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A firm fixed price proposal was negotiated at a value of $800K. Funding at the time was available in the amount of $500K. The contract was awarded at a value of $800K, pursuant to DFARS 252.232-7007, the intention was to incrementally fund the contract in the amount of $500K. At the time, the organization was experiencing issues with the contract writing system, which resulted in the CLINs being inadvertently fully funded, thus over-obligating the $500K funding document by $300K. Unknowingly, the KO signed the contract. Within the same day, the error was discovered A modification was done to reduce the obligation to the $500K available. Does this constitute an ADA violation?
When is it appropriate to use the clause, FAR 52.232-18 'Availability of Funds' in solicitations? Working for the Army it has been observed that often times, especially for O&M requirements towards the end of the FY, a contracting office may issue solicitations without express assurance from a requiring activity that a certain, reasonable amount of funds are available for and will be commited to the specific requirement being solicited. In such cases Contracting Officers include the clause, FAR 52.232-18 'Availability of Funds' in the solicitation with the expectation that the requirement may not make it to contract award (could be because the requiring activity doesn't like the price, or has decided to re-prioritize it's funds elsewhere). This practice has been questioned, however, since that clause is prescribed by by FAR 32.705-1(a) for use 'in solicitations and contracts if the contract will be chargeable to funds of the new fiscal year and the contract action will be initiated before the funds are available.' And further, the Army has an agency specific restriction found at AFARS 5101.602-2(a)(1) that states, 'Except as authorized in FAR Subparts 17.1 and 32.7.., before issuing a solicitation, the contracting officer must have a written statement (or equivalent) indicating that sufficient funds are available.' One interpretation of this is that the exceptions at FAR Subparts 17.1 and 32.7 apply to multi-year and/or incrementally funded contracts, and outside those types of requirements, 52.232-18 is inappropriate and the Contracting Officer should have express funding assurance before issuing a solicitation. Another interpretation is that the FAR allows wide latitude in many cases (this being one of them), and the prescription at FAR 705-1(a) only suggests some but not all potential appropriate situations for including FAR 52.232-18 and soliciting without specific funding assurance. It has also been argued that using FAR 52.232-18 while operating under a CRA is almost always appropriate, since, essentially, all solicitations meet the presription at 32.705-1(a) and are 'subject to availablity of funds'. While investigating this issue other pertinent regulations & policy guidance has been consulted, including FAR subparts 1.6, 17.1 & 32.7 (and associated DFARS/AFARS regs), the DoD FMR (vol14 ch2), and the JAG fiscal law deskbook (ch4).