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SUBPART 232.7--CONTRACT FUNDING

(Revised May 25, 1999)

 

 



 232.702 Policy.
 232.703 Contract funding requirements.
 232.703-1 General.
 232.703-3 Contracts crossing fiscal years.
 232.703-70 Military construction appropriations act restriction.
 232.704 Limitation of cost or funds.
 232.704-70 Incrementally funded fixed-price contracts.
 232.705 Contract clauses.
 232.705-70 Clause for limitation of Government’s obligation.


232.702  Policy.

Fixed-price contracts shall be fully funded except as permitted by 232.703-1.

 

232.703  Contract funding requirements.

 

232.703-1  General.

 

      (1)  A fixed-price contract may be incrementally funded only if—

 

              (i)  The contract is funded with research and development appropriations;

 

              (ii)  Congress has otherwise incrementally appropriated program funds; or

 

              (iii)  The head of the contracting activity approves the use of incremental funding for either base services contracts or hazardous/toxic waste remediation contracts.

 

      (2)  Incrementally funded fixed-price contracts shall be fully funded as soon as practicable after full funding is available.

 

232.703-3  Contracts crossing fiscal years.

 

     (b)  The contracting officer may enter into a contract, exercise an option, or place an order under a contract for severable services for a period that begins in one fiscal year and ends in the next fiscal year if the period of the contract awarded, option exercised, or order placed does not exceed 1 year (10 U.S.C. 2410a).

 

232.703-70  Military construction appropriations act restriction.

Annual military construction appropriations acts restrict the use of funds appropriated by the acts for payments under cost-plus-fixed-fee contracts (see 216.306(c)).

 

232.704  Limitation of cost or funds.

 

232.704-70  Incrementally funded fixed-price contracts.

 

      (a)  Upon receipt of the contractor’s notice under paragraph (c) of the clause at 252.232-7007, Limitation of Government’s Obligation, the contracting officer shall promptly provide written notice to the contractor that the Government is—

 

              (1)  Allotting additional funds for continued performance and increasing the Government’s limitation of obligation in a specified amount;

 

              (2)  Terminating the contract; or

 

              (3)  Considering whether to allot additional funds; and

 

                    (i)  The contractor is entitled by the contract terms to stop work when the Government’s limitation of obligation is reached; and

 

                    (ii)  Any costs expended beyond the Government’s limitation of obligation are at the contractor’s risk.

 

      (b)  Upon learning that the contract will receive no further funds, the contracting officer shall promptly give the contractor written notice of the Government’s decision and terminate for the convenience of the Government.

 

      (c)  The contracting officer shall ensure that, in accordance with paragraph (b) of the clause at 252.232-7007, Limitation of Government’s Obligation, sufficient funds are allotted to the contract to cover the total amount payable to the contractor in the event of termination for the convenience of the Government.

 

232.705  Contract clauses.

 

232.705-70  Clause for limitation of Government’s obligation.

Use the clause at 252.232-7007, Limitation of Government's Obligation, in solicitations and resultant incrementally funded fixed-price contracts.  The contracting officer may revise the contractor’s notification period, in paragraph (c) of the clause, from “ninety” to “thirty” or “sixty” days, as appropriate.

 

 

 


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