13-03

Procurement Information Circular

 

February 21, 2013

 

CLASS DEVIATION TO NFS 1832.7 - LIMITATION ON INCREMENTAL FUNDING

 

PURPOSE:  To provide a class deviation that revises NASA FAR Supplement (NFS) 1832.702-70 and 1832.705-270 relative to the procedures for determining whether a contract or task order can be incrementally funded.

 

GUIDANCE:  Currently, NFS 1832.702-70 differentiates the limitation of incremental funding by contract type, specifically cost-reimbursable and fixed price type contracts.  This distinction has caused some confusion among procurement personnel and has distracted from the true discriminators that should be utilized in determining if a procurement action can be incrementally funded or not.  Specifically, in determining if a contract or task order can be incrementally funded or not, contracting officers must consider whether (1) the procurement is severable or non-severable, (2) a bona-fide need exists, and (3) the appropriation is available for use.  Contract type should not be the focus when determining whether a procurement action can be incrementally funded.  To assist in making this incremental funding determination, contracting officers should review NASA OCFO Decision Memorandum 12-02, Funding for Research and Development (R&D) and Technology Development Contracts, dated December 21, 2011, and other associated financial policies on this subject contained on the OCFO Policies and Procedures webpage - http://www.nasa.gov/offices/ocfo/policies/acq_fund.html.  

 

Accordingly, NFS 1832.702-70 and 1832.702-270(a) are revised as follows.

 

-          1832.702-70(a) through (c) are revised to remove specific contract type requirements because contract type (i.e. fixed-price, cost-reimbursement) is not the appropriate parameter for determining if a procurement action can be incrementally funded or not.

-          1832.702-70(a) through (e) are revised to clarify that this incremental funding policy applies to contracts as well as task orders under Indefinite Delivery/Indefinite Quantity (IDIQ) contracts.

-          1832.702-70(g) is being deleted.  SBIR and STTR contracts are no longer exempt from the guidance provided in 1832.702-70.  Given the relatively low contract values and short periods of performance on these contracts, incremental funding on these contracts is not cost effective and causes an unnecessary resource workload burden on budget and procurement personnel.

-          1832.705-270(a) is revised to clarify that NFS clause 1852.232-77 shall be utilized in all solicitations and contracts for fixed-price contracts and not just fixed-price R&D contracts. 

 

 ACTION REQUIRED BY CONTRACTING OFFICERS:  Effectively immediately, ensure that new funding actions on existing and future contracts and task orders meet the revised incremental-funding criteria set forth in this class deviation.

 

EFFECTIVE DATE:  This PIC is effective as dated and shall remain in effect until implemented in the NFS, or otherwise rescinded.

 

HEADQUARTERS CONTACT:   William Roets, (202) 358-4483, email: william.roets-1@nasa.gov.

 

          /s/

William P. McNally
Assistant Administrator for Procurement

 

Enclosure

 

Subpart 1832.7--Contract Funding

 

1832.702  Policy.

 

1832.702-70  NASA policy.

   (a) Cost-reimbursement When determining if a contract or task order can be incrementally funded, contracting officers, in conjunction with budget, financial, and program office personnel, must consider whether 1) the procurement is severable or non-severable, 2) a bona-fide need exists, and 3) the appropriation is available for use.  If incremental funding is appropriate, Ccontracts and task orders may be incrementally funded only if all the following conditions are met:
(1) The total value of the contract or task order (including options as defined in FAR Subpart 17.2) is--
    (i)  $500,000 or more for R&D contracts or task orders under which no supplies are deliverable; or
    (ii) $1,000,000 or more for all other contracts or task orders.
(2)The period of performance exceeds one year.
(3) The funds are not available to fund the total contract or task order value fully at time of award.
(4) Initial funding of the contract or task order is $100,000 or more.

  (b) Fixed-price contracts, other than those for research and development, shall not be incrementally funded.

  (c)(1) Fixed-price contracts, for research and development may be incrementally funded if the conditions of 1832.702-70(a)(1) through (4) are met and the initial funding of the contract is at least 50 percent of the total fixed price.
       (2) (b) Incrementally-funded fixed-price contracts or task orders shall be fully funded as soon as adequate funding becomes available.
  (dc) Except for a modification issued to fully fund a contract or task order, incremental-funding modifications shall not be issued for amounts totaling less than $25,000.
  (ed) Except for a modification issued to close out a contract or task order, modifications deobligating funds shall not be issued for amounts totaling less than $25,000.
  (fe) The procurement officer, with the concurrence of the installation Chief Financial Officer, may waive any of the conditions set forth in paragraphs 1832.702-70(a) through (ed).  The procurement officer shall maintain a record of all such waivers. during the fiscal year.
  (g)A class deviation from the conditions set forth in paragraphs 1832.702-70(a) through (e) exists to permit incremental funding of contracts under Phase II of the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs.  This deviation exists with the understanding that the contracts will be fully funded when funds become available.

 

1832.705 Contract clauses.

 

1832.705-2  Clauses for limitation of cost or funds.

 

1832.705-270   NASA clauses for limitation of cost or funds.
   (a) The contracting officer shall insert the clause at 1852.232-77, Limitation of Funds (Fixed-Price Contract), in solicitations and contracts for fixed-price, incrementally-funded research and development contracts or task orders. 
   (b) The contracting officer shall insert a clause substantially as stated at 1852.232-81, Contract Funding, in Section B of solicitations and contracts containing the clause at FAR 52.232-22, Limitation of Funds.  Insert the amount of funds available for payment, the items covered, and the applicable period of performance. The amount obligated for fee in paragraph (b) of the clause should always be sufficient to pay fee anticipated to be earned for the work funded by the amount in paragraph (a) of the clause.