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  • Question

    Can I extend the base period so that I use the money on the base period, even though the base period falls in a different fiscal year?


    Answer

    The appropriate course of action in this situation is for the government to exercise its rights in accordance with the option provisions in the contract.  FAR 32.703-3- Contracts crossing fiscal years, deals directly with this issue.  FAR 32.703-3(a) does not allow a contract that is funded by annual appropriations to cross fiscal years, except in accordance with statutory authority or when the contract calls for an end product that cannot feasibly be subdivided for separate performance (severable) in each fiscal year. 

    The fact your contract has options available indicates your service is severable.
    FAR 32.703-3(b) allows the head of an executive agency, except NASA, to enter into a contract for severable services for a period that begins in one fiscal year and ends in the next fiscal year if the period of the contract awarded does not exceed one year.  Extending the base period in order to use up remaining appropriated funds is not allowed by fiscal law. Funding provided by congress is appropriated for a specific purpose, time and amount.  The terms of the contract are dictated by a combination of the limitations congress imposes on the funding and the supply/service requirements.  Fiscal law is the discipline of determining if requirements and appropriations are correctly matched.  Fiscal law influences contract type, term, and condition decisions.

    The contracting professional is encouraged to seek input from qualified legal counsel specializing in fiscal law applications when making decisions regarding the use of available special contracting methods in FAR Part 17 during contract formation.  Extending a contract period of performance does not influence congress’ intended purpose, time or amount for the funding. The time to interpret the Bona Fide Needs Rule and its application to the acquisition scenario is at the contract formation phase of the acquisition cycle.  Once the contract is in place, only those terms and conditions in the contract are available to the parties.


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