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  • Question

    Is there an issue in relation to the Bona Fide needs rule? Can this be considered non-severable?


    Answer

    The following response is based solely on the question and background information provided.  As we do not have the entire facts particular to your contract, program and situation, we highly recommend you consult your Contracting Officer and Legal Office for guidance. 
     
    Without statutory authority, fixed period appropriations are only available for the genuine or bona fide needs arising in the period of availability for which they are made. Thus, an agency may not obligate current appropriations for the bona fide needs of future fiscal years without statutory authority. However, one provision of the Federal Acquisition Streamlining Act, now codified at 41 U.S.C. 3903, provides a statutory exception to the bona fide needs rule. Section 3903 now authorizes executive agencies to obligate current appropriations to enter a multiyear contract for the acquisition of both non-severable and severable services for the bona fide needs of up to five (5) fiscal years.
     
    The bona fide needs rule applies to cost-reimbursement contracts, just as it does to other contract types. An agency may use a cost-reimbursement to procure severable services that cross fiscal years if done in conjunction with multiyear contracting authority. When modifying a cost-reimbursement contract to procure additional severable services, an agency must also ensure the modification complies with the bona fide needs rule or one of its statutory exceptions at the time of modification.
     
    See GAO Decision dated Aug 16, 2013 at https://acc.dau.mil/CommunityBrowser.aspx?id=710557. 
     

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