nicholasd360

Thank you to you both. I see now I introduced four widgets into my fact pattern, and then only set repair levels for three of them. That was a mistake on my part. I should have stated that I set repair categories for all four; however, I don't think that really impacts Mr. Hoffman's answer. After reading both your responses I now believe where I went wrong was that I determined the funds to be excess after I set the repair categories, rather than at physical completion (i.e. the point at which the contractor has completed the required deliveries and the Government has inspected and accepted the supplies). Going forward, as long as there is the potential for an additional level of performance I will leave the funds right where they are at even if the contractor is willing to sign a modification agreeing to deobligate them.

Thank you regardless for the well-wishes.

Hi everyone: I have lurked on this board for a while and found it to be very helpful. This is my first post, but I have been unable to obtain a clear answer (or at least one I am satisfied with) from my own research or from my peers. Please excuse me if this has been covered somewhere else, but I promise I looked before I started writing. Assume the following scenario: Issuing activity issues a contract for overhaul of 4 widgets. The contract includes 3 categories of repair (Minor, Major, and Total Rebuild). The most expensive selection (Total Rebuild) is fully funded (i.e. the contract is funded at the time of issuance for three Total Rebuilds). The contract includes the following statement: "The category of repair for each item shall be determined by the contractor and ACO or the ACO's authorized representative. IAW the attached Performance Work Specification. The contractor shall only be paid for the actual category of repair and the quantity accomplished under applicable sub-line items as authorized by the ACO. Upon completion of the contract/order, the ACO is authorized to issue a modification reflecting any downward contract funding adjustment required based on the repair effort that was authorized and performed." I required the Contractor to prepare traceability documentation and obtain the concurrence of the QAR/COR (as to the necessity for the particular repair) prior to preparing a contract modification selecting the category of repair for each widget. Once satisfied with traceability documentation I prepared a bilateral modification using FAR 42.302(a)(22) as my authority. The selected repair levels were one Total Rebuild and two Major. Since the original funding on the contract was for three Total Rebuilds, after the modification there were obligated funds left over on the contract. I determined the funds to be excess and deobligated them (because the repair levels for all widgets were selected and agreed upon and the contract had more funds on it than necessary to accomplish the work agreed upon). The authority for the funding deobligation was FAR 42.302(a)(70). After I executed the modification setting the categories of repair, and deobligated the money I determined to be excess, I was approached by the issuing activity. They requested that going forward I leave all obligated funds on each contract until final delivery. The reason they provided is that they would like the funds to be available in the event the Contractor decides they need a higher level of repair. They also stated this how it has always been done, so thus it is fine (which immediately made me all-the-more skeptical). My thoughts on the issues presented: Although I thought it may be informative here, I was unable to locate a definition for the term ?excess funds? in the FAR, DFARS, or the FMR. I am very hesitant to leave obligated funding on a contract which?at the particular moment in time I am setting the categories of repair IAW FAR 42.302(a)(22)?serves no purpose. It seems to me the issuing activity should be required to return the funding as soon as possible so that it can be used for an actual existing requirement, not left on the particular contract to be used in-the-event the funds turn out to be needed at a later time (i.e. in the unusual event the initial repair level proposed is not high enough). Notwithstanding, if the practice is not specifically prohibited by policy I am willing to leave the funds on the contract at the issuing activities request. I simply want to ensure I am not violating law or regulation by doing so. My questions to the group (or perhaps better stated, three incarnations of the same question): 1. I understand the Limitation of Cost or Funds clause bars a Contracting Officer from creating or authorizing an obligation (as in a Government obligation to provide funds to a Contractor) in excess of available funds or in advance of an appropriation. I suppose what I am asking here is is the reverse allowed (i.e. can available funds be maintained on a contract when no current obligation (again, as in a Government obligation to provide funds to a Contractor) exists)? 2. Does any regulation or policy prohibit leaving funding on a contract that is not (at the instant time) for an actual requirement, but which is left on the contract as a contingency in the event it is necessary? 3. Is the Contracting Officer free to leave these funds on the contract so that they are available in-the-event the necessary repair category changes? Any help any of you can provide would be greatly appreciated. Also, thank you for being here. I find both the home page and the discussion pages very helpful.