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I have a FFP task order with a cost reimbursable CLIN for travel.  After an option year is over any travel funds remaining are deobligated.  I noticed that the total task order value is decreased based on the deobligation.  Is this correct?  Or should the total task order value stay the same as the deobligation was not a change in scope?

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FAR 16.201 (a) - "Fixed-price types of contracts provide for a firm price or, in appropriate cases, an adjustable price. Fixed-price contracts providing for an adjustable price may include a ceiling price, a target price (including target cost), or both. Unless otherwise specified in the contract, the ceiling price or target price is subject to adjustment only by operation of contract clauses providing for equitable adjustment or other revision of the contract price under stated circumstances. (EA)"

So you have CLIN for travel, with obligated funds, for the base period. This CLIN has a ceiling for reimbursement and at the end of the year all of the funds are not used. The funds should be de-obligated and the TO order amount should be reduced to reflect the appropriate value spent (actual v. target) for reporting purposes. 

The scope of the contract is not affected by the de-obligation. If you expect (target) 10 days of travel, obligate funds (ceiling) for 10 days of travel and only use 5, then you report the 5.

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Milcon, 

Who is deobligating funds for travel? A finance office or the contracting office?

It sounds like your order has two CLINS - a fixed price one for performance of the work and a cost reimbursable one for travel.  The total order value is the sum of both CLINS.

Only the cost reimbursable travel CLIN is decreased from less travel.  The first CLIN remains unchanged in scope and amount.  You can say the total order value is reduced from less travel but the scope of the order hasn’t changed.

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7 hours ago, Milcon said:

I have a FFP task order with a cost reimbursable CLIN for travel.  After an option year is over any travel funds remaining are deobligated.  I noticed that the total task order value is decreased based on the deobligation.  Is this correct?  Or should the total task order value stay the same as the deobligation was not a change in scope?

Yes, the travel CLIN is adjusted to reflect the actual travel costs and the total contract amount is adjusted, accordingly. There is no change in scope. 

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13 hours ago, formerfed said:

Milcon, 

Who is deobligating funds for travel? A finance office or the contracting office?

It sounds like your order has two CLINS - a fixed price one for performance of the work and a cost reimbursable one for travel.  The total order value is the sum of both CLINS.

Only the cost reimbursable travel CLIN is decreased from less travel.  The first CLIN remains unchanged in scope and amount.  You can say the total order value is reduced from less travel but the scope of the order hasn’t changed.

Formerfed,

The contracting office is deobligating the unused travel funds. This has nothing to do with the FP CLINS, only the CR travel CLIN.  I was just told by policy that we shouldn't be reducing the total task order amount when travel is deobligated, as it is not decreasing the scope (they said that is the only reason the reduce the total task order value). 

The thing is is the original dollar amount on the CLIN is an estimate- we often add another CLIN for more travel when needed-(it is all based on new hiring training).  If we don't use it, it is deobligated.  But do I reduce the total task order value when the money is deobligated? Or does the total task order value stay the same.  

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11 hours ago, joel hoffman said:

Yes, the travel CLIN is adjusted to reflect the actual travel costs and the total contract amount is adjusted, accordingly. There is no change in scope. 

Joel,

Is it stated anywhere that this is what we do.  Or this this "just what we do"?

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5 minutes ago, Milcon said:

Formerfed,

The contracting office is deobligating the unused travel funds. This has nothing to do with the FP CLINS, only the CR travel CLIN.  I was just told by policy that we shouldn't be reducing the total task order amount when travel is deobligated, as it is not decreasing the scope (they said that is the only reason the reduce the total task order value). 

The thing is is the original dollar amount on the CLIN is an estimate- we often add another CLIN for more travel when needed-(it is all based on new hiring training).  If we don't use it, it is deobligated.  But do I reduce the total task order value when the money is deobligated? Or does the total task order value stay the same.  

What didn’t you understand or agree with in what I said?

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38 minutes ago, Milcon said:

Joel,

Is it stated anywhere that this is what we do.  Or this this "just what we do"?

If you have separate CLINs for 1) the FFP effort and 2) the CR travel, which total up to 3) the task order amount, please tell me why you have to move  the excess funding to the FFP effort and then increase that CLIN amount, accordingly. The FFP CLIN and its scope are fixed, correct? 

What you are saying doesn’t make sense.

1) + 2) = 3). 
If 2) is reduced, then 1) must increase for 3) the task order amount to remain the same.

BUT 1) is FFP. What scope are you going to add to 1) in order to increase it? The task order amount must equal the total of all CLINs. 

It doesn’t have to state that anywhere. Where does it state how to do what you said you must do? 

What am I missing from your scenario? 

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22 minutes ago, joel hoffman said:

What am I missing here? 

This...

 

32 minutes ago, Milcon said:

I was just told by policy

 

27 minutes ago, Milcon said:

Is it stated anywhere that this is what we do. 

Another way to explain to hopefully help. "policy" who?   I do not believe that fiscal management policy supports "I was just told".

The issue you have brought up is a fiscal management matter as much as it is a contract management issue.   On the fiscal management side I suspect that if you talk to your budget and accounting folks they will provide specific detail as to the need to deobligate.   I suspect it will be something like you no longer need the funds fenced by the obligation to pay for more anticipated needs (travel) so therefore they are unfenced (de-obligated) to return funds to the big pot for other use and/or make the accounting books right on what your agency has actually spent.  As the CO has the only authority to obligate/de-obligate the funds fenced pursuant to a contract then the CO is assisting in fiscal management of the contract funds.

As already provided by other comments of the this thread the "Scope" of the contract is not reduced it is simply trued up to reflect what actually happened and make the fiscal books right.   

I might also suggest that you do some reading regarding scope and fiscal management stuff related to contracts.   As GAO has a expressed expert view on scope as related to a contract and also gives direction of sorts with regard to fiscal policy related to contracts a good place to start is to meander through what is commonly known as the GAO Redbook.  Here is a link that will get you to the full Redbook.  Do not be fooled by the bonafide needs link as it is important but the full book is accessible here as well.

http://www.wifcon.com/bonafidecontents.htm

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MILCON, does the same total  CR travel CLIN  amount span multiple option years with funding current to the FY of actual travel used? In other words, funding source for travel  would change but total CLIN for travel would be constant.. 

I did not assume that scenario. 

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8 minutes ago, joel hoffman said:

MILCON, does the same total  CR travel CLIN  amount span multiple option years with funding current to the FY of actual travel used? In other words, funding source for travel  would change but total CLIN for travel would be constant.. 

I did not assume that scenario. 

No.  Each year has its own travel CLIN.

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6 minutes ago, Milcon said:

No.  Each year has its own travel CLIN.

 

6 minutes ago, Milcon said:

No.  Each year has its own travel CLIN.

Okay, then you reduce the travel CLIN when you remove the excess funding for it, thus reducing the task order amount accordingly. I don’t know why you require a written policy reference from me for that. 

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What is with the snarky comments?  Has WIFCON started being rude to people trying to get clarification.  I apologize if something I stated wasn't clear or if I offended someone by asking follow up questions or that I asked where something is stated.  

My policy team is telling me not to reduce the total task order value.  If I go back to them stating that what we are doing (reducing the total task order value) is correct and we will continue, I would like to have something to show them stating what I am doing is correct- hence asking "Is it stated anywhere that this is what we do.  Or this this "just what we do"?"   

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1 hour ago, C Culham said:

This...

 

 

Another way to explain to hopefully help. "policy" who?   I do not believe that fiscal management policy supports "I was just told".

The issue you have brought up is a fiscal management matter as much as it is a contract management issue.   On the fiscal management side I suspect that if you talk to your budget and accounting folks they will provide specific detail as to the need to deobligate.   I suspect it will be something like you no longer need the funds fenced by the obligation to pay for more anticipated needs (travel) so therefore they are unfenced (de-obligated) to return funds to the big pot for other use and/or make the accounting books right on what your agency has actually spent.  As the CO has the only authority to obligate/de-obligate the funds fenced pursuant to a contract then the CO is assisting in fiscal management of the contract funds.

As already provided by other comments of the this thread the "Scope" of the contract is not reduced it is simply trued up to reflect what actually happened and make the fiscal books right.   

I might also suggest that you do some reading regarding scope and fiscal management stuff related to contracts.   As GAO has a expressed expert view on scope as related to a contract and also gives direction of sorts with regard to fiscal policy related to contracts a good place to start is to meander through what is commonly known as the GAO Redbook.  Here is a link that will get you to the full Redbook.  Do not be fooled by the bonafide needs link as it is important but the full book is accessible here as well.

http://www.wifcon.com/bonafidecontents.htm

Thank you. I will review.  

 

10 minutes ago, Don Mansfield said:

@Milcon Doesn't your policy team have the burden of proof? Shouldn't they have to justify their position?

I think we both have burden of proof.  

 

Thank you to all who have commented.  I appreciate your help.  

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If you reduce the CLIN to match the funding then you MUST, by the rules of arithmetic, reduce the task order amount to match the new total CLINs amount. 

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@Milcon  The most recent post brought something to mind for me.    I am not sure it will be of an assist for your discussion with the policy folks but you might take a detailed read of FAR subpart 4.10 regarding Uniform Use of Line items.   There might be a hidden gem in it to assist in your conversation.

 

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22 hours ago, Milcon said:

After an option year is over any travel funds remaining are deobligated.  I noticed that the total task order value is decreased based on the deobligation.  Is this correct?

This is okay, especially if the option year is over.

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1 hour ago, C Culham said:

@Milcon  The most recent post brought something to mind for me.    I am not sure it will be of an assist for your discussion with the policy folks but you might take a detailed read of FAR subpart 4.10 regarding Uniform Use of Line items.   There might be a hidden gem in it to assist in your conversation.

 

Thank you.  I will check this out.  

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@Milcon

I haven't seen any mention of this, and I may have missed it, but I'm wondering where in the order the "total task order value" appears. Some questions:

  1. Was the order issued under DD Form 1155 or Optional Form 347? Some other form? 
  2. If DD 1155, are you talking about the amount that goes in box 25?
  3. If OF 347, are you talking about the amount that goes in box 17(h)?
  4. If neither form, where does the "total task order value" appear?
  5. Is the "total task order value" the sum of (1) the firm-fixed price (for performance) and (2) the estimated cost of travel?

 

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On 3/18/2021 at 3:38 PM, Vern Edwards said:

5. Is the "total task order value" the sum of (1) the firm-fixed price (for performance) and (2) the estimated cost of travel?

Yep, this is one of the basic questions (in addition to Vern’s other questions).

Secondly, when the excess funding for the CR travel CLIN was de-obligated, was the amount of the travel CLIN reduced accordingly?  I don’t think that it has been clearly stated one way or another but I may have missed that. You said that the excess funds for the CR CLIN have been deobligated.  I  assume that the line item amount for travel was reduced accordingly but please confirm.

Thank you.

EDIT: If the answers to these two questions are yes and one of those forms or a similar form was used, the total amount of the task order will change when you change the total amount of any CLIN.

Thank you. 

 

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On 3/17/2021 at 11:12 AM, Milcon said:

Or should the total task order value stay the same as the deobligation was not a change in scope?

Milcon is asking whether it makes sense to change the "total task order value" in light of the fact that the deobligation of funds associated with the travel CLIN does not reflect a change in the scope of the order.

In order to answer that question, those of you who have chosen to respond to Milcon should ask yourselves:

     What, if anything, is the (1) contractual and (2) administrative significance of the "total task order value"?

The answers to those questions depend in part on the location and context of "total task order value" in the task order.

Maybe "total task order value" is just an entry on a form, with no contractual or administrative significance whatsoever, and Milcon should just go along with his policy shop's program. Maybe it's just a product of simple arithmetic.

Or maybe Milcon's question is just a bureaucratic mystery, like the proper entry in SF 30, Block 13C.

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42 minutes ago, Vern Edwards said:

Maybe

I really hate to drag this thread out but what the heck.   Actually what needs to be clarified is the mixed metaphors.

Is not the real intent of the OP's  post whether an "obligation" or "deobligation" of monies on a task order is an implication of "scope".  The answer to which sometimes it is and sometimes it is not.   And, I would offer that the  "deobligating the unused travel funds" is not a change in scope.  Likewise it follows that "the total task order value is decreased based on the deobligation" is not a change of scope.  So if the total value of the task order is reduced it makes no sense to say the total value must remain the prior higher value as that value dictates the scope of the task order.  

By example ----

Task Order issued in one fiscal year and has the ability to cross fiscal years which just happens to be consistent with the option year of the task order.   The money funding the travel CLIN is one year money.   Not all the one year money was used so it needs to be deobligated and the end of the fiscal/option year to go to the big pot in the sky.  The deobligaton occurs and the total value of the Task Order is reduced, yet not the scope as the work is still needed as the deobligation had nothing to do with a task order change, it was an fiscal management need.  An administrative modification.   Now the task order need continues to the next fiscal/option year.  If no further travel is needed yet the work continues the scope did not change.   Or in the alternative and in anticipation that the work will continue and travel will be needed the new one year money of the new fiscal year will be added back into the travel CLIN.   All the while scope of the work never changed.

Now considering the example I strongly suspect that the task order is in some sort of electronic order writing system as I would be absolutely amazed that a task order is typed or hand written ( not that I can't be amazed and might be!) and manually entered into an accounting system.   As such this electronic system to write the task order is probably tied to the fiscal/fund management system as well.   So I suspect the OP went into the system and did the deobligation and "noticed that the total task order value is decreased based on the deobligation." and now wonders "is this correct".  And I say yep that is correct as a deobligation of a CLIN on a Task Order does lower the value of the obligation associated with the task order regardless of the form as again I bet it is in the electronic system.   

 "I was just told by policy that we shouldn't be reducing the total task order amount when travel is deobligated, as it is not decreasing the scope (they said that is the only reason the reduce the total task order value)." is not a factual or sensible statement considering the obligation or deobligation of funds on a task order, or any contract for that matter, as many times  funds  can be obligated and deobligated as demonstrated by the example above on a task order and the scope of the work is not changed.

So the real question remains who the heck is "policy" and what is their reasoning to say what they have and then, with the thoughts passed along in this thread, Milcon could go along with "policy" that they are right scope has not changed but clarify to them that scope is some cases does not have to be tied the value of an obligation.   Policy's contention is my book is incongruent the rules of fiscal management regarding obligation of funds, the concept of scope as it relates to obligation of funds and yes I will even include math. 

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This was the opening post:

On 3/17/2021 at 11:12 AM, Milcon said:

I have a FFP task order with a cost reimbursable CLIN for travel.  After an option year is over any travel funds remaining are deobligated.  I noticed that the total task order value is decreased based on the deobligation.  Is this correct?  Or should the total task order value stay the same as the deobligation was not a change in scope?

The very first response to that should have been:

If the "total task order value" is the sum of the values of the individual order line items, then a change that reduces the value of any of the order line items should result in a commensurate reduction to the "total task order value."

Period. However, an amusing addition to that would have been, Duh.

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On 3/18/2021 at 8:07 PM, joel hoffman said:

If the answers to these two questions are yes and one of those forms or a similar form was used, the total amount of the task order will change when you change the total amount of any CLIN.

Thank you. 

And yes, “this is just what we do” (to be consistent with the fact that the total amount of the task order equals the total of all the CLINs).

 

Thank you.

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