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FAR 17.1 Applicability When Using No-Year Funds


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Q: Do the policies and procedures of FAR 17.1 apply to contracts/orders when using no-year appropriations?

Opinions between operations, policy, and legal counsel at our agency are vastly mixed on this question. Some argue it does not apply and point to Principles of Federal Appropriations Law, 3d ed. (GAO Redbook), Vol. I, Chapter 5, Section 8 - Multiyear Contracts, p. 5-39 which states: “An agency may engage in multiyear contracting only if it has (1) no-year funds or multiple year funds covering the entire term of the contract or (2) specific statutory authority.” [emphasis added]. Also see FAR 17.101 which states: “This subpart implements 41 U.S.C. 3903 and 10 U.S.C. 2306b and provides policy and procedures for the use of multi-year contracting.” So, if a CO is placing a multi-year contract/order under the authority of the no-year appropriation and is not relying on the specific statutory authority at 41 USC 3903 or 10 USC 2306B (the multi-year statutory authority of FASA), then does FAR 17.1 apply?

Conversely, one could argue that FAR 17.101 states that this subpart implements the multi-year authority of FASA and provides policies/procedures when using a multi-year contract (regardless of authority used). The definition of multi-year at FAR 17.103 states in part: “”Multi-year contract” means a contract for the purchase of supplies or services for more than 1, but not more than 5, program years.” The definition does not differentiate between type of authority or appropriation used. In a previous version of the FAR (prior to FAC 90-40 when the multi-year authority of FASA was promulgated and added to the FAR), the description of multi-year contracting at 17.1 was inclusive of no-year, multiyear, and 1-year appropriations. See here: https://acquisition.gov/far/90-39/html/17.html at FAR 17.102-1(a): “Multiyear contracting may be used when no-year or multiyear funds are available or, in the case of 1-year funds, when multiyear contracting is specifically authorized by statute.”

Thanks in advance for any comments on this matter.

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Guest Vern Edwards

If your no-year funds are sufficient for your entire requirement, then FAR Subpart 17.1 does not apply. Why would it? FAR Subpart 17.1 applies when the available funds are not sufficient for the entire requirement and you have Congressional permission to enter into a contract to purchase more than you currently have money for. What FAR Subpart 17.1 mainly does is establish a procedure for establishing cancellation (as opposed to termination for convenience) procedures and ceilings. If you have enough no-year money for an entire requirement, why would you bother with cancellation procedures and ceilings?

But see FAR 17.104(a). If you have no-year funds, but not enough for your entire requirement, and if you have Congressional authorization to use multi-year contracting, then you would have to follow the procedures in FAR Subpart 17.1.

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If your no-year funds are sufficient for your entire requirement, then FAR Subpart 17.1 does not apply. Why would it? FAR Subpart 17.1 applies when the available funds are not sufficient for the entire requirement and you have Congressional permission to enter into a contract to purchase more than you currently have money for. ...

But see FAR 17.104(a). If you have no-year funds, but not enough for your entire requirement, and if you have Congressional authorization to use multi-year contracting, then you would have to follow the procedures in FAR Subpart 17.1.

So your opinion is 17.1 does not apply if the contract/order is fully funded at the time of award, but that 17.1 does apply if the contract/order is not fully funded at the time of award?

FAR 17.102 - Applicability is not explicit on when the subpart applies in this situation. However, FAR 17.104 - General states: “(a) Multi-year contracting is a special contracting method to acquire known requirements in quantities and total cost not over planned requirements for up to 5 years unless otherwise authorized by statute, even though the total funds ultimately to be obligated may not be available at the time of contract award.” [emphasis added]. This seems to indicate that a multi-year contract may either be incrementally funded or fully funded at time of award. Again, there is no distinction between whether no-year, multiple-year, and 1-year appropriations are used.

What FAR Subpart 17.1 mainly does is establish a procedure for establishing cancellation (as opposed to termination for convenience) procedures and ceilings. If you have enough no-year money for an entire requirement, why would you bother with cancellation procedures and ceilings?

I agree that the main purpose of the policies and procedures of 17.1 is to establish cancellation procedures to protect the contractor in a multi-year contract funded with annual appropriations when it is unknown if future years' funds will be available, however 17.1 also requires the Government to make a formal determination that "1) The need for the supplies or services is reasonably firm and continuing over the period of the contract; and (2) A multi-year contract will serve the best interests of the United States by encouraging full and open competition or promoting economy in administration, performance, and operation of the agency’s programs." It seems wise to me to require the documentation of the determination that a multi-year contract which “locks in” pricing and other contract terms over a long period of time is preferable to a multiple year contract which gives the Government the option on a periodic basis to not continue with the contract if it’s determined that contract pricing and terms are no longer the best alternative. In my agency, the HCA approves the determination for any multiyear contract. If FAR 17.1 does not apply to multi-year contracts that are fully funded at time of award with no-year appropriations, then the above determination and approval would also not be required.

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Guest Vern Edwards

I have told you what I think. If you have sufficient no-year funds to cover your requirements for more than one year, and if you are authorized to use those funds to buy those requirements, then I don't think you have to comply with FAR Subpart 17.1. But if you want to comply with FAR Subpart 17.1 anyway, be my guest. I don't think its worth talking about at length. I mean, if you have been complying with 17.1 all along without too much trouble, why bother changing?

When you get a chance, take a look at Formation of Government Contracts, 4th ed., by Cibinic, Nash and Yukins, pages 1363 -1386, which covers multi-year contracts. It says, on page 1364, "This form of contract was devised by the DOD in the 1960s to all its contracting activities to procure supplies for several years in spite of the fact that appropriated funds were available for such supplies for only one year."

The idea is to take advantage of economies of scale by buying out-year quantities even though funds are not presently available for those quantities. It makes no sense (to me) to follow FAR Subpart 17.1 when you are fully funded for all your requirements.

Best regards.

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