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1 NCMA BOSTON MARCH WORKSHOP March 16, 2011 Presented by: Maj Frank Hollifield, ESC/JAS Mr. Peter Camp, ESC/JAS AWARD FISCAL LAW – POTENTIALLY YOUR WORSE.

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Presentation on theme: "1 NCMA BOSTON MARCH WORKSHOP March 16, 2011 Presented by: Maj Frank Hollifield, ESC/JAS Mr. Peter Camp, ESC/JAS AWARD FISCAL LAW – POTENTIALLY YOUR WORSE."— Presentation transcript:

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2 1 NCMA BOSTON MARCH WORKSHOP March 16, 2011 Presented by: Maj Frank Hollifield, ESC/JAS Mr. Peter Camp, ESC/JAS AWARD FISCAL LAW – POTENTIALLY YOUR WORSE NIGHTMARE

3 DISCLAIMER THE VIEWS EXPRESSED IN THIS PRESENTATION ARE THOSE OF THE PRESENTERS AND MAY NOT REFLECT THE OFFICIAL POLICY OR POSITION OF THE DEPARTMENT OF DEFENSE OR THE UNITED STATES AIR FORCE 2

4 AGENDA WHY DOES IT MATTER TO YOU? WHAT’S THE LAW? – AUTHORIZATIONS VS. APPROPRIATIONS WHAT ABOUT THE COLORS OF MONEY? – THE BASIC RULES THE PITFALLS OF FISCAL LAW – PURPOSE, TIME, AND AMOUNT (PTA) – THE ANTI-DEFICIENCY ACT (ADA) SUMMARY BACK-UP CHARTS 3

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6 5 Anti-Deficiency Act (ADA) Violations are reported to the President. Responsible parties are identified by name. This is enough to ruin anyone’s day.

7 DoD Inspector General Reports on Potential Antideficiency Act Violations Resulting from DoD Purchases Made Through Non- DoD Agencies (FY 2004-09) Over the last 6 years, the DoD Office of Inspector General issued 16 reports addressing FY 2004 through FY 2009 DoD purchases through non-DoD agencies. These reports address whether the funding policies, procedures, and internal controls of each activity selected for review were in place, compliant, and properly administered. Overall, the DoD IG reviewed seven non-DoD agencies purchasing goods and services on behalf of DoD. The non-DoD agencies processed approximately 98,750 purchases from FY 2004 through FY 2007, valued at approximately $15.6 billion. At these agencies, the DoD IG reviewed 869 purchases valued at approximately $1.9 billion. (DoD IG Memorandum for Under Secretaries of the Navy, Army, and Air Force, September 28, 2010; DoD IG Report No D-2008-082, April 25, 2008, Executive Summary, Background, p. i) 6

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9 THE POWER OF THE PURSE “No money shall be drawn from the Treasury, but in Consequence of Appropriations made by law... “ – Constitution, Article I, section 9, clause 7 8

10 FISCAL LAW IS COMPRISED OF THE LAWS AND POLICY GOVERNING THE EXECUTION OF APPROPRIATIONS US CONSTITUTION UNITED STATES CODE PUBLIC LAWS REGULATIONS – DOD POLICY (DOD 7000.14-R) – SERVICE POLICY (i.e., AFI 65-601) – FAR, DFARS AND SERVICE SUPPLEMENTS (i.e., 32.7, 37.106, 204.7107, 232.7, e.g., AF FARS 5332.7) OPINIONS (COMPTROLLER GENERAL AND FEDERAL COURTS) 9

11 FAR 32.702 POLICY BEFORE EXECUTING ANY CONTRACT, THE CONTRACTING OFFICER SHALL OBTAIN WRITTEN ASSURANCE FROM RESPONSIBLE FISCAL AUTHORITY THAT ADEQUATE FUNDS ARE AVAILABLE (FORM 9, AFMC 36) NO OFFICER OR EMPLOYEE OF THE GOVERNMENT MAY CREATE OR AUTHORIZE AN OBLIGATION IN EXCESS OF THE FUNDS AVAILABLE, OR IN ADVANCE OF APPROPRIATIONS (ANTI-DEFICIENCY ACT 31 USC 1341), UNLESS OTHERWISE AUTHORIZED BY LAW. 10

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13 CONGRESSIONAL AUTHORIZATION Authorization is the legal authority to carry out a program. – Authorizations generally start with the Congressional Committee with cognizance over the subject matter, e.g. House Armed Services Committee, Senate Armed Services Committee (HASC, SASC). These are standing Committees. An authorization does not provide budget authority 12

14 WHAT IS BUDGET AUTHORITY? “... [A]uthority provided by law to enter into obligations which will result in immediate or future outlay involving government funds....” (2 USC Section 622(2)) 13

15 CONGRESSIONAL APPROPRIATION An act of Congress that permits a federal agency to incur obligations and to make payments out of the Treasury for a specified purpose. – House Appropriations Committee, Senate Appropriations Committee (HAC, SAC). These are standing committees and they are “Spending Committees” An Appropriation Act is the most common form of budget authority 14

16 Appropriations Committee: Authorizes use of funds to Accomplish Programs. Provides Funding (Budget Authority) Puts money into the checking account Budget Committees: Sets overall budget ceilings Authorization Committees: Provide Authority to Accomplish Certain Programs Specifies Program Levels Manpower Programs Number of Aircraft, etc. Handles Policy Matters Opens the checking account 15

17 A COMPARISON Authorizations Provides permission and direction on how to spend funds Policy oriented Separate bills written in House and Senate Generally permanent law The Authorization Act does not provide budget authority Appropriations Provides budget authority or permission to draw funds from the US Treasury Budget oriented Bill traditionally originates in House Senate modifies House bill Generally one-year law 16

18 Military Departments Department Of Defense President (OMB) Congress Service Budgets DoD Budget authorizations process appropriations process Apportionment CBO Report Concurrent Budget Resolution Budget Execution Testimony & Appeals FEBAPRMAYJULSEPTOCT National Budget Allotment MARJUNAUG National Defense Authorization Act DoD Appropriations Act joint conference joint conference THE PROCESS OF ENACTMENT 17

19 OMB OSD Treasury Dept Treasury Dept Service (Air Force) Service (Air Force) PEO/MAJCOM (AFMC) Program Managers/Units Budget Authority Authorization Appropriation 18

20 THE OFFICE OF MANAGEMENT AND BUDGET APPORTIONS OMB apportions amounts available for obligation, including budgetary reserves established pursuant to law, in an appropriation or fund account. – An Apportionment divides amounts available for obligations by specific time periods (quarters or years), activities, projects, objects, or a combination of these. (Definitions extracted from A Glossary of Terms Used in the Federal Budget Process, GAO, Revised January, 1993 and Cornelius E. Tierney, Federal Accounting Handbook: Policies, Standards, Procedures, Practices, Wiley (2000).) 19

21 OSD ALLOCATES An allocation is the amount of budget authority transferred from one agency, bureau, or account that is set aside in a transfer appropriation account to carry out the purpose of the parent appropriation or fund. – DOD funds the Services through the Office of Secretary of Defense’s Comptroller Office 20

22 SERVICES ALLOT The Services and their MAJCOMs generally allot funds, following specific procedures that each Agency establishes within the general requirements stated in applicable OMB Circulars An authorization by either the agency head or another authorized employee to his/her subordinates to incur obligations within a specified amount. The amount allotted by an agency cannot exceed the amount apportioned by the OMB. 21

23 REMEMBER! THE ESTABLISHED RULE IS – EXPENDITURES OF PUBLIC FUNDS IS PROPER ONLY WHEN AUTHORIZED BY CONGRESS – NOT THAT PUBLIC FUNDS MAY BE EXPENDED UNLESS PROHIBITED BY CONGRESS VERY DIFFERENT FROM INTERPRETING THE FAR 22

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25 The of Money 24

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29 PURPOSE, TIME, AMOUNT APPROPRIATIONS PROVIDE AUTHORITY TO INCUR OBLIGATIONS AND TO MAKE DISBURSEMENTS FOR THE PURPOSES, DURING THE TIME LIMITS AND UP TO THE AMOUNT LIMITATIONS SPECIFIED IN THE APPROPRIATION ACT. (TITLE 31 OF THE UNITED STATES CODE (USC)) 28

30 LIMITATIONS ON THE USE OF APPROPRIATED FUNDS THE THREE MAIN ELEMENTS OF FISCAL LAW: – AN AGENCY MAY OBLIGATE AND EXPEND APPROPRIATIONS ONLY FOR A PROPER PURPOSE – AN AGENCY MAY OBLIGATE ONLY WITHIN THE TIME LIMITS APPLICABLE TO THE APPROPRIATION – AN AGENCY MUST OBLIGATE FUNDS ONLY WITHN THE AMOUNTS APPROPRIATED BY CONGRESS AND FORMALLY DISTRIBUTED TO THE AGENCY. (Title 31 of the United States Code (USC) 29

31 PURPOSE USMC (Albany, GA) contracts to build/install prefabricated building using procurement funds. 30 ADA Report 10-09 Improper use of procurement funds Value exceeded Unspecified Minor MilCon (UMMC) threshold (10 USC 2805) Should have used MilCon, Navy (MCN)—USMC lacked authority to obligate this fund. ADA violation: improperly exceeded administrative subdivision

32 TIME FUNDS ARE ONLY AVAILABLE FOR OBLIGATION DURING THE AVAILABILITY OF THE APPROPRIATION (10 USC 2306c) DON’T OBLIGATE – BEFORE THE PRESIDENT SIGNS THE APPROPRIATIONS BILL, OR – AFTER THE AVAILABILITY PERIOD OF THE FUNDS 31

33 APPROPRIATIONS ARE TIME BOUND 32

34 PRIOR YEAR(S), CURRENT YEAR, BUDGET YEAR(S) AT ANY GIVEN TIME, SEVERAL FISCAL YEARS MAY BE UNDER CONSIDERATION: 33

35 TIME BONA FIDE NEEDS RULE RULE: 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. (31 U.S.C. 1502(A)) ARE YOU OBLIGATING CURRENT DOLLARS FOR CURRENT NEEDS? – IF NOT, YOU MIGHT BE IN THE MIDDLE OF A NIGHTMARE 34

36 TIME BONA FIDE NEEDS RULE Late FY 05 & 07: USMC Logistics Command C4 Division (Albany, GA!) contracts for IT training with establishing content, dates, or students. Training provided in subsequent FY—violation of Bona Fide Needs Rule » ADA Violation: No proper funds available at time of obligation 35 ADA Report 10-15

37 BONA FIDE NEEDS RULE Letter Contracts Letter Contract entered into force: FY1 Definitized in FY1: obligate FY1 funds Definitized in FY2: obligate FY2 funds Obligating Letter Contracts, B-197274 (Sep. 23, 1983) 36

38 TIME BONA FIDE NEEDS RULE Lease termination clauses “The real effect of termination liability is to obligate the Commission to purchase a certain quantity... During each of five successive years or to pay damages for its failure to do so. In other words, the termination charges represent a part of the future, as distinguished from current, deliveries and needs under the contract, and for that reason such charges are not based on a current fiscal year need.” 36 Comp. Gen. 683, 685 (1957) 37

39 BONA FIDE NEEDS RULE Overuns/Underruns Cost reimbursement contract/funding overruns: If the ceiling must be raised, it does not relate back and current funds must be used. B-219829 (Jul. 22, 1986) 38 Underruns after expiration of appropriation’s period of availability: using money resulting from the contract to order additional quantity exceeds the scope of the original contract. Only chargeable to funds current at the time of modification. B-207433 (Sep. 16, 1983)

40 39 B-317413, National Science Foundation (Apr. 24, 2009) Cost Reimb. K w/ LOF Clause FY1: Sr. Scientist “directs” change in order of deliverables, resulting in cost overrun FY2: Claim settled GAO: Year of settlement (FY2) is proper appropriation—no obligation arose until US entered into settlement But, a ratification of unauthorized commitment would have “related back” to the FY1 commitment BONA FIDE NEEDS RULE

41 AMOUNT DON’T SPEND IN EXCESS OR IN ADVANCE OF AN APPROPRIATION – 31 USC 1341(a)(1)(a) DON’T OBLIGATE IN EXCESS OF AN APPORTIONMENT OR ALLOCATION. – 31 USC 1517 DON’T AUGMENT FROM OTHER SOURCES - MISCELLANEOUS RECEIPTS – 31 USC 3302(b) DON’T ACCEPT VOLUNTARY/FREE SERVICES – 31 USC 1342 40

42 AMOUNT Now for Something Really Scary! 41

43 AMOUNT Dep’t of Army, FY08 Mil Personnel, Appropriation, and the ADA, B-318724 (Jun. 22, 2010) Budget Office: “3500” responsibility Relied on estimates of PM obligations – Short by $200M – Transferred $ from Working Capital GAO: exceeding “3500” appropriation by $87M = ADA Violation – “Lack of Budget Office-PM Communication” DOD Comptroller Report (?) 42

44 The Working Capital Fund is not a Time Machine * B-319349, USCP (Jun. 4, 2010) FY07: SWO rescinded; for future costs, USCP advances $6.8M expired FY 03 annual funds to a DOT “no- year” WCF 43 KO * Unless otherwise specifically provided by law FY09: DOT obligates the funds. GAO: the advanced funds don’t become “no-year”

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46 EXPENSE VS. INVESTMENT EXPENSE (O&M) VERSUS INVESTMENTS (PROCUREMENT) BASIC DISTINCTION BETWEEN EXPENSE AND INVESTMENT COSTS: – EXPENSES ARE COSTS INCURRED TO OPERATE & MAINTAIN THE ORGANIZATION, SUCH AS PERSONAL SERVICES, SUPPLIES, AND UTILITIES – INVESTMENTS ARE COSTS RESULTING IN THE ACQUISITION OF, OR AN ADDITION TO, END ITEMS See DOD Financial Management Regulation, Vol. 2A, Ch. 1, para. 010201 45

47 EXPENSE VS. INVESTMENT BASIC EXPENSE COST DETERMINATION GUIDELINES/CRITERIA: – COSTS OF RESOURCES CONSUMED IN OPERATING AND MAINTAINING. WHEN COSTS GENERALLY CONSIDERED EXPENSES ARE INCLUDED IN THE PRODUCTION OR CONSTRUCTION OF AN INVESTMENT ITEM, THEY SHALL BE CLASSIFIED AS INVESTMENT COSTS EXPENSE EXAMPLES: – LABOR OF CIVILIAN, MILITARY, OR CONTRACTOR PERSONNEL – RENTAL CHARGES FOR EQUIPMENT AND FACILITIES – FOOD, CLOTHING, AND FUEL – SUPPLIES AND MATERIALS DESIGNATED FOR SUPPLY MANAGEMENT OF THE DEFENSE WORKING CAPITAL FUNDS – MAINTENANCE, REPAIR, OVERHAUL, REWORK OF EQUIPMENT 46

48 EXPENSE VS. INVESTMENT (Cont’d) BASIC INVESTMENT COST DETERMINATION GUIDELINES/CRITERIA: – COSTS TO ACQUIRE CAPITAL ASSETS, SUCH AS REAL PROPERTY AND EQUIPMENT INVESTMENT EXAMPLES: – ITEMS OF EQUIPMENT, INCLUDING ASSEMBLIES, AMMUNITION AND EXPLOSIVES, MODIFICATION KITS, SPARES AND REPAIR PARTS NOT MANAGED BY THE DEFENSE WORKING CAPITAL FUNDS – EQUIPMENT ITEMS NOT SUBJECT TO CENTRALIZED ITEM MANAGEMENT AND ASSET CONTROL, AND HAVING A SYSTEM UNIT COST EQUAL TO OR GREATER THAN THE CURRENTLY APPROVED EXPENSE AND INVESTMENT DOLLAR THRESHOLD FOR DoD: THRESHOLD IS CURRENTLY $250,000; FOR EVERYONE ELSE IT IS $100,000 – CONSTRUCTION TO INCLUDE THE COST OF LAND AND RIGHTS THEREIN; INCLUDES REAL PROPERTY EQUIPMENT INSTALLED AND MADE AN INTEGRAL PART OF SUCH FACILITIES, RELATED SITE PREPARATION, AND OTHER LAND IMPROVEMENTS 47

49 EXPENSE VS. INVESTMENT (Cont’d) KNOWING THE DIFFERENCE IS CRITICAL TO THE PROPER EXECUTION OF INVESTMENT APPROPRIATIONS, BECAUSE –- – IT ENSURES COMPLIANCE WITH REGULATORY AND POLICY DIRECTION, AS DISCHARGED BY CONGRESSIONAL, GAO, OMB, AND OSD COMPTROLLER GUIDANCE INSTRUMENTS, AND – AVOIDS INFRACTIONS, WHICH ARE REPORTABLE TO OSD, CONGRESS, AND THE PRESIDENT (GOVERNING POLICY - DOD FMR, VOLUME 2A, CHAPTER 1) 48

50 EXPENSE VS. INVESTMENT It’s Not Just for Buildings! NGA MIPR to fund recapitalization of net- enabled portal. Budget analyst certifies $8.6 M FY’03 O&M funds available for project. – Hardware; software; commercial imagery – A classic Investment – Correct funds were Procurement – DOD IG Audit uncovers; No proper funds remain to correct—ADA Violation 49 ADA Report 10-04

51 A Few Words About Project Splitting 10-03 DISA (SAFB) 10-05 USA O&M for MILCON 10-07 USA O&M for MILCON 10-10 USA O&M for MILCON 50

52 A Few Words About Project Splitting 51

53 CROSSING FISCAL YEARS... ORDINARILY O&M FUNDS ARE NOT ALLOWED TO CROSS FISCAL YEARS – A SERVICE CONTRACT THAT IS FUNDED WITH ANNUAL APPROPRIATIONS MAY NOT CROSS FISCAL YEARS (FAR 32.703-3) DoD HAS AN EXCEPTION BY STATUTE THAT ALLOWS A CONTRACTING OFFICER TO – ENTER INTO A CONTRACT, EXERCISE AN OPTION, OR PLACE AN ORDER UNDER A CONTRACT FOR SEVERABLE SERVICES – FOR A PERIOD THAT BEGINS IN ONE FISCAL YEAR AND ENDS IN THE NEXT FISCAL YEAR, IF THE PERIOD OF THE CONTRACT AWARDED, OPTION EXERCISED, OR ORDER PLACED – DOES NOT EXCEED 1 YEAR, AND – CURRENT YEAR FUNDS ARE USED TO FULLY FUND THE SEVERABLE SERVICES ACROSS FISCAL YEARS. (See 10 USC 2410A, DFARS 232.703-3) 52 ADA Report 10-02

54 Severable or Non-Severable? 53

55 RDT&E APPROPRIATION SPECIFIC POLICY INCREMENTAL FUNDING – FUND ONLY WHAT CAN BE EXECUTED IN THE FIRST YEAR INCLUDE ONLY THOSE COSTS IN THE BUDGET REQUEST EXPECTED TO BE INCURRED/ PERFORMED FOR THAT FISCAL YEAR OR 12 MONTH PERIOD FOR SEVERABLE SERVICES CLAUSES TO BE USED COST CONTRACTS – LIMITATION OF FUNDS (LOF)(FAR 52.232.22) FFP CONTRACTS – LIMITATION OF GOVERNMENT’S OBLIGATION (LOGO)(DFARS 252.232-7007) 54 ADA Report 10-12

56 PROCUREMENT APPROPRIATION SPECIFIC POLICY FULL FUNDING AN END ITEM IS FULLY FUNDED WHEN IT MEETS THE FOLLOWING CRITERIA: – FUNDS ARE PROGRAMMED, BUDGETED AND APPROVED TO COVER THE TOTAL ESTIMATED COST OF THE CONTRACT QUANITY OF END ITEMS AT THE TIME OF CONTRACT AWARD – THE ITEM MUST BE A COMPLETE, USABLE END ITEM – NO FUTURE-YEAR APPROPRIATION IS REQUIRED FOR DELIVERY OF THE END ITEM AUTHORIZED AND APPROVED BY CONGRESS – YOU CAN’T BUY AN END ITEM WITH TWO (OR MORE) DIFFERENT YEARS OF MONEY 55

57 FULL FUNDING EXCEPTIONS – ADVANCE PROCUREMENT ALLOWS PROGRAMS TO ORDER ITEMS THAT HAVE A LONG LEAD IN ADVANCE OF ORDERING THE COMPLETE, USABLE END ITEM. – ADVANCE ECONOMIC ORDER QUANTITY (EOQ) PROCUREMENT THIS APPLIES TO MULTI-YEAR PROCUREMENTS WHEN IT IS ADVANTAGEOUS TO THE GOVERNMENT TO BUY A LARGE QUANTITIES OF ITEMS UP-FRONT. CONGRESSIONAL AUTHORIZATION IS REQUIRED PRIOR TO EXECUTING ONE OF THESE EXCEPTIONS 56

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59 WHAT IS THE ADA? THE PRIMARY “ENFORCEMENT DEVICE” TO ENSURE CONGRESS’ POWER TO DETERMINE HOW MUCH MONEY CAN BE SPENT BY A GIVEN AGENCY OR PROGRAM CODIFIED IN THREE MAJOR STATUTES – 31 U.S.C. § 1341 LIMITATIONS ON EXPENDING AND OBLIGATING AMOUNTS [“ANTI-DEFICIENCY ACT”] – 31 U.S.C. § 1342 LIMITATION ON VOLUNTARY SERVICES – 31 USC § 1517 PROHIBITED OBLIGATIONS AND EXPENDITURES (AFI 65-608, Chapter “Antideficiency Act Violations”) 58

60 WHAT CONSTITUTES AN ADA VIOLATION? VIOLATION OF THE BONA-FIDE NEED RULE – WRONG FISCAL YEAR VIOLATED – 31 U.S.C. 1502(a) – MAY LEAD TO AN ADA VIOLATION VIOLATION OF THE PURPOSE STATUTE – OBLIGATION CHARGED AGAINST INAPPROPRIATE ACCOUNT – 31 U.S.C. 1301 – MAY LEAD TO AN ADA VIOLATION OBLIGATE/EXPEND IN EXCESS OF OR IN ADVANCE OF AN APPROPRIATION – 31 U.S.C. 1341(a) – AUTOMATIC ADA VIOLATION – E.g., DFARS Clause…. OBLIGATE/EXPEND IN EXCESS OF AN APPORTIONMENT OR AN ADMINISTRATIVE SUBDIVISION – 31 U.S.C. 1517 (a) – AUTOMATIC ADA VIOLATION 59

61 DFARS Clauses E.g., FY10 Appropriations Act/DFARS 252.222-7006 – Prohibits use of funds FY’10 appropriations >$1M if contractor restricts employee’s to arbitration for certain civil claims – Remains in effect during CRA! 60

62 Indemnification Agreements 61 10-08; GAO-10-399, Financial Audit: Am. Battle Monument Commission’s Financial Statements for FY 2009 and 2008 (Mar. 2010); The Analysis Group, B-401726; B-401726.2 (Nov. 13, 2009) (Task order quote containing open-ended indemnification clause is contrary to ADA and per se unawardable; in allowing offeror to remove quote, AF/A5’s action amounted to permitting a material revision—i.e., “discussions.” See also CSHIB-Interagency Agreement with GSA, B-318425 (Dec. 8, 2009), (open- ended CAC services violate ADA)

63 Indemnification Agreements 62 ADA Report 10-08

64 RAMIFICATIONS OF ADA VIOLATION CRIMINAL PENALTIES (MONETARY FINE AND IMPRISONMENT) DISCIPLINARY SANCTIONS THAT ATTACH TO GOVERNMENT CIVILIAN AND MILITARY PERSONNEL WHO VIOLATE THE ADA A DOD CIVILIAN OR MILITARY MEMBER MAY BE HELD PERSONALLY LIABLE FOR THE RECOUPMENT OF FUNDS DEPENDING ON THE SERVICE – THERE MIGHT BE AN EXPANSIVE VIEW OF THE RANGE OF RESPONSIBILITY FOR ADA VIOLATIONS 63

65 TOP ADA CAUSES MAJOR CATEGORIES OF VIOLATIONS: – USE FUNDS FOR OTHER THAN THEIR INTENDED PURPOSE – EXCEED MINOR CONSTRUCTION ADMINISTRATIVE LIMIT – EXCEED FUNDS AVAILABLE – USE O&M TO ACQUIRE EQUIPMENT ITEMS THAT EXCEED THE DESIGNATED AMOUNT FOR MANDATORY USE OF PROCUREMENT FUNDS (EXPENSE VERSUS INVESTMENT THRESHOLD) – OBLIGATE IN ADVANCE OF FUNDS BEING AVAILABLE 64

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67 66 Too New to Fail???

68 67 Light Refreshments Leading to Air War College’s ADA Violation ADA Report 09-03

69 68 B-310108, 6 Feb 08, Forest Service—Apportionment Limitation for Aviation Resources The Emergency Exception to the ADA Be sure it’s a real emergency before you use it! See also, B-319009 (Apr. 27, 2010), US Secret Service—Statutory Restriction on Availability of Funds Involving Presidential Candidate Nominee Protection

70 69 ADA Report 09-04 ADA Report 09-05 IT MIPRS to NIH and DOI leading to ADA Violations due to failure to return unused 3400 funds—funds were rolled over and reused by the purchasing agency the next year

71 70 DOD IG Report No. D-2008-082 Review of 7 Non-DOD Agencies’ MIPR purchases, FY04-09 Total: 99K Purchases, $15.6B Total Reviewed: 869, $1.9B Findings: 608 Potential ADA Violations (70%) $518.5M (40%) Bona Fide Needs Rule Prior Year Funds for Current Needs Advance Payments Purpose Statute Use of Entirely Wrong Funds DOD IG Report No. D-2008-066

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73 A FOUR PRONG TEST TO AVOID AN ADA NIGHTMARE (1)IDENTIFY THE APPROPRIATION PROPOSED FOR OBLIGATION AND EXPENDITURE (2)DETERMINE WHETHER THE APPROPRIATION IS AVAILABLE FOR THE PURPOSE SERVED BY THE OBLIGATION AND EXPENDITURE (3)DETERMINE WHETHER THE APPROPRIATION IS AVAILABLE AT THE TIME OF THE OBLIGATION AND EXPENDITURE (4)DETERMINE WHETHER THE APPROPRIATION IS AVAILABLE IN THE AMOUNT OF THE OBLIGATION AND EXPENDITURE 72

74 THE BOTTOM LINE YOU CAN’T SPEND – MORE MONEY THAN YOU LEGALLY HAVE – MONEY ON AN EFFORT THAT WASN’T APPROVED BY CONGRESS, OR – IN ADVANCE OF AN APPROPRIATION YOU CANNOT RECEIVE SERVICES WITHOUT PAYING FOR THEM WHEN THERE HAS BEEN A VIOLATION, IT HAS TO BE REPORTED 73

75 CONTACT INFORMATION Maj Frank Hollifield, ESC/JAS Phone: (781) 377-7127 E-mail: frank.hollifield@hanscom.af.milfrank.hollifield@hanscom.af.mil Mr. Peter Camp, ESC/JAS Phone: (781) 377-4077 E-mail: peter.camp@us.af.milpeter.camp@us.af.mil 74

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77 DEFENSE COMMITTEES Authorization House Armed Services Committee (HASC) Five Subcommittees Senate Armed Services Committee (SASC) Six Subcommittees House Permanent Select Committee on Intelligence (HPSCI) Senate Select Committee on Intelligence (SSCI) Appropriations House Appropriations Committee (HAC) Defense Subcommittee (HAC-D) Senate Appropriations Committee (SAC) Defense Subcommittee (SAC-D) 76

78 FY99 C-5 Program Budget Justification (P-Doc) 77 This line item funds modifications to the C-5 aircraft. The four engine C-5 carries outsized and heavy cargo (tanks, helicopters, etc.) between main operating bases. The primary modification budgeted in FY99 is the TF-39 High pressure Turbine (HPT). Other modifications enhance operational capability while improving flight safety, reliability and maintainability. The specific modifications budgeted and programmed are below. MODMODIFICATION COST TOTAL NRTITLEFY-97FY-98FY-99FY-00FY-01FY-02FY-03TO GOPROG. 3150NAVSTAR GLOBAL POSITIONING11.98.36.75.388.5 4252AIRLIFT DEFENSIVE SYSTEMS1.34.32.72.85.130.8 6032COMPARTMENT FLOOR CORROS0.40.30.7 6037TF39 ENGINE HIGH PRESSURE19.734.233.137.041.124.9190.0 6038AVIONICS MODERN PROGRAM113.453.7123.2107.0200.6597.9 96001STATION KEEPING EQUIPMENT10.82.413.610.20.437.5 96004SINCGARS7.913.113.234.3 99999XLOW COST MODIFICATI0.90.10.12.8 Z88888REPROGRAMMINGS1.71.7 TOTAL FOR C-561.681.263.6193.0121.0154.4107.5 200.6 BUDGET ITEM JUSTIFICATION (EXHIBIT P-40) Date February 1998 P-1 ITEM NOMENCLATURE: C-5APPROPRIATION/BUDGET ACTIVITY AIRCRAFT PROCUREMENT-AIR FORCE/Aircraft Modifications P-1 SHOPP LIST ITEM NO. 035 PAGE NO. 214

79 OPERATION & MAINTENANCE ANNUAL APPROPRIATION OPERATION, MAINTENANCE AND ADMINISTRATION OF THE ACTIVITIES NOT COVERED BY OTHER APPROPRIATIONS - CIVILIAN PAY - O&M OF AIRCRAFT AND MISSILES - REPAIR AND MAINTENANCE OF FACILITIES - CONTRACTOR LOGISTICS SUPPORT - MISSION PROGRAM SUSTAINMENT - BASE OPERATIONS – AVAILABLE FOR OBLIGATION FOR UP TO ONE YEAR 78

80 ANNUAL & MULTI-YEAR APPROPRIATIONS ANNUAL APPROPRIATIONS – ACTIVE/AVAILABLE FOR OBLIGATION FOR A SINGLE YEAR OPERATIONS & MAINTENANCE (AF: 3400) MILITARY PERSONNEL (AF: 3500)) MULTI-YEAR APPROPRIATIONS – ACTIVE/AVAILABLE FOR OBLIGATION FOR MORE THAN ONE YEAR MILITARY CONSTRUCTION (AF: 3300) RDT&E (AF: 3600) AVIONICS & AIRCRAFT (AF: 3010) MISSILE PROCUREMENT (AF: 3020) OTHER PROCUREMENT (AF: 3080) – EACH SERVICE HAS IT OWN FUND DESIGNATORS AS PREVIOUSLY SHOWN 79

81 RESEARCH, DEVELOPMENT, TEST & EVALUATION MULTI-YEAR APPROPRIATION CONTRACTUAL SERVICES AND ASSOCIATED COSTS – STUDIES AND ADVANCED DEVELOPMENT – PROTOTYPE ARTICLES – RE-DESIGN DURING DEVELOPMENT – DT&E AND IOT&E – DEVELOPMENT/DESIGN/PURCHASE INSTALLATION AND ACCEPTANCE TESTING OF EQUIPMENT/INSTRUMENTATION REQUIRED FOR RDT&E – COMMERCIAL COMPONENT CONFIGURATION CHANGES – ONE-OF-A-KIND ARTICLES, INCLUDING SUPPORT EQUIPMENT – SPECIALIZED EQUIPMENT, INSTRUMENTATION AND FACILITIES IN SUPPORT OF AN RDT&E CONTRACTOR AT GOVERNMENT-OWNED AND COMPANY-OPERATED ACTIVITIES – END ITEMS, WEAPONS, EQUIPMENT COMPONENTS, MATERIEL, AND SERVICES REQUIRED FOR RDT&E ACTIVITIES. – TDY IN DIRECT SUPPORT OF AN RDT&E MISSION PROGRAM AVAILABLE FOR OBLIGATION FOR UP TO TWO YEARS 80

82 MILITARY PERSONNEL ANNUAL APPROPRIATION PAY AND ALLOWANCES OF MILITARY PERSONNEL PERMANENT CHANGE OF STATION COSTS OTHER MILITARY PERSONNEL COSTS – AVAILABLE FOR OBLIGATION FOR UP TO ONE YEAR 81

83 MILITARY CONSTRUCTION MULTI-YEAR APPROPRIATION LAND ACQUISITIONS CONSTRUCTION & ACQUISITION OF FACILITIES ALTERATIONS OF EXISTING FACILITIES – AVAILABLE FOR OBLIGATION FOR UP TO FIVE YEARS 82

84 PROCUREMENT MULTI-YEAR APPROPRIATION ELECTRONIC AND TELECOMMUNICATIONS EQUIPMENT MUNITIONS AND ASSOCIATED EQUIPMENT VEHICULAR EQUIPMENT OTHER BASE MAINTENANCE AND SUPPORT EQUIPMENT – AVAILABL E FOR OBLIGATION FOR UP TO THREE YEARS 83

85 AIRCRAFT PROCUREMENT MULTI-YEAR APPROPRIATION AIRCRAFT WEAPON SYSTEMS MODIFICATIONS DIRECT GROUND SUPPORT EQUIPMENT SPARES AND REPAIR PARTS WAR CONSUMABLES SPECIAL PURPOSE AUTOMATIC DATA PROCESSING EQUIPMENT PRE-DELIVERY FUEL SIMULATORS AND TRAINING DEVICES – AVAILABLE FOR OBLIGATION FOR UP TO THREE YEARS 84

86 MISSILE PROCUREMENT MULTI-YEAR APPROPRIATION MISSILE WEAPON SYSTEMS MODIFICATIONS, MODERNIZATIONS, RETROFIT AND UPDATE SPARES AND REPAIR PARTS WAR CONSUMABLES SITE ACTIVATION SPECIAL PURPOSE ADPE LAUNCH VEHICLES – AVAILABLE FOR OBLIGATION FOR THREE YEARS 85

87 THE ANTI-DEFICIENCY ACT (ADA) IS A SERIES OF IMPORTANT STATUTES 31 U.S.C. § 1341 LIMITATIONS ON EXPENDING AND OBLIGATING AMOUNTS [“ANTI-DEFICIENCY ACT”] 31 U.S.C. § 1342 LIMITATION ON VOLUNTARY SERVICES 31 U.S.C. § 1350 CRIMINAL PENALTY 31 U.S.C. § 1351 REPORTS ON VIOLATIONS 31 U.S.C. § 1511 DEFINITION AND APPLICATION 31 U.S.C. §.1512 APPORTIONMENT AND RESERVES 31 U.S.C. § 1513 OFFICIALS CONTROLLING APPORTIONMENTS 31 U.S.C. § 1514 ADMINISTRATIVE DIVISION OF APPORTIONMENTS 31 U.S.C. § 1515 AUTHORIZED APPORTIONMENTS NECESSITATING DEFICIENCY OR SUPPLEMENTAL APPROPRIATIONS 31 U.S.C. § 1516 EXEMPTIONS 31 U.S.C. § 1517 PROHIBITED OBLIGATIONS AND EXPENDITURES 31 U.S.C. § 1518 ADVERSE PERSONNEL ACTIONS 86


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