FAR and DFARS › FAR Part 37: Service Contracting › Subpart 37.1
FAR 37.106 Funding and term of service contracts.
The codified text (eCFR, as of 2026-10-02). Under the Revolutionary FAR Overhaul ↗, agencies follow class deviations with new text for many parts while the formal rules go through the Federal Register: check the solicitation and your contract's clauses, which rule.
In plain English
This section limits how long service contracts funded by annual appropriations can last, generally not beyond the end of the fiscal year of the appropriation unless the law allows otherwise. It also lets the head of an executive agency (except NASA) award severable-service contracts, options, or orders that cross from one fiscal year into the next, as long as the period does not exceed one year. It matters because it controls when appropriated funds can be used and how long your service contract can run.
Applies to: Service contracts funded by annual appropriations and executive agencies (except NASA) awarding severable-service contracts
What it requires
- Do not extend the term of a service contract funded by annual appropriations beyond the end of the fiscal year of the appropriation unless authorized by law
- For a severable-services contract, option, or order that begins in one fiscal year and ends in the next, keep the period to no more than one year
Key terms: severable services · annual appropriations · fiscal year · option · multiyear authority
Written by AI from this section's text. A guide, not legal advice: the text below rules.
The text
(a) When contracts for services are funded by annual appropriations, the term of contracts so funded shall not extend beyond the end of the fiscal year of the appropriation except when authorized by law (see paragraph (b) of this section for certain service contracts, 32.703-2 for contracts conditioned upon availability of funds, and 32.703-3 for contracts crossing fiscal years).
(b) The head of an executive agency, except NASA, may enter into a contract, exercise an option, or place an order under a contract for severable services for a period that begins in one fiscal year and ends in the next fiscal year if the period of the contract awarded, option exercised, or order placed does not exceed one year (10 U.S.C. 3133 and 41 U.S.C. 3902). Funds made available for a fiscal year may be obligated for the total amount of an action entered into under this authority.
(c) Agencies with statutory multiyear authority shall consider the use of this authority to encourage and promote economical business operations when acquiring services.
Sections it refers to
← 37.105 Competition in service contracting. · 37.107 Service Contract Labor Standards. →
Rule changes for FAR Part 37
- Federal Acquisition Regulation: Revolutionary Federal Acquisition Regulation Overhaul Parts 6, 7, 10, 18, 26, 37, and 41 ↗ · proposed 2026-06-23 · comments due 2026-07-23
- Federal Acquisition Regulation: Preventing Organizational Conflicts of Interest in Federal Acquisition ↗ · proposed 2025-01-15 · comments due 2025-03-17
- Federal Acquisition Regulation: Sustainable Procurement ↗ · final rule 2024-04-22 · effective 2024-05-22
Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.