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

Options for Non-severable Services – Multi-year Contracting Procedures

Contract formation and funding (obligation) are valid.

As noted previously, contract modifications to exercise option(s) for non-severable services must fully-funded from a then-current appropriation source, unless authorized by statute. At this time, the only statutorily authorized exception applicable to HHS is the general authority conferred by 41 U.S.C. 254c* and FAR Subpart 17.1 to enter into multi-year contracts. In this case, the option(s) will be structured using multi-year contracting procedures with the required funding and, therefore, will comply with the applicable principles of appropriations law.

NOTE: The term "then-current appropriation" means one that is available for obligation on the date the contract action will be executed/effective.

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* Re-codified as 41 U.S.C. 3903 by Public Law 111-350, January 4, 2011. This new citation is not yet available as a hyper-link in the United States Code web site maintained by the Office of the Law Revision Counsel, U.S. House of Representatives