[Federal Register Volume 81, Number 221 (Wednesday, November 16, 2016)]
[Rules and Regulations]
[Pages 80608-80610]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-27548]


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DEPARTMENT OF THE TREASURY

48 CFR Parts 1032 and 1052


Department of the Treasury Acquisition Regulations; Incremental 
Funding of Fixed-Price, Time-and-Material or Labor-Hour Contracts 
During a Continuing Resolution

AGENCY: Department of the Treasury.

ACTION: Final rule.

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SUMMARY: This final rule amends the Department of Treasury Acquisition 
Regulation (DTAR) for the purposes of providing acquisition policy for 
incremental funding of Fixed-Price, Time-and-Material or Labor-Hour 
contracts during a continuing resolution.

DATES: Effective date: December 16, 2016.

FOR FURTHER INFORMATION CONTACT: Thomas O'Linn, Procurement Analyst, 
Office of the Procurement Executive, at (202) 622-2092.

SUPPLEMENTARY INFORMATION:

Background

    The DTAR, which supplements the Federal Acquisition Regulation 
(FAR), is codified at 48 CFR Chapter 10.
    The Anti-Deficiency Act, 31 U.S.C. 1341 and the FAR section 32.702, 
state that no officer or employee of the government may create or 
authorize an obligation in excess of the funds available, or in advance 
of appropriations unless otherwise authorized by law. A continuing 
resolution (CR) provides funding for continuing projects or activities 
that were conducted in the prior fiscal year for which appropriations, 
funds, or other authority was previously made available.
    Each CR is governed by its specific terms. However, amounts 
available under a CR are frequently insufficient to fully fund contract 
actions that may be required during its term. No existing contract 
clause permits partial funding of a contract action awarded during a 
CR. While other strategies are available to address the need to take 
contract actions during a CR, these strategies--for example short-term 
awards--are inefficient and may have other disadvantages.
    On July 12, 2016, the Department issued a proposed rule (81 FR 
45118) that would establish policies and procedures in order to 
facilitate successful, timely, and economical execution of Treasury 
contractual actions during a CR. Specifically, the proposed rule would 
set forth procedures for using incremental funding for fixed-price, 
time-and-material and labor-hour contracts during a period in which 
funds are provided to Treasury Departmental Offices or Bureaus under a 
CR. Heads of contracting activities may develop necessary supplemental 
internal procedures as well as guidance to advise potential offerors, 
offerors and contractors of these policies and procedures.
    The comment period for the proposed rule closed on September 12, 
2016. No public comments were received. Accordingly, the Department is 
adopting the proposed rule without substantive change.

Regulatory Planning and Review

    This rule is not a significant regulatory action as defined in 
section 3(f) of Executive Order 12866. Therefore a regulatory 
assessment is not required.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. chapter 6) generally 
requires agencies to conduct an initial regulatory flexibility analysis 
and a final regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements, unless the agency certifies 
that the rule will not have a significant economic impact on a 
substantial number of small entities.
    It is hereby certified that this rule will not have a significant 
economic impact on a substantial number of small entities. The rule is 
intended to make changes to the DTAR that would allow for improvements 
in continuity when Treasury funding is operating under a CR and should 
not have significant economic impacts on small entities.

List of Subjects in 48 CFR Parts 1032 and 1052

    Government procurement.
    Accordingly, the Department of the Treasury amends 48 CFR Chapter 
10 as follows:

PART 1032--CONTRACT FINANCING

0
1. The authority citation for part 1032 continues to read as follows:

    Authority:  41 U.S.C. 1707.


[[Page 80609]]



0
2. Add subpart 1032.7 to read as follows:
Subpart 1032.7--Contract Funding
Sec.
1032.770 Incremental funding during a Continuing Resolution.
1032.770-1 Scope of section.
1032.770-2 Definition.
1032.770-3 General.
1032.770-4 Policy.
1032.770-5 Limitations.
1032.770-6 Procedures.
1032.770-7 Clause.

Subpart 1032.7--Contract Funding


1032.770   Incremental funding during a Continuing Resolution.


1032.770-1   Scope of section.

    This section provides policy and procedure for using incremental 
funding for fixed-price, time-and-material and labor-hour contracts 
during a period in which funds are provided to Treasury Departmental 
Offices or Bureaus, under a continuing resolution (CR). HCAs may 
develop necessary supplemental internal procedures as well as guidance 
to advise potential offerors, offerors and contractors of these 
policies and procedures. Additionally, Bureaus who receive non-
appropriated funds may utilize and tailor these policies and procedures 
to fit their needs.


1032.770-2   Definition.

    ``Continuing Resolution'' means an appropriation, in the form of a 
joint resolution, that provides budget authority for federal agencies, 
specific activities, or both to continue operation until the regular 
appropriations are enacted. Typically, a continuing resolution is used 
when legislative action on appropriations is not completed by the 
beginning of a fiscal year.


1032.770-3   General.

    The Anti-Deficiency Act, 31 U.S.C. 1341 and FAR 32.702, states that 
no officer or employee of the Government may create or authorize an 
obligation in excess of the funds available, or in advance of 
appropriations unless otherwise authorized by law. A CR provides 
funding for continuing projects or activities that were conducted in 
the prior fiscal year for which appropriations, funds, or other 
authority was previously made available. Each CR is governed by the 
specific terms in that specific CR (e.g. duration of the CR) and under 
certain CRs, the funding amounts available for award of contract 
actions are inadequate to fund the entire amounts needed for some 
contract actions.


1032.770-4   Policy.

    (a) A fixed-price, time-and-materials or labor-hour contract or 
order for commercial or non-commercial supplies or severable or non-
severable services may be incrementally funded when--
    (1) Funds are provided to a Treasury Departmental Office or Bureau 
under a CR. This includes funds appropriated to a bureau, funds 
appropriated to another entity that will be directly obligated on a 
Treasury contract, and funds in a revolving fund or similar account 
that will be reimbursed by a customer agency funded by a CR;
    (2) Sufficient funds are not being allocated from the responsible 
fiscal authority to fully fund the contract action that is otherwise 
authorized to be issued;
    (3) There is no statutory restriction that would preclude the 
proposed use of funds;
    (4) Funds are available and unexpired, as of the date the funds are 
obligated;
    (5) Assurance is provided by the responsible financial authority 
that full funding is anticipated once an Appropriation Act is enacted; 
and
    (6) The clause prescribed by 1032.770-7 is incorporated into the 
contract or order.
    (b) Incremental funding may be limited to individual line item(s) 
or a particular order(s).


1032.770-5   Limitations.

    (a) This policy does not apply to contract actions that are not 
covered by the CR.
    (b) If this policy is applied to non-severable services or to 
supplies, the contracting officer shall take into consideration the 
business risk to the Government if funding does not become available to 
fully fund the contract. If the contracting officer determines the use 
of incremental funding for non-severable services or supplies is in the 
best interest of the Government the contracting officer shall ensure 
the contractor fully understands how the limitations of the 
Government's liabilities under the contract might impact its ability to 
perform within the prescribed contract schedule.


1032.770-6   Procedures.

    (a) An incrementally funded fixed-price, time-and-materials or 
labor-hour contract shall be fully funded once funds are available.
    (b) The contracting officer shall ensure that sufficient funds are 
allotted to the contract to cover the total amount payable to the 
contractor in the event of termination of convenience by the 
Government.
    (c) Upon receipt of the contractor's notice under paragraph (c) of 
the clause at 1052.232-90, Limitation of Government's Obligation, the 
contracting officer shall promptly provide written notice to the 
contractor that the Government is--
    (i) Obligating additional funds for continued performance and 
increasing the Government's limitation of obligation in a specified 
amount;
    (ii) Obligating the full amount of funds needed;
    (iii) Terminating for convenience, as applicable, the affected line 
items or contract; or
    (iv) Considering whether to allot additional funds; and
    (A) The contractor is entitled by the contract terms to stop work 
when the Government's limitation of obligation is reached; and
    (B) Any costs expended beyond the Government's limitation of 
obligation are at the contractor's risk.
    (d) Upon learning that the contract will receive no further funds 
by the date provided in the notice under paragraph (c) of the clause at 
1052.232-70, Limitation of Government's Obligation, the contracting 
officer shall promptly give the contractor written notice of the 
Government's decision and terminate the affected line items or 
contract, as applicable, for the convenience of the Government.


1032.770-7   Clause.

    The contracting officer shall insert the clause at 1052.232-70, 
Limitation of Government's Obligation, in
    (a) Solicitations and resultant contracts when incremental funding 
of fixed-price, time-and-material or labor-hour contract via a CR is 
anticipated; or
    (b) Contracts or orders when incremental funding of a fixed-price, 
time-and-material or labor-hour contract is authorized and the Treasury 
Departmental Office or Bureau is operating under a CR (see 1032.770-4); 
and
    (c) The CO shall insert the information required in paragraphs (a) 
and (c) of the clause.

PART 1052--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
3. The authority citation for part 1052 continues to read as follows:

    Authority: 41 U.S.C. 1707.


0
4. Add 1052.232-70 to subpart 1052.2 to read as follows:


1052.232-70   Limitation of Government's obligation.

    As prescribed in 1032.770-7, insert the following clause. 
Contracting

[[Page 80610]]

officers are authorized, in appropriate cases, to revise paragraph (a) 
of this clause to specify the work required under the contract, in lieu 
of using contract line item numbers as well as revise paragraph (c) of 
this clause to specify a different notification period and percentage. 
The 30-day period may be varied from 45, 60 to 90 days, and the 75 
percent from 75 to 85 percent:

Limitation of Government's Obligation (Nov 2016)

    (a) Funding is not currently available to fully fund this 
contract due to the Government operating under a continuing 
resolution (CR). The item(s) listed in the table below are being 
incrementally funded as described below. The funding allotted to 
these item(s) is presently available for payment and allotted to 
this contract. This table will be updated by a modification to the 
contract when additional funds are made available, if any, to this 
contract.

----------------------------------------------------------------------------------------------------------------
                                                                                           Funds  required for
  Contract line item number  (CLIN)       CLIN  total price      Funds  allotted to the    complete  funding of
                                                                          CLIN                  the  CLIN
----------------------------------------------------------------------------------------------------------------
                                      $                         $                        $
                                      $                         $                        $
                                      $                         $                        $
                                      $                         $                        $
    Totals..........................  $                         $                        $
----------------------------------------------------------------------------------------------------------------

    (b) For the incrementally funded item(s) identified in paragraph 
(a) of this clause, the Contractor agrees to perform up to the point 
at which the total amount payable by the Government, including any 
invoice payments to which the Contractor is entitled and 
reimbursement of authorized termination costs in the event of 
termination of those item(s) for the Government's convenience, does 
not exceed the total amount currently obligated to those item(s). 
The Contractor is not authorized to continue work on these item(s) 
beyond that point. The Government will not be obligated in any event 
to reimburse the Contractor in excess of the amount allotted to the 
line items of the contract regardless of anything to the contrary in 
any other clause, including but not limited to the clause entitled 
``Termination for Convenience of the Government'' or paragraph (1) 
entitled ``Termination for the Government's Convenience'' of the 
clause at FAR 52.212-4, ``Commercial Terms and Conditions Commercial 
Items.''
    (c) Notwithstanding paragraph (h) of this clause, the Contractor 
shall notify the Contracting Officer in writing at least thirty days 
prior to the date when, in the Contractor's best judgment, the work 
will reach the point at which the total amount payable by the 
Government, including any cost for termination for convenience, will 
approximate 85 percent of the total amount then allotted to the 
contract for performance of the item(s) identified in paragraph (a) 
of this clause. The notification shall state the estimated date when 
that point will be reached and an estimate of additional funding, if 
any, needed to continue performance. The notification shall also 
advise the Contracting Officer of the estimated amount of additional 
funds required for the timely performance of the item(s) funded 
pursuant to this contract. If after such notification additional 
funds are not allotted by the date identified in the Contractor's 
notification, or by an agreed upon substitute date, the Contracting 
Officer will terminate any item(s) for which additional funds have 
not been allotted, pursuant to the terms of this contract 
authorizing termination for the convenience of the Government. 
Failure to make the notification required by this paragraph, whether 
for reasons within or beyond the Contractor's control, will not 
increase the maximum amount payable to the Contractor under 
paragraphs (a) and (b) of this clause.
    (d) The Government may at any time prior to termination allot 
additional funds for the performance of the item(s) identified in 
paragraph (a) of this clause.
    (e) The termination provisions of paragraphs (a) through (h) of 
this clause do not limit the rights of the Government under the 
clause entitled ``Default'' or ``Termination for Cause.'' The 
provisions of this clause are limited to the work and allotment of 
funds for the item(s) set forth in paragraph (a) of this clause. 
This clause no longer applies once the contract is fully funded.
    (f) Nothing in this clause affects the right of the Government 
to terminate this contract pursuant to the Government's termination 
for convenience terms set forth in this contract.
    (g) Nothing in this clause shall be construed as authorization 
of voluntary services whose acceptance is otherwise prohibited under 
31 U.S.C. 1342.
    (h) The parties contemplate that the Government will allot funds 
to this contract from time to time as the need arises and as funds 
become available. There is no fixed schedule for providing 
additional funds.

(End of clause)

    Dated: November 8, 2016.
Iris B. Cooper,
Senior Procurement Executive, Office of the Procurement Executive.
[FR Doc. 2016-27548 Filed 11-15-16; 8:45 am]
 BILLING CODE 4810-25-P