By formerfed on Thursday, October 10, 2002 - 02:24 pm:

I worked at one major cabinet level agency (civilian) and their legal staff ultimately came up with this position after several years of advising on a variety of different approaches. It may not be completely correct but it makes the greatest sense to me and is the easiest to deal with.

The background premise is Congress ultimately intends to provide an annual appropriation at some point, so CR's are just to keep things going until agreement is reached. Therefore the goal is to assume that the full amount of money will be there at some point.

First, all fixed price contracts require full funding. You cannot normally incrementally fund a fixed price contract with regular appropriations. Second, cost reimbursement contracts are funded with an appropriate amount and cites the limitation of funding clause. Third, multiyear contracts may be funded similar to cost reimbursement contracts, acknowledging the potential cancellation charges. Lastly, if the agency has sufficient funds, cost reimbursement and incrementally funded contract may be funded for the full annual amount to avoid going back and adding funds with each CR.

By cmercy on Thursday, October 10, 2002 - 03:12 pm:

FF
May I suggest that the comment about fully funding fixed price contract seems somehow untrue....and for a practical reason. Say you have an office that has a hundred fixed price contracts for services and each has an option. If you are on a CR you get only a portion of your anticipated yearly budget....as a practical matter how could you possibly fully fund all your contracts? Especially if you have only been provided ...say 1/12 of your contract expenses.

By formerfed on Thursday, October 10, 2002 - 03:40 pm:

cmercy,

This agency had sufficient money to fully fund fixed price contracts so that wasn't an issue. Employee salaries and severable type services constitute a large part of their budget so they could fund fixed price contracts with say 1/12th of their appropriation.

If someone was in a different position, the Availability of Funds clause needs added in order to exercise an option without money. But their legal position is fixed priced contracts cannot be incrementally funded.

By anonconorig on Thursday, October 10, 2002 - 05:17 pm:


Former Fed:

I know of no rule or regulation that says you cannot incrementally fund a fixed price contract. In fact I have seen it done on many occasions. Albeit, you really have to be on your toes in monitoring costs including potential termination costs should the Government have to T for C due to unavailability of additional funds.

By Vern Edwards on Friday, October 11, 2002 - 05:33 am:

Formerfed:

I agree with anonconorig -- see DFARS 232.703-1.

I know of no general rule against the incremental funding of fixed-price contracts, although some agencies may not do so as a matter of policy.

Vern

By formerfed on Friday, October 11, 2002 - 08:40 am:

Anonconorig and Vern,

The chief contract lawyer for that agency knew that the DFARS permitted incremental funding for DOD. For some reason I can't remember, he felt that Civilian agencies couldn't do it using the standard FAR clauses and option provision. I put a call into him and if I find out more, I'll post it here.

By Anon on Friday, October 11, 2002 - 08:47 am:

This is what we put out in anticipation of the )# CR situation, maybe I'm wrong but I ran it by my Comptroller who gave me the OK to issue it:

Flash 02-

Subj: Funding of contractual documents during periods of Continuing Resolution (CR) authority

With the beginning of a new fiscal year approaching, it is possible that initial budget authority will be in the form of a Continuing Resolution (CR). Under CR authority, certain limits are imposed on funding contracts and orders for services. Contracts and orders for services are incrementally funded during the period CRs are in effect. For example, if a CR is passed covering a period for less than the full fiscal year (or for less than the remaining term of an effected contract/order) the contract or order is funded only for the period the CR is in effect. As new budget authority is passed, the contract /order is then modified to fund any remaining period covered by the new budget authority. Successive CRs may result in successive modifications being issued to incrementally fund the contract/order.

By Vern Edwards on Saturday, October 12, 2002 - 04:19 am:

formerfed:

Of course you can't incrementally fund fixed-price contracts with the standard FAR clauses, because they are written for cost-reimbursement contracts! You have to write a special clause for fixed-price contracts. DOD uses a clause called "Limitation of Government's Obligation." They've used a clause with that name for more than thirty years.

It sounds to me that the "chief contract lawyer" didn't have enough contracting experience and know-how to get the job done.

By Shaun on Tuesday, October 29, 2002 - 12:32 pm:

I hate to beat a dead horse; however, I have a few questions regarding CRs? These questions are directed at what should you do scenarios?

Scenario:
In a situation, where the Government exercises an option for the continuation of services on a grounds maintenance contract, and Congress/Executive have not passed the appropriations act for your agency, and enact a CR that only provides a partial funding for this contract. The Agency invokes the availablity of funds/Limitation of Government Obligation clause due to the lack of funding.
1. Can the contractor continue to perform (I am assuming under their own risk/funds)the work entailed within the scope of the contract?
2. What if the contractor does not want to perform after funds to become available, what should the Government do?
3. Can the contractor submit invoices after the Government has invoked the availibilty of funds clause/limitation of Government obligation?

I thank all of you who respond to this posting in advance.

By Vern Edwards on Thursday, October 31, 2002 - 08:30 am:


In what sense did the continuing resolution only partially fund your contract? Do you mean that it funded only part of the contract year?

By Shaun on Thursday, October 31, 2002 - 10:37 am:

The funding available under the CR did not have enough to cover this option under this contract.