Appropriations Remain Available in Terms of Time?

[goergens]

I am currently doing work with a federal agency client and a question has arisen as to whether or not an annual appropriation remains available in terms of time under a specific scenario. A firm-fixed-price contract was awarded for severable services for a period of one year and fully funded at time of award. During that time, there was a government-caused delay that required the performance to extend beyond the 12 months originally determined to be the PoP. As such, when work resumed, the total period of performance funded by the obligated appropriation was now 15 months for this severable service, which exceeds the 12 month limit imposed by 41 U.S.C. sect. 253l. Although the total amount of services rendered and charged to the government did not exceed 12 months - i.e., they still got 12 months of service at the FFP per month - the performance of said services lasted 15 months. Obviously the intent of the agency at award was to comply with the limits of 41 U.S.C. sect. 253l, but circumstances played out differently. Which is the appropriate course of action in terms of time availability given the cause of the extension: modify the contract to extend the PoP at no increase in price and use the original funding/appropriation, or modify the contract to extend the PoP and fund the remaining three months with current year money?

[Guest Vern Edwards]

The answer will depend on the explanation for a "delay" that caused annually funded severable services to be extended beyond the original 12 months. That kind of delay does not normally occur under a contract for severable services. I cannot answer your question until you clearly explain that what happened and why it caused severable services to be extended.

[goergens]

The delay was due to the government waiting for replacement/new equipment to be delivered from another organization within the government. The contractor could not proceed with work until that equipment was delivered. 

[Guest Vern Edwards]

Did the agency issue a stop-work order?

[goergens]

Yes, they did, and it ended just shy of the 90 day mark.

[Guest Vern Edwards]

Okay. First, the GAO Red Book does not address this specific situation, and I could not find any GAO appropriations decision that addressed it. I may have missed something, so you might want to double check.

The issue, of course, is whether the use of the obligated funds for a period beyond the original 12 months would violate the bona fide needs rule. Here is my thinking, but I cannot back it up with an authoritative ruling by GAO: Since the contract was for 12 months, and since the agency issued a stop-work order under the clause at FAR 52.242-15, Stop-Work Order (AUG 1989), for no more than 90 days, the stop-work order was within the scope of the contract. Accordingly, the modification to adjust the performance period is within scope. Thus, the funds, which were obligated for 12 months of severable services, are still available for the balance of the 12 months. I think that is a good argument, but the only way to know for sure would be to either find a GAO decision that supports that view, which I do not think exists, or to ask GAO for an opinion.

The risk of not getting a GAO opinion is violation of the Anti-deficiency Act. Alternatively, the agency could deobligate the balance of the original obligation and obligate current year funds. Or terminate the contract for convenience and award a new contract. Personally, I'd prefer to use the obligated but unexpended balance.

I would not say what you did:

1 hour ago, goergens said:

When work resumed, the total period of performance funded by the obligated appropriation was now 15 months for this severable service, which exceeds the 12 month limit imposed by 41 U.S.C. sect. 253l. Although the total amount of services rendered and charged to the government did not exceed 12 months - i.e., they still got 12 months of service at the FFP per month - the performance of said services lasted 15 months.

That's confusing. Performance did not last 15 months. The contract remained in effect after issuance of the stop-work order, but there was no performance during that period. The agency will get no more than 12 months of performance. It's important to understand that and to make it clear.

It's an interesting question, and I wish I had a firm answer, but I don't.

[goergens]

Right - they only got 12 months of service but the contract period lasted longer than 12 months. I have looked all over GAO decisions and the Red Book for an answer on whether the "as long as the contract doesn't exceed one year" means one calendar year max, or one year of service (which was the bona fide need). 

Thanks for your help anyway.