Since January 2010, the FAR travel cost theory (FAR 31.205-46) has limited airfare costs to the lowest priced airfare open to the service provider during normal business hours. There are a few exceptions including where circuitous routing would be required, travel during unreasonable hours, prolonged travel excessively, or to meet up with the medical needs of the traveler.
Many companies, including Government companies allow certain employees to journey-business course or even high grade. The surplus over the lowest priced airfare is unallowable and should be removed from any billing to the Federal government or the annual incurred cost distribution. A problem comes up however in determining what the cheapest priced airfare was at the time the travel literary was organized and covered.
Contractors need to set up an activity for contemporaneously documenting the lowest priced airfare when reservations are created. That way, it’s easy to apportion the business class or first class airfare between allowable and unallowable quantities. Barring that, exactly what is a contractor to do after the fact – like when it is preparing its annual incurred cost submission?
One source for determining the lowest priced available airfares in place during travel is to utilize the Department of Transportation’s “Domestic Airline Consumer Airfare Report”. DOT’s Office of Aviation analysis collects air travel data and prepares them in conformity with public law to be used in the development of Airport Competition Plans, not for determining the lowest costed airfare at a specific time. The quarterly report shows the common airfares between two metropolitan areas, the average airfare by the biggest carrier, and average airfare by the cheapest costed carrier.
Using these details source should be considered a last resort – the most practical method is to create something that documents the lowest available airfare at that time reservations are made. However, like this has some very good precedence – DCAA is using the method to question costs when auditing annual incurred cost submissions.
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