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  • Question

    Can funds that are not canceling year funds be de-obligated before DFAS has done it's final audit on a cost plus fixed fee contract?


    Answer

    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.  Furthermore, FAR subpart 32.7 covers Contract Funding including the prescription of the Limitation of Cost clause in FAR 32.704 which 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.

    Since it is unknown what other work/tasks remain on this contract and assuming the particular task in question is truly no longer a requirement, I would recommend deobligating funds using a bilateral modification as per FAR 43.103(a)(3).  This provides for written notification and mutual agreement acknowledging the requirement no longer exists and no further work should be performed for that task.


    As to the amount that can be deobligated and in conjunction with awaiting a final audit (or determination of final indirect cost rates), I recommend you consult with your PCO, ACO/DCMA and DFAS.  This is to make sure enough funding remains to make payment on the final voucher after potential adjustments resulting from the final audit and/or cost determinations.


    If this question is a result of the start of the contract closeout process, I recommend getting in touch with your ACO/DCMA and referring to FAR 4.804 and the DCMA Contract Closeout Instruction (
    http://www.dcma.mil/policy/135/DCMA-INST-135.pdf) for further guidance.

    As always, we encourage you to work with your contracting and legal office as well as referencing your agency specific regulations for any acquisition as we don't have all the facts or access to the contract files.



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