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    i have a contract that's a cost type and up for canceling funds. The company is out of business and no response from the buying activity. What actions would you take?


    Answer

    Your question raises a number of other questions.  Did the Buying Activity take any type of action against the contractor?  Are the leftover funds due to non-delivery or nonperformance of services?  Are there any legal documents showing the company is out of business so a determination could be made by a Contracting Officer that the contract is closed and the contractor will not be seeking any additional funds under the effort?  If that determination can be made, you should be able to de-obligate any remaining funds.  However, I would try to get the input of an acquisition lawyer about this.  Bottom line:  You will need some Contracting Officer to be able to determine that the contract is closed (administratively or however that is determined) and that the contractor will never come back for any claim or payment under that contract.

    The rest of this answer deals with when a valid bill arrives against an appropriation that is cancelled:

    When a valid, certified invoice or other “bill” from a vendor or supplier arrives at the paying finance office after that appropriation goes into the “closed” status (i.e., funds are “cancelled”), determination of which fiscal year funds should be cited for payment should be relatively simple but is sometimes misunderstood: pay the invoice with currently available funds of the same appropriation account cited for the original contract or other obligation document. This is consistent with U.S. Code, Title 31, Section 1552(a), which states that after the five year expired status period, “the account is closed and any remaining obligated and unobligated balance is cancelled and thereafter shall not be available for obligation or expenditure for any purpose”.
     
     Section 1553(b) of Title 31 further states that “obligations and adjustments to obligations that would have been chargeable to that account prior to closing and that are not otherwise chargeable to current appropriations of the agency may be charged to current appropriations of the agency for the same purpose”. Within DoD, the requirements of Title 31 have been set forth in Chapter 10, Volume 3, of the FMR.
     
    According to Chapter 10, Volume 3, of the FMR, there are specific restrictions on the use of currently available funds used to pay an invoice resulting from an obligation that cites a “cancelled” appropriation that has moved into the “closed” period. The total amount of charges to the current year appropriation account may not exceed the lesser of the following:
     
    · unexpended balance of the closed appropriation account;
    · unexpired unobligated balance of the currently available appropriation account being charged;
    · one percent of the total original amount appropriated to the current appropriation account being charged.


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