Can the Government take funds unpaid funds from TO 0001 as compensation for the overpayment on TO 0002, which the contractor refuses to return?
As with many issues in the Contracting business, there may be more than one answer to any given problem. In this case, it sounds like your requirement changed. Once the contracting officer is convinced that there are no scope issues at hand, it seems likely that TO 0002 could be modified to reflect the change. I would recommend that you work out with the contractor and the financial management personnel how best to address the payments issues. It seems likely that with the mod, the overpayment received for TO 0002 could be applied to the amount still due on TO 0001. Otherwise, there would be a series of refunding, and repayment. That should be a joint decision as to how it is done. The main point is to ensure that the contract (TOs), the invoices, and the funds paid are correctly accounted.
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