Overview
FAR 32.700 establishes the foundational framework for contract funding requirements and provides the regulatory basis for using clauses that limit the government's financial liability. It clarifies that while the FAR provides broad procedures, specific fiscal details are governed by individual agency regulations.
Key Rules
- Funding Requirements: Defines the basic standards for how the government must provide and document funds for a contract.
- Clause Prescription: Directs the use of "Limitation of Cost" clauses (for fully funded cost-reimbursement contracts) and "Limitation of Funds" clauses (for incrementally funded cost-reimbursement contracts).
- Regulatory Hierarchy: Establishes that detailed fiscal and accounting procedures remain within the domain of specific agency fiscal regulations rather than the general FAR subpart.
Practical Implications
- Liability Management: Contractors must understand these rules to ensure they do not perform work beyond available funding, as the government is generally not obligated to reimburse costs exceeding the limits established by these clauses.
- Compliance Alignment: Contracting officers and contractors must look to agency-specific supplements (such as the DFARS or GSAM) for the granular administrative procedures required to process funding actions.