the basic of federal fiscal laws

8/6/2019 The Basic of Federal Fiscal Laws

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The Basics ofThe Basics of

Federal Fiscal LawFederal Fiscal Law

Presenters:Presenters:

Mr. DANA SMITHMr. DANA SMITH

Counsel, FISC NorfolkCounsel, FISC Norfolk

Ms. LORI CHOFNASMs. LORI CHOFNAS

Counsel, FISC Norfolk,Counsel, FISC Norfolk,

Philadelphia SitePhiladelphia Site20 August 2007

I want to learn federal fiscal Law

and I don't care if it takes allafternoon.


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Where It All BeginsWhere It All Begins

No money shall be drawn

from the Treasury, but in

consequence of

appropriations made by

law


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The Half Empty Glass RuleThe Half Empty Glass Rule

You dont need to be a

pessimist to

understand fiscal law,

but it helps.

The established rule is

that the expenditure of

public funds is properonly when established

by Congress, not that

public funds may be

expended unlessprohibited by Congress.

U.S. v. MacCollom, 426 U.S.

317 (1976)


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Sources of Law

United States Code

Authorization Acts

Authorize ProjectsAuthorize Appropriations

Enact Permanent Legislation


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Appropriation ProcessAppropriation Process

Authorization Act

Appropriation Act

Apportionment-OMB

Rate of Obligation SECDEF

Allocation - DEPT COMP

Suballocation MACOM

Allotment - SUBORD CMD

Suballotment INSTALLATION

Allowances (Targets)


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Appropriations Act

Appropriations Acts

31 U.S.C. 1301 (d)

Other Public Laws Opinions


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Legislative History

Provides clarity and context to legislation

Assists in understanding Congressionalintent

Cannot fill in gaps, add or detract

Useful when contemporaneous

when the legislative history is doubtful,go to the statute. (Felix Frankfurter, 350U.S. 366, 374); LTV, 55CG 307


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Continuing Resolutions

Legislation that permits continuingoperations in absence of an Appropriation

Act

Generally at current or lower rate

General provisions of prior year apply

No new programs may start


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Handy Fiscal TermsHandy Fiscal Terms

Commitment

Obligation

Expenditure

Funding:

Available

Expired

Closed

Reprogramming


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PTAPTA

PURPOSE: Obligation for purposefor which money was appropriatedby Congress

TIME: Obligation during period ofavailability

AMOUNT: Sum of money

appropriated to support obligation


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PurposePurpose31 U.S.C. 1301

Based upon specific authority

Example: budget line items

Implied authority

Example: Necessary Expense Rule

No authority

Examples:

Purchases prohibited by statutory foreign sourcerestrictions

Items identified as improper by GAO


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31 U.S.C. 1301(a)

Appropriations shall be applied only to theobjects for which appropriations weremade except as otherwise authorized bylaw.

Determining purpose

Necessary expense

Not provided for elsewhere Not prohibited

Stated purpose


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Necessary Expense

Logical relationship

Within a reasonable range of discretion

Pass the smirk test


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TimeTime

Funds must be obligated before expiration

Every account has a shelf life

Varies according to fund

O & M 1 year/annualfund

Military Personnel 1

year/annual fund

Procurement - 3 Years

RDT&E - Normally 2Years

Major Military Construction- 5 Years

Shipbuilding - 5 Years

Stock/Industrial/WorkingCapital Funds - Indefinite


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Bona Fide Needs Rule

The balance of an appropriation limited forobligation to a definite period of time isavailable only for:

payment of expenses properly incurred during the period of availability or

to complete contracts properly made

within that period of availability


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Bona Fide Needs RuleBona Fide Needs Rule

May expend fiscal year funds only forthe bona fide needs of that same fiscalyear.

31 U.S.C. 1502(a)

So, just what constitutes a bona fideneed on 30 September?


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Defining a Bona Fide Need

The determination of a bona fide needdepends largely on the facts andcircumstances, such as

agency mission nature of the requirement

types of services/supplies

type of contract/agreement

timing of contract/agreement


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Continuing Needs

Current fiscal year funds may be obligatedto satisfy a need that arose in a prior fiscalyear if:

the need was not previously met forlegitimate reasons

the need continues into the subsequentfiscal year and

incurring obligations was discretionarywith the agency


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Future Years Needs vice Continuing Needs

Funds appropriated for a specific year arenot legally available to meet the needs of afuture year.


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Crossing Fiscal Years - Supplies

If supplies cannot be acquired in the samefiscal year in which a bona fide need forthose supplies arises, delivery in asubsequent fiscal year is OK when:

Time between contract execution andrecording the obligation and delivery isnot excessive, and

Supplies are not standard commercialitems readily available elsewhere


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Crossing Fiscal Years: Contracted Services

10 U.S.C. 2410a

Obligation of funds:

Funds available for a fiscal year may beobligated for the total amount of a contract forthe procurement of severable services or thelease of real or personal property for a periodthat begins in one fiscal year and ends in thenext if the total contract period does notexceed 12 months.


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Amount

The lack of money is the root of all evil.

Mark Twain


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Amount

31 U.S.C. 1341

do not make or authorize an obligationor expenditure in excess or in advance

of the amount in an appropriation offund

31 U.S.C. 1517

do not make or authorize an obligationor expenditure in excess of anapportionment or allocation


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AmountAmount

Contracting Officer may only obligatemonies that are available (and in hand).

Bad things to do:

Exceed Congressional Appropriation

Exceed Administrative Subdivision

Exceed funding limitation provided byrequiring activity


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The False CommitmentThe False Commitment

(Gee, You Mean the Computer Doesnt Think For Me?)(Gee, You Mean the Computer Doesnt Think For Me?)

One Touch Financial (OTF) commits butdoes not obligatefederal funds! In order

to obligate funds, you must place anorder or sign a contract with a vendor.Take note of this, particularly at the endof the fiscal year.

Get those orders placed /contractsawarded before the end of 30 September!


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The AntiThe Anti--Deficiency ActDeficiency Act

It is a violation of law to eitherspend orobligate funds:

in advance of appropriations, or

after the expiration of appropriations, or

in excess of appropriations

31 U.S.C. 1341Administrative Penalties

Criminal Penalties


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Not obeying the basics

PTA

Violation of foreign source restrictions

Multi-year contracting

With annual appropriations

Via automatic options

Expense/Investment threshold violation

Funding large construction projects with OMN

Ignoring funding cutoff provisions

Example: A-76 Program time limitations

GreatWays to Violate the ADAGreatWays to Violate the ADA


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Unauthorized CommitmentUnauthorized Commitmentvs. ADA Violationvs. ADA Violation

DOD FMR, DOD

7000.14R, Volume 14

NAVSO P-1000-3

Federal Acquisition

Regulations (FAR)Subpart 1.602-3

NAVSUPINST 4200.81B,

Enclosure 7

UAC:Wholly unauthorized individual entered into

contractGovernment not bound by agreement.

ADA: Authorized (e.g. warranted) official

overstepped their authority in regard to P-T-or A

UAC-RatificationADA-Investigation


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Before You Buy...Before You Buy...

Think and analyze:

Do the basic rules of fiscal law allow or prohibitthese purchases?

Never forget PTA

Does the FAR/DFARS/DOD & Navy Instructionsallow/prohibit these purchases?

Does the GPC/SAP Instruction/policy guidanceallow/prohibit these purchases?

NAVSUPINST 4200.99, Enclosure 1

NAVSUPINST 4200.85, Enclosure 2

Are paperwork and procedures correct?

Dont forget to ask for legal advice.


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Lets Be Careful Out There!Lets Be Careful Out There!

When in doubt: Ask your OGC Attorney.When in doubt: Ask your OGC Attorney.

Whennot in doubt: Ask your OGC Attorney anyway.Whennot in doubt: Ask your OGC Attorney anyway.


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This is LOCAL training provided to FISC Norfolk employees.This training is not intended to be widely distributedthroughout the Department of the Navy, Department ofDefense, or the United States Government.

The comments, observations, and opinions of thepresenter are not intended to represent the official positionof the Department of the Navy or the Department ofDefense.

Care must be taken to examine each situation according toits specific and peculiar facts. In addition, the rules

applicable to the obligation and expenditure ofappropriated funds are subject to change at any time. Thistraining is not a substitute for individualized legal advice.

DisclaimerDisclaimer

This presentation is part of a visual information (VI) mixed mediapackage and has no assigned Production Approval Number (PAN).

the basic of federal fiscal laws

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