Key takeaways
- Vergo enforces contract-level coding at submission so every reimbursement arrives ready to post, with employees handling everything by text message and approval workflows that route by GL account, by amount, or by project.
- Federal Acquisition Regulation (FAR) Part 31 and Cost Accounting Standards (CAS) require aerospace companies to allocate costs to the specific contracts that benefit from them.
- Engineer travel reimbursements submitted without contract numbers, cost elements, and performance periods create audit exposure, distort contract profitability, and delay month-end close.
- Multi-contract field assignments and remote test sites make it difficult to reconstruct accurate contract coding after the fact.
- Structured reimbursement workflows that enforce contract-level coding at submission eliminate back-office guesswork and ensure compliance.
Where should you go next?
- Learn more about Vergo Employee Reimbursements
- Learn more about Vergo Expense Management
- Learn more about Vergo AP Invoice Automation
Why aerospace and defense companies require contract-level coding
Aerospace and defense companies operate under a cost-accounting structure that most commercial businesses never encounter. When a structural engineer flies to a launch facility in Florida or a propulsion test site in the Mojave, that travel expense is a billable or allocable charge tied to a specific government or commercial contract. Federal Acquisition Regulation (FAR) Part 31 and Cost Accounting Standards (CAS) require that costs be allocated to the contracts that actually benefit from them. The disconnect happens at the field level: an engineer books a flight, submits a receipt, and marks it simply as "travel." By the time that expense reaches the accounting team, the contract number, cost element, and period of performance have to be reverse-engineered — if they can be determined at all.
What makes contract coding difficult for engineer travel
Several structural factors make this problem persistent across aerospace programs and test operations. Engineers routinely split time across contracts within a single trip, requiring proportional allocation that generic receipts cannot capture. Work occurs at government facilities, test ranges, and launch complexes where finance staff have no visibility into who is where and why. Standard expense platforms have no concept of a contract number, CLIN, or cost element code — they are built for commercial overhead recovery, not project-level billing. Engineers batch-submit receipts weeks after travel, making accurate contract recall unreliable. A misclassified travel expense that lands in overhead instead of a direct contract can violate CAS 402 and trigger an audit finding.
The consequences of miscoded engineer travel
When travel reimbursements lack proper contract-level coding, the consequences extend well beyond inconvenience. DCAA auditors specifically test whether direct costs are consistently treated as direct, and miscoded travel on government contracts is a leading cause of questioned costs and disallowances. A contract that absorbs travel costs it shouldn't bear will show false losses, corrupting earned value calculations and EAC reporting. Without contract-level coding, invoices to clients either miss recoverable costs or bill costs that aren't legitimately chargeable — both create dispute risk. Controllers and cost accountants spend extra days chasing engineers for contract coding before they can close the period and produce accurate cost-to-date and EAC reports. Travel costs improperly pooled into general and administrative or overhead inflate indirect rates, affecting pricing on future bids and fee negotiations.
A practical example
Before structured coding workflows, a project controller receives 40 unformatted receipts after month-end and manually assigns contract codes based on memory and calendar checks. The controller emails the engineer who traveled to three different test sites in one week, asking which contract paid for which leg of the trip. The engineer responds two days later with incomplete recollection. The controller makes a best guess, posts the expense, and hopes the next DCAA audit doesn't flag it. After implementing contract-level coding at submission, every reimbursement arrives pre-coded and pre-approved, ready to post. The controller closes the period days earlier with a clean audit trail, and the contracts reflect accurate direct costs from the start.
How Vergo handles this
Vergo enforces contract-level coding at the point of submission. Employees submit receipts by text or from their phone, and Vergo prompts for the required coding fields — contract, charge number, cost element — before the request is complete, with no portal login. Every coding decision shows why it was chosen based on your accounting structure and history, so a reviewer confirms in seconds instead of re-coding by hand. Approval workflows route by GL account, by amount, or by project, or you can skip approval flows entirely and let policy flags catch only what breaks a rule. Once transactions clear, they sync into your accounting or ERP software with full contract-level detail. Card spend, employee reimbursements, and AP invoices run through one coding model — same coding, same review, one reconciliation — and payment stays on the rails you already use.
Related questions
Frequently Asked Questions
What FAR requirements govern travel cost allocation on government contracts?
FAR Part 31.205-46 covers allowable travel costs on government contracts, requiring that costs be reasonable, allocable to the benefiting contract, and consistently treated. CAS 402 prohibits treating the same type of cost as both direct and indirect. Misallocation of engineer travel is one of the most frequently cited findings in DCAA floor checks and incurred cost audits.
How does missing contract-level coding affect cost-to-date reporting on an aerospace program?
Estimates at completion and revenue recognition depend on accurate cost-to-date figures by contract. When travel reimbursements sit in a holding account or are coded to the wrong contract, costs-to-date are understated or misstated, skewing percentage-of-completion calculations. This produces incorrect revenue recognition and can cause material misstatements in interim financial reporting to lenders and customers.
Why do standard T&E tools like SAP Concur or Expensify fall short for aerospace and defense companies?
General-purpose expense platforms are designed for overhead recovery, not contract cost allocation. They lack native fields for contract numbers, CLINs, cost element codes, or performance periods. Accounting teams are left mapping generic categories to contract budgets manually — a time-intensive process that introduces error and breaks the audit trail required under FAR and CAS compliance frameworks.
Can reimbursement platforms integrate with aerospace ERPs to automate contract cost posting?
Yes. Vergo integrates with the ERPs aerospace and defense companies run, including Deltek Costpoint, SAP, Oracle, IFS and Epicor. Contract-coded reimbursements post with the charge number, contract and cost element attached, without manual rekeying, removing the reconciliation step that delays program close.
How should an engineer allocate travel costs when a single trip covers multiple contracts?
Travel costs that benefit multiple contracts must be allocated using a rational, defensible basis — typically the proportion of time spent on each contract during the trip, documented contemporaneously. Engineers should record daily contract activity logs during multi-contract travel. Allocation based on memory weeks later is rarely defensible under DCAA scrutiny and creates audit risk.
What internal controls should a controller implement for engineer travel reimbursements?
Effective controls include requiring contract-number selection before submission approval, enforcing receipt attachment thresholds, setting maximum submission windows after travel (typically 14–30 days), and requiring supervisor sign-off confirming the contract alignment. A system that enforces these rules at submission — rather than during post-hoc review — reduces controller burden and strengthens the compliance audit trail significantly.
