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Fully Fund Policy

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It is the established business process in my contracts shop to fully fund Procurement and MILCON type appropriations for the entire fiscal year. My definition of ?fully fund? means obligating all the funds to a contract for a specific fiscal year. However, in researching the origins of this policy, fully funding seems to take on a different definition that refers to budget authority. I?m unable to find any policy that requires fully funding (obligating) a contract for these specific appropriations or any appropriation for that matter. The fully fund policy is indirectly or directly addressed in three laws and regulations: 1.) the Antidefiency and Adequacy of Appropriations Acts; 2.) OMB Circular A-11; and 3.) DOD Directive 7000.14-R. In reviewing these laws and regulations, it seems to me that the fully fund policy refers to budget authority of appropriated funds ? not obligation on a contract. So, where does this requirement come from to fully fund (obligate) Procurement and/or MILCON on contracts?

See Appendix B, CRS Report for Congress for detailed policy of the Fully Fund Principle: http://fas.org/sgp/crs/natsec/RL31404.pdf

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So, where does this requirement come from to fully fund (obligate) Procurement and/or MILCON on contracts?

Usually, Congress appropriates funds for the procurement of supplies and military construction on an annual basis. Agencies tell Congress what they plan to buy in the next fiscal year and Congress (hopefully) appropriates funds. (For a description of that process, see GAO's Principles of Federal Appropriations Law, Vol. I, Ch. 1, Sec. D.)

According to the Bona Fide Needs Rule (which is case law, see GAO's Principles of Federal Appropriations Law, Vol. I, Ch. 5, Sec. B), the funds must be used for the needs of the year in question. Since the appropriation is for one year, the funds must be obligated under contract before the end of the fiscal year for which they were appropriated, which is when the obligational authority will expire. (Don't confuse obligation with expenditure. The contractor might not complete the work and ask for payment until a future year, but must be paid with the funds of the year in question.)

The combination of the Bona Fide Needs Rule and the statutory deadline on annual obligational authority is what requires that you fully fund (record an obligation for) the entire contract amount at the time of award. That is where the full funding requirement comes from. This does not apply if Congress appropriates multiple-year funds, as is the case for research and development, or if Congress agrees to fund a capital asset program incrementally.

If I have not answered your question, come back, and we'll sort it out.

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Usually, Congress appropriates funds for the procurement of supplies and military construction on an annual basis. Agencies tell Congress what they plan to buy in the next fiscal year and Congress (hopefully) appropriates funds. (For a description of that process, see GAO's Principles of Federal Appropriations Law, Vol. I, Ch. 1, Sec. D.)

According to the Bona Fide Needs Rule (which is case law, see GAO's Principles of Federal Appropriations Law, Vol. I, Ch. 5, Sec. B), the funds must be used for the needs of the year in question. Since the appropriation is for one year, the funds must be obligated under contract before the end of the fiscal year for which they were appropriated, which is when the obligational authority will expire. (Don't confuse obligation with expenditure. The contractor might not complete the work and ask for payment until a future year, but must be paid with the funds of the year in question.)

The combination of the Bona Fide Needs Rule and the statutory deadline on annual obligational authority is what requires that you fully fund (record an obligation for) the entire contract amount at the time of award. That is where the full funding requirement comes from. This does not apply if Congress appropriates multiple-year funds, as is the case for research and development, or if Congress agrees to fund a capital asset program incrementally.

If I have not answered your question, come back, and we'll sort it out.

Vern, thank you for your response.

Allow me to provide some background to my question. One of the programs that I support deals with many other customer fund sources. What this means for them is that funding "dribbles" in through the fiscal year and the program is unable to fully fund the specific tasking all at once. The appropriation type is procurement dollars. This puts us in a bind since procurement dollars are connected to an end item which needs to be fully funded since we are "not allowed" to incrementally fund procurement dollars. Hence my original question, "where does this requirement come from to fully fund (obligate) Procurement and/or MILCON on contracts?"

Our solution to this specific situation has been to create a CLIN for the procurement dollars that are being funded and designate its own period of performance separate from the period of performance clause in the contract. This allows us to say that this period of performance on this CLIN is being fully funded. When the next batch of procurement dollars is provided, a new CLIN is created with a new period of performance. Keep in mind that these periods of performances are for 3-4 months (each time funding is provided) and are within the period of performance date range as designated in the original contract. I don't know about you, but this seems like a lot of paper work just to be able to say that we are fully funding the requirement. Is this solution effective? Does it violate any regulations?

Assuming that we fully fund the task prior to "the statutory deadline", what regulation says that we cannot incrementally fund before this deadline?

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I'm having trouble understanding what is going on. You're going to have to be more specific.

I assume that you are buying supplies. Is that right?

If so, what do you mean when you say that the funding dribbles in? Are they coming to you from time to time wanting to buy more supplies? Are you buying additional items or quantities with each dribble? Or are you buying one item or one lot and then building up funding for that item or lot from time to time as the money comes in, setting up a separate CLIN for each dribble?

What it sounds like you're doing (or want to do) is incrementally funding the purchase of a single item or lot something within a single fiscal year. It sounds like you're doing that because the organization that you're buying for doesn't have all the money it needs up front, but will have it before the year ends. Is that right?

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Does this help?

DFARS 232.702 Policy.

Fixed-price contracts shall be fully funded except as permitted by 232.703-1.

232.703 Contract funding requirements.

232.703-1 General.

(1) A fixed-price contract may be incrementally funded only if?

(i) The contract (excluding any options) or any exercised option?

(A) Is for severable services;

(B) Does not exceed one year in length; and

( C) Is incrementally funded using funds available (unexpired) as of the date the funds are obligated; or

(ii) The contract uses funds available from multiple (two or more) fiscal years and?

(A) The contract is funded with research and development appropriations; or

(B) Congress has otherwise authorized incremental funding.

(2) An incrementally funded fixed-price contract shall be fully funded as soon as funds are available.

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I'm having trouble understanding what is going on. You're going to have to be more specific.

I assume that you are buying supplies. Is that right?

If so, what do you mean when you say that the funding dribbles in? Are they coming to you from time to time wanting to buy more supplies? Are you buying additional items or quantities with each dribble? Or are you buying one item or one lot and then building up funding for that item or lot from time to time as the money comes in, setting up a separate CLIN for each dribble?

What it sounds like you're doing (or want to do) is incrementally funding the purchase of a single item or lot something within a single fiscal year. It sounds like you're doing that because the organization that you're buying for doesn't have all the money it needs up front, but will have it before the year ends. Is that right?

I'm buying a "Lot" of installation service hours using procurement type funds. The PWS nor the contract states how many hours per installation. So, there is no way to know if a complete installation is being purchased when funds are added to the contract. Not all the funding is available for obligation from the start because it comes from other commands/agencies, but it will all be fully funded before the year ends. As money does become available (as it dribbles in), funding is added to the contract (which is a CPFF) creating new CLINs with specific periods of performance.

The reason that we create new CLINs and POPs is because our financial office requires it. There is supposedly a rule that says procurement type funds must be fully funded, up-front at time of award or at option exercise. When there are situations where funding can't be fully funded (such as this one), then we are advised to create CLINs/POPs and "fully fund" these. This rule just seems so arbitrary to me because: 1) no one knows if we are buying full complete installations with each funding modification; 2) while we may be fully funding a 2 month POP, we are still incrementally funding the entire year it seems.

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Does this help?

DFARS 232.702 Policy.

Fixed-price contracts shall be fully funded except as permitted by 232.703-1.

232.703 Contract funding requirements.

232.703-1 General.

(1) A fixed-price contract may be incrementally funded only if?

(i) The contract (excluding any options) or any exercised option?

(A) Is for severable services;

(B) Does not exceed one year in length; and

( C) Is incrementally funded using funds available (unexpired) as of the date the funds are obligated; or

(ii) The contract uses funds available from multiple (two or more) fiscal years and?

(A) The contract is funded with research and development appropriations; or

(B) Congress has otherwise authorized incremental funding.

(2) An incrementally funded fixed-price contract shall be fully funded as soon as funds are available.

Joel, I wasn't aware of this clause. This specific contract is CPFF though which would make this clause not applicable. This is the sort of thing that I'm looking for though.

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I don't understand your statement: "I'm buying a "Lot" of installation service hours using procurement type funds. The PWS nor the contract states how many hours per installation. So, there is no way to know if a complete installation is being purchased when funds are added to the contract." However, it suggests that you should be using an IDIQ contract.

Looking back over your posts, it sounds to me like your "customers" come to you when they need work done and when they have funds and you then mod the contract to add a CLIN for the work. Maybe they come back and want to add work to the task, or add another task, and so you add another CLIN. It does not sound like you have a fully specified task at the outset, with an estimated cost, and are merely allotting funds to the contract for performance in increments as money becomes available. It sounds to me like what you are looking for is a way to avoid adding a new CLIN each time a customer comes to you with money. If that is what this is about, then incremental funding is not the answer.

I think you might be confused about incremental funding, but I'm not sure. Incremental funding is a procedure wherein you have a specified job and an estimated cost, say, $1,000,000 to do Job X, and you tell the contractor: "Look, I'm going to allot $250,000 of the $1,000,000 to the contract. That's all I've got right now and that allotment limits our contractual obligations to each other. You must work toward completion of the job until that money is gone. Let me know in advance when you're going to need more money in order to keep working, and, if I've got it, I'll allot more to the contract. You can then continue working toward completion until that next allotment runs out. We'll keep doing that until the job is done or I run out of money, whichever happens first. You don't have to finish the job if I can't come up with more money."

You don't incrementally fund a contract for which no price or estimated cost has been established. It's not incremental funding to specify and order performance of a task, enlarge a task, or add more tasks to a contract as funds become available, if that's what you're doing. That's not what incremental funding is about.

All I can say now is that I know of no regulation that you can cite that would permit you to do what I think you want to do. I think what you should be doing is issuing tasks under an IDIQ contract, but I'm not sure. Let me ask a question, and I'm not trying to insult you: Are you a newbie? An intern or some other kind of trainee?

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Joel, I wasn't aware of this clause. This specific contract is CPFF though which would make this clause not applicable. This is the sort of thing that I'm looking for though.

This isn't a Chem-Demil contract, is it?

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Joel, no it is not a chem-demil contract.

Vern, this being Seaport-e, it is an ID/IQ contract in which the task order is CPFF (sorry for not making this clear in the first place). CLIN 1000 is the base year and CLINs 1001, 1002, 1003, and 1004 are the option years. Each CLIN ceiling has a total hour amount and dollar amount. The ceiling for each CLIN is approximately 20,000 hours and $6,000,000 total CPFF amount (I cannot recall exact hour or dollar amount). We just exercised one of the option years. Upon exercising the option year, the program office incrementally funded only a portion of this ceiling amount using RDTE, OMN, OPN, and other customer funds. Each line of accounting has its own SLIN under this priced CLIN. The different appropriation types match up with different tasking within the PWS.

My primary concern is with the OPN funds and this installation tasking. The first allotment of OPN funding was for only 2 months. The program office eventually sent down two more modifications adding OPN funding which fully funded this effort for the remainder of the fiscal year. This last modification with OPN funding set off red flags in our financial office because OPN is supposedly not allowed to be incrementally funded. In order to get these last funds approved by our financial office, we were told to add period of performance dates to all the OPN SLINs. For example, the first incremental funding modification put funding on SLIN 1000/01 (OPN) and we were required to designate a POP of 10/1/2009-12/31/2009. The next incremental funding modification put funding on SLIN 1000/02 (OPN) and we were required to put a POP of 1/1/2010-3/31/2010. Etc etc. Please note that these dates are different then what is called out in Section F of the Task Order.

What regulation requires fully funding OPN? Why are we required to designate separate POPs? I've asked several people in the office these questions and the answers have been sporadic. It seems generally accepted within my office that OPN must be fully funded from the outset, but no one can tell me why. One person told me that the FMR requires OPN to be fully funded from the outset, but I was unable to find it within the FMR. Another person told me it has to do with this "Fully Fund Principle", but this seems to only relate to budget authority as I've mentioned in previous posts. OPN is typically used to buy material or end items, so maybe the fact that we are using it to procure services is obfuscating the situation?

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1102pleb:

You asked:

What regulation requires fully funding OPN? Why are we required to designate separate POPs?

I think I now understand your question. This is going to be complicated, so pay close attention.

Ultimately, it is GAO's Bona Fide Needs Rule which requires full funding of the OPN work. The case law is implemented in agency-level regulations. In your case, the regulation is the DOD Financial Management Regulation, Vol. 3, Ch. 8, Sec. 080303, which can be accessed here: http://comptroller.defense.gov/fmr/. But it does not expressly say that OPN work must be fully funded. You have to understand some terminology, the case law, and the application of the regulation.

Let's start with the case law. See Financial Crimes Enforcement Network-Obligations under a Cost?Reimbursement, Nonseverable Services Contract, Comp. Gen. Dec. B-317139, June 1, 2009, 2009 CPD ? 158:

The general rule is that a nonseverable service is considered a bona fide need at the time the agency orders the service and, therefore, should be charged to an appropriation current at the time the agency enters into the contract. B?305484, June 2, 2006, at 6-7; 65 Comp. Gen. 741, 743 (1986). A nonseverable service is one that requires the contractor to complete and deliver a specified end product (for example, a final report of research). 65 Comp. Gen. at 743-744. Severable services, which are recurring in nature, are bona fide needs at the time the service is completed, and obligations for severable services should be charged to appropriations current at that time. B?287619, July 5, 2001, at 6. A severable service is a recurring service or one that is measured in terms of hours or level of effort rather than work objectives. B?277165, Jan. 10, 2000, at 5; 60 Comp. Gen. 219, 221-22 (1981). Whether a contract is for severable or nonseverable services affects how the agency may fund the contract; severable services contracts may be incrementally funded, while nonseverable services contracts must be fully funded at the time of the award of the contract. 73 Comp. Gen. 77;71 Comp. Gen. 428 (1992).

What ruling this means is that when you use OPN funds, which are annual appropriations, to issue a task order for a nonseverable service, you must record an obligation for the entire amount of the OPN subclin (i.e., fully fund it) at the time of award and upon exercise of each option, using funds for the fiscal year for which the work is to be done, even if part of the work will be done in the next fiscal year. The rule does not apply only to OPN funded task subclins, but to all task subclins funded with annual appropriations. (RDT&E funds are not annual appropriations.)

The case law is implemented for DOD by the DOD FMR. As I said, you won't find an express statement that contracts funded with procurement money (OPN) must be fully funded. (The world of regulation often does not work that way.) You have to read carefully, understand the terminology, and put two and two together. According to DOD FMR Vol. 3, Ch. 8, para. 080303 C:

C. Service Contracts. Services are generally chargeable to the appropriation current at the time the services are rendered. The determination to charge the appropriation current on the date the contract is let, or to charge the funds current at the time services are rendered, depends upon whether the services are ?severable? or ?entire.? A contract which is considered entire is charged to the fiscal year current when it was let, even though performance may extend into the next fiscal year. On the other hand, service contracts that are considered severable must be charged to the fiscal year in which the services are rendered. Service contracts which are severable may not cross fiscal years, in the absence of statutory authority. There is no precise formula or rule that determines whether a contract is severable or entire. Each case must be determined by the terms and circumstances involved.

1. Severable Services. Service contracts can be for either a single undertaking or end item (entire) or for performance with compensation fixed in proportion to the amount of service performed (Absent a statutory authority, the term of a severable service contract that is funded by annual appropriations will not extend beyond the end of the FY current at the time the contract is awarded except when authorized by law. Option years are treated as new contracts. Therefore, when the severable service contract has renewal options, obligate funds for the basic period and any penalty charges for failure to exercise options. 10 U.S.C. 2410a is a statutory authority that permits the full obligation of severable service contracts that begin in one fiscal year and end in the next, provided the contract period does not exceed one year. The contract period for performance of severable services must begin during fund?s period of availability and may not exceed the fund?s period of availability, absent statutory authority.

2. Non-Severable Services. Non-severable services contracts (such as services to produce a single or unified outcome, product, or report) are ?entire? and must be funded entirely with appropriations available for new obligations at the time the contract is awarded, and the period of performance may extend across fiscal years.

Your financial office apparently considers your OPN-funded subclin to be for a non-severable service. Thus, it wants you to fund the entire year of OPN service when you award an OPN-funded task order or exercise an OPN-funded option. Why? Because that's what the DOD FMR says, based on the Bona Fide Needs Rule established by the GAO. But your finance office is helping you get around the problem by making you break the option year down into smaller periods so you can fully fund each period separately, when you get the money. As best as I can figure it out, it is treating your non-severable service as if it were severable.

Okay, now here is where it might get really confusing. Let?s say that the subclin period of performance for a non-severable service begins on 1 Oct and will end on 30 Sept the following year. You plan to fund the entire subclin with procurement money for that fiscal year, so there is no Bona Fide Needs issue. But you won?t get all the money on day one, because the customers are going to dribble it out, for reasons of their own, whatever those reasons may be. But you'll get it all before the fiscal year expires. Can you use the Limitation of Funds clause, FAR 52.232-22, and fund the subclin incrementally, as the money comes in? Apparently not. Why not? Because the DOD FMR, at Vol. 3, Ch. 8, para. 080303 C. 2, says, ?Non-severable services contracts (such as services to produce a single or unified outcome, product, or report) are ?entire? and must be funded entirely with appropriations available for new obligations at the time the contract is awarded ? .? Underlining added. I think your financial office is interpreting the latter underlined phrase to mean that an obligation for the entire contract amount must be recorded at the time of award. But I don't think that's what the DOD FMR means. I think it means funded entirely with the fiscal year funds that were available at the time the contract was awarded. Note that the FMR passage I quoted does not use the terms "fully fund" or "incrementally fund."

I think you could incrementally fund the subclin described above, because would be no violation of the Bona Fide Needs Rule, which is what I think the DOD FMR is written to prevent.

Is this explanation clear? The key to all of this is the Bona Fide Needs Rule.

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Guest carl r culham

Vern - Noting the specifics and your conclusions of how the needs are being interpeted by 1102pleb's fiscal office does raise one question for me. Considering how this is being handled in total it seems that issuing indiviudal task orders is more appropriate than modifying the initial task order with additional CLINs?

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Vern - Noting the specifics and your conclusions of how the needs are being interpeted by 1102pleb's fiscal office does raise one question for me. Considering how this is being handled in total it seems that issuing indiviudal task orders is more appropriate than modifying the initial task order with additional CLINs?

Carl,

I thought about that, too. But the funding issue is so complicated that I didn't want to ask a question or make a critique or recommendation that was tangential to 1102pleb's initial inquiry. Except for one brief loss of self-control during which I suggested task orders, I managed to limit myself to providing the explanation he asked for. Except for Joel's interjections, I have managed to keep the thread within its original bounds, which made it easier for me to communicate with 1102pleb. I'm waiting now to see if what I wrote makes sense to him. Do you think it makes sense?

Vern

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Vern,

It took a while for me to digest all the information you gave me, but your explanation makes perfect sense.

Your financial office apparently considers your OPN-funded subclin to be for a non-severable service. Thus, it wants you to fund the entire year of OPN service when you award an OPN-funded task order or exercise an OPN-funded option. Why? Because that's what the DOD FMR says, based on the Bona Fide Needs Rule established by the GAO. But your finance office is helping you get around the problem by making you break the option year down into smaller periods so you can fully fund each period separately, when you get the money. As best as I can figure it out, it is treating your non-severable service as if it were severable.

My first instinct when I read the FMR quote was that it could have two distinct meanings. As you pointed out, the FMR states, "Non-severable services contracts ... must be funded entirely with appropriations available for new obligations at the time the contract is awarded..." If it just said "non-severable services must be funded entirely at contract award", there would be little doubt in my mind about the true meaning of this statement. The fact that it adds the words "with appropriations available for new obligations" leaves doubt about the original meaning. Whatever the FMRs true meaning, the GAO is fairly clear with its interpretation that "nonseverable services contracts must be fully funded at the time of the award of the contract." I have no clue why putting POPs on SLINs became a viable workaround, but it doesn't seem like a compliant alternative to fully funding OPN at contract award. So, if a customer cannot provide full funding for OPN at contract award, what alternative solutions exist? Or does the contracts shop just need to draw a line in the sand with this customer and stop awarding contracts and/or exercising options until full funding can be provided?

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Let me suggest that you check my explanation with the financial office to see if mine matches theirs. They may have a different reason for requiring full funding than the one I have given. I think that the idea behind establishing new CLINs or subclins, each with its own period of performance, is to make the services severable, and thus incrementally fundable, but I'm not sure. You should ask for an explanation.

Contract funding is an extremely complex and mysterious business.

I'm not sure that GAO is right when it says: "Whether a contract is for severable or nonseverable services affects how the agency may fund the contract; severable services contracts may be incrementally funded, while non-severable services contracts must be fully funded at the time of the award of the contract. 73 Comp. Gen. 77; 71 Comp. Gen. 428 (1992)." I think that is right if incremental funding of nonseverable services would cross fiscal years and result in a violation of the Bona Fide Needs Rule. That was the case in 73 Comp. Gen. 77. But see 71 Comp. Gen. 428, in which the GAO stated the rule as follows: "[A] contract for services, entire in nature (i.e., ?that cannot feasibly be subdivided for separate performance in each fiscal year?) may not be funded in increments across fiscal years." If a non-severable service does not cross a fiscal year, and there would be no bona fide needs or Antideficiency Act violation, then why can't it be funded incrementally using the Limitation of Funds clause? I don't think that question has ever come before GAO. Probably because incremental funding in such a case did not make much sense in the distant past. Why bother with it if the funds come from one source and are available? But with contracts like Seaport, in which funds might come from different offices, each doing its own thing with annual funds management, incremental funding within a fiscal year makes more sense.

If your non-severable service is provided entirely within a single fiscal year, and will be entirely paid for with the funds of that fiscal year, then there would be no violation of the Bona Fide Needs Rule. If that is the case, then I don't know why you cannot incrementally fund the contract under the Limitation of Funds clause. Does your OPN CLIN cross fiscal years?

As for alternative solutions, that's hard without knowing more about the requirement. You said that you're buying "installation" services, but I still don't know exactly what the contractor is doing for each of your customers, and without that knowledge I can't make intelligent suggestions. I'm sure that there are other solutions (there almost always are), but I'm not sure what they might be in your case. If you want to provide more info, then I'm willing to continue the discussion. Of course, if you could get your customers to quit fooling around and provide the money up front, that would be a good thing.

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I'm not sure that GAO is right when it says: "Whether a contract is for severable or nonseverable services affects how the agency may fund the contract; severable services contracts may be incrementally funded, while non-severable services contracts must be fully funded at the time of the award of the contract. 73 Comp. Gen. 77; 71 Comp. Gen. 428 (1992)." I think that is right if incremental funding of nonseverable services would cross fiscal years and result in a violation of the Bona Fide Needs Rule. That was the case in 73 Comp. Gen. 77. But see 71 Comp. Gen. 428, in which the GAO stated the rule as follows: "[A] contract for services, entire in nature (i.e., ?that cannot feasibly be subdivided for separate performance in each fiscal year?) may not be funded in increments across fiscal years." If a non-severable service does not cross a fiscal year, and there would be no bona fide needs or Antideficiency Act violation, then why can't it be funded incrementally using the Limitation of Funds clause? I don't think that question has ever come before GAO. Probably because incremental funding in such a case did not make much sense in the distant past. Why bother with it if the funds come from one source and are available? But with contracts like Seaport, in which funds might come from different offices, each doing its own thing with annual funds management, incremental funding within a fiscal year makes more sense.

If your non-severable service is provided entirely within a single fiscal year, and will be entirely paid for with the funds of that fiscal year, then there would be no violation of the Bona Fide Needs Rule. If that is the case, then I don't know why you cannot incrementally fund the contract under the Limitation of Funds clause.

I had the same thought when the June 2009 decision came out. I don't know where the GAO is coming from, either. They must not have considered the possibility that an agency may want to incrementally fund a requirement within the same fiscal year.

I also agree with you on what the DoD FMR means. I believe it means that the contract must be fully funded with appropriations available for new obligations for the fiscal year in which the contract is awarded--not that the contract be fully funded at the time of award. I'm going to ask some of the finance professors how they read it.

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They must not have considered the possibility that an agency may want to incrementally fund a requirement within the same fiscal year.

Don, although I?m not very familiar with how we receive funds here, it is my understanding that there isn?t really a choice to fully fund contracts because we have so many funding sources (different appropriations and other customer funds). Maybe no one here has put their foot down and required that full funding be established from the funders, but I just assume it is much too hard to organize multiple funding sources (it is hard enough getting funds from just one source sometimes). Either way, I?m very interested to hear the finance professors thoughts on this matter.

Does your OPN CLIN cross fiscal years?

Vern, the OPN SLIN for this specific task order does cross fiscal years. Most of our seaport task orders utilize incremental funding and both fund options within the fiscal year and fund options across fiscal years. This issue is not unique to this one task order.

As for alternative solutions, that's hard without knowing more about the requirement.

It is management and technical support of actual installations on ships. This installation support services is for the scheduling, tracking, monitoring, maintaining baseline documents, updating drawings, etc. I hope this isn?t too general, but the subtasks literally go on for pages. Having read through the requirements a few times now, it isn?t so black and white whether this is non-severable versus severable. While an installation is a service needed in its entirety, it becomes less clear when you start talking about support services of those installations. This could go either way in my mind.

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It is management and technical support of actual installations on ships. This installation support services is for the scheduling, tracking, monitoring, maintaining baseline documents, updating drawings, etc.

Assuming that the support not for one or more particular installation(s), but for a period of time, e.g., monthly, it sounds severable to me. But if it's for one or more particular installations, then it's probably non-severable.

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Guest carl r culham

Vern - Unanticipated interuption. Thanks for the response and yes your conclusions through-out the thread make sense including reasoning for not raising the matter of separate task orders, that is why I waited, but then could not help myself.

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Vern - Unanticipated interuption. Thanks for the response and yes your conclusions through-out the thread make sense including reasoning for not raising the matter of separate task orders, that is why I waited, but then could not help myself.

Carl:

The funding issue is interesting, isn't it? As for the practical side, I, like you, think that there must be a simple solution. I'm not making any suggestions because I don't fully understand the requirement. But have at it.

Vern

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My first instinct when I read the FMR quote was that it could have two distinct meanings. As you pointed out, the FMR states, "Non-severable services contracts ... must be funded entirely with appropriations available for new obligations at the time the contract is awarded..." If it just said "non-severable services must be funded entirely at contract award", there would be little doubt in my mind about the true meaning of this statement. The fact that it adds the words "with appropriations available for new obligations" leaves doubt about the original meaning. Whatever the FMRs true meaning, the GAO is fairly clear with its interpretation that "nonseverable services contracts must be fully funded at the time of the award of the contract."

I think the part about "...appropriations available for new obligations..." refers to period of continuing resolutions where the appropriation is available only for continuing government operations and not new initiatives/obligations.

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Guest carl r culham

Vern - Absolutely interesting especially how fiscal office interpretations relate to the contract method/type approach. As I read the thread one could even be distracted by appropriation law versus the agency's own fiscal management policies. Again not a place to go without details and fully agree your overview approach was a great response. I will leave my input at the subtle suggestion made of possibly using separate task orders.

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I think the part about "...appropriations available for new obligations..." refers to period of continuing resolutions where the appropriation is available only for continuing government operations and not new initiatives/obligations.

formerfed-

I think the part about "...appropriations available for new obligations..." refers to the period of time before appropriations expire for obligation purposes. This varies among different types of appropriations. In DoD, for example, O&M funds are available for new obligations for one year (the fiscal year for which they were appropriated.) RDT&E funds are available for new obligations for 2 years; procurement funds are available for new obligations for 3 years. At the end of these times, the funds "expire" and may not be used for new obligations, however, all of these types of funds may be obligated after they have expired under certain specified circumstances, such as to pay for a change order, or a claim. After expiration, the funds are available for payment (or for obligation against changes/claims) for 5 years, at which time they are "canceled," and they aren't available at all, even for payment against valid unliquidated obligations.

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Carl:

The funding issue is interesting, isn't it? As for the practical side, I, like you, think that there must be a simple solution. I'm not making any suggestions because I don't fully understand the requirement. But have at it.

Vern

I know nothing about Seaport but I see similar situations and they are handled one of two ways. Depending upon the agency, their mission, and the language in their appropriation, the lead agency funds the entire task/work and seeks reimbursement from the other agencies after the fact. The other method is setting up a working capital fund wheer each agency is required to regularly deposit their share in the fund for the lead agency to spend. Both avoid incremental funding with dribs and drabs,

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I will leave my input at the subtle suggestion made of possibly using separate task orders.

I'm not sure whether you are suggesting a separate task order for each color of money, each task listed in the PWS, or by the amount of funding provided by the customer at issuance of the task order (thereby alleviating the full funding issue). Administrative burden would be my main argument against doing separate task orders. We'd have to conduct a competition for each task order since seaports are ID/IQ MAC. This would mean that we would need to compete a task order as frequent or more frequent then once a year whereas we are only competing them once every five years currently. This would have a tremendous impact on contractor personnel changeover as well (contractors could potentially change every year vice every 5 years).

Assuming that the support not for one or more particular installation(s), but for a period of time, e.g., monthly, it sounds severable to me. But if it's for one or more particular installations, then it's probably non-severable.

It seems to me that installation support services would always be for a particular installation (even if not clearly defined by the customer at the get go) and, therefore, would always be considered non-severable services. The only reasoning behind this belief is that installation support services are for an end item and would need to be funded in its entirety being an end item. Can you think of a situation where you'd ever use OPN for severable services?

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