Obligated funds on a Contract and The Government Purchase Card

flitzer said:

I have a program manager that has requested to change the method of payment on a T&M CLIN up to $2500.00 from payment by electronic funds transfer to payment by third party (GPC) in an effort to de-obligate the funds for the contract.  It seems to me I can change the payment method, but in no way can I de-obligate the contract as this is a violation of the Antideficiency Act.  Can a third party credit card company be considered obligated if there are no funds on the contract to fund these services?  I feel like this is really dumb question:)

Many agencies have policies related to use of GPC for such an effort.  Usually the guidance is contained in a guide regarding use of the GPC along with use as alternative payment method.   Have you researched internal agency documents first to find an answer to your question?   As an aside there are many more considerations besides the one you note with regard to using the GPC as the ordering/payment method when stipulated in a contract/purchase order.

flitzer said:

It seems to me I can change the payment method...

Really?  I’m not so sure.  Are you thinking unilaterally, or bilaterally?

A vendor accepting payment by Government purchase card) is charged a fee by the card company. I don’t know how much It typically costs per transaction these days .

it was substantial amount eleven years ago as a one person consultant small business. 

A unilateral change order will probably not be free. It’s not an administrative modification.

its probably not a big deal to a Vendor for a  small amount, assuming that they accept charge cards..

flitzer said:

I have a program manager that has requested to change the method of payment on a T&M CLIN up to $2500.00 from payment by electronic funds transfer to payment by third party (GPC) in an effort to de-obligate the funds for the contract.  It seems to me I can change the payment method, but in no way can I de-obligate the contract as this is a violation of the Antideficiency Act.

Seems that you could bilaterally modify the contract payment terms to incorporate GPC as the method of payment. (see FAR 13.201( b ) and DFARS 213.270  if applicable or for reference)

Chapter 7 of the GAO Redbook provides that you would have to comply with the government's obligation rules (e.g., creating and recording). The T&M CLIN (contract) created the obligation so I assume the GPC would have to have adequate funds loaded to cover and record the obligation.

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Can a third party credit card company be considered obligated if there are no funds on the contract to fund these services?

I don't think the Third Party (Bank) is obligated ...

A possible consideration that may or may not be applicable:  Was the funding obligated on contract during this or a previous fiscal year?  If not obligated this year, and you're considering to pay using funds from this FY on the purchase card, you may create a bona fide needs violation.

ji20874 said:

Really?  I’m not so sure.  Are you thinking unilaterally, or bilaterally?

Bilaterally

jewettr said:

A possible consideration that may or may not be applicable:  Was the funding obligated on contract during this or a previous fiscal year?  If not obligated this year, and you're considering to pay using funds from this FY on the purchase card, you may create a bona fide needs violation.

Yes, funding was obligated on this contract last year.

C Culham said:

Can a third party credit card company be considered obligated if there are no funds on the contract to fund these services?

No.  If your agency has a contractual obligation to pay for services then the obligated amount has to be reserved for the future payment of the obligation.  Changing a contract's method of payment (e.g., EFT vs Purchase Card) doesn't change this.

Many responses lacking specific references concerns me in this Beginner forum discussion. 

Notably, FAR subpart 32.11 specifically provides that use of the GCPC is a EFT means.  Further the same subpart does provide some guiding principles to use of a GCPC as a third party payment method, notably see FAR 52.232-36.

Take a step further and consider DFARS subpart 232.11.

(Again) I highly recommend that the OP seek guidance and opinion from his/her agency FAR supplements and policy and possible SME's within his/her agency and not depend on responses found in this discussion trail.

C Culham said:

Many responses lacking specific references concerns me in this Beginner forum discussion.

Thanks, Carl.