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HHS Reference Tool for Contract Funding, Formation and Appropriations Law Compliance



Regulations and

Case Studies

Frequently Asked Questions


HHS Reference Tool Content

I.Basic Appropriations Law Concepts
 A.Anti-Deficiency Act
 B.Bona FideNeeds Rule
 C.Appropriation Types
 D.Continuing Resolution
II.Decision Factors
 A.No-Year Appropriation
 B.Bona FideNeeds Rule
 C.Acquiring Severable Services
  1.Annual Appropriation
   a.Contract period not more than one year
   b.Contract period more than one year
    -Incremental Funding
  2.Multiple-Year Appropriation
   a.Contract period will not extend beyond multiple-year appropriation's period of availability
   b.Contract period will extend beyond multiple-year appropriation's period of availability
    -Incremental Funding
 D.Acquiring Non-severable Services
  1. Funded in Full
    a.Entire Contract/Single Requirement
    b.Fully Funded Initial Requirement (Followed by Options)
  2.Multi-year Contracting
  3.Options After Initial Requirement
    a.Severable Services
    -Annual Appropriation
    -Multiple-Year Appropriation
    b.Non-severable Services
    -Fully Funded
    -Multi-Year Contract
 E.Acquiring both severable and non-severable services
  1.Single Definitive Contract
  2.Indefinite-Delivery/Indefinite-Quantity Contract
III.Case Studies
IV.Frequently Asked Questions


On June 28, 2010, the Deputy Assistant Secretary for Grants and Acquisition Policy and Accountability issued Acquisition Policy Memorandum (APM) 2010-01, Guidance Regarding Funding of Contracts Exceeding One Year of Performance.

The APM provides guidance on contract formation and funding strategies applicable to contracts and orders exceeding 1 year of performance. It also provides HHS Acquisition Regulation (HHSAR) coverage, including: (a) policies related to contract funding requirements for severable and non-severable services; and (b) standard solicitation provisions and contract clauses to be used when specific contract types will be incrementally funded.

The purpose of this reference tool is to provide an interactive means of ensuring that HHS staff members use sound contract formation and funding strategies when contracting for services. It applies the APM policies, FAR, and HHSAR requirements; presents basic appropriations law concepts; and includes links to specific GAO decisions of relevance to the available contract formation choices. It also contains 12 case studies and a set of frequently asked questions to illustrate key learning principles and practical applications.

Most of the information presented in this reference tool applies to new definitive contracts or task orders to acquire services. Services by their nature may be either severable or non-severable. There are, however, two alternatives available to acquire both severable and non-severable services under one contract: Single Definitive Contract or Indefinite-Delivery/Indefinite-Quantity Contract.

Given the nuances of appropriations law, this tool cannot substitute for the interpretation of appropriations law by OGC based on the facts and circumstances of a particular situation and should not be used as the sole basis for decision-making. If there is any question concerning the application of appropriations law, OGC advice must be must be sought.