Federal Appropriations Law:

A Primer James F. Nagle

Oles Morrison Rinker & Baker LLPwww.oles.com

nagle@oles.com

What is Federal Appropriations Law

• Fiscal law

• The body of law that governs the availability and use of federal funds– GAO Principles of Appropriations Law,

Volume I, page 1 to 2

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Congress’s Role

• Decides whether to fund

• How much and how long to fund

• Sets terms and conditions of use

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Role of GAO

• Financial and Program Audits

• Legal Opinions

• Legal Decisions

• Publishes the Red Book

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Three Phases of an Appropriation

• Period of Availability

• Expired Phase – Five Years

• Closure – Returns to Treasury

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Specific versus General Appropriations

• Agency must use Specific Appropriation to the exclusion of General Appropriation – Amount in Specific Appropriation is a ceiling – Once Specific Appropriation is exhausted, cannot use

General Appropriation

• Two Appropriations available for the same purpose – Use the “Rule of Election” and be consistent

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Rules of Fiscal Law

• The propriety of the use of funds depends on three things– The Purpose of the obligation or expenditure – The obligation must occur within the Time limits

applicable to the Appropriation– The obligation expenditure must be within the Amounts that Congress has established

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Purpose

• The Purpose statute, 31 U.S.C. 1301 (a)

• Necessary Expense doctrine– The expenditure must be a logical relationship to the

Appropriation charged– Must not be prohibited by law– Must not be otherwise provided for

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Examples of Necessary Expense Issues

• Clothing

• Water

• Office Equipment

• Business Cards

• Entertainment

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Time Limitations

• Type of Appropriation / Duration– Annual– Multi-year– No year

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Bona fide Needs Rule

• A fiscal year appropriation may be obligated only to meet a legitimate, or bona fide, need arising in, or continuing to exist, in the fiscal year for which the appropriation is made

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Bona Fide Needs

• Supply contracts

• Services contracts– Non Severable – same as supply contracts– Severable – normally charge appropriation

when services are rendered – but major exceptions

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Amount – the Anti-Deficiency Act

• Cannot obligate the government in advance of or in excess of an Appropriation

• Cannot accept voluntary services• Issues

– Indemnifications– Change Orders– Options– Judgment Fund

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