FY End Spending – a Webinar Recap

On August 19 Management Concepts conducted a one-hour webinar entitled It’s About Time: Appropriations Law and Year-End Spending Webinar. More than 300 attendees joined us to understand key appropriations law time factors particularly as we approach the end of the fiscal year. Many related topics were covered but three stood out: recognizing legitimate year-end spending, understanding how to charge the correct fiscal year in accordance with the Bona Fide Needs rule and finally, what steps to take if the wrong FY is selected including related Antideficiency Act implications. I saw seven key takeaways, each related to one or more these three topics. They include:

• The Bona Fide Needs Rule (BFN) is one of the fundamental principles of Appropriations Law. It basically states an agency must charge current program needs to current FY appropriations.
• We covered three key exceptions to the BFN premise. They all involved situations where current year needs may be delivered in a subsequent FY. These allowed exceptions are:
  1. Ordering items that require a long lead time. An example shared involved ordering a hard to find part for preventative maintenance on an HVAC unit. If the work is to be performed on 15 October we might need to order the part by the end of September (and charge those funds) to allow for fabrication and shipment of the part in order to have it in time for the 15 October maintenance.
  2. Restocking supplies to normal inventory levels at year end. If we normally stock 50 black toner cartridges for the copiers in the building and note on 20 September we only have 20 in stock then 30 more may be ordered. We order them with FY15 dollars even though the cartridges will not be actually used until FY16.
  3. Registering for training that will actually take place in the following year. A few conditions were noted.
• Severable and non-severable services were covered and the differences explained. Proper obligation practices were also described for each. Basically, we learned severable services are for recurring personnel level of effort services such as routine copier maintenance, periodic landscaping, or cleaning services. Contracts covering those types of services are limited in their period of performance to 12 months but may cross FY lines. Non-severable services on the other hand can extend longer than 12 months but must result in a single or “entire” deliverable. This might be for something like a software project delivery or a publishable report. We learned these type of contracts cannot be incrementally funded but rather must be funded entirely with current year funds at the time of contract award in accordance with the BFN rule.
• Obligation principles related to the BFN rule were explained. One important note is recording evidences the obligation but does not create it! If a given transaction is not sufficient to constitute a valid obligation, simply recording it will not make it one! Conversely, failing to record a valid obligation in no way diminishes its validity or affects the fiscal year to which it is properly chargeable. So if we enter into a proper contract on 30 September but do not record the obligation until 7 October the obligation must be recorded against FY15 (September) funds.
• Another key takeaway related to charging the wrong appropriation due to improper time or purpose infractions. If the improper charge cannot be reversed with a sufficient unobligated balance remaining in the proper appropriation, an ADA violation must be reported. This also includes charges for prohibited purchases, such as bottled water which could also result in an ADA violation.
• There are many different ways to violate the ADA, such as overobligating. Various levels of overobligations which constitute an automatic violation include the appropriation, apportionment, and allotment levels.
• Finally, there are numerous ways to help prevent BFN, time, and ADA violations. At the top of the list is quality training to help raise situational awareness about relevant appropriation law issues … including end of year time violations! There are also many job aids and tools we can use to help steer clear of potential violations including several found at the GAO website.

Did you miss our webinar? Click here to listen to the recording!