FAR 43.105—Availability of funds.
Plain-English Summary
FAR 43.105 tells contracting officers when they must confirm that money is available before issuing a contract modification that increases the government’s financial obligation, and it identifies the limited exceptions to that rule. It also explains how the required funding certification is measured—normally against the negotiated price, but sometimes against the best available cost estimate if the modification is executed before price agreement. In addition, it implements a statutory restriction on providing funds or making payments to certain institutions of higher education that restrict ROTC or military recruiting access on campus, and it states the acquisitions to which that restriction does not apply. In practice, this section is about preventing unauthorized commitments and funding shortfalls, ensuring fiscal discipline in contract changes, and avoiding prohibited funding relationships with covered educational institutions. It matters both for contract administration and for compliance screening before award, modification, or payment actions are taken.
Key Rules
Fund certification before funding increases
A contracting officer may not execute a contract modification that increases or will increase funds unless a certification of fund availability has first been obtained. This is a mandatory precondition designed to ensure the government has budget authority before it commits additional money.
Two exceptions to certification
The certification requirement does not apply to modifications of contracts that are already conditioned on availability of funds, or to contracts that contain a limitation of cost or limitation of funds clause. In those cases, the contract structure already addresses the funding risk.
Certification amount basis
The fund availability certification must normally be based on the negotiated price. If the modification is executed before the parties agree on price, the certification may be based on the best available estimate of cost.
Higher education funding prohibition
Under 10 U.S.C. 983, agencies may not provide funds by contract or modification, or make contract payments, to an institution of higher education that has a policy or practice of hindering ROTC units or military recruiting on campus as described in FAR 9.110.
Limited scope of the prohibition
The prohibition on funding certain institutions does not apply to acquisitions at or below the simplified acquisition threshold, or to acquisitions of commercial products, including COTS items, and commercial services. Those transactions are carved out from the restriction.
Responsibilities
Contracting Officer
Verify fund availability before executing any modification that increases or will increase funding, unless an exception applies. Ensure the certification is based on the negotiated price or, if price is not yet agreed, on the best available cost estimate. Screen for the higher-education funding prohibition before providing funds or making payments.
Agency Budget/Finance Officials
Provide the certification of fund availability when required and confirm that sufficient appropriations or other budget authority exist to support the modification. Support payment controls that prevent disbursement where the statutory prohibition applies.
Contractor
Understand that funding increases through modification depend on government fund availability and may be delayed or denied if certification is not obtained. For educational institutions, recognize that prohibited funding relationships can bar contract funding or payment.
Institution of Higher Education
Avoid policies or practices that hinder ROTC units or military recruiting if the institution seeks federal contract funding or payments, unless the transaction falls within a stated exception.
Agency Legal/Policy Staff
Advise on whether a modification falls within an exception, whether the funding certification is adequate, and whether the 10 U.S.C. 983 prohibition applies to a particular acquisition or payment.
Practical Implications
Before issuing a change order or bilateral modification that adds money, the contracting officer should confirm the funding line is available and documented; missing certification can make the action improper even if the parties agree on scope or price.
If the modification is negotiated but not yet priced, the officer can rely on the best available estimate, but should update the funding action once the final price is settled to avoid underfunding or overcommitting.
The exceptions are narrow: do not assume every incrementally funded or cost-reimbursement contract is exempt. The contract must actually be conditioned on availability of funds or contain the relevant limitation clause.
The higher-education restriction is a separate compliance check that can affect award, modification, and payment. It is easy to overlook because it is not about price or performance, but about the recipient institution’s campus access policies.
The statutory carve-outs for simplified acquisitions and commercial products/services mean the prohibition will not apply in many routine buys, but the contracting officer should still document why the exception applies if the institution is otherwise covered.
Official Regulatory Text
(a) The contracting officer shall not execute a contract modification that causes or will cause an increase in funds without having first obtained a certification of fund availability, except for modifications to contracts that- (1) Are conditioned on availability of funds (see 32.703-2 ); or (2) Contain a limitation of cost or funds clause (see 32.704 ). (b) The certification required by paragraph (a) of this section shall be based on the negotiated price, except that modifications executed before agreement on price may be based on the best available estimate of cost. (c) In accordance with 10 U.S.C. 983 , do not provide funds by contract or contract modification, or make contract payments, to an institution of higher education that has a policy or practice of hindering Senior Reserve Officer Training Corps units or military recruiting on campus as described at 9.110 . The prohibition in this paragraph (c) does not apply to acquisitions at or below the simplified acquisition threshold or to acquisitions of commercial products, including commercially available off-the-shelf items, and commercial services.