Overview
This section outlines the regulatory constraints and authorities regarding the duration of service contracts and the obligation of funds, specifically addressing how annual appropriations interact with contract terms that span multiple fiscal years.
Key Rules
- General Fiscal Year Limitation: Contracts funded by annual appropriations generally cannot extend beyond the end of the fiscal year (September 30) unless specifically authorized by law.
- Severable Services Exception: Under 10 U.S.C. 3133 and 41 U.S.C. 3902, executive agencies (excluding NASA) may award contracts, exercise options, or place orders for severable services that cross fiscal years, provided the total period of performance does not exceed one year.
- Full Obligation Authority: For authorized severable service actions crossing fiscal years, agencies may obligate the total cost of the action using funds from the fiscal year in which the action was initiated.
- Multiyear Authority: Agencies possessing specific statutory multiyear authority are encouraged to use it to achieve more economical business operations and better pricing for services.
Practical Implications
- Operational Continuity: This section provides Contracting Officers with the flexibility to award 12-month "bridge" or routine service contracts at any point in the year without being forced to align the period of performance strictly with the government's October 1–September 30 fiscal cycle.
- Funding Strategy: It allows agencies to fully fund a one-year severable service contract (e.g., janitorial or IT support) using current-year expiring funds, even if the majority of the work is performed in the following fiscal year.