The Anti-Deficiency Act

(Or: how do you look in pinstripes?)

Keith M. Dunn

Associate Counsel

Office of Counsel for the Assistant Secretary of the Navy (Financial Management & Comptroller)

in the beginning . . .

. . . it shall not be lawful for any department of the government to expend in any one fiscal year any sum in excess of appropriations made by Congress for that fiscal year, or to involve the government in any contract for the future payment of money in excess of such appropriations.

16 Stat. 251 (1870)

Statutory Provisions

The Antideficiency Act prohibits federal employees from:

• making or authorizing an expenditure from, or creating or authorizing an obligation under, any appropriation or fund in excess of the amount available in the appropriation or fund unless authorized by law. 31 U.S.C. 1341(a)(1)(A).

• involving the government in any obligation to pay money before funds have been appropriated for that purpose, unless otherwise allowed by law. 31 U.S.C. 1341(a)(1)(B).

• accepting voluntary services for the United States, or employing personal services not authorized by law, except in cases of emergency involving the safety of human life or the protection of property. 31 U.S.C. 1342.

• making obligations or expenditures in excess of an apportionment or reapportionment, or in excess of the amount permitted by agency regulations. 31 U.S.C. 1517(a).

Relevant Statutes: Appropriations

• “In Excess of.” An officer or employee may not make or authorize an obligation or expenditure that exceeds an amount available in an appropriation or fund. 31 U.S.C.

1341(a)(1)(A)

• “In Advance of.” An officer or employee may not involve the government in a contract or obligation for the payment of money before an appropriation is made unless authorized by law. 31 U.S.C. 1341(a)(1)(B)

Relevant Statutes: Apportionment

• 31 U.S.C. § 1512 requires apportionment of appropriations.

• 31 U.S.C. § 1513(b) requires the President to apportion Executive Branch appropriations. The President has delegated this authority to the Office of Management and Budget (OMB)

• An obligation in excess of an apportionment or an administrative subdivision of funds is a violation of 31 U.S.C. § 1517

Relevant Statutes: Administrative

Subdivisions

• 31 U.S.C. 1514 requires agency heads to establish

administrative controls that: (1) restrict obligations or

expenditures to the amount of apportionments; and (2)

enable the agency to fix responsibility for exceeding an

apportionment

• An obligation in excess of an administrative subdivision of

funds is a violation of 31 U.S.C. 1517

Voluntary Services

• An agency may not accept voluntary services except in emergencies involving human life and property. 31 USC 1342

• Distinction between voluntary services and gratuitous services – An agency may accept unpaid services if a person executes

an advance written agreement (1) stating that the services are offered without expectation of payment, and (2) expressly waives any future claims against the government. B-324214, January 27, 2014

• Statutory authority to accept certain voluntary services – 10 USC 1588

– 10 USC 2601

Exceptions to the Antideficiency Act

• A statute must explicitly contain language providing authority to enter into binding contracts without the funds adequate to make payments under them. – Example: Feed and Forage Act (Adequacy of

Appropriations Act), 41 USC 11 • Still need an appropriation to liquidate the contract obligation

• A general “notwithstanding any other provision of law” clause does not constitute a waiver of the ADA – B-303961, Dec. 6, 2004

– Need legislative history to indicate Congressional intention to give agency authority to obligate in advance or in excess of an appropriation.

Preliminary Review – Reporting Suspected

Violations

• Purpose is to gather basic facts and determine whether a violation appears likely. Completion of the review is usually required within 14 weeks of the date of discovery.

• Focus is on the potential violation, not possible corrective actions

• In all cases, the reviewer shall request and obtain advice of legal counsel on legal issues raised during the preliminary review and legal office reviews for legal sufficiency

• Preliminary Report must be forwarded to the Assistant Secretary (Financial Management & Comptroller) of the Military Department or the equivalent for DoD activities

Formal Investigation

• If the preliminary report determines that a violation occurred, an Investigating Officer must be appointed and a formal investigation must be initiated within 2 weeks of approval of the preliminary investigation.

• Purpose is to determine the relevant facts and circumstances of the potential violation, who was responsible, and what corrective action should be taken

• Final report must reach the office of USD (Comptroller) within 12 months 2 weeks from the date the preliminary review ended.

Formal Investigations (cont’d)

• Responsibility for a violation is established at the moment the improper activity occurs, e.g., overobligation, overexpenditure, etc. A responsible party is the person who has authorized or created the obligation, commitment, or expenditure in question.

• Reports may also name commanders, budget officers, or finance officers because of their positions if they failed to exercise their responsibilities properly

• The investigation shall attempt to discover the specific act, or failure to act, that caused the violation and who was responsible for that act or failure to act

Reports to the President and Congress

The Secretary of Defense must report violations to the President

and Congress (31 U.S.C. 1351, 1517(b)). The report must also

be transmitted to the Comptroller General and Office of

Management and Budget.

GAO publishes summary reports of ADA violations at

http://www.gao.gov/legal/lawresources/antideficiencyrpts.html

Disciplinary Action

• If disciplinary action is required then the Military Department returns the case to USD(C) with proposed disciplinary action

• Disciplinary action shall be: – administered on a case-by-case basis

– based on relevant factors including: • the nature and seriousness of the offense (e.g. negligent or willful)

• the record, experience, and position of the responsible individual

• Administrative discipline for civilians may include: – Written admonishment or reprimand

– Reduction in grade

– Suspension from duty without pay

– Removal from office

• Military personnel may be subject to administrative discipline or action under the Uniform Code of Military Justice

Criminal Penalties

• A knowing and willful

violation of the

Antideficiency Act is a

Class E felony. 18 U.S.C.

3559(a)(5)

• Punishment may include a

$5,000 fine, confinement

for up to two years, or

both. 31 USC 1350

No Private Right of Action

In view of the explicit provisions of 31 U.S.C. 1351, there is no private right of action for declaratory, mandatory, or injunctive relief under the Antideficiency Act. Thurston v. U.S., 696 F. Supp. 680 (D.D.C. 1988)

Statistics

Reported Cases:

FY13 - 10

FY12 - 20

FY11 - 23

FY10 - 16

FY09 - 12

FY08 - 23

Source: gao.gov

Violations of the ADA

Every ADA violation is in essence an Amount

violation, as the prohibitions in the ADA are against

spending more money than is available at the time the

obligation is made.

However, violations of the ADA may fall into any of

the three categories of Purpose, Time and Amount.

Purpose Violations

Two types of violations:

1. Using the wrong funds

2. An expenditure for a purpose for which no funds are available

A Purpose (as well as a Time) violation can be corrected if it is possible to replace the incorrect funds with the correct funds

In order to avoid the violation, the correct funds in sufficient amount must have been available at the time of the original obligation as well as at the time of the correction

using the wrong funds

• O&M,N used to purchase computer hardware and software when procurement funds should have been used – 1517 violation because no proper funds

available – under 10 USC 2222(b) ADA violated

because expenditures exceeded $1M and prior certification not received

• O&M,MC used to fund four military

construction projects that should have been aggregated for funding purposes and funded with MC,NR

• Procurement funds used to build and install a prefabricated building above the minor MILCON threshold; MCN should have been used

no funds available

• O&M,N funds used to purchase meals and keepsake gifts for employees at a banquet

• O&M, DHP used to purchase food and gifts for attendees at a health conference

• Army and Navy O&M used to purchase unauthorized public relations memorabilia and alcohol for a function at the end of a joint exercise with the Australian Defense Force

• NWCF used to buy bottled water, for which there was no appropriation available

Time Violations

• Contracting prior to an appropriation being enacted

• Obligating funds after the period of availability for obligation has expired

• Using the wrong year funds

• Bona fide need violations

– obligating current year funds for future year needs

• training class coupons

Amount Violations

• Contract Issues

– Flexibly priced contracts

– Claims settlements

– Multiyear contracts

• B-322160, October 3, 2011

• Improper Augmentations

• Over-obligating MILPERS accounts

• Indemnification Agreements

– Project Stormfury, 59 Comp. Gen. 369

– Terms & conditions in commercial contracts

• Ignoring statutory restrictions on the availability of funds

– B-319009, April 27, 2010

Duties

• AVOID

– B-255831, July 7, 1995

• MITIGATE

– 55 Comp. Gen. 768

• CORRECT

– If proper funds available at the time of the violation and the time of correction

• Question dubious

transactions

• Monitor Contract

Performance

• CYA – Consult Your

Attorney!