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Sole Source, Business Clearance subject to availability of funds


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Anticipate releasing a solicitation subject to availability of funds.

How far along in the process can I get without funds? Can I achieve business clearance (negotiate with contractor with agreement of negotiated amount contingent upon availability of funds?) and assume that Contract Clearance will be where the stop sign is at?

 

(Country X does not have funds avail this year, manpower to be provided this CY to work pre-award, but adtl lines for buy will not be implemented until next CY.)

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Just now, Self Employed said:

How far along in the process can I get without funds?

Read FAR 32.703-2, Contracts conditioned upon availability of funds, paragraph (a), and the clause prescribed by FAR 32.706-1(a). Then think about it.

Check your agency FAR supplement.

Artificial intelligence would know the answer. So would people who research the FAR.

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Thanks for the citations - however, that does not answer my question of whether I will be authorized via business clearance to enter negotiations with the contractor without funds.

Don't necessarily see why not, and believe contract clearance would be the proverbial stop-sign.

Acq does not meet requirements at FAR 32.703-2(a)/(b).

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Just now, Self Employed said:

Thanks for the citations - however, that does not answer my question of whether I will be authorized via business clearance to enter negotiations with the contractor without funds.

UNDER FAR YOU CAN GO ALL THE WAY TO CONTRACT AWARD. THAT'S WAY THEY CREATED A CONTRACT CLAUSE ABOUT AVAILABILITY OF FUNDS.

A CONTRACT CLAUSE! A CONTRACT CLAUSE!

YOU WOULDN'T NEED A CONTRACT CLAUSE IF YOU COULDN'T ENTER INTO CONTRACT NEGOTIATIONS.

The answer to your question is a matter of local policy. You seem to think that "business clearance" means the same thing to everyone. It doesn't. The term "business clearance" does not even appear in the FAR. It only appears in the DFARS, and only in two places.

Put your question to someone in your organization.

 

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4 minutes ago, Vern Edwards said:

UNDER FAR YOU CAN GO ALL THE WAY TO CONTRACT AWARD. THAT'S WAY THEY CREATED A CONTRACT CLAUSE ABOUT AVAILABILITY OF FUNDS.

A CONTRACT CLAUSE! A CONTRACT CLAUSE! YOU WOULDN'T NEED A CONTRACT CLAUSE IF YOU COULDN'T ENTER INTO CONTRACT NEGOTIATIONS.

 

 

Only if you meet the conditions at FAR 32.703-2(a)/(b), which has been previously stated before this bold and italicized post that the acq does not.

Thus, it is only included/referenced in the solicitation.

4 minutes ago, Vern Edwards said:

 

The answer to your question is a matter of local policy. You seem to think that "business clearance" means the same thing to everyone. It doesn't.

 

Which is why I'm asking for thoughts/experience(s).

 

Thanks for your contribution(s).

 

 

 

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Just now, Self Employed said:

Only if you meet the conditions at FAR 32.703-2(a)/(b), which has been previously stated before this bold and italicized post that the acq does not.

Check local policy.

If the procurement is sole source, then asking for a proposal and negotiating should be okay as long as the prospective contractor knows that you don't have money and a contract might not happen. But whether your office will let you do it is a local matter.

 

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14 minutes ago, Vern Edwards said:

Your question was poorly thought out and poorly worded, as was your last response. If your acquisition does not meet the conditions for contracting conditioned upon availability of funds, then why are you asking about it?

I think you are correct that it's a matter of local policy.

There is nothing precluding solicitation before funds are available.

Your references refer to what needs to be included if the contract is to be let prior to funds being available, but I know I can't let the contract.

My question is to how far I can go after receipt of solicitation up to contract award, which contains multiple phases.

I have stated I believe the stop sign will either be at business or contract clearance, which is specific to my agency, USAF. 

That is what the OP asks.

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When I was a systems and R&D CO for the Air Force Systems Command with an unlimited warrant, I negotiated a lot of sole source contracts before funds were available. It was never a problem and never questioned. We didn't use the term "business clearance" in those days. We used the term "Contract Review Committee clearance," which took place after JAG review. Sometimes a contract needed approval by the Secretary of the Air Force after Committee clearance and CO signature. In such cases we could not submit a contract for secretarial approval before funds were available.

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23 hours ago, Self Employed said:

Country X does not have funds avail this year, manpower to be provided this CY to work pre-award, but adtl lines for buy will not be implemented until next CY

My thought relates more to how are personnel efforts to perform the pre-work are being funded.   Country X  not having the funds available implies that funds have not been made available to the Federal government.   Is funding for personnel wrapped up in the Country X funding to be provided?  If YES does the Air Force have appropriated funds otherwise to perform the pre-work?   If NO does the Air Force appropriations allow the pre-award work in advance of funding from Country X, or in other words is it an authorized project that allows for use of Air Force appropriated funds for personnel?

 

 

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On 3/17/2023 at 9:08 AM, Self Employed said:

Country X does not have funds avail this year, manpower to be provided this CY to work pre-award, but adtl lines for buy will not be implemented until next CY.)

With respect to Carl’s post, this is sole source and is voluntary on the part of the contractor. Therefore, proposal prep and negotiation costs (if that is what you are cryptically referring to) aren’t reimbursable, right? They are typically an indirect, contractor overhead or G&A (e.g. bid and proposal) cost.

Salaries of Air Force employees to prepare,  negotiate and award contracts are likely O&M funded, aren’t they?

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On 3/17/2023 at 10:55 AM, Retreadfed said:

Who is paying for this contract?  Will U.S. appropriated funds be used?

Typically, foreign funded contract funds flow through the U.S. Treasury. 

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As the OP stated, the conditions for use of the two clauses at 52.232-18 and -19 do not seem to be applicable. In addition, funds won’t be available from the Country X through the US Treasury until the second quarter of next FY, in the next “Calendar Year”.

It would seem, at first glance that there is plenty of time to solicit, receive a proposal, and negotiate a contract to be funded in the next calendar year. Without any more information, my first impression would be - don’t try to price a contract this early that can’t start for 9-10 months out from now. And definitely don’t award a contract in advance of funding.

When the US Military was still active in the former Panama Canal Zone in the 1990’s, our USACE (Corps of Engineers) District advertised many O&M funded backlog of construction (maintenance, repair and alteration) contracts with award subject to the availability of funds. The industry was well aware and cooperated. As excess funds were being released by U.S. Army Southern Command and made available, we’d award as many contracts as possible prior to the expiration of the FY funds at midnight.

Of course, we never awarded any of those contracts without funding. The original poster’s scenario is consistent with that.

But we proceeded up to the point of award prior to obtaining funding, with industry’s full knowledge and participation.

 

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On 3/17/2023 at 11:55 AM, Retreadfed said:

Who is paying for this contract?  Will U.S. appropriated funds be used?

FMS country. 11X8242 funds, FMS trust fund. Office of the President. Technically the account is subject to apportionment, but my understanding is that when funds are implemented from the Letter of Offer and Acceptance the FMR considers it a disbursement.

 

2 hours ago, joel hoffman said:

As the OP stated, the conditions for use of the two clauses at 52.232-18 and -19 do not seem to be applicable. In addition, funds won’t be available from the Country X through the US Treasury until the second quarter of next FY, in the next “Calendar Year”.

It would seem, at first glance that there is plenty of time to solicit, receive a proposal, and negotiate a contract to be funded in the next calendar year. Without any more information, my first impression would be - don’t try to price a contract this early that can’t start for 9-10 months out from now. And definitely don’t award a contract in advance of funding.

When the US Military was still active in the former Panama Canal Zone in the 1990’s, our USACE (Corps of Engineers) District advertised many O&M funded backlog of construction (maintenance, repair and alteration) contracts with award subject to the availability of funds. The industry was well aware and cooperated. As excess funds were being released by U.S. Army Southern Command and made available, we’d award as many contracts as possible prior to the expiration of the FY funds at midnight.

Of course, we never awarded any of those contracts without funding. The original poster’s scenario is consistent with that.

But we proceeded up to the point of award prior to obtaining funding, with industry’s full knowledge and participation.

Thanks Joel -- Similar thoughts. 

 

  

On 3/17/2023 at 11:34 AM, Vern Edwards said:

When I was a systems and R&D CO for the Air Force Systems Command with an unlimited warrant, I negotiated a lot of sole source contracts before funds were available. It was never a problem and never questioned. We didn't use the term "business clearance" in those days. We used the term "Contract Review Committee clearance," which took place after JAG review. Sometimes a contract needed approval by the Secretary of the Air Force after Committee clearance and CO signature. In such cases we could not submit a contract for secretarial approval before funds were available.

I regret to inform you that those terms (business and contract clearance,) have been codified in the AF supplement, and even worse -- additional requirements codified by PEO and therein each individual division.

No process before the process.

That said, provisions you have mentioned do not apply here.

 

  

On 3/18/2023 at 10:09 AM, C Culham said:

My thought relates more to how are personnel efforts to perform the pre-work are being funded.   Country X  not having the funds available implies that funds have not been made available to the Federal government.   Is funding for personnel wrapped up in the Country X funding to be provided?  If YES does the Air Force have appropriated funds otherwise to perform the pre-work?   If NO does the Air Force appropriations allow the pre-award work in advance of funding from Country X, or in other words is it an authorized project that allows for use of Air Force appropriated funds for personnel?

 

 

I probably touch a dozen different cases. I am technically completely funded by one case. When there are personnel who are not assigned a MPCN they are admin-funded. Typically an office carries a certain amount of admin funded positions, which if goes on frequent enough requires them to be moved to an office with a slot to assign them to. As you can imagine, America's recent arms dealing demonstration in Ukraine is accelerating  international demand for materiel. 

 

In an FMS office that pre-work is the cost of doing business. On each case USG takes a %/cut for Manpower/Admin of the case. DCMA/DCAA also take their own cut. Pre-Letter of Request work often includes requests for a rough order of magnitude, and 3-4 meetings with the KTR for our program managers to actually understand their requirement. Estimate is blessed by blessing division, and then sent to country for signature for an official Letter of Request. This codifies what the country is actually looking for. Usually they're looking at not just the U.S. but many other sources to fulfill their needs. We might get this far with a country who wants to do business. Until this goes out and then a Letter of Offer and Acceptance is signed, there is no agreement between USG/Country. Even when the LOA is signed, until they send the check in the mail (designated bank,) funds are received and processed via trust fund.

As Joel mentioned it's treated as overhead until you get to the phase of a formal proposal, and typically only your large(er) businesses bother with proposal prep costs.

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This is a long thread. Why? The OP asked:

On 3/17/2023 at 8:08 AM, Self Employed said:

Anticipate releasing a solicitation subject to availability of funds.

How far along in the process can I get without funds? Can I achieve business clearance (negotiate with contractor with agreement of negotiated amount contingent upon availability of funds?) and assume that Contract Clearance will be where the stop sign is at?

@Self EmployedSince we now know that you aren't talking about the rule at FAR 32.703-2, those are questions to ask your local powers that be. No one else can answer them or offer any helpful "thoughts/experience(s)."

But if you guys are just bored, please feel free to pointlessly continue.

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31 minutes ago, Vern Edwards said:

 

But if you guys are just bored, please feel free to pointlessly continue.

 

I don't necessarily think of additional questions as pointless. Not everyone reading this forum has all of the answers. One of WIFCON's greatest uses is for posterity. Not even for necessarily the right/wrong answer, but arguments made for or against a way forward that might become relevant to someone else in a different application entirely. Whether you personally value the added information/detail on questions asked is certainly important to you, but not everyone who visits this website publishes articles on federal acquisition and may very well encounter something similar in their future experience(s) in a niche acquisition field.

The questions surrounding the type of funding and the different way(s) offices conduct proposal prep are certainly valid directly related and tangential topics respectively.

 

 

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