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    Appearance of impropriety aside, is this legal? It sounds vaguely like parking funds to me as a good portion of these were done at EOY.


    You are to be commended for looking closely at the contractor’s invoice to detect this problem.  You stated there are two types of funding on the contract, Operations and Maintenance (O&M) and Research, Development, Test and Engineering (RDT&E).  O&M is 1 year funding and can be used for 12 continuous months, RDT&E is 2 year funding can be obligated over a 2 year period.  The contractor’s indirect rates have changed reducing what they are charging for overhead.  To ensure they don’t lose any of the funding on the contract the contractor has submitted what appear to be erroneous invoices.  These invoices need to be corrected to reflect the contractor’s actual charges.  
    If there is additional funding available on the contract, check with the requiring agency and ask if there is additional work within the scope of the contract that could be added that would benefit the government.  However, you must be aware of the time limitations on the funding especially the O&M funds.  If no additional work is required or if the funding time limit has been exceeded then the funding will have to be deobligated, and the contract price reduces.

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