December 7 , 1988
Subject: Applicability of Federal Travel Rules to Federal Contracts
The purpose of this Memo is to provide information on the current status of the applicability of federal travel rules to federally-funded contracts, and to provide support to campus Contracts and Grants Officers when they are negotiating or renegotiating travel clauses in federal contracts.
The scope of this Memo is limited to federal extramural awards to campuses. How the changes discussed below will affect the prime contracts between the University and the Department of Energy for the operation of the three major laboratories is under review.
Because this issue involves three federal laws as well as different regulations and policy documents, the following glossary may help avoid confusion:
Identification of Relevant Statutes, Regulations, and Policy Documents:
"Pub. L. 93-400" refers in this Memo to the law that originally established the Office of Federal Procurement Policy (OFPP) in 1974.
"41 USC 401" refers to the codification of statutes pertaining to the OFPP.
"Federal Travel Regulations" refers to the per diem ceilings applicable to travel by federal employees.
"Pub. L. 99-234" refers to the Federal Civilian Employee and Contractor Travel Expenses Act of 1985, which added a new Section 24 to 41 USC 401, whereby federal contractors were to become subject to the Federal Travel Regulations.
"FAR 31.205-46(a)" refers to the section of the Federal Acquisition Regulations that implements Pub. L. 99-234 for commercial contractors.
"Pub. L. 100-679" refers to the OFPP Act Amendments of 1988 (also
known as the OFPP Reauthorization Bill) that amended 41 USC 420; signed into law on November 17, 1988.
"G-28" refers to Business and Finance Bulletin G-28, Policy and Regulations Governing Travel, containing University of California travel policy and per diem allowances.
Title II of Pub. L. 99-234 added new language at 41 USC 420. This new section stated, in part, that "under any contract with any executive agency, costs incurred by contractor personnel for travel.. shall be considered to be reasonable and allowable only to the extent that they do not exceed the rate and amounts set by [GSA]."
The above language was implemented in Section 31.205-46(a) of the FAR effective July 31, 1986. Since this section of the FAR deals with commercial contractors, universities were not automatically affected. However, NASA and DOE subsequently published interim and proposed rules, respectively, to implement Pub. L. 99-234 for their contracts with universities. Individual Contracting Officers at other agencies, e.g. NIH and DOD, also insisted on inserting the FAR clause in certain contracts awarded to the University.
The upshot is that for some University researchers traveling on some federal contracts, the reimbursement rates authorized by G-28 have been limited by the federal per diem ceilings in the Federal Travel Regulations.
On November 17, 1988, the President signed into law the OFPP Reauthorization Bill, Pub. L. 100-679. While the law dealt mainly with changes pertaining to OFPP, it also contained language that in effect blocks the application of Pub. L. 99-234 to the University.
Relevant Text of Pub. L. 100-679
Pursuant to Section 12 of Pub. L. 100-679, 41 USC has been amended by the addition of a new paragraph b., so that the complete section now reads as follows:
(a) Under any contract with any executive agency, costs incurred by contractor personnel for travel, including costs of lodging, other subsistence, and incidental expenses, shall be considered to be reasonable and allowable only to the extent that they do not exceed the rates and amounts set by subchapter 1 of chapter 57 of title 5, United States Code, or by the Administrator of General Services or the President (or his designee) pursuant to any provision of such subchapter. This section shall be implemented in regulations prescribed as a part of the single system of Government-wide procurement regulations as defined in section 4 of this Act.
(b)(1) The provisions of subsection (a) shall not apply to any agreement between an executive agency and a State institution, or an executive agency and a nonprofit institution, entered into for the purpose for conducting federally sponsored research and related activities.
(2) Under any agreement described under paragraph (i), costs incurred by personnel for travel, including costs of lodging, other subsistence, and incidental expenses, shall be considered reasonable and allowable only to the extent that such costs do not exceed--
(A) charges normally allowed by the respective institution in its regular operations as a result of an institutional policy; and
(B) the limits and principles as are provided for by government-wide regulation of such costs established by the Director of the Office of Management and Budget [i.e., for the University, OMB Circular A-21].
(3) The regulation under paragraph (2)(B) shall specifically provide that in the absence of an institutional policy regarding travel costs, the rates and amounts established under subchapter I of chapter 57 of title 5, United States Code, or by the Administrator of General Services or the President (or his designee) pursuant to any provisions of such subchapter shall apply to agreements between an executive agency and a State institution, or an executive agency and a nonprofit institution, entered into for the purpose of conducting federally sponsored research and related activities.
This means that federal Contracting Officers no longer have statutory authority to impose the Federal Travel Regulations on the University. Since the University does have an institutional policy regarding travel costs (G-28), this University policy will apply to all federally-funded contracts pursuant to Pub. L. 100-679.
Campus C& G Officers should not accept the imposition of the Federal Travel Regulations in any new federally-funded contract or grant. Both Pub. L. 100-679 and OMB Circular A-21 (Sec. J.43.a.) mandate the use of the University's own travel policy in determining the allocation of travel costs to federally-sponsored agreements.
Renegotiation of existing contracts that contain language more restrictive than G-28 is at campus option. Consideration should be given to whether the personnel working on the contract would benefit from a renegotiation and contract modification to allow use of University policy and rates instead of the Federal Travel Regulations. If renegotiation is opted, this office will assist if requested.
Refer: Bill Sellers
Subject Index: 07
Organization Index: F-005
David F. Mears
University Contracts and Grants Coordinator
cc: Director Alter