Oregon State University

Exhibit 1

Grant, Contract & Gift Accounting Manual
Section 000: Introductory Material - Exhibits

[Federal Register: November 13, 1998 (Volume 63, Number 219)]
[Rules and Regulations]              
[Page 63417-63421]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13no98-18]

[[Page 63417]]

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GENERAL SERVICES ADMINISTRATION

41 CFR Parts 301-3 and 301-10

[FTR Amendment 74--1998 Edition]
RIN 3090-AG73

Federal Travel Regulation; Use of Commercial Transportation, Fly America Act

AGENCY: Office of Governmentwide Policy (OGP), GSA.

ACTION: Final rule.

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SUMMARY: This final rule amends the Federal Travel Regulation (FTR) provisions pertaining to use of U.S. flag air carriers under the provisions of 49 U.S.C. 40118, commonly referred to as the Fly America Act. This final rule reduces the connecting time for use of U.S. flag air carrier service at an overseas interchange point; requires that airline tickets issued under a code share agreement identify the U.S. flag air carrier's designator code and flight number; removes references to "gateway airports;"' and implements a new method for calculation of the employee's liability for unauthorized transportation on a foreign air carrier.

EFFECTIVE DATE: January 1, 1999.

FOR FURTHER INFORMATION CONTACT: Technical information: Umeki G. Thorne, telephone (202) 501-1538. FTR ``plain language'' format: Internet GSA, ftrtravel.chat@gsa.gov.

SUPPLEMENTARY INFORMATION: Subsection 127 (d) of the General Accounting Office Act of 1996 (Pub. L. 104-316) amended 49 U.S.C. 40118 to require that the Administrator of General Services Administration (GSA) issue regulations under which agencies may permit payment for transportation on a foreign air carrier when such transportation is determined necessary. This final rule implements the Administrator's authority under the statute, identifying when U.S. flag air carrier service is deemed available (for transportation between a point in the United States and a point outside the United States) or reasonably available (for transportation between two points outside the United States). This final rule is written in the "plain language" style of regulation writing as a continuation of GSA's effort to make the FTR easier to understand and use. This final rule removes Part 301-3 of 41 CFR Chapter 301 and adds the provisions implementing the Fly America Act to Part 301-10. This final rule also modifies the proposed rule with request for comments published in the Federal Register on April 7, 1998 (63 FR 16936).

During the 30-day comment period provided by the proposed rule, GSA received comments from four Federal agencies, three U.S. flag air carriers, an air carrier association, and three non-Government entities. GSA carefully reviewed each comment. Changes based on comments received have been grouped by section of the proposed rule and subject area and are discussed in the following general analysis.

Section 301-10.134

What Is U.S. Flag Air Carrier Service?

U.S. Air Carrier Certificate

Section 301-10.134 of the proposed rule generally defines ``U.S. flag air carrier service'' as service on an air carrier holding a certificate under 49 U.S.C. 41102. One Federal agency requested that GSA clarify that although U.S. flag air carriers must hold a certificate, the transportation does not have to be authorized by such certificate, if it is authorized by rule or exemption. GSA has revised Sec. 301-10.134 accordingly.

Code Share Agreements

Ticket Stock

A comment from a non-Government entity supported the language in Sec. 301-10.134 of the proposed rule stating that service under a code share arrangement, when the entire ticket is issued by a U.S. flag air carrier, is deemed U.S. flag air carrier service. In contrast, three Federal agencies, two U.S. flag air carriers and the air carrier association objected to this requirement as too restrictive. Two of the Federal agencies and the air carrier association stated that many developing countries have neither U.S. flag air carrier facilities nor personnel. Accordingly, in such cases, obtaining a ticket on U.S. flag air carrier ticket stock is not practicable and could preclude travelers from benefiting from U.S. flag air carrier service through code share arrangements. The air carrier association also pointed out that the essential feature on an airline ticket is the air carrier designator code and flight number rather than the ticket stock. One U.S. flag air carrier stated that imposing a U.S. air carrier ticket stock requirement could, in some cases, divert traffic to foreign air carriers in those locations where no U.S. flag air carrier facilities or personnel are located. In addition, GSA notes that as airlines and travelers more frequently utilize electronic ticketing, a U.S. air carrier ticket stock requirement appears outdated. As a result of these comments, the language of the proposed rule has been revised. The final rule states that the ticket (or documentation for an electronic ticket) must identify the U.S. flag air carrier's designator code and flight number. The requirement that the ticket be issued on U.S. flag air carrier ticket stock has been removed.

Foreign Air Carrier Code Share Service as U.S. Flag Air Carrier Service

One U.S. flag air carrier objected, except under limited circumstances, to the determination that service by a foreign air carrier under a code share arrangement is service by a U.S. flag air carrier. Specifically, the U.S. flag air carrier stated that code share service by a foreign air carrier is merely a form of interline service and therefore should not be considered service by a U.S. flag air carrier unless the U.S. flag air carrier bears the financial risk of empty seats on the aircraft. In contrast, the air carrier association commented that code share arrangements between U.S. flag air carriers and foreign air carriers are consistent with the Fly America Act because they promote the intent of the Fly America Act by improving the economic and competitive position of U.S. flag air carriers.

The final rule provides that U.S. flag air carrier service includes service provided by a foreign air carrier under a code share agreement when the ticket, or documentation in the case of an electronic ticket, identifies the U.S. flag air carrier's designator code and flight number. It is GSA's position that codesharing between U.S. flag air carriers and foreign air carriers increases opportunities for U.S. flag air carriers to expand into new international markets, which in turn promotes revenues to U.S. flag air carriers, thereby furthering the goals of the Fly America Act. Additionally, the U.S. flag air carrier whose designator code and flight number appears on the ticket, or documentation in the case of an electronic ticket, takes responsibility for the passenger(s) traveling under the U.S. flag air carrier's designator code and flight number, supporting the determination that the code share service is properly deemed service by the U.S. flag air carrier.

Section 301-10.135

When Must I Travel Using U.S. Flag Air Carrier Service?

Exception for Transportation Under Bilateral and Multilateral Agreements

Section 301-10.135 of the proposed rule states that U.S. flag air carrier service must be used for all travel funded by the U.S. Government, unless one of the various exceptions applies. One Federal agency commented that Sec. 301-10.135(b), which addresses bilateral or multilateral agreements, could be misleading because the criteria from the Fly America Act for exchanging fly-national privileges under such agreements are to be applied by the negotiators at the time the agreement is made, not by the traveler. That agency also stated that as of the date of the proposed rule there were no bilateral or multilateral agreements in effect that met the requirements of the Fly America Act. Based on this comment, GSA has clarified Sec. 301-10.135(b). Under the final rule, a traveler is not required to use U.S. flag air carrier service if transportation by a foreign air carrier is provided under a bilateral or multilateral air transportation agreement which the Department of Transportation has determined meets the conditions specified in the Fly America Act. To verify existence of any qualifying bilateral or multilateral agreements, agencies should contact the U.S. Department of Transportation, Office of the Secretary, Office of International Aviation, Room X-40, Washington, DC 20590.

Direct Service by Foreign Air Carrier

A Federal agency commented on Sec. 301-10.135(d) of the proposed rule, which states that when no U.S. flag air carrier provides service on a particular leg of the route, foreign air carrier service may be used, but only to or from the nearest interchange point on a usually traveled route to connect with U.S. flag air carrier service. The agency requested that GSA eliminate the words, ``but only to or from the nearest interchange point on a usually traveled route'' in order to save travel time by enabling travelers to use direct service on a foreign air carrier. GSA is not persuaded that this change is warranted. While the use of a foreign air carrier may be more convenient when the foreign air carrier has nonstop or direct service, GSA does not consider a shorter travel time in these circumstances to be sufficient to consider U.S. flag air carrier service unavailable or use of a foreign air carrier necessary. Therefore, GSA did not adopt the revision proposed in the comment. Of course, if the traveler meets an exception provided in the regulation, such as those provided in Sec. 301-10.136, then the traveler may use a foreign air carrier.

Section 301-10.136

What Exceptions to the Fly America Act Requirements Apply When I Travel Between the United States and Another Country?

            Removal of the terms "gateway airport in the United States" and "gateway airport abroad."  The air carrier association requested clarification for the removal of terms "gateway airport in the United States'' and "gateway airport abroad." The association stated that it does not oppose the deletion of the terms but requested that GSA clarify any policy change intended by the elimination of these terms. GSA does not intend to make a significant substantive policy change through the removal of the terms "gateway airport abroad" and "gateway airport in the United States." However, as there are a myriad of potential travel situations, there may be instances where the removal of the terms result in a different outcome than that which would have resulted under the former rule.

Connecting Time

Section Sec. 301-10.136 (b)(3) of the proposed rule reduced the connecting time from 6 hours or more to 4 hours or more at an overseas interchange point for purposes of determining whether U.S. flag air carrier service is unavailable. One Federal agency and one non-Government entity commented in support of this policy change. In contrast, two U.S. flag air carriers and the air carrier association opposed this policy change. The U.S. flag air carriers and the air carrier association stated that this change would unnecessarily risk the loss of business by U.S. airlines as it is likely to result in U.S. flag air carrier service being deemed unavailable in more instances, thereby diverting more travel to foreign air carriers.

GSA has considered these comments, but the change included in the proposed rule reducing the connecting time from 6 hours or more to 4 hours or more remains in this final rule. GSA included a number of considerations in its review of the issue. When the Fly America Act was first implemented in the 1970's, the 6 hour or more connecting time rule was established as a reasonable standard for connecting service through an overseas interchange point. Since that time, U.S. flag air carriers have significantly expanded their service in international markets and increased their service at international interchange points so that passengers can connect in a shorter time frame. Expanded use of code share arrangements has also helped reduce connecting times at overseas interchange points.

In reviewing this issue, GSA's analysis of airline schedule data showed that the airlines' average layover or connecting time is 2\1/2\ hours. GSA's analysis also showed that there would not be a large number of flights impacted by this change. Therefore, reducing the connecting time from 6 hours to 4 hours should not result in a significant loss of revenue to U.S. flag air carriers. Under the final rule, U.S. flag air carrier service is deemed unavailable when connecting service at an overseas interchange point would require a connecting time of 4 hours or more. This exception applies only when no U.S. flag air carrier service is available within the 4 hour time period, including U.S. flag air carrier service under a code share agreement.

Section 301-10.138

In What Circumstances Is Foreign Air Carrier Service Deemed a Matter of Necessity?

Excess Foreign Currency

Section (b)(3) of this section of the proposed rule stated that "(b) Necessity includes, but is not limited to, the following circumstances when: (3) Your program or activity may only be financed, under statute, using excess foreign currency and all U.S. flag air carriers refuse to accept foreign currencies." As no excess foreign currency situations exist at the present time (and have not existed since 1992), GSA has determined that the provision included at Sec. 301-10.138(b)(3) of the proposed rule is unnecessary. Therefore Sec. 301-10.138(b)(3) of the proposed rule is not included in this final rule. Should excess foreign currency issues arise in the future, GSA will determine at that time whether a provision on the subject should be included in the regulation.

Safety Exceptions

The air carrier association commented on Sec. 301-10.138(b)(1)(2), stating that although the association did not object to the safety exceptions included in the proposed rule, GSA should inform travelers that security exceptions (due to a terrorist threat on a U.S. flag air carrier) should only be invoked after consultation with the Office of Civil Aviation Security of the Federal Aviation Administration (FAA). In the event of a threat to a U.S. flag air carrier, the FAA and the Department of State will issue a travel advisory notice to the general public. Agencies should take any such travel advisory notices into account when determining whether foreign air carrier service is deemed a necessity as provided in Sec. 301-10.138. Written approval is required for a determination that foreign air carrier service is a necessity based on a security threat to a U.S. flag air carrier and must be supported by a travel advisory notice. The language of this final rule includes this requirement. With respect to threats against Government employees or other travelers, which formulate the basis for a determination that foreign air carrier service is necessary (as contrasted with threats to a U.S. flag air carrier), evidence of such threats must accompany the agency's approval of the use of foreign air carrier service.

Section 301-10.144

What Is My Liability if I Improperly Use a Foreign Air Carrier?

Splitting the Cost of Air Travel Between Federal and Non-Federal Funds

One non-Government entity commented that the provision included in this section of the proposed rule for computing liability may encourage splitting the cost of a trip between non-Federal and Federal funds to permit the use of a foreign air carrier for convenience or lower rates. The comment stated that the entity's practice has been to deny payment of the total cost of the air travel (both foreign and U.S.) if a foreign air carrier was improperly used for any part of the trip.

Under Sec. 301-3.6(c)(4) of the current FTR, employee liability is computed based on a formula used to determine the amount of lost revenue to the U.S. flag air carrier(s) rather than denial of the entire cost of air travel. The new policy for employee liability, which denies reimbursement for use of any foreign air carrier for any part of the trip for which it was not authorized, is intended to simplify the process for computing employee liability. 49 U.S.C. 40118 applies only to transportation that is financed with U.S. Government funds and will not result in improperly splitting the costs of a trip between Federal and non-Federal funds. GSA's intent is to ensure that agencies establish internal procedures for disallowance of reimbursement to travelers who use foreign air carrier service that was not authorized or otherwise permitted under this regulation. Therefore this section has been modified to include a provision requiring agencies to establish such internal procedures.

Ticket Purchases Made Through a Government Contractor Travel Agency

One Federal agency stated that agencies which are not using charge cards for purchase of airline tickets should be allowed to make payment directly to the Travel Management Center, and then seek reimbursement from the employee when an employee has improperly used a foreign air carrier. The issue of whether a Federal agency must pay a travel management center/travel agency contractor when there is improper use of a foreign air carrier is a matter of contract administration. GSA notes that many Government contracts for travel management center/travel agency services include a provision requiring that the contractor abide by the terms of the Fly America Act in issuing tickets for Federal travelers and bear the financial burden for failure to do so.  Accordingly, GSA determined it unnecessary to revise Sec. 301-10.144 on this issue.

GSA has determined that this final rule is not a significant regulatory action for the purposes of Executive Order 12866 of September 30, 1993. This final rule is not required to be published in the Federal Register for notice and comment; therefore, the Regulatory Flexibility Act does not apply. The Paperwork Reduction Act does not apply because the proposed revisions do not impose recordkeeping or information collection requirements, or the collection of information from offerors, contractors, or members of the public which require the approval of the Office of Management and Budget under 44 U.S.C. 501 et seq. This final rule is also exempt from Congressional review prescribed under 5 U.S.C. 801 since it relates solely to agency management and personnel.

List of Subjects in 41 CFR Parts 301-3 and 301-10

Government employees, Travel and transportation expenses.  For the reasons set out in the preamble, 41 CFR Chapter 301 is amended as follows.

PART 301-3--USE OF COMMERCIAL TRANSPORTATION

  1. Under the authority of 5 U.S.C. 5707, part 301-3 is removed.
    PART 301-10--TRANSPORTATION EXPENSES
  1. The authority citation for 41 CFR part 301-10 continues to read as follows:
    Authority: 5 U.S.C. 5707; 40 U.S.C. 486(c); 49 U.S.C. 40118.
  1. An undesignated center heading and sections 301-10.131 through 301-10.144 are added to read as follows:

Use of United States Flag Air Carriers

Sec.
<!--[if !supportLists]--> 301-10.131    What does United States mean?
<!--[if !supportLists]--> 301-10.132    Who is required to use a U.S. flag air carrier?
<!--[if !supportLists]--> 301-10.133    What is a U.S. flag air carrier?
<!--[if !supportLists]--> 301-10.134    What is U.S. flag air carrier service?
<!--[if !supportLists]--> 301-10.135    When must I travel using U.S. flag air carrier service?
<!--[if !supportLists]--> 301-10.136    What exceptions to the Fly America Act requirements apply when I travel between the United States and another country?
<!--[if !supportLists]--> 301-10.137    What exceptions to the Fly America Act requirements apply when I travel solely outside the United States, and a U.S. flag air carrier provides service between my origin and destination?
<!--[if !supportLists]--> 301-10.138    In what circumstances is foreign air carrier service deemed a matter of necessity?
<!--[if !supportLists]--> 301-10.139    May I travel by a foreign air carrier if the cost of my ticket is less than traveling by a U.S. flag air carrier?
<!--[if !supportLists]--> 301-10.140    May I use a foreign air carrier if the service is preferred by or more convenient for my agency or me?
<!--[if !supportLists]--> 301-10.141    Must I provide any special certification or documents if I use a foreign air carrier?
<!--[if !supportLists]--> 301-10.142    What must the certification include?
<!--[if !supportLists]--> 301-10.143    What is my liability if I improperly use a foreign air carrier?

Use of United States Flag Air Carriers

Sec. 301-10.131

What does United States mean?

For purposes of the use of United States flag air carriers, United States means the 50 states, the District of Columbia, and the territories and possessions of the United States (49 U.S.C. 40102).

Sec. 301-10.132

Who is required to use a U.S. flag air carrier?

Anyone whose air travel is financed by U.S. Government funds, except as provided in Sec. 301-10.135, Sec. 301-10.136, and Sec. 301-10.137.

Sec. 301-10.133

What is a U.S. flag air carrier?

An air carrier which holds a certificate under 49 U.S.C. 41102 but does not include a foreign air carrier operating under a permit.

Sec. 301-10.134

What is U.S. flag air carrier service?

U.S. flag air carrier service is service provided on an air carrier which holds a certificate under 49 U.S.C. 41102 and which service is authorized either by the carrier's certificate or by exemption or regulation. U.S. flag air carrier service also includes service provided under a code share agreement with a foreign air carrier in accordance with Title 14, Code of Federal Regulations when the ticket, or documentation for an electronic ticket, identifies the U.S. flag air carrier's designator code and flight number.

Sec. 301-10.135

When must I travel using U.S. flag air carrier service?

You are required by 49 U.S.C. 40118, commonly referred to as the ``Fly America Act,'' to use U.S. flag air carrier service for all air travel funded by the U.S. Government, except as provided in Sec. 301-10.136 and Sec. 301-10.137 or when one of the following exceptions applies:

  1. Use of a foreign air carrier is determined to be a matter of necessity in accordance with Sec. 301-10.138; or
  2. The transportation is provided under a bilateral or multilateral air transportation agreement to which the United States Government and the government of a foreign country are parties, and which the Department of Transportation has determined meets the requirements of the Fly America Act; or
  3. You are an officer or employee of the Department of State, United States Information Agency, United States International Development Cooperation Agency, or the Arms Control Disarmament Agency, and your travel is paid with funds appropriated to one of these agencies, and your travel is between two places outside the United States; or
  4. No U.S. flag air carrier provides service on a particular leg of the route, in which case foreign air carrier service may be used, but only to or from the nearest interchange point on a usually traveled route to connect with U.S. flag air carrier service; or
  5. A U.S. flag air carrier involuntarily reroutes your travel on a foreign air carrier; or
  6. Service on a foreign air carrier would be three hours or less, and use of the U.S. flag air carrier would at least double your en route travel time; or
  7. When the costs of transportation are reimbursed in full by a third party, such as a foreign government, international agency, or other organization.

Sec. 301-10.136

What exceptions to the Fly America Act requirements apply when I travel between the United States and another country?

The exceptions are:

  1. If a U.S. flag air carrier offers nonstop or direct service (no aircraft change) from your origin to your destination, you must use the U.S. flag air carrier service unless such use would extend your travel time, including delay at origin, by 24 hours or more.
  2. If a U.S. flag air carrier does not offer nonstop or direct service (no aircraft change) between your origin and your destination, you must use a U.S. flag air carrier on every portion of the route where it provides service unless, when compared to using a foreign air carrier, such use would:
    1. Increase the number of aircraft changes you must make outside of the U.S. by 2 or more; or
    2. Extend your travel time by at least 6 hours or more; or
    3. Require a connecting time of 4 hours or more at an overseas interchange point.

Sec. 301-10.137

What exceptions to the Fly America Act requirements apply when I travel solely outside the United States, and a U.S. flag air carrier provides service between my origin and my destination?

You must always use a U.S. flag carrier for such travel, unless, when compared to using a foreign air carrier, such use would:

  1. Increase the number of aircraft changes you must make en route by 2 or more; or
  2. Extend your travel time by 6 hours or more; or
  3. Require a connecting time of 4 hours or more at an overseas interchange point.

Sec. 301-10.138

In what circumstances is foreign air carrier service deemed a matter of necessity?

  1. Foreign air carrier service is deemed a necessity when service by a U.S. flag air carrier is available, but
    1. Cannot provide the air transportation needed; or
    2. Will not accomplish the agency's mission.
  2. Necessity includes, but is not limited to, the following circumstances:
    1. When the agency determines that use of a foreign air carrier is necessary for medical reasons, including use of foreign air carrier service to reduce the number of connections and possible delays in the transportation of persons in need of medical treatment; or
    2. When use of a foreign air carrier is required to avoid an unreasonable risk to your safety and is approved by your agency (e.g., terrorist threats). Written approval of the use of foreign air carrier service based on an unreasonable risk to your safety must be approved by your agency on a case by case basis. An agency determination and approval of use of a foreign air carrier based on a threat against a U.S. flag air carrier must be supported by a travel advisory notice issued by the Federal Aviation Administration and the Department of State. An agency determination and approval of use of a foreign air carrier based on a threat against Government employees or other travelers must be supported by evidence of the threat(s) that form the basis of the determination and approval; or
    3. When you can not purchase a ticket in your authorized class of service on a U.S. flag air carrier, and a seat is available in your authorized class of service on a foreign air carrier.

Sec. 301-10.139

May I travel by a foreign air carrier if the cost of my ticket is less than traveling by a U.S. flag air carrier?

No. Foreign air carrier service may not be used solely based on the cost of your ticket.

Sec. 301-10.140

May I use a foreign air carrier if the service is preferred by or more convenient for my agency or me?

No. You must use U.S. flag air carrier service, unless you meet one of the exceptions in Sec. 301-10.135, Sec. 301-10.136, or Sec. 301-10.137 or unless foreign air carrier service is deemed a matter of necessity under Sec. 301-10.138.

Sec. 301-10.141

Must I provide any special certification or documents if I use a foreign air carrier?

Yes, you must provide a certification, as required in Sec. 301-10.143 and any other documents required by your agency. Your agency cannot pay your foreign air carrier fare if you do not provide the required certification.

Sec. 301-10.142

What must the certification include?

The certification must include:

  1. Your name;
  2. The dates that you traveled;
  3. The origin and the destination of your travel;
  4. A detailed itinerary of your travel, name of the air carrier and flight number for each leg of the trip; and
  5. A statement explaining why you met one of the exceptions in Sec. 301-10.135, Sec. 301-10.136, or Sec. 301-10.137 or a copy of your agency's written approval that foreign air carrier service was deemed a matter of necessity in accordance with Sec. 301-10.138.

Sec. 301-10.143

What is my liability if I improperly use a foreign air carrier?

You will not be reimbursed for any transportation cost for which you improperly use foreign air carrier service. If you are authorized by your agency to use U.S. flag air carrier service for your entire trip, and you improperly use a foreign air carrier for any part of or the entire trip (i.e., when not permitted under this regulation), your transportation cost on the foreign air carrier will not be payable by your agency. If your agency authorizes you to use U.S. flag air carrier service for part of your trip and foreign air carrier service for another part of your trip, and you improperly use a foreign air carrier (i.e., when neither authorized to do so nor otherwise permitted under this regulation), your agency will pay the transportation cost on the foreign air carrier for only the portion(s) of the trip for which you were authorized to use foreign air carrier service. The agency must establish internal procedures for denying reimbursement to travelers when use of a foreign air carrier was neither authorized nor otherwise permitted under this regulation.

Dated: November 5, 1998.
David J. Barram,
Administrator of General Services.
[FR Doc. 98-30344 Filed 11-12-98; 8:45 am]
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