((a)) ** Funding for periods not in excess of five years; conditions** Any contract for the procurement of property or services, or both, for the Department of State or the Foreign Service which is funded on the basis of annual appropriations may nevertheless be made for periods not in excess of 5 years when—

((1)) appropriations are available and adequate for payment for the first fiscal year and for all potential cancellation costs; and

((2)) the Secretary of State determines that—

((A)) the need of the Government for the property or service being acquired over the period of the contract is reasonably firm and continuing;

((B)) such a contract will serve the best interests of the United States by encouraging effective competition or promoting economies in performance and operation; and

((C)) such a method of contracting will not inhibit small business participation.

((b)) ** Cancellation of contracts** In the event that funds are not made available for the continuation of such a contract into a subsequent fiscal year, the contract shall be cancelled and any cancellation costs incurred shall be paid from appropriations originally available for the performance of the contract, appropriations currently available for the acquisition of similar property or services and not otherwise obligated, or appropriations made for such cancellation payments.