![]() ![]() (c) Agency funding of multi-year contracts shall conform to the policies in OMB Circulars A-11 (Preparation and Submission of Budget Estimates) and A-34 (Instructions on Budget Execution) and other applicable guidance regarding the funding of multi-year contracts. Accordingly, for multi-year contracts, the agency head may authorize modification of the requirements of this subpart and the clause at 52.217-2, Cancellation Under Multi-year Contracts. The extent to which cancellation terms are used in multi-year contracts will depend on the unique circumstances of each contract. (b) Multi-year contracting is a flexible contracting method applicable to a wide range of acquisitions. This method may be used in sealed bidding or contracting by negotiation. (a) Multi-year contracting is a special contracting method to acquire known requirements in quantities and total cost not over planned requirements for up to 5 years unless otherwise authorized by statute, even though the total funds ultimately to be obligated may not be available at the time of contract award. Recurring costs means costs that vary with the quantity being produced, such as labor and materials. Nonrecurring costs means those costs which are generally incurred on a one-time basis and include such costs as plant or equipment relocation, plant rearrangement, special tooling and special test equipment, preproduction engineering, initial spoilage and rework, and specialized work force training. The key distinguishing difference between multi-year contracts and multiple year contracts is that multi-year contracts, defined in the statutes cited at 17.101, buy more than 1 year’s requirement (of a product or service) without establishing and having to exercise an option for each program year after the first. A multi-year contract may provide that performance under the contract during the second and subsequent years of the contract is contingent upon the appropriation of funds, and (if it does so provide) may provide for a cancellation payment to be made to the contractor if appropriations are not made. Multi-year contract means a contract for the purchase of supplies or services for more than 1, but not more than 5, program years. (2) Fails to notify the contractor that funds are available for performance of the succeeding program year requirement.Ĭancellation ceiling means the maximum cancellation charge that the contractor can receive in the event of cancellation.Ĭancellation charge means the amount of unrecovered costs which would have been recouped through amortization over the full term of the contract, including the term canceled. (1) Notifies the contractor of nonavailability of funds for contract performance for any subsequent program year or Cancellation results when the contracting officer. Cancellation means the cancellation (within a contractually specified time) of the total requirements of all remaining program years.
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