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Our agency has a long-standing policy of allowing incremental funding across fiscal years.  As an anecdote, we had this one requirement for chaplain services that began 1 Sep 16, ends 31 Aug 17, and the RA only wanted to provide 2 months of FY16 OMA funds, intending to fund the other 10 months with FY17.  Am I crazy, or doesn’t this violate the ADA by obligating the government in advance of funding?  As the KO, I pushed back, requesting full funding or a change to the base period to match available funding.  The RA was not pleased, nor was our management.  We’ve been going back and forth for months and still are, prompting the RA to provide the full funding to ensure award by 30 Sep 16.  But the fight is still on; management won’t rescind this policy, stating that we have to help the RA with their budget difficulties.  Agency regulation requires management to report even *suspected* cases of ADA violations to HQ, but they won’t.  I’ve bounced this off of other KOs for a reality check; they all agree that it is an ADA violation.  As fish don’t know they’re wet, do we not know we’re wrong?  Our legal counsel cites FAR clause 52.232-18 as authority; we disagree.  Who’s right?

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Guest Vern Edwards
20 minutes ago, Troy64 said:

Am I crazy, or doesn’t this violate the ADA by obligating the government in advance of funding? 

If your agency's "policy" (as opposed to mere practice)  is to incrementally fund such contracts, and if it is including appropriate clauses in the contracts, then you should have no worries about ADA violation.

Incremental funding is incremental obligation. The agency is obligated only up the funding allotment. Once the allotment runs out, there is no further obligation unless the agency provides additional funds. So if the ADA is all you're worried about, relax, unless your agency is not including appropriate incremental funding clauses in the contracts. FAR 52.232-18 is not an adequate clause for incremental funding and is not intended to be used for that purpose.

I'm not saying that incremental funding is an appropriate way to proceed, only that your ADA worries may be groundless.

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Guest Vern Edwards

The simplest thing to do would be to write the contract with a period of performance of 1 Sept through 31 Oct 2016 with an option to extend through 31 August 2017.

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Guest Vern Edwards

"Push back" is not very clear. It could mean anything from We just want you to do it the way that we want to do it or We want you to do it the way that we've always done it to a good argument against it on some ground or other. To say that someone "pushed back" does give us much to go on in responding to the issue.

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The push back was both of those; the RA wanted it a certain way AND it's the way they've done it in the past.  Actually, I misspoke:  I did not advocate for an option from 1 Nov 16 to 31 Aug 17 because we would wind up having this same debate each year when we exercise the options.  My first preference was/is full funding and the only other alternative a shortened base period that matched available funding and full year options.  I have to disagree with the assessment that there would be nothing to worry about as far as the ADA.  I read another discussion in which the consequences of violating the ADA were mocked ("Who's Afraid of the ADA?").  While it *MAY* be true that in most cases that all anyone might receive is slap on the wrist (Letter of Concern), the potential is still there should, for any reason, someone want to do worse.  Removal for unintentional violation, $5K in fines or 2 years in prison for willfully doing so - I'm not the gambling sort when it comes to my ability to move freely among the general population.  And for what?  So the RA can have a full five-year contract instead of four and some change? 

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Troy:

What incremental funding clauses are in the contract? If your contract doesn't include the necessary incremental funding clauses, you could have an issue. So far you've only referenced 52.232-18, Availability of Funds. (Not an incremental funding clause.)

Also, is the contract for severable services? Crossing fiscal years may trigger bona fide needs rule and/or ADA concerns.

I presume you are DoD (Air Force), since you didn't raise a concern about crossing fiscal years and use the term RA, so you should read the contract funding policy at DFARS 232.702.

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Troy,

The example you provide is possible without violating the ADA; however, you have not presented enough facts for us to determine whether or not that is the case.  Are you DoD and are you utilizing DFARS 252.232-7007 "Limitation of Government's Obligation"?  

I've seen many a complaint (and at one point been the complainer myself before I learned better) about incremental funding, but sometimes it is necessary for contracting to bear some additional workload if the circumstances warrant it.  If your customer and the budget office have "budget difficulties" it is contracting's job to provide them the various business solutions that may address their "difficulties" and then implement the most appropriate/feasible option.  In order to do that though (and for the members of the forum to advise you properly), you have to understand the issue beyond merely "budget difficulties."  Maybe you have already done so and you're dealing with an office that is just stuck in their ways, but I can't recall a situation where I didn't reach a mutually satisfactory result after I sat down with a customer, identified and understood the problem, then respectfully presented them options and reasons why it was more beneficial for everyone involved.  Try adapting your tactics from a rules based, "it's in violation of the ADA" approach (which isn't accurate as far as I can tell) to identifying their interests/concerns and providing solutions that address them.

 

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Guest Vern Edwards

From a strictly contracting point of view, incremental funding is nothing but a kind of option and no big deal. What makes incremental funding controversial is its use as a way to fund acquisitions of capital assets. http://www.gao.gov/assets/100/90240.pdf

I think Troy64 is confused about incremental funding and about the Anti-deficiency Act, and I agree with Matthew's comments.

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I and other KOs that I've consulted with.  Believe me, if I were alone in this thinking, we wouldn't even be having this conversation.  Even senior legal counsel has conceded that I have a valid concern and admitted that this issue has come up multiple times over the years (I just learned that factoid recently).  As I stated before, there is a whole lot more to this story.  I mistakenly thought I could boil this down to its basic components and get a response to what I and others think is a pretty clear cut issue.  My apologies. 

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If you are Air Force no award should be made until funds are available. (See AFFARS MP 5332.7)

There are codified rules for contracting in advance of funding. Generally, no legal liability on the part of the Government may arise until funds are made available to the Contracting Officer.

Like you said, there is more to the story …

"There's an old saying in Tennessee — I know it's in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can't get fooled again."

Hope you get it sorted out.

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Guest Vern Edwards
7 hours ago, Troy64 said:

By the way, incremental funding is not the issue - obligating the government in advance of appropriations is.

Well, obligating the government is a bad thing to do. But you started out saying that your agency was incrementally funding the contract. Incremental funding is not obligating the government is advance of appropriations. It is obligating the government incrementally.

What you have failed to do is clearly explain to us how your agency's approach constitutes obligating the government in advance of appropriations.

Awarding a contract for 12 months of performance, but conditioning part of the government's obligation on further funding in the future, with no obligation beyond currently allotted funding, is not obligating the government in advance of performance.

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  • 1 month later...

The base period of the contract (to be awarded in September) is 12 months, of which only 2 months were to be funded with FY16 funds, the other 10 with FY17 (Not yet appropriated in September).  That is obligating the government for 12 months with only two months of available funding and 10 months of funds not yet appropriated - how is that *NOT* obligating the government in advance of appropriations?  The agency's argument is that 52.232-18 (Not DFARS 252.232-7007, yes I know about it, Matthew) allows us to terminate the contract in the unlikely event that funds are not appropriated prior to expiration of the funded portion.  I completely disagree with that assertion, however, just for argument's sake, let's say that's true.  The hole in that logic is that action is required to prevent an ADA violation.  If, for whatever reason, administration of that contract slips through the cracks, and they do, then it absolutely is an ADA violation on the first day of performance when no funding is available (it's actually a violation upon release of the contract).  Yes, 252.232-7007 requires the contractor to notify the KO when funding is about to run out, but I've yet to see one do so.  The surest way to avoid this situation is to not write a contract for services beyond available funding to begin with.  We do not create a situation in which, through inaction, an ADA violation would/could occur.  We're not even supposed to release a solicitation unless it is either funded or we have a statement that funds are available, per AFARS 5132.702 (yes, I work for the Army).  In FY16, no one can certify that FY17 O&M funds are available.  If we can't even solicit, how can we award?

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Troy64:

The government is only obligated to the extent the contract terms and conditions provide. Properly executed, the government would not be obligated on the 10 months at time of award.

I personally do not think 52.232-18 is being used properly, but the facts are sketchy. If 52.232-18 is used as you say: what written notification is issued to the contractor informing them to perform on the fully funded two-month period, but not the ten-month period?

…No legal liability on the part of the Government for any payment may arise until funds are made available to the Contracting Officer for this contract and until the Contractor receives notice of such availability, to be confirmed in writing by the Contracting Officer. (FAR 52.232-18)

In the end, it seems you are mixing a few issues. One being your understanding of contracts conditioned upon the availibility of funds (incremental funding and availibility of funds clauses) as they relate to ADA. Another being the risks of ADA as a consequence of inadequate contract administration (creating an ADA violation through inaction). The latter is supported by the first. Lastly, your understanding or at least characterization of AFARS 5132.702 is incomplete. Re-read it and see if it provides the flexibility you need to accomplish the task. I think you will find what you need.

*Would a contract conditioned upon 52.232-18 need to be terminated if the condition was not met? If yes, would 52.232-18 be the termination authority?

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