Contract Funding
FAR Subpart 32.7 ensures that government contracts are not obligated beyond available funds, requiring strict compliance with funding limitations and notification procedures.
Overview
FAR Subpart 32.7, "Contract Funding," establishes the rules and procedures for ensuring that government contracts are properly funded and that obligations do not exceed available appropriations. This subpart covers the scope of contract funding, key policies, specific funding requirements, limitations on costs or funds, the consequences of unauthorized obligations, and the required contract clauses to ensure compliance. It is designed to prevent the government from incurring obligations in excess of appropriated funds and to protect both agencies and contractors from unauthorized commitments. The subpart also addresses the enforceability of obligations made without proper funding and outlines the necessary clauses that must be included in contracts to ensure funding limitations are clear and enforceable.
Key Rules
- Scope and Policy
- Defines the applicability of contract funding requirements and the overarching policy to avoid over-obligation.
- Contract Funding Requirements
- Specifies how contracts must be funded, including incremental funding and full funding requirements.
- Limitation of Cost or Funds
- Establishes procedures for limiting government liability to available funds and requires contractors to notify the government when costs approach funding limits.
- Unenforceability of Unauthorized Obligations
- Clarifies that obligations made without proper funding are unenforceable against the government.
- Contract Clauses
- Mandates the inclusion of specific clauses in contracts to address funding limitations and compliance.
Responsibilities
- Contracting Officers: Ensure contracts are properly funded, include required clauses, and monitor funding status.
- Contractors: Track incurred costs, notify the government when approaching funding limits, and comply with funding-related clauses.
- Agencies: Oversee funding availability, prevent unauthorized obligations, and enforce compliance with funding regulations.
Practical Implications
- This subpart exists to prevent violations of the Anti-Deficiency Act and ensure fiscal responsibility.
- It impacts daily contracting by requiring strict adherence to funding limits and timely communication between contractors and agencies.
- Common pitfalls include failure to monitor funding status, unauthorized commitments, and omission of required contract clauses.