HEALTH AFFAIRS

1. TRICARE Management Activity HEALTH AFFAIRS Bona Fide Need And the Availability of Appropriations as to Time

2. Availability of Appropriations • Purpose • Time • Amount This presentation deals with the aspect of availability as to Time with special emphasis on the Bona Fide Need Rule. PowerPoint Presentation Text Reference Discussion Examples

3. Background • Congressional Control of Appropriations • Money must be spent as Congress directs • Time limits are a primary means of Congressional control • Types of Appropriations • Annual • Multiple year • No year • If an agency fails to obligate its annual funds by the end of the fiscal year for which they were appropriated, they cease to be available for new obligations

4. Penalties • Consequences of Exceeding an Appropriation’s Period of Availability • Antideficiency Act (31 USC sections 1341, 1349, 1350) • Up to $5,000 fine, imprisonment for up to 2 years, or both • Suspension from duty without pay or removal from office • Named in ADA Violation Report to President and Congress • Other disciplinary action per DoD Directive 7200.1 • The Antideficiency Act Prohibits: • Making or authorizing an expenditure or obligation in excess of the amount available in an appropriation or in excess of formal subdivisions of funds • Involve the government in a contract or obligation for the payment of money before an appropriation is made

5. Appropriations Supporting the MHS • The Defense Health Program has a single appropriation account 97_0130, with O&M, Procurement and RDT&E programs defined by Limit Code • Operations & Maintenance (O&M) .185_, .186_, or .188_ • Procurement .187_ • Research, Development, Test and Evaluation (RDT&E) .183_ Note: For FY 2007, the DHP no longer falls under the Defense Appropriations Act, but instead has been made part of the Military Quality of Life/Veterans Affairs Appropriation.

6. Appropriations Supporting the MHS

7. Before Appropriations Take Effect • Subject to Availability of Funds (STAF) • Recurring O&M services funded on an annual basis • Special projects requiring advance notice to contractor • May have an effective date after 1 October • At-Risk performance • Interim Legislation (Continuing Resolution) • Provides interim budget authority • Limited Government operations during CRA • No new starts • Actions during funding gaps (absence of a CRA) • Exempt and non-exempt activities • Orderly shut-down of non-exempt activities

8. Concept of Bona Fide Need A fiscal year appropriation may be obligated only to meet a legitimate, or bona fide, need arising in, or in some cases arising prior to but continuing to exist in, the fiscal year for which the appropriation was made. • Bona Fide Need deals with timing, not purpose • Continuing Need • Statutory Basis • 31 USC 1502(a) – Bona Fide Need Statute: The balance of a fixed term appropriation “is available only for payment of expenses properly incurred during the period of availability or to complete contracts properly made within that period…" • 31 USC 1341(a) – Antideficiency Act

9. Determining Bona Fide Need • Applies to Multiple Year as well as Annual Appropriations • Simplest Form – All actions occur in the same FY • Applies even if funds are not to be disbursed and the exact amount owed cannot be determined until the subsequent FY • Depends Largely on the Facts and Circumstances of the Particular Case, Such As: • Nature of the obligation and transaction • Supply, service, training • Specified delivery date • Normal rate of consumption and inventory levels • Degree of Government control over start of work • When Government will make facilities, sites, or tools available • Accepted planning factors • Delivery or production lead time

10. Bona Fide NeedServices • Depends Upon Whether the Services Are: • “Severable” – continuing or recurring in nature • “Nonseverable” – represent a single undertaking • Generally service contracts which are "severable" may not cross fiscal year lines unless authorized by statute • DoD has been granted a statutory exception • DOD agencies may obligate funds current at the time of contract award to finance any severable service contract with a period of performance that does not exceed one year (10 U.S.C. § 2410a.) • Training that begins on or after 1 Oct may be a bona fide need of the prior FY if: • Scheduling is beyond the control of the agency • Time between contract award and performance is not excessive

11. Bona Fide NeedReplacement Contracts/Contract MODs • Funds May Be Obligated After Their Period of Availability for: • Bid Protests • Available for 100 days after final ruling • Terminations for Default • Originally obligated funds remain available for a re-procurement • Agency must act without delay to re-procure the same item or service • Terminations for Convenience • Pursuant to a court order, or • Contracting Officer determines original award was erroneous • Contract Modifications • Attributable to “antecedent liability” • Does not exceed the scope of the original contract

12. Bona Fide Need Year-End Spending General Rule – An appropriation for a given fiscal year is not available for the needs of a future fiscal year • An appropriation is just as much available to supply the needs of the last day of a particular year as any other day or time in the year however… • Where an obligation is made toward the end of a fiscal year and it is clear from the facts and circumstances that the need relates to the following fiscal year, the bona fide needs rule has been violated The Greater the Number of Actions Occurring in Subsequent Fiscal Years, the More Vulnerable the Transaction to a Bona Fide Need Violation MIPR | Contract – MOD – Performance – Payment Contract | MOD – Performance – Payment Contract - Performance | Payment RISK(Current) FY (Subsequent)

13. Bona Fide NeedIntragovernmental Orders • Economy Act • Authority Has Inherent Safeguards • Must award contract by end of period of availability • Must return excess funds at expiration • Other Statutory Authority • Franchise Funds & GSA IT Fund • Need not automatically return funds when they expire • Do not have to award contract by the end of the fiscal year • May retain funds and apply to contracts when they are awarded • Bona Fide Need is Ultimately a Requiring Activity Responsibility