Wednesday, April 29, 2015

Use of Corporate Aircraft

Government contractors that use company aircraft must maintain logs of flights containing specified information as required by FAR 31.205-46, Travel. Such information would include:

  • Date, time and point of departure
  • Destination, date, and time of arrival
  • Name of each passenger and relationship to the contractor
  • Authorization for trip, and
  • Purpose of trip.

Regardless of the cost of trips using corporate aircraft, the amount that is reimbursed under Government cost-type contracts is limited to "the lowest priced airfare available to the contractor during normal business hours". Exceptions apply including travel by such aircraft that is specifically required by contract specification, term, or condition, or a higher amount approved by the contracting officer. A higher amount is justified when accommodations require circuitous routing, require travel during unreasonable hours, excessively prolong travel, result in increased cost that would offset transportation savings, or are not reasonably adequate for the physical or medical needs of the traveler.

The manifest information required by FAR 31.205-46(c) is used by auditors and contracting officers to ensure that costs of owned, leased or chartered aircraft are properly charged against Government contracts and that directly associated costs of unallowable activities are not charged to such contracts.

The FAR Council estimates that there are about 6,000 trips per year on corporate aircraft where some or all of the costs are charged to Government contracts.  That might seem like a small number for the hundreds of thousands of Government contractors, but the number of Government contractors with corporate aircraft is relatively small. We don't know what that number is but if the top 25 contractors utilized private aircraft, the 6.000 trips would equate to 240 tips per year each.

Some contractors utilizing corporate aircraft don't bother to charge the Government for the use, even if the travel is allocable to a contract. To them, the cost of compliance far outweighs the amount that would otherwise be reimbursable under a contract (i.e. the lowest priced airfare available to the contractor during normal business hours).

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