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  • Question

    Can I take into account the expired FY12 OMA, to include customer funds, to pay for the CY13 termination costs since they are already on the contract, although not the current delivery order? Where in the regulations can I find this answer?


    Answer

    See the DoD Financial Management Regulation, Volume 3, Chapter 8, Section 0805 RECORDING OBLIGATIONS FOR COMMERCIAL PROCUREMENT CONTRACTS AND ORDERS

    Paragraph 080512. "Termination of Contracts and Agreements. When a contract or agreement is terminated in whole or in part for the convenience of the government by the giving of a "Notice of Termination" to the other party to the contract or agreement, the obligation recorded for the contract or agreement shall be decreased to an amount that is sufficient to meet the settlement costs under the termination. The obligation shall not be decreased below the amount estimated by the contracting officer, based on the best evidence then available, as the amount due as a result of the termination."

    Therefore, in this situation you have presented, the amount of funds needed to cover the termination costs should remain obligated on the contract.

    In addition, the FY12 OMA are expired and no longer available for new obligations, and do not meet the requirement to have current funds available when the need is identified. Additional guidance on obligations can be found in Volume 3, Chapter 8, Section 0803 OBLIGATIONS, and on the meeting the Bona Fide Need rule in subparagraph 080303. A. Contracts or Orders for Goods, or Services to Meet Bona Fide Need.


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