitation and contract if the contracting officer determines them appropriate in concluding a business arrangement satisfactory to both parties and not otherwise precluded by law or Executive order.

[Retreadfed]

On 2/27/2024 at 1:30 PM, joel hoffman said:

See 31.103 Contracts with commercial organizations.

Joel, Z said the contract was for commercial services.  If the contract is a T&M contract, it is governed by FAR 52.212-4 Alt I which does not incorporate the cost principles from FAR Part 31.  

[Voyager]

I think Joel is just sensing that a lack of government-unique terms and conditions does not mean the government, as an enormous buyer entering a commercial market, cannot leverage its purchasing power to get terms and conditions favorable to its shareholders (taxpayers).  That has always been the focus of DOD in the post-FY16 NDAA era.  One of the main precepts they train is "Be a Prudent Businessperson", along with "Understand the Competitive Market Conditions" and "Have Reasonable Knowledge of the Marketplace".

[joel hoffman]

On 3/1/2024 at 12:38 PM, Retreadfed said:

Joel, Z said the contract was for commercial services.  If the contract is a T&M contract, it is governed by FAR 52.212-4 Alt I which does not incorporate the cost principles from FAR Part 31.  

Retreadfed, I agree that 52.212-4 Alt I does not incorporate the cost principles from FAR Part 31.

Z said that “travel [is] a reimbursable ODC on a T&M Line Item” in a fixed price contract. And Z said “ Business Class jumped [off] the screen when the CO looked at the proposal's travel cost estimates”. In other words, the KO analyzed the basis for and/or amount of the proposed flying cost.

That constitutes cost analysis, which is addressed in subpart 15.404 and is applicable when requiring and/or evaluating data other than certified cost or pricing for commercial services in 15.403.

Per 31.103 (a),  The cost principles and procedures in  subpart  31.2 and agency supplements shall be used in pricing negotiated services contracts whenever cost analysis is performed as required by 15.404-1(c)” [“Cost analysis”].

As I mentioned above, 31.103 (b) (ii),  addresses using the cost principles and applicable procedures in Part 31 for cost reimbursable aspects of time and materials pricing.   

 

 

[joel hoffman]

On 3/1/2024 at 1:22 PM, Voyager said:

I think Joel is just sensing that a lack of government-unique terms and conditions does not mean the government, as an enormous buyer entering a commercial market, cannot leverage its purchasing power to get terms and conditions favorable to its shareholders (taxpayers).  That has always been the focus of DOD in the post-FY16 NDAA era.  One of the main precepts they train is "Be a Prudent Businessperson", along with "Understand the Competitive Market Conditions" and "Have Reasonable Knowledge of the Marketplace".

Yes- and the government and some commercial customers may have different quality, cost, budget and schedule goals and objectives than other commercial customers.

Many commercial clients will tradeoff higher initial cost (and probably not be overly concerned about travel costs) vs. shorter time to start or resume production, get their products to market, and/or quality and reliability, for instance. Return on investment.

Many commercial customers often have continuing relationships with their vendors, I.e., little or no competition involved. True best value…