IT’S CRUNCH TIME! Fiscal Year-End Spending

The end of the fiscal year is rapidly approaching…and you know what that means…

Yep!  We’ve got a lot of things to get obligated – things we need but either haven’t been able to purchase yet, or things we haven’t had the funding for.  There’s hope that – as often happens – “they” will find some funding that’s available and we’ll get some of it.  It may be late in the year, but we’ll take it!

Did you miss our complimentary webinar last week on the ins and outs of fiscal year-end spending? Don’t worry – an archive recording and the presentation are still available for download.

In the meantime, here are the top 10 things to remember as we try to manage our year-end spending:

1. The “Bona Fide Needs Rule.”  It says that you can only buy for needs that exist in the fiscal year to be charged.  That means, for FY16, you can only obligate for bona fide needs of this year.  You can’t use FY16 funds to buy next year’s needs (unless you follow some specific exceptions to be explained below).
2. Have your priorities listed before the funding arrives so you can move fast and get them obligated before funding expires.
3. Under the stock replacement rule, you can replenish stock (like office supplies) and purchase up to one year’s worth any time in the year (amount ordered has to be based on historical usage for one year).
4. If there’s a long lead time for something that has to be ready early in the next fiscal year (like provisions for a ship that has to sail October 15), then you have a need to get the provisions ordered this fiscal year to meet the sailing date.
5. You can register for a training class, or order a class to be delivered at your site, with FY16 funds and attend/take delivery of the training in FY17 (usually in the first quarter) as long as you (your agency) has no control over the timing and the length of time for attendance/delivery is not excessive.
6. Severable services contracts (for recurring services like monthly copier maintenance) are legal even though they may cross fiscal year lines; i.e., you obligate the entire contract with FY16 funds even though some of the services will be rendered in FY17. Such contracts are limited to a maximum of 12 months.
7. For non-severable contracts (those for taking delivery of some completed product or item at the end of a period of performance), you must obligate for the entire cost of the item with FY16 funds, and may still take delivery of the item sometime in FY17 or even beyond.
8. If you have some type of subscription (new or renewal) that must begin on October 1, then you have a need to order it in FY16 in order for it to begin on October 1.
9. For indefinite delivery, indefinite quantity (IDIQ) contracts whose period of performance crosses fiscal years, you obligate for the minimum order stated in the contract with funds available when the contract is signed. Then for orders placed after the minimum amount is ordered, you obligate them with funds current at the time the orders are placed.
10. Don’t be tempted to “park” funds just to say they’re obligated so they won’t expire. This takes place when an agency places an “order” (one not really intended to be fulfilled) with a revolving fund, for example, so it can be recorded as obligated.  Parking often takes place at the end of the year when funds are about to expire.  Then later – in the next fiscal year – when the agency decides what it actually wants to order, it modifies the original order.  Legally that cannot happen because if the original order is not legitimate, there is no legal obligation.  The funds backing the order expire at the end of the year and cannot be used for any new orders.

Be sure to consult GAO’s Principles of Federal Appropriations Law – the Red Book – for further guidance on the above issues, or for any other questions that may come up related to year-end spending.  Better yet, download my fiscal year-end webinar on everything covered above – and more. And Good luck!