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  • Question

    1. Is this a valid obligation realignment of funds using an expired appropriation or should the supplies use current year funding? If the use of the expired appropriation is inappropriate, does the expired appropriation or period of performance on contract play a part in the determination? 2. Is there a general rule of thumb for CLIN/SCLIN realignments on the same contract for expired appropriations inappropriate? 3. Are there any particular areas we should focus on to determine if it is appropriate to move funding around on CLINs/SCLINs? 4. Do reprocurement actions mostly pertain to replacement contracts? If not, what exactly does reprocurement mean?


    Answer

    The FY10 O&M funds expired 30 Sep 2010. As of 1 Oct 2010, all unobligated balances and unliquidated obligations moved from the current account to the expired account. Those expired funds are available for five years for payments and adjustments (up or down) to existing obligations. They are not available for new obligations or increased scope of work on existing obligations. The appropriation retains its FY identity and remains available for recording, adjusting and liquidating obligations properly chargeable to that account. See DOD 7000.14-R par 100201, Volume 3 Chapter 10 Accounting Requirements for Expired and Closed Accounts. 
     
    The procurement of supplies in FY11 is viewed as a new obligation. The attempt to use expired FY10 funds for FY11 supply needs would also violate the bona fide need rule. Required FY11 supplies should be purchased with FY11 funds, not FY10.
     
    The period of performance of a contract has no bearing on the current, expired or cancelled status of an appropriation.
     
    With expired funds, the focus should be on proper payments and adjustments to EXISTING obligations (no new obligations).
     
    "Do reprocurement actions mostly pertain to replacement contracts? If not, what exactly does reprocurement mean?"
     
    To reprocure literally means to procure again. The reason for the repurchase may be to replace supplies lost, to replace defective supplies rejected, to purchase supplies after the original contractor has been terminated for default, etc. In the latter case, the Government may reprocure the supplies under a replacement contract. See FAR 49.402-6 and 52.219-8 (b).  Which funds are used to fund the replacement contract? If the criteria for a replacement contract are met, original contract funds may be used. The criteria are set forth in DoD Financial Management Regulation (FMR) vol. 3, chapter 8, para. 080303. E. "Contractor Default" and in FMR Vol. 3, chapter 10, para. 100206. "Reprocurements." Per the latter cite, "(i)f all of these conditions cannot be met, then current year funds shall be used to fund the requested action."
     
    The context of your discussion of "reprocurement" seems to relate more to how one determines whether a particular change is in-scope. Per DOD FMR vol. 3, chapter. 6, para. 061001: “Within-scope changes generally are funded from the appropriation that originally financed the contract until cancellation. Change-in-scope contract changes are financed from appropriations currently available for obligation at the time the change is made. Specific guidelines for determining scope of work changes are defined in Chapter 8 of this Volume.”
     
    Vol. 3, chapter 8, para. 080304 identifies "Specific Guidelines for Determining Scope of Work Changes". Generally, an in-scope change is one that was within the reasonable contemplation of the parties and the field of competition for the original contract. However, scope determinations are very complicated and are heavily governed by case law. As this FMR paragraph points out, scope determinations must be made by the contracting officer. Consult your contracting officer and legal counsel for any scope determinations in your particular case."

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