FFP Travel Costs

Is the contract already awarded?

Contract has not been awarded.

nkd9 said:

A contractor using local employees vs having to transport them seems to have an unfair advantage

What is unfair about it?  Not every advantage is unfair.

Did the offeror submit an offer in a competitive environment for the FFP work, and in addition proposed mileage reimbursement on top of the FFP?  Or are you still in the pre-solicitation, market research phase?

Unless there is something special, I'm with Retreadfed in not seeing anything unfair.  My office used to require short-term work in Alaska.  Of course, the Seattle and Portland companies had an advantage over the Oklahoma and Florida companies.  If all else is equal, the Seattle or Portland company will win fair and square, and the Government will benefit from that.  For the Government to pay extra to let the Oklahoma company win would be absurd -- if the Oklahoma company wants to win, it will need to sharpen its pencil and make a better offering (price and/or quality).  By the way, the Oklahoma company will have an advantage over the Seattle company for work in Texas.  It al works out.

nkd9 said:

Customer requests that travel be reimbursed per the JTR. My question. How would you evaluate this when it came time to evaluate price?

If the travel is going to be reimbursed per JTR, is the travel CLIN a reimbursement CLIN?

Remember, a firm-fixed-price contract provides for a price that is not subject to any adjustment on the basis of the contractor’s cost experience in performing the contract.

You may want to read FAR 31.102 and 31.205-46; and consider the thoughts in this previous post:

Travel should not be reimbursable in the scenario contemplated in this thread.

The location is known.  The number of overnights is known.  The number of meals is known.  These are all part of the Government’s requirement.

Make the whole thing FFP, and let offerors bid their prices to meet the Government’s requirement.

The offeror’s location IS NOT part of the Government’s requirement.  We do not have to equalize that.  The far-away offerors will have to compete against the near offerors.  This IS NOT unfair, this is simply the reality of the market.

If location, number of overnights, and number of meals were not known, we might have to think further because of the uncertainty in the Government’s requirement.  But in the scenario here, there is NO UNCERTAINTY in the Government’s requirement — instead, there is a far-away crybaby prospective offeror who is hoodwinking federal employees with its sob-story.  But that offeror is fully capable of submitting a FFP proposal just like anyone else.  The playing field is perfectly level.

No uncertainty = FFP.

On 5/3/2019 at 8:36 PM, nkd9 said:

Working with a contract where we tell the contractor we need a set number of employees at a set location for a number of hours- Temporary help services. 

Customer requests that travel be reimbursed per the JTR. My question. How would you evaluate this when it came time to evaluate price? A contractor using local employees vs having to transport them seems to have an unfair advantage. The  performance work statement does specify how many nights and meals but leaves miles open.

It appears that the requirement is known but customer wants to use cost reimbursement with JTR limit. 

Im  with the others - it should be FFP and competed. 

It would appear that the customer would be concerned about the cost of travel if they were no limits on it.

To evaluate reasonableness, you could look at the travel line item prices of those offers that are overall most competitive considering cost and non-cost. Then - knowing the location - develop your own estimate with the JTR rates for each location and compare to each offer, as applicable.

Sounds like a lot of work but the only variable would be airfare from the offeror’s location, right?  Otherwise, the local costs can be estimate - theoretically same for everyone. 

Then if the offered price or prices seem high, you could conduct discussions and tell them you think the travel cost CLIN is too high. If otherwise conducting discussions, you can include that as a discussion item.

Jamaal Valentine said:

You may want to read FAR 31.102 and 31.205-46; and consider the thoughts in this previous post:

The distinction between this thread and the earlier thread cited above, is that the amount of travel is determinate in the current original post. 

If the OP wants to reassure the client that   the selected firm’s  travel costs fairly well conform to the JTR limits, the OP you can evaluate and compare with a government estimate for that firm’s location. 

 And if the reasonableness of travel cost is a concern to the Customer, state in the evaluation criteria that the government may (will?) evaluate the Reasonableness of the proposed Travel CLIN, in comparison with JTR rates, as applicable to that firm. Of course, you’d need to know where the employees would be traveling from. If that can’t be tied down, discussions could consider that. At least you’d understand the basis of the proposed price. Which might reveal that FFP isn’t necessarily the most economical  pricing method .   When you make the contractor responsible for covering all their costs in a bid item, they are going to cover their risks.

joel hoffman said:

And if the reasonableness of travel cost is a concern to the Customer, state in the evaluation criteria that the government may (will?) evaluate the Reasonableness of the proposed Travel CLIN, in comparison with JTR rates, as applicable to that firm.....  Which might reveal that FFP isn’t necessarily the most economical  pricing method.  When you make the contractor responsible for covering all their costs in a bid item, they are going to cover their risks.

Joel,

If the locations are known, and the number of nights is known, and the number of meals is known, then FFP is the best approach, hands down.  Compliance with the JTR is wholly irrelevant.  Competition with FFP is the best approach for the original poster.  No travel CLIN — just bury travel as part of the work CLIN.  The faraway crybaby offeror will need to sharpen its pencil — if it can’t win on price, it will have to win on technical merit.

ji20874 said:

Joel,

If the locations are known, and the number of nights is known, and the number of meals is known, then FFP is the best approach, hands down.  Compliance with the JTR is wholly irrelevant.  Competition with FFP is the best approach for the original poster.  No travel CLIN — just bury travel as part of the work CLIN.  The faraway crybaby offeror will need to sharpen its pencil — if it can’t win on price, it will have to win on technical merit.

I don’t disagree that FFP is likely a good way to go when the scope and costs are reasonably determinant . 

But if they include an FFP travel CLIN, which might be useful for contract admin purposes, they could evaluate the reasonableness. That seems to be a concern of the customer and was the essence of the original question. 

As for a price advantage due to location, it wouldn’t matter whether travel is paid for as FFP or cost reimbursement.

Why does the government care about meals, mileage, or travel costs at all? If the work will be competitively awarded as FFP and evaluated using price analysis what's the goal? The requirement seems defined well enough so that the field of competition can compete intelligently:

On 5/4/2019 at 10:36 AM, nkd9 said:

...we tell the contractor we need a set number of employees at a set location for a number of hours...

I wonder if this is going to be labeled as a PBSA; and if the contracting officer satisfied FAR 7.108.

All, 

Thanks for the wealth of knowledge and advice. These replies have given me some good points to bring up with the customer.

If you want to save money and give an advantage (not an "unfair advantage") to local offerors who do not need to price in travel costs, then make it firm fixed price.

If you want to expand the pool of offerors nationwide, then make it cost reimbursable. 

This is a classic "trade-off" decision. Cheaper and local? Better and nationwide? Can you get the highest quality anyway, even if you keep it local? Maybe your local area is awash with potential offerors, anyway.

On 5/3/2019 at 9:36 PM, nkd9 said:

How would you evaluate this when it came time to evaluate price?

Assuming that the goal of the  contract is not "travel", why are you evaluating it?   Just say travel will be treated as a reimbursable per the JTR and be done with it.  No one is favored or prejudiced.

Otherwise, level of performance might end up being determined by who can travel cheapest, not who has the best qualifications.

On 5/5/2019 at 12:24 PM, ji20874 said:

Joel,

If the locations are known, and the number of nights is known, and the number of meals is known, then FFP is the best approach, hands down.  Compliance with the JTR is wholly irrelevant.  Competition with FFP is the best approach for the original poster.  No travel CLIN — just bury travel as part of the work CLIN.  The faraway crybaby offeror will need to sharpen its pencil — if it can’t win on price, it will have to win on technical merit.

But the city-pairs aren't known.....why would you even bother comparing Seattle-DC with Baltimore-DC?  Just say "closest LPTA wins".

Please take care. Some who read only the discussion above might see the phrase "per the JTR" used in its given context, and mistakenly assume that the JTR applies to contractor travel...well, it  doesn't. Look at the introductory paragraphs of the JTR and you'll see for yourself...it's too plain to miss (and the exception noted there barely dilutes the general rule).

Knowing this about the JTR shouldn't stop us from doing what we aim to do, however. Notice that Joel Hoffman was discussing "JTR rates" and "JTR limits" with evident care to avoid the confusing phrase "per the JTR".  He's on to something...

See also the careful phrasing of the Cost Principle FAR 31.205-46 --Travel Costs. for a more lengthy example along the same lines.

Yes, I agree that JTR per diem rate limits themselves don’t directly apply to contractors. 

Having said that, I’ve found that, when I travelled along with contractors, some companies had better hotel rates than the government rates. 

And, depending upon the timing and circumstances, contractors sometimes paid less airfare than the government’s all-season, fully refundable rates, when they used non-refundable fares. 

I chose the wrong term in the phrase  “firm’s  travel costs fairly well conform to the JTR limits”. I meant “compare reasonably well in comparison with the JTR limits. 

And yes, one could use the criteria in 31.205-46, Travel Costs as a guideline for an estimate of reasonableness in the evaluation criteria. But keep in mind that, for an FFP competitive proposal,  “allowable cost” limitations aren’t directly applicable. It’s more a yardstick for evaluation purposes, subject to application of judgement.

On ‎5‎/‎6‎/‎2019 at 3:07 PM, REA'n Maker said:

Just say travel will be treated as a reimbursable per the JTR and be done with it.  No one is favored or prejudiced.

Otherwise, level of performance might end up being determined by who can travel cheapest, not who has the best qualifications.

That's what tradeoff analysis is for.

On 5/14/2019 at 8:15 AM, jwomack said:

That's what tradeoff analysis is for.

Are you saying that you trade off "travel" with "qualifications"?

As Joel summarizes above, the best you could evaluate travel is a yardstick/JTR approach to ensure consistency, so why use it as a criteria?

One guy proposes bus travel and the other guy proposes air travel.  Do you really want to get into a trade off analysis of those two approaches?  To what end?

I'm saying I would consider total cost to the Government when determining what's in the government's best interest.

Some contractors offer lower than FTR/JTR rates, e.g., as a percentage like 10% below FTR/JTR.

Some contractors won't need to travel if they have a large footprint.

If the Government says "we'll pay JTR" then there's no incentive for contractors to do anything to reduce or even eliminate some travel costs.

Just state in the solicitation that Travel will not be reimbursed and case closed. If you receive one proposal/quote then so be it. Or you can state in the solicitation that only airfare/ground transportation will be reimbursed, but not meals and incidentals or lodging. It depends on the dollar value of the acquisition, if it's $1,000,000.00, maybe reimbursing travel is not a big deal. FTR only applies to federal employees, so just because a CO allows Travel reimbursement on a contract it does not mean that the contractor is entitled to all of the elements that FTR offers, such as lodging and meals, the CO can choose what elements of Travel can be reimbursed.

Sam101 said:

Just state in the solicitation that Travel will not be reimbursed and case closed. If you receive one proposal/quote then so be it. Or you can state in the solicitation that only airfare/ground transportation will be reimbursed, but not meals and incidentals or lodging. It depends on the dollar value of the acquisition, if it's $1,000,000.00, maybe reimbursing travel is not a big deal. FTR only applies to federal employees, so just because a CO allows Travel reimbursement on a contract it does not mean that the contractor is entitled to all of the elements that FTR offers, such as lodging and meals, the CO can choose what elements of Travel can be reimbursed.

Sam101,

I don't agree with your statements. Have you read FAR 31.205-46?

Thanks here_2_help, I'll read FAR 31.205-46, I just have to determine when it applies, such as does it apply to 8.4, 13, 14, 15, 16.5, and contract type. From first thought I don't see how a firm fixed price contract under any FAR part can have Travel "reimbursed" though. Perhaps capping the Travel at $50K or something is my first thought, but I'll have to read the FAR to come up with something regarding 31.205-46. First thought regarding how to evaluate Travel costs during proposal/quote evaluations, I have wrote in the solicitation that for purposes of evaluation of price, the Travel CLIN will be $50K, and capped at $50K as a matter of fact also during performance of the contract. I have only ever done 8.4 and 13 buys.

So, 31.201-2 "Determining allowability" says at (a)(4) "Terms of the contract", which means the terms that are in the solicitation, and the terms in the solicitation can be that only transportation is an allowable cost. If I were a contractor wanting to win a contract at least for past performance's sake, I would much rather see a solicitation saying that "airfare is the only allowable travel cost" in section H rather than seeing "travel shall not be reimbursed at all." If allowing Travel automatically means that the government is required to allow all costs that the FTR allows, then it may make the program office not want to make Travel an allowable cost at all.

But I guess determining whether or not there are contractors out there that are willing to bid on a contract that does not allow full reimbursement of Travel is best done at the market research stage.

Sam101 said:

which means the terms that are in the solicitation, and the terms in the solicitation can be that only transportation is an allowable cost.

Assuming that contract stated that allowability of costs would be determined in accordance with FAR subpart 31.2, wouldn't that be a FAR deviation?

Don Mansfield said:

Assuming that contract stated that allowability of costs would be determined in accordance with FAR subpart 31.2, wouldn't that be a FAR deviation?

I take this to mean that in accordance with FAR 31.205-46, a contract can never be FFP since it would be nearly impossible to estimate the true cost of Travel at time of submitting a proposal. And that there is no point of indicating in the contract that the Travel CLIN has a "not to exceed" limit (I always indicate that the Travel CLIN has a NTE limit, although I'm not sure if that is common practice), since if during performance the contractor incurs Travel costs beyond the "not to exceed" amount, the contractor can still bill for Travel costs incurred anyways. 

And if 31.205-46 is saying that Travel is required to be an allowable cost, I am now beginning to assume that a solicitation can never say that "Travel shall not be reimbursed at all", can it?

Certainly, a contracting officer could declare in a solicitation that travel costs will not be reimbursed in a FFP contract.  If so, the prospective offerors have to bear the risk of estimating travel and making their own FFP pricing decisions.  If some prospective offerors don't like that risk and decide not to bid, that's fine.  If the result is a contract that s too expensive for the Government to afford, or no one bids, well, that might indicate that the Government did a poor job in market research.  If one offeror is closer and thus will have lower travel costs than another offeror, that is not an unfair advantage and the Government is not required to "equalize" that advantage -- no, it is fair for the Government to take full advantage of those facts.  The contracting officer can consider all of this during market research, and make a decision accordingly.

ji20874 said:

Certainly, a contracting officer could declare in a solicitation that travel costs will not be reimbursed in a FFP contract.

Right, and I'm thinking that based on this logic, that if a CO is wanting to be "nice" or accommodating to some degree in regards to Travel cost, that the CO can state in the solicitation which elements of Travel (such as airfare only) is an allowable cost to include in a FFP proposal (although I believe that even in a cost-reimbursement or T&M contract type RFP that a CO can do the same). Airfare reimbursement is better than nothing.

But this leads me to another question, since Travel must be requested by the contractor and approved by the COR/CO prior to the contractor incurring Travel costs, does that mean that the CO can obligate funds to the Travel CLIN at time of Travel approval? Or does the CO need to obligate funds to the Travel CLIN at time of contract award? Does it make a difference if the service contract is severable or not? Say, even if the actual contract work is a nonseverable service, can the CO "incrementally" fund the Travel CLIN as Travel is approved? Essentially treating the Travel CLIN like a severable line item?

Another factor to consider is whether the amount and nature of the travel can be reasonably estimated before hand.

If it can, then the government could simply say that it will not be separately reimbursed. In that case bidders or proposers would be advised to include their estimated costs in the cost of the contract.

however if the amount of nature of contractor travel is not reasonably determinable, it would not be in the governments best interest to simply require contractors to Estimate amount to include in their bid or proposal.

That is when the government can include a separate line item for reimbursement of travel expenses. In my judgment, the government could include a plug line item amount and be specific about any restrictions Or limits on type of travel (e.g.,  No business or first class, best hotel rates, none or limits for per diem, etc.).

One must be careful not to simply say “travel is not reimbursable“ in a firm fixed price contract with no separate contract line item for travel reimbursement. Stead of saying no reimbursement you need to say “travel will not be separately reimbursed”. The contractor would normally have the right to include estimated travel costs in its firm fixed price bid or proposal.

Sam101 said:

But this leads me to another question, since Travel must be requested by the contractor and approved by the COR/CO prior to the contractor incurring Travel costs, does that mean that the CO can obligate funds to the Travel CLIN at time of Travel approval? Or does the CO need to obligate funds to the Travel CLIN at time of contract award?

If I have a Government-directed Travel CLIN, I usually fund the CLIN up-front with an estimated amount.

Sam101 said:

And if 31.205-46 is saying that Travel is required to be an allowable cost, I am now beginning to assume that a solicitation can never say that "Travel shall not be reimbursed at all", can it?

31.205-46 does NOT say that Travel is required to be an allowable costs. Instead, if the contract says that travel costs will be a reimbursable line item and that travel costs claimed for reimbursement must be allowable IAW FAR Subpart 31.2, then 31.205-46 controls what costs are allowable, and what costs are not allowable. It establishes the "ground rules" for reimbursable contractor travel costs.

Any FFP contract can require travel and it doesn't need to be a separate reimbursable CLIN. However, if you ask contractors to propose travel costs in their FFP bids then they are going to propose travel PLUS contingencies, because who knows? And if you are then going to require CO approval for travel, and you take too long to approve, that will be a delay/disruption REA. And if you are going to require travel in significantly in excess of the amount the contractor included in its proposal, that may be another downstream REA if the contractor believes you have changed the scope of work.

Sam101 said:

I take this to mean that in accordance with FAR 31.205-46, a contract can never be FFP since it would be nearly impossible to estimate the true cost of Travel at time of submitting a proposal. And that there is no point of indicating in the contract that the Travel CLIN has a "not to exceed" limit (I always indicate that the Travel CLIN has a NTE limit, although I'm not sure if that is common practice), since if during performance the contractor incurs Travel costs beyond the "not to exceed" amount, the contractor can still bill for Travel costs incurred anyways. 

And if 31.205-46 is saying that Travel is required to be an allowable cost, I am now beginning to assume that a solicitation can never say that "Travel shall not be reimbursed at all", can it?

I asked a question. I did not state anything that should lead you to conclude that a contract should never be FFP. If you decide to answer, stop and think about the question before you start writing.

In reading your posts in this thread and others, I've noticed that you tend to take hard positions that you don't know to be true and leave it to others to correct you. Assuming that you're a beginner, let me suggest a different approach. Think through how you could be wrong before posting. If there's something that you don't understand, ask a question. Be more tentative about your conclusions. Practice intellectual humility. Don't state something is true unless you can prove it to be true.

Just some advice that you're free to ignore.

Don Mansfield said:

I asked a question. I did not state anything that should lead you to conclude that a contract should never be FFP. If you decide to answer, stop and think about the question before you start writing.

In reading your posts in this thread and others, I've noticed that you tend to take hard positions that you don't know to be true and leave it to others to correct you. Assuming that you're a beginner, let me suggest a different approach. Think through how you could be wrong before posting. If there's something that you don't understand, ask a question. Be more tentative about your conclusions. Practice intellectual humility. Don't state something is true unless you can prove it to be true.

Just some advice that you're free to ignore.

Thanks Don, fair enough, sorry about that... I knew that you were asking a question, my reply wasn't an answer to your question, it was just an observation to your question, maybe I was thinking out loud... In my post about the rule of two I stated that I may not be interpreting FAR 19.502-2(b) correctly after my statement, I knew that I had to be wrong because the GAO keeps applying the rule of two to services. 

I never seen a bid protest involving travel cost constraints in a solicitation, and I have looked.

here_2_help said:

Any FFP contract can require travel and it doesn't need to be a separate reimbursable CLIN. However, if you ask contractors to propose travel costs in their FFP bids then they are going to propose travel PLUS contingencies, because who knows? And if you are then going to require CO approval for travel, and you take too long to approve, that will be a delay/disruption REA.

In a FFP contract where travel is not a separate reimbursable CLIN, there is no need for contracting officer approval of travel.

ji20874 said:

In a FFP contract where travel is not a separate reimbursable CLIN, there is no need for contracting officer approval of travel.

I couldn't agree more. Tell it to your colleagues.

ji20874 said:

n a FFP contract where travel is not a separate reimbursable CLIN, there is no need for contracting officer approval of travel.

I totally agree with H2H.  When I worked with DCAS (this shows what an old mossback I am), we had as much trouble with PCOs who did not know what was in their contracts, as we did with contractors.  PCOs really need to make sure that the terms of the contract are consistent, particularly that what is in Section H is consistent with what is in Section I.  Further, it is amazing in contracts for commercial items how many PCOs include standard FAR clauses that are duplicative of paragraphs in 52.212-4 such as the termination provisions and payment provisions.