Jump to content
The Wifcon Forums and Blogs
jtolli

ODC Funds Crossing Fiscal Years?

Recommended Posts

Under the principles of Federal Appropriations Law is it permissible for Other Direct Cost (ODC) funds on a severable services contract to ?cross? fiscal years? For example; you have a Firm Fixed Price contract with fixed price labor CLINs and a cost type ODC CLIN that is used to fund for travel. The period of performance is 1 July 2010 through 30 June 2011. The contract is funded with FY10 O&M funds (1 year money). Can the FY10 funds on the ODC CLIN be used for travel that occurs after 1 Oct 2010 (FY11)? Under the bona fide needs rule, is the travel a bona fide need of FY10 or FY11?

I have read the portion of the GAO Red Book in Chapter 5 that discusses services rendered beyond the fiscal year and states in part, ?Most federal agencies have authority to enter into a 1-year severable service contract, beginning at any time during the fiscal year and extending into the next fiscal year, and to obligate the total amount of the contract to the appropriation current at the time the agency entered into the contract.? But does that apply to all of the funding on the contract, or just the actual ?services? (labor) portion of the contract? In the portion of Chapter 5 that discusses materials, it says in part, ?An agency may not obligate funds when it is apparent from the outset that there will be no requirement until the following fiscal year?. So is that the portion of the bona fide needs rule that would apply to the ODC portion of the contract? If you know that part of the travel will occur in FY11, should that portion be funded with FY11 funds?

Share this post


Link to post
Share on other sites
Guest Vern Edwards

There is no such thing as "ODC funds." The bona fide needs rule is the same for O&M funds used to pay for other direct costs and for O&M funds used to pay for labor hours.

Share this post


Link to post
Share on other sites

Thank you Vern. I have never heard of such an application of the bona fide needs rule in this manner either, but our Resource Management and contracting folks are saying it is a violation of the bona fide needs rule to use the funds obligated on the ODC CLIN on a contract past the fiscal year end date. They have us working on submitting requests to de-obligate FY11 funds that we don't aniticipate using between now and 30 Sep, and then they will do a modification to place FY12 subject to the availability of funds (SAF) money back onto the ODC CLIN for the remainder of the period of performance. Unfortunately no one has been able to cite any particular reference in the Red Book that prohibits the use of these funds past 30 Sep. The pat answer is, "it's fiscal law".

Share this post


Link to post
Share on other sites

The cite you provided says ?Most federal agencies have authority to enter into a 1-year severable service contract, beginning at any time during the fiscal year and extending into the next fiscal year, and to obligate the total amount of the contract to the appropriation current at the time the agency entered into the contract.? It doesn't mention the type of funds or contract type. You can just do it. Your finance peoples logic about charges such as travel occuring after Oct 1 need to be funded with next years funbding doesn't make sense - why single out travel and not extend it to all costs?

Share this post


Link to post
Share on other sites
Thank you Vern. I have never heard of such an application of the bona fide needs rule in this manner either, but our Resource Management and contracting folks are saying it is a violation of the bona fide needs rule to use the funds obligated on the ODC CLIN on a contract past the fiscal year end date. They have us working on submitting requests to de-obligate FY11 funds that we don't aniticipate using between now and 30 Sep, and then they will do a modification to place FY12 subject to the availability of funds (SAF) money back onto the ODC CLIN for the remainder of the period of performance. Unfortunately no one has been able to cite any particular reference in the Red Book that prohibits the use of these funds past 30 Sep. The pat answer is, "it's fiscal law".

Somebody seems to be missing the point of the Bona Fide needs rule. That rule does not address when work must be done. It speaks to when the need for the work arises. For example, if a need to rotate a unit to Afghanistan from Ft. Bragg arises this year, contracts to implement that rotation in a timely manner can be issued now, although the rotation will not occur until next year.

In your case, I am assuming you have identified a need now that will be satisfied over the next year. To fill that need, you have identified certain travel that will be necessary to accomplish the work. It seems to me that the criteria for application of the Bona Fide needs rule have been met.

Share this post


Link to post
Share on other sites
Guest Vern Edwards

The end of a fiscal year controls only when funds may be obligated, not when the funds may be expended. If you obligate FY 2010 funds for a one-year service contract crossing into FY 2011, you can use the FY 2010 funds to pay for work initiated under the contract in FY 2011.

Oh well, as long as you have money for what you have to do, don't waste time or energy arguing with bean counters.

Share this post


Link to post
Share on other sites
Guest Vern Edwards

I just thought of something. Did you fully fund the contract at the time of award, or is it a task order contract with each order seperately funded?

Share this post


Link to post
Share on other sites
I just thought of something. Did you fully fund the contract at the time of award, or is it a task order contract with each order seperately funded?

Yes, they are fully funded contracts, and no they aren't task order contracts. Many of the contracts don't have "firm" travel established though. What I mean by that is there is a "bucket" of money placed on the ODC CLIN to cover travel that is anticipated to occur sometime during the one year period of performance, but there isn't always a schedule of when specifically the travel will take place. I was thinking perhaps that was part of the reasoning for us being told that we could not use the current fiscal year funds (e.g. it appears there will be no need until the next fiscal year). But when I asked about some contracts where we do have definite travel schedules, including some scheduled in October, the answer was it doesn't matter, any travel to occur in FY12 must be funded with FY12 funds.

It's not a big deal, as you say no sense in wasting a lot of time arguing about it. There is a positive side to it in that it allows us to recover some FY11 funds to use for other requirements. I'm just the type of person who likes to understand the "why" of doing things, and get frustrated when someone just cites a vague reference (fiscal law) without providing any specifics.

Share this post


Link to post
Share on other sites
Guest Vern Edwards

Well, your resource managers are wrong in my opinion. But they won't care what I think. If it's their call, let them call it.

Share this post


Link to post
Share on other sites
Yes, they are fully funded contracts, and no they aren't task order contracts. Many of the contracts don't have "firm" travel established though. What I mean by that is there is a "bucket" of money placed on the ODC CLIN to cover travel that is anticipated to occur sometime during the one year period of performance, but there isn't always a schedule of when specifically the travel will take place. I was thinking perhaps that was part of the reasoning for us being told that we could not use the current fiscal year funds (e.g. it appears there will be no need until the next fiscal year). But when I asked about some contracts where we do have definite travel schedules, including some scheduled in October, the answer was it doesn't matter, any travel to occur in FY12 must be funded with FY12 funds.

It's not a big deal, as you say no sense in wasting a lot of time arguing about it. There is a positive side to it in that it allows us to recover some FY11 funds to use for other requirements. I'm just the type of person who likes to understand the "why" of doing things, and get frustrated when someone just cites a vague reference (fiscal law) without providing any specifics.

I agree with Vern's ultimate conclusion. However, just to make sure that we are sure of what the facts are, it is my understanding that the ODC CLIN is to cover travel by contractor personnel in support of effort described in the FFP CLINs and the ODC CLINs are not being used to fund travel by government personnel. Is that correct?

Share this post


Link to post
Share on other sites
I agree with Vern's ultimate conclusion. However, just to make sure that we are sure of what the facts are, it is my understanding that the ODC CLIN is to cover travel by contractor personnel in support of effort described in the FFP CLINs and the ODC CLINs are not being used to fund travel by government personnel. Is that correct?

Yes, you are correct, it is for travel by the contractor to support the contract effort.

Share this post


Link to post
Share on other sites

Here is a question and answer from the Ask A Professor site that someone pointed me to

https://dap.dau.mil/aap/pages/qdetails.aspx...stionID=107100:

"Question -

On a contract support contractor labor with a period of performance of 28 Sep 2010 through 27 Sep 2011, does the Bona Fide Needs rule prohibit payment of the travel CLIN with FY10 dollars due to the fact that most of the travel will be conducted in FY11? Can FY10 dollars be used for the travel CLIN or are FY11 dollars required?

Scenario - I am the COR in the last stage of implementing a contract for contractor support personnel who will develop JCIDS documentation and other capability development work. The period of performance is 28 Sep 2010 to 27 Sep 2011. Funding is all FY10 dollars. "Legal at the contracting office says that the labor CLIN can be paid with FY10 dollars, but the Bona Fide Needs rule requires that the travel CLIN be paid with FY11 dollars.

Answer -

I have checked several sources and your response from the Army JAG is consistent. The Bona Fide Needs Rule requires that travel be paid for with the FY dollars in which the travel was conducted. I've attached a good site to research the Bona Fide Needs Rule.

http://www.wifcon.com/bonafidecontents.htm

Note: Material added 11/8/2010

The official "bona fide need" rule applies to appropriated funds. Details on contract considerations within the DoDFMR can be found here at

http://comptroller.defense.gov/fmr/03/03_08.pdf ."

Share this post


Link to post
Share on other sites
Guest Vern Edwards

jtolli:

What are we supposed to make of your last post? You quote a COR's question to AAP in part as follows:

On a contract support contractor labor with a period of performance of 28 Sep 2010 through 27 Sep 2011, does the Bona Fide Needs rule prohibit payment of the travel CLIN with FY10 dollars due to the fact that most of the travel will be conducted in FY11? Can FY10 dollars be used for the travel CLIN or are FY11 dollars required?

Scenario - I am the COR in the last stage of implementing a contract for contractor support personnel who will develop JCIDS documentation and other capability development work. The period of performance is 28 Sep 2010 to 27 Sep 2011. Funding is all FY10 dollars. "Legal at the contracting office says that the labor CLIN can be paid with FY10 dollars, but the Bona Fide Needs rule requires that the travel CLIN be paid with FY11 dollars.

Okay. Fine. Did "Legal" say why? Apparently, the COR did not ask "Legal." Instead, he/she asked the "professor" at AAP, who said that he/she "checked several sources," but does not cite them, providing only a link to Wifcon, at which place the word "travel" does not appear.

I could find no discussion of this in the Redbook, and I checked both my pdf version and the online version at Westlaw. The only GAO decisions I could find about the bona fide needs rule and travel dealt with the temporary duty travel of Government employees, the most recent of which is B-238110, 70 Comp. Gen. 469 (1991), which concluded as follows:

Temporary duty travel is a bona fide need of the year in which the travel actually occurs. Therefore, agencies must charge the expenses of temporary duty travel to the appropriation current in that fiscal year. Where travel spans two fiscal years, agencies must charge the expenses to the appropriations current in the fiscal years in which the particular travel expenses are incurred.

That decision refers to temporary duty travel by a government employee, not travel by contractor personnel under a government contract pursuant to the terms of the contract. I could find no decision about application of the bona fide needs rule to travel by contractor personnel under a government contract. If someone knows of one or finds one I would appreciate hearing from them.

In any case, compliance with "Legal's" interpretation might result in an Anti-deficiency Act violation, since an agency would enter into a contract in one fiscal year obligating a contractor to travel in the next fiscal year prior to the availability of funds for the next year. Does that make sense to anybody?

I do not address the Defense Financial Management Regulation. Maybe there is some unique DOD policy about this. (However, nothing in the DFMR at the site of the link seems to address the problem.) Since the bona fide needs rule is of GAO invention, I think a search of the Redbook is enough.

Share this post


Link to post
Share on other sites

Jtoli on post 3 you state, "Unfortunately no one has been able to cite any particular reference in the Red Book that prohibits the use of these funds past 30 Sep. The pat answer is, "it's fiscal law"." Your statement appears to indicate a misunderstanding of what is fiscal law. ?The established rule is that the expenditure of public funds is proper only when authorized by Congress, not that public funds may be expended unless prohibited by Congress.? United States v. MacCollom, 426 U.S. 317 (1976). You must have an authority to expend appropiated funds not a prohibition against it. If you have legal support perhaps you could request a PTA analysis on your concerns. Regards.

Share this post


Link to post
Share on other sites
jtolli:

What are we supposed to make of your last post? You quote a COR's question to AAP in part as follows:

Okay. Fine. Did "Legal" say why? Apparently, the COR did not ask "Legal." Instead, he/she asked the "professor" at AAP, who said that he/she "checked several sources," but does not cite them, providing only a link to Wifcon, at which place the word "travel" does not appear.

You can make whatever you want from that question and answer from AAP. I only shared it to illustrate that there appears to be a belief in some circles that contractor travel must be paid for with funds from the fiscal year that travel occured. Like you I wish the professor would have cited the sources, but again that is typical of what I have ran into when asking this question; nobody can really cite any difinitive source to support their position that the travel funds are limited to use in the fiscal year that travel actually occurs. I am now being told that there was a legal opinion issued within my command thay also supports that position, and am trying to get a copy of it to see what the basis of the opinion is.

Share this post


Link to post
Share on other sites
Guest Vern Edwards

I'd be interested in seeing that opinion, because the position those people are taking makes no sense to me.

Share this post


Link to post
Share on other sites
Unfortunately no one has been able to cite any particular reference in the Red Book that prohibits the use of these funds past 30 Sep.

Maybe your money folks are considering the travel to have been a contingent liability in which a bona fide need never materialized. Red Book, 7-56.

Share this post


Link to post
Share on other sites
Maybe your money folks are considering the travel to have been a contingent liability in which a bona fide need never materialized. Red Book, 7-56.

No, it now appears that what they are hanging their hat on is the DoD Financial Management Regulation (FMR), Volume 3, Chapter 8, Paragraph 0811 which reads:

"0811 TEMPORARY DUTY TRAVEL

Tentative obligations for temporary duty travel shall be recorded from written administrative determinations, based on the travel authorizations issued, for the estimated transportation to be purchased and the estimated reimbursement to be earned by the traveler for per diem allowances, use of privately owned vehicles, and incidental travel expenses. When travel is performed under a blanket authorization (with the itinerary not definite), the amount of the tentative obligation recorded in the current month shall not exceed the estimate of the travel expenses to be incurred to the end of the current month. When the period covered by the travel authorization extends beyond the end of the fiscal year, and the travel costs are being paid by means of an annual appropriation or the final year of availability of a multiple-year appropriation, the amount of the recorded obligation shall be the cost of transportation purchased and reimbursements earned to the end of the fiscal year."

(Bold added by me)

So then the question would be if contractor personnel traveling under a contract are considered to be performing "temporary duty travel", or is the FMR only referring to travel performed by Government personnel? I don't know the answer to that question, and it doesn't matter much now as we have already moved forward with de-obligating funds that will not be used this fiscal year. I am merely trying to provide additional information I received.

Share this post


Link to post
Share on other sites

To put some closure to this message string, we were provided a reference that is being cited to support the stance that ODC funds (for travel) cannot cross the fiscal year. The reference is GAO Principles of Federal Appropriations Law, Third Edition, Volume II, Chapter 7, B. 7. e.

Share this post


Link to post
Share on other sites
To put some closure to this message string, we were provided a reference that is being cited to support the stance that ODC funds (for travel) cannot cross the fiscal year. The reference is GAO Principles of Federal Appropriations Law, Third Edition, Volume II, Chapter 7, B. 7. e.

So far as I can tell, all of the decisons cited by the GAO in this paragraph relate to travel by government employees, not travel by contractors pursuant to the terms of a contract. Thus, their relevance to your issue is questionable at best.

Share this post


Link to post
Share on other sites
Guest Vern Edwards

It's entirely irrlevant, for reasons already given.

Share this post


Link to post
Share on other sites
It's entirely irrlevant, for reasons already given.

I was being charitable. If I had wanted to be blunt, I could have said this is an example of people not knowing how to read decisions or to understand the significance of what they have read to the question before them.

Share this post


Link to post
Share on other sites
Guest
This topic is now closed to further replies.

×
×
  • Create New...