32.703-2 Contracts conditioned upon availability of funds
Source: FAR 32.703-2 on acquisition.gov
Contracts contingent on future appropriations require specific clauses and written notice of fund availability before performance can begin.
Overview
FAR 32.703-2 outlines the rules for awarding and managing contracts that are contingent upon the availability of appropriated funds, particularly when funds for a new fiscal year are not yet available. This section allows contracting officers to initiate certain contract actions before funds are appropriated, provided specific clauses are included and certain conditions are met. It covers fiscal year contracts for operations and maintenance, as well as indefinite-quantity or requirements contracts funded by annual appropriations. The regulation also prohibits the government from accepting supplies or services until the contractor is notified that funds are available.
Key Rules
- Fiscal Year Contracts
- Contracts may be initiated before new fiscal year funds are available if they are for normal operations and Congress has consistently appropriated funds for them. The contract must include FAR clause 52.232-18.
- Indefinite-Quantity or Requirements Contracts
- These contracts may extend beyond the fiscal year if minimum quantities are ordered in the initial year and the contract includes FAR clause 52.232-19.
- Acceptance of Supplies or Services
- The government cannot accept supplies or services until the contracting officer confirms in writing that funds are available.
Responsibilities
- Contracting Officers: Ensure proper clauses are included, verify contract eligibility, and provide written notice of fund availability before acceptance.
- Contractors: Must not deliver supplies or services until notified in writing that funds are available.
- Agencies: Oversee compliance with funding and notification requirements.
Practical Implications
- This section exists to prevent unauthorized commitments and ensure contracts are only performed when funds are legally available. It impacts contract timing, clause inclusion, and delivery schedules. Common pitfalls include failing to include required clauses or accepting performance before funds are confirmed.
(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 32.706-1(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 32.706-1(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.