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  • Question

    Does the Anti-Deficiency Act, Bona Fide Need Rule, FAR/DFAR, DAG, or any other statute/code or regulation prevent taking funds from (deob'ing) an awarded contract under protest to use on another contract? From past experience, I have not been able to move funds from a contract under protest (since it is still an "awarded" albeit "in limbo" vehicle?)...


    Answer

    There are two aspects to consider in this question.  First, is it reasonable and proper to deobligate funds on the protested contract, and second, what, if any,  are the ramifications of continuing work under a different vehicle in this environment.  Relative to whether a deobliation is proper, look to the GAO Redbook, chp 7 which states that an obligation arises when the definite commitment is made, even though the actual payment may not take place until a future timeframe or  fiscal year.  For appropriations law purposes, the term “obligation” includes both matured and unmatured commitments. A matured commitment is a legal liability that is currently payable. An unmatured commitment is a liability which is not yet payable but for which a definite commitment nevertheless exists.  The fact that an unmatured liability may be subject to a right of cancellation does not negate the obligation.  It further states that a proper and unliquidated obligation should not be deobligated unless there is some valid reason for doing so.  Absent a valid reason, it is improper to deobligate funds solely to “free them up” for new obligations.  To do so risks violating the Antideficiency Act.  So assuming the awarded contract reflects a valid binding contract and obligation, the stop work realistically changes the commitment to a future or unmatured commitment/liability pending the outcome of the protest decision.  In view of these considerations, it would not be proper to deobligate the funds.
     
    The other perspective is that one should also consider the impact of extending the incumbent contract.  If the work is critical to the organization, the proper process for ensuring the work is performed  is to seek an urgent and compelling determination from the proper organizational authority to allow the commencement of work under the awarded contract.  It could be viewed that deobligating funding to continue work on the incumbent contract is a method to circumvent the process established by the FAR Part 33.  One would also have to determine whether there would be an impact to the scope of work on the pending contract since some of the work would have been performed under a different vehicle.  Given that Agencies shall make their best efforts to resolve agency protests within 35 days and GAO issues its recommendation on a protest within 100 days from the date of filing, or within 65 days under the express option, the organization needs to balance the ramificaitons of a deobligation and the time necessary to negotiate a bridge against these decision timelines.



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