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AF is terminating a program and disbanding is program office. AF is transferring the program to DHS US Customs Border & Protection (CBP) effective the new FY. The program has three active contracts in place funded by the AF. Future funding will come from DHS CBP. The contracts have periods of performance that extend beyond the current FY. The principal contract includes two options for operational support and line items for equipment acquisition. The AF would like to transfer (essentially novation) these three contracts to DHS CBP. DHS CBP has agreed to accept responsibility for the contracts. AF does not want any involvement with these three contracts and wishes DHS CBP to completely administer them, including both PCO and ACO functions. Should actual transfer be precluded for any reason(s) an alternate approach proposed would be for the AF to delegate PCO and ACO functions under the authority of FAR 42.202 Assignment of Contract Administration and informed by FAR 42.3 Contract Administration Office. Clearly, the option of terminating the AF contracts and issuing new DHS CBP contract, competitively or noncompetitively, would require a significant amount of time and effort. There can be no break in program operations, as these involve national security.

What is the best approach given the above situation? Is it legal and in compliance with any regulation or policy to transfer (in essence novation) a contract(s) from one federal agency to another (non DoD)? What steps would be required? Could, for example, the AF contracting office change the issuing office (itself) to DHS CBP via an SF30? (A new contract number could even be assigned as discussed in DFARS 204.7001 Policy c1 “continued contract”.) Is it legal and in compliance with any regulation or policy to assign contract administration functions for a contract(s) from one federal agency to another (non DoD)? Are there other options? Are there any examples, including contract number(s), of any actual contract actions accomplishing what is required above?

This is an actual situation where answers are critically needed for operational reasons.

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Guest Vern Edwards

It seems to me that this question has been asked before and with respect to the very program you describe. You simply must work with counsel to decide how this can be done. It seems to me that you will need some kind of interagency agreement with CBP, and you may need the consent of the contractor. I believe that the legal and administrative issues are complex beyond my knowledge. Having said that, I don't doubt that there is a way to do what you want. The question is how to go about it.

The contracting officials and lawyers of both agencies need to sit down and figure out what they need to know and how they are going to get the answers. One question is whether such a change would constitute some kind of novation and thus require the consent of the contractor. Another question is what contract terms will need to be altered, e.g., from DFARS and AFFARS to the DHS Supplement. The government personnel must then talk things over with the contractor. Switching from one agency to another, when you consider the cultural shift, could have significant implications for the contractor, and probably not for the better.

As for assigning contract admin to CBP, I think you can do that, but that would not eliminate "any involvement" by the USAF, which you state is one of USAF's goals?

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I have on occasion over the years been involved at both ends of contract transfers, albeit they were all transfers within and between various elements of DOD. This needn’t be complicated or difficult, particularly when all three parties involved (four, if there’s a separate contract administration office, such as DCMA) are supportive. Just go ahead and issue a modification on an SF-30 transferring purchasing office cognizance to DHS CBP. It will be best to have the new DHS CBP contract number in advance so the new number can be included in the transferring modification. Don’t change any of the terms or conditions until DHS CBP has assumed cognizance, since many of the clauses are required by law, and some are tied to the funding, and so will need to remain applicable to the work completed with such funding. If DHS CBP needs to have different terms added, they should add them if and when they add new funds to the contract.

And speaking of funding, one issue that may need special attention is contract payment. I had no problems with it in my cases, since the payment office (DFAS) didn’t change, but you may not be so fortunate, and you’ll need to make sure that appropriate instructions are provided to the contractor and to the payment offices involved so all know who is going to make payment for which invoices.

Finally, don’t forget to address government property (both CAP and GFP), if applicable, and/or other similar issues.

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Also, don't forget to address the issue of any contract debts that may have arisen from actions that took place before the transfer occurred such as defective pricing. I'm sure the AF would be interested in getting any money it has spent back if it could.

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I've done this twice before within GSA where we and the other office had different payment systems. We were lucky enough to be able to do it at the option year of the contract so had a clean break point. In each case the old office did a bilateral mod that was effective on the last day of the current option period transferring administration of the contract. The new contract office executed and funded the option period. We revised Section G, Contract Administration, to include language that all matters involving payment for costs incurred were to be handled by the contracting office that had cognizance during that period of performance. That way no funds changed hands between the two offices, and the old contracting office was effectively able to do a contract close-out on their portion after they got the last invoice and provided a copy to the new office. (Luckily neither one was Cost Plus)

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