My question is - can I do this modification using prior year funds? if so, what authority can I use to do so?
This is a great question. Normally we get bona fide need questions of using one FY funds for supplies that will not be delivered and/or used until the next fiscal year.
Applying the Bona Fide Needs rule and the associated "lead time" and "stock level" exceptions is not always cut and dry. It often requires the specifics to be examined more closely. Here,your organization seems to be using the language at 31 USC 1502(a) for justification that the expense was "incurred" in the previous fiscal year; therefore using prior FY funds in the new FY is appropriate and authorized. It's an interesting approach I don't think I've seen before. You may be justified as long as your organization is consistent with these procedures annually and your Fiscal Law attorney agrees.
If that's the case; as long as you have a proper long line of accounting with funds available, and the funds have not expired and the bona fide need is still valid, you can push forward with the modification using the prior year's funds.
If using the commercial contract format (SF 1449), the authority you would reference in block 13.C of the SF30 will be FAR 52.212-4(c). If not using the commercial contract format, you will still use block 13.C of the SF30 (supplemental agreement) and cite 'mutual agreement of the parties'.
**NOTE: Whenever you are dealing with areas of accounting/money, to include prior year funds, please validate/verify the funds availability by consulting your finance team within your office to ensure funds are available, correctly coded, and most importantly, not expired.