Is DFARS Clause 252.232-7007 Limitation of Government's Obligation only to be used to incrementally fund a firm-fixed price contract under a Continuing Resolution (CR)? I read the clause and prescription and could not find any mention that this clause is only applicable to a CR; however, other Contracting Officers are insisting that it is only applicable when the Government is operating under a CR.
I agree that a CR is a reason why a Contracting Officer may negotiate into a contract this clause but it is not the sole reason. Can you verify? Thanks.
First of all, the short answer is that a Continuing Resolution (CR) is not the only scenario for using DFARS Clause 252.232-7007. All the regulations are silent regarding the term "CR" (only HHSAR 332.703-70 mentions it), but there are several potential references that may be applicable.
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Second, the clause DFARS 252.232-7007 prescription at 232.705-70 Limitation of Government's Obligation states that it is only to be used in solicitations and resultant incrementally funded, fixed price contracts. There are no other applicable DFARS clauses or references specifically to a CR.
To generalize, a CR creates a scenario where the contract is not fully funded, so there must be a clause to address the need to fund which is similar to what is called "incremental funding". The applicable references for a CR, therefore, could be:
FAR 32.703-1 -- General.
(a) If the contract is fully funded, funds are obligated to cover the price or target price of a fixed-price contract or the estimated cost and any fee of a cost-reimbursement contract.
(b) If the contract is incrementally funded, funds are obligated to cover the amount allotted and any corresponding increment of fee.
FAR 32.703-2 -- Contracts Conditioned Upon Availability of Funds.
(a) Fiscal year contracts. The contracting officer may initiate a contract action properly chargeable to funds of the new fiscal year before these funds are available, provided that the contract includes the clause at 52.232-18, Availability of Funds (see 32.705-1(a)). This authority may be used only for operation and maintenance and continuing services (e.g., rentals, utilities, and supply items not financed by stock funds)
(1) necessary for normal operations and
(2) For which Congress previously had consistently appropriated funds, unless specific statutory authority exists permitting applicability to other requirements.
(b) Indefinite-quantity or requirements contracts. A one-year indefinite-quantity or requirements contract for services that is funded by annual appropriations may extend beyond the fiscal year in which it begins; provided, that --
(1) Any specified minimum quantities are certain to be ordered in the initial fiscal year (see 37.106) and
(2) The contract includes the clause at 52.232-19, Availability of Funds for the Next Fiscal Year (see 32.705-1(b)).
(c) Acceptance of supplies or services. The Government shall not accept supplies or services under a contract conditioned upon the availability of funds until the contracting officer has given the contractor notice, to be confirmed in writing, that funds are available.
FAR 32.705-1 -- Clauses for Contracting in Advance of Funds.
(a) Insert the clause at 52.232-18, Availability of Funds, in solicitations and contracts if the contract will be chargeable to funds of the new fiscal year and the contract action will be initiated before the funds are available.
(b) The contracting officer shall insert the clause at 52.232-19, Availability of Funds for the Next Fiscal Year, in solicitations and contracts if a one-year indefinite-quantity or requirements contract for services is contemplated and the contract--
(1) Is funded by annual appropriations, and
(2) Is to extend beyond the initial fiscal year (see 32.703-2(b)).
Consider the following other FAR clauses that may be applicable:
FAR 52.232-19 Availability of Funds Crossing the Next FY (IDIQ and IDR for option years)
FAR 52.232-20 Limitation of Cost (fully funded cost-reimbursement)
FAR 52.232-22 Limitation of Funds (incrementally funded cost-reimbursement)
Here are some sites that may provide some additional resources:
Bottom line: DFARS 252.232-7007 is not CR specific. FAR 52.232-18 is frequently used for CRs. Whether DOD or GSA uses one or the other, or a combination, is an agency level decision.