Question: At what point in the acquisition process does the Government need to have committed funds or the process is on hold?

Situation: The Government has a hybrid CPIF/CPAF contract with a Contractor for what is most correctly classified as a series of complex non-commercial supplies which will be accomlished according to specifications. This contract is not an IDIQ, rather the ordering of work is done by modifying the contract to add the work according to option CLINs much like the issuance of a delivery order. The Government agency is a little short on money, needs to have some work done within the current fiscal year, but will not commit funds for the work just yet. The magnitude of the work is roughly $6M. The agency sends an unfunded purchase request to the contracting office for action stating that 'we would like to fund this'. The contract contains no clause which would restrict the Government from moving forward with a request for contract modification to add the work which would be considered within scope despite having no committed funding at the level of the Government estimate. The Contracting Officer has observed the agency behave in this manner previously; specifically two instances where the agency was not able to fund a major portion of the requirement for work similar in magnitude to the instant body of work but has gone through the process of requesting a change proposal and even negotiating and arriving at a negotiated target cost for the work, only to have the work scope significantly reduced to fit the actual amount of funding available. The result previously has been that the Government in the course of descoping work had to cut 1/2 of the work package to accomodate the deficit of 1/3 of the necessary funding for the entire work package. The Contracting Officer considers the following realistic potential Courses of Action (COAs):

Course of Action 1: The Contracting Officer halts the process stating that funds must be committed at the level of the Government's estimate for the work in order to request a change proposal. The Contracting Officer conducts an exhaustive search for his / her authority to enforce such a standard, but is unable to find one. This exhaustive search includes the contract, agency internal controls and policies, FAR, agency FAR supplement(s), case law, Administration of Government Contracts, Formation of Government Contracts, wifcon archives, etc. The agency becomes displeased with the contracting office, does not commit funds, and communicates at the executive and senior executive level to force the request for change proposal to be issued by the contracting office.

Course of Action 2: The Contracing Officer proceeds with the request for change proposal with no assurance that funds are available or budgeted to fund the requirement. History repeats itself.

Discussion: I've got to say it seems like COA 1 is a losing battle. There's nothing explicit that I have been able to find aside from the Army FAR Supplement at 5101.602-2 that gives Contracting Officers the responsiblility and authority to force the agency to have funding in-hand or budgeted and that only seems to apply when forming a new contract. The Air Force in the past has used Special Advance Authority to identify within soliciations that fudning is not available and would assign a degree of probability that the requirement would become funded. But again, that was specific to forming a new contract. It just seems to me that an agency can't say with a straight face that it is proceeding in good faith with the Contractor to go through a 4 month change proposal process (which is paid for through costs on the contract) without (1) having funds committed in its accounting system, (2) having funds budgeted, or (3) at a minimum formally notifying the Contractor that funds are not currently available and may or may not become available.

Any thoughts on this topic would be greatly appreciated.

DAMB,

Your story is very familiar to me--I worked in the same environment at one point in my career. I also looked for some type of rule that said funds needed to be committed before negotiations could begin with a contractor--and I came up empty. I probably dealt with the same customer that you are dealing with now.

I think you should elevate the issue to your management. Maybe they can get more of a "commitment" from the customer before "committing" their employees to negotiating contracts that don't come to fruition.

No big deal. First, this is not a matter of something a CO can "enforce". The CO can simply refuse to proceed and let the people making the request go over the CO's head. The chief of the contracting office or the head of the contracting activity back the CO or tell him to proceed as requested. It's a management decision.

As for the contractor, just tell them that you don't yet have funds and that there is no guarantee that you will ever have funds, but that you would like a proposal. Unless a clause in the contract requires them to submit one, they can refuse or take the risk.

DAMB,

Your story is very familiar to me--I worked in the same environment at one point in my career. I also looked for some type of rule that said funds needed to be committed before negotiations could begin with a contractor--and I came up empty. I probably dealt with the same customer that you are dealing with now.

I think you should elevate the issue to your management. Maybe they can get more of a "commitment" from the customer before "committing" their employees to negotiating contracts that don't come to fruition.

Don, yes, you know exactly which customer we are talking about here. And commitment certainly is a relative term, which is certainly a new concept to me.

No big deal. First, this is not a matter of something a CO can "enforce". The CO can simply refuse to proceed and let the people making the request go over the CO's head. The chief of the contracting office or the head of the contracting activity back the CO or tell him to proceed as requested. It's a management decision.

As for the contractor, just tell them that you don't yet have funds and that there is no guarantee that you will ever have funds, but that you would like a proposal. Unless a clause in the contract requires them to submit one, they can refuse or take the risk.

Vern,

Yes, truly the CCO and HCA have to use their judgement to balance the agency's mission against the funds that may or may not be available. For some agencies this is a black and white issue, for others it is not. But in any event, as long as it is clear to all involved the status of the funds, then at least the Government is operating in good faith.