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What is a considered to be a "reasonable period of time" when it comes to negotiating the reprocurement of a defaulted contract?


mcorse

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What is considered to be a "reasonable time" to re-procure a project after the original contract is placed in default?

I have a contract that was placed in default last year (the contract modification to default and deobligate the funds has not occurred for administrative reasons) and it has taken 11 months to finally negotiate the replacement contract. My accounting office is telling me that more than a “reasonable amount of time” has occurred and the unliquidated funds remaining on the original contract are no longer available and that when I receive the payment of the penal sum of the performance bond those funds are not available either.

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...a contract that was placed in default last year (the contract modification to default and deobligate the funds has not occurred for administrative reasons)...

How is it that you have a contract "placed in default" that was not modified to reflect the default? You either terminate for default or you do not.

In addition to checking with your legal counsel as to what is meant by the phrase "undue delay" as it relates to reprocurement and applicable agency financial management regulations concerning the use of expired appropriations, you should also review the Miscellaneous Receipts Statute (31 U.S.C. § 3302(B)) and also at 31 USC §§ 1502 and 1552.

The simple approach is that bad news does not get better with time. The longer it takes to reprocure, the harder it will be to pay for the reprocurement. The original appropriation will tell you when it expired for obligation. From the expiration of the appropriation, it remains available for another five (5) years before it is canceled. Relative to Terminations for Default (T4D), there is Life After Death for the appropriation provided a Bona Fide Need still exists; reprocurement is accomplished without undue delay; and substantially the same item or serive is procured. So, if you have a good justification for why it took 11 months to effect the reprocurement and the funds haven't been canceled (or otherwise spent by the Treasury), the funds ought to be available for reprocument purposes.

... when I receive the payment of the penal sum of the performance bond those funds are not available either...

How is it that you will receive the payment of the penal sum? Shouldn't the U.S. Treasury be the recipient of such funds?

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What is considered to be a "reasonable time" to re-procure a project after the original contract is placed in default?

I have a contract that was placed in default last year (the contract modification to default and deobligate the funds has not occurred for administrative reasons) and it has taken 11 months to finally negotiate the replacement contract. My accounting office is telling me that more than a “reasonable amount of time” has occurred and the unliquidated funds remaining on the original contract are no longer available and that when I receive the payment of the penal sum of the performance bond those funds are not available either.

There's no easy answer to your question. For guidance, refer to the discussion of replacement contracts on pp. 5-28 to 5-33 of The GAO Red Book.

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