FAR 31 Allowability: Travel, Training, and Conferences

When it comes to A&E Firms undergoing a FAR Overhead Rate Audit, understanding allowable costs is essential. Travel, training, and conferences are common expenses for A&E Firms. Understanding these types of expenses in the context of FAR Part 31, can help a firm optimize their overhead rate.

Travel, Training, and Conference Costs: Allowability Criteria

Travel Costs

Generally, travel costs incurred by A&E Firms are allowable, but they are required to meet the reasonableness and documentation requirements set forth in FAR 31.205-46.

• Costs for transportation may be based on mileage rates, actual costs incurred, or a combination, provided the method used results in a reasonable charge.
• Costs for lodging and meals must fall within the per diem rates established by the General Services Administration (GSA).
• Costs for airfare are allowable up to the lowest priced airfare (i.e. coach or economy) available during normal business hours.
• Documentation of the date, place, business purpose, and traveler details needs to be maintained to support allowability.

Training Costs

Generally, costs of training and education that are related to the field in which the employee is working and are intended to maintain or upgrade employee skills to aid in the completion of contracts are allowable.

• A&E Firms should maintain documentation of the training purposes and establish personnel policies that support employee training.
• Training as part of a conference may have specific requirements regarding prior approval and documentation, especially if the event is partially or wholly funded by the government.
• Overtime compensation for training and education and the cost of salaries for attending undergraduate level classes during business hours are unallowable under FAR 31.205-44.

Conference Expenses

Conference costs, including associated travel and per diem, are generally allowable as indirect costs, if reasonable and necessary to support contract objectives.

• Travel costs to/from the conference must meet allowability standards as outlined above related to per diem rates.
• Special situations exist where up to 300% of the applicable maximum per diem rate may be reimbursed when a conference requires attendance at a pre-arranged hotel.
• Documentation should be maintained on the necessity, cost-effectiveness, and mission-related benefits of attending the conference.
• The registration and association fees of allowable conference expenses are also allowable.

Overhead Allocation and Segregation

For all three cost categories – Travel, Training, and Conferences – it is crucial to maintain separate accounts for allowable and unallowable expenses within the accounting system. This will ensure that only compliant costs are included in overhead charges submitted to the government for reimbursement. Additionally, timekeeping systems and accurate record-keeping procedures are necessary to separate allowable indirect labor (proposal or training attendance) from unallowable activities. Travel, training, and conference expenses pertaining to unallowable activities (i.e. marketing/advertising training) would also be unallowable under FAR 31.

Key Compliance Tips

• Ensure all travel, training, and conference expenses are supported by detailed documentation and consistent with FAR limits.
• Establish personnel policies surrounding travel, training, and conferences.
• Utilize accounting software capable of flagging and segregating unallowable costs for indirect rate calculations.

Conclusion

Understanding the types of travel, training, and conference expenses that are allowable under FAR 31 is essential for FAR compliance. Implementing procedures to identify these costs and segregate them into cost categories will help a firm manage travel, training, and conference expenses effectively. Remember to consult the specific FAR provisions and seek professional advice to ensure compliance with regulations.

By adhering to the rules and making informed decisions, companies can optimize their overhead rate while staying within the bounds of FAR 31 regulations.

For more information about McKonly & Asbury’s Architecture, Engineering, and Construction (AEC) experience, visit the AEC Industry Page and don’t hesitate to contact a member of the AEC team.

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