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Posted by on May 2, 2014

Does the Bona Fide Needs (BFN) Rule Now Have Less Bite?

Office SuppliesSome say one of the bedrock principles of federal appropriations law was eroded by a recent decision from the Government Accountability Office (GAO). May we now order several years’ worth of office supplies with a one-year appropriation if it saves money?

Based on decision B-322455, dated August 16, 2013, the answer sure does seem to be yes, but it certainly did not used to be.

Because of the Bona Fide Needs Rule, there was generally no authority to order more than one year’s worth of supplies with a one-year appropriation. If an agency wanted to order for a future year, it had to wait until the future year arrived and use its current year funds. But in decision B-322455, GAO decided 41 USC 3903 (from the Federal Acquisition Streamlining Act) allows one-year appropriations to be used to acquire up to five years’ worth of services provided certain conditions are met. Only services were addressed in the decision because the inquiring department only included services in their question to GAO.

But does the same principle now apply to office supplies? It almost certainly does. The law reads as follows: “An executive agency may enter into a multiyear contract for the acquisition of property or services if. . .” And since property is typically defined as something owned or possessed, that stipulation pertains to office supplies.

As mentioned above, 41 USC 3903 does require that certain conditions are met:

  1. The purchase is limited to five years
  2. Funds must be “available and obligated . . . for the full period of the contract”
  3. “The need for the property . . . is reasonably firm and continuing over the period of the contract”
  4. “A multiyear contract will serve the best interests of the Federal Government by encouraging full and open competition or promoting economy in administration, performance, and operation of the agency’s programs”

The Bona Fide Needs Rule would still apply in this way: if the need to place the order (obligation of funds) doesn’t really exist until the next fiscal year, then the order must wait until next year. And now the only question that remains is:

How many agencies will really allow one-year funds to be obligated for up to five years’ worth of property such as office supplies?

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