3432.706-2 Clauses for limitation of cost or

funds.

(c) The contracting officer must insert the clause at 3452.232–70 (Limitation of cost or funds) in all

solicitations and contracts where a limitation of cost or limitation of funds clause is utilized.

(d) The contracting officer must insert the provision in 3452.232–71 (Incremental funding) in a

solicitation if a cost-reimbursement contract using incremental funding is contemplated.

(e)

(1) The contracting officer must insert the clause at 3452.232–72 (Limitation of Government's

obligation) in solicitations and resultant incrementally funded fixed-price contracts or contract line

items (CLIN(s)) of such contracts only if—

(i) Sufficient funds are not available to the Department at the time of contract award or exercise of

option to fully fund the contract, option, or CLIN(s); and

(ii) The contract (excluding any options), any exercised option, or CLIN(s)—

(A) Is for severable services; and

(B) Does not exceed one year in length; and

(C) Is incrementally funded using funds available (unexpired) as of the date the funds are obligated;

or

(D) Congress has otherwise authorized incremental funding.

(2) When a partially funded contract contains the clause at 3452.232–72 (Limitation of Government's

obligation) upon learning that the contractor is approaching the price of the contract or the limit of

the funds allotted to the contract or specified CLIN(s) or upon receipt of the contractor's notice

under paragraph (b) of the clause at 3452.232–72, the contracting officer must promptly obtain

funding information pertinent to the continuation of the applicable CLIN(s) or contract and notify

the contractor in writing. This notification must provide that—

(i)

(A) Additional funds have been allotted, in a specified amount;

(B) The contract or applicable CLIN(s) is not to be further funded;

(C) The contract or applicable CLIN(s) is to be terminated; or

(D) The Government is considering whether to allot additional funds;

(ii) The contractor is entitled by the contract terms to stop work on applicable CLIN(s) when the

funding limit is reached; and

(iii) Any work beyond the funding limit will be at the contractor's risk.
(3) Upon learning that a partially funded contract will receive no further funds, the contracting

officer must promptly give the contractor written notice of the decision not to provide funds.

(4) The contracting officer must ensure that sufficient funds are allotted to the contract or applicable

CLIN(s) to cover the total amount payable to the contractor in the event of termination for the

convenience of the Government.

(5) The Government must not accept supplies or services under an incrementally funded contract or

CLIN(s) once funding limits are reached until the contracting officer has given the contractor notice,

to be confirmed in writing, that funds are available.

(6) Government personnel encouraging a contractor to continue work in the absence of funds will

incur a violation of Revised Statutes section 3679 (31 U.S.C. 1341) that may subject the violator to

civil or criminal penalties.

(7) An incrementally funded fixed-price contract and/or CLIN(s) must be fully funded as soon as

funds are available.

(8) The contracting officer must insert the information required in the table in paragraph (l) of the

clause at 3452.232–72. Since the funds allotted must cover costs of termination of the applicable

CLIN(s) for the Government's convenience, the contractor must provide the last date of performance

subject to the contracting officer's concurrence. The contracting officer may revise the contractor's

notification period in paragraph (b) of the clause from “ninety” to “thirty” or “sixty” days, as

appropriate.

Parent topic: Subpart 3432.7—Contract Funding