FAR 31.205-46—Travel costs.
Plain-English Summary
FAR 31.205-46 governs the allowability of travel costs charged to government contracts, including transportation, lodging, meals, incidental expenses, airfare, and travel by contractor-owned, -leased, or -chartered aircraft. It explains when contractor personnel’s official business travel is allowable, how transportation may be priced, and how lodging, meals, and incidentals are generally capped by the applicable Federal per diem systems for the continental United States, Alaska/Hawaii/outlying areas, and foreign areas. It also addresses special or unusual situations where actual expenses above standard per diem may be allowable, the need for written justification and higher-level approval, documentation and receipt requirements, and the need for advance agreements in some cases. The section further limits airfare to the lowest priced available fare unless specific exceptions apply and are documented, and it caps contractor aircraft travel costs at the allowable airfare unless the contract requires such aircraft or the contracting officer approves a higher amount. In practice, this section is designed to prevent excessive or poorly documented travel charges while still allowing reasonable, mission-related travel costs when properly supported and approved.
Key Rules
Official business only
Travel costs are allowable only when incurred by contractor personnel on official company business and only to the extent they are reasonable. The contractor may use mileage, actual costs, per diem, or a combination, but the method must produce a reasonable charge.
Per diem caps apply
Lodging, meals, and incidental expenses are generally allowable only up to the maximum daily per diem rates in effect at the time of travel under the applicable Federal travel system for the travel location. The controlling system depends on whether travel is in the contiguous United States, Alaska/Hawaii/outlying areas, or foreign areas.
Higher actual expenses need approval
Actual costs above standard per diem may be allowable in special or unusual situations, but only if the higher Federal civilian employee rate is authorized under the applicable travel regulations and the contractor meets all required conditions, including written justification and, for repetitive use in an area, advance contracting officer approval.
Documentation and receipts required
Travel costs are allowable only if the contractor documents the date and place of travel, the purpose of the trip, and the traveler’s name and title or relationship to the contractor. A receipt is required for each expenditure of $75 or more, and the approved justification for higher actual expenses must be retained.
Partial days and no-lodging adjustments
The full per diem rate is generally not reasonable when no lodging is incurred or on partial travel days such as departure and return days. Downward adjustments are normally required, though they do not have to follow the Federal Travel Regulation formula so long as the result is reasonable.
Airfare limited to lowest available fare
Airfare above the lowest priced airfare available to the contractor during normal business hours is unallowable unless one of the listed exceptions applies, such as circuitous routing, unreasonable travel hours, excessive travel time, offsetting cost increases, medical or physical needs, or mission requirements. Any exception must be documented and justified.
Contractor aircraft costs capped
Costs of travel by contractor-owned, -leased, or -chartered aircraft include lease, charter, operation, personnel, maintenance, depreciation, insurance, and related costs. These costs are limited to the allowable airfare for the destination unless the contract specifically requires such aircraft or the contracting officer approves a higher amount.
Advance agreements may help
An advance agreement under FAR 31.109 may be useful to establish how the contractor will comply with the per diem, higher actual expense, and related travel-cost rules. This can reduce disputes and improve audit readiness.
Only selected travel rules are incorporated
The FAR does not incorporate the referenced travel regulations in full; it adopts only the maximum per diem rates, the definitions of lodging, meals, and incidental expenses, and the special-or-unusual-situation provisions. Contractors must not assume the entire Federal travel rule set automatically applies.
Responsibilities
Contractor
Ensure travel costs are for official company business, use a reasonable pricing method, apply the correct per diem limits, document all required trip information, obtain and retain approvals for higher actual expenses, collect required receipts, justify airfare exceptions, and limit contractor-aircraft charges to allowable airfare unless an exception applies.
Contractor management or authorized designee
Approve written justifications for use of higher actual expense amounts, administer the authority properly, and control it to prevent abuse. If higher actual expenses are used repeatedly or continuously in a particular area, seek advance approval from the contracting officer.
Contracting Officer
Approve advance use of higher actual expense authority when repetitive or continuing use is needed in a particular area, and approve higher contractor-aircraft travel costs when the contract does not specifically require such aircraft but a higher amount is justified and agreed to.
Government auditor or reviewer
Evaluate whether claimed travel costs are supported, reasonable, properly limited to applicable per diem or airfare rules, and backed by the required documentation, receipts, and approvals.
Traveling contractor personnel
Use travel arrangements consistent with company policy and the contract, provide accurate trip details and supporting documentation, and follow any approved limitations or special authorizations.
Practical Implications
Contractors should expect routine travel charges to be scrutinized against per diem ceilings and lowest-fare rules, so booking and expense policies need to align with FAR allowability standards.
Partial travel days and trips without lodging are common audit trouble spots; contractors should make sure per diem is reduced appropriately and can explain the basis for the adjustment.
If a project regularly requires premium lodging or actual-expense travel in a particular location, the contractor should consider an advance agreement or contracting officer approval before the pattern becomes repetitive.
Airfare exceptions are not automatic just because a traveler prefers a different flight; the reason for paying more must fit one of the listed exceptions and be documented at the time of travel.
Contractor-owned or chartered aircraft can be very expensive and are generally capped at comparable airfare, so contractors should confirm contract requirements or obtain approval before charging those costs.
Official Regulatory Text
(a) Costs for transportation, lodging, meals, and incidental expenses. (1) Costs incurred by contractor personnel on official company business are allowable, subject to the limitations contained in this subsection. Costs for transportation may be based on mileage rates, actual costs incurred, or on a combination thereof, provided the method used results in a reasonable charge. Costs for lodging, meals, and incidental expenses may be based on per diem, actual expenses, or a combination thereof, provided the method used results in a reasonable charge. (2) Except as provided in paragraph (a)(3) of this subsection, costs incurred for lodging, meals, and incidental expenses (as defined in the regulations cited in (a)(2)(i) through (iii) of this section) shall be considered to be reasonable and allowable only to the extent that they do not exceed on a daily basis the maximum per diem rates in effect at the time of travel as set forth in the- (i) Federal Travel Regulations, prescribed by the General Services Administration, for travel in the contiguous United States, available on a subscription basis from the- Superintendent of Documents U.S. Government Publishing Office Washington DC 20402 Stock No.922-002-00000-2; (ii) Joint Travel Regulation, Volume2, DoD Civilian Personnel, AppendixA, prescribed by the Department of Defense, for travel in Alaska, Hawaii, and outlying areas of the United States, available on a subscription basis from the- Superintendent of Documents U.S. Government Publishing Office Washington DC 20402 Stock No.908-010-00000-1; or (iii) Standardized Regulations (Government Civilians, Foreign Areas), Section 925, "Maximum Travel Per Diem Allowances for Foreign Areas," prescribed by the Department of State, for travel in areas not covered in (a)(2)(i) and (ii) of this paragraph, available on a subscription basis from the- Superintendent of Documents U.S. Government Publishing Office Washington, DC 20402 Stock No.744-008-00000-0. (3) In special or unusual situations, actual costs in excess of the above-referenced maximum per diem rates are allowable provided that such amounts do not exceed the higher amounts authorized for Federal civilian employees as permitted in the regulations referenced in (a)(2)(i), (ii), or (iii) of this section. For such higher amounts to be allowable, all of the following conditions must be met: (i) One of the conditions warranting approval of the actual expense method, as set forth in the regulations referenced in paragraphs (a)(2)(i), (ii), or (iii) of this section, must exist. (ii) A written justification for use of the higher amounts must be approved by an officer of the contractor’s organization or designee to ensure that the authority is properly administered and controlled to prevent abuse. (iii) If it becomes necessary to exercise the authority to use the higher actual expense method repetitively or on a continuing basis in a particular area, the contractor must obtain advance approval from the contracting officer. (iv) Documentation to support actual costs incurred shall be in accordance with the contractor’s established practices, subject to paragraph (a)(7) of this section, and provided that a receipt is required for each expenditure of $75.00 or more. The approved justification required by paragraph (a)(3)(ii) of this section and, if applicable, paragraph (a)(3)(iii) of this section must be retained. (4) Paragraphs (a)(2) and (3) of this section do not incorporate the regulations cited in paragraphs (a)(2)(i), (ii), and (iii) of this section in their entirety. Only the maximum per diem rates, the definitions of lodging, meals, and incidental expenses, and the regulatory coverage dealing with special or unusual situations are incorporated herein. (5) An advance agreement (see 31.109 ) with respect to compliance with paragraphs (a)(2) and (3) of this subsection may be useful and desirable. (6) The maximum per diem rates referenced in paragraph (a)(2) of this subsection generally would not constitute a reasonable daily charge- (i) When no lodging costs are incurred; and/or (ii) On partial travel days ( e.g., day of departure and return). Appropriate downward adjustments from the maximum per diem rates would normally be required under these circumstances. While these adjustments need not be calculated in accordance with the Federal Travel Regulation or Joint Travel Regulations, they must result in a reasonable charge. (7) Costs shall be allowable only if the following information is documented- (i) Date and place (city, town, or other similar designation) of the expenses; (ii) Purpose of the trip; and (iii) Name of person on trip and that person’s title or relationship to the contractor. (b) Airfare costs in excess of the lowest priced airfare available to the contractor during normal business hours are unallowable except when such accommodations require circuitous routing, require travel during unreasonable hours, excessively prolong travel, result in increased cost that would offset transportation savings, are not reasonably adequate for the physical or medical needs of the traveler, or are not reasonably available to meet mission requirements. However, in order for airfare costs in excess of the above airfare to be allowable, the applicable condition(s) set forth above must be documented and justified. (c) (1) "Cost of travel by contractor-owned, -leased, or -chartered aircraft," as used in this paragraph, includes the cost of lease, charter, operation (including personnel), maintenance, depreciation, insurance, and other related costs. (2) The costs of travel by contractor-owned, -leased, or -chartered aircraft are limited to the allowable airfare described in paragraph (b) of this section for the flight destination unless travel by such aircraft is specifically required by contract specification, term, or condition, or a higher amount is approved by the contracting officer. A higher amount may be agreed to when one or more of the circumstances for justifying higher than allowable airfare listed in paragraph (b) of this section are applicable, or when an advance agreement under paragraph (c)(3) of this section has been executed. In all cases, travel by contractor-owned, -leased, or -chartered aircraft must be fully documented and justified. For each contractor-owned, -leased, or -chartered aircraft used for any business purpose which is charged or allocated, directly or indirectly, to a Government contract, the contractor must maintain and make available manifest/logs for all flights on such company aircraft. As a minimum, the manifest/log shall indicate- (i) Date, time, and points of departure; (ii) Destination, date, and time of arrival; (iii) Name of each passenger and relationship to the contractor; (iv) Authorization for trip; and (v) Purpose of trip. (3) Where an advance agreement is proposed (see 31.109 ), consideration may be given to the following: (i) Whether scheduled commercial airlines or other suitable, less costly, travel facilities are available at reasonable times, with reasonable frequency, and serve the required destinations conveniently. (ii) Whether increased flexibility in scheduling results in time savings and more effective use of personnel that would outweigh additional travel costs. (d) Costs of contractor-owned or -leased automobiles, as used in this paragraph, include the costs of lease, operation (including personnel), maintenance, depreciation, insurance, etc. These costs are allowable, if reasonable, to the extent that the automobiles are used for company business. That portion of the cost of company-furnished automobiles that relates to personal use by employees (including transportation to and from work) is compensation for personal services and is unallowable as stated in 31.205-6 (m)(2).