Defense Acquisition University

CON 290

SA 1-1 GCTA Team 1:

1)What is an authorization?

2. What is an “appropriation” and how does it differ from an authorization?

3. What is an obligation?

4. What is an expenditure?

5. What is a “commitment”?

6. Given the definitions of obligation, expenditure and commitment, in what order do they occur in the procurement cycle? (No citation or source required.)

7. Using funds for other than an appropriation’s intended purpose is a violation of the Purpose Statute. Therefore, an expenditure must either be (1) specifically identified in the appropriation or (2) reasonably necessary to, or will contribute materially toward, accomplishing the purpose of the appropriation. (GAO’s “Necessary Expense Rule”).

How is the Necessary Expense Rule typically applied to each of the following items? First, discuss whether the item is generally considered a “necessary expense”. Then identify exceptions, if any, to the general rule.

8. Appropriations are categorized by purpose. The major DoD appropriation categories are: Operations & Maintenance (O&M)

Military Personnel (MILPERS)

Research, Development, Test & Evaluation (RDT&E) Procurement

Military Construction (MILCON)

All DoD costs are classified as either an expense or an investment. Expenses are costs of resources consumed in operating and maintaining the Department of Defense. Investments are costs to acquire capital assets such as real property and equipment.

For each of the major appropriation categories, are the costs budgeted to that category considered an expense or an investment?

9. May an agency purchase equipment using O&M funds without violating the Purpose Statute? Explain.

Fiscal Law Deskbook, 2014, Chapter 2

10. Under the Time Rule, appropriated funds may only be obligated during their “period of availability.” What happens to the funds after the period expires? For each of the major DoD appropriations categories, how long is the period of availability?

11. Under the Bona Fide Needs Rule, agencies may obligate funds only for requirements that represent bona fide needs of the appropriation’s period of availability. How is the rule generally applied to supply contracts?

D. Supplies. 1. Generally, the bona fide need for a supply is determined by when the government actually requires (will be able to use or consume to fulfill a requirement) the supplies being acquired. Accordingly, agencies generally must obligate funds from the fiscal year in which the supplies will be used. Betty F. Leatherman, Dep't of Commerce, B-156161, 44 Comp. Gen. 695 (1965); To Administrator, Small Business Admin., B-155876, 44 Comp. Gen. 399 (1965); Chairman, United States Atomic Energy Commission, B-130815, 37 Comp. Gen. 155 (1957). 2. In most cases, the need to use supplies, and the obligation of funds for the acquisition to meet the need, take place during the same FY. In such cases, the bona fide needs rule is satisfied as in the example below: Normal Single FY Supply Contracts 1 Oct Obligation 30 Sept Delivery Need Order

3. Supply needs of a future fiscal year are the bona fide need of the subsequent fiscal year, unless an exception applies. As demonstrated in the graphic above, this requirement does not usually create problems for agencies using annual funds. However, towards the end of the fiscal year, adhering to the Bona Fide Needs Rule becomes more difficult. Orders of supplies often cannot be delivered until the next FY, cannot be produced in time, or perhaps won’t be used entirely during FY1. Two GAO recognized exceptions are the lead-time exception (for both delivery and production) and the stock-level exception. DOD FMR, Vol. 3, Ch.8, para. 080303. 3- 10 TJAGLCS-ADK 2013 Fiscal

12. Under what circumstances may an agency use current year funds to purchase supplies that are not a bona fide need of the current fiscal year?

13. Do the exceptions from Question 12 apply to commercially available items?

14. The Antideficiency Act (ADA) covers both amount and time issues. Under the ADA, an agency may not obligate or expend in excess or in advance of available appropriations. What is the statutory criminal penalty for violating the ADA?

15. Agencies must report ADA violations to the President and Congress, with copy to the GAO. The GAO website compiles and publishes these reports annually. Locate the most recent year’s reports and identify three ADA violations. For each, identify the agency and describe the type of violation and any corrective action taken.

16. Under the Miscellaneous Receipts Statute, an agency may not keep money it receives from sources other than congressional appropriations but must deposit it in the U.S. Treasury.

Keeping such funds would improperly “augment” the amount of the agency’s appropriated funds. Identify 2 exceptions to the Miscellaneous Receipts Statute.