Fed Gov't Contract vs. State Law

If the employer’s organization is more restrictive than the FAR/contract rates, then the lower rates would apply.

Mac, is the contract a cost reimbursement contract?

Mac, in my prior experience doing R&D contracts with universities; they have forward pricing rate agreements (FPRA) that were negotiated with the Department of Health and Human Services. I don't recall if the FPRAs addressed per diem rates, but it may be worth taking a look if you can get your hands on it.

On 7/13/2023 at 8:57 AM, Mac0372 said:

1. Does a state policy supersede a federal contract?   (assuming specific conditions are NOT set in the Federal Grant and/or Statement of Work)

Example:  A North Carolina (pick any) university has a contract with U.S. Army Special Forces Command (Fort Bragg/Liberty, NC) for communication work.  Although the employees supporting this contract are considered "state employees", they all physically reside and work in other states (Florida, Colorado, Kentucky, etc.) at miitary installations and currently travel around the United States and Overseas in support of the contract. 

Per the statement of work (SOW) set forth by the Gov't, the employees on this contract receive Per Diem in accordance with the limitations set forth in the FAR 31.205-46 and the General Services Administration (GSA) per diem rates.

However, the state university has it's own travel policy citing state statues which differ from GSA per diem rates.  For example the state has a flat rate of $40 a day per diem for employess no matter where in the US (or world) the employee is traveling.  So if the employee traveled to San Diego for 5 days the university will only allow $40 a day ($200 total) when the GSA per diem is $82 a day ($410).  

The employees of this contract travel overseas and many places where GSA rates are FAR above the university's $40 a day rate.  This seems unethical and illegal to hold these employees to state policy when there is a Gov't SOW which states otherwise.

FAR 31.205-46 is a cost principle that applies to commercial organizations. If the contractor is a university, then OMB Uniform Guidance at 2 CFR part 200, subpart E and appendix III would apply. Assuming this is a cost-reimbursement contract, FAR 52.216-7(a) should reference FAR subpart 31.3.

On 7/13/2023 at 11:57 AM, Mac0372 said:

Per the statement of work (SOW) set forth by the Gov't, the employees on this contract receive Per Diem in accordance with the limitations set forth in the FAR 31.205-46 and the General Services Administration (GSA) per diem rates.

Note that the rates stated in 31.205-46 are maximum rates.  Nothing in the FAR prevents a contractor from paying its employees lesser rates.  The key is that the contractor does not bill the government at the maximum rates derived from the regulations listed in 31.205-46, but pay its employees a lower rate.  

Don has identified what the proper cost principles that should apply to state university employees.  That doesn't mean that the contracting officer may have inserted the wrong cost principle in the contract.

Don Mansfield said:

OMB Uniform Guidance at 2 CFR part 200, subpart E and appendix III

Not sure what you mean by Appendix III, Don as it would pertain to the rates for travel costs. Appendix III covers indirect costs for Universities…

@joel hoffman, I meant those were the applicable cost principles for educational institutions.

Don Mansfield said:

@joel hoffman, I meant those were the applicable cost principles for educational institutions.

Perhaps Max should check with the University office that reimburses travel whether the State limit applies to travel costs that are funded by the Federal government under the USG daily limits in the contract.

I doubt though whether that would be successful. It would appear in their accounting system as an excessive cost for any University or State audit. There would have to be a paper trail to explain it. Since the University would actually be making the travel payments to their employees, they probably wouldn’t change the rules just because the source of the funding isn’t from the State University.

The Saudi Arabian Government funded ALL costs of the Corps of Engineers Assistance Program from the 60’s onward, including contracts, Corps salaries, benefits, travel, logistics, etc The US Treasury applied all laws and rules that would apply to US funded costs, because it was all paid by the US Treasury from the Saudi Arabia funds deposited in the US Treasury.