Heretalearn Posted September 8, 2011 Report Share Posted September 8, 2011 1. If the government does not notify you that funds have been made available for the contract option by its start date, then there is no contract. If you work without a contract you might not get paid. The CO or COTR could go to jail and be fired if they ask you to keep working in the absence of funds. 2. In the absence of a contract, you have no contractual obligation to the government and may stop working. 3. Send the CO and COTR an email notifying them that you are not obligated to continue to perform and that you will stop performing as of a specified date. Tell them that you are continuing only long enough to give them time to prepare for the cessation of the services. Tell them that during this period you are not bound by the terms of the expired contract. End the email with a polite goodbye... they would have no grounds to trash your past performance due to your work stoppage. The quote above is from the Topic, "Availability of Funds", which addressed questions regarding a contractor's risk when continuing to perform after an option is exercised but before funds are obligated for the option period. I remember (maybe inaccurately) in a different Topic discussion, a member or members stating that retroactive exercise (exercise, not funding) of a lapsed option isn't possible, on the basis that one can't take a contract action on a lapsed contract. My company is performing a contract from which it would like to extricate itself. The contract contains FARs 52.232-18 Availability of Funds and 52.232-19 Availability of Funds for the Next Fiscal Year. The next option commences October 1. Historically, the CO has exercised each option with a unilateral modification that stated, in part, "In accordance with FAR 52.232-18, this modification is subject to the availability of FY__ funds." In each instance the funds for the option were obligated a week or more after issuance of the modification exercising the option subject to the availability of funds. I have suggested to my company's leadership that regardless of when the option is actually exercised, should the Agency neglect to obligate funding by the option start date, there will then be no contract, we will not be obligated to continue performance, and we will not be bound by the terms of the expired contract. (We would continue to perform while the Agency makes other arrangements in that case, as long as we were't bound by the expired contract.) I have suggested that we should arrange to have a notification, along the lines discussed in Paragraph No. 3 in the quote above, delivered immediate upon expiration of the current option if funding has not been obligated for the next option. A Federal contracting consultant has advised the company leadership that should events and the company proceed as described above, the CO could merely obligate funding after receipt of our notification, retroactive to the commencement of the new option. In his judgement this action would in some way reconstitute the contract. He has further advised that standing our ground in such a case would constitute default and trigger the default and/or liquidated damages consequences. If the CO fails to obligate funds for the next option by its start date, and we consequently notify the CO that the contract has expired and we will stop performance on a date certain - (1) can the the CO subsequently obligate the funds retroactively? (2) If the CO does so and we cease performance in accordance with our notification, will that constitute default? I hesitate to pit my judgement against that of a professional Federal contracting consultant. Maybe he knows something I don't know. Link to comment Share on other sites More sharing options...
Don Mansfield Posted September 9, 2011 Report Share Posted September 9, 2011 Heretalearn, You're right to second-guess the consultant. It depends on what your contract says. Here's an excerpt from Formation of Government Contracts, Third Edition, p. 1272: Exercise of an option before funds are made available, contingent of the availability of funds, is an invalid exercise, J.E.T.S., Inc., ASBCA 26135, 82-2 BCA ?15,986 ; Lear Siegler Inc., ASBCA 30224, 86-3 BCA ?19,155. However, exercise of an option contingent on the availability of funds is proper if that is called for in the option clause of the contract, Western States Management Servs., Inc., ASBCA 37504, 92-1 BCA ?24,663 ; Cessna Aircraft Co., ASBCA 43196, 93-3 BCA ?25,912. See also Freightliner Corp., ASBCA 42982, 94-1 BCA ?26,538, where the board held that the agency could obtain its requirements for a sixth year by exercising an option on the fifth year of a multiyear contract. I suggest that you and your attorney take a look at your contract and the cases cited and determine which is most applicable to your situation. Link to comment Share on other sites More sharing options...
Guest Vern Edwards Posted September 10, 2011 Report Share Posted September 10, 2011 You should discuss this with a government contracts attorney, not a consultant, unless the consultant is an attorney. You should NEVER refuse to perform an option or stop performance that you have already begun without talking to an attorney first. Link to comment Share on other sites More sharing options...
Heretalearn Posted September 13, 2011 Author Report Share Posted September 13, 2011 We won't actually discontinue performance. I think we may have to get a COFD and bring the matter before the BCA, and we would continue to perform throughout that process if the CO requires it. I would still like the group's judgement as to the existence of a contract if, after exercising the option subject to the availability of funds, the CO does not, in fact, fund the option by it's start date - and whether, if she funds it retroactively, that somehow reconstitutes a lapsed contract. In my mind, that's a different question than whether the option exercise is proper when issued. Link to comment Share on other sites More sharing options...
formerfed Posted September 13, 2011 Report Share Posted September 13, 2011 Historically, the CO has exercised each option with a unilateral modification that stated, in part, "In accordance with FAR 52.232-18, this modification is subject to the availability of FY__ funds." In each instance the funds for the option were obligated a week or more after issuance of the modification exercising the option subject to the availability of funds I'm not going to do any research on this but you likely would be on shakey ground. Over the past few years, it's rare that agencies receive funding and get it down to the contract levels at the start of the FY (Oct 1). It may be that Congress won't pass a CR until the last minute - who knows, some years it ddn't occur until several days later. With a CR, agencies receive a proportion of a full year. Finance and Budget people need to see how much that is and where it gets applied starting at the major items at the Department level and filtering down to the field levels. That takes time. Link to comment Share on other sites More sharing options...
Guest Vern Edwards Posted September 14, 2011 Report Share Posted September 14, 2011 Heretalearn: You wrote: In each instance the funds for the option were obligated a week or more after issuance of the modification exercising the option subject to the availability of funds. I presume that by "obligated" you meant that the CO had processed a mod to provide a fund citation. Here is the current text of the availability of funds clause in question: Funds are not presently available for performance under this contract beyond ________. The Government?s obligation for performance of this contract beyond that date 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 for performance under this contract beyond _____, until funds are made available to the Contracting Officer for performance and until the Contractor receives notice of availability, to be confirmed in writing by the Contracting Officer. The clause establishes a condition precedent to the contractor's obligation to perform: that the contractor receive a "notice" from the CO of fund availability. The notice must be subsequently confirmed in writing. The notice could be a telephone call and the confirmation could be an email. The clause does not establish a deadline for written confirmation. Nothing in the clause requires a contract modification as a condition precedent to the duty to perform. The only modification required would be to cite funds for invoicing and government internal purposes, which, in my opinion, could be done by a unilateral administrative change. See the definition in FAR 43.101. Before you ask for a CO's final decision, get the facts straight: The issue is when the CO notified you, not when when he modified the contract. The Government's obligation of funds is contingent upon the notice and occurs at that point in time. A court may find that the notification was constructive, rather than formal. So what happened in your case? Did the CO tell that that the money had come, or indicate that to you in some other way, but take a week to mod the contract? If that's it, then I don't think you have a case. I have not looked for case law. See a lawyer. Link to comment Share on other sites More sharing options...
Heretalearn Posted September 14, 2011 Author Report Share Posted September 14, 2011 Heretalearn:You wrote: I presume that by "obligated" you meant that the CO had processed a mod to provide a fund citation. Here is the current text of the availability of funds clause in question: The clause establishes a condition precedent to the contractor's obligation to perform: that the contractor receive a "notice" from the CO of fund availability. The notice must be subsequently confirmed in writing. The notice could be a telephone call and the confirmation could be an email. The clause does not establish a deadline for written confirmation. Nothing in the clause requires a contract modification as a condition precedent to the duty to perform. The only modification required would be to cite funds for invoicing and government internal purposes, which, in my opinion, could be done by a unilateral administrative change. See the definition in FAR 43.101. Before you ask for a CO's final decision, get the facts straight: The issue is when the CO notified you, not when when he modified the contract. The Government's obligation of funds is contingent upon the notice and occurs at that point in time. A court may find that the notification was constructive, rather than formal. So what happened in your case? Did the CO tell that that the money had come, or indicate that to you in some other way, but take a week to mod the contract? If that's it, then I don't think you have a case. I have not looked for case law. See a lawyer. As it happens, in the past the CO has not notified us either orally or in writing that funds were available prior to issuance of the funding modification. I don't know what will happen, of course, with regard to the new option. Thank you. Your analysis makes the position clear. We'll consult a federal contract attorney to advise and direct us. Link to comment Share on other sites More sharing options...
joel hoffman Posted September 14, 2011 Report Share Posted September 14, 2011 As it happens, in the past the CO has not notified us either orally or in writing that funds were available prior to issuance of the funding modification. I don't know what will happen, of course, with regard to the new option.Thank you. Your analysis makes the position clear. We'll consult a federal contract attorney to advise and direct us. If your firm is trying to extricate itself from the contract option, I think that avenue would be the best approach - especially since the answers to your questions depend upon the specific facts of your situation. Good luck. Link to comment Share on other sites More sharing options...
Don Mansfield Posted September 14, 2011 Report Share Posted September 14, 2011 FWIW, I looked for cases where the Government's notice of funds availability was late (i.e., was provided after the proposed start date). The only cases I could find were multi-year contracts that contained an automatic cancellation provision if the notice was not provided by a specified date. I wonder if the contractor would be required to perform if the contract were silent on this issue and the Government's notice was late. For example, the Government exercises an option subject to the availability of funds in September. The option period begins on 1 October. The Government does not provide notice of funds availability until 15 October. Would the contractor be required to perform after receiving the notice? Link to comment Share on other sites More sharing options...
Heretalearn Posted December 16, 2011 Author Report Share Posted December 16, 2011 FWIW, I looked for cases where the Government's notice of funds availability was late (i.e., was provided after the proposed start date). The only cases I could find were multi-year contracts that contained an automatic cancellation provision if the notice was not provided by a specified date. I wonder if the contractor would be required to perform if the contract were silent on this issue and the Government's notice was late. For example, the Government exercises an option subject to the availability of funds in September. The option period begins on 1 October. The Government does not provide notice of funds availability until 15 October. Would the contractor be required to perform after receiving the notice? This was our fact situation precisely. The CO exercised Option X (commencing October 1) subject to Availability of Funds but did not provide notice of availabile funds until October 11 (and in fact told us more than once in the interim that funds were not yet available to her). (Based on the information received in this string we consulted an experienced Government contract attorney.) At 12:01 a.m. on October 1 we notified her of our belief that the contract had therefore lapsed, and later requested and received a COFD, which we appealed. The Government settled with us by allowing a no-cost, no-fault termination. During discussions, the agency's outside counsel referred us to United Food Services, Inc., 93-1 BCA P 25,462 (1992). I wasn't sure the case was relevant here because in that fact situation the CO did provide the notice of available funding prior to commencement of the new option. The appellant seems to be taking issue with, among other things, the validity of the funding. The Board ruled on whether the option was effectively exercised prior to its commencement, declining to decide whether the alleged lapse in funding, if any, breached the contract, but stated: "Events that concern lapses in funding on or after 1 October 1990 have no bearing on (the issue of whether or not the option was exercised effectively prior to 1 October 1990). With respect to the alleged lapses in funding, we decide only that assuming they were breaches, a breach during an option period does not serve to invalidate an otherwise valid exercise of the option." That surprised me. I'd have thought a lapse in funding would serve to lapse the contract. It flummoxes me if we are bound to perform services for which the Government is not bound to pay us. I suspect the Government settled with us on our original terms (we wanted out of the contract) because, as Mr. Edwards pointed out earlier in this string, the notice was a condition precedent to effective exercise of the the option and the CO failed to provide the notice. As they settled with us, the issue's still ambiguous, unless the case they sent us before settlement makes some point too nuanced for me to grasp. I'm sorry - I'm not asking a specific question, which is what this forum's for. I just wanted to share what little light was shed, and the practical resolution that resulted from your collective sagacity. Thank you all. Link to comment Share on other sites More sharing options...
Don Mansfield Posted December 16, 2011 Report Share Posted December 16, 2011 Interesting. Thanks for sharing. Link to comment Share on other sites More sharing options...
kitty Posted December 20, 2011 Report Share Posted December 20, 2011 The quote above is from the Topic, "Availability of Funds", which addressed questions regarding a contractor's risk when continuing to perform after an option is exercised but before funds are obligated for the option period. I remember (maybe inaccurately) in a different Topic discussion, a member or members stating that retroactive exercise (exercise, not funding) of a lapsed option isn't possible, on the basis that one can't take a contract action on a lapsed contract.My company is performing a contract from which it would like to extricate itself. The contract contains FARs 52.232-18 Availability of Funds and 52.232-19 Availability of Funds for the Next Fiscal Year. The next option commences October 1. Historically, the CO has exercised each option with a unilateral modification that stated, in part, "In accordance with FAR 52.232-18, this modification is subject to the availability of FY__ funds." In each instance the funds for the option were obligated a week or more after issuance of the modification exercising the option subject to the availability of funds. I have suggested to my company's leadership that regardless of when the option is actually exercised, should the Agency neglect to obligate funding by the option start date, there will then be no contract, we will not be obligated to continue performance, and we will not be bound by the terms of the expired contract. (We would continue to perform while the Agency makes other arrangements in that case, as long as we were't bound by the expired contract.) I have suggested that we should arrange to have a notification, along the lines discussed in Paragraph No. 3 in the quote above, delivered immediate upon expiration of the current option if funding has not been obligated for the next option. A Federal contracting consultant has advised the company leadership that should events and the company proceed as described above, the CO could merely obligate funding after receipt of our notification, retroactive to the commencement of the new option. In his judgement this action would in some way reconstitute the contract. He has further advised that standing our ground in such a case would constitute default and trigger the default and/or liquidated damages consequences. If the CO fails to obligate funds for the next option by its start date, and we consequently notify the CO that the contract has expired and we will stop performance on a date certain - (1) can the the CO subsequently obligate the funds retroactively? (2) If the CO does so and we cease performance in accordance with our notification, will that constitute default? I hesitate to pit my judgement against that of a professional Federal contracting consultant. Maybe he knows something I don't know. Link to comment Share on other sites More sharing options...
kitty Posted December 20, 2011 Report Share Posted December 20, 2011 I just had a discussion with a GAO Attorney regarding this very issue. It is acceptable to exercise an option, let's say for 1 October, in the month of September, contingent upon availability of funds on 1 October; however, if on 1 October, funds are not available via a CR or actual funding, there is no contract. The Contractor should not be performing, and the Government cannot purport that it will pay in the rears or be paid retroactive. This is an antideficiency since you are obligating the government when there are no funds available. Link to comment Share on other sites More sharing options...
Heretalearn Posted December 20, 2011 Author Report Share Posted December 20, 2011 I just had a discussion with a GAO Attorney regarding this very issue. It is acceptable to exercise an option, let's say for 1 October, in the month of September, contingent upon availability of funds on 1 October; however, if on 1 October, funds are not available via a CR or actual funding, there is no contract. The Contractor should not be performing, and the Government cannot purport that it will pay in the rears or be paid retroactive. This is an antideficiency since you are obligating the government when there are no funds available. Leaving aside what constitutes funds being "available" for the moment, the stated conclusion certainly seems logical. But neither we, nor the attorney we retained, nor, apparently, the Government's outside counsel in the dispute discussed above, found an unequivocal precedent. The case cited to us by the Government's counsel stopped short of addressing whether a funding "breach" is curable, stating only that it didn't impact an otherwise properly exercised option. It would be informative if the GAO attorney you spoke to is aware of a case that specifically states that a lapse in "available" funding (however that is determined) terminates a contract. Link to comment Share on other sites More sharing options...
napolik Posted December 20, 2011 Report Share Posted December 20, 2011 I just had a discussion with a GAO Attorney regarding this very issue. It is acceptable to exercise an option, let's say for 1 October, in the month of September, contingent upon availability of funds on 1 October; however, if on 1 October, funds are not available via a CR or actual funding, there is no contract. The Contractor should not be performing, and the Government cannot purport that it will pay in the rears or be paid retroactive. This is an antideficiency since you are obligating the government when there are no funds available. Prior to exercising an option, agencies sometimes find that they do not yet have the funds in hand. To remedy this problem, an agency has occasionally attempted to wedge an availability of funds condition into the option at the time of exercise. Such attempts have been regularly rebuffed as invalidating the option exercise because the acceptance of the option must be unconditional and in exact accord with the terms of the option.17 To avoid this pitfall, the government must, at least, include the availability of funds condition in the initial contract. 17 See Lear Siegler Inc., ASBCA 30224, 86-3 BCA ? 19,155 at 96,795; J.E.T.S., Inc., ASBCA No. 26135, 82-2 BCA ? 15,986 at 79,274-75. But see Contel Page Services, Inc., ASBCA No. 32100, 87-1 BCA 19,540 at 98,736 (valid option exercise where availability of funds condition appeared in initial contract). Option and Availability of Funds Link to comment Share on other sites More sharing options...
Heretalearn Posted December 20, 2011 Author Report Share Posted December 20, 2011 Now we're just rambling about random option exercise and availability of funds issues. Link to comment Share on other sites More sharing options...
kitty Posted December 21, 2011 Report Share Posted December 21, 2011 My final recommendation to you would be to call the GAO Hotline or email them (this is on the GAO website) by indicating you are seeking an informal decision regarding your matter. Give them as much information as you have regarding the circumstances. They will forward it to the appropriation attorneys who will respond within 72 hours. And, good luck. Link to comment Share on other sites More sharing options...
napolik Posted December 21, 2011 Report Share Posted December 21, 2011 Now we're just rambling about random option exercise and availability of funds issues. One may "legally" exercise an option subject to the availability of funds only if the availability of funds clause was included in the basic contract. Many contracting officers put the clause in the mod exercising the option. If challenged at a BCA, the exercise will not be sustained. The last time I contacted GAO about an "informal opinion", I was told that GAO no longer offers informal opinions. When did you speak with the GAO attorney? Link to comment Share on other sites More sharing options...
Guest Vern Edwards Posted December 21, 2011 Report Share Posted December 21, 2011 Heretalearn should seek legal advice. The most important thing to do with this thread is to think about how to handle the problem of exercising options in the future when funds are not available. Given the uncertainty about funding in the past few years, it seems to me that COs should think ahead. They ought to include the availability of funds clause, if authorized and appropriate, and make it clear that the clause will apply to options. The parties ought to discuss the prospect of delays in the funding of options and reach agreement on how they will handle such problems. The agreement will depend on agency policy and legal outlook. I agree with napolik that the government cannot unilaterally insert the availability of funds clause in option mods. I suspect that if the availability of funds clause is in the contract for use with options and funds do not become available by the first day of the new fiscal year, the contract will have expired and the contractor will no longer be obligated to perform, even if funds become available later. However, I have done no research on that matter. If the contractor continues to perform it will have to do so at its own risk. I don't think a contractor should continue to perform without first getting legal advice. I don't think the contractor is obligated to perform if the government provides notice of fund availability a week late. Again, however, the contractor should get legal advice. Government personnel should not ask for or knowingly encourage or accept continued performance in the absence of funds. Most contractors will want the government to exercise the option and won't want to stop performance. But if a contractor wants out of the option, the absence of funds on day one of the option period is their chance to get out. They should put the Government on notice in advance that they will consider the contract to have expired if they do not receive notice of fund availability by close of business the day before day one of the option period. Link to comment Share on other sites More sharing options...
C Culham Posted December 21, 2011 Report Share Posted December 21, 2011 Vern has offered the best approach in his most recent post. A few thoughts to compliment....... The matter of unauthorized commitment does rear its ugly head if anyone other than a CO or authorized rep thereof advocates continued performance absent a exercise of the option. Consider the language of FAR 17.204(d) when thinking about your contract langauge as proposed by Vern. Again Vern's suggested approach is the most sound but I do find the comparison of the language of FAR 17.1 and 17.2 interesting. In the case of multi-year contracts (17.1) absence of funds demands cancellation of a contract but for a option contract cancellation is not demanded. Might just be the crack in the door that allows for exercise of option after the fact absent language to the contrary. Link to comment Share on other sites More sharing options...
Heretalearn Posted December 21, 2011 Author Report Share Posted December 21, 2011 I did seek legal advice, and the Government ultimately settled with us. At issue were (1) the CO did not provide any written or oral notice of funds availability prior to commencement of the new option; (2) per statements made by the CO in writing and orally, it appears that funds were not, in fact, available until 11 days after the option commenced. (I suspect that had our matter not been settled, the definition of "available" may also have become an issue.) I could not find a case which addressed either of our issues directly (but my research resources are limited). Nor could the attorney we used (but the case settled early, I don't think he did much research). The case the Government's outside counsel referred us to was distinguishable (it appeared) on the first issue and took pains (it appeared) not to address the second issue. If that was the best case he could find, I'm not surprised our case settled early. So far as I can tell, none of the cases kindly provided above addresses either issue, though I'm not a lawyer, nor do I have a fraction of the experience or insight you all have, so I might have missed something. COs do need to think ahead. If our CO had provided the notice of funds availability we would not have had an alleged "hook" to extricate ourselves from the contract. I think COs mostly do think ahead, which may be why it's hard to find decisions that are on-point. But if our CO's statements that she didn't have available funds yet was accurate, notifying us that funds were available certainly wasn't the answer. Had we wanted to continue performance it would have been at our risk, and that she insisted that we do so must, by all I have read, have been at her risk - in theory, at great personal risk. (I have to think she genuinely believed that the notice and actually having funding available, however she defined that, were irrelevant because she would not have taken such a great personal risk, so I naturally wonder what she based that belief on, even after our case settled. She SEEMED to think that the Availability of Funds clause is a get-out-of-jail-free card for the Government regarding funding issues.) It seems everyone is between a rock and a hard place, not the least because for all the pronouncements and dire warnings, there's a conspiracy of silence between COs and contractors about working without funding. I know this because we 've been particpating in it for the better part of three years. Before that, it never came up. Stop Orders may be useful where the clause is present and the services aren't vital. But if Congress doesn't get its appropriations act together, sooner or later a sprinkling of COs will be unable to provide funding for work already suffered to be performed at risk, and the regulations will hit the fan, after which it might be easier to find cases. Link to comment Share on other sites More sharing options...
amthomf Posted June 12, 2013 Report Share Posted June 12, 2013 I believe this issue is related to the above post, plus wifcon will not let me start a new topic??? Is anyone well acquainted with CESSNA AIRCRAFT CO. v. DALTON No. 96-1185? The part the interest me is the Discussion III B. para. 3, which reads, “We reject Cessna's arguments. As noted above, 31 U.S.C. § 1341(a) prohibits the government from making expenditures or incurring obligations before funds have been appropriated. However, as for the apportionment process, addressed by 31 U.S.C. §§ 1511-1519, no such timing limitation exists. For example, section 1512 merely requires appropriations to be apportioned to prevent obligations at rates that could result in the need for a deficiency or supplemental appropriation. Section 1513 provides a time table for carrying out the apportionment process, but is silent on the issue of whether the apportionment process must be carried out before obligations can be incurred. For its part, section 1517 prohibits government officials or employees from authorizing obligations that exceed apportionments, but says nothing about incurring obligations prior to carrying out the apportionment process. In sum, the relevant statutory provisions do not prohibit government agencies from incurring contractual obligations before completing the apportionment process. The remaining sections pertaining to apportionments are similarly silent.” The argument is being made that the CESSNA AIRCRAFT CO. v. DALTON case supports an agency’s ability to utilize FAR 52.232-18 (Availability of Funds) and accept supplies or services under the contract as long as funds have been appropriated. Even though FAR 32.703-2© clearly states, “The Government shall not accept supplies or services under a contract conditioned upon the availability of funds until the contracting officer has given the contractor notice, to be confirmed in writing, that funds are available.” Does anyone agree with the above argument? Your professional opinion Vern, Don, here_2_help, Joel, and all other challengers is much appreciated. Cessna case link: http://www.leagle.com/decision-result/?xmldoc/19971568126F3d1442_11403.xml/docbase/CSLWAR2-1986-2006 Link to comment Share on other sites More sharing options...
Retreadfed Posted June 12, 2013 Report Share Posted June 12, 2013 Please explain how 52.232-18 can be used as authority for payment before funds are made available to the contracting officer when the clause states "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." I do not see a conflict between Cessna and 52.232-18. As the court noted, the statutes discussed are silent on whether the government can incur an obligation prior to the apportionment of an appropriation. When a statute is silent on a point, agencies are permitted to fill in those gaps through regulations. Case in point, the Contract Disputes Act is silent on what is a claim. FAR 52.233-1 fills in the gap on that point. FAR 52.232-18 seems to fulfill a similar function in regard to the incurrence of an obligation prior to an apportionment. Link to comment Share on other sites More sharing options...
amthomf Posted June 12, 2013 Report Share Posted June 12, 2013 Retreadfed, 52.232-18 isn’t being used as an authority for payment before funds are available, but as the authority to accept supplies or services before funds are available for payment as long as funds have been appropriated. I don’t see a conflict between Cessna and 52.232-18 either. I also don’t believe the Cessna case supports the scenario described in my first sentence – accepting supplies or services as soon as funds are appropriated, regardless if the agency actually has the funds to make payments. Link to comment Share on other sites More sharing options...
Don Mansfield Posted June 12, 2013 Report Share Posted June 12, 2013 The argument fails to address the Recording statute. Let's say the CO notifies the contractor that funds are available based on the belief that funds just have to be appropriated, not apportioned, to comply with FAR 52.232-18. The contractor would then be required to deliver the supplies and/or perform the services specified in the contract. As such, an obligation has been created. Pursuant to the Recording Statute, an obligation must be recorded by the agency in the amount of the obligation that was created. When you put a line of accounting on a contract document and a dollar figure, you are communicating the amount of the obligation created and to which appropriation it should be charged. The agency accounting office uses this information to record the obligation in the agency's books. In your scenario, it sounds like an obligation would be created but not recorded. Those making the argument may come back with "We'll just record the obligation later--when the funds come in." Agency financial management policies may place limits on how much time may pass between the creation of an obligation and the recording of an obligation. DoD adheres to the "Ten-Day Rule" in Volume 3, Chapter 8, 080301( A ) of the DoD Financial Management Regulation. Link to comment Share on other sites More sharing options...
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