Disallowance of expenditures
Government-financed international air travel must use U.S.-flag carriers unless a properly documented justification for using a foreign-flag carrier is attached to the voucher, or the expenditure will be disallowed.
Overview
FAR 47.403-3 outlines the requirements for disallowing expenditures related to U.S. Government-financed international air transportation when foreign-flag air carriers are used instead of U.S.-flag carriers. The regulation enforces the Fly America Act by requiring agencies to disallow such expenditures unless a proper justification is provided. Contractors must attach a memorandum to the voucher explaining why U.S.-flag air carriers were not used. If a traveler uses a foreign-flag carrier without justification or takes an indirect route, the amount disallowed is calculated based on the loss of revenue to U.S.-flag carriers, as detailed in a specific Comptroller General decision. The regulation also clarifies that using a statement similar to the one in FAR clause 52.247-63 satisfies the justification requirement.
Key Rules
- Justification for Foreign-Flag Carrier Use
- Agencies must disallow expenditures for foreign-flag air carrier use unless a memorandum justifying the necessity is attached to the voucher.
- Calculation of Disallowed Amounts
- If U.S.-flag carriers are not used without proper justification, the disallowed amount is based on the loss of revenue to U.S.-flag carriers, following a prescribed formula.
- Acceptable Justification Statement
- Contractors can satisfy the justification requirement by using a statement similar to that in FAR 52.247-63.
Responsibilities
- Contracting Officers: Ensure vouchers for foreign-flag air carrier use include proper justification or disallow the expenditure; apply the revenue loss formula when necessary.
- Contractors: Provide adequate justification for using foreign-flag carriers and attach it to the voucher; use the required statement format.
- Agencies: Oversee compliance and enforce disallowance of unsubstantiated expenditures.
Practical Implications
- This section enforces the Fly America Act, promoting the use of U.S.-flag air carriers for government-financed travel.
- Contractors must be diligent in documenting and justifying any use of foreign-flag carriers to avoid disallowed costs.
- Failure to comply can result in financial penalties and increased scrutiny during audits.