FAR 52.232-18—Availability of Funds.
Plain-English Summary
FAR 52.232-18, Availability of Funds, is a funding-contingency clause used when the Government has not yet received appropriations or otherwise does not presently have funds available to pay for the contract. The clause addresses four core topics: that funds are not presently available; that the Government’s obligation is contingent on the later availability of appropriated funds; that no legal liability for payment arises until funds are made available to the contracting officer; and that the contractor must receive notice of that availability, confirmed in writing by the contracting officer. In practice, this clause protects the Government from creating an enforceable payment obligation before Congress or the agency has provided funding, while also putting the contractor on clear notice that performance may begin before funding is secured. It is especially important in situations involving continuing resolutions, delayed appropriations, or other uncertain funding conditions. For contractors, the clause means there is a real risk that the Government may not be able to pay until funds are formally available and notice is issued, so performance, billing, and cash-flow planning must account for that contingency. For contracting officers, the clause requires careful communication and documentation so the contractor understands that funding alone—not just internal expectation or verbal assurance—controls when the Government becomes legally liable.
Key Rules
No funds presently available
The clause states that funds are not presently available for the contract. This means the Government is not making an immediate funded commitment and the contract is being entered into subject to a funding contingency.
Obligation depends on appropriations
The Government’s obligation is contingent on the later availability of appropriated funds that can legally be used for the contract. If funds never become available, the Government does not incur the payment obligation described by the clause.
No liability before funding
No legal liability for payment arises until funds are made available to the contracting officer for the contract. This prevents the contractor from treating the Government as bound to pay before the funding condition is satisfied.
Notice must be given
The contractor must receive notice that funds are available, and that notice must be confirmed in writing by the contracting officer. Verbal statements, assumptions, or internal agency actions are not enough by themselves to trigger liability under the clause.
Payment rights are delayed
The clause does not create an immediate right to payment upon award or performance. Payment rights begin only after the funding condition is met and the required written notice is provided.
Responsibilities
Contracting Officer
Insert and administer the clause when appropriate, monitor funding status, and provide written notice to the contractor when funds become available. The contracting officer must avoid implying that the Government is obligated to pay before the funding condition is satisfied.
Agency
Ensure appropriated funds are obtained and properly made available for the contract before the Government incurs a legal payment obligation. The agency must manage the procurement consistent with fiscal law and funding limitations.
Contractor
Recognize that the contract is subject to a funding contingency, plan performance and cash flow accordingly, and wait for written notice before assuming the Government has a legally enforceable payment obligation. The contractor should not rely on informal assurances of funding.
Practical Implications
This clause is a warning sign that funding is uncertain, so contractors should be cautious about starting work, ordering materials, or incurring major costs before written notice of funding availability.
A common pitfall is confusing award of the contract with availability of funds; under this clause, award alone does not mean the Government is legally liable to pay.
Contracting officers should document the funding notice carefully, because the written confirmation is what ties the funding event to the Government’s payment obligation.
Contractors should track whether the clause appears in the solicitation or award and should ask for clarification if performance timing, start dates, or invoicing expectations depend on funding.
If funds are delayed or never become available, the contractor may face schedule disruption or nonpayment risk, so internal planning should account for possible stop-and-start performance.
Official Regulatory Text
As prescribed in 32.706-1 (a) , insert the following clause: Availability of Funds (Apr 1984) Funds are not presently available for this contract. The Government’s obligation under this contract is contingent upon the availability of appropriated funds from which payment for contract purposes can be made. No legal liability on the part of the Government for any payment may arise until funds are made available to the Contracting Officer for this contract and until the Contractor receives notice of such availability, to be confirmed in writing by the Contracting Officer. (End of clause)