(a) Upon notification that a cost overrun is anticipated, the Contracting Officer shall inform the contractor to submit a request for additional funds, which shall include the following:
(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, and overhead, to be furnished in the following format:
(i) Original estimate.
(ii) Costs incurred to date.
(iii) Estimated cost to completion.
(iv) Revised estimate.
(v) Amount of adjustment.
(5) The factors responsible for the increase (e.g., error in estimate, changed conditions).
(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 a projected overrun, the Contracting Officer shall-
(1) Immediately advise the appropriate program office and furnish the office a copy of the notice and any other data received;
(2) Request audit or cost advisory services, and technical support, as necessary, for evaluation of information and data received; and
(3) Maintain continuous communications with the program office to obtain: a timely written decision and justification to continue the contract with additional funds (including verification of funds availability); or a timely written decision and request to terminate the contract.
(c) After receiving the decision by the program office, the Contracting Officer shall promptly notify the contractor in writing of the following:
(1) The specified amount of additional funds allotted to the contract.
(2) Work shall be discontinued when the allotted funds are exhausted, and any work performed after that date is at the contractor's risk.
(3) The Government is considering whether to allot additional funds to the contract and will notify the contractor as soon as possible, but that any work performed after the currently allotted funds are exhausted is at the contractor's risk. (Timely, formal notification of the Government's intention is essential to preclude loss of contractual rights in the event of dispute, termination, or litigation.)
(d) If the program office permits, the Contracting Officer shall refrain from issuing any contractual documents that require new work or an extension of time, pending resolution of the projected overrun.
