January 29, 2018

Documentation can be challenging. A final rule was published in December of 2009 that revised the FAR cost principle on Travel Costs (FAR 31.205-46). The revision replaced the language “lowest customary standard, coach, or equivalent airfare” with “lowest priced airfare available to the contractor.”

There has been much discussion as to whether the revision places additional documentation burdens on contractors. While the revised rule did not explicitly change the documentation requirements, some interpretations suggest additional documentation is required, especially when contractors have negotiated airfare agreements with airlines or travel agencies.

The burden of proof for establishing reasonableness of costs is placed on the contractor under FAR 31.201-3(a).  Maintaining adequate documentation is one important element to supporting allowable costs.

Let’s examine the documentation required before the FAR change. The following documentation requirements support the necessity of the trip and can be found at FAR 31.205-46(a)(7):

  • Date expense incurred.
  • Place of origin and destination.
  • Purpose of trip.
  • Name of traveler.
  • Traveler’s title or relationship to contractor.

When airfare costs are in excess of the lowest available fare, justification of the higher fare must include one or more of the following documented reasons under FAR 31.205-46(b):

  • The lower fare required circuitous routing.
  • The lower fare required travel during unreasonable hours.
  • The lower fare excessively prolonged travel.
  • The lower fare resulted in increased cost that would offset transportation savings.
  • The lower fare did not provide accommodation for the physical or medical needs of the traveler.
  • The lower fare was not reasonably available to meet mission requirements.

The general trip documentation clearly does not change. And, while the reasons that justify higher airfares do not change, the documentation required to determine the lowest available fare is unclear. The FAR is silent on how the lowest available fare is determined.

The current volatile pricing conditions for air travel makes documentation of the lowest available airfare challenging to the contractor. The removal of “customary standard, coach, or equivalent” is a recognition that coach fares are no longer customary or standard. It is a reflection of an increased burden on the contractor to seek out and document its efforts to seek out lowest fares available through any means.

Tip: Consider Implementing New Procedures

If you have agreements with travel agencies or airlines:

  • Include a copy of the lowest available airfare from such agreements AND a copy of a dated Internet screen capture from a travel website such as Travelocity or Expedia, which are known to offer “lowest-price” based fares across airlines.

If you do not have agreements with travel agencies or airlines:

  • Include a copy of a dated screen capture from a travel site such as Travelocity, Expedia or other site known to offer price-based fares across airlines.

Regardless of travel agreements:

  • If the higher fare is justified and should be allowable, be sure to document the reason for it.
  • Change your company policy to require that travelers include this airfare documentation with their expense vouchers.

© 2018