Modification of Contract

I don’t know what organization you are with. However,  If there are still FY 18 funds that haven’t been obligated, they remain available for obligation for in-scope modifications. There are DoD procedures for requesting and providing those funds. 

You would use current year funds only if the Army, for example, had no remaining  FY 18 funds to make available.

Am on road at moment. I’m sure someone will provide the citation from the FInancial Management Regulations if you are with DoD.

Yes, it is with the Army!

Kristin3 said:

Yes, it is with the Army!

OK then your finance and accounting office should be able to take care of that   Please note that installations will often claim that there are no funds available. However they have to go up to Army level to seek those funds. Use to happen all the time with us.

I completely agree with Joel.; You should be using FY 18 funds for what you described.  I wouldn’t let local finance people blow you off about not having FY 18 funds because they certainly should.  If not it needs escalated to use funds available to Army.

See Volume 3 Chapter 8. I’m having some difficulty locating the exact paragraph for funds that have expired for new obligations but remain available to fund in-scope changes.  %#?## IPhone 😃

joel hoffman said:

See Volume 3 Chapter 8. I’m having some difficulty locating the exact paragraph for funds that have expired for new obligations but remain available to fund in-scope changes.  %#?## IPhone 😃

Thank you! I'm looking for it now.

Ok sorry, Kristin.  I should have referred you to the GAO Redbook. “Principles of Federal Appropriations Law” 

see Volume 1 , Chapter 5,  “Availability of Appropriations - Time” I suggest reading through the whole Chapter for overall knowledge.

However, you want to know what funds to use for in-scope changes to a construction contract funded with prior year funds which is being performed during subsequent FY, after the original funds expired for new obligations. 

Your example was a differing site condition, but could also be other in-scope changes to the plans or specs - not additional scope.

You will see that once Annual O&M appropriations expire for the purpose of new obligations, the appropriation remains  available for in-scope modifications for a period of five years. 

Look at B. “The Bona fide Needs Rule” -7- “Contract Modifications and Amendments affecting Price.”

Look also at D, “Disposition of Appropriations Balances”, 3. “Expired Appropriations Accounts”, for discussion concerning the life of the accounts and what to use if the funds are no longer available during or after the five year period (I.e., the account is exhausted during or has been closed afterwards). You then use current year funds available for the same purpose or other expired funds that are still available for the same purpose.

The DODFMR provides specific accounting instructions but doesn’t clearly explain that in-scope modifications are antecedent obligations, not “new” obligations. I found the references to five year period of availability for existing obligations for expired funds in numerous Chapters of the FIRMR. I just couldn’t find anything there that specifically discussed in-scope mods being “existing obligations”.

Hope this helps.

Kristin, the GAO Red Book is available online

(Volume I, Chapter 5, B 7; and D 3)

For anyone interested, Bob has much of this summarized here

/legacy/reg/80025411632fccbc.html

Update: Are FY 18 O & M funds expired at this point?

Contract was awarded mid September 2018, now they are requesting to use FY 18 O & M funds? My thought was that these funds were still available a year from the date they were appropriated.

Kristin, you don’t appear to be understanding what the Red Book, Bob’s summary and I are saying.

FY18 funds are still available (not expired) for obligating in-scope mods to an FY 18 funded contract. After 30 September 2018, they are NOT available (expired) for NEW obligations. 

in fact, generally, FY 18 funds would be THE funds that you must use for an in-Scope mod - NOT FY19 funds.

joel hoffman said:

Kristin, you don’t appear to be understanding what the Red Book, Bob’s summary and I are saying.

FY18 funds are still available (not expired) for obligating in-scope mods to an FY 18 funded contract. They are NOT available (expired) for NEW obligations. 

in fact, generally, FY 18 funds would be THE funds that you must use for an in-Scope mod - NOT FY19 funds.

I have confused myself beyond belief and the client had asked us for the wrong thing. I know they need FY 18 funds for the in-scope modification, but they are specifically asking for O & M funds so I wasn't sure if that was included in these type of funds despite the handbook saying they expire one year after appropriation.

Ok -  is the original contract funded with the same type funds as they are providing? 

If so - they are not expired for in-scope modifications. Is the mod an in-scope or is it for additional, new work that is “out of scope?

EDIT: FY18 O&M funds remain available until 30 September 2024 for IN-SCOPE mods to an FY 18 O&M funded contract.  BUT - your legal and F&A resources are supposed to know the answer and advise you.

Kristin3 said:

but they are specifically asking for O & M funds so I wasn't sure if that was included in these type of funds

Was there a typo? I’m not following you... can you please clarify 😊

joel hoffman said:

Ok -  is the original contract funded with the same type funds as they are providing? 

If so - they are not expired for in-scope modifications. Is the mod an in-scope or is it for additional, new work that is “out of scope?

EDIT: FY18 O&M funds remain available until 30 September 2024 for IN-SCOPE mods to an FY 18 O&M funded contract.  BUT - your legal and F&A resources are supposed to know the answer and advise you.

Yes, the original contract was with O & M and now O & M funds are requested again. It is also an in-scope.

Kristin3 said:

Yes, the original contract was with O & M and now O & M funds are requested again. It is also an in-scope.

Okay! So are we in sync now?

joel hoffman said:

Okay! So are we in sync now?

Yes! I'm sorry I completely missed one of your posts earlier. 

So just to confirm contract was awarded in FY 18 with FY O & M 18 funds, requesting funds for an in-scope modification. They should use FY 18 O & M funds for in-scope modification which are available for five years. 

O & M funds only expire after 1 year for NEW obligations (aka out of scope obligation would be a new obligation)

Just now, Kristin3 said:

Yes! I'm sorry I completely missed one of your posts earlier. 

So just to confirm contract was awarded in FY 18 with FY 18 funds, requesting funds for an in-scope modification. They should use FY 18 O & M funds for in-scope modification which are available for five years. 

O & M funds only expire after 1 year for NEW obligations (aka out of scope obligation would be a new obligation)

👍👍👍👍👍👍👍 (“LIKE”!)

On ‎9‎/‎10‎/‎2019 at 5:21 PM, Kristin3 said:

If something was unexpectedly found which qualified as a differing site condition,

Are you dealing with a construction contract?  If so, why are you using O&M funds?

Could be repair, minor construction, roofing, pavement repairs, electrical or HVAC or a myriad of other types of work.

joel hoffman said:

Could be repair, minor construction, roofing, pavement repairs, electrical or HVAC or a myriad of other types of work.

Yes, it could be a lot of things that we can speculate about.  However, since this is a beginner forum, it would be a learning experience for Kristin to be able to answer that question.

its road construction

Thanks.  can you answer the second part of my question?  In this regard, have you been told of the infamous airfield constructed at Ft. Lee, VA using O&M funds?

Retreadfed, are you concerned that the OP is spending O&M funds for other than unspecified minor construction, maintenance or repairs?

joel hoffman said:

Retreadfed, are you concerned that the OP is spending O&M funds for other than unspecified minor construction, maintenance or repairs?

Not necessarily, but we know that it happens generally inadvertently through a lack of knowledge or not knowing all the facts of a procurement.  As the contracting officer, Kristin needs to make sure that all requirements of law and regulation have been met before signing off on the mod.  Thus, it would be good to know the rules in this regard and to be on the alert for potential repeats of the Ft. Lee airfield.  I know this was covered in several courses I took while working for DoD.

For the original poster's benefit, it might be good to say that there is a concern regarding the statutory cost limitation on funding construction projects with O&M funds -- let's say the limit is $300K (it used to be that amount) -- a contract for minor construction for $250K using O&M money is fine, but an additional $100K modification using O&M money would bust the limitation in violation of statute.  I think the limit today is higher.  See 10 USC 2805.

ji20874 said:

For the original poster's benefit, it might be good to say that there is a concern regarding the statutory cost limitation on funding construction projects with O&M funds -- let's say the limit is $300K (it used to be that amount) -- a contract for minor construction for $250K using O&M money is fine, but an additional $100K modification using O&M money would bust the limitation in violation of statute.  I think the limit today is higher.  See 10 USC 2805.

It’s $750 Thousand and up to $2 MILLION with Secretary of the Service approval. It hasn’t been $300k for many years.

Well, I allowed that it might be higher today -- I left DoD many years ago.  What is important is using the right terms, such as statutory cost limitation, and providing the citation, such as 10 USC 2805 (but I don't know the DoD implementing regulation citation), to help the original poster do her own research and ask the right questions, so she can get the right answers, rather than talking around the issue.

Kristin3, since you're using O&M funds for a construction project in DoD, is there any possibility that your proposed modification might violate the statutory cost limitation in 10 USC 2805?

Also, if it is $2M or more, congress needs to be notified regardless of the color of money used.

Hello everyone again,

New project...FY 18 repair and doing an inscope mod. and they want to use FY 18 funds for repair....do you need to do a bona fide needs analysis for this type of in-scope mod? I've read the GAO etc. and i know you can use FY 18 funds, but do you have to do a bona fide need analysis as well? 

thanks!

Kristin,

What is your role?  Contracting officer, finance/budget specialist, program manager, attorney, something else?

You should be able to rely on your funds certifying official — he or she will certify that the provided funds are appropriate for the intended use.

There is no FAR requirement for the contracting officer to do a “bona fide needs analysis” — he or she simply needs to be satisfied that the work is within the scope of the original contract.  The FAR doesn’t require documentation for the file — the mere fact of the signed modification is the proof of the contracting officer’s satisfaction on that matter.

Kristin3 said:

Hello everyone again,

New project...FY 18 repair and doing an inscope mod. and they want to use FY 18 funds for repair....do you need to do a bona fide needs analysis for this type of in-scope mod? I've read the GAO etc. and i know you can use FY 18 funds, but do you have to do a bona fide need analysis as well? 

thanks!

Do not forgot that your agency may have guidance as to your responsibility with regard to bona fide needs review, analysis or whatever it might be called.  By example NASA's FAR Supplement (NFS) at 1837.106-70 does place bona fide needs responsibility on certain folks.  Other agency's may have responsibilities stated in policy documents.   In this context ji20874's guidance is general, your agency's guidance may be more specific.

So, if there is not enough funds in that prior year account when that in scope mod needs to be executed, can I use whatever is there in that prior year account and fund the rest with current year funds? I have done that before but I don't know if that is common practice.

For example:

In-scope mod amount: $50,000.00

FY 18 account available amount: $30,000.00

Current Year available amount: $1,000,000.00

Solution: Take $30,000.00 from that prior year FY2018 account, and take the remaining $20,000.00 from current year funds. Is this common practice? Or is it an all or nothing thing where if there is not 100% of the amount in the prior year account then I must use all current year funds? Thanks.

Sam, what specifically do you mean when you say “not enough funds in that prior year account”? In other words what prior year account (I.e., locally available funds, agency available funds, etc.) are you referring to?

For instance, if you are in a DoD Service, are you referring to Service level funding or a locally available account?

The reason I ask is that prior year funding may be available for in-scope mods at a higher level than currently allocated locally. If so, that doesn’t allow you to use current year funding...

However, if  adequate prior year funds of the type originally obligated are not available from any levels, then you can make up the difference with current year funds available for that purpose .

joel hoffman said:

Sam, what specifically do you mean when you say “not enough funds in that prior year account”? In other words what prior year account (I.e., locally available funds, agency available funds, etc.) are you referring to?

For instance, if you are in a DoD Service, are you referring to Service level funding or a locally available account?

The reason I ask is that prior year funding may be available for in-scope mods at a higher level than currently allocated locally. If so, that doesn’t allow you to use current year funding...

However, if  adequate prior year funds of the type originally obligated are not available from any levels, then you can make up the difference with current year funds available for that purpose .

Thanks Joel, I was talking about the lowest level of the actual prior year accounting line, but I see your point, so, my take away from your answer is that the accounting department must find prior year funds somehow, but if they cannot find them from any level, then supplementing the remainder of the mod amount from current year funds is allowable.

Sam101 said:

Thanks Joel, I was talking about the lowest level of the actual prior year accounting line, but I see your point, so, my take away from your answer is that the accounting department must find prior year funds somehow, but if they cannot find them from any level, then supplementing the remainder of the mod amount from current year funds is allowable.

Correct. I will add a caution though. My USACE organization performed construction contracting for USAF MILCON and O&M funded projects. The USAF project managers would take the necessary actions for USAF to transfer funds via “MIPRs“ (“military interdepartmental funds requests”) for O&M funded contracts and mods and for user requested changes for MILCON contracts. It was not uncommon for them to transfer or try to transfer current year funding for changes to O&M funded contracts, claiming that original year funding wasn’t available.

I don’t know if they didn’t inform their Finance and Accounting Offices (Resource Management Offices) or if their F&A offices were just plain ignorant. We couldn’t accept the current year MIPRs unless they could show that the original year funding was no longer available for in-scope changes at Air Staff level or wherever funds expired for new obligations were managed ( I used to know but don’t remember).

I don’t ever remember an instance when they weren’t available.