52.232-18 -- Removal Upon Receipt of Funding

[KME]

Any authority on point (re: removing 52.232-18 once funds made available)?

I was recently advised my contracting office planned to delete 52.232-18 from contracts once funding is obtained. I advised that's a bad idea. What happen's next FY (clause is not read into a contract per Christian Doctrine), chances that KO's will not add the clause if/when needed are high, etc. I've since heard from a KO that DFAS (Rome) will not make a payment if the clause is in the contract. I advised that our senior contracting officials need to engage DFAS and explore. Point: I've since re-read 52.232-18 and the first sentence got me thinking (a challenge!): "Funds are not presently available for this contract." My gut still says removing the clause is ... well stupid (I mean ill-advised), but I started to question myself (can the Govt make payments if the contract states "funds are not presently available for this contract"?). My experience - the KO merely advises the contractor, via MOD, that funds are available -- and that's it.

[baierle]

Any authority on point (re: removing 52.232-18 once funds made available)?

I am curious about the responses you get on this. I worked for the Army and the KO at the time had me doing the same thing--removing the clause. It did not make sense, just as you said, --because dollars to donuts one woule not have the clause in at the start of the next FY.

I say engage DFAS because that process/policy is ridiculous...

Happy New Year!

I was recently advised my contracting office planned to delete 52.232-18 from contracts once funding is obtained. I advised that's a bad idea. What happen's next FY (clause is not read into a contract per Christian Doctrine), chances that KO's will not add the clause if/when needed are high, etc. I've since heard from a KO that DFAS (Rome) will not make a payment if the clause is in the contract. I advised that our senior contracting officials need to engage DFAS and explore. Point: I've since re-read 52.232-18 and the first sentence got me thinking (a challenge!): "Funds are not presently available for this contract." My gut still says removing the clause is ... well stupid (I mean ill-advised), but I started to question myself (can the Govt make payments if the contract states "funds are not presently available for this contract"?). My experience - the KO merely advises the contractor, via MOD, that funds are available -- and that's it.

[napolik]

Any authority on point (re: removing 52.232-18 once funds made available)?

Let's look at the clause:

Quote

Availability of Funds (Apr 1984) Funds are not presently available for this contract. The Government's obligation under this contract is contingent upon the availability of appropriated funds from which payment for contract purposes can be made. No legal liability on the part of the Government for any payment may arise until funds are made available to the Contracting Officer for this contract and until the Contractor receives notice of such availability, to be confirmed in writing by the Contracting Officer.

Unquote

The last sentence obligates the contracting officer to notify the contractor in writing when the funds are made available. It does not say that the contracting officer must provide written notice and remove the clause from the contract.

As the contract consists of the basic contract and all modifcations, a mod providing the funds anticipated by the clause provides the money and notifies DFAS that the monies are obligated.

I have never encountered that problem with DFAS when using the availability of funds clause. Perhaps you should speak to a supervisor at DFAS.

[Govt0905]

It should be pointed out that if the contract has option years that are not funded, it is important not to remove the FAR 52.232-18 (Availability of Funds) clause from the contract.

There is a series of ASBCA rulings from the 1980-1990s whch hold that an attempt to exercise an option and insert the FAR 52.232-18 when it is not present in the base contract constitutes an invalid option exercise. Lear Siegler, Inc., Management Servs. Div., 86-3 BCA ? 19,155; Holly Corp., 83-1 BCA ? 16,327; J.E.T.S., Inc., 82-2 BCA ? 15,986, aff?d in relevant part, rev?d on other grounds, ASBCA No. 28642, 87-1 BCA ? 19,569, aff?d sub. nom., J.E.T.S., Inc. v. United States, 838 F.2d 1196 (Fed. Cir. 1988), cert. denied, 486 U.S. 1057 (1988).

However, if the FAR 52.232-18 is present in the base contract, it can be placed in the option exercise. Cessna Aircraft Co., ASBCA No. 43196, 93-3 BCA ? 25,912, motion to reopen denied, ASBCA 43196, September 7, 1995, aff?d sub nom, Cessna Aircraft Co. v. Dalton, 126 F.3d 1442 (Fed. Cir. 1998), cert. denied, 525 U.S. 818 (1998); United Food Services., Inc., ASBCA No. 43711, 93-1 BCA ? 25,462; Western States Management Services, Inc., ASBCA 37504, 92-1 BCA ? 24,663.

[KME]

This (below) is great feedback. Tks.

It should be pointed out that if the contract has option years that are not funded, it is important not to remove the FAR 52.232-18 (Availability of Funds) clause from the contract.

There is a series of ASBCA rulings from the 1980-1990s whch hold that an attempt to exercise an option and insert the FAR 52.232-18 when it is not present in the base contract constitutes an invalid option exercise. Lear Siegler, Inc., Management Servs. Div., 86-3 BCA ? 19,155; Holly Corp., 83-1 BCA ? 16,327; J.E.T.S., Inc., 82-2 BCA ? 15,986, aff?d in relevant part, rev?d on other grounds, ASBCA No. 28642, 87-1 BCA ? 19,569, aff?d sub. nom., J.E.T.S., Inc. v. United States, 838 F.2d 1196 (Fed. Cir. 1988), cert. denied, 486 U.S. 1057 (1988).

However, if the FAR 52.232-18 is present in the base contract, it can be placed in the option exercise. Cessna Aircraft Co., ASBCA No. 43196, 93-3 BCA ? 25,912, motion to reopen denied, ASBCA 43196, September 7, 1995, aff?d sub nom, Cessna Aircraft Co. v. Dalton, 126 F.3d 1442 (Fed. Cir. 1998), cert. denied, 525 U.S. 818 (1998); United Food Services., Inc., ASBCA No. 43711, 93-1 BCA ? 25,462; Western States Management Services, Inc., ASBCA 37504, 92-1 BCA ? 24,663.

[chuparosa]

I just join and saw this discussion.

A CO recently notified me that their agency legal office determined the Continuing Resolution Extension end date is the date the work performed under the contract option will cease. The contract option was exercised with FY'11 funds starting 1 Dec. 2010. The option was incrementally funded past the date of the CR end date. The CO has been advised to also bilaterally mod the contract by inserting the subject FAR Clause. From everyone I've spoken with so far, they believe the CO is receiving inaccurate advice.

Any comments.