• Increase font size
  • Default font size
  • Decrease font size
Home News Archive Travel Rules Cause Problems for Everybody—Even DOD!

Travel Rules Cause Problems for Everybody—Even DOD!

E-mail Print PDF


One of the largest drivers of unallowable costs is business-related travel expenses.  The Cost Principle at FAR 31.205-46 requires (among other things) that contractors can only claim travel expenses that do not exceed the ceilings imposed by the Federal Travel Regulations, Joint Travel Regulations, and/or the Standardized Regulations, depending on which set of travel regulations is applicable to the trip.  Importantly, these regulations are designed to regulate the travel of employees of the Federal government—and not contractor employees.  Consequently, only certain parts of those travel regulations apply to contractor employees.  It’s a difficult Cost Principle to navigate through, made more difficult by references to the various sets of Federal regulations noted above.

Compliance with the FAR Cost Principle is difficult, requires personnel resources, and costs the contractor additional expense.  In addition to the back-office employees necessary to assure compliance and support Government audits of compliance, there is the not insignificant additional cost associated with requiring employees to provide more detail than they would if they were not traveling on government-related business, and to provide more explanations and documentation than they otherwise would.  We’ve suspected for a while that compliance with this particular Cost Principle may actually cost the Federal government more than it “saves” in unallowable contractor costs—but of course we have no evidence to support our suspicion.

Recently, the travel Cost Principle was revised to narrow the range of allowable airfare costs a contractor can incur.  We didn’t like the revision, and told you why at the time.  We predicted that Government auditors would misinterpret the rule and cause problems.  And our prediction was proven correct a couple of months later, when DCAA published its audit guidance telling auditors how to audit for compliance with the revised rule.  A complex Cost Principle was made even more complex by a poorly drafted rule revision, and the situation was exacerbated by DCAA’s flawed interpretation of the rule.

So it is with a bit (or perhaps a bit more than that) of Schadenfreude that we note this article in FederalTimes.com, which reports that “Pentagon officials” have asked Congress for a relaxation to the byzantine set of rules governing travel on behalf of the Department of Defense.  The reason for the request is that the current regulatory regime is too complex, according to officials of the Defense Transformation Agency.  According to the article, the Defense Department “has defined 76 types of trips that its employees might take,” making programming the Defense Travel System software too difficult.  The project to automate the Defense Travel System has been an on-going project for more than 15 years.

The FederalTimes.com article quoted Mr. David Fisher as saying, “We'd have to spend millions and millions of dollars to get it right.  We'd like to be able to continue that investment in a simpler world."  The article reported that Fisher and his co-worker, Ms. Pam Mitchell, “asked for the subcommittee's help in navigating about 2,000 pages of sometimes contradictory rules and regulations that govern Defense travel. Reforming the system will require legislative action.” 

Contractors would like to ask Congress to undertake similar reform efforts.  While it is true that certain travel costs might be subject to abuse, the majority of such costs are “commercial”  in nature and pricing is largely governed by market forces.  It’s time for the travel rules to be simplified, for everybody.


 

Newsflash

Effective January 1, 2019, Nick Sanders has been named as Editor of two reference books published by LexisNexis. The first book is Matthew Bender’s Accounting for Government Contracts: The Federal Acquisition Regulation. The second book is Matthew Bender’s Accounting for Government Contracts: The Cost Accounting Standards. Nick replaces Darrell Oyer, who has edited those books for many years.