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Confusion over FAR 52.232-22


JFQ

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We received a contract with a "Limitation of Funds" clause stating that the max amount allowable on the contract for all of the CLINS is $500K. However the contract, which is a CPFF contract is for almost twice the amount and the fee itself is much less than the difference.

Can anyone please help explain how 52.232-22 works? does it mean $500K from one source?

I would appreciate any guidance.

Thank you

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While I have not seen your contract, and thus don't know the full details, it sounds like your contract is incrementally funded. That is, the Government has not yet provided all the funds to make up the total value of the ordered goods or services. This is quite common and you have to notify the Government when you reach 75% of available funding and request additional funds.

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Thanks Loul,

That does make more sense. My confusion was that they cited to 52.232-22 "Limitation of Funds" but then said under that clause, the total amount available and allocated is $500K which is estimated to cover the cost through the Period of Performance.

Looking up FAR 32.706, it states that 52.232-22 is required to be put in for solicitations and contracts if an incrementally funded cost-reimbursement contract is contemplated. So it seems you are right that it is incrementally funded. It is just confusing to me that they would use language saying the $500K is sufficient to cover cost through the end of the POP and there is no mention of a 70 or 75% notification requirement.

Thanks again.

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JFQ,

Echoing Retreadfed, you need to read the clause thoroughly and you must comply with its requirements. In particular, pay close attention to the notification requirements. Make sure you know HOW you are going to comply with the notification requirements.

DCAA considers the ability to comply with the notification requirements a fundamental attribute of an adequate accounting system.

Hope this helps.

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