The Antideficiency Act
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The Antideficiency Act. 30 SW/JAQ November 10, 2011 Courtesy of ESC/JA. Overview.

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The Antideficiency Act

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The antideficiency act

The Antideficiency Act

30 SW/JAQ

November 10, 2011

Courtesy of ESC/JA


Overview

Overview

  • “The Antideficiency Act evolved over a period of time, in response to various abuses. As late as the post-Civil War period, it was not uncommon for agencies to incur obligations in excess of or in advance of appropriations. Some agencies would spend their entire appropriations during the first few months of the fiscal year, continue to incur obligations, and then return to Congress for appropriations to fund these ‘coercive deficiencies.’”

    • B-300480.2, June 6, 2003.


Overview1

Overview

  • “The congressional response to abuses of this nature was a series of enactments collectively known as the Antideficiency Act, which prescribes a set of funds control and financial management procedures regarding the obligation and expenditure of agency funds.”

    • B-300480.2, June 6, 2003.


Overview2

Overview

  • In general, the Antideficiency Act prohibits obligations and expenditures in advance of or in excess of an appropriation.


Overview3

Overview

  • Fiscal Law’s Three Pillars

    • Purpose

    • Time

    • Amount

  • Exceptions

  • Sanctions


Purpose

Purpose

  • “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law….” Article I, Section 9, Clause 7

    • Only Congress can determine the purposes for which public funds may be disbursed.


Purpose1

Purpose

  • “Appropriations shall be applied only to the objects for which the appropriations were made except as otherwise provided by law.” 31 U.S.C. § 1301(a)

  • “It is difficult to see how a legislative prohibition could be expressed in stronger terms. The law is plain and any disbursing officer disregards it at his peril.” 4 Comp. Dec. 569, 570 (1898)


Purpose2

Purpose

  • The “Purpose Statute” was enacted in the Act of March 3, 1809 because of perceived abuses by the military departments.

  • Appropriations for DoD are differentiated by Service (Air Force, Army, etc.) and Component (Active, Reserve, etc.) and Purpose (O&M, Personnel, etc.) – Nearly 100 separate appropriations in all!


Purpose3

Purpose

  • Major Appropriations

    • Personnel – pay and allowances, PCS, etc.

    • O&M – operations and maintenance of installations, day-to-day expenses of training exercises, deployments, etc.

    • Procurement – production and modification of missiles, aircraft, etc.

    • RDT&E – basic and applied scientific research, etc.

    • MILCON – military construction


Purpose4

Purpose

  • Three-part test

    • Particular statutory purpose or “Necessary Expense”

      • Congress does not specify every item of expenditure in an Appropriations Act.

      • Agencies have “reasonable discretion”

      • Expenditures must be “reasonably necessary” or “contribute materially”

    • Not prohibited by law

    • Not otherwise provided for


Purpose5

Purpose

  • Operation and Maintenance, Air Force [3400]“For expenses, not otherwise provided for, necessary for the operation and maintenance of the Air Force, as authorized by law; and not to exceed $7,699,000 can be used for emergencies and extraordinary expenses, to be expended on the approval or authority of the Secretary of the Air Force, and payments may be made on his certificate of necessity for confidential military purposes, $33,477,116,000.”

    • Pub. L. No. 111-118, Title II


Purpose6

Purpose

  • Operation and Maintenance, Air Force Reserve

    “For expenses, not otherwise provided for, necessary for the operation and maintenance, including training, organization, and administration, of the Air Force Reserve; repair of facilities and equipment; hire of passenger motor vehicles; travel and transportation; care of the dead; recruiting; procurement of services, supplies, and equipment; and communications, $3,131,200,000.”

    • Pub. L. No. 111-118, Title II


Purpose7

Purpose

  • Aircraft Procurement, Air Force [3010]

    “For construction, procurement, and modification of aircraft and equipment, including armor and armament, specialized ground handling equipment, and training devices, spare parts, and accessories therefor; specialized equipment; expansion of public and private plants, Government-owned equipment and installation thereof in such plants, erection of structures, and acquisition of land, for the foregoing purposes, and such lands and interests therein, may be acquired, and construction prosecuted thereon prior to approval of title; reserve plant and Government and contractor-owned equipment layaway; and other expenses necessary for the foregoing purposes including rents and transportation of things, $13,295,474,000, to remain available for obligation until September 30, 2012; Provided, That none of the funds provided in this Act for modification of C–17 aircraft may be obligated until all C–17 contracts funded with prior year ‘‘Aircraft Procurement, Air Force’’ appropriated funds are definitized unless the Secretary of the Air Force certifies in writing to the congressional defense committees that each such obligation is necessary to meet the needs of a warfighting requirement or prevents increased costs to the taxpayer and provides the reasons for failing to definitize the prior year contracts along with the prospective contract definitization schedule.”

    • Pub. L. No. 111-118, Title III


Purpose8

Purpose

  • Missile Procurement, Air Force [3020]

    “For construction, procurement, and modification of missiles, spacecraft, rockets, and related equipment, including spare parts and accessories therefor, ground handling equipment, and training devices; expansion of public and private plants, Government-owned equipment and installation thereof in such plants, erection of structures, and acquisition of land, for the foregoing purposes, and such lands and interests therein, may be acquired, and construction prosecuted thereon prior to approval of title; reserve plant and Government and contractor-owned equipment layaway; and other expenses necessary for the foregoing purposes including rents and transportation of things, $5,995,544,000, to remain available for obligation until September 30, 2012.”

    • Pub. L. No. 111-118, Title III


Purpose9

Purpose

  • Other Procurement, Air Force [3080]

    “For procurement and modification of equipment (including ground guidance and electronic control equipment, and ground electronic and communication equipment), and supplies, materials, and spare parts therefor, not otherwise provided for; the purchase of passenger motor vehicles for replacement only, and the purchase of two vehicles required for physical security of personnel, notwithstanding price limitations applicable to passenger vehicles but not to exceed $250,000 per vehicle; lease of passenger motor vehicles; and expansion of public and private plants, Government-owned equipment and installation thereof in such plants, erection of structures, and acquisition of land, for the foregoing purposes, and such lands and interests therein, may be acquired, and construction prosecuted thereon, prior to approval of title; reserve plant and Government and contractor-owned equipment layaway, $17,138,239,000, to remain available for obligation until September 30, 2012.”

    • Pub. L. No. 111-118, Title III


Purpose10

Purpose

  • Research, Development, Test and Evaluation, Air Force [3600]

    “For expenses necessary for basic and applied scientific research, development, test and evaluation, including maintenance, rehabilitation, lease, and operation of facilities and equipment, $28,121,985,000, to remain available for obligation until September 30, 2011.”

    • Pub. L. No. 111-118, Title IV


Purpose11

Purpose

  • Sec. 8001. “No part of any appropriation contained in this Act shall be used for publicity or propaganda purposes not authorized by the Congress.”

  • Sec. 8019. “None of the funds available to the Department of Defense may be used to demilitarize or dispose of M–1 carbines, M–1 Garand rifles, M–14 rifles, .22 caliber rifles, .30 caliber rifles, or M–1911 pistols, or to demilitarize or destroy small arms ammunition or ammunition components that are not otherwise prohibited from commercial sale under Federal law, unless the small arms ammunition or ammunition components are certified by the Secretary of the Army or designee as unserviceable or unsafe for further use.”

  • Sec. 8020. “No more than $500,000 of the funds appropriated or made available in this Act shall be used during a single fiscal year for any single relocation of an organization, unit, activity or function of the Department of Defense into or within the National Capital Region: Provided, That the Secretary of Defense may waive this restriction on a case-by-case basis by certifying in writing to the congressional defense committees that such a relocation is required in the best interest of the Government.”

    • Pub. L. No. 111-118, Title VIII


Purpose12

Purpose

  • Generally, it is impermissible to augment an appropriation

    • By paying out of the wrong appropriation

    • Miscellaneous Receipts violation

      • “Except as provided in section 3718(b) [ ] of this title, an official or agent of the Government receiving money for the Government from any source shall deposit the money in the Treasury as soon as practicable without deduction for any charge or claim.” 31 U.S.C. § 3302(b)

    • Accepting voluntary services without statutory authority

      • Obtain agreement (no cost) in writing – in advance!


Purpose13

Purpose

  • Investment/Expense Threshold

  • Expenses are costs of resources consumed in operating and maintaining DoD

    • Normally financed with O&M funds

  • Investments are acquisitions of DoD capital assets

    • Normally financed with Procurement funds

      • System cost >= $250,000 (Current threshold)

      • Computer buys need careful scrutiny


Purpose14

Purpose

  • Construction vs. Repair

    • Repair = O&M funds

    • Minor Construction

      • <= $750,000 O&M (or <= $1.5M if to correct a deficiency that threatens life, health or safety) per 10 U.S.C. 2805(c).

    • Unspecified Minor Military Construction

      • <= $2.0M (or <= $3M if to correct a deficiency which threatens life, health or safety) per 10 U.S.C. 2805(a)

      • Secretarial approval

      • Congressional notification (wait 21 days (14 days if the notice is submitted electronically))

    • Specified Military Construction

    • No Project Splitting!


Purpose15

Purpose

  • Violation of Purpose Statute may be ADA violation

  • May avoid ADA violation if:

    • Proper funds were available at time of obligation

    • Proper funds were continuously available until the correction is made

    • Air Force may not require continuous availability, but no guarantees


The antideficiency act

Time

  • Most appropriations have a period of availability

    • Specified time available for obligation

      • May not obligate before appropriation and receipt

      • Must be obligated before they expire

      • Exceptions are rare (statutory)

    • Once obligated, disbursement may be made before or after expired, but before closed

    • Appropriations close five years after they expire

      • There is no longer an M account


The antideficiency act

Time

  • “Obligation means a legally binding agreement that will result in outlays, immediately or in the future. When you place an order, sign a contract, award a grant, purchase a service, or take other actions that require the Government to make payments to the public or from one Government account to another, you incur an obligation.”

    • OMB Circular A-11 (2010), at ¶ 20.5(a).


The antideficiency act

Time

  • Congress determines the period of availability for each appropriation

  • Generally

    • O&M – 1 year

    • Personnel – 1 year

    • RDT&E – 2 years

    • Procurement – 3 years

    • MILCON – 5 years


The antideficiency act

Time

  • Appropriation is available for obligation only for expenses which are a Bona Fide Need of the period of availability for obligation. 31 U.S.C. § 1502(a)

    • Supplies – FY of use

      • Lead-Time exception

      • Stock level exception

        • FY end stockpiling of supplies is prohibited


The antideficiency act

Time

  • Services – FY of performance

    • Nonseverable services

    • Statutory exception 10 U.S.C. § 2410a for severable services which do not exceed one year

      • Allows us to break the fiscal year cycle


The antideficiency act

Time

  • Construction – Need must arise while funds are available for obligation

    • Normal weather

    • Required delivery date

    • When Gov’t intends to make site available to the contractor

    • Degree of control the Gov’t has over when the contractor can begin work


Amount

Amount

  • May not make or authorize an obligation or expenditure that exceeds an amount available in an appropriation or fund.

    • 31 U.S.C. § 1341(a)(1)(A)

  • Includes expired appropriations

  • Statutory restriction or prohibition may make amount available ZERO!


Amount1

Amount

  • Sec. 8038(a). “None of the funds appropriated in this Act may be expended by an entity of the Department of Defense unless the entity, in expending the funds, complies with the Buy American Act. For purposes of this subsection, the term ‘‘Buy American Act’’ means title III of the Act entitled ‘‘An Act making appropriations for the Treasury and Post Office Departments for the fiscal year ending June 30, 1934, and for other purposes’’, approved March 3, 1933 (41 U.S.C. 10a et seq.).”

    • Pub. L. No. 111-118, Title VIII


Amount2

Amount

  • May not make or authorize an obligation or expenditure that exceeds an apportionment.

    • 31 U.S.C. § 1517(a)(1)

  • An apportionment is a distribution by OMB of amounts available for specified time periods, activities, projects or objects.

  • This statute does not prohibit obligating in advance of an apportionment. (But, do not obligate in advance of the appropriation without authority….)


Amount3

Amount

  • May not make or authorize an obligation or expenditure that exceeds a formal subdivision established by regulations.

    • 31 U.S.C. § 1517(a)(2)

  • Allocations and allotments are formal subdivisions.

  • Allowances are not formal subdivisions.


Amount4

Amount

  • Open-ended indemnification provisions violate 31 U.S.C. § 1341.

    • There are exceptions to this rule – but they are statutory!

  • A judgment by a court or board of contract appeals in excess of an appropriation or subdivision of funds is not a violation.

  • Penalties for failure to exercise an option may be violations.


Exceptions

Exceptions

  • Congress may authorize a contract in advance or in excess of an appropriation

    • Ex: 41 U.S.C. § 11 permits DoD to contract for clothing, subsistence, etc. for the current fiscal year

    • That is contract authority, not disbursement authority


Exceptions1

Exceptions

  • Contracts conditioned on the availability of funds

    • Solicitation and contract include the clause FAR 52.232-18, Availability of Funds


Sanctions

Sanctions

  • Disciplinary Actions

    • Military Members

      • Administrative Counseling  Court-Martial

    • Federal Employees

      • Oral Admonishment  Removal (+ Prosecution)

    • “The fact that a violation was not willfully and knowingly committed does not, by itself, justify the absence of disciplinary actions.” AFI 65-608, ¶ 2.11.1.


Sanctions1

Sanctions

  • Class E felony (knowing/willful)

    • $5,000 fine, confinement of up to 2 years, or both

      • 31 U.S.C. §§ 1350, 1519

    • If you suspect a potential ADA violation, you must report it to the Comptroller within 10 days. Knowing and willful concealment of a violation is a crime!

      • Reporting procedures may be found in AFI 65-608, ¶ 3.3.


Sanctions2

Sanctions

  • SecDef must report violations to the President (through OMB) and to Congress

  • This is not your 15 minutes of fame!


Summary

Summary

  • Fiscal Law’s Three Pillars

    • Purpose

    • Time

    • Amount

  • Exceptions

  • Sanctions


Summary1

Summary

Questions?


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