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Limitation on Incremental Funding and Deobligations

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National Aeronautics and Space Administration.


Final rule.


This final rule amends the NASA FAR Supplement (NFS) to revise the criteria for incrementally funding contracts and establish dollar thresholds for incremental funding and deobligations under contracts. These changes will further limit the number of contracts eligible to be incrementally funded and the number of incremental funding and deobligation modifications.


February 20, 2002.

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Ron Lentz, NASA Headquarters (Code HK), Washington, DC, (202) 358-0416, e-mail:

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A. Background

Currently, NFS 1832.702-70 limits the incremental funding of cost-reimbursement and fixed-price contracts. In spite of these restrictions, numerous incremental funding modifications are being issued against Start Printed Page 7619each of the above contracts. The high number of modifications creates a workload burden for budget and procurement personnel in the Agency. This final rule further restricts the number of cost-reimbursement contracts that can be incrementally funded by revising the criteria that a contract must meet in order for it to be incrementally funded. A threshold of $500,000 or more is specified for R&D contracts under which no supplies are deliverable and a minimum contract period of performance of at least one year is specified. Furthermore, initial contract funding must be $100,000 or more. It also establishes a minimum dollar threshold of $25,000 that certain incremental funding and deobligation modifications must meet.

B. Regulatory Flexibility Act

NASA certifies that this final rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq. because the changes primarily affect internal procedures which will merely result in fewer, but larger dollar value, funding actions on contracts.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because this final rule does not impose any new record keeping or information collection requirements, or collection of information from offerors, contractors, or members of the public that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, et seq.

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List of Subjects in 48 CFR Part 1832

  • Government procurement
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Tom Luedtke,

Assistant Administrator for Procurement.

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Accordingly, 48 CFR part 1832 is amended as follows:

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1. The authority citation for 48 CFR Part 1832 continues to read as follows:

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Authority: 42 U.S.C. 2473(c)(1).

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2. Revise section 1832.702-70 to read as follows:

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NASA policy.

(a) Cost-reimbursement contracts may be incrementally funded only if all the following conditions are met:

(1) The total value of the contract (including options as defined in FAR Subpart 17.2) is—

(i) $500,000 or more for R&D contracts under which no supplies are deliverable; or

(ii) $1,000,000 or more for all other contracts.

(2) The period of performance exceeds one year.

(3) The funds are not available to fund the total contract value fully at award.

(4) Initial funding of the contract is $100,000 or more.

(b) Fixed-price contracts, other than those for research and development, shall not be incrementally funded.

(c)(1) Fixed-price contracts for research and development may be incrementally funded if the conditions of 1832.702-70(a)(1) through (4) are met and the initial funding of the contract is at least 50 percent of the total fixed price.

(2) Incrementally funded fixed-price contracts shall be fully funded as soon as adequate funding becomes available.

(d) Except for a modification issued to fully fund a contract, incremental funding modifications shall not be issued for amounts totaling less than $25,000.

(e) Except for a modification issued to close out a contract, modifications deobligating funds shall not be issued for amounts totaling less than $25,000.

(f) The procurement officer, with the concurrence of the installation Comptroller, may waive any of the conditions set forth in paragraphs 1832.702-70(a) through (e). The procurement officer shall maintain a record of all such approvals during the fiscal year.

(g) A class deviation from the conditions set forth in paragraphs 1832.702-70(a) through (e) exists to permit incremental funding of contracts under Phase II of the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. This deviation exists with the understanding that the contracts will be fully funded when funds become available.

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[FR Doc. 02-4076 Filed 2-19-02; 8:45 am]