Must a C.O. assure that funds are available prior to issuing a C.O.'s final decision or reaching a settlement agreement with a contractor under a CDA action, when both of which would make the contract amount exceed available funds?

For example, a contractor submits a claim to the C.O. C.O. writes a final decision. Decision says Government owes contractor a sum certain amount. The sum certain amount when added to the contract amount, exceeds the available funds of the contract. Must C.O. obtain funds available certification prior to writing a binding final decision that would cause an increase beyond available funds?

By Anonymous on Monday, January 14, 2002 - 01:47 pm:

Yes

By joel hoffman on Monday, January 14, 2002 - 02:32 pm:

I would maintain that a negotiated settlement agreement, in lieu of a Contracting Officer's Decision, could be made contingent upon the availability of funding - in fact we have done it this way for years. Agreemeents, properly negotiated and drafted, do not bind the KO/Government/Contractor in the event that the funds don't materialize. They aren't admissible SP? - I'm TDY)in litigation.

As to whether issuance of a Contracting Officer's Decision requires funds, I'd tend to agree with anonymous 01:47PM, but an attorney ought to confirm this. happy sails! joel

By Kennedy How on Tuesday, January 15, 2002 - 11:59 am:

Joel,

I guess my question here would be if there was no money to be had in the immediate instance, but the KO knows the Government is wrong, yet, he wouldn't be able to say-so, as there is no money.

The alternative is to issue no decision (which then would be a "Deemed Denial", which we also hate doing), or issue a written denial knowing the Government will get killed in court.

In the series of claims I was intimately involved with, we had no money to pay off the claims (though we were told we could ask for it, and we "should" get it). We never really had to pursue this, since the KO Final Decisions were denial of the claims, though one ended up being partially our fault, which the evidence came out during discovery, etc.

Kennedy

By joel hoffman on Tuesday, January 15, 2002 - 10:08 pm:

Kennedy, I don't know the answer regarding whether issuing a CO Decision, admitting some merit beyond funds available, is an ADA violation. According to a Navy Anti-Deficiency Act Homepage, at http://www.navsea.navy.mil/sea01p/memos/adahome.html , you may have a violation. The thing to do is request more funds, immediately. happy sails! joel

By Anonymous on Wednesday, January 16, 2002 - 10:47 am:

Using Kennedy's scenario (Government owes contractor, but no money to be had) could (or should) you write a C.O.'s decision with language making it contingent upon availability of funds?

By joel hoffman on Wednesday, January 16, 2002 - 12:57 pm:

Using the logic from the above website, I'd say no. A KO Decision is an official contract action, pursuant to the claims provisions in the contract. You can't admit liability but say that liability is conditioned upon obtaining additional funds. happy sails! joel

By Kennedy How on Friday, January 18, 2002 - 12:13 pm:

I'd agree that if the KO admits liability, you'd most likely have gone around begging for the money to cover it. The Army has a fund set up for these sorts of contingencies, which is where we got the funding to settle the claim. On the other hand, I don't really know just how much a fund like that can cover; for example, could the Navy's fund cover a loss in the A-12 claim, without a special appropriation of some sort.

I would hope there isn't an agency out there that would deny a valid claim solely because there isn't money to cover it, on the off-chance they might luck out and win, thereby avoiding a payout.

Kennedy

By joel hoffman on Friday, January 18, 2002 - 12:32 pm:

Kennedy, I agree with you, in concept. However, I don't know the answer, other than what I read. happy sails! joel

By formerfed on Friday, January 18, 2002 - 01:06 pm:

Kennedy,

You're entirely right. The Army, and just about every agency, has funds for this purpose. There are many other potential liabilities arising out of conducting agency business besides contract claims. In fact, annual disclosing of potential payment for claims is a line item in every agency financial reoprt. Somewhere in the big scheme of things, money for payment is available, excluding something of the magnitude of A-12. The Justice Deaprtment also has a judgement fund to pay for cases where the government loses in court. This ensures timely payment. Agencies are suposed to reimburse Justice in a prompt manner, but I often wonder how slowly that occurs.

By joel hoffman on Friday, January 18, 2002 - 04:26 pm:

Formerfed, if you are referring to the "Judgement Fund", it isn't available to settle claims found with partial merit by the KO. That fund is only available to administratively handle obligations dictated by litigation judgements, which are eventually reimbursed from the Agency's funds. happy sails! joel

By joel hoffman on Friday, January 18, 2002 - 04:41 pm:

formerfed, your post already confirms what I told you. happy sails! joel