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  • Question

    From a contracting perspective only, what is the statutory authority and/or FAR cite that enables or prohibits the KO from deobliging of funds from a contract after they are initially obligated?


    Answer

    The following response is based solely on the question and background information provided. As we do not have all of the facts particular to your contract, program, and situation, we highly recommend you consult your leadership, contracting officer and Legal Office for guidance.  I assume your cost reimbursable contract contains the clause at FAR 52.232-20, Limitation of Cost.  This clause stipulates the procedures associated with contractor's obligations to perform within the target cost of the contract and the various notification requirements of both the contractor and the contracting officer to ensure costs incurred and paid are managed within said contract target cost.  FAR 32.700 -- Contract Funding places the obligation on the Contracting Officer to manage funds appropriately for contracts under
     
    his/her authority.  Note FAR 32.703-1 which addresses both full funding and incremental funding levels required under either funding approach. Additionally, FAR 32.704 clearly directs that the Contracting Officer manage  funding under a contract subject to the Limitation of Cost clause such that target costs are not exceeded.  Whether and when a Contracting Officer obligates or deobligates funds is immaterial so long as the funds are provided on the contract in conformance with the Limitation of Cost clause and any other funding limitations or guidance stipulated by your local agency.
     
     

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