advanced appropriations law - fedtrain pressing questions do you have an appropriations law question...
TRANSCRIPT
Graduate School, USA
FEDERAL APPROPRIATIONS LAW
Refresher / Update Session FINC 7200
Randy LeGrand
Teacher
© 2008 - 2013 FedTrain, Inc. All rights reserved.
1 of 100 slides
Administrative Matters
• Registration Forms (FINC7200, FAL Update)
• Class Hours (Finish by 5:30)
• Attendance Policies; CPE Credit (8)
• Facilities
• Cell Phones, eTablets, etc.
• Evaluations (This afternoon)
• Materials; Slides
2
Pressing Questions
Do you have an appropriations law question that you want answered before the class ends?
o Something you don’t understand or need clarified, and/or,
o A problem/issue with which you are dealing.
• Write your Q/Issue’s on a piece of paper. Bring them to the podium. Put your table/row number on it.
• Many Q’s will be answered in the regular presentation.
• I will set aside time this afternoon to cover unanswered items.
3
Update
Red Book Major Changes.
• Vol. I (3rd Ed.) Chapters 1-4 (2004) (Issued with Basic Course)
• Vol. II (3rd Ed.) Chapters 5-11 (2006) (Issued with Basic Course)
• Vol. III (3rd Ed.) Chapters 12 - 15 (2008) (On the CD-Rom) (Formerly Vol. IV, 2nd Ed. Updated and renumbered September 2008.
• VOL. III (2nd Ed.) Archived in September 2008 (No longer maintained by GAO. Valuable Info.)
• Annual Updates. (March 2012) (On the CD-Rom)
o Download everything (including CG Decisions)
from: www.gao.gov/legal
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.”(1-2)
5
The Legal Structure
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). (1-4)
6
The Legal Framework
These are fundamental Principles of Appropriations Law:
Article I, Section 7:
‘Congress shall … pay the debts and provide for the common
Defense and general Welfare of the United States’ (1-3)
Article I, Section 9, Clause 7:
‘No money shall be drawn from the Treasury, but in
Consequence of Appropriations made by Law…..’
No mention of budget responsibilities for anyone.
7
Chapter 1 – Legal Framework
Permanent Funding Statutes:
An appropriation is available for obligation:
• For a lawful Purpose. 31 U.S.C. § 1301(a);
• During the Time period for which the appropriation is made. 31 U.S.C. § 1502(a);
• For which an Amount is on hand. 31 U.S.C. § 1341(a);and,
• From which an authorized official creates a specific, definite, certain and legally binding commitment on the United States which will result in an immediate or future payment from Treasury. 31 U.S.C. § 1501(a).
8
Chapter 1 – GAO
Government Accountability Office:
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)
o Audit and report on functions of Executive Branch.
o Issue non-binding CG Decisions. [DoJ, OLC opinion].
9
Chapter 1 – GAO: DoJ Position
CG Decisions are binding on the Executive Branch [sometimes] …..:
“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, US Supreme Court, 1985
10
Chapter 1 – GAO: DoD View
DOD FMR, Vol. 5, Ch. 1, para. 010802.E
While an opinion of the CG [Comptroller General] may have
persuasive value, it cannot itself absolve an accountable
official, the Department of Justice has concluded as a matter
of law that the statutory mechanism that purports to
authorize the CG to relieve Executive Branch Officials from
liability (i.e., 31 U.S.C. §§ 3527, 3528, and 3529) is unconstitutional
because the CG, as an agent of Congress, may not exercise
Executive power, and does not have the legal authority to
issue decisions or interpretations of law that are binding on
the Executive Branch. 11
Chapter 2 - Statutory Construction
Limitations on flexibility: Transfers and Reprogrammings
Congress enacts general and specific appropriations.
In Department of the Army:
• 75 13 2020 is a general 1-year appropriation for Operations and Maintenance, Army.
• 75 13 2040 is a specific 2-year appropriation for Research, Development, Test and Evaluation.
It is illegal to transfer funds between appropriations without specific statutory authority. 31 U.S.C. § 1532(a)
Secretary of the Army has general transfer authority. Notify Congress.
12
Chapter 2 - Statutory Construction
Limitations on flexibility: Transfers and Reprogrammings
Congress permits limited Reprogramming of funds. (The movement of money within an appropriation)
Specific guidelines are found in General Provisions of each annual appropriations act. 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 a PPA by 10% or $1M (the lesser).
• Reorganizes offices, PPA.
13
Chapter 3 – Administrative Procedures
Issuance of Regulations:
Congress enacted the Administrative Procedures Act 5 U.S.C. § 511 – 559 governing issuance of agency regulations.
Broadly there are two types of agency regulations:
External – Issuing rules and procedural requirements on outside agencies or parties. (Including other federal agencies, private parties e.g. persons,
institutions, organizations, etc.)
Internal – Issuing rules governing the internal administration and management of the agency.
14
Chapter 3 – Administrative Procedures
Issuance of Regulations:
Administrative Procedures Act:
External regulations generally must:
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.
15
Chapter 3 – Administrative Procedures
Issuance of Regulations:
Administrative Procedures Act:
Internal regulations generally:
Do not require a controlling statute.
But, must conform to laws and higher authority regulations.
Retroactive regs. must be authorized by a controlling authority. Retroactive confirmations are different.
May require approval of a higher level management official.
16
Licensed in 1998 - 2013 by FedTrain, Inc., Atlanta, GA
Lesson 2
Availability of Appropriations:
TIME
Chapter 5
Objectives
LESSON TOPIC
5.0 Time Limits on Appropriations
5.1 The Life Cycle of an Appropriation
5.2 Continuing Resolution Authorization
5.3 Bona Fide Needs Rule
5.4 Continuing Needs Corollary
5.5 Exceptions to the Rule
5.6 Obligating Service Contracts
5.7 Advance Payments Prohibition
Chapter 5 - Time
Congress can and does limit the time period of appropriations availability. (5-3)
Principle of appropriations Law:
Congress has the right to limit its
appropriations to particular times as well as
to particular purposes, and when it has
clearly done so, its will expressed in the law
should be implicitly followed.”
Appropriations Terminology
Concepts and types of Budget Authority (2-3)
The “Life of an Appropriation”.
Disposition of Appropriation Balances
• An appropriation goes through three distinct stages:
CURRENT EXPIRED CLOSED
Appropriations Terminology
The “Life of the FY 08 Appropriation”
FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14
CURRENT CLOSED
CURRENT: Create new obligations; record, adjust and liquidate .
CLOSED: No further charges or payments may be made.
E X P I R E D
Expired: [Create new] Record; adjust, and liquidate obligations
properly chargeable to the prior year.
Appropriations Terminology
Concepts and types of Budget Authority (2-3)
The “Life of an Appropriation”. Stages (5-67..74)
• Current (5-67) - An appropriation is available for the purpose of incurring and recording obligations properly chargeable to the fiscal year for which made.
• Expired - “After the end of the period of availability for obligation of a fixed appropriation account and before the closing of that account under section 1552(a) of this title, the account shall retain its fiscal-year identity and remain available for recording, adjusting, and liquidating obligations properly chargeable to that account.”
Appropriations Terminology
Concepts and types of Budget Authority (2-3)
The “Life of an Appropriation”. Stages (5-67..74)
• Canceled (5-71) - “On September 30th of the 5th fiscal year after the period of availability for obligation of a fixed appropriation account ends, the account shall be closed and any remaining balance (whether obligated or unobligated) in the account shall be canceled and thereafter shall not be available for obligation or expenditure for any purpose.”
Appropriations Terminology
Concepts and types of Budget Authority (2-3)
The “Life of an Appropriation”. Stages (5-67..74)
• Canceled Obligations - “Once an account has been closed: (5-73..74)
“Obligations and adjustments to obligations that would have been properly chargeable to that account, both as to purpose and in amount, before closing and that are not otherwise chargeable to any current appropriation account of the agency may be charged to any current appropriation
account of the agency available for the same purpose.”
Continuing Appropriations Resolutions
Before the Fiscal Years begins
Continuing Appropriations Resolution (CRA).
There are three major rules in a traditional CRA:
Rate for Operations
No New Starts
Expiration Date
Continuing Resolutions
Congressional Action: Continuing Appropriations
P.L. 113-6 Consolidated and Further Continuing
Appropriations Act, 2013, March 26, 2013
• Sec. 1101. “Such amounts as may be necessary, at the level [amount] provided in the applicable appropriations Acts for FY 2012….”
Rate for Operations
27
Continuing Resolutions
Congressional Action: Continuing Appropriations.
• Sec. 1104. “No appropriation or funds ….. shall be used to initiate or resume and project or activity for which appropriations were not available during fiscal year 2012.”
No New Starts
28
29
Chapter 5 - Availability as to Time
29
Expiration Date
Congressional Action: Continuing Appropriations.
• Sec 1106….. “Unless otherwise provided for in this act, ….. the authority granted pursuant to this division shall be available through September 30, 2013.”
30
CHAPTER 5 - AVAILABILITY AS TO TIME
Expiration Date (Prior to the FY 13 year-long CRA)
• Sec 106….. Unless otherwise provided for in this
act, the authority granted pursuant to this act
shall be available until March 27, 2013.
•The latest CRA period is for 178 of the 365 days in
FY13. That’s 48.77% of the year.
• If the FY 12 appropriation was for $5 bil, then
$2.588bil (48.77 + 0.612%) may be obligated during
the initial FY13 CRA period.
30
Objectives
LESSON TOPIC
5.0 Time Limits on Appropriations
5.1 The Life Cycle of an Appropriation
5.2 Continuing Appropriation Authorization
5.3 Bona Fide Needs Rule
5.4 Continuing Needs Corollary
5.5 Exceptions to the Rule
5.6 Obligating Service Contracts
5.7 Advance Payments Prohibition
32
CHAPTER 5 - AVAILABILITY AS TO TIME
Bona Fide Needs Rule (5-12..13)
• 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.
Chapter 5 - Time
Future years’ Needs. (5-15)
An appropriation may not be used for
the needs of some time period
subsequent to the expiration of its
period of availability.
Chapter 5 – Time: NLRB Training
The National Labor Relations Board needed to send two
employees to a training class conducted by OPM .
Legend: I = Initial discussions (Summer 2010).
E = Email confirmations of tentative reservations (Late September).
C = Contract (SF 182) signed by NLRB using FY 10 funds (Oct. 14th).
D = Deadline for receipt of SF 182 by OPM (Oct. 15th).
T – Training date Jan 2011.
:
FY 10 FY 11
I E C D T
Chapter 5 – Time: NLRB Training
The National Labor Relations Board needed to send 2
employees to a training class conducted by OPM .
ISSUES:
1. Was there a need in FY 10 for the training? 2. Was there a need for NLRB to contract in FY 10 for the
training in FY11? 3. Was the need fulfilled or contracted for in FY 10? 4. Does the Continuing Needs Corollary apply? How? 5. What is the Procurement Lead Time Exception? Does it
apply? 6. Was the time intervening between contracting and
training excessive?
FY 10 FY 11
I E C D T
36
CHAPTER 4 - AVAILABILITY AS TO PURPOSE
NLRB – Recording of Training Obligations
B-321296, July 12, 2011
The NLRB sent two employees to an OPM training class starting in January 2011. Concerned that the class would fill up, in late September 2010 the NLRB officials called OPM officials to reserve the two seats. OPM officials reserved the seats subject to receipt of the certified SF 182s not later than October15, 2010. NLRB prepared, certified, and forwarded the SF 182 on October 12, 2010 (FY 11) using its FY10 annual (1-yr) appropriation. GAO indicated that when an agency must obligate funds in a prior year to obtain property or services delivered in a subsequent year, appropriations may be obligated in the prior year if the training was a legitimate need of the prior year, scheduling was beyond the ordering agency’s control and the time intervening was not excessive. Because they did not incur the obligation in the prior year, current FY funds FY11 must be obligated.
Objectives
LESSON TOPIC
5.0 Time Limits on Appropriations
5.1 The Life Cycle of an Appropriation
5.2 Continuing Appropriation Authorization
5.3 Bona Fide Needs Rule
5.4 Continuing Needs Corollary
5.5 Exceptions to the Rule
5.6 Obligating Service Contracts
5.7 Advance Payments Prohibition
Chapter 5 - Time
The Continuing Need Corollary. (5-18..19)
Unmet needs are those that preexisted in one FY and, unfilled – meaning not ordered or contracted for, that carry-over to another FY.
The appropriation current at the time the need is filled – ordered or contracted for - is the one that is obligated for the need.
Can’t go back and use left-over prior year appropriations for a carry-over need.
Objectives
LESSON TOPIC
5.0 Time Limits on Appropriations
5.1 The Life Cycle of an Appropriation
5.2 Continuing Appropriation Authorization
5.3 Bona Fide Needs Rule
5.4 Continuing Needs Corollary
5.5 Exceptions to the Rule
5.6 Obligating Service Contracts
5.7 Advance Payments Prohibition
40
Chapter 5 - Time
Obligating Orders for Property. (5-22..23)
Principles of Appropriations Law:
• Appropriations are available only to meet the legitimate needs of the fiscal year for which they are made available. (Basic rule page 5-2)
• Appropriations are not available to meet the needs of some time period subsequent to the period of their availability. (Page 5-15)
• An agency may not obligate funds when it is apparent from the outset that there will be no requirement until the following fiscal year.
Chapter 5 - Time
Obligating orders for Materials. (5-22)
Exceptions:
Procurement Lead Time Exception:
• “However, the timing of delivery, while obviously a relevant factor, is not conclusive.”
o Need now but must wait for delivery
• Order now; obligate now, receive in the future; pay upon receipt; charge back to prior year.
Chapter 5 - Time
Obligating orders for Materials. (5-22)
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, provided the intervening period is necessary for production or fabrication of the material.
o 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.
Chapter 5 - Time
Obligating orders for Materials. (5-23)
Exceptions:
• Stock replacement exception:
oAppropriations are available to
acquire quantities of stock not to
exceed one year supply
irrespective of delivery or use.
44
Chapter 5 – Time
5-Year Contracting Authority (5-45..46)
• 41 U.S.C. 3903 (Civilian Agencies)
• 10 U.S.C. 2306 b & c (For DoD) (Limited to certain programs)
Using a fixed appropriation (one year, etc.)
An agency may obligate some or all of the five year requirement for goods or services using the current year appropriation.
Even though the future needs do not exist in the first year.
“Congress …. has relaxed the constraints of the bona fide needs rule to permit agencies …...”
Chapter 5 – Time
5-Year Contracting Authority (5-45..46)
• 41 U.S.C. 3903 (Civilian Agencies)
• 10 U.S.C. 2306 b & c (For DoD) (Limited to certain programs)
Using a fixed appropriation (one year, etc.)
An agency may obligate some or all of the five year requirement for goods or services using the current year appropriation.
Even though the future needs do not exist in the first year.
“Congress …. has relaxed the constraints of the bona fide needs rule to permit agencies …...”
Objectives
LESSON TOPIC
5.0 Time Limits on Appropriations
5.1 The Life Cycle of an Appropriation
5.2 Continuing Resolution Authorization
5.3 Bona Fide Needs Rule
5.4 Continuing Needs Corollary
5.5 Exceptions to the Rule
5.6 Obligating Service Contracts
5.7 Advance Payments Prohibition
Chapter 5 – Availability as to Time
Bona fide Needs Rule. (5-23)
Obligating orders for services. (5-23..24)
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?
47
Chapter 5 - Time
Bona fide Needs Rule. (5-24..25)
Severability
• Relates to the certainty of the government’s liability under the contract.
Chapter 5 - Time
Severability
To determine severability, examine the:
a. Statement of work;
b. Performance Period/Delivery Date;
c. Termination Clause; and
d. Liquidated Damages Clause.
Chapter 5 - Time
Severability Example 1: Assume the following:
a. Statement of work: Provide Security Guard Services
b. Period of Performance: July 1, 20CY to June 30, 20NY)
c. Term. Clause: Government may terminate upon 30 day notice. Invoice monthly.
d. Damages: Government will pay all costs through termination period plus two months services.
Chapter 5 - Time
Severability Example 1: Assume the following:
a. Statement of work: Provide Security Guard Services
Is it possible to determine the amount of the government's liability at the time of award as any amount other than the full price of the 12-month contract (in this case)?
YES.
The government liability is no more than the value of the services performed until termination notice, plus the 30-day notice period and the 2 months damages clause.
Chapter 5 - Time
Severability Example 2: Assume the following:
a. Statement of work: Conduct a research study.
b. Delivery Date: Not later than September 15, 201X. (3 years from now)
c. Term. Clause: Government may terminate at any time upon issuance of a ‘Stop Work Notice (SWN)’. Invoice upon completion.
d. Damages: Government will pay all costs through SWN plus 20% of remaining contract price.
Chapter 5 - Time
Severability Example 2: Assume the following:
a. Statement of work: Conduct a research study.
Is it possible to determine the amount of the government's liability at the time of award as any amount other than the full price of the contract?
No.
The government’s liability is fixed, definite and certain. A specific termination date cannot be anticipated and alternative liability payments cannot be calculated.
Chapter 5 - Time
Severability Example 2: Assume the following:
a. Statement of work: Conduct a research study.
Is it possible to determine the amount of the government's liability at the time of award as any amount other than the full price of the contract?
No.
The government’s liability is fixed, definite and certain. A specific termination date cannot be anticipated and alternative liability payments cannot be calculated.
Example 1: SEVERABLE
Example 2:
NON-SEVERABLE
Chapter 5 - Availability as to Time
Bona fide Needs Rule. (5-24..25)
Non-severable (entire) services.
• Services which cannot logically be separated by performance or fiscal periods; a single undertaking.
o Logical, discernible starting point.
o Successive steps, stages, phases, milestones, each building upon each other.
o Defined deliverable.
o A clear conclusion.
• Such as repairing a piece of equipment; conducting a study; working on a project.
Incremental funding requires statutory authority.
Chapter 5 - Availability as to Time
Service Contracts
Severable service contracts (5-23)
• Generally may not cross fiscal year lines. [OLD LAW]
• New laws however give agencies flexibility obligating severable services contracts.
• Obligate either as the services are performed (standard rule);
• Or……,
Chapter 5 - Availability as to Time
Service Contracts
Severable service contracts
• When a severable service contract crosses fiscal year lines
o And the period of performance is for 12 months or less;
o An agency may obligate the entire amount of the performance period using the FY funds at the time the contract is effective. 41 U.S.C. § 3902 or 10 U.S.C. § 2410a (DoD)
Chapter 5 - Time
Other issues: (5-26)
• Personal services contracts.
oMay be severable or nonseverable.
oRequires specific statutory authority.
• Research contracts.
oMay be severable or nonseverable.
• Training contracts.
oMost training contracts are non-severable.
oMay fully obligate now for training starting in the following fiscal year if the agency has no control over scheduling; time intervening is not excessive.
Chapter 5 – Time
Replacement contracts for prior years: (5-28)
• Use prior year funds if Terminated for Default
• Three tests must be met:
• Bona fide need must continue to exist;
• Replacement does not exceed scope of the original contract; and,
• Replacement awarded within a
reasonable time period after termination.
Chapter 5 – Time
Replacement contracts for prior years: (5-28)
Use prior year funds if Terminated for Convenience Under Special Circumstances (5-
32)
oErroneous Award
oNon-discretionary termination
oNo fault of the government
oNo fault of the contractor
Chapter 5 – Time
Contract modifications requiring upward adjustments in the price: (5-33)
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.
61
Chapter 5 – Time
Contract modifications requiring upward adjustments in the price:
Assume a Severable IT equipment maintenance contract for three one-year periods of performance (POP) starting in July 2013 for $120,000 per year ($10,000 per month). Obligated the entire first period of performance under 41 U.S.C 3902 (10 U.S.C 2410a for DoD). Remainder SAF.
FY 13 FY 14 FY 15 FY 16
POP 1 POP 2 POP 3
CLIN Description Amount
1 Software maintenance $ 65,000
2 Personal Computers, printers and copiers $ 35,000
3 Servers and peripherals $ 20,000
Sub-total $120,000
62
Chapter 5 – Time
Contract modifications requiring upward adjustments in the
price:
Assume a Severable IT equipment maintenance contract for three one-year periods of performance (POP) starting in July 2013 for $120,000 per year ($10,000 per month). Obligated the entire first period of performance under 41 U.S.C 3902 (10 U.S.C 2410a for DoD). Remainder SAF.
FY 13 FY 14 FY 15 FY 16
POP 1 POP 2 POP 3
CLIN Description Amount
1 Software maintenance $ 65,000
2 Personal Computers, printers and copiers $ 35,000
3 Servers and peripherals $ 20,000
Sub-total $120,000
4 Add maintenance service for 200 PC’s (Quote $50k) $ 0
63
Chapter 5 – Time
Contract modifications requiring upward adjustments in the price:
Assume a Severable IT equipment maintenance contract for three one-year periods of performance (POP) starting in July 2013 for $120,000 per year ($10,000 per month). Obligated the entire first period of performance under 41 U.S.C 3902 (10 U.S.C 2410a for DoD). Remainder SAF.
FY 13 FY 14 FY 15 FY 16
POP 1 POP 2 POP 3
CLIN Description Amount
1 Software maintenance $ 65,000
2 Personal Computers, printers and copiers $ 35,000
3 Servers and peripherals $ 20,000
Sub-total $120,000
4 Add maintenance service for 200 PC’s (Proceed Jan 1) $ 50,000
4
64
Chapter 5 – Time
Contract modifications requiring upward adjustments in the price: (5-
34)
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
65
Chapter 5 – Time
Contract modifications requiring upward adjustments in the price:
Assume a Severable IT equipment maintenance contract for three one-year periods of performance (POP) starting in July 2013 for at $120,000 per year ($10,000 per month). Obligated entire first period of performance under 41 U.S.C 3902/10 U.S.C 2410a. Remainder SAF.
FY 13 FY 14 FY 15 FY 16
POP 1 POP 2 POP 3
CLIN Description Amount
1 Software maintenance $ 65,000
2 Personal Computers, printers and copiers $ 35,000
3 Servers and peripherals $ 20,000
Sub-total $120,000
4 Add maintenance service for 200 PC’s (Proceed Jan 1) $ 50,000
4
66
Chapter 5 – Time
Contract modifications requiring upward adjustments in the price:
Assume a Severable IT equipment maintenance contract for three one-year periods of performance (POP) starting in July 2013 for at $120,000 per year ($10,000 per month). Obligated the entire first period of performance under 41 U.S.C 3902 /10 U.S.C 2410a. Remainder SAF.
FY 13 FY 14 FY 15 FY 16
POP 1 POP 2 POP 3
CLIN Description Amount
1 Software maintenance $ 65,000
2 Personal Computers, printers and copiers $ 35,000
3 Servers and peripherals $ 20,000
Sub-total $120,000
4 Add maintenance service for 200 PC’s (Proceed Jan 1) $ 50,000
4
67
Chapter 5 – Time
Contract modifications requiring upward adjustments in the
price: (5-34)
Severable services. Footnote 20
Presumably, if an agency using 41 U.S.C 3902 or 10
U.S.C 2410a for DoD, 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), a modification calling for increased
services under that contract should be charged to that
same appropriation.
New law
68
Chapter 5 – Time
Contract modifications requiring upward adjustments in the price:
Assume a Severable custodial services contract for three one-year periods of performance (POP) starting in July 2010 for at $120,000 per year ($10,000 per month). Obligated entire first period of performance under 41 U.S.C 3902 (10 U.S.C 2410a DoD). Remainder SAF.
FY 13 FY 14 FY 15 FY 16
POP 1 POP 2 POP 3
CLIN Description Amount
1 Software maintenance $ 65,000
2 Personal Computers, printers and copiers $ 35,000
3 Servers and peripherals $ 20,000
Sub-total $120,000
4 Add maintenance service for 200 PC’s (Proceed Jan 1) $ 50,000
4
69
Chapter 5 – Time
Contract modifications requiring upward adjustments in the
price:
Assume a Severable IT equipment maintenance contract for three one-year periods of performance (POP) starting in July 2013 for at $120,000 per year ($10,000 per month). Obligated entire first period of performance under 41 U.S.C 3902/10 U.S.C 2410a. Remainder SAF. FY 13 FY 14 FY 15 FY 16
POP 1 POP 2 POP 3
CLIN Description Amount
1 Software maintenance $ 65,000
2 Personal Computers, printers and copiers $ 35,000
3 Servers and peripherals $ 20,000
Sub-total $120,000
4 Add maintenance service for 200 PC’s (Proceed Jan 1) $ 50,000
4
70
Chapter 5 – Time
Contract modifications requiring upward adjustments in the price:
Assume a Severable IT equipment maintenance contract for three one-year periods of performance (POP) starting in July 2013 for at $120,000 per year ($10,000 per month). Obligated the entire first period of performance under 41 U.S.C 3902/10 U.S.C 2410a. Remainder SAF.
FY 13 FY 14 FY 15 FY 16
POP 1 POP 2 POP 3
CLIN Description Amount
1 Software maintenance $ 65,000
2 Personal Computers, printers and copiers $ 35,000
3 Servers and peripherals $ 20,000
Sub-total $120,000
4 Add maintenance service for 200 PC’s (Proceed Jan 1) $ 50,000
5 Replace coaxial cable wiring (proceed May 1) $ 175,000
4 5
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Chapter 5 – Time
Contract modifications requiring upward adjustments in the
price:
Antecedent Liability. (5-35)
• An upward adjustment required by a clause in the original contract (changed Conditions, government caused delay, etc.)
• Could not be foreseen at the time of award.
• An increase price adjustment will be obligated against the appropriation funding
the original contract.
72
Chapter 5 – Time
Contract modifications requiring upward adjustments in the
price: Assume a Severable IT equipment maintenance contract for three one-
year periods of performance (POP) starting in July 2013 for at $120,000 per year ($10,000 per month). Obligated the entire first period of performance under 41 U.S.C 3902/10 U.S.C 2410a. Remainder SAF. FY 13 FY 14 FY 15 FY 16
POP 1 POP 2 POP 3 4 5
73
CLIN Description Amount
1 Software maintenance $ 65,000
2 Personal Computers, printers and copiers $ 35,000
3 Servers and peripherals $ 20,000
Sub-total $120,000
4 Add maintenance service for 200 PC’s (Proceed Jan 1) $ 50,000
5 Replace coaxial cable wiring (proceed May 1) $ 175,000
Chapter 5 – Time
Contract modifications requiring upward adjustments in the
price: Assume a Severable IT equipment maintenance contract for three one-
year periods of performance (POP) starting in July 2013 for at $120,000 per year ($10,000 per month). Obligated the entire first period of performance under 41 U.S.C 3902/10 U.S.C 2410a. Remainder SAF. FY 13 FY 14 FY 15 FY 16
POP 1 POP 2 POP 3
4 5
74
CLIN Description Amount
1 Software maintenance $ 65,000
2 Personal Computers, printers and copiers $ 35,000
3 Servers and peripherals $ 20,000
Sub-total $120,000
4 Add maintenance service for 200 PC’s (Proceed Jan 1) $ 50,000
5 Replace coaxial cable wiring (proceed May 1) $ 175,000
CHAPTER 4 - AVAILABILITY AS TO 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) (4-6)
76
CHAPTER 4 - AVAILABILITY AS TO PURPOSE
The Necessary Expense Doctrine. (4-19)
• It is not reasonable to expect that every item of
expenditure would be itemized in an
appropriation act. (4-20)
• The spending agency has reasonable discretion
in determining how to carryout the purposes of
the appropriation.
77
CHAPTER 4 - AVAILABILITY AS TO PURPOSE
The Necessary Expense Doctrine:
Three tests must be met.
1. Logical relationship; direct contribution.
2. Not prohibited by law.
3. Not otherwise provided for in another appropriation. (4-21..22)
An agency may ….
78
Quiz
CHAPTER 4 - AVAILABILITY AS TO PURPOSE
The Necessary Expense Doctrine. (4-20)
Meetings (4-36)
• Four statutes address meetings: (4-37)
5 U.S.C. § 5946
31 U.S.C. § 1345
5 U.S.C. § 4109
5 U.S.C. § 4110
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CHAPTER 4 - AVAILABILITY AS TO PURPOSE
Meetings.
5 U.S.C. § 5946 (4-37)
• Appropriations are not available to pay expenses of attendance at meetings hosted by private societies and associations.
• The law was intended to stop federal officials from attending outside meetings that did not relate to their government duties.
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CHAPTER 4 - AVAILABILITY AS TO PURPOSE
The Necessary Expense Doctrine. (4-20)
31 U.S.C. § 1345 (4-44)
• Appropriations are not available to pay travel, transportation, or subsistence expenses of non-federal parties at meetings [GAO added: ‘of
conventions of private societies and associations ‘]
• This section applies exclusively to non-federal parties.
• Meetings, initially was defined by GAO as both government and non-government sponsored.
81
CHAPTER 4 - AVAILABILITY AS TO PURPOSE
Meetings.
5 U.S.C. § 4109 (4-38)
• With passage of the Government Employees Training Act congress effectively provided an exception to 5
U.S.C. § 5946 allowing payment of training expenses.
• This section applies exclusively to federal civilian employees, not military or USPHS Commissioned Corps.
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CHAPTER 4 - AVAILABILITY AS TO PURPOSE
Meetings
5 U.S.C. § 4110 (4-38)
• The next section in GETA allows expenses for attendance at any meeting where the topics being covered relate to agency management or functions.
• This section applies to expenses of both federal employees and officers as well as non-federal parties.
83
CHAPTER 4 - AVAILABILITY AS TO PURPOSE
The Necessary Expense Doctrine. (4-20)
31 U.S.C. § 1345. • Over several decades GAO permitted
exceptions to the statute for expenses of non-federal parties performing a direct service to the government at meetings .
• In recent years (most recently in March 2005) GAO said that 31 U.S.C. § 1345 restrictions do not apply to government sponsored meetings authorized under 5 U.S.C. § 4110.
• Depts. of Labor, HHS & Educ. are exempt.
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CHAPTER 4 - AVAILABILITY AS TO PURPOSE
The Necessary Expense Doctrine. (4-20)
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. 86
Quiz
87
CHAPTER 4 - AVAILABILITY AS TO PURPOSE Memo 1: Eliminating Excess Conference Spending
and Promoting Efficiency in Government
OMB Memo M-11-35, September 21, 2011
Issued pursuant to Presidential Executive Order 13576, Jun 13, 2011 calling for an efficient and accountable federal government.
Announced formation of a high level committee headed by the Vice-President.
Requires:
• Agencies to publish policies relating to conference planning and conduct.
• Ensure strict guidelines are established to prevent wasteful spending.
• Pending publication of the policies, all conference approvals require signature of Under Secretary at the department level.
• Resulted from the excesses reported by DOJ IG for Justice Department conferences.
• Preceded the reported GSA conference excesses.
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CHAPTER 4 - AVAILABILITY AS TO PURPOSE Memo 2: Promoting Efficient Spending
to Support Agency Operations [TAB 2]
OMB Memo M-12-12, May 11, 2012
Issued following Executive Order 13589, November 9, 2011 and publicity over the GSA Western Regions Conference in Las Vegas, NV in October 2010.
Requires:
• Travel cuts from 2010 baseline levels of 30% through 2016.
• Senior departmental level reviews of all planned conferences over $100K.
• Senior departmental level approval of all conferences over $100K.
• Prohibition of expenses over $500K for a single conference. Waivers permitted if granted by the agency head (Secretary, HHS).
• Annually (starting Jan 2013) publicize on main website all prior year conferences (starting with FY12) costing more than $100K.
Freezes square footage on all civilian real estate holdings. New acquisitions must be offset by reductions elsewhere.
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CHAPTER 4 - AVAILABILITY AS TO PURPOSE
DoD DEPSEC Memo:
• Provides guidance on conference approvals within DoD.
• Gives guidelines for alternatives, prohibited expenses; jointly held conferences and escalation circumstances.
• Delegates to component Secretary (and comparable levels for others) authority to approve conferences hosted by DoD costing more than $500k; non-DoD hosted at $20k.
• Allows delegation to Asst. Secretary of components (comp. for others) for conferences $100k to $500k.
• Allows delegation below $100k to GO/SES only.
DoD Policy – September 29, 2012 Conference Oversight and Approval Authorities 2012
CHAPTER 4 - AVAILABILITY AS TO PURPOSE
A general comment about Chapter 4:
Three very broad areas require a careful review of the law. 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 use of appropriations for purchases when the primary benefit accrues to a party or entity other than the US government.
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CHAPTER 4 - AVAILABILITY AS TO PURPOSE
Legal Authorities:
The property clause in the Constitution.
• 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.
• The purchase and distribution of promotional (give-away items) require statutory authority.
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CHAPTER 4 - AVAILABILITY AS TO PURPOSE
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 not gifts.
• An employee may be issued tools and equipment to personally use. They are not gifts, but property.
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CHAPTER 4 - AVAILABILITY AS TO PURPOSE
Disposing of property:
• Military (and certain civilian agency) recruiters are permitted by various laws to acquire promotional items for issuance to potential recruits/centers of influence. They are deemed gifts authorized by law.
• Appropriations allow Official Reception and Representation funds to be used to purchase gifts (mementos) for visiting dignitaries.
Bottom Line: If something purchased with appropriations is going to be given to someone personally, first find a legal authority.
93
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CHAPTER 4 - AVAILABILITY AS TO PURPOSE
Refreshments for Counter-terrorism Training Exercises
B-317423, March 9, 2009
The Army in Ansbach, Germany planed to buy refreshments for persons involved in a general training exercise designed to prepare personnel for a potential terrorist attack/event. Trainees will include U.S. and foreign national local-hire civilian employees, military members assigned to the command, non-appropriated fund employees, contractors and the general public doing business on/with the military base at the time of the exercise.
GAO concluded that where agencies have determined that the food is necessary to accomplish a statutory objective, GAO has no objection to the expenditures.
In this instance, since the planned activities are covered under both the civilian and military training acts, the purchase of the refreshments are authorized under those statutes. Further, since participation of outsiders in the exercise is necessary to replicate conditions that would be present under an actual event, GAO said that purchasing the additional food was allowed.
95
CHAPTER 4 - AVAILABILITY AS TO PURPOSE
Entertainment
Specifically: Food
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:
• Travel (5 U.S.C. § 5702)
• Training (5 U.S.C. § 4109)
• Award Ceremonies (5 U.S.C. § 4501–4506)
• Cultural Awareness functions: Small food samples permitted
• Miscellaneous authorities (Safety, gift funds, foundation donations, reception and representation funds.)
Quiz
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CHAPTER 4 - AVAILABILITY AS TO PURPOSE
Entertainment: Food
At meetings, conventions, conferences, retreats, seminars, symposiums and etc.
Non-Executive Branch sponsored meetings
• Registration Fee
o Not itemized: Pay it
o Itemized: Food must be - Incidental, Important, Mandatory
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CHAPTER 4 - AVAILABILITY AS TO PURPOSE
Entertainment: Food at meetings.
Executive Branch sponsored meetings
Two types: Internal and Formal
• Internal:
o Day-to-day; discussions of internal agency matters: No Food
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CHAPTER 4 - AVAILABILITY AS TO PURPOSE
Entertainment: Food at meetings: Executive Branch sponsored meetings
Two types: Internal and Formal
• Formal: 5 U.S.C. § 4110
o Typically external; attended by government and non-government persons
o Topics of broad interest to both
o Food must be - Incidental, Important, Mandatory
99
CHAPTER 4 - AVAILABILITY AS TO PURPOSE
Use of Appropriations to Purchase Food at Formal Government Meetings
B-300826, March 5, 2005
NIH asked GAO if they could use NIH appropriations to pay for food at a meeting of hundreds of attendees from various walks of life (government and non-government) at a conference on Parkinson’s Disease. The meeting would include formal registration, general sessions, speeches, workshops, and break-out sessions discussing broad topics of general interest to all attendees. GAO concluded that such meetings were different from day-to-day routine, internal meetings of an agency. Thus appropriations could be used to pay for food if three conditions were present:
(1) Incidental; (2) Important; and (3) Mandatory.
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CHAPTER 4 - AVAILABILITY AS TO PURPOSE
Authority for NIH to Collect Fees for Conference Expenses
NIH requested Congress to grant it an exception to 31 U.S.C. § 3302(b)
allowing NIH to: Collect and retain registration fees obtained from third parties to defray
expenses for scientific, educational, and research-related conferences.
The NIH Manual establishes the policies and procedures for the retention of registration fees when conference services are obtained through contract.
On May 7, 2008 statutory language was changed in the Note under Section C.2. to clarify that a non-Federal entity co-sponsoring a conference with an Institute/Center may charge and collect a registration/conference fee from all participants, including non-HHS Federal and non-Federal.
101
CHAPTER 4 - AVAILABILITY AS TO PURPOSE
Collection of a fee by a contractor for costs to conduct a government conference (meeting)
B-306663, January 4, 2006
Senator Mikulski (Md.) asked GAO to reconsider its decision regarding formal government conferences, particularly the matter of collecting a registration fee. She asked -- if a contractor collects the fees would it effectively overcome the prohibitions in 31 U.S.C. § 3302(b) cited in GAO decision B-300826 (NIH Parkinson's Disease conference)?
GAO replied that the language of the statute compels an employee or agent of the government collecting fees from outside sources for the government to deposit the fees in the general fund of Treasury absent statutory authority to the contrary. A fundamental principle of appropriations law is that an
agency may not acquire through another party by contract, grant,
agreement or other instrument that which it could not itself acquire
directly.
102
CHAPTER 4 - AVAILABILITY AS TO PURPOSE
Payment of a Facility Rental Fee that Includes Food
B-281063, December 1, 1999
An agency paid a contract fee to rent a commercial facility to conduct a conference. A certifying official questioned the authority to pay such a fee because the meeting was conducted within the local commuting area of all attendees – none of whom were in a travel
status under 5 U.S.C. § 5902, and food was provided as a part of the
rental fee.
GAO concluded that an agency may pay such a fee if the contracted facility charge was:
(a) All inclusive; (b) Non-negotiable; and, (c) Competitively priced with those that did not include food in their price.
103
CHAPTER 4 - AVAILABILITY AS TO PURPOSE
Payment for Light Refreshments at Government Meetings
B-288266, January 10, 2003
In January 2000, GSA published a change to the Federal Travel Regulations (41 CFR 301-11 & 301-74) authorizing the use of appropriations to pay for light refreshments at a local agency sponsored conferences/meetings when a majority of the employees in attendance are in a travel status under 5 U.S.C. § 5702. GAO concluded that GSA does not have authority to authorize food for non-travelers at a local conference. Thus, an agency may purchase food for the travelers at a qualifying conference, but not for the others.
104
CHAPTER 4 - AVAILABILITY AS TO PURPOSE
Food for Veterans Benefits Administration Focus Groups
B-304718, November 9, 2005
The VBA has a statutory objective to provide the Secretary of Veterans Affairs with recommendations on veterans benefits. They wanted to purchase snacks and lunches for participants in focus group sessions. GAO concluded that where agencies have determined that the food is necessary to accomplish a statutory objective, GAO has no objection to the expenditures.
CHAPTER 4 - AVAILABILITY AS TO PURPOSE
Food for Navy Inspector General Volunteer Focus Groups
B-318499, November 19, 2009
A Navy Inspector General department wants to purchase refreshments for volunteer focus groups empanelled to provide input regarding subject matter for the Inspector General’s use in formulating the department’s annual inspection and investigation plans.
Where agencies have determined that food is necessary to accomplish a statutory objective, GAO has no objection to the expenditures. In this instance, the use of the “volunteer focus group” is merely one of a number of normal, routine staff functions commonly employed to gather information necessary to carry out administrative and managerial functions.
Because the IG did not identify a specific statutory objective, the expenditures were not authorized.
105
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CHAPTER 4 - AVAILABILITY AS TO PURPOSE
Refreshments for National Parks Service “Trail Days” Activities
B-310023, April 17, 2008
The National Parks Service planed to buy refreshments for the general public attending the annual “Trails Days” activities.
GAO concluded that where agencies have determined that the food is necessary to accomplish a statutory objective, GAO has no objection to the expenditures.
Since in this instance, the NPS failed to establish a connection between the expenditures for food at “Trail Days” activities and a statutory objective, the expenditures were not authorized.
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CHAPTER 4 - AVAILABILITY AS TO PURPOSE
Commercial (Bottled) Water
B-310502, February 4, 2008 B-318588, September 29, 2009
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); DOD FMR 700.14, Vol. 10, Chapter 12 for DoD guidance.
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CHAPTER 4 - AVAILABILITY AS TO PURPOSE
Kitchen Appliances
B-302933, 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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CHAPTER 4 - AVAILABILITY AS TO PURPOSE
Gift Cards Presented to Outside Parties
B-310981, January 25 , 2008
Generally, using appropriations to promote an agency program, project or activity (PPA) requires statutory authority.
• Purchasing tokens, medallions, pens, trinkets and other give-away items for distribution to parties outside the US government are considered promotional items.
• Give-away items at a job fair promoting agency vacancies is permitted.
• An agency responsible for overseeing the USA conversion from Analog to Digital TV signals wanted to be able to offer gift cards of modest value to persons who volunteer to participate in a survey/test.
• GAO concluded that the law that directed the national transition imposes an objective on the agency to achieve an acceptable outcome.
• Thus, if an agency determines that the purchase of promotional items of nominal value furthers fulfilling a statutory objective, GAO would have no objection to the purchase and distribution of the items.
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CHAPTER 4 - AVAILABILITY AS TO PURPOSE
Advertising, Publicity and Propaganda
B-330368, September 30, 2005
A federal agency used a third party contractor to produce advertisements relating to a federal program without identifying the federal agency as the source of the funding for the project. The content included materials which could be construed to violate the prohibition on lobbying Congress or publicity of a particular agency program or project.
GAO concluded that the contractor was working under the authority, and subject to the oversight scrutiny, of a federal agency. Thus the agency is held accountable for the content of the advertisement. If the content violated a restriction in an appropriation act or other law, funds made available for the advertisement would not be available and thus payments would violate the Antideficiency Act.
111
CHAPTER 4 - AVAILABILITY AS TO PURPOSE
Wearing Apparel
• 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; engaged in hazardous duties.
• Uniforms 5 U.S.C. § 5901. (Day-to-day & situational)
• OSHA 29 U.S.C. § 668 (1970).
• Other statutory authority.
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Chapter 4 - Availability as to Purpose
Wearing Apparel
B-288683, October 3, 2002, USA Corps of Engineers, Rock Island, IL B-288828, October 2, 2002 USA Corps of Engineers, Vicksburg, MS
In two cases on wearing apparel, GAO determined: a. Employees must provide their own wearing apparel, even in inclement weather if that clothing is normally something they are ordinarily expected to provide for themselves, a union arbitration ruling notwithstanding. b. Similarly, an agency may not purchase as government property for subsequent issue to employees items the employees are ordinarily expected to provide for themselves. c. Congress only allows two specific conditions for which appropriations may be used to provide wearing apparel: Safety / hazardous conditions; and Uniforms. Therefore, an agency may not provide wearing apparel unless they have statutory authority otherwise.
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CHAPTER 4 - AVAILABILITY AS TO PURPOSE
Memberships and Fees Paid to Private Associations
B-305095, December 8, 2005
Generally, buying a personal membership in a private society or association is prohibited by 5 U.S.C. § 5946.
• 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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CHAPTER 4 - AVAILABILITY AS TO PURPOSE
Reimbursement to Employee for Contest Registration Fee
B-317894, May 26, 2009
Generally, paying an entry fee in a contest conducted by a private society or association is prohibited by 5 U.S.C. § 5946.
• An agency requested a decision from GAO regarding the legality of reimbursing an employee the costs of a fee paid to enter a contest on behalf of the agency.
• GAO concluded that 5 U.S.C. § 5946 prohibits payment of costs associated with contests conducted by a private society or association.
•Several CG decisions have extended the scope of the law to include payment of individual membership and or individual fees associated with contests. In recent years, however, GAO has not objected to the reimbursements to employees for the entrance fees in the contest relates to agency programs or functions, the agency benefits through the competition and the agency receives any monetary award associated with the contest.
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CHAPTER 4 - AVAILABILITY AS TO PURPOSE
Professional Liability Insurance
P.L. 106-58 (1999)
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 that appropriations 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.
116
CHAPTER 4 - AVAILABILITY AS TO PURPOSE
Federal Prison Industries (UNICOR) Changes
P.L. 108-447, Consolidated appropriations Act for FY 2005
“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 an opportunity to compete.
117
Chapter 4 - Availability as to Purpose
Payments for Professional Certification Expenses
5 U.S.C. §5757(a)
Congress authorized agencies to pay, or reimburse employees, for necessary expenses to obtain and/or maintain professional certifications and licenses. 5 U.S.C. 5757(a)
Covers: (1) Occupational Licenses and Permits. (2) Professional Certifications and Licenses.
Chapter 6 - Availability as to Amount
Antideficiency Act Violation The Act prohibits:
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
Accepting voluntary services; except during an extreme emergency threatening imminent danger to human life or property. 31 U.S.C. § 1342
Overobligating an Apportionment or sub-apportionment.
31 U.S.C. § 1517(a)
118
Chapter 6 - Availability as to Amount
Antideficiency Act Violation
The Act also generally prohibits:
Transfers between Appropriations without statutory Authority. 31 U.S.C. § 1502(a)
Obligations for purposes not intended for the appropriation. 31 U.S.C. § 1301(a) • 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.
Augmenting an appropriation with money or appropriations from outside sources. 31 U.S.C. § 3302(b).
119
120
Chapter 5 - Availability as to Time
No Cost Contracts B-308968, November 27, 2007 - Using contractors to collect conference fees
Senator Barbara Mikulski (Md.) asked GAO if no-cost contracts violated federal statutes.
• GAO examined one such contract and concluded that an agency may enter into a properly structured no-cost contract permitting a contractor to conduct events planning and execution services in connection with government conferences without paying the contractor for its services.
• GAO concluded such contracts do not violate the Miscellaneous Receipts statute, 31 U.S.C. § 3302(b) because the government contract imposes no requirement for the government to make a payment. The contractor will be paid from fees collected from attendees and/or other parties. Consequently, the agency’s appropriation is not augmented by receipt of these services.
Chapter 6 - Availability as to Amount
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.
121
Chapter 6 - Availability as to Amount
Accountable Officials
Federal laws generally define Accountable Officials in two categories:
• Responsible for an Antideficiency Act violation. 31U.S.C. § 1341(a), or
• Liable for an illegal, improper or incorrect payment. 31 U.S.C. § 3528(a)
Penalties / Recoupment of losses vary. Different for each category.
122
Chapter 6 - Availability as to Amount
Accountable Officials: Responsibility Determining which official is Responsible for a violation:
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 raking official who:
• Knew, or • Should have known that the actions being taken were • Improper or questionable.
123
Chapter 9 – Payment Liabilities
Accountable Officials: Liability
Determining which official is Liable:
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.
•Is liable the moment an illegal, improper or incorrect payment is made.
•Is liable regardless of lack of fault or negligence on the official’s part.
•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.
124
Chapter 9 – Payment Liabilities
Liability for an illegal, improper, or incorrect payment
B-280764, Pecuniary Liability Determinations of Certifying Officers
A defense official asked GAO if a new directive was legal (DoD Directive 7000.15). It purported to hold certain officials liable although they were not appointed as accountable officers per 31 U.S.C. § 3325 and 31 U.S.C. 3528(a).
GAO cited substantial court case precedent and concluded that an administrator may not hold an individual accountable for an illegal, improper or incorrect payment unless the individual is the person who certifies the payment to a disbursing officer.
Subsequently, DoD rescinded its directive and asked Congress for statutory authority to hold accountable those who certify vouchers to an
appointed certifying official. Congress agreed in 10 U.S.C. § 2773a.
125
Chapter 10 – Grants and Cooperative Agreements
General Rules
Grants and COAGs:
• Funds in the hands of the grantee largely lose their federal identity.
• The Grant & Cooperative Agreement Act, federal regulations and the grant instrument itself govern the allowable costs which may be incurred by the grantee.
• Administrative laws governing agency use of appropriations for internal operations generally don’t apply.
• Cooperative Agreements (COAG) are generally subject to the same rules as grants.
• A grant or COAG is considered analogous to a nonseverable service contract.
126
Chapter 10 – Grants and Cooperative Agreements
General Rules
Grants and COAGs:
• 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. They are not acquisition instruments.
• Not all federal agencies have grant making authority.
127
Chapter 10 – Grants and Cooperative Agreements
General Rules
Cooperative Agreements:
• A very popular alternative to contracting procedures.
o 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.
• COAGs, like grants, are obligated entirely at the time of award for the full amount of the agreement.
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FEDERAL APPROPRIATIONS LAW UPDATE
Conclusion
Graduate School family of Appropriations Law courses
Federal Appropriations Law (4-day Basic Course)
Advanced Federal Appropriations Law (3 days)
Reimbursable Agreements (2 days)
FAL Update Course (1 day)
FAL Management Officials Course (1 day)
Specific one-day & half-day sessions. 129