Document
Federal Acquisition Regulation; FAR Case 2006-024, Travel Costs
The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils) are proposing to amend the Federal Acquisition Regulation (FAR) to change the ...
SUPPLEMENTARY INFORMATION:
A. Background
The travel cost principle at FAR 31.205-46(b) currently limits allowable contractor airfare costs to “the lowest customary standard, coach, or equivalent airfare offered during normal business hours.” The Councils are aware that this limitation is being interpreted inconsistently, either
as lowest coach fare available to the contractor or lowest coach fare available to the general public, and these inconsistent interpretations can lead to confusion regarding what costs are allowable.
The Councils agreed that the current language at FAR 31.205-46(b) does not promote consistency in the application of the cost principle and that, accordingly, the cost principle requires clarification. The Councils considered three alternative approaches to revising the cost principle:
1. Do nothing, leaving FAR 31.205-46 unchanged;
2. Amend FAR 31.205-46(b) to explicitly state that allowable contractor airfare costs are limited to the lowest standard or coach fare available to the
general public; or
3. Amend FAR 31.205-46(b) to explicitly state that allowable contractor airfare costs are limited to the lowest standard or coach fare available to the contractor.
With regard to the first option, the Councils do not believe that the cost principle can be left unchanged based on the different interpretations of which the Councils have become aware. The Councils also believe that establishing the lowest coach fare available to the general public as the benchmark for cost allowability is not a feasible option in practice. Under such a standard, contractors could potentially be required to continuously monitor a fluctuating fare market to determine what was the lowest fare available on a given day. Likewise, Government auditors could not reasonably recreate the competitive fare market for each instance of a contractor’s travel in determining compliance with the cost principle.
Accordingly, the Councils believe that the reasonable standard to apply in determining the allowability of airfares is the
lowest coach fare available to the contractor. It is not prudent to allow the costs of the lowest coach fares available to the general public when contractors have obtained lower fares as a result of direct negotiation.
Furthermore, the Councils believe that the cost principle should be clarified to omit the term “standard” from the description of the classes of allowable airfares since that term does not describe actual classes of airline service. The Councils believe that “customary coach, or equivalent” more accurately describes the classes of service for which the cost will be considered allowable.
This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 
5 U.S.C. 804.
B. Regulatory Flexibility Act
The Councils do not expect this proposed rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601,
et seq., because most contracts awarded to small entities use simplified acquisition procedures or are awarded on a competitive, fixed-price basis, and do not require application of the cost principles and procedures discussed in this rule. An Initial Regulatory Flexibility Analysis has, therefore, not been performed. We invite comments from small businesses and other interested parties. The Councils will consider comments from small entities concerning the affected FAR Part 31 in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 601,
et seq.
(FAR case 2006-024), in correspondence.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the proposed changes to the FAR do not impose information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501,
et seq.
Dated: December 10, 2007.
Al Matera,
Director, Office of Acquisition Policy.
Therefore, DoD, GSA, and NASA propose amending 
48 CFR part 31 as set forth below:
PART 31—CONTRACT COST PRINCIPLES AND PROCEDURES
1. The authority citation for 48 CFR part 31 continues to read as follows:
40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 U.S.C. 2473(c).
2. Amend section 31.205-46 by revising paragraph (b) to read as follows:
Travel costs.
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(b) Airfare costs, in excess of the lowest priced coach class, or equivalent, airfare available to the contractor during normal business hours are unallowable except when such accommodations require circuitous routing, require travel during unreasonable hours, excessively prolong travel, result in increased cost that would offset transportation savings, are not reasonably adequate for the physical or medical needs of the traveler, or are not reasonably available to meet mission requirements. However, in order for airfare costs in excess of the above airfare to be allowable, the applicable condition(s) set forth above must be documented and justified.
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