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    What is my authority for de-obligating funds in this manner?


    The policy for executing funds is found in the Financial Management Regulations 7000.14.  Specifically, Volume #9 contains the following information regarding the correction of an administrative error.  In your question, you did not specify the contract type or funding appropriation details, so here is the best answer available.
    090101. Contracts and Purchase Orders as Supporting Documents A. Purchase transactions by a contracting officer are shown by a written contractual document.
    B. The disbursing office is to receive one copy of the contract in accordance with FAR 4.201. This copy should be retained in the disbursing office files to support payments.
    090201. Correction of Administrative Errors. Errors in contractual documents must be corrected by a formal modification. In the past, there have been problems between disbursing offices and contracting offices concerning the timely issuance and receipt of corrective administrative modifications when payment already has been made. Disbursing office personnel will notify the contracting office personnel of items in the contract that need to be corrected. Contracting personnel will make the changes through a formal modification. Disbursing office personnel will not make any changes to contracts.
    Since the obligation was in written form, a correction should be sent in writing from the contracting officer.  It appears the contractor has not invoiced the government for the incorrect amount, nor has the amount been paid, it should be considered an administrative correction of the obligation amount.
    FMR Volume #9 has additional rules, if the amount was $100 or less.
    The other option would be to keep the funds obligated on the contract, but apply it to a different CLIN (contract line item), which should also be done in writing. 
    Timeliness is key, especially if the obligation period of the funds will expire 9-30-2015.  This will allow the funds to be obligated to other efforts this fiscal year.

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