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MV2009

Paragraph i of FAR 52.232-22

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I  have been looking for the answer and am hoping someone here can explain the intent behind paragraph i of 52.232-22 as well as its purpose.

As written, is this paragraph saying that if the contractor incurs cost that are in excess of the amount previously allotted by the Government those costs shall be allowable to the same extent as if incurred afterwards unless the Contracting Officer issues a termination or other notice and directs that the increase is solely to cover termination or other specified expenses?  It appears the formatting is off in the clause, otherwise its not clear to me what subparagraph (i)(1) is saying.

Assuming its formatting, the Contractor could work at risk and would be reimbursed when the Government provides additional funding unless the Contracting Officer directs otherwise? If so, lets take the following examples and get your thoughts on it:

1) Funding is added to the contract by adding a new informational SLIN (PoP at the priced CLIN level remains unchanged) and Contracting Officer provides no direction outside of the effective date of modification.  Since PoP is not specified at the informational SLIN level, can the contractor bill for costs incurred prior the additional funds being allotted on contract?

2) Funding is added to the contract by adding a new separately identifiable line item with a PoP identified at the line item level.  Does the PoP specified at the line item count as guidance from the Contracting Officer?

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Why would a CO add a SLIN or a new CLIN in the way that you describe? Why do something like that? What's the purpose?

Please explain before I devote time to an answer.

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I've seen agencies do either approach when performing incremental funding modifications on service contracts...the reason being the long lines of accounting are different. (I.e the initial funding was done in FY16 and the next increment will be done in FY17).  I can provide further detail if my response is insufficient.

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Are you with the contractor or the agency?

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Since PoP is not specified at the informational SLIN level, can the contractor bill for costs incurred prior the additional funds being allotted on contract?

What you should do is ask the CO. But, I assume that unless the informational subline item says otherwise, the funds increase the original "amount allotted" and paragraph (i) should still apply, and you can invoice for costs incurred before the increase.

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Does the PoP specified at the line item count as guidance from the Contracting Officer?

This is more difficult, because the funds are associated with  a separate CLIN. They probably meant for the funds to increase the original "amount allotted," but it's unclear. Ask the CO if paragraph (i) applies.

If the reason for the new SUBCLIN and CLIN is different ACRNs for different long line account numbers, then I think the agency might be commingling funds, which is a no-no.

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I'm on the government side of the equation and interpret the info SLIN the same way you do. On separately priced SLINs, the PoP should be considered direction from the Contracting Officer and thus would make costs incurred at risk prior to the start date of the new SLIN unallowable for that line item.  

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Well, what I don't understand is why the funding mod didn't say that the (an) "amount allotted" was being increased by $XXX from $XXX to $XXX and, if there is more than one amount allotted, which one was being increased. That simple annotation would have eliminated all doubt. It's not good that the mod leaves someone in the government in doubt about what's been done and its legal effect. Mods should be clear about what they're doing. Crystal.

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Agreed.  I assume the intent behind this paragraph was to address when the additional funds would be added to the existing line item on contract or to provide clarity in case the Government was silent.  The inclusion of this paragraph in this clause is interesting as it gives the contractor the flexibility to work at risk with an option to get reimbursed.  If the contractor wants to work at risk, that should be a business decision outside of the contract and I don't understand why the Government would want to discuss handling this in the clause.  To me, it seems like the paragraph, encourages the contractor to continue working if it knew that additional funds would be allotted.

 

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MV, wouldn't the government want the contractor to continue working if the government knew more funds would be added?  Remember under an incrementally funded contract, the parties enter into the contract with the expectation that the contractor will do a specific amount of work for the government.  However, the government does not provide funds to cover all the work, but the parties anticipate that the government will add additional funds to cover the anticipated work as the contract progresses.  

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59 minutes ago, MV2009 said:

If the contractor wants to work at risk, that should be a business decision outside of the contract and I don't understand why the Government would want to discuss handling this in the clause. 

They state the agreement in the clause because, otherwise, some government person would say that the contractor worked at risk, that was a business decision, and the government won't compensate them. If the contractor stopped work to await funds, the ultimate cost to the government would likely be higher.

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Retreadfed, I agree with you the point is to fund up to the contract value but if I don't know if the funds will ever come outside of the guarantee received prior to award, its bad practice to encourage performance to continue.  Vern, you are correct that the costs associated with the stop work and restarting the work or contractor requesting termination would be more expensive. I don't know why it is hard for agencies to fully fund or provide accurate and realistic funding increments.

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