B. 4. Delivery of
Materials Beyond the Fiscal Year
When the government purchases goods or
materials in one fiscal year and
delivery occurs in whole or in part in a subsequent fiscal year, the
is whether the contract meets a bona fide need of the fiscal year in
was made. This was the central legal issue in our discussion of
spending in section B.2 of this chapter, but the issue exists
when in the fiscal year the contract is made. In this section we
those contracts where the agency intends to meet the needs of the
year in which it entered into the contract. We will discuss
contracts, where an agency intends to meet its needs for more than
fiscal year, in sections B.8 and B.9.
An agency may not obligate funds when it is apparent from the outset
there will be no requirement until the following fiscal year. For
was found that annual appropriations obligated to fund an agreement
between the General Services Administration (GSA) and the Federal
Commission (FPC), whereby GSA agreed to renovate space in a federal
building incident to relocation of FPC personnel, were not available
since the relocation was not required to, and would not, take place
by the end of the fiscal year, and because the space in question
would not be made “tenantable” until the following fiscal year.
B-95136-O.M., Aug. 11, 1972.
If deliveries are scheduled only for a
subsequent fiscal year, or if contract timing effectively precludes
delivery until the following fiscal year, one could question whether
the contract was made in the earlier fiscal year only to obligate
funds from an expiring appropriation and that the goods or materials
were not intended to meet a bona fide need of that year. See
38 Comp. Gen. 628,
630 (1959); 35
Comp. Gen. 692 (1956);
33 Comp. Gen. 57,
21 Comp. Gen. 1159 (1941);
1 Comp. Gen. 115
(1921); 27 Comp. Dec. 640 (1921).
However, the timing of delivery, while
obviously a relevant factor, is not conclusive. There are perfectly
legitimate situations in which an obligation may be incurred in one
fiscal year with delivery to occur in a subsequent year. Thus, where
materials cannot be obtained in the same fiscal year in which they
are needed and contracted for, provisions for delivery in the
subsequent fiscal year do not violate the bona fide needs
rule as long as the time intervening between contracting and
delivery is not excessive and the procurement is not for standard
commercial items readily available from other sources. 38 Comp. Gen.
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, provided the intervening period is necessary for
production or fabrication of the material.
37 Comp. Gen. 155,
If an obligation is proper when made,
unforeseen delays that cause delivery or performance to extend into
the following fiscal year will not invalidate the obligation. In one
case, for example, although work under a construction contract was
performed during the fiscal year following its execution, the
Comptroller General approved payment to the contractor under the
original obligation since the agency had awarded the contract as
expeditiously as possible and had made provision for the work to
begin within the current fiscal year, but experienced a delay in
obtaining certain materials the government had agreed to provide.
1 Comp. Gen. 708
(1922). See also
23 Comp. Gen. 82
Comp. Gen. 436 (1941).
An order or contract for the
replacement of stock is viewed as meeting a bona fide need of
the year in which the contract is made as long as it is intended to
replace stock used in that year, even though the replacement items
will not be used until the following year. See
44 Comp. Gen. 695
(1965). “Stock” in this context refers to “readily available
common-use standard items.” Id. at 697. See also 73 Comp. Gen. 259
(1994); 32 Comp.
Gen. 436 (1953). Generally, scheduling delivery for the
following year would seem irrelevant. There are limits, however. GAO
has questioned the propriety, from the bona fide needs perspective,
of purchases of materials carried in stock for more than a year
prior to issuance for use.
B-134277, Dec. 18,