FEDERAL APPROPRIATIONS LAW. Update / Refresher

Transcription

1 FedTrain, Inc. FEDERAL APPROPRIATIONS LAW Update / Refresher Randy LeGrand Teacher 2018 FedTrain, Inc. Rev. 01/18

2 Administrative Matters Registration - Sign-In Class Hours Attendance Policies; CPE Credit (8) Facilities Cell Phones, etablets, etc. Evaluations Materials; Slides; ecertificates 1 of 112

3 Pre-Course Quiz Quiz is located in the very back of the Participant Manual There are 29 questions examining your knowledge of the course materials covered in the basic course. Please don t spend more than 30 seconds on average per question. Finish in about 15 minutes. The answers will be covered in the course presentation. 2

4 Pre-Course Quiz Quiz is located in the very back of the Participant Manual Begin the Quiz Now. 3

5 Pre-Course Quiz Quiz is located in the very back of the Participant Manual 2 Minutes Remain. 4

6 Pre-Course Quiz Quiz is located in the very back of the Participant Manual. There are 29 questions probing your knowledge of the course materials covered in the basic course. Don t be concerned about not remembering the information it s been a while. and things tend to change. Time is up! Please don t spend on average more than 30 seconds on each question. Try to finish in 15 minutes. I will cover most of the items in my regular presentation; the rest covered as follow-ups. Pre-Course Quiz answers are not in order. 5

7 References Current GAO Red Book Published Editions. (Annotated extracts used in all courses.) Vol. I Chapters 1-5 (3 rd Ed.) 2004 Vol. II Chapters 6-11 (3 rd Ed.) 2006 Vol. III Chapters (3 rd Ed.) 2008 Annual Update. (March 2015) Current Revisions: (03/16) Online only; Updated annually. Chapters 1 & 2 (Incorporating former Chapter 3) are new. Succeeding chapters will be renumbered. GAO discontinued using volumes & Updates. Download at: 6

8 THE LEGAL FRAMEWORK, CONGRESSIONAL ACTION AND THE ADMINISTRATIVE PROCEDURES ACT CHAPTERS 1, 2 & 3

9 Chapters 1 & 2 The Legal Framework A federal agency is a creature of law and can function only to the extent authorized by law. The Supreme Court has expressed what is perhaps the quintessential axiom of appropriations law as follows: The established rule is that the expenditure of public funds is proper only when authorized by Congress, not that public funds may be expended unless prohibited by Congress. (1-3) 8

10 Chapters 1 & 2 The Legal Framework Said another way,. as the Supreme Court put it in 1850: However much money may be in the Treasury at any one time, not a dollar of it can be used in the payment of any thing not previously sanctioned [by a congressional appropriation]. Reeside v. Walker, 52 U.S. (11 How.) 272, 291 (1850). (1-3) 9

11 Chapters 1 & 2 The Legal Framework These are fundamental Principles of Appropriations Law: (1-3) Article I, Section 7: Congress shall pay the debts and provide for the common Defense and general Welfare of the United States Article I, Section 9, Clause 7: No money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of Receipts and Expenditures of all public Money shall be published from time to time. No mention of budget responsibilities for anyone. Quiz 2 a. Quiz 2 10

12 The Legal Framework Permanent Finding Statutes: (1-3) The four cornerstones of Appropriations Law An appropriation is available for obligation and disbursement for: A lawful Purpose 31 U.S.C. 1301(a); Use during the Time period for which the appropriation is made 31 U.S.C. 1502(a); Which an Amount is on hand 31 U.S.C. 1341(a); and, Which an authorized certifying official certifies an invoice/voucher to a disbursing officer for Payment from Treasury. 31 U.S.C. 3528(a). (1-19) 11

13 GAO The Government Accountability Office 12

14 Chapters 1 & 2 The Legal Framework Government Accountability Office: (1-4) Created in 1921, Title III, Budget and Accounting Act: Title I mandated submission of a President s Budget Estimate each year on the first Monday in January. Title II created the Bureau of the Budget (Now O.M.B.) Moved functions from Compt. of Treasury in Executive Branch to Legislative Branch. Broad authority to: (31 U.S.C. 3527, 3528 & 3529) Audit and report on functions of Executive Branch. Issue CG Decisions relating to fiscal matters. Quiz 3 a. & c. Quiz 13

15 Chapters 1 & 2 The Legal Framework Department of Justice n1 The Comptroller General is an agent of Congress. Therefore, although his views often provide helpful guidance on appropriations matters and related issues, they do not bind the Executive Branch. See, e.g., Submission of Aviation Insurance Program Claims to Binding Arbitration, 20 Op. O.L.C. 341, 343 n.3 (1996). [31 Op. O.L.C. 1, April 5, 2007] Research reference: 2007 OLC LEXIS 6; 31 Op. O.L.C. 1 See also, Bowsher v. Synar, U.S. Supreme Court, 1986 [48 U.S. 714, 106 S. Ct. 3181, 92L. Ed. 2d U.S.] (1-4) 14

16 The Legal Framework Therefore GAO decisions are viewed two ways: In his capacity as CG, decisions relating to the recording of obligations and the legality of making certain payments are clearly within his role as Chief Accounting Officer of the USA. Bona fide need issues. Obligating longevity bonuses; Training contracts, etc FedTrain, Inc. 15

17 The Legal Framework Obligating Employment Bonus Contracts B , July 16, 2014 GAO responded to a general provision in an appropriations act requiring an opinion on the obligation of an annual appropriation entering into multiyear bonus contracts, such as longevity/retention bonus contracts for military [and by implication, USPHS] members. GAO likened a multiyear bonus contract instrument to that of a nonseverable fixed price contract in which the government relinquishes control over the duty to make a payment to the second party and thus incurs a liability for the full amount of the bonus at the time the instrument is effective. GAO rejected DOD s argument that the agreement was in fact compensation governed by 31 U.S.C. 1501(a)(7) which requires that such liabilities should be recorded as they are actually earned. 16

18 The Legal Framework National Defense Authorization Act for P.L , November 25, 2015 SEC RECORDATION OF OBLIGATIONS FOR INSTALLMENT PAYMENTS OF INCENTIVE PAYS, ALLOWANCES, AND SIMILAR BENEFITS WHEN PAYMENT IS DUE. (a) IN GENERAL. Chapter 19 of title 37, United States Code, is amended by adding at the end the following new section: Recordation of installment payment obligations for incentive pays and similar benefits (a) IN GENERAL. In the case of any pay, allowance, bonus, or other benefit described in subsection (b) that is paid to a member of the uniformed services on an installment basis, each installment payment shall be charged to appropriations that are available for obligation at the time such payment is payable. This provision is in response to a recent GAO, Comp. Gen. B Obligation of Bonuses under Military Service Agreements, July 16, 2014, which concluded that DOD cedes fiscal exposure to service members when it enters into such agreements and should change its obligational practices to obligate the entire bonus amount when the agreement is signed. 17

19 The Legal Framework Therefore GAO decisions are viewed two ways: In his capacity as CG, decisions relating to the recording of obligations and the legality of making certain payments are clearly within his role as Chief Accounting Officer of the USA. Bona fide need issues. Obligating longevity bonuses; Training contracts, etc. Otherwise, decisions that purport to limit Executive Branch discretion without the benefit of a controlling, specific legal authority are not viewed as binding on the Executive Branch. Business Cards; Commercial (bottled) water, etc. Quiz 3 a. & c. Quiz 2013 FedTrain, Inc. 18

20 Chapters 1 & 2 The Legal Framework Legislative History Documents: Transfers and Reprogramming Rules 19

21 Chapters 1 & 2 The Legal Framework Concepts and types of Budget Authority Transfer and Reprogramming: Transfer. (1-6) Congress typically provides general transfer authority to allow transfer of budget authority from one appropriation or fund account to another. Transfer authority exists in the annual appropriation & authorization acts as well as in permanent legislation. 20

22 Chapters 1 & 2 The Legal Framework Limitations on flexibility: Transfer and Reprogramming (1-7) Congress permits limited Reprogramming of funds. (The movement of money within an appropriation.) Specific guidelines are found in General Provisions of annual appropriations acts in certain agency appropriations. Generally they require Congressional notification of any reprogramming that: Creates or eliminates a PPA (Program, Project or Activity). Increases/decreases money amounts for a specified PPA. Increases or decreases an unspecified PPA by 10% or Quiz $500k (the lesser). 5 Reorganizes offices, PPA. c. The FY17 HHS Appropriations act does not contain the above language. Quiz 22

23 Chapter 3 Administrative Procedures Issuance of Regulations: The Administrative Procedures Act (5 U.S.C ) governs issuance of agency regs. ( ) Broadly there are two types: External Issuance of rules and procedural requirements on outside agencies or parties. (E.g. other federal agencies, private parties i.e. persons, institutions, organizations, etc.) Internal Issuance of rules governing the internal management and administration of the agency. 23

24 Chapter 3 Administrative Procedures Issuance of Regulations: Administrative Procedures Act: External regulations generally must: ( Rely on a controlling statute. Quiz 6 b. Quiz 7 a. & c. Announce proposed regulations in advance in the Federal Register. Retroactive rules must be authorized by the controlling statute. Allow an opportunity for public review and comment. Consider and comment on resulting public issues. Thereafter, be published in final form in the Federal Register, normally to be effective at least 30 days hence. OMB administers the act for the Executive Branch. Quiz 24

25 Chapter 3 Administrative Procedures Issuance of Regulations: Administrative Procedures Act: Internal regulations generally: ( ) Quiz 8 d. Do not require a controlling statute. Must conform to laws and higher authority regulations. No retroactive regs. unless authorized by a controlling authority. Retroactive confirmations are different. May require approval of a higher level management official. Quiz 25

26 Chapters 1, 2 & 3 The Legal Framework Significant Changes: None Reinforcement of existing policy: B , Words of Futurity in Appropriations Acts (ATF), August 28, 2007 Executive Order 13457, Complying with Earmarks in Legislative History Documents, February 1, 2008 B , Statutory Construction of Appropriations Acts (EPA), March 23, 2009 B , Notification Reprogramming Rules (CFTC), January 23, 2013 B , DOT Violated Anti-lobbying Restrictions, December 13,

27 AVAILABILITY OF APPROPRIATIONS: PURPOSE Chapter 4 (1-50)

28 Appropriations Availability - Purpose The Purpose Statute Quiz 9 d. Appropriations are available only for the objects for which the appropriations were made except as otherwise provided by law. 31 U.S.C. 1301(a) ( ) Quiz 28

29 Appropriations Availability - Purpose The Necessary Expense Doctrine. ( ) It is not reasonable to expect that every item of expenditure would be itemized in an appropriation act. The spending agency [official] has reasonable discretion in determining how to carryout the purposes of the appropriation. 29

30 Appropriations Availability - Purpose The Necessary Expense Doctrine: An agency may exercise discretion if the proposed expenditure meets three tests: 1. Logical and makes a direct contribution to the appropriation. 2. Not prohibited by law. 3. Not otherwise provided for in another appropriation. (1-52) 30

31 Appropriations Availability - Purpose The Necessary Expense Doctrine. Meetings ( ) Four statutes address meetings: 5 U.S.C U.S.C U.S.C U.S.C (HHS, Labor, Educ. Exempt) 31

32 Availability of Appropriations: Purpose Conferences 32

33 Availability of Appropriations: Purpose The Necessary Expense Doctrine. Conferences (Meeting: a gathering of two or more parties.) (---) Meetings in general are authorized by 5 U.S.C Include such descriptors as seminar, retreat symposium, training conference, convention, workshop, etc. President issued two Executive Orders and OMB issued two Memoranda on the subject. The following is a brief chronology. 33

34 Appropriations Availability - Purpose Timeline: (--) October 2010 GSA Las Vegas conference. April 2012 GSA Inspector General issues scathing report on the abuses. $823,000 Training Conference. $130,000 travel related expenses for 6 scouting visits to the sole-sourced casino. Multiple FAR violations. Termed: Over the top. 34

35 Appropriations Availability - Purpose Consequences: GSA Administrator Resigned. Fired: 3 GSA Regional Commissioners; the Buildings Services Commissioner; a senior D.C. staff attorney; and a high ranking administrator suspended, later retired. Jeffrey Neely the regional commissioner who orchestrated the conference was convicted of fraud (incl. other acts beyond the conference); sentenced to 3 months in jail, fined $2,000, ordered to repay $8,000 restitution. 35

36 Appropriations Availability - Purpose Consequences: The other two Regional Commissioners appealed their firings to the Merit Systems Protection Board and were ultimately reinstated. Reaction: November 2011: President Obama issued Executive Order May 2012: OMB issued Memo M

37 Appropriations Availability - Purpose Promoting Efficient Spending to Support Agency Operations OMB Memo M-12-12, May 11, 2012 Issued following Executive Order 13589, November 9, Requires: 30% travel cuts from 2010 baseline levels through Senior departmental review and approval of all conferences over $100K. Conference expenses over $500K must be personally approved by the agency head (Secretary, HHS). Publicize all conferences costing more than $100K on agency main website. Government-wide conference spending controls imposed. Reporting systems emerge. Quiz 13 a. c. & d. Quiz 37

38 Appropriations Availability - Purpose Based on authority in the FY15 Appropriations Act, the Secretary, HHS: Delegated to OPDIV head approval for all conferences; above $500k may not be delegated. May delegate high-level approval for conferences between $100k and $500k. Allows for approvals below $100k as the OPDIV head desires. HHS StaffDiv delegations modified slightly. Updated prior guidelines and conference definitions. Congress required quarterly reporting of all conference attendance costing over $20k. 38

39 Appropriations Availability - Purpose As the Obama administration prepared to exit: OMB issued Memo M November Touted substantial savings in conferences. Modified M by deemphasizing the role of department level approvals. Required agencies to designate appropriate officials to approve conferences. Modified reporting requirements. Thus HHS 2015 authorities were mirrored throughout the executive branch. 9

40 Appropriations Availability - Purpose May 2017: P.L , Consolidated Appropriations Act, Div. E, Title VII, Sec. 739(E): None of the funds made available in this or any other appropriations Act may be used for travel and conference activities that are not in compliance with OMB Memo M-12-12, May 11, 2012 or any subsequent revisions to that memorandum. June 2017: OMB Do away with it all.. But,.. OMB Memo eliminated both OMB M & M-17-08; HR 3354 FY18 Consol. Appns. Rpt. contains the above language. 40

41 Appropriations Availability - Purpose A general comment about Purpose Availability: (--) Three broad areas require a review of the law when buying for others: FOOD GIFTS WEARING APPAREL All three of the above share a common characteristic. They are: PERSONAL IN NATURE. The law is understandably guarded about allowing the use of appropriations for a purchase when the primary benefit accrues to a party or entity other than the U. S. government. 41

42 Appropriations Availability - Purpose Legal Authorities: The property clause in the Constitution. (1-78) Quiz 12 d. Article IV, Sec. 3. Property acquired by the United States may be disposed of only as authorized by law. Title II of the Federal Property and Administrative Services Act of 1949 codifies in permanent law regulations on acquisition and disposition of property. Property is anything of value (real or personal) that has a material utility. The laws prescribe a variety of ways to dispose of excess and surplus property. E.g. Appropriations allow Official Reception and Representation funds to be used to purchase gifts (mementos) for visiting dignitaries. Quiz 42

43 Appropriations Availability - Purpose Disposing of property: The Incentive Awards Act 5 U.S.C authorizes the presentation of monetary and nonmonetary awards. As such, they are not gifts. OSHA, 29 U.S.C. 668 and other laws permit purchase of articles of protective clothing and equipment. 5 U.S.C 5901, authorizes the issuance of uniforms. As such, they are property items not gifts. An employee may be issued tools and equipment to personally use on the job. They are property not gifts. 43

44 Appropriations Availability - Purpose Disposing of property: Certain give-away items are deemed gifts authorized by law. Recruiters (for military and certain civilian agencies) are permitted by various laws to acquire promotional items. All agencies have inherent authority to promote employment opportunities. Certain PPAs in HHS have promotion authority. Bottom Line: If you are planning to purchase something of value with appropriated funds to be given to someone personally, first find the legal authority. 44

45 The image part with relationship ID rid8 was not found in the file. Appropriations Availability - Purpose Entertainment - Food Recap (Government-wide) Principle:.. as a general rule, appropriated funds are not available. to provide free food to employees [at] within their official duty stations Exceptions: Where other authority exists: ( ) Training (5 U.S.C. 4109) Award Ceremonies (5 U.S.C ) Quiz 11. c. Cultural Awareness functions: Small food samples permitted (B , Jan 2004) Light Refreshments (B , January 27, 2003) Quiz 14 a., b., c. & d. Renting meeting space with food included. (B ). Miscellaneous authorities (Safety, gift funds, foundation donations, reception and representation funds.) Quiz 45

46 The image part with relationship ID rid8 was not found in the file. Appropriations Availability - Purpose Entertainment - Food Recap HHS/CDC Principle:.. as a general rule, appropriated funds are not available. to provide free food to employees [at] within their official duty stations Exceptions: Where other authority exists: ( ) Training (5 U.S.C. 4109) (Not at HHS sponsored Training) Award Ceremonies (5 U.S.C ) (HHS: Light Refreshments - $4 CDC) Cultural Awareness functions: Small food samples permitted (B , Jan 2004) Light Refreshments (B , January 27, 2003) Renting meeting space with food included. (B ). Miscellaneous authorities (Safety, gift funds*, foundation donations*, reception and representation funds.) *Unless the donation is specific to food. 46

47 Buying Commercial Water Buying Bottled Water When is it legal to buy commercial water? 47

48 Buying Commercial Water 1. The taste of the water in this area is not good. Bottled water is much better. 2. Also we need to stock up on bottled water because the city water plant malfunctions a lot. Several times a year we have to boil water for a day or two. 3. The contracting specialist has price quotes from local suppliers for both bulk buys and routine monthly resupply of bottled water usage. 48

49 Buying Commercial Water B , December 17, 2013 (1-89) Commercial (Bottled) Water Purchase of commercial drinking water is generally prohibited except when the public source is: Quiz Unreliable, unsafe or unavailable; or, 15 Necessary to stock for emergencies. a. & b. Army elements wanted authority to purchase commercial water for issue to employees who were assigned, on a semi-regular basis, to work in remote or rough terrain areas. These locations were not within a reasonable proximity of verifiably safe drinking water. GAO concluded that when employees are performing duties at locations where safe public drinking water is not reasonably available, an agency may incur necessary expenses to acquire commercial drinking water. See also: B (1992) and B (1961); B , February 4, 2008, B , September 29, Quiz 49

50 Buying Commercial Water 1. The taste of the water in this area is not good. Bottled water is much better. No 2. Also we need to stock up on bottled water because the city water plant malfunctions a lot. Several times a year we have to boil water for a day or two. OK 3. The contracting specialist has price quotes from local suppliers for both bulk buys and routine monthly resupply of bottled water. OK, but not for routine consumption. 50

51 Appropriations Availability - Purpose Non-Food 51

52 BUYING PROPERTY Purchase of Kitchen Appliances B-32933, Purchase of Kitchen Appliances, June 25, 2004 An agency upon moving into a recently constructed federal office wanted to acquire kitchen appliances, e.g., refrigerators, microwaves, commercial coffee pots, etc., to be placed in large, centrally located break-room areas. The agency wanted to promote efficiencies and effectiveness of working operations, enhance safety and health. GAO concluded that prior decisions on the subject limited such purchases to strict circumstances. Now, GAO determined that agencies may, subject to policies/regulations, permit the purchase of kitchen appliances, such as the above if a determination is made that the primary benefit of the purchase accrues to the government and that adequate policies and procedures are in place to prevent abuse. Prior CG decisions were modified accordingly to conform. B (1997), B (1983) and 47 Comp. Gen 657 (1968). 52

53 BUYING PROPERTY Purchase of Kitchen Supplies B : Disposable Cups, Plates & Cutlery (Commerce-DOC), August 6, 2015 In 2009, DOC and NWSEO signed a memorandum of understanding (MOU), which stated that DOC would provide "disposable cups, plates, and utensils to employees. DOC commenced providing the disposable items. But, in 2013 DOC announced that it could not use appropriated funds for this purpose. The NWSEO objected and the matter went to arbitration. GAO said in a 2013 decision (B ), that neither the DOC nor the arbitrator's opinion demonstrated that supplying the disposable items was an essential part of accomplishing a statutory mission of the agency. GAO concluded that appropriated funds were therefore not available to pay for the cups, plates, and cutlery. NWSEO argued GAO lacked authority to rule on these labor matters. GAO disagrees. GAO cited: U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) Navy v. FLRA, 665 F.3d 1339 (D.C. Cir. 2012) and D.C. Circuit, Air Force v. FLRA, 648 F.3d 841 (D.C. Cir. 2011) (union proposal to use appropriated funds to pay for uniform cleaning was non-negotiable because this purpose was not authorized by law). 53

54 MANDATORY SOURCES The manager wants special business cards for his staff. GPC holder found a great price on the web from a national retailer. Perfect quality, timeliness and price. What could go wrong? 54

55 Mandatory Sources Using Mandatory Sources (GSA, VA, DLA, Lighthouse for the Blind, Gov. Publishing Office, etc.) Principle of Law: ( ) When a source for goods or services is prescribed by law that source must be used to the exclusion of all others; unless an exception applies or a waiver is granted by the required source. 55

56 Mandatory Sources The manager wants special luxury business cards for his staff. GPC holder found a great price on the web from a national retailer. Perfect quality, timeliness and price. What could go wrong? The Lighthouse for the Blind, an Ability One mandatory source, lists business cards on it s procurement list. Agencies must buy from a NIB/NISH supplier. FAR 8.6. Manager won t get luxury cards. 56

57 Mandatory Sources Federal Prison Industries (UNICOR) Changes P.L , Consolidated appropriations Act for FY 2005 A former mandatory sole source: (FAR 8.6) None of the funds in this act or any other act for FY 2005 and thereafter may be used to purchase an item from the Federal Prison Industries, Inc... unless the goods or services are determined to be best value. [under the FAR and related laws]. FPI must be given the opportunity to compete. 57

58 Advertising, Promotion & Gifts 1. The manager wants to give away T-shirts at a conference to promote childhood obesity awareness programs. Says its a major mission objective. 2. Another manager wants to give away $10 gift cards to attract conference attendees to his booth. (Potential customers of the agency s working capital fund.) 3. At job fairs the HR dept. wants to give away ballpoint pens with the office address/usajobs.gov web site printed on them. (Attract job seekers at the fairs.) 58

59 Advertising, Promotion and Gifts Principle of Law: ( ) Appropriated funds are not available to advertise or promote agency programs or initiatives absent statutory authority. Appropriated funds are available to inform the public about agency programs and opportunities. 59

60 Advertising, Promotion & Gifts 1. The manager wants to give away T-shirts at a conference to promote childhood obesity awareness programs. Says its a major mission objective. OK If the agency has promotion authority. 2. Another manager wants to give away $10 gift cards to attract conference attendees to his booth. (Potential customers of the agency s working capital fund.) No 3. At job fairs the HR dept. wants to give away ballpoint pens with the office address/usajobs.gov web site printed on them. (Attract job seekers at the fairs.) OK Quiz 16 a. & c. Quiz 60

61 Miscellaneous Employee Related Expenses 61

62 MEMBERSHIPS IN PRIVATE ORGANIZATIONS 1. Upper management wants to approve an employee request that his/her membership in the National Association of Government Supervisors be paid by the GPC. 2. An employee needs public speaking training. The Toastmasters chapter can provide the accredited training. Tuition is $600. Members only. Membership is $ An employee in a remote area (a firefighter) must maintain physical fitness as a part of the job. Federal facilities not available. Facilities for others are available. Manager wants to reimburse for local gym membership fees - $30 per month. 4. An accounting department manager wants to be reimbursed for his/her AICPA license renewal. Two employees want to be reimbursed for costs to take the test and pay for their CPA licenses. Not a job requirement either instance. 62

63 MEMBERSHIPS IN PRIVATE ORGANIZATIONS Memberships and Fees Paid to Private Associations B , December 8, 2005 (1-83) Generally, 5 U.S.C prohibits buying a personal membership in a private society or association. An agency requested a decision from GAO regarding the legality of purchasing a membership in a private society or association. GAO concluded that several CG decisions have long permitted the payment of a membership fee when it is necessary to achieve a training objective (5 U.S.C. 4109) or when the membership is purchased in the name of the agency as a necessary expense of carrying out an agency mission or function (31 U.S.C. 1301(a)). In this instance the membership is in the name of the agency and therefore appropriated funds are available upon a determination of necessity. 63

64 PROFESSIONAL CERTIFICATION EXPENSES Payments for Professional Certification Expenses 5 U.S.C. 5757(a) Quiz 18 a., b. & c. Agencies may pay or reimburse employees for necessary expenses to attain and/or maintain professional certifications and licenses. 5 U.S.C. 5757(a) Laws now allow paying for: (1) Occupational licenses and permits. (2) Professional certifications and licenses. Quiz 64

65 Memberships in Private Organizations 1. Upper management wants to approve an employee request that his/her membership in the National Association of Government Supervisors be paid. No 2. An employee needs public speaking training. The Toastmasters chapter can provide the accredited training. Tuition is $600. Members only. Membership is $35. OK 3. An employee in a remote area (a firefighter) must maintain physical fitness as a part of the job. No federal facilities available. Manager wants to reimburse for local gym membership fees - $30 per month. OK 4. An accounting department manager wants to be reimbursed for his/her AICPA license renewal. Two employees want to be reimbursed for costs to take the test and pay for their CPA licenses. Not a job requirement either instance. OK.. agencies may pay for 65

66 Appropriations Availability - Purpose P.L (1999) (1-78) Professional Liability Insurance According to testimony from various parties before Congress, federal managers and certain others needed to be reimbursed for portions of their personal liability insurance premiums. This is due to the increasing frequency of law suits being brought against them because of actions they took, or failed to take, in the ordinary lawful conduct of their duties. In 1999, Congress created an entitlement for certain officials specifying that appropriations for salaries and expenses would be available to reimburse them for one-half of the paid annual premium for professional liability insurance (Errors and Omissions / Malpractice). The officials covered by the act are: Supervisors. Senior management officials (policy making functions). Law enforcement personnel. 66

67 Wearing Apparel ( ) WEARING APPAREL Employees are expected to report for work properly attired for their duties. Exceptions: Quiz 17 a. b. & d. 5 U.S.C Unusual apparel; necessary for safe accomplishment of mission; and engaged in hazardous duties. Uniforms 5 U.S.C (Day-to-day & situational) Quiz 10 a. & b. OSHA 29 U.S.C. 668 (1970). Other statutory authority. Quiz 67

68 AVAILABILITY AS TO PURPOSE Notable CG Decisions: B , Prohibited use of COAGS to acquire conference services and support, March 19, 1997 B , Prohibited purchases of disposable cups, plates, cutlery when potable water was unavailable, November 29, 2017 B , Prohibited purchases of disposable cups, plates, cutlery required by union labor arbitration, August 6, 2015 B , Prohibited purchase of accident insurance for traveling employees (NTSB), September 25, 2007 B , Prohibited payment for employee credit monitoring services, (CBP) October 10,

69 AVAILABILITY OF APPROPRIATIONS: TIME Chapter 5

70 Appropriations Availability - Time

71 Appropriations Availability - Time Concepts and types of Budget Authority (1-29) The Life of an Appropriation. Disposition of Appropriation Balances An appropriation goes through three distinct stages: CURRENT EXPIRED CLOSED 71

72 Availability of Appropriations: Time Before the Fiscal Years begins Continuing Appropriations Resolution (CRA). There are three major rules in a traditional CRA: (OMB Cir A-11, Sec. 123) Rate for Operations 131 days 35.89% % No New Starts Expiration Date Limited Funding February 8 72

73 Appropriations Availability - Time Bona Fide Needs Rule (1-33) Enacted in 1870: Quiz 19 a. The balance of a fixed term appropriation is available only for the payment of expenses properly incurred during the period of availability or to complete contracts properly made within that period. 31 U.S.C. 1502(a) Congress has the right to limit its appropriations to specific time periods as well as to particular objects, and when done so, its will express in the law must be implicitly followed. Opinion of the Attorney General, Quiz 73

74 Appropriations Availability - Time Bona Fide Needs Rule Terms (--) Full Funding A requirement is funded entirely at the time the obligation is created. Incremental Funding A requirement extending over two or more fiscal years which is obligated in stages, phases, milestones or separate fiscal years. Forward funding Using current year funds to obligate for goods or services that are not presently needed and will be delivered in a fiscal year. 74

75 Appropriations Availability - Time Obligating orders for Property. ( ) Procurement Lead Time Exception: An agency may not obligate funds when it is apparent from the outset that there will be no requirement until the following fiscal year. However, the timing of delivery, while obviously a relevant factor, is not conclusive. Need now but must wait for delivery: Order now; obligate now, receive in the future; pay upon receipt; charge back to prior year. 75

76 Appropriations Availability - Time Obligating orders for Property. ( ) Exceptions: Procurement Lead Time Exception: Similarly, an agency may contract in one fiscal year for delivery in a subsequent year if the material contracted for will not be obtainable on the open market at the time needed for use Need in the future but must order now to have in the future: Order now, obligate now, receive in the future; pay upon receipt; charge back to prior year. 76

77 Appropriations Availability - Time Obligating orders for Services. ( ) Principle of Appropriations Law: Services are obligated using appropriations in effect at the time the services are performed unless the services are non-severable; in which case the services are entirely obligated at the time the contract is effective. What is Severability? 77

78 Appropriations Availability - Time Obligating orders for Services Severability Relates to the certainty of the government s liability under the contract. 78

79 Appropriations Availability - Time Obligating orders for Services. ( ) Quiz 20 Non-severable (entire) services. a. & d. Services which cannot logically be separated by performance or fiscal periods; a single undertaking. Logical, discernible starting point. Successive steps, stages, phases, milestones, each building upon each other. Defined deliverable. Clear conclusion. Not limited to 12-month fiscal year performance. Such as repairing a piece of equipment; conducting a study; working on a project. Must be funded entirely upon award. Incremental funding requires statutory authority. Quiz 79

80 Appropriations Availability - Time Bona fide Needs Rule. ( ) Severable services. Services which can be logically separated by performance between fiscal periods or other subjective criteria. Typically, repetitive, recurring, routine etc. (Such as maintaining office equipment, temporary contract staff support labor; custodial services, etc.) 80

81 Appropriations Availability - Time Obligating orders for Services ( ) Severable service contracts A severable services contract may cross fiscal year lines. When it does: And the period of performance is for 12 months or less; An agency may obligate the entire amount of the performance period using the FY funds at the time the contract is effective. 10 U.S.C. 2410a (DoD) or 41 U.S.C (Civ.) Quiz 21 b. Quiz 22 a. & b. Quiz 81

82 Appropriations Availability - Time Noteworthy CG Decisions: B , Severable services authority using non-economy Act Interagency Agreements, January 7, 2015 (2-193) B , Obligating longevity bonuses, July 16, 2014 (Previously discussed) B , Obligating training a contract in one fiscal year for training conducted in a subsequent year (NLRB), July 13, 2011 B , Obligating Cost Reimbursement Multiyear Contracts, August 16, 2013 (2-172) B , Inapplicability of severable services contracting authority in a multi-year or no-year appropriation, April 21, 2009 (2-181) B , Funding for subscription contracts, September 17,

83 Appropriations Availability - Time Replacement contracts using prior year funds: ( ) Default terminations: Use prior year funds. Convenience Terminations: Use current year funds. Convenience Terminations under Special Conditions: Use prior year funds if termination was: Erroneous award; and/or Non-discretionary, No fault of the government; and No fault of the part of the contractor. 83

84 Appropriations Availability - Time Contract modifications requiring upward adjustments in the price. ( ) Non-severable services or supplies and materials. If a modification exceeds the general scope of a contract for property, quantities of materials or nonseverable services, the modification amounts to a new obligation and is chargeable to the fiscal year in which the modification is effective. 84

85 Appropriations Availability - Time Contract modifications requiring upward adjustments in the price: ( ) Severable services. In the case of a contract for severable services, a modification for increased services must be charged to the fiscal year or years in which the services are performed. Old law 85

86 Appropriations Availability - Time Contract modifications requiring upward adjustments in the price: Severable services. (1-45) Footnote 20 Presumably, if an agency: obligates the full amount of a severable services contract which crosses fiscal year lines to the first year of the contract (or period of performance); and, uses an annual appropriation under 41 U.S.C 3902 (or 10 U.S.C 2410a for DoD); then, a modification calling for increased services under that contract should be charged to that same appropriation. New law 86

87 AVAILABILITY OF APPROPRIATIONS: AMOUNT Chapter

88 The Act prohibits: (1-15) CHAPTER 6 AMOUNT LIMITS Antideficiency Act Violation Overobligating an Appropriation or Fund. 31 U.S.C. 1341(a)(1)A Obligating in advance of an Appropriation. 31 U.S.C. 1341(a)(1)B Overobligating an Apportionment or sub-apportionment. 31 U.S.C. 1517(a) Accepting voluntary services; except during an extreme emergency threatening imminent danger to human life or property. 31 U.S.C

89 CHAPTER 6 AMOUNT LIMITS Antideficiency Act Violation The Act also generally prohibits: ( ) Transfers between Appropriations without statutory Authority. 31 U.S.C. 1502(a) (1-6) Previously discussed. Obligations for purposes not intended for the appropriation. 31 U.S.C. 1301(a) Previously discussed (1-16) Purpose violations may be cured. If the proper appropriation has remaining balances to accept the transfer from the improper account there is no ADA violation. Normally requires higher HQ approval. (1-15) Augmenting an appropriation with money or appropriations from outside sources. 31 U.S.C. 3302(b). (1-16) 89

90 CHAPTER 6 AMOUNT LIMITS Ratification of Unauthorized Commitments 90

91 CHAPTER 6 AMOUNT LIMITS Unauthorized Commitments The Act also is the basis for prohibiting Unauthorized Commitments FAR - 48 C.F.R : An agreement entered into by an official who lacked the authority to bind the USA to pay for goods or services received. May be ratified if all 7 criteria are met. Ratifying authority is the head of the contracting activity (agency or bureau head). May be delegated no lower than to the head of the contracting office. Quiz 23 a. & b. Quiz 91

92 CHAPTER 6 AMOUNT LIMITS If a violation is committed. Who is held accountable? 92

93 Accountable Officials If a higher level official directed, knew of or was otherwise in a position to prevent the illegal actions, can the official avoid ADA consequences? ( ) 31 U.S.C requires agencies have processes that: Establish controls to prevent ADA violations. Fix responsibility for offenses. Hopkins and Nutt study on the ADA. 93

94 CHAPTER 6 AMOUNT LIMITS Who is the Accountable Official if an ADA violation occurs? Example: Suppose a conference was conducted last year. The fund certification by a budget analyst (fund certifier) was for $200,000. Who is the accountable official if: It is later discovered that only $167,000 was available. The budget analyst questioned certain items in the P.R. (T-shirts for attendees, refreshments, mementos, etc.) The Budget Branch Chief ordered that funds be certified because of time sensitivities. The contracting officer awarded the contract for $220,000 without obtaining a new fund certification; questionable items were purchased.. 94

95 CHAPTER 6 AMOUNT LIMITS Accountable Officials: Responsibility Determining which official is Responsible for a violation: ( ) Look first to the party who created the obligation. The appointed fund certifying officer is primarily accountable. Then others may be at fault: Approving officer; contracting officer, department managers, executives. Quiz 24 a. b. & d. The individual who will be held responsible for a violation of the Act, specifically or generally, will be the highest ranking official who: Knew, or Should have known that the actions being taken were Improper or questionable. Quiz 25 d. Quiz 95

96 CHAPTER 6 AMOUNT LIMITS Who is the Accountable Official if an ADA violation occurs? Example: The Budget Analyst. Assume a conference was conducted last year. The fund certification by a budget analyst (fund certifier) was for $200,000. Who is the accountable official if: It is later discovered that only $167,000 was available. The contracting officer awarded the contract for $220,000 without obtaining a new fund certification. The budget analyst questioned certain items in the P.R. (T-shirts for attendees, refreshments, mementos etc.). The Branch Chief or Contracting Officer The Budget Branch Chief ordered that funds be certified because of time sensitivities and those questionable items were purchased. 96

97 Antideficiency Act Penalties What are the penalties for violating the Antideficiency Act? (1-19) Administrative: Reprimand, suspension, reassignment to other duties, reduction in grade, etc. Penal: Up to: $5,000 fine; and/or, 2 years in jail. No one ever prosecuted / convicted. W h y? The matter of the Baltimore Corps of Engineers. Tab 3, page

98 CERTIFICATION LIABILITIES AND RELIEF Chapter

99 CHAPTER 9 LIABILITIES FOR PAYMENTS Determining which official is Liable: ( ) 31 U.S.C. 3325, 3528(a), & 3529 provide that the official who certified the payment voucher to a disbursing officer: Must be appointed in writing. (1-20) Is liable the moment an illegal, improper or incorrect payment is made. (1-20) Quiz 26 d. Is liable regardless of lack of fault or negligence on the official s part. (1-20) Has a right to appeal and/or request relief from designated relief approval authorities - up to GAO. May also be subject to, when circumstances warrant, administrative discipline. Quiz 99

100 Payment Certification Many officials make certifications. (1-22) But, this does not make them payment Certifying Officers. Certifying Officers make payment certifications to a disbursing official and, Must be so designated in writing. 31 U.S.C. 3325(a)(1). 100

101 Consider this situation: Payment Certification A short-staffed, overworked COR neglects to properly monitor a contractor s daily performance. Was reported to higher HQ; Investigation reveals improper overpayments to contractor. Attempts to recover from contractor fail. Who is the accountable official? 101

102 Payment Certification Vendor $ Electronic Funds Transfer 6 Disbursing Office 1 Invoice 2 Contracting Officer Representative (COR) Who is the Accountable Official? 5 3a 10 U.S.C. 2773a (For DoD) 3 31 U.S.C. 3528(a) 4 Approving Official Finance Center/Accounts Payable 102

103 Payment Certification Duties and Liabilities (1-23) A Certifying Officer must focus on three requirements of law (31 U.S.C 3528(a)). Facts Math Legality Certifying Officers are liable the moment an illegal, improper or incorrect payment is made. 103

104 CHAPTER 9 LIABILITIES FOR PAYMENTS Criteria for Relief from Liability: ( ) 31 U.S.C. 3328(b) establishes criteria for the relief of officials from liability for an erroneous payment (illegal, incorrect or improper). A payment certifier may be relieved by a delegated official of personal financial liability for a loss if: 1. The official relied on official records when making the certification; and, by reasonable diligence and inquiries the official could not determine the actual facts regarding the payment; or, 2. The official acted in good faith; the payment was not specifically prohibited by law; and, the government received reasonable value for the payment. 104

105 CHAPTER 9 LIABILITIES FOR PAYMENTS Noteworthy CG Decisions: B , DoD lacks authority to establish financial liability contrary to 31 U.S.C. 3528, May 4, 2000 (Later DoD was given authority in 10 U.S.C. 2773a.) B , Relief from accountability of certifying officer (VA), January 15,

106 GRANTS AND COOPERATIVE AGREEMENTS Chapter

107 CHAPTER 10 GRANTS AND COOPERATIVE AGREEMENTS Grants and COAGs: ( ) Types of Grants: Formula Discretionary. Administrative laws governing agency use of appropriations for internal operations generally don t apply. The Grant & Cooperative Agreement Act, federal regulations and the grant instrument itself govern the allowable costs which may be incurred by the grantee. Thus, funds in the hands of the grantee largely lose their federal identity. A grant or COAG is considered analogous to a nonseverable service contract. 107

108 CHAPTER 10 GRANTS AND COOPERATIVE AGREEMENTS Grants and COAGs: ( ) Are not contracts. Quiz 27 a. b. c. & d. Quiz 28 a. & c. FAR rules don t apply i.e. competitive sourcing, best value determinations, etc. A contract acquires goods or services to support internal agency operations. A grant or COAG transfers something of value to an outside party in furtherance of a federal objective. Not all federal agencies have grant making authority. Quiz 108

109 CHAPTER 10 GRANTS AND COOPERATIVE AGREEMENTS Cooperative Agreements: ( ) Quiz 29 a., b. & c. A very popular alternative to contracting procedures. Cannot, however, be used to acquire goods or services for the USA. Contemplates substantial USA involvement in executing the COAG unlike a grant. Grant Management Officers play an important role in COAG awards. Quiz 109

110 CHAPTER 10 GRANTS AND COOPERATIVE AGREEMENTS Significant Changes: Migration of legacy OMB Circulars to Title 2, C.F.R. 110

111 This concludes the Federal Appropriations Law Update / Refresher Course Final details: Evaluations ecompletion Certificates - Trash, chairs.. 111

112 Disclaimer Federal Appropriations Law Course This presentation cannot substitute for supervisory and legal assistance regarding appropriations law matters dealing with the facts and circumstances of a particular issue and should not be used as the sole basis for decision-making. When in doubt concerning appropriations law matters, you should refer the issue through your organizational management officials up to the agency s Office of General Counsel. 112