Comparing Travel Cost Rules Under FAR 31.205-46 for Federal Bids
When sending specialty trade crews, project superintendents, or estimators out of town for federal projects, travel expenses can quickly create contract disputes if calculated incorrectly. Under FAR 31.205-46, travel expenses incurred on official company business are allowable only within specific regulatory ceilings and criteria. Understanding how the Federal Acquisition Regulation compares per diem methods against actual expense allowances, vehicle reimbursements, and documentation mandates is essential when building your estimate for general conditions job costs.
Standard Per Diem Limits vs. Actual Expense Method
Under FAR 31.205-46, costs for lodging, meals, and incidental expenses can be based on per diem, actual expenses, or a combination of both, provided the method results in a reasonable charge. However, these costs are generally 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 established by three distinct federal authorities:
- Contiguous United States: Governed by the Federal Travel Regulations prescribed by the General Services Administration.
- Alaska, Hawaii, and Outlying Areas: Governed by the Joint Travel Regulation, Volume 2, DoD Civilian Personnel, Appendix A, prescribed by the Department of Defense.
- Foreign Areas: Governed by the Standardized Regulations (Government Civilians, Foreign Areas), Section 925, prescribed by the Department of State.
In contrast, contractors facing special or unusual situations may bill actual expenses exceeding standard per diem ceilings. To make higher amounts allowable, the situation must meet the conditions warranting actual expense treatment under the applicable travel regulations, must not exceed the higher amounts authorized for federal civilian employees, and requires a written justification approved by an officer of the contractor's organization or designee. When actual costs are used, a receipt is required for each expenditure of $75.00 or more. Furthermore, if higher actual expenses become necessary repetitively or on a continuing basis in a given area, the contractor must obtain advance approval from the contracting officer.
Full Travel Days vs. Partial Days and Lodging-Free Trips
Estimators cannot simply carry the maximum daily per diem rate across every travel day on a job schedule. Maximum per diem rates generally do not represent a reasonable daily charge when no lodging costs are incurred, or on partial travel days such as the day of departure and return.
Under these conditions, downward adjustments from maximum per diem allowances are normally required. While contractors are not required to calculate these downward adjustments strictly in accordance with the Federal Travel Regulations or Joint Travel Regulations, the adjusted figures must ultimately result in a reasonable charge to the federal contract.
Commercial Airfare vs. Contractor-Owned Aircraft
When crew or management transport involves air travel, the regulations set strict limits based on the travel method selected:
- Commercial Airfare: Airfare costs in excess of the lowest priced airfare available to the contractor during normal business hours are unallowable. Exceptions apply only when standard accommodations require circuitous routing, require travel during unreasonable hours, excessively prolong travel, result in increased costs that offset savings, do not meet physical or medical needs, or are not available to meet mission requirements. Any higher fare must be documented and justified.
- Contractor-Owned, Leased, or Chartered Aircraft: Costs include lease, charter, operation (including personnel), maintenance, depreciation, and insurance. These costs are capped at the allowable lowest commercial airfare for the destination unless aircraft travel is specifically required by contract terms or approved by the contracting officer. Contractors must keep detailed flight manifests showing departure dates, times, and points; arrival destinations, dates, and times; passenger names and relationships to the company; trip authorization; and trip purpose.
Business Travel vs. Commuting in Company Vehicles
For ground transportation, contractors may base charges on mileage rates, actual costs, or a combination of both. Costs for contractor-owned or leased automobilesāincluding lease, operation, personnel, maintenance, depreciation, and insuranceāare allowable to the extent the vehicles are used for official company business. To avoid unallowable charges, estimators should review common mistakes when pricing mileage and truck costs into bids.
A critical distinction exists between jobsite transport and personal commuting. The portion of company-furnished automobile costs related to personal use by employees, including driving to and from work, represents compensation for personal services and is unallowable under FAR 31.205-6(m)(2).
Mandatory Travel Documentation Rules
Regardless of whether travel is charged through mileage, per diem, or actual receipts, expenses are allowable only if specific details are documented. Contractors must record:
- The date and place (city, town, or similar designation) of the expenses.
- The purpose of the trip.
- The name of the individual on the trip, including their title or relationship to the contractor.
To reduce disputes over cost allowability, contractors and contracting officers may also utilize an advance agreement under FAR 31.109 to establish agreed-upon travel procedures before performance begins.
Sources
Acquisition.GOV: FAR 31.205-46 Travel costs
Published October 31, 2026. No affiliate links on this page. Facts come from the sources linked above; check them for updates.