advanced appropriations law - fedtrain€œappropriations law” as follows: “the established rule...

FedTrain, Inc.

FEDERAL APPROPRIATIONS LAW

Update / Refresher

Randy LeGrandTeacher

© 2018 FedTrain, Inc. Rev . 02/18

1 of 112

Administrative Matters

▪ Registration - Sign-In

▪ Class Hours

▪ Attendance Policies; CPE Credit (8)

▪ Facilities

▪ Cell Phones, eTablets, etc.

▪ Evaluations

▪ Materials; Slides; eCertificates

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Pre-Course Quiz

Quiz is located in the very back of the Participant Manual

There are 29 questions examining your knowledge of the course materials covered in the basic course.▪ Please don’t spend more than 30 seconds

– on average – per question. Finish in about 15 minutes.

▪ The answers will be covered in the course presentation.

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Pre-Course Quiz


Begin the Quiz Now.

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Pre-Course Quiz


2 Minutes Remain.

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Pre-Course Quiz

Quiz is located in the very back of the Participant Manual.

▪ There are 29 questions probing your knowledge of the course materials covered in the basic course.

▪ Don’t be concerned about not remembering the information – it’s been a while…. and things tend to change.

▪ Please don’t spend – on average – more than 30 seconds on each question. Try to finish in 15 minutes.

▪ I will cover most of the items in my regular presentation; the rest covered as follow-ups.

Pre-Course Quiz answers are not in order.

Time is up!

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References

Current GAO Red Book▪ Published Editions. (Annotated extracts used in all courses.)

• Vol. I Chapters 1-5 (3rd Ed.) 2004

• Vol. II Chapters 6-11 (3rd Ed.) 2006

• Vol. III Chapters 12-15 (3rd Ed.) 2008

▪ Annual Update. (March 2015)

▪ Current Revisions: (03/16) Online only; Updated annually.

• Chapters 1 & 2 (Incorporating former Chapter 3) are new.

• Succeeding chapters will be renumbered.• GAO discontinued using volumes & Updates.

▪ Download at: https://www.gao.gov/legal/red-book/overview.

THE LEGAL FRAMEWORK,CONGRESSIONAL ACTION

AND THE

ADMINISTRATIVEPROCEDURES ACT

CHAPTERS 1, 2 & 3

Chapters 1 & 2 – The Legal Framework

A federal agency is a creature of law and can function only to the extent authorized by law. The Supreme Court has expressed what is perhaps the quintessential axiom of “appropriations law” as follows:

“The established rule is that the expenditure of public funds is proper only when authorized by Congress, not that public funds may be expended unless prohibited by Congress.”(1-3)

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Said another way,

…. as the Supreme Court put it in 1850:

“However much money may be in the Treasury at any one time, not a dollar of it can be used in the payment of any thing not… previously sanctioned [by a congressional appropriation].”

Reeside v. Walker, 52 U.S. (11 How.) 272, 291 (1850). (1-3)

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These are fundamental Principles of Appropriations Law: (1-3)

Article I, Section 7:

‘Congress shall … pay the debts and provide for the common Defense and general Welfare of the United States’Article I, Section 9, Clause 7:

‘No money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of Receipts and Expenditures of all public Money shall be published from time to time.’No mention of budget responsibilities for anyone.

Quiz2a.

Quiz 2

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The Legal Framework

Permanent Finding Statutes: (1-3)

The four cornerstones of Appropriations Law

An appropriation is available for obligation and disbursement for:

• A lawful Purpose 31 U.S.C. § 1301(a); • Use during the Time period for which the

appropriation is made 31 U.S.C. § 1502(a);

• Which an Amount is on hand 31 U.S.C. § 1341(a); and,

• Which an ‘authorized certifying official’ certifies an invoice/voucher to a disbursing officer for Paymentfrom Treasury. 31 U.S.C. § 3528(a). (1-19)

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GAO

The Government Accountability Office

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Government Accountability Office: (1-4)

Created in 1921, Title III, Budget and Accounting Act:

• Title I mandated submission of a President’s Budget Estimate each year on the first Monday in January.

• Title II created the Bureau of the Budget (Now O.M.B.)

• Moved functions from Compt. of Treasury in Executive Branch to Legislative Branch.

• Broad authority to: (31 U.S.C. §§ 3527, 3528 & 3529)

▪ Audit and report on functions of Executive Branch.

▪ Issue CG Decisions relating to fiscal matters.

Quiz3

a. & c.

Quiz

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Department of Justice

“n1 The Comptroller General is an agent of Congress.

Therefore, although his views often provide helpful

guidance on appropriations matters and related issues,

they do not bind the Executive Branch. See, e.g., Submission of

Aviation Insurance Program Claims to Binding Arbitration, 20 Op. O.L.C. 341,

343 n.3 (1996).” [31 Op. O.L.C. 1, April 5, 2007] Research reference: 2007 OLC

LEXIS 6; 31 Op. O.L.C. 1

See also, Bowsher v. Synar, U.S. Supreme Court, 1986 [48 U.S. 714, 106 S. Ct. 3181,

92L. Ed. 2d 583 1986 U.S.] (1-4)14

The Legal Framework

Therefore GAO decisions are viewed two ways:

▪ In his capacity as CG, decisions relating to the recording of obligations and the legality of making certain payments are clearly within his role as Chief Accounting Officer of the USA.

▪ Bona fide need issues.

▪ Obligating longevity bonuses; Training contracts, etc.

15© 2013 FedTrain, Inc.

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The Legal Framework

Obligating Employment Bonus ContractsB-325526, July 16, 2014

GAO responded to a general provision in an appropriations act requiring an opinion on the obligation of an annual appropriation entering into multiyear bonus contracts, such as longevity/retention bonus contracts for military [and by implication, USPHS] members.

GAO likened a multiyear bonus contract instrument to that of a nonseverable fixed price contract in which the government relinquishes control over the duty to make a payment to the second party and thus incurs a liability for the full amount of the bonus at the time the instrument is effective.

GAO rejected DOD’s argument that the agreement was in fact compensation governed by 31 U.S.C. § 1501(a)(7) which requires that such liabilities should be

recorded as they are actually earned.

The Legal Framework

National Defense Authorization Act for 2016. P.L. 114-92, November 25, 2015

SEC. 662. RECORDATION OF OBLIGATIONS FOR INSTALLMENT PAYMENTS OF INCENTIVE PAYS, ALLOWANCES, AND SIMILAR BENEFITS WHEN PAYMENT IS DUE.

(a) IN GENERAL.—Chapter 19 of title 37, United States Code, is amended by adding at the end the following new section:

‘‘§ 1015. Recordation of installment payment obligations for incentive pays and similar benefits‘‘(a) IN GENERAL.—In the case of any pay, allowance, bonus,or other benefit described in subsection (b) that is paid to a memberof the uniformed services on an installment basis, each installmentpayment shall be charged to appropriations that are available forobligation at the time such payment is payable.

This provision is in response to a recent GAO, Comp. Gen. B–325526— ‘‘Obligation of Bonuses under Military Service Agreements,’’ July 16, 2014, which concluded that DOD cedes fiscal exposure to service members when it enters into such agreements and should change its obligational practices to obligate the entire bonus amount when the agreement is signed.

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The Legal Framework

Therefore GAO decisions are viewed two ways:

▪ In his capacity as CG, decisions relating to the recording of obligations and the legality of making certain payments are clearly within his role as Chief Accounting Officer of the USA.

▪ Bona fide need issues.

▪ Obligating longevity bonuses; Training contracts, etc. ▪ Otherwise, decisions that purport to limit Executive

Branch discretion without the benefit of a controlling, specific legal authority are not viewed as binding on the Executive Branch.

▪ Business Cards; Commercial (bottled) water, etc.

18© 2013 FedTrain, Inc.

Quiz3

a. & c.

Quiz


Legislative History Documents:

Transfers and Reprogramming Rules

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Concepts and types of Budget Authority Transfer and Reprogramming:

▪ Transfer. (1-6)

Congress typically provides general transfer authority to allow transfer of budget authority from one appropriation or fund account to another.

Transfer authority exists in the annual appropriation & authorization acts as well as in permanent legislation.

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Transfers and Reprogramming

▪ Limitations on flexibility: Transfer and Reprogramming (1-5..6)

▪ Congress enacts general and specific appropriations.

▪ In CDC: (as an example)

▪ 075 18 0955 is a specific 1-year appropriation for Global Health

• 075 18/19 0955 is a specific subordinate 2-year appropriation for International HIV-Aids.

▪ It is illegal to permanently transfer funds between appropriations without specific statutory authority.

▪ Secretary, HHS has transfer authority [1%out / 3% in ]

▪ Notify. (1-6) Quiz

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Quiz4a.


Limitations on flexibility: Transfer and Reprogramming (1-7)

Congress permits limited Reprogramming of funds. (The movement of money within an appropriation.)

Specific guidelines are found in General Provisions of annual appropriations acts in certain agency appropriations. Generally they require Congressional notification of any reprogramming that:

▪ Creates or eliminates a PPA (Program, Project or Activity).▪ Increases/decreases money amounts for a specified PPA.▪ Increases or decreases an unspecified PPA by 10% or

$500k (the lesser).▪ Reorganizes offices, PPA.

▪ The FY17 HHS Appropriations act does not contain the above language. Quiz

Quiz5c.

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Chapter 3 – Administrative Procedures

Issuance of Regulations:

▪ The Administrative Procedures Act (5 U.S.C. § 511 – 559)

governs issuance of agency regs. (1-11..13)

▪ Broadly there are two types:

▪ External – Issuance of rules and procedural requirements on outside agencies or parties. (E.g.other federal agencies, private parties i.e. persons, institutions, organizations, etc.)

▪ Internal – Issuance of rules governing the internal management and administration of the agency.

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Administrative Procedures Act:

External regulations generally must: (1-11..13

▪ Rely on a controlling statute.

▪ Announce proposed regulations in advance in the Federal Register. Retroactive rules must be authorized by the controlling statute.

▪ Allow an opportunity for public review and comment.

▪ Consider and comment on resulting public issues.

▪ Thereafter, be published in final form in the Federal Register, normally to be effective at least 30 days hence.

OMB administers the act for the Executive Branch.

Quiz7

a. & c.

Quiz

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Quiz6b.



Administrative Procedures Act:

Internal regulations generally: (1-11..13)

▪ Do not require a controlling statute.

▪ Must conform to laws and higher authority regulations.

▪ No retroactive regs. unless authorized by a controlling authority. Retroactive confirmations are different.

▪ May require approval of a higher level management official.

Quiz8d.

Quiz

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Chapters 1, 2 & 3 – The Legal Framework

Significant Changes: None

Reinforcement of existing policy:

▪ B-309704, Words of Futurity in Appropriations Acts (ATF), August 28, 2007

▪ Executive Order 13457, Complying with Earmarks in Legislative History Documents, February 1, 2008

▪ B-317450, Statutory Construction of Appropriations Acts (EPA), March 23, 2009

▪ B-323792, Notification Reprogramming Rules (CFTC), January 23, 2013

▪ B-329368, DOT Violated Anti-lobbying Restrictions, December 13, 2017

AVAILABILITY OFAPPROPRIATIONS:

PURPOSE

Chapter 4(1-50)

Appropriations Availability - Purpose

The Purpose Statute

Appropriations are available only for the objects for which the appropriations were made except as otherwise provided by law. 31 U.S.C. § 1301(a) (1-51..52)

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Quiz9d.

Quiz


The Necessary Expense Doctrine. (1-51..52)

• It is not reasonable to expect that every item of expenditure would be itemized in an appropriation act.

• The spending agency [official] has reasonable discretion in determining how to carryout the purposes of the appropriation.

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The Necessary Expense Doctrine:

▪ An agency may exercise discretion if the proposed expenditure meets three tests: 1. Logical and makes a direct contribution to the appropriation.2. Not prohibited by law.3. Not otherwise provided for in another appropriation. (1-52)

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The Necessary Expense Doctrine.

Meetings (1-52..54)

• Four statutes address meetings:

5 U.S.C. § 5946

5 U.S.C. § 4109

5 U.S.C. § 4110

31 U.S.C. § 1345 (HHS, Labor, Educ. Exempt)

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Availability of Appropriations: Purpose

Conferences

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Availability of Appropriations: Purpose

The Necessary Expense Doctrine.Conferences (Meeting: a gathering of two or more parties.) (---)

• Meetings in general are authorized by 5 U.S.C. §4110.

• Include such descriptors as seminar, retreat symposium, training conference, convention, workshop, etc.

• President issued two Executive Orders and OMB issued two Memoranda on the subject.

• The following is a brief chronology.

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Timeline: (--)

▪ October 2010 – GSA Las Vegas conference.

▪ April 2012 – GSA Inspector General issues

‘scathing report’ on the abuses.

• $823,000 Training Conference.

• $130,000 travel related expenses for 6 scouting visits to the sole-sourced casino.

• Multiple FAR violations.

• Termed: “Over the top ”.34


▪ Consequences:

• GSA Administrator Resigned.

• Fired: 3 GSA Regional Commissioners; the Buildings Services Commissioner; a senior D.C. staff attorney; and a high ranking administrator suspended, later retired.

• Jeffrey Neely – the regional commissioner who orchestrated the conference was convicted of fraud (incl. other acts beyond the

conference); sentenced to 3 months in jail, fined $2,000, ordered to repay $8,000 restitution.

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▪ Consequences:

• The other two Regional Commissioners appealed their firings to the Merit Systems Protection Board and were ultimately reinstated.

▪ Reaction:

• November 2011: President Obama issued Executive Order 13589.

• May 2012: OMB issued Memo M-12-12.

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Promoting Efficient Spending to Support Agency Operations

OMB Memo M-12-12, May 11, 2012

▪ Issued following Executive Order 13589, November 9, 2011.

▪ Requires:

• 30% travel cuts from 2010 baseline levels through 2016.

• Senior departmental review and approval of all conferences over $100K.

• Conference expenses over $500K must be personally approved by the agency head (Secretary, HHS).

• Publicize all conferences costing more than $100K on agency main website.

▪ Government-wide conference spending controls imposed. Reporting systems emerge. Quiz

13a. c. & d.

Quiz

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▪ Based on authority in the FY15 Appropriations Act, the Secretary, HHS:

• Delegated to OPDIV head approval for all conferences; above $500k may not be delegated.

• May delegate high-level approval for conferences between $100k and $500k.

• Allows for approvals below $100k as the OPDIV head desires.

• HHS StaffDiv delegations modified slightly.

• Updated prior guidelines and conference definitions.

• Congress required quarterly reporting of all conference attendance costing over $20k.


▪ As the Obama administration prepared to exit:

• OMB issued Memo M-17-08 November 2016.

• Touted substantial savings in conferences.

• Modified M-12-12 by deemphasizing the role of department level approvals.

• Required agencies to designate ‘appropriate’ officials to approve conferences.

• Modified reporting requirements.

▪ Thus HHS’ 2015 authorities were mirrored throughout the executive branch.

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• May 2017: P.L. 115-31, Consolidated Appropriations Act, Div. E, Title VII, Sec. 739(E):

None of the funds made available in this or any other appropriations Act may be used for travel and conference activities that are not in compliance with OMB Memo M-12-12, May 11, 2012 or any subsequent revisions to that memorandum.

• June 2017: OMB ……

• OMB Memo 17-26 eliminated both OMB M-12-12 & M-17-08;

• HR 3354 FY18 Consol. Appns. Rpt. contains the above language.

‘Do away with it all ….. But, ..’


A general comment about Purpose Availability: (--)▪ Three broad areas require a review of the law when buying

for others:• FOOD• GIFTS• WEARING APPAREL

▪ All three of the above share a common characteristic. They are:

• PERSONAL IN NATURE.▪ The law is understandably guarded about allowing the use

of appropriations for a purchase when the primary benefit accrues to a party or entity other than the U. S. government.

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Legal Authorities:▪ The property clause in the Constitution. (1-78)

• Article IV, Sec. 3. Property acquired by the United States may be disposed of only as authorized by law.

• Title II of the Federal Property and Administrative Services Act of 1949 codifies in permanent law regulations on acquisition and disposition of property.▪ Property is anything of value (real or personal) that has a

material utility.▪ The laws prescribe a variety of ways to dispose of excess and

surplus property.▪ E.g. Appropriations allow Official Reception and

Representation funds to be used to purchase gifts (mementos) for visiting dignitaries.

Quiz12d.

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Quiz


Disposing of property:▪ The Incentive Awards Act 5 U.S.C. § 4501-4506

authorizes the presentation of monetary and non-monetary awards. As such, they are not gifts.

▪ OSHA, 29 § U.S.C. 668 and other laws permit purchase of articles of protective clothing and equipment. 5 § U.S.C 5901, authorizes the issuance of uniforms. As such, they are property items not gifts.

▪ An employee may be issued tools and equipment to personally use on the job. They are property not gifts.

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Disposing of property:

▪ Certain give-away items are deemed gifts authorized by law.

• Recruiters (for military and certain civilian agencies) are permitted by various laws to acquire promotional items.

• All agencies have inherent authority to promote employment opportunities.

• Certain PPAs in HHS have promotion authority.▪ Bottom Line: If you are planning to purchase

something of value with appropriated funds to be given to someone personally, first find the legal authority.

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Entertainment - Food Recap (Government-wide)Principle: “.. as a general rule, appropriated funds are not available …. to provide free food to employees [at] within their official duty stations …”

Exceptions: Where other authority exists: (1-57..61)

• Training (5 U.S.C. § 4109)

• Award Ceremonies (5 U.S.C. § 4501–4506)

• Cultural Awareness functions: Small food samples permitted (B-301184, Jan 2004)

• Light Refreshments (B-288266, January 27, 2003)• Renting meeting space with food included. (B-281063).

• Miscellaneous authorities (Safety, gift funds, foundation donations, reception and representation funds.)

Quiz11. c.

Quiz14

a., b., c. & d.

Quiz

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Entertainment - Food Recap ▪ Principle: “.. as a general rule, appropriated funds are not available …. to

provide free food to employees [at] within their official duty stations …”Exceptions: Where other authority exists: (1-57..61)

• Training (5 U.S.C. § 4109) (Not at HHS sponsored Training)

• Award Ceremonies (5 U.S.C. § 4501– 4506) (HHS: Light Refreshments - $4 CDC)

• Cultural Awareness functions: Small food samples permitted (B-301184, Jan 2004)

• Light Refreshments (B-288266, January 27, 2003)• Renting meeting space with food included. (B-281063).

• Miscellaneous authorities (Safety, gift funds*, foundation donations*, reception and representation funds.) *Unless the donation is specific to food.

HHS/CDC

Buying Commercial Water

Buying Bottled WaterWhen is it legal to buy commercial water?

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1. The taste of the water in this area is not good. Bottled water is much better.

2. Also we need to stock up on bottled water because the city water plant malfunctions a lot. Several times a year we have to boil water for a day or two.

3. The contracting specialist has price quotes from local suppliers for both bulk buys and routine monthly resupply of bottled water usage.

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Commercial (Bottled) Water

B-324781, December 17, 2013 (1-89)

Purchase of commercial drinking water is generally prohibited except when the public source is:

• Unreliable, unsafe or unavailable; or, • Necessary to stock for emergencies.

Army elements wanted authority to purchase commercial water for issue to employees who were assigned, on a semi-regular basis, to work in remote or rough terrain areas. These locations were not within a reasonable proximity of verifiably safe drinking water.

GAO concluded that when employees are performing duties at locations where safe public drinking water is not reasonably available, an agency may incur necessary expenses to acquire commercial drinking water.

See also: B-247871 (1992) and B-147622 (1961); B-310502, February 4, 2008, B-318588, September 29, 2009.

Quiz15

a. & b.

Quiz


1. The taste of the water in this area is not good. Bottled water is much better. No

2. Also we need to stock up on bottled water because the city water plant malfunctions a lot. Several times a year we have to boil water for a day or two. OK

3. The contracting specialist has price quotes from local suppliers for both bulk buys and routine monthly resupply of bottled water. OK, but not for routine consumption.

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Non-Food

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BUYING PROPERTY

Purchase of Kitchen Appliances

B-32933, Purchase of Kitchen Appliances, June 25 , 2004

An agency upon moving into a recently constructed federal office wanted to acquire kitchen appliances, e.g., refrigerators, microwaves, commercial coffee pots, etc., to be placed in large, centrally located break-room areas. The agency wanted to promote efficiencies and effectiveness of working operations, enhance safety and health.

GAO concluded that prior decisions on the subject limited such purchases to strict circumstances. Now, GAO determined that agencies may, subject to policies/regulations, permit the purchase of kitchen appliances, such as the above if a determination is made that the primary benefit of the purchase accrues to the government and that adequate policies and procedures are in place to prevent abuse. Prior CG decisions were modified accordingly to conform.

B-2716601 (1997), B-210443 (1983) and 47 Comp. Gen 657 (1968).

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BUYING PROPERTY

Purchase of Kitchen Supplies

B-327146: Disposable Cups, Plates & Cutlery (Commerce-DOC), August 6, 2015

In 2009, DOC and NWSEO signed a memorandum of understanding (MOU), which stated that DOC would provide "disposable cups, plates, and utensils” to employees. DOC commenced providing the disposable items. But, in 2013 DOC announced that it could not use appropriated funds for this purpose. The NWSEO objected and the matter went to arbitration.

GAO said in a 2013 decision (B-326021), that neither the DOC nor the arbitrator's opinion demonstrated that supplying the disposable items was an essential part of accomplishing a statutory mission of the agency. GAO concluded that appropriated funds were therefore not available to pay for the cups, plates, and cutlery. NWSEO argued GAO lacked authority to rule on these labor matters. GAO disagrees.

GAO cited: U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) Navy v. FLRA, 665 F.3d 1339 (D.C. Cir. 2012) and D.C. Circuit, Air Force v. FLRA, 648 F .3d 841 (D.C. Cir. 2011) (union proposal to use appropriated funds to pay for uniform cleaning was non-negotiable because this purpose was not authorized by law).

MANDATORY SOURCES

The manager wants special business cards for his staff. GPC holder found a great price on the web from a national retailer. Perfect quality, timeliness and price.

What could go wrong?

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Mandatory Sources

Using Mandatory Sources

(GSA, VA, DLA, Lighthouse for the Blind, Gov. Publishing Office, etc.)

Principle of Law: (1-11..13)

When a source for goods or services is prescribed by law that source must be used to the exclusion of all others; unless an exception applies or a waiver is granted by the required source.

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Mandatory Sources

The manager wants special luxury business cards for his staff. GPC holder found a great price on the web from a national retailer. Perfect quality, timeliness and price.

What could go wrong?

• The Lighthouse for the Blind, an Ability Onemandatory source, lists business cards on it’s procurement list. Agencies must buy from a NIB/NISH supplier. FAR 8.6.

• Manager won’t get luxury cards.

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Mandatory Sources

Federal Prison Industries (UNICOR) Changes

P.L. 108-447, Consolidated appropriations Act for FY 2005

A former mandatory sole source: (FAR 8.6)

“None of the funds in this act or any other act for FY 2005 and thereafter may be used to purchase an item from the Federal Prison Industries, Inc. ….. unless the goods or services are determined to be best value….” [under the FAR and related laws]. FPI must be given the opportunity to compete.

Advertising, Promotion & Gifts

1. The manager wants to give away T-shirts at a conference to promote childhood obesity awareness programs. Says its a major mission objective.

2. Another manager wants to give away $10 gift cardsto attract conference attendees to his booth. (Potential customers of the agency’s working capital fund.)

3. At job fairs the HR dept. wants to give away ballpoint pens with the office Email address/USAJobs.gov web site printed on them. (Attract job seekers at the fairs.)

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Advertising, Promotion and Gifts

Principle of Law: (1-80..83)

Appropriated funds are not available to advertise or promote agency programs or initiatives absent statutory authority.

Appropriated funds are available to inform the public about agency programs and opportunities.

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Advertising, Promotion & Gifts

1. The manager wants to give away T-shirts at a conference to promote childhood obesity awareness programs. Says its a major mission objective. If the agency has promotion authority.

2. Another manager wants to give away $10 gift cardsto attract conference attendees to his booth. (Potential customers of the agency’s working capital fund.)

3. At job fairs the HR dept. wants to give away ballpoint pens with the office Email address/USAJobs.gov web site printed on them. (Attract job seekers at the fairs.)

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OK

No

OK

Quiz16

a. & c.

Quiz

Miscellaneous Employee Related Expenses

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MEMBERSHIPS IN PRIVATE ORGANIZATIONS

1. Upper management wants to approve an employee request that his/her membership in the National Association of Government Supervisors be paid by the GPC.

2. An employee needs public speaking training. The Toastmasters chapter can provide the accredited training. Tuition is $600. Members only. Membership is $35.

3. An employee in a remote area (a firefighter) must maintain physical fitness as a part of the job. Federal facilities not available. Facilities for others are available. Manager wants to reimburse for local gym membership fees - $30 per month.

4. An accounting department manager wants to be reimbursed for his/her AICPA license renewal. Two employees want to be reimbursed for costs to take the test and pay for their CPA licenses. Not a job requirement either instance.

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MEMBERSHIPS IN PRIVATE ORGANIZATIONS

Memberships and Fees Paid to Private Associations

B-305095, December 8, 2005 (1-83)

Generally, 5 U.S.C. § 5946 prohibits buying a personal membership in a private society or association.

• An agency requested a decision from GAO regarding the legality of purchasing a membership in a private society or association. • GAO concluded that several CG decisions have long permitted the payment of a membership fee when it is necessary to achieve a training objective (5 U.S.C. § 4109) or when the membership is purchased in the name of the agency as a necessary expense of carrying out an agency mission or function (31 U.S.C. § 1301(a)). • In this instance the membership is in the name of the agency and therefore appropriated funds are available upon a determination of necessity.

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PROFESSIONAL CERTIFICATION EXPENSES

Payments for Professional Certification Expenses

5 U.S.C. § 5757(a) 2004 1-92

Agencies may pay or reimburse employees for necessary expenses to attain and/or maintain professional certifications and licenses. 5 U.S.C. 5757(a)

Laws now allow paying for:(1) Occupational licenses and permits.(2) Professional certifications and

licenses.

Quiz18

a., b. & c.

Quiz

Memberships in Private Organizations

1. Upper management wants to approve an employee request that his/her membership in the National Association of Government Supervisors be paid.

2. An employee needs public speaking training. The Toastmasters chapter can provide the accredited training. Tuition is $600. Members only. Membership is $35.

3. An employee in a remote area (a firefighter) must maintain physical fitness as a part of the job. No federal facilities available. Manager wants to reimburse for local gymmembership fees - $30 per month.

4. An accounting department manager wants to be reimbursed for his/her AICPA license renewal. Two employees want to be reimbursed for costs to take the test and pay for their CPA licenses. Not a job requirement either instance.

65

No

OK

OK

OK …..’agencies may pay for…’

66


Professional Liability InsuranceP.L. 106-58 (1999) (1-78)

According to testimony from various parties before Congress, federal managers and certain others needed to be reimbursed for portions of their personal liability insurance premiums. This is due to the increasing frequency of law suits being brought against them because of actions they took, or failed to take, in the ordinary lawful conduct of their duties.

In 1999, Congress created an entitlement for certain officials specifying thatappropriations for salaries and expenses would be available to reimburse them for one-half of the paid annual premium for professional liability insurance (Errors and Omissions / Malpractice). The officials covered by the act are:

• Supervisors.• Senior management officials (policy making functions).• Law enforcement personnel.

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WEARING APPAREL

Wearing Apparel (1-95..99)

• Employees are expected to report for work properly attired for their duties.

• Exceptions:• 5 U.S.C. § 7903. Unusual apparel; necessary for

safe accomplishment of mission; and engaged in hazardous duties.

• Uniforms 5 U.S.C. § 5901. (Day-to-day & situational)

• OSHA 29 U.S.C. § 668 (1970).

• Other statutory authority.

Quiz17

a. b. & d.

Quiz

Quiz10

a. & b.

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AVAILABILITY AS TO PURPOSE

Notable CG Decisions:

▪ B-261110, Prohibited use of COAGS to acquire conference services and support, March 19, 1997

▪ B-329316, Prohibited purchases of disposable cups, plates, cutlery when potable water was unavailable, November 29, 2017

▪ B-327146, Prohibited purchases of disposable cups, plates, cutlery required by union labor arbitration, August 6, 2015

▪ B-309715, Prohibited purchase of accident insurance for traveling employees (NTSB), September 25, 2007

▪ B-309604, Prohibited payment for employee credit monitoring services, (CBP) October 10, 2007


TIME

Chapter 5

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Appropriations Availability - Time

1-29

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Concepts and types of Budget Authority (1-29)

The “Life of an Appropriation”. Disposition of Appropriation Balances

▪ An appropriation goes through three distinct stages:

CURRENT EXPIRED CLOSED

Availability of Appropriations: Time

Before the Fiscal Years begins

▪ Continuing Appropriations Resolution (CRA).

▪ There are three major rules in a traditional CRA: (OMB Cir A-11, Sec. 123)

Rate for Operations

No New Starts

Expiration Date

174 days47.67%

- 0.6791%

March 23

Limited Funding

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Bona Fide Needs Rule (1-33)

• Enacted in 1870:

“The balance of a fixed term appropriation is available only for the payment of expenses properly incurred during the period of availability or to complete contracts properly made within that period. ” 31 U.S.C. 1502(a)

“Congress has the right to limit its appropriations to specific time periods as well as to particular objects, and when done so, its will express in the law must be implicitly followed”. Opinion of the Attorney General, 1870.

Quiz

Quiz19a.

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Bona Fide Needs Rule

• Terms (--)

• Full Funding – A requirement is funded entirely at the time the obligation is created.

• Incremental Funding – A requirement extending over two or more fiscal years which is obligated in stages, phases, milestones or separate fiscal years.

• Forward funding – Using current year funds to obligate for goods or services that are not presently needed and will be delivered in a fiscal year.


Obligating orders for Property. (1-38..41)

Procurement Lead Time Exception:

An agency may not obligate funds when it is apparent from the outset that there will be no requirement until the following fiscal year.

▪ However, the timing of delivery, while obviously a relevant factor, is not conclusive.

• Need now but must wait for delivery:

–Order now; obligate now, receive in the future; pay upon receipt; charge back to prior year.

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Obligating orders for Property. (1-38..41)

Exceptions:Procurement Lead Time Exception:

▪ “Similarly, an agency may contract in one fiscal year for delivery in a subsequent year if the material contracted for will not be obtainable on the open market at the time needed for use……

• Need in the future but must order now to have in the future:

– Order now, obligate now, receive in the future; pay upon receipt; charge back to prior year.

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Obligating orders for Services. (1-38..41)

Principle of Appropriations Law:

Services are obligated using appropriations in effect at the time the services are performed unless the services are non-severable; in which case the services are entirely obligated at the time the contract is effective.

What is Severability?

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Obligating orders for Services

Severability

Relates to the certainty of the government’s liabilityunder the contract.


Obligating orders for Services. (1-38..41)

▪ Non-severable (entire) services. • Services which cannot logically be separated by

performance or fiscal periods; a single undertaking. • Logical, discernible starting point.• Successive steps, stages, phases, milestones,

each building upon each other.• Defined deliverable. Clear conclusion.• Not limited to 12-month fiscal year performance.

• Such as repairing a piece of equipment; conducting a study; working on a project.

▪ Must be funded entirely upon award. Incremental funding requires statutory authority.

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Quiz20

a. & d.

Quiz


Bona fide Needs Rule. (1-31..34)

Severable services.

▪ Services which can be logically separated by performance between fiscal periods or other subjective criteria.

• Typically, repetitive, recurring, routine etc. (Such as maintaining office equipment, temporary contract staff support labor; custodial services, etc.)

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Obligating orders for Services (1-38..41)

Severable service contracts

• A severable services contract may cross fiscal year lines. When it does:

• And the period of performance is for 12 months or less;

• An agency may obligate the entire amount of the performance period using the FY funds at the time the contract is effective. 10 U.S.C. § 2410a (DoD) or 41 U.S.C. § 3902 (Civ.)

Quiz21b.

Quiz

Quiz22

a. & b.

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Noteworthy CG Decisions:

▪ B-323940, Severable services authority using non-Economy Act Interagency Agreements, January 7, 2015 (2-193)

▪ B-325526, Obligating longevity bonuses, July 16, 2014 (Previously discussed)

▪ B-321296, Obligating training a contract in one fiscal year for training conducted in a subsequent year (NLRB), July 13, 2011

▪ B-322455, Obligating Cost Reimbursement Multiyear Contracts, August 16, 2013 (2-172)

▪ B-317636, Inapplicability of severable services contracting authority in a multi-year or no-year appropriation, April 21, 2009 (2-181)

▪ B-309530, Funding for subscription contracts, September 17, 2007

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▪ Replacement contracts using prior year funds: (1-43..44)

• Default terminations: Use prior year funds.

• Convenience Terminations: Use current year funds.

• Convenience Terminations under Special Conditions: • Use prior year funds if termination was:

• Erroneous award; and/or

• Non-discretionary,

• No fault of the government; and

• No fault of the part of the contractor.


▪ Contract modifications requiring upward adjustments in the price. (1-44..45)

Non-severable services or supplies and materials.

If a modification exceeds the general scope of a contract for property, quantities of materials or nonseverable services, the modification amounts to a new obligation and is chargeable to the fiscal year in which the modification is effective.

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Contract modifications requiring upward adjustments in the price: (1-44..45)

Severable services.

In the case of a contract for severable services, a modification for increased services must be charged to the fiscal year or years in which the services are performed.

Old law

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Contract modifications requiring upward adjustments in the price: Severable services. (1-45) Footnote 20

Presumably, if an agency:▪ obligates the full amount of a severable services

contract which crosses fiscal year lines to the first year of the contract (or period of performance); and,

▪ uses an annual appropriation under 41 U.S.C 3902 (or 10 U.S.C 2410a for DoD); then,

▪ a modification calling for increased services under that contract should be charged to that same appropriation. New law

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AMOUNT

Chapter 61-15

CHAPTER 6 – AMOUNT LIMITS

Antideficiency Act ViolationThe Act prohibits: (1-15)

▪ Overobligating an Appropriation or Fund.31 U.S.C. § 1341(a)(1)A

▪ Obligating in advance of an Appropriation.31 U.S.C. § 1341(a)(1)B

▪ Overobligating an Apportionment or sub-apportionment.31 U.S.C. § 1517(a)

▪ Accepting voluntary services; except during an extreme emergency threatening imminent danger to human life or property. 31 U.S.C. § 1342

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Antideficiency Act Violation

The Act also generally prohibits: (1-16..17)

▪ Transfers between Appropriations without statutoryAuthority. 31 U.S.C. § 1502(a) (1-6) Previously discussed.

▪ Obligations for purposes not intended for the appropriation. 31 U.S.C. § 1301(a) Previously discussed (1-16)• Purpose violations may be cured.• If the proper appropriation has remaining balances to accept the

transfer from the improper account there is no ADA violation. Normally requires higher HQ approval. (1-15)

▪ Augmenting an appropriation with money or appropriations from outside sources. 31 U.S.C. § 3302(b). (1-16)

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Ratification of Unauthorized Commitments

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Unauthorized Commitments

The Act also is the basis for prohibiting Unauthorized Commitments FAR - 48 C.F.R. 1.602-3:

• An agreement entered into by an official who lacked the authority to bind the USA to pay for goods or services received.

• May be ratified if all 7 criteria are met.

• Ratifying authority is the head of the contracting activity (agency or bureau head).

• May be delegated no lower than to the head of the contracting office.

Quiz23

a. & b.

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Quiz


If a violation is committed….

Who is held accountable?

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Accountable Officials

If a higher level official directed, knew of or was otherwise in a position to prevent the illegal actions, can the official avoid ADA consequences? (1-18..19)

▪ 31 U.S.C. 1514 requires agencies have processes that:• Establish controls to prevent ADA

violations.• Fix responsibility for offenses.• Hopkins and Nutt – study on the ADA.

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Who is the Accountable Official if an ADA violation occurs?Example:

▪ Suppose a conference was conducted last year. The fund certification by a budget analyst (fund certifier) was for $200,000. Who is the accountable official if:• It is later discovered that only $167,000 was available.

• The budget analyst questioned certain items in the P.R. (T-shirts for attendees, refreshments, mementos, etc.)

• The Budget Branch Chief ordered that funds be certified because of time sensitivities.

• The contracting officer awarded the contract for $220,000 without obtaining a new fund certification; questionable items were purchased.

• .


Accountable Officials: Responsibility

Determining which official is Responsible for a violation: (1-18..19)

▪ Look first to the party who created the obligation. • The appointed fund certifying officer is primarily

accountable.• Then others may be at fault: Approving officer;

contracting officer, department managers, executives.

▪ The individual who will be held responsible for a violation of the Act, specifically or generally, will be the highest ranking official who:

• Knew, or • Should have known that the actions being taken were• Improper or questionable.

Quiz24

a. b. & d.

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Quiz

Quiz25 d.

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Who is the Accountable Official if an ADA violation occurs?Example:

▪ Assume a conference was conducted last year. The fund certification by a budget analyst (fund certifier) was for $200,000. Who is the accountable official if:• It is later discovered that only $167,000 was available.

• The contracting officer awarded the contract for $220,000 without obtaining a new fund certification.

• The budget analyst questioned certain items in the P.R. (T-shirts for attendees, refreshments, mementos etc.).

• The Budget Branch Chief ordered that funds be certified because of time sensitivities and those questionable items were purchased.

The BudgetAnalyst.

The Branch Chiefor

Contracting Officer

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Antideficiency Act Penalties

▪ What are the penalties for violating the Antideficiency Act? (1-19)

• Administrative: • Reprimand, suspension, reassignment to other

duties, reduction in grade, etc.• Penal: Up to:

• $5,000 fine; and/or, • 2 years in jail.

• No one ever prosecuted / convicted. W h y?• The matter of the Baltimore Corps of Engineers.

Tab 3, page 3-121.

CERTIFICATIONLIABILITIES AND

RELIEF

Chapter 91-20

CHAPTER 9 – LIABILITIES FOR PAYMENTS

Determining which official is Liable: (1-20..25)

▪ 31 U.S.C. §§ 3325, 3528(a), & 3529 provide that the official who certified the payment voucher to a disbursing officer:

• Must be appointed in writing. (1-20)

• Is liable the moment an illegal, improper or incorrect payment is made. (1-20)

• Is liable regardless of lack of fault or negligence on the official’s part. (1-20)

• Has a right to appeal and/or request relief from designated relief approval authorities - up to GAO.

• May also be subject to, when circumstances warrant, administrative discipline.

Quiz

99

Quiz26d.

100

Payment Certification

▪ Many officials make certifications. (1-22)

• But, this does not make them payment Certifying Officers.

• Certifying Officers make payment certifications to a disbursing official and,

• Must be so designated in writing. 31 U.S.C. 3325(a)(1).

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▪ Consider this situation:

▪ A short-staffed, overworked COR neglects to properly monitor a contractor’s daily performance.

▪ Was reported to higher HQ; Investigation reveals improper over-payments to contractor.

▪ Attempts to recover from contractor fail.

▪ Who is the accountable official?

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31 U.S.C. 3528(a)10 U.S.C. 2773a

(For DoD)

Invoice

Approving Official

Contracting Officer Representative (COR)

Vendor

Disbursing Office

$Electronic Funds Transfer

Finance Center/Accounts Payable

Who is the Accountable

Official?

12

3

4

3a

5

6

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▪ Duties and Liabilities (1-23)

▪ A Certifying Officer must focus on three requirements of law (31 U.S.C 3528(a)).

• Facts

• Math

• Legality

▪ Certifying Officers are liable the moment an illegal, improper or incorrect payment is made.


Criteria for Relief from Liability: (1-24..25)

▪ 31 U.S.C. § 3328(b) establishes criteria for the relief of officials from liability for an erroneous payment (illegal, incorrect or improper). A payment certifier may be relieved by a delegated official of personal financial liability for a loss if:

1. The official relied on official records when making the certification; and, by reasonable diligence and inquiries the official could not determine the actual facts regarding the payment; or,

2. The official acted in good faith; the payment was not specifically prohibited by law; and, the government received reasonable value for the payment.

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Noteworthy CG Decisions:

▪ B-280764, DoD lacks authority to establish financial liability contrary to 31 U.S.C. 3528, May 4, 2000 (Later DoD was given authority in 10 U.S.C. 2773a.)

▪ B-309267, Relief from accountability of certifying officer (VA), January 15, 2008

GRANTSAND

COOPERATIVEAGREEMENTS

Chapter 101-100

CHAPTER 10 – GRANTS AND COOPERATIVE AGREEMENTS

▪ Grants and COAGs: (1-101..120)

• Types of Grants:▪ Formula▪ Discretionary.

• Administrative laws governing agency use of appropriations for internal operations generally don’t apply.

• The Grant & Cooperative Agreement Act, federal regulations and the grant instrument itself govern the allowable costs which may be incurred by the grantee.

• Thus, funds in the hands of the grantee largely lose their federal identity.

• A grant or COAG is considered analogous to a non-severable service contract.

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▪ Grants and COAGs: (1-101..120)

• Are not contracts.

▪ FAR rules don’t apply – i.e. competitive sourcing, best value determinations, etc.

• A contract acquires goods or services to support internal agency operations.

• A grant or COAG transfers something of value to an outside party in furtherance of a federal objective.

• Not all federal agencies have grant making authority. Quiz

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Quiz28

a. & c.

Quiz27

a. b. c. & d.


▪ Cooperative Agreements: (1-101...120)

• A very popular alternative to contracting procedures.

• Cannot, however, be used to acquire goods or services for the USA.

• Contemplates substantial USA involvement in executing the COAG – unlike a grant.

• Grant Management Officers play an important role in COAG awards.

Quiz

109

Quiz29

a., b. & c.

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Significant Changes: ▪ Migration of legacy OMB Circulars to Title 2, C.F.R.

This concludes the Federal Appropriations Law

Update / Refresher Course

▪ Final details:

• Evaluations

• eCompletion Certificates - Email

• Trash, chairs …..

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Disclaimer

Federal Appropriations Law Course

This presentation cannot substitute for supervisory and legal assistance regarding appropriations law matters dealing with the facts and circumstances of a particular issue and should not be used as the sole basis for decision-making.

When in doubt concerning appropriations law matters, you should refer the issue through your organizational management officials up to the agency’s Office of General Counsel.

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