Travel is a special category of costs that need to be reviewed during a price analysis. During this webinar, we will discuss how to analyze Travel based on the Federal Travel Regulations. Additionally, I’ll introduce the new Travel Module in SpendLogic, which makes these reports a breeze!

Transcript:

Hi, I’m Patrick Mathern, the founder of SpendLogic. I’m here today to talk to you a little bit about analyzing travel costs. Some of the things that we’re going to talk about here today, the basics of travel. We’re going to talk about something called the FTRs, the Federal Travel Regulations, as well as their OCONUS cousin.

I’m going to talk about what they cover and kind of what you get out of them and how you use those. And that’s going to fall right into, you know, what kind of analysis is needed for travel costs. And the way that we always approach these webinars in all of our training is from a standpoint of compliance with a CPSR. So, many of you that are going to be watching this, you work in companies that have a approved procurement system, and so your CPSRs is what you go through every three years to maintain that compliance with the DCMAs requirements.

Now, some of you won’t have that or maybe you’re in a company that’s growing. That’s great. Anytime that you can use these if you’re doing federal contracting or subcontracting, it’s a good idea to use these concepts in your analysis as well as your proposals, by the way. After that, I’m going to get into a demo of SpendLogic. We have a new travel module.

And I’ll talk to you a little bit about that and show you how that’s going to make your life easier. And then we’ll do a little recap. So, let’s get to it. Okay. So, first off, Federal Travel Regulations. If you’re in price analysis, if you’re in federal contracting, you’re probably going to know what this is all about. You probably have heard about it.

You probably use it quite a bit. So, you know, what is it? This is the travel and relocation policy that the federal government uses. And they apply this to their subcontracts as well. So, if you propose travel costs, they’re going to say, “Okay. We will reimburse you for those travel costs or we’ll award you travel costs up to the limits that are included in the FTRs.”

For that reason, most contractors will set their policies and procedures to mirror the Federal Travel Regulations. There are some differences a lot of times. So, you know, whereas the Federal Travel Regulations, you got to jump through a lot of hoops to run or to fly business or first class. Within the contractor, it’s probably a little bit looser, but, you know, what’s going to apply is any cost that is over the FTRs is going to be recorded as unallowable.

One caveat here. As I talk through this, and I mention the FTRs, note that for anything that’s OCONUS or outside the continental United States if you’re doing overseas travel, then this is actually handled by the Department of State.

And they also publish factors and limits on costs for their travel, so, for that OCONUS travel. So, just note that when I talk about FTRs, I’m also talking about the OCONUS travel that is discussed by the Department of State. Yeah. So, FTRs.

You can go to the GSA’s website and you can search the FTRs. This is probably what you’re doing today in your price analysis. So, as you know, you go and you determine or you set forth the year, and then it’s going to…and then you give it either a zip code or you give it a city and state. And what it’s going to do is it then comes back to you with a couple categories of cost. Okay?

So, the FTRs include, as you can see on the screen here, they include lodging and M&IE, meals and incidental expenses. Okay? So, lodging, this is pretty small on the screen, but there is, in this particular case, this is for, I think, Seattle. Or no, I’m sorry, this is Santa Barbara, California. And so there’s some seasonality.

Okay? So, depending on what month you’re traveling, your lodging costs are going to change a little bit. Okay? Your M&IE does not change. But do note that in M&IE at the very end, there’s a first and last day of travel factor. So, whereas M&IE is $76 for each of the days that you’re there, first and last day of travel is, I believe, 75% and it’s $57.

So, you know, you have to take that into consideration. The Department of State format is pretty similar to this, maybe not quite as clean and glamorous and it’s not updated with the same regularity, but it would look very much the same as this. You’d have lodging and M&IE. Note that there are no costs for hotels or airfare or…I’m sorry, not hotels.

Hotels is here. Airfare or rental cars or other expenses, maybe a personally-owned vehicle, maybe mileage or something like that. Those are all things that you would get from other sources and they have to fit within the guidance set forth by the FTRs.

So, when you’re doing an analysis, okay, and when you document an analysis, what is typically going to be looked for? Right? How am I going to get this past my, number one, internal reviewers, and then also the DCMA or even contracting officers? So, first and foremost, as always, when you are looking at costs and doing an analysis, you need to first and foremost make sure that it’s in alignment with your internal policies and procedures.

Okay? Usually, those are going to be very close to the FTRs, but again, make sure that you follow those procedures first, and then, you know, you can kind of get into some of these factors. So, the DCMA or the contracting officers, especially, they’re going to be looking to see if the trips have actually been reviewed.

Have you looked at what trips are proposed and made some sort of an assessment as to whether they’re required or not? If you’re just listing exactly what’s in the proposal with no indication that you’ve actually looked at it or thought about disallowing it for some reason, then they may question you on that. Second, have these costs been compared with the FTRs or the Department of State? Right?

So, you should show some evidence of matching this to the FTRs and doing your analysis based on that. Third, have the first and last days been adjusted for the M&IE limitations? Okay? A lot of times, this is something that people overlook. It’s easy to do. I’ve done it myself in the past. But you’ll get a question or you’ll get a finding from the reviewer based on that.

And last but not least, certainly not least is, is the appropriate documentation included here? So, usually, that’s a screenshot. And where we find this coming into play is like a screenshot of your airfare or your proposed log, or, excuse me, your rental car cost.

So, a lot of times, those things get missed. Make sure that you put them in there. This is just like every other price analysis methodology, you know, that you use. It’s all about telling the story. So, don’t just tell me what your analysis is. Give me the supporting documentation so I can put the story together for myself if I were speaking on behalf of a reviewer.

Okay? So, that’s a little bit about where we want to get to, okay, with travel. Now, I want to switch gears a little bit and quickly show you how we do this in SpendLogic. This is a new module in SpendLogic for us. We just released it here in the last couple of weeks, and it’s already getting a lot of attention. And internally, we use it and it really streamlines things.

It makes it way easier to do travel. Travel is not hard by any means, but you have to go to multiple sources and you have to, you know, take screenshots and, you know, make sure that you align everything and you’ve got to type it all into a spreadsheet. And your spreadsheet might be tweaked a little bit or whatever, maybe it changed from the last time. So, what SpendLogic does is it automates all that stuff in the background.

It also integrates the data from the FTRs or the Department of State, whichever, you know, if you’re doing CONUS or OCONUS. So, all that data is included here in SpendLogic. Now, as far as your airfare and your rental car, that’s still up to you. You can use… Some companies use their own internal documentation and their own internal costs. Other companies go to travelocity.com.

So, whatever it is that you’re doing now, SpendLogic can integrate with that. So, I’ll run you through a quick example. I’ve already completed it, so I’m just going to kind of walk through the screens and show you what the report looks like. As you can see, I’m on my Line Items tab within SpendLogic. And if I had parts and services on this purchase order, then I could add those here as well. In this case, I’ve already added a line for travel, okay?

This button is now grayed out. So, I can go right in and I can show you what’s going on in there. As I go in, the first thing that it’s going to ask me, well, the first thing it went to is the Risk Check because I already completed this, but we’ll get there. The first thing it’s going to say is, okay, Travel G&A and Profit. So, as you know, there are different ways to apply a G&A and Profit, okay? If you have a time and material contract or you have some sort of a contract where you don’t compensate for profit or you just compensate and you don’t even compensate for G&A, let’s say, so you are just reimbursing on cost, then you have the ability to do that here.

So, we have some options. What are you going to apply for G&A Markup? You can choose an industry average G&A rate, okay? And I’ll show you that in a second. You can apply a known rate. So, if your supplier says, “Our G&A rate is 14% or whatever, 15%,” you can put that in. Or the last one is travel is reimbursed down in cost.

No G&A is applied. So, you have the flexibility to do things the way that you, you know, need to do it in your company. So, I’m just going to choose the top one, an industry-average G&A rate. And that automatically puts a 13% rate in this area here in the tool. And that affects the calculation.

So, it’s going to hit it with a markup of 13% plus whatever profit we include on the next line. That 13% is a factor that we have researched and applied and you’ll see it in the final report and it’ll show you the source of that data as well. So, you have everything that you need to tell the story of where these things came from because sometimes you don’t know the G&A rate.

So, here you go. The next line is Profit. This is consistent throughout our tool. If you need some help, if you need to run the way to guidelines, you can use our weighted guidelines tool and you can put it in there. Next, we get to the actual Travel Analysis screen, okay? We’ve moved down on the left-hand side to Travel Analysis. And now you kind of get to see, you know, what is it that we’re doing?

So, the way this is organized is whatever your supplier has proposed, that is, you know, each of these line items that you’re going to put in here. So, they’ve proposed, it looks like here, a CDR for two travelers out in January. They’re going to King County and they want $3,000 for this. Okay, so, let’s walk through this a little bit.

And then, by the way, to the right is my analysis, okay? And that’s already been filled in for me. So, the first several lines are pretty, pretty simple, pretty straightforward. You just type in the purpose, give it the number of travelers and the departure and the return dates. Okay? Once you go to the Location, you’re going to get a popup box that says, “Okay. Where is your travel starting? And then where are you going?”

Okay? So, I’ve told it I’m going somewhere in the Continental United States. And when I gave it the zip code of 93105, it told me or it knew that this was Santa Barbara, California, and it put that in there automatically. In this one, my destination is also within the continental United States, 98117. So, this is King County.

So, what it’s done in the background after this is it said, “Okay. I know where those locations are. Okay? And for King County, I have that M&IE, that meals and incidental that I showed you previously, as well as the hotel expense. It’s already done the calculations for the first and last day for the M&IE. It’s brought that over.

It also knows what the limitations on hotel are. And it’s also included that seasonality. So, you don’t have to do any of that any longer. It automatically puts that in there and it adds the markup for you. So, right then and there, you can tell how this is a much simpler way of doing this rather than, you know, walking through an Excel spreadsheet and going to the FTRs and all that fun stuff.

As I continue across, it asked me what my airfare is. I told it it was 500 bucks a person. I got it from travelocity.com. And then it makes me provide that screenshot. So, again, SpendLogic is going to help you tell that story and it’s also going to make sure that you don’t forget simple things such as a screenshot or the support for this particular line item here. So, again, SpendLogic is going to help you tell that story.

It does the same thing with the rental car. I’ve told it it’s $250 Travelocity and I uploaded an example document. In your case, it would be a screenshot of some sort. As I continue to the right, I’ve got this thing that’s called Other. And by the way, I know I skipped over Trip Disallowed. I’ll go over that in just a second.

You can see my second line is disallowed. So, if I had additional analysis, okay, so, let’s say that they also proposed some personally-owned vehicle cost or some parking cost or something like that, you’re able to go in and input that and you just describe it, talk about the amount, talk about your analysis, and then do some sort of, you know, upload the documentation.

Again, this is for, like, POV, personally-owned vehicles, or airport parking or something like that. Moving down to the second line. So, you can see they’ve also proposed a sightseeing trip, okay? And this is out in May. And they want to go to Capri, which is in Italy. And you can see instead of a destination of continental United States, I chose Italy and it gives me the areas or the cities in Italy that I can choose from.

In this particular case, they proposed Capri, so I said, “Okay. That’s what I’m going to analyze.” They also want $20,000 for that. I mean, it sounds nice, right? Let’s go to Italy in May and hang out on Capri. Well, unfortunately for them, this trip is disallowed. So, when I click this button, it asks you to… What the tool is going to do is it’s going to disallow it and put an analysis value of zero in that line item.

So, it says, “Okay, you got to explain why you’re doing that.” And I wrote in there this trip was reviewed and determined to be outside the scope of this effort. And I’ll leave it there, but it’s obviously outside, right? So, what you can do is you can… It’s also going to ask you for some sort of documentation. Now, at this point, I can either cancel this disallowment and allow the trip or I can save it and disallow it.

And what that’ll do, again, is to the right, you’ll see that it’s zeroed out in the analysis position, okay? Now that I’ve filled out my analysis, I go to my Risk Check. And look, I’ve got a red flag. What is this? A lot going on on the screen there, a lot of words, but basically what it says is, “Hey, there’s a big difference between your analysis and proposed.” So, any time in SpendLogic you have a huge delta between analysis and proposed, and, by the way, we call it huge anything over 20%, it’s going to have you give it some sort of an explanation.

So, there’s a couple options. The first one is that you reviewed it and you analyzed it and it is what it is. This just basically says to the DCMA or to your internal compliance team that, “Okay. I know there’s a big difference and it’s okay. I’ve done my due diligence. There’s nothing funny.” Or you also have the ability to go in and fill in, you know, whatever you want to say with Other. Now that I continue, I go to my Report tab at the top and I can go ahead and download my report.

Very, very quickly, I will show you what that looks like. Here is the download of that particular report. You can see my proposal and analysis. And as I scroll down, it talks about that… The first thing it does is it talks about the difference in analysis because that’s something that’s going to be very noticeable. So, we put that right upfront. As I get further into it, this is taken directly from the screens that we filled out, okay?

You can see my proposed in total. But the real magic is down here in the Calculations by Line Item. It talks about, you know, your airfare and your rental car. This is stuff that you put in yourself. But then once I get into my hotel and my M&IE, it shows the calculations, it shows exactly what it’s doing. If I had multiple rates for seasonality, then it would show that. It talks about where it got this data.

It got it from the FTRs and the rates for King County in Washington. So, here is… This is really the magic of it, it tells the story. It shows all the calculations. Like in line two, trip was disallowed and it talks about why it was disallowed. And then it wraps up with your conclusion, all right? So, that’s kind of it in a nutshell, okay?

Very basic recap of what we just talked about. Analyzing your travel costs requires a very similar level of analysis as any labor and material, okay? So, if you’ve got services or labor or material, whatever it is that you’re doing, travel kind of gets pushed off to the side, it’s usually a very small portion of cost, but the more diligence you can put into telling the story, and that’s providing the required support as well as discussing your calculations and things, the better off you’re going to be because these are still important costs.

Second, using the FTRs or the Department of State website is going to make sure that you are in alignment with the DCMA’s expectations. So, if you’re not doing that today, get in the habit of it. This is a kind of a no-brainer. This is an easy one, kind of a slam dunk. So, anytime you’re analyzing travel, use those as your source data and you’ll be in good shape.

And last but not least, don’t forget, SpendLogic is going to simplify it. So, you can see based on what I just showed you how it’s much simpler to just walk through the SpendLogic screens than it is to hop back and forth to the FTRs, look it up, find your seasonality, determine if it applies, do the calculations. This is a much more straightforward way of doing it. Thank you for watching.

So, for any of you out there that watch this and you haven’t caught any of our previous webinars, you can go to spendlogic.com and then go over to the Events in Resources page and you can see all of our webinars. We’ve done quite a few of these now and it’s been a little while since we’ve done one, but we’re going to pick them back up and get a little bit more regular here. If you need software services or training on price analysis, source justification, or commercial item determinations, please reach out to us at [email protected].

And don’t forget to click Surprise… Subscribe. If you click Surprise, nothing will happen, but if you click Subscribe, then you’ll be notified whenever we have new videos available. Thanks for your time, and I look forward to seeing you all again on a future webinar. Thanks.