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  • Question

    My supervisor wants to know if OPA money can be used in this effort. I have not been able to find any clear guidance on this subject.


    Answer

    There is no requirement that a cost reimbursement type contract be funded with a particular appropriation account. The appropriation account (or accounts) used to fund a contract is driven by the type of effort being performed under the contract, not the contract type. Normally, a cost reimbursement contract type is used for efforts that involve a relatively high level of risk. Thus, these type contracts are normally used for development of a weapon system or end item or other research and development type efforts. Accordingly, these contracts are typically funded with Research, Development, Test and Evaluation (RDT&E) appropriations.
    You indicate that your contract will be funded with a combination of RDT&E, procurement and Operations and Maintenance (O&M) appropriations. This could very well be the appropriate way to fund different portions of the contracted effort. I recommend you consider the following to determine if the funding used and/or the proposed contract type is appropriate in your situation.
    1) Are the different tasks under the contract appropriately funded with RDT&E, procurement and O&M? Particularly for the RDT&E and procurement portions, were funds requested in the President's Budget (i.e., specifically called out in the budget justification materials...P-forms and R-forms) and were funds subsequently appropriated for those purposes?
    2) The general DoD policy for selecting contract types would lead you to use cost-reimbursement contracts sparingly, that is, only when there is a relatively high level of risk involved in the work being contracted. You should perhaps reconsider whether or not a cost reimbursement contract type is appropriate for all or portions of your effort. You may find, particularly for the procurement and O&M funded portions, that some type of fixed-price arrangement is more appropriate. Typically, efforts that are properly funded with O&M and procurement are inherently less risky (i.e., procuring or sustaining already developed or off-the-shelf type items).

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