Change in Contract Scope Requires Current Year Funds

As an appropriations law instructor, my students frequently ask me about contracts.

Recently, I was asked was about a contract that has been extended. My student explained that his agency had processed two short-term extensions for this contract, the first of which only required additional labor. The second extension required both labor and travel.

The student wanted to know if the remaining funds on the contract could be used from the first extension or if the agency would need to use current year funds because of the additional request for travel. He noted that labor and travel were recorded on separate contract line items.

After reviewing the situation, my opinion was that the agency was changing the scope of the contract for the portion of the contract covered by the extension. I reminded my student that when you change the contract period and there is added cost, you need to use funds currently available at the time of change.

I am always elated when I receive questions such as this because it lets me know that government employees are keen to make sure they are charging the correct appropriation for all of their contracting issues like contract extensions and changes in scope. And rightly so!

As I’ve said before, the intersection of appropriations law and contract law is a very sticky subject. Always consult your agency’s legal counsel for matters such as this. Additionally, a good resource for understanding the intersection of appropriations law and contract law comes from the 2010 GAO Appropriations Law Forum. GAO prepared a very handy crosswalk for common issues that makes a wonderful reference tool when dealing with these matters.