Limitation of liability clause and deobligating funds

[Trish99]

I'm doing a modification that deobligates funds from the base year of the basic task order. Task order is currently in the first option year. Task order also contains the limitation of liability clause. When mods are issued that deobligates funds, should this clause information be updated to reflect the new funds available based on deobligations or only when mods are incrementally funding the task order? 

[joel hoffman]

There is no guarantee to the contractor that deobligated funds are available, unless they are re-obligated on the applicable option.  So, why would you contractually mention unobligated funds? 

[Trish99]

That's what I'm trying to understand myself. The limitation of liability is in the basic and as mods are issued that add incremental funding, there's a chart tracking the incremental funding balance as mods are issued. I've been told to update the clause to reduce the amount of funding available based on the current deobligation requirement

[joel hoffman]

Ok 

looks like it is already identified in the contract. If you deobligate funds then I supposed that you need to reduce the funds in the chart. 

[ji20874]

Trish,

You mentioned the limitation of liability clause -- which clause were you referencing?  The clause at FAR 52.246-23, Limitation of Liability; 52.246-24, Limitation of Liability - High-Value Items; or 52.246-25, Limitation of Liability - Services?

Regardless, I cannot see how any of these fit the question.

I wonder if you really intended to mention the clause at DFARS 252.232-7007, Limitation of Government's Obligation?

[Retreadfed]

Trish99, could you also tell us what the TO is for, e.g. supplies, services, and how the TO is priced (cost reimbursement, FFP, etc.)?

[ji20874]

And, tell us if option one is merely continued funding of work started under the base period (it’s all mixed together) or if option one is a separate CLIN for a new period of performance (the work under the base is finished and the work under the option proceeds).

[Trish99]

Option one has a new labor and ODC CLINs. The task order is for services under a CPFF arrangement.

[Retreadfed]

Thank you.  You did not answer ji's question about which Limitation of Liability clause is in the contract.  In this regard, why do you have such a clause in the contract?  I presume that either or both of the Limitation of Cost clause or Limitation of Funds clause is in the contract.

Are you sure you want to deobligate funds relating to the base period?  If final costs for that period have not been determined yet, you  may have to add funds back later.

[Trish99]

a local clause was inserted

5252-232-9210 Limitation of Liability (Jan.1992)

[ji20874]

To me, it seems very sloppy to have a local clause with the EXACT same name as a standard FAR clause -- couldn't they have found a new name for the local clause?

If I understand correctly, the base CLIN is finished -- all the work is done, and closeout of that CLIN will occur as soon as the indirect rates are finalized and settled -- and all new work is being done under a new option one CLIN, with its own stand-alone estimated cost and fee -- nothing from the base CLIN rolls over into the option CLIN.  If that is right, then YES, you may de-obligate excess funds as an administrative function (unilaterally), but be careful not to de-obligate too much, as retreadfed makes a good point about future coverage of those indirect rates.

[Trish99]

Ji20874, while I appreciate your response that really wasn't what I was asking. Our finance department has already cleared the funding for deobligation. My question has to do with the actual chart itself and updating the chart to reflect the deobligation. I'm sure it's fine, I was thinking this clause was applicable to incremental funding ONLY, not necessarily reflecting deobligating funding actions

[Retreadfed]

4 minutes ago, Trish99 said:

I was thinking this clause was applicable to incremental funding ONLY, not necessarily reflecting deobligating funding actions

Since this is a local clause that most people here likely have not seen, it will be hard to comment intelligently on this.

[joel hoffman]

I did a google search for 5252-232-9210 Limitation of Liability (Jan.1992).

I couldnt find it on the Internet. In s it possible to scan it and try to convert it to something we can read?

 

[ji20874]

If--

• all work under the base period CLIN is finished and the CLIN there is a stand-alone CLIN (with its own stand-alone obligated funding, estimated cost, and fixed fee amount), and
• the de-obligation is an administrative action to remove excess funds, and
• the work in the option one is stand-alone work in a stand-alone CLIN (with its own stand-alone obligated funding, estimated cost, and fixed fee amount),

then NO, you should not update the information in the local clause.  Your administrative de-obligation has no impact on the rights or obligations of the parties, but the information in the local clause does -- so leave the clause and its fill-ins alone to reflect the amount the contractor's costs may rise to.  If the indirect cost settlement is higher than you anticipate, you might have to re-obligate funds to cover the government's obligation -- if not, you might later be able to de-obligate even more money.

Joel, I found the clause -- it is a Navy clause to be used in conjunction with the Limitation of Funds clause.

[Retreadfed]

1 minute ago, ji20874 said:

it is a Navy clause to be used in conjunction with the Limitation of Funds clause.

However, I cannot find that clause in the CFR.  Thus, its enforceability is questionable.

[C Culham]

Gentlemen:  This may help you.  Not saying this is exactly the TO represented by the OP but should help give an idea of how the clause is represented in modifications.   Carry on....

(REF- http://www.industechnology.com/assets/pdf/task-orders/N00039-17-F-3009/N0003917F3009-P00016.pdf

 

B-4 LIMITATION OF LIABILITY - INCREMENTAL FUNDING (5252.232-9210)

(a) This contract is incrementally funded with respect to both cost and fee.

(b) The amounts presently available and allotted to this contract for payment of cost and fee are as follows:

 

ITEM(S) AMOUNT ALLOTTED (COST AND FEE)

See attachment no. 5, Allotment of Funds.

 

(c) The parties contemplate that the Government will allot additional amounts to this contract from time to time by unilateral contract modification, and any such modification shall state the total amounts allotted for cost and fee, and the CLINs covered thereby.

(d) Subject to the provisions of FAR 52.232-22 "Limitation of Funds" clause of this task order, no legal liability on the part ofthe Government for payment in excess of the amounts provided above shall arise unless additional funds are made available and are incorporated via modification to this task order.

 

Not related to the above  but then there is this reference….   https://g2ss.com/app/uploads/2019/06/N0003917F3004P00028.pdf

 

 

 

GENERAL INFORMATION

The purpose of this modification is to:

(1) Obligate funding in the amount of $116,000 to OY2 Labor CLIN 7002 with a Period of Performance of 30

March 2019 through 29 March 2020.

(2) Update Clause B-3, Limitation of Liability -- Incremental Funding (5252.232-9210)(JAN 1992) to reflect the

funding provided under this modification.

 

 

[C Culham]

18 hours ago, Retreadfed said:

However, I cannot find that clause in the CFR.  Thus, its enforceability is questionable.

At the hazard of this comment starting a whole other line of discussion in this thread I would offer that possibly, noting the reference in the "local" clause to 52.232-22 that FAR 1.303(b) might apply in this instance.   Again "might" as just an internal thing that NAVWAR does to keep track of the monies.  I will leave it to everyone's imagination on the "might".