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  • Question

    What modification authority should be used to remove the excess funds? Should the modification to remove excess funds be bilateral or unilateral?


    Answer

    Clauses already in the contract should be checked first as a reference for modification authorities, so those should be reviewed to see if any apply. Note DFARS PGI 243.171 briefly discusses obligation or deobligation of funds, so review that to see if it applies to your action. If there are no clauses applicable in the contract, then this DFARS PGI could be referenced as the authority. If the action were to be bilateral and no clause applies, then "Mutual agreement of the parties" could be used. If the contract is commercial and the contracting officer wants the action to be bilateral, then FAR 52.212-4(c) could be used. 

    There are different opinions regarding if a deobligation of funding is administrative in nature. If the contracting officer determines it to be administrative, then that would allow an unilateral modification, as long as the pricing on the contract was not reduced as well. In this case, no authority would apply as box 13.B. would be checked in the Standard Form 30 for the modification. 

    If the contracting officer prefers to have the deobligation be a bilateral action and a contractor went out of business, is there still someone from that company who has the fiduciary ability to sign on behalf of the company? If yes, then you could make the modification bilateral and have that individual sign it. Otherwise, if there is no one to sign the modification, then it would have to be unilateral.

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