Acquisition Tips & Tools #53:  Contract Funding and the End of Fiscal Year Cycle - A Reminder

Issue Date: August 28, 2017

This month’s Tips and Tools is a reminder that the end of the fiscal year (September 30) and the beginning of the next fiscal year (October 1) is a challenging time for contracting.  Your focus is on your mission and you might be wondering, “How can I ensure my mission requirements are met?”

Contracting Officers (COs) and you, our customers, must work together to obligate end of the fiscal year funds in a timely manner and simultaneously prepare for requirements that start at the beginning of the next fiscal year; however, contractors are not permitted to work without funding - doing so puts contractors and the Government at risk.  The Government cannot accept something of value for “free” from contractors.  To make matters worse, as we all know, Congress rarely passes a budget on time, which means we are normally working under a continuing resolution.

To help mitigate this risk, you can work with your CO to get your contracts off the fiscal year cycle (Oct 1 - Sept 30) and possibly change the start/end of performance periods to other time frames in the year (for example, start Feb 1 and end Jan 31 of the following year).  Another way to mitigate this risk is to work with your CO to restructure your contract into smaller chunks (or options), giving you the ability to fully fund the smaller pieces when trying to operate under a continuing resolution.

In very limited circumstances and where permitted by the appropriate clause, contracts can be awarded (or options can be exercised) “subject to the availability of funds” in the next fiscal year.  The purpose of this is to keep the contract vehicle alive until the funds become available in the next fiscal year; however, this does not permit the contractor provide supplies or services before funds are available.  Knowingly accepting supplies or services from a contractor without funding available could make Government employees personally liable for violating the Anti-Deficiency Act and subject them to potential disciplinary action and criminal prosecution.  

The key to preventing mission delays during this challenging time of year is advance planning.  By working with your CO early in the acquisition process, you can properly plan and structure your contract vehicles to comply with the Federal Acquisition Regulation (FAR) and appropriations law.  Doing so will help ensure mission requirements are met, and protect the contractor and the Government - as well as you personally - from financial harm.

Remember these Tips and Tools are for you.  If you have any questions about the acquisition process, please contact your Contracting Officer.  Have a topic you want covered in the future? We want to hear it! Submit an email to aqdawareness@ibc.doi.gov or call us at 703-964-8800.