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We have an effort for Research and Development. The period of performance is one (1) three year period. CLIN 0001 (1 Lot) is for NRE. CLIN 0002 (8 Each) is for EDMs. The minimum quantity on the IDIQ is CLIN 0001 (1 lot) and CLIN 0002 (8 ea). The rest of the CLINs on the IDIQ have no minimum guarantee and will be issued if/when needed.

My question is this...We have R&D funding for this effort so the plan is to incrementally fund CLINs 0001 & 0002. However, if the minimum quantity is the 1 lot and 8 each and delivery of these are at the end of the 3 year PoP can we run into a problem if we don't get funding on out years and can't fund the remainder of this effort despite having issued a delivery order for the minimum quantity (CLIN 0001 and CLIN 0002).

What I'm basically saying is are we doing something or in violation of anything if we issue a delivery order for the minimum quantity (0001 & 0002) with the intention of incrementally funding it with R&D funds assuming we get marks or don't get the funding anticipated?

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Your duty under an IDIQ contract is to ORDER the minimum.  Whether you fully fund or incrementally fund an order is irrelevant, the fact is that you ORDER'ed the minimum.  I assume you will be using the Limitation of Cost or Limitation of Funds clause (FAR 52.232-20 or -21), or the clause at DFARS 252.232-7007, Limitation of Government’s Obligation.

Who can predict the future?  If you are unable to provide the next funding allotment, then you can deal with that problem at that time.

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9 hours ago, KingWink said:

We have R&D funding for this effort so the plan is to incrementally fund CLINs 0001 & 0002

If you are with DoD, you are required to fund the minimum quantity when the contract is issued.  In other words, issuing a contract with the minimum quantity creates a liability that needs to be recorded.

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15 hours ago, Retreadfed said:

If you are with DoD, you are required to fund the minimum quantity when the contract is issued.  In other words, issuing a contract with the minimum quantity creates a liability that needs to be recorded.

Retreadfed,

I couldn't find a requirement in the DFARS to fund the minimum when an indefinite-delivery contract is issued.  I looked in 216.5, Indefinite-Delivery Contracts, and 232.7, Contract Funding.

It is true that the agency must record the obligation of the minimum, but that can be done internally on the books of the agency without obligating funds on a task or delivery order.  DoD 7000.14-R, Financial Management Regulation, Vol. 3, Ch. 8, section 080604 requires recording of the minimum as an obligation upon execution of the parent indefinite-delivery contract, but does not require immediate issuance of a task or delivery order funding the minimum.  According to the FMR, additional recordings need only occur once cumulative task or delivery order funding amounts exceed the already-obligated (and already-recorded) minimum amount.

Recording need not be the same as funding.

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3 hours ago, ji20874 said:

Recording need not be the same as funding.

In what way(s)? Within context, it seems recording is tantamount to funding and vice versa, but not necessarily issuing an order. (based on the rules regarding over- or underrecording)

I guess what I am really questioning is if you can have recording without funding or funding without recording. I should revist the definitions of Fiscal Law terms like appropriation, commitment, obligation, and recording. (appropriation is probably the real 'funding')

Reminds me of this myth-busting post:

 

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Jamaal, 

In order to understand correct principles, think back to the old days when things were done manually -- in the old days, a contracting officer created an obligation by signing a contract (with a funds commitment document in the file) -- then, days or weeks later, the agency comptroller recorded the obligation on the books of the agency.  If there was a dispute in the meantime, or if the comptroller never did the recording, the contractor still had a valid contract in hand.  Payment could not happen until the obligation was recorded.

Contracting officers obligate.  Comptrollers record.

Obligation happens in a contract.  Funding commonly happens in a contract, but funding (and obligating beyond the minimum) for an indefinite-delivery contract happens at the order level.  Recording happens on the books of the agency.

Absolutely, these are different.  These are not the same.

What has happened over time is that agencies have adopted automated systems, and the contracting officer's automated system for creating contracts (creating obligations) feed into the comptroller's system for recording obligations.  So when the contracting officer pushes the button in his or her system, both obligating and recording occur simultaneously.

But these are still different actions.

Nowadays, people erringly think of these as the same thing -- and they erringly think that the contracting officer does the recording.  They don't understand correct principles.  In forums like this one, we have professional dialogue to sharpen our learning.

Yes, you can have funding without recording.  If a contracting officer signed a normal (non-ID) contract last week but the recording doesn't happen until next week, there will be a few weeks between funding and recording.

Yes, you can have recording without funding.  If a contracting officer signed an indefinite-delivery contract last week without a simultaneous task or delivery order (no funding), the comptroller will have recorded the minimum obligation on the books of the agency.  Then, next week, the contracting officer might start issuing task or delivery orders.  There will be a few weeks between recording and funding.

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@ji20874 thank you ... I see what you mean. You're correct; they are different actions.

I should have directed my thoughts to contract funding pursuant to FAR Subpart 32.7:

"No officer or employee of the Government may create or authorize an obligation in excess of the funds available, or in advance of appropriations (Anti-Deficiency Act, 31 U.S.C. 1341), unless otherwise authorized by law. Before executing any contract, the contracting officer shall --

(a) Obtain written assurance from responsible fiscal authority that adequate funds are available or

(b) Expressly condition the contract upon availability of funds in accordance with 32.703-2."

Funding can described as the appropriation (or continuing resolution) and administrative commitment of an appropriation (FAR 32.702(a)). These happen in advance of an obligation (e.g., IDIQ minimum guarantee). Contract funding can be fully funded, partially (incrementally) funded, or subject to the availability of funds. After an obligation is funded and created it must be recorded within a timeframe.

Requirements to fund obligations, by issuing an order, when awarding IDIQ contracts in the Air Force are based on a supplement stating:

"obligation shall be recorded based upon the issuance of a delivery or task order for the cost/price of the minimum quantity specified...Recording and subsequently reporting the required obligation using anything other than a delivery or task order will result in the action not being reported in FPDS-NG. (See DoD 7000.14-R, Volume 3, Chapter 8, paragraph 080604)."

Appropriation – Legal basis for withdrawing funds from the treasury and may contain specific provisions for specific expenditures.

Commitment – an administrative reservation of funds from a responsible fiscal authority in anticipation of future obligation.

Obligation – act legally binding the Government to make payment.

 

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ji, you are correct and I used a bad choice of words.  What I intended to convey is that the agency must have funds available to cover the minimum when an IDIQ contract is awarded and must record that minimum amount as an obligation (liability) at the time the contract is awarded.

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4 hours ago, ji20874 said:

Obligation happens in a contract.  Funding commonly happens in a contract, but funding (and obligating beyond the minimum) for an indefinite-delivery contract happens at the order level.  Recording happens on the books of the agency.

Absolutely, these are different.  These are not the same.

What do you mean by "funding"?

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43 minutes ago, Don Mansfield said:

What do you mean by "funding"?

I don't have a personal definition, but you can figure it out.  An indefinite-delivery contract creates an obligation, and causes a recording, but does not provide funds.  An order under that contract will provide funds (and may also create a further obligation and cause another recording).

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2 hours ago, ji20874 said:

I don't have a personal definition, but you can figure it out.  An indefinite-delivery contract creates an obligation, and causes a recording, but does not provide funds.  An order under that contract will provide funds (and may also create a further obligation and cause another recording).

What do you mean by "provide funds"?

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I know what I would mean if I used those words, but I don't know what you mean.

Chapter 7 of the GAO Redbook discusses the creation of an obligation of appropriated funds, recording of an obligation of appropriated funds, but does not cover what you believe to be distinct in the context of contracting--"providing funds" or "funding".

So, what do you mean by "providing funds"?

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Well, you might not be able to figure it out, but the rest of our readers can.

But to help you, Don, think of the context.  Both an indefinite-delivery contract and an order going beyond the minimum create obligations and cause recordings.  And yet there is still a difference between an indefinite-delivery contract and an order.  When you figure that out, you will know what I mean in this context by providing funds.  

I am pretending like your question is honest intellectual inquiry.  If you object to what I wrote, why don’t you offer something constructive for our readers?

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1 hour ago, ji20874 said:

When you figure that out, you will know what I mean in this context by providing funds.

Nope. Still no idea what you mean.

Does anybody know what ji means? According to him, if you are reading this thread you know.

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I presume the context is:

On 6/1/2019 at 7:55 AM, ji20874 said:

I couldn't find a requirement in the DFARS to fund the minimum when an indefinite-delivery contract is issued.

Recording need not be the same as funding.

In my mind, the Antideficiency Act is the universal requirement to fund obligations. The act prohibits federal agencies from obligations or expending federal funds in advance or in excess of an appropriation.

I don't think a universal definition of fund, funds, or funding has been used in this thread. Seems some are suggesting that funding occurs when an order with line of accounting is issued to a contractor. Some seem to think funding can come later - seemingly distinguishing between recording and funding, but not addressing ADA. I believe funding occurs much earlier during appropriation and commitment. No need for a mystery or guessing game though...everyone can explain what they mean.

I haven't found a universal usage in FAR and its supplements neither. For example, what does 'obligate funds' mean here:

5316.504 Indefinite-Quantity Contracts

(1) See MP5316.504 for the requirement to obligate funds when awarding indefinite-delivery indefinite-quantity (IDIQ) contracts.

However,  FAR Subpart 32.7, Contract Funding, which I cited earlier offers some insight:

10 hours ago, Jamaal Valentine said:

No officer or employee of the Government may create or authorize an obligation in excess of the funds available, or in advance of appropriations (Anti-Deficiency Act, 31 U.S.C. 1341), unless otherwise authorized by law. Before executing any contract, the contracting officer shall --

(a) Obtain written assurance from responsible fiscal authority that adequate funds are available or

(b) Expressly condition the contract upon availability of funds in accordance with 32.703-2.

(bold emphasis added)

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2 hours ago, Jamaal Valentine said:

I don't think a universal definition of fund, funds, or funding has been used in this thread.

I agree.  I suggest a read of GAO Redbook Chapter 2.  I suggest further that we as professionals should stick to appropriation, apportion, commitment, and obligation when discussing contracts  and quit trying to justify use of terms that are not well defined nor universally used.

Sorry but "fund" or "funding" a contract doesnot work me except in the circumstance where Congress has specifically so stated for a specific contract.

For the most within agency process there is appropriation, apportion, commitment, and obligation and throw in recording if you want.  But please not fund or funding.

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On 5/31/2019 at 6:55 PM, ji20874 said:

Recording need not be the same as funding.

 

Add me to the list of readers not believing the word "funding" is meaningful in the procurement realm. 

It is merely short-hand customers use to describe budgeting, commitment, obligation, expenditure, and/or disbursement.   When someone has an "unfunded requirement", it means a project with no funding component identified.  Sponsors fund; customers fund; Congress funds. Procurement starts with a commitment of funds, not "funding".

Now; let's discuss the meaning* of the term "allotted funds" as used in 52.232-22 -- Limitation of Funds....

 

(* NOT "definition")

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On 6/2/2019 at 12:11 AM, C Culham said:

For the most within agency process there is appropriation, apportion, commitment, and obligation and throw in recording if you want. 

In the acquisition world, isn't an apportionment synonymous with a commitment (i.e., appropriations are apportioned into discrete commitments)?

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1 hour ago, REA'n Maker said:

In the acquisition world, isn't an apportionment synonymous with a commitment (i.e., appropriations are apportioned into discrete commitments)?

https://www.gao.gov/mobile/products/PAD-80-5

Dated I know.

 I may have erred in mentioning appointment but wanted to track from appropriation to commitment in that I view apportionment as making an appropriation available to an agency from which they will then commit the apportionment for a specific purpose such as a purchase request.  

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REA'n Maker,

We're talking specifically about contract obligations.  Some contract actions (such as some indefinite-delivery contracts) create obligations and cause recordings without providing or citing funds (such as the obligation for the minimum quantity or amount).  Some other contract actions (such as some task or orders under indefinite-delivery contracts) create obligations and cause recordings while providing or citing funds (such as for a purchase).  We need to be able to tell the difference between these, where both create obligations and cause recordings but only one provides or cites funds.

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2 hours ago, ji20874 said:

Some contract actions (such as some indefinite-delivery contracts) create obligations and cause recordings without providing or citing funds (such as the obligation for the minimum quantity or amount).

So would there be an obligation of appropriated funds? Yes or no.

If no, then what would be obligated?

By the way, when you make a claim, you have the burden of proof. If you can't (or won't) bear the burden, then intellectual humility demands that you retract your claim.

Readers,

For fun, I suggest you read this and evaluate how well ji is doing in this thread. Is he supporting his assertions with facts and evidence? Is he responsive to critical questions regarding his claims? Are his assumptions reasonable? Do you see any evidence of intellectual virtues or vices?

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Carl,

The document you provided defines "obligation," but does not differentiate between (1) contract actions (such as some indefinite-delivery contracts) that create obligations and cause recordings without providing or citing funds (such as the obligation for the minimum quantity or amount); and (2) contract actions (such as some task or orders under indefinite-delivery contracts) that create obligations and cause recordings while providing or citing funds (such as for a purchase).

Sometimes, as contracting officers, we need to differentiate between these two.  You object to my use of the word "funding" to address providing or citing funds within a contract action, but have not provided a better word.

The word "funding" is commonly used for this purpose, your objections notwithstanding.  Here's several instances from a single Wifcon thread where the word was used without objection by esteemed colleagues--

Retreadfed:  

  • ...don't get recording of an obligation and providing a fund cite on a contract confused...

Matthew Fleharty:  

  • ...The issue of "obligation" is separate from "funding"...
  • ...The two are often conflated/married together...
  • ...See how the terms "obligation" and "funds" come up together consistently, yet also notice how they are separate...

Vern Edwards:  

  • ...Obligation is the act of making a contractually binding promise to pay for something with appropriated funds...
  • ..."Funding" a contract means that (1) a CO has made an obligation, (2) the CO has funds, and (3) the CO has commenced the process of recording an obligation by citing the long-line funds account on a contract document and distributing a copy of that document to the finance office...

These come from a thread on incremental funding, rather than indefinite-contract minimums, at http://www.wifcon.com/discussion/index.php?/topic/3678-guaranteed-minimum-fully-funded-in-fy/

I agree that the word "funding" can have multiple meanings and can be confusing, but in the context of this thread, there was no confusion in my use of "funding" to describe providing or citing funds within a task order, in contrast to an indefinite-delivery contract where funding is not usually provided or cited within the contract (even though funds are obligated and a recording is made).

But still, since you object, what is the word to use?  I don't require an official term from an official document, but a term so I don't offend when differentiating between (1) contract actions (such as some indefinite-delivery contracts) that create obligations and cause recordings without providing or citing funds (such as the obligation for the minimum quantity or amount); and (2) contract actions (such as some task or orders under indefinite-delivery contracts) that create obligations and cause recordings while providing or citing funds (such as for a purchase).  "Obligate" and "record" are too imprecise, as both of these can occur without providing or citing funds within the contractual document.

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