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

Home

Overview

Regulations and
Guidance

Case Studies

Frequently Asked Questions

Disclaimer

HHS Reference Tool Content

I.Basic Appropriations Law Concepts
 A.Anti-Deficiency Act
 B.Bona FideNeeds Rule
 C.Appropriation Types
  1.Annual
  2.Multiple-Year
  3.No-Year
 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
    -Options
    -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
    -Options
    -Incremental Funding
  3.Modifications
 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
  4.Modifications
 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

Options — Type of Services

What type of services will be acquired using the planned option(s)? 

 

Severable      Non-Severable

 


Help Notes

Severable Services

Definition

Severable services are provided on an on-going, as needed or recurring basis and meet a need of the Government at the time they are delivered (e.g., information technology help-desk support). When the need for a portion of recurring or continuing services arises in the fiscal year subsequent to the one in which the services were initially funded, that portion is severable and chargeable to appropriations available for obligation in the subsequent fiscal year.

Key Exception

A significant exception to this general rule was provided with the passage of the Federal Acquisition Streamlining Act (FASA) in 1994, providing agencies greater flexibility in their use of annual appropriations. This authority was implemented by FAR 32.703-3(b), Contracts crossing fiscal years. In essence, a contract, option or order for severable services funded from an annual appropriation may cover a period that begins in one fiscal year (FY) and ends in the next FY, provided that: (1) the requirement is a bona fide need at the point of contract action execution; and, (2) the period funded by the contract action does not exceed twelve months. Funds made available for a fiscal year (i.e., annual appropriations) may be obligated for the total amount of a contract action entered into under this authority.

Example

A multi-year contract with two line items, covering: (1) a 5-year study, concluding in a final report documenting the research results; and (2) an option for the key research team members to present their findings at three HHS-sponsored meetings over the next 12 months (severable services) .

Non-severable Services

Definition

Non-severable services constitute a specific, entire job or single undertaking with a defined end-product that cannot feasibly be subdivided for separate performance. Accordingly, non-severable services must be financed entirely out of the appropriation current at the time of award, even though performance may extend into future fiscal years. Following that logic, contracts for non-severable services cannot be incrementally funded (see 71 Comp Gen 428 (1992) and GAO Decision B-317139, Matter of Financial Crimes Enforcement Network). The only means to award a contract for non-severable services without full funding up front is to use the multi-year contracting method per FAR Subpart 17.1.

Key Exception

The only means to award a contract for non-severable services without full funding up front is to use the multi-year contracting method per FAR Subpart 17.1.

Example

A multi-year contract with two line items, covering: (1) a 5-year study, concluding in a final report documenting the research results; and (2) an option for a 3-year follow-up study of research participants, again concluding in a final report documenting study results (non-severable services). 

Relevant Case Study

Return to Decision Factors