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mwade

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  1. Apologies for leaving that up to interpretation jdm843, I was not referring to that discussion in the Redbook, as it was not applicable to your situation. I was referring to the underlying discussion in B.5 (pp. 5-23 to 5-28). My premise is that the first question you must ask in the case of severable services is not "Is the modification in or out of scope?" but rather "What fiscal year are the underlying services chargeable to?". The answer is that, absent the authority provided by 10 U.S.C. Sec. 2410a, severable services performed in FY14 would always be chargeable to FY14, regardless of when awarded. B-259274, May 22, 1996 affirms this. As I discussed in the prior post- If you had incrementally funded these severable services, obligating FY14 funds for the later 6 months of performance, would you contemplate that the price of a change in these later 6 months would be chargebale to FY13 as a result of antecedent liability? While a change to a requirement that was a bona fide need in the year in which the contract was awarded would always be chargeable to funds of that fiscal year, severable services are not funded as a bona fide need in that fiscal year, but rather as an exception to that rule B-259274, May 22, 1996: "The purpose of 10 U.S.C. Sec. 2410a is to overcome the bona fide needs rule of this Office. By making current fiscal year budget authority available in the next fiscal year when it would otherwise not be available, section 2410a is a statutory exception to the bona fide needs rule. The bona fide needs rule provides that a fiscal year appropriation may be obligated only to meet a legitimate, or bona fide, need arising in the fiscal year for which the appropriation was made. [2] For service contracts, whether an expense was properly incurred or properly made during the period of availability depends upon whether the services are severable or nonseverable. A nonseverable contract is essentially a single undertaking that cannot be feasibly subdivided. B-240264, Feb. 7, 1994. It is considered a bona fide need of the fiscal year in which the agency entered into the contract. Consequently, agencies should record nonseverable service contracts as obligations at the time of award. Service contracts, where the services are continuing and recurring in nature, such as the vehicle maintenance contract here, are severable and are chargeable to the appropriation current at the time services are rendered. See 60 Comp.Gen. 219, 221 (1981). By definition, severable services address needs of the time the services are rendered. 71 Comp. Gen. 428, 430 (1992)." The thought exercise on the part of GAO at footnote 20 on Redbook Vol. I, Chapter 5B, Section 7 page 5-34 does not logically follow from the case it cites, B-259274, May 22, 1996. I see no compelling reason why a modification service that was not a bona fide need in the prior fiscal year but, rather, fully funded with those funds as an exception to the bona fide needs rule in accordance with 10 U.S.C. Sec. 2410a, should be exclusively chargeable to the prior fiscal year. The final sentence of this footnote is telling: "We found no case law addressing this point, however." The discussion on the latter half of page 5-36 is indicative of the fact that antecedent liability is deeply linked with the bona fide needs rule. Absent a bona fide need in the year of the appropriation, the exception provided by 10 U.S.C. Sec. 2410a is necessary just to contemplate the use of those funds to cover the change. While I believe the question of funding in-scope changes to non-severable services and supplies is clearly a settled matter, in-scope changes to a severable service made in the second fiscal year of performance might be a question which could resonably be submitted to GAO.
  2. At the risk having my own logic torn to shreds in my first post on the forum, I would propose that jdm843's situation is not necessarily so cut and dry as severable services are somewhat unique and the general argument with regard to antecedent liability may not apply, or at least not have the expected impact. There is a reasonable argument that, even if the change is in-scope, it may be properly chargeable to either year. The Red Book states that severable services are chargeable to the year in which they are occurred except where specific statutory authority exists (i.e. DFARS 232.703-3, 10 USC § 2410a and 41 U.S.C. § 253l). The cited statutory authority states that DOD may enter into a contract for severable services for a period that begins in one fiscal year and ends in the next fiscal year if the contract period does not exceed one year (10 USC § 2410a). Absent the discretionary decision to exercise this authority, severable services of the type described would be chargeable to FY14 for the portion of performance that occurs in FY14. DFARS 232.703-1 specifically authorizes contracting officers to incrementally fund firm fixed price contracts for severable services that do not exceed one year in length. As a result, one could easily envision a situation where contracting officer, for a single contract or year of performance for severable services, wholly abandons the authority provided in 10 USC § 2410a et al and funds the contract precisely according to the basic principle that severable services are chargeable to the year in which they are occurred. In this situation, I don't believe there would be any question that the modification would be chargeable to the current fiscal year. B-259274 Date: May 22, 1996 specifically held that 10 U.S.C. Sec. 2410a is an exception to the Bona Fide Needs Rule – rather than making the entirety of the period of performance of such a service (i.e. the full 12 months) a Bona Fide Need in the year in which the contract is executed, it allows full funding at the time of award as an exception to this rule. Although the following is somewhat tangential in applicability as it specifically deals with discretionary increases to cost reimbursement contracts in excess of the limitation of cost, GAO opines in 'Environmental Protection Agency--Request For Clarification of B-195732, June 11, 1980, 59 Comp, Gen. 518' that "...application of a rule designed to permit the use in appropriate circumstances of prior year funds after their period of availability has expired to preclude use of currently available funds for otherwise appropriate ends would serve no useful purpose." Logically, I do not see a significant difference in the reasoning necessary to conclude that although 10 USC § 2410a permits the use of funds chargeable to the year in which the contract was issued to be used for 12 months crossing fiscal years, it does not preclude the use of currently available funds for otherwise appropriate ends (i.e. performance of severable services, even if modified, in the year in which they are performed). The bottom line is that, even if the change is in-scope, it may be properly chargeable to either year.
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