At the risk of beating this subject to death, we present, yet again, another discussion on travel costs. Travel costs, though not always significant in the scheme of things, is an area that Government auditors find low hanging fruit - a high probability of finding unallowable costs. Within the general cost category of travel, there are several cost limitations that contractors without a good set of travel policies, procedures, and practices, can easily exceed. Today we will cover the types of costs that are included in the maximum per diem rates.
Maximum per diem rates are based on one of three sources depending on destination. For the continental U.S., FAR prescribes the use of the FTRs (Federal Travel Regulations). For Alaska, Hawaii, and "outlying areas" FAR requires that JTR (Joint Travel Regulations) rates be used. And, for international travel, the State Department rates (Department of State Standardized Regulations) are to be used. However, the rates from these sources have different compositions. Under FTR, taxes on hotel rooms and laundry/dry cleaning can be charged separately whereas under the State Department, these costs are included in the rate and may not be billed separately. Under the JTR, hotel tax is separately billable but laundry and dry cleaning are included. Confusing? You can incorporate the following table in your policy and procedure manual to help you avoid unallowable costs.
All of these rates include the following "incidental expenses": fees and tips to waiters and porters; transportation between places of lodging or business and places where meals are taken, if suitable meals cannot be obtained at the TDY site; and mailing costs associated with filing travel vouchers and payment of Government-sponsored charge card billings.
As we stated earlier, this is a prime area for contract auditors to review, especially during their audits of incurred cost. Contractors without intricate knowledge of the travel regulations are at risk for noncompliance.