The Top Five Tips for Government Contractor Per Diem Reimbursement

Travel is essential for the work of many government contractors and it is important to be familiar with the regulations regarding travel expenses. Common mistakes may cause reimbursement from your contracting office to be delayed or even denied.

Per diem rates cover three types of travel costs: lodging, meals and incidental expenses (IE). The General Services Administration (GSA) creates a set of daily allowed rates for the Continental United States (CONUS) every year. For localities without designated per diem rates, the standard CONUS rate applies.

Follow these tips to maximize recoverable costs related to government contracting travel:

1. Look at expenses beyond contract travel: It’s a common misconception to think that rates only apply to contract travel. Per diem limits are considered ‘allowable’ costs and apply to all staff within a company whether the purpose of the travel is related to a contract, attending a conference or to business development efforts.
2. Brush up on hotel expense rules: Be sure to exclude the taxes imposed on your hotel stay. These are not factored into daily per diem amounts. Know also that, as a contractor, your company may not be eligible for federal rates at hotels. Unfortunately, there are few ways around this. You can ask your contracting officer for an exception for a particular trip with unusual circumstances, but you must ask in advance. You are, however, allowed to use the “mix and match” approach, which combines expenses. If, as a company, you choose to allow your employees to stay in an over-the-limit hotel, the amount over the maximum should be classified as an unallowable cost. A contractor may save some time and effort knowing that meals and incidentals do not require expense itemization or receipts.
3. Book through a US airline: Another common mistakes that many government contractors make when booking travel is failure to use a United States airline. The Fly America Act requires you to use an American carrier unless no other option is available. While this may seem counterintuitive when you can sometimes get a better rate through a foreign carrier, it is still an important requirement to remember.
4. Understand the definition of travel days: Contractors often wonder, “What defines a travel day?” More than 12 hours away from your usual place of work. But what about partial travel days? You get 75% of the daily MIE rate for the day you leave and the day you return. Another common question is, “Which city’s rate is used on a multi-part trip if you start in one city and end the day in another?” Regardless of what cities you visited during a day, the regulation states that … “Per diem is based on the traveler’s temporary duty location at 2400.” Another thing to consider is that per diem rates are based on the temporary duty location, not the lodging facility location.
5. Cozy up to the JTR: It helps to become familiar with the recent modifications made to the Joint Travel Regulations (JTR), which went into effect on November 1, 2014. One of the notable changes includes the Flat Rate Per Diem policy, which requires travelers who are on temporary duty for more than 30 days in one location to receive a flat rate per diem. For longer-term duty of 31-180 days, the authorized flat rate is 75% of the locality rate.

Contact Aprio’s Government Contracting team for help with navigating per diem rules for travel.