Travel and Expense Management for Government Contractors

What should a government contractor look for in T&E software?

On a federal contract the cost principles decide what can be billed, and an auditor decides whether the records prove it. Five things matter.

What you need	Why	In ExpenseOS
Travel inside the federal per diem	FAR 31.205-46 allows lodging, meals and incidentals only up to the maximum per diem for the place and date; from 1 October 2026 the standard rate is $113 a night and $68 a day (GSA).	GSA's lodging and meals rates for each city and month, with per diem paid at them and the first and last days at 75%.Soon
Airfare at the lowest priced fare	FAR 31.205-46(b): airfare above the lowest priced fare available during normal business hours is unallowable unless a listed exception is documented and justified.	Flights are searched and every fare is checked against the policy before anyone books. Business or first only with a documented exception.
Unallowable costs kept off contracts	Alcohol (FAR 31.205-51) and entertainment with its directly associated costs (31.205-14) are unallowable, and FAR 31.201-6 has unallowable costs identified and excluded from any billing, claim or proposal.	Client meals, events and tickets each have their own category, and every expense is coded to its GL account and cost center, such as a contract.
Approval above per diem, in writing	FAR 31.205-46(a)(3): costs above per diem are allowable only in special situations, with a written justification approved by an officer of the company or a designee, and a receipt for each expenditure of $75 or more.	Anything above the policy goes to an approver first, with the reason, before the money moves. Approval reports show who approved what.
Records an auditor can follow	FAR 31.205-46(a)(7) allows travel costs only when the date and place, the purpose of the trip and the traveler's name and title are documented, and FAR 31.201-2(d) puts supporting records on the contractor.	Every expense keeps its receipt, its purpose and who spent it, and every policy change is previewed, confirmed and kept in a controls log.

The rules that apply to government contractors

What each rule requires, and what it means for a travel and expense policy.

Rule	What it requires	What it means for your policy
Travel costs, FAR 31.205-46(a)	Lodging, meals and incidentals are allowable only up to the maximum per diem in effect for the place and date: GSA's rates in the continental US, the Joint Travel Regulations' in Alaska, Hawaii and outlying areas, and the State Department's abroad. Per diem is generally not a reasonable daily charge when no lodging is incurred or on partial travel days.	Cap lodging and meals at the per diem for the destination, and pay less on days without a hotel.
Above per diem, FAR 31.205-46(a)(3)	In special or unusual situations, actual costs above per diem are allowable up to the higher amounts federal employees may be paid, with a written justification approved by an officer of the contractor's organization or designee and a receipt for each expenditure of $75 or more. Using it repeatedly in one area needs the contracting officer's advance approval.	Route anything above per diem to an approver with a written reason, and keep the receipts.
Airfare, FAR 31.205-46(b)	Airfare above the lowest priced fare available to the contractor during normal business hours is unallowable, unless that fare means circuitous routing, travel at unreasonable hours, excessively prolonged travel, higher total costs, accommodations unsuited to a traveler's medical needs, or missing mission requirements. The exception must be documented and justified.	Book the lowest priced fare, and document any exception.
Documentation, FAR 31.205-46(a)(7)	Travel costs are allowable only if the date and place of the expense, the purpose of the trip and the traveler's name and title or relationship to the contractor are documented.	Record the purpose and the traveler on every trip.
Alcohol, FAR 31.205-51	Costs of alcoholic beverages are unallowable.	Keep alcohol off anything billed to a contract, even with a meal.
Entertainment, FAR 31.205-14	Costs of amusement, diversions and social activities are unallowable, with their directly associated costs, such as tickets, meals, lodging, rentals, transportation and gratuities, and so are memberships in social, dining or country clubs.	Keep entertainment, and the meals and travel that go with it, off contracts.
Unallowable costs, FAR 31.201-6	Costs that are expressly unallowable, including the costs directly associated with them, are identified and excluded from any billing, claim or proposal applicable to a government contract.	Code unallowable costs to their own accounts, so they never reach a bill.
Supporting records, FAR 31.201-2(d)	The contractor is responsible for accounting for costs appropriately and keeping records, supporting documentation included, that show costs claimed were incurred, are allocable to the contract and comply with the cost principles. The contracting officer may disallow costs that aren't supported.	Keep the receipt and the reason with every expense.
Gifts to federal employees, 5 CFR 2635.204(a)	Executive branch employees may accept unsolicited gifts worth $20 or less per source per occasion, up to $50 in a calendar year from any one source, and never cash or investments such as stocks and bonds.	Track gifts per recipient, or give government employees none.
US-flag air carriers, FAR 52.247-63	Where the clause is in the contract, international air travel uses US-flag carriers when they're available, and the voucher explains why one wasn't.	Check the carrier on international trips charged to a contract.
GSA per diem rates, FY2027	From 1 October 2026: $113 a night for lodging and $68 a day for meals and incidentals in most of the continental US, with higher rates in 295 areas and meal rates from $68 to $92.	The federal rate for the destination sets the tax-free ceiling, and the limit on federally billed travel.
IRS substantiation, Treas. Reg. §1.274-5	A receipt for every lodging expense, whatever it costs, and for any other travel expense of $75 or more, with the amount, date, place and business purpose.	Keep the hotel bill for every night, and receipts for anything else at $75 and up.

2026 market benchmarks for government contractors

Published figures to measure a travel and expense policy against.

Benchmark	Figure	Source
Federal per diem, FY2027 standard	$113 lodging, $68 meals and incidentals, $181 a day	GSA
Federal meals and incidentals, FY2027	$68 to $92 a day, 75% on the first and last days	GSA
Areas with their own, higher rates	295	GSA
Washington, DC lodging, FY2027 (with Alexandria, Arlington, Fairfax, Montgomery and Prince George's)	$192 to $295 a night by month, $92 meals and incidentals	GSA per diem rates
Domestic round trip sold through travel agencies, first half of 2026	$614 on average, up 13%	ARC
Fare premium for booking 13 to 7 days out	About 26% over the cheapest window, 74 to 21 days out	CheapAir airfare study, 2024

The government contractors policy pack

On day one, a company starts from the pack for its industry. This one is for companies that bill federal contracts: travel at GSA rates and the lowest priced fare, with alcohol and entertainment kept out of contract costs. Each category starts with a limit and a rule.

Government contractors pack

Airfare$900 a round tripThe lowest priced fare available during normal business hours, 14 days ahead when you can. Business or first only with a documented exception.
LodgingMarket rateEach city's market rate this week with no margin above it, or $113 a night where there's no market data. The itemized hotel bill for every stay.
Ground transport$120 a tripRideshare or transit before a rental car, and rental cars mid-size or smaller. A receipt over $75.
Meals$68 a dayWhat you spend on nights away, up to the federal standard meals rate, with receipts at $75. Alcohol is never billed to a contract.
Client meals$75 a personEach guest, their company and the business reason, with the itemized receipt. Never billed to a government contract.
Events and ticketsNo limitNever billed to a government contract. A manager approves it first, and it's coded apart from meals.
Gifts$25 a person a yearThe most that's tax-deductible, and never to government employees.
Software$200 a monthA manager approves any charge over $500, a year's plan included. Tools that hold contract or government data need IT's OK first.
Equipment$2,000 an itemCompany property: IT approves computers, phones and tablets first and tags them.
GSA ratesSoonPer cityThe pack's choice, as the FAR expects: hotels at GSA's lodging rate for each city and month, and meals as a flat daily rate at GSA's meals rate for where you stay, 75% on the days you leave and return.
Contract travelPer contractA starting policy for each contract: the lowest priced fare up to $900 and meals at $68 a day. Above per diem only with a written justification a company officer approves, and receipts at $75.

Every line is a starting point. Admins change limits on screen or in a sentence, and ExpenseOS shows every change it would make before anything applies. From then on, every request is answered against the policy before the money moves, with the rule named, and anything out of policy goes to a person with the reason.

Questions government contractors ask

What should a government contractor look for in travel and expense software?

Travel checked against FAR 31.205-46 before anyone books: lodging and meals within the federal per diem, airfare at the lowest priced fare, and anything above per diem justified in writing with receipts. Then alcohol and entertainment kept out of contract billing, and records an auditor can follow. ExpenseOS starts government contractors from a policy pack built on those rules and answers every request before the money moves, with the rule named.

What travel costs are allowable on a federal contract?

Under FAR 31.205-46, lodging, meals and incidentals up to the maximum per diem for the place and date, and airfare up to the lowest priced fare available during normal business hours unless a listed exception is documented. From 1 October 2026 the standard GSA rate is $113 a night for lodging and $68 a day for meals and incidentals, with higher rates in 295 areas. Each trip documents the date and place, the purpose and the traveler's name and title.

Can a contractor spend more than the GSA per diem?

Only in special or unusual situations, up to the higher amounts federal employees may be paid, with a written justification approved by an officer of the company or a designee and a receipt for each expenditure of $75 or more (FAR 31.205-46(a)(3)). Using the higher amounts repeatedly in one area needs the contracting officer's advance approval.

Are alcohol and entertainment allowable on government contracts?

No. FAR 31.205-51 makes alcoholic beverages unallowable, and FAR 31.205-14 makes entertainment unallowable along with its directly associated costs, such as tickets, meals, lodging, transportation and gratuities. Under FAR 31.201-6, unallowable costs and the costs directly associated with them are identified and excluded from any billing, claim or proposal.

Can a contractor give gifts to government employees?

Federal ethics rules let executive branch employees accept unsolicited gifts worth $20 or less per occasion, up to $50 in a calendar year from any one source, and never cash (5 CFR 2635.204(a)). Many contractors give government employees nothing at all, which is where the government contractors pack starts.

Does ExpenseOS pay per diem at GSA rates?

Per diem at GSA's rates for each city and month, with the first and last days at 75%, is coming to ExpenseOS, and it's the government contractors pack's choice. Until then the pack caps meals at $68 a day, the federal standard rate, with receipts at $75, keeps a travel policy for each contract, and sends anything above the policy to an approver first, with the reason.

Start from the government contractors pack.

A short walkthrough mapped to your policy: what the pack sets up, what you would change, and how every request is answered before the money moves.

Book a demo →See pricing

Sources

Rules and figures as published on 1 November 2026. This page summarizes public rules and published figures for general information; it is not legal or tax advice.

Travel and expense management for government contractors