[Code of Federal Regulations]

[Title 48, Volume 4]

[Revised as of October 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 48CFR342.7101-2]



[Page 71-72]

 

            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM

 

                  CHAPTER 3--HEALTH AND HUMAN SERVICES

 

PART 342_CONTRACT ADMINISTRATION--Table of Contents

 

         Subpart 342.71_Administrative Actions for Cost Overruns

 

Sec. 342.7101-2  Procedures.



    (a) Upon notification that a cost overrun is anticipated, the 

contracting officer shall inform the contractor to submit a request for 

additional funds which is to include:

    (1) Name and address of contractor.

    (2) Contract number and expiration date.

    (3) Contract item(s) and amount(s) creating overrun.

    (4) The elements of cost which changed from the original estimate 

(i.e., labor, material, travel, overhead, etc.) to be furnished in the 

following format:

    (i) Original estimate,

    (ii) Costs incurred to date,

    (iii) Estimated cost to completion,

    (iv) Revised estimate, and

    (v) Amount of adjustment.

    (5) The factors responsible for the increase, i.e., error in 

estimate, changed conditions, etc.

    (6) The latest date by which funds must be available for commitment 

to avoid contract slippage, work stoppage, or other program impairment.

    (b) When the contractor submits a notice of an impending overrun, 

the contracting officer shall:

    (1) Immediately advise the appropriate program office and furnish a 

copy of the notice and any other data received;



[[Page 72]]



    (2) Request audit or cost advisory services, and technical support, 

as necessary, for evaluation of information and data received; and

    (3) Maintain continuous follow-up with the program office to obtain 

a timely decision as to whether the work under the contract should be 

continued and additional funds provided, or the contract terminated. The 

decision of the program office must be supported by an appropriate 

written statement and funding authority, or a formal request for 

termination, when applicable. After a programming and funding decision 

is received from the program office, the contracting officer shall 

promptly notify the contractor in writing that:

    (i) A specified amount of additional funds has been allotted to the 

contract by a contractual instrument; or

    (ii) Work will be discontinued when the funds allotted to the 

contract have been exhausted, and that any work performed after that 

date is at the contractor's risk; or

    (iii) The Government is considering whether additional funds should 

be allotted to the contract and will notify the contractor as soon as 

possible, but that any work performed after the funds then allocated to 

the contract have been exhausted is at the contractor's risk. Timely, 

formal notification of the Government's intention is essential in order 

to preclude loss of contractual rights in the event of dispute, 

termination, or litigation.

    (c) If program requirements permit, contracting officers should 

refrain from issuing any contractual documents which will require new 

work or an extension of time, pending resolution of an overrun or 

additional fund request.