Jump to content
The Wifcon Forums and Blogs
KeithB18

Non Appropriated Funds Procedures

Recommended Posts

Hello all:

I've got a NAF procedures question.

Situation: My small, civilian agency has some circumstances where we receive non-appropriated funding from private sources for narrowly defined projects. The money is wired in from the vendor, and in the past, we've used the FAR to award contracts using the NAF money. This money is in no way appropriated by Congress. At points in the past, we've had multiple award IDIQs set up but they have since lapsed. In the interim, we've used GSA schedules to purchase the services we require. They are commercial financial services.

Argument: I argue that since the money in not appropriated by Congress, the FAR does not apply and we should be free to design our own award procedures.

Research:

FAR 1.104 "Applicability" states, “The FAR applies to all acquisitions as defined in Part 2 of the FAR, except where expressly excluded.”

Acquisition is defined in FAR 2.101: "'Acquisition' means the acquiring by contract with appropriated funds of supplies and services by and for the use of the Federal Government through purchase or lease…”

Flipping over to FAR 2.101, "Contract’ means a mutual binding legal relationship obligating the seller to furnish the supplies or services (including construction) and the buyer to pay for them. It includes all types of commitments that obligate the Government to an expenditure of appropriated funds and that, except as otherwise authorized, are in writing…”

Additionally, the Foreward of the FAR states, "The FAR is the primary regulation for use by all Federal Executive agencies in their acquisition of supplies and services with appropriated funds."

Just to make it clear, my argument is that since we are using non-appropriated funding, the FAR does not apply.

I have been able to find some DOD procedures for using NAF, particularly for MWR and commisary operations. The Army regulation I found was essentially a watered down FAR. I'm not sure that would make a great model for what we are trying to accomplish.

Unsurprisingly, I'm getting pushback from the lawyers, the policy department and my boss, but they cannot tell me why they don't agree. (It just "seems" wrong, in other words) Before I push them too hard, I wanted to see if anyone here has experience or can point out where I've gone wrong.

What I'd like to do is put in place a short local policy that governs the process for award NAF contracts. I think it makes sense to compete these projects to ensure that everyone is getting a fair deal, but I do not think it makes sense to utilize part 5 if we don't have to. I envision something like 8.404©(2); a streamlined approach to competing the requirement among as many vendors as our market research suggests is practicable.

Share this post


Link to post
Share on other sites

Likewise, see AR 215-4 Non-Appropriated FundnContracting for Army NAF Instrumentalities at http://www.apd.army.mil/jw2/xmldemo/r215_4/main.asp#appa

NAFI contracting, at least in DoD is not subject to FAR, although certain Federal laws do apply, as noted in the AR. The NAF folks are very sensitive about USACE contracting officers trying to use the FAR to contract for the Army NAF...

Share this post


Link to post
Share on other sites

DOD DIrective 4105.67 explicitly states:

4.9. The following do not apply to NAF procurements:

4.9.1. FAR ..., the Defense Federal Acquisition Regulation supplement ..., or DoD Component supplements.

Likewise, SECNAV Instruction 7043.5B clearly allows for local procedures to be developed - "NAF program managers shall establish procurement authorities, policies and procedures in accordance with [the DOD Directive and Instruction] and this instruction."

There is a lot of flexibility in the NAF arena to do some innovative things, as long as they're guided by intelligent, responsible principles, and good business judgment.

Share this post


Link to post
Share on other sites

Keith,

your NAF dollars come from one vendor and go to another vendor, or to the same vendor ?

Share this post


Link to post
Share on other sites

Keith, you and your lawyers need to determine which laws DO apply to your NAFI.

Share this post


Link to post
Share on other sites
Guest Vern Edwards

It is well-established that the FAR does not apply to purchases made with nonappropriated funds. See the Comptroller General's letter, The Honorable Sidney R. Yates, Chairman, Subcommittee on the Department of the Interior and Related Agencies, Committee on Appropriations, House of Representatives, GAO B-211149, December 12, 1985. See also Good Food Service, Inc. -- Reconsideration, GAO B-256526, 94-2 CPD para. 16. That really isn't debatable, and your boss, your policy office, and your lawyer are truly clueless if they don't know that.

However, the question of whether funds are appropriated or nonappropriated is a lot more complicated than most people think. Agencies sometimes think they are using nonappropriated funds only to discover that the Comptroller General of the United States disagrees with them. See, e.g., International Line Builders, 67 Comp. Gen. 8 (1987), GAO B-227811, 87-2 CPD para. 345, and Newport News Industrial Corp.; Simulation Assocs., Inc., GAO B-220364, 85-2 CPD para. 705.

Are you sure that you understand the basis for your boss's, policy office's and lawyer's objections? Are you sure that the funds are nonappropriated?

Share this post


Link to post
Share on other sites

One other thing. From the nature of your posting it seems that the funds in question are not MWR non-appropriated funds, but funds received under the gift acceptance authority of your agency (you describe them as from a vendor, which to me sounds like they are a gift). While the FAR does not apply (see Vern's post), it does not necessarily follow that the MWR (NAFI) contracting rules will apply.

Share this post


Link to post
Share on other sites

wvanpup & Mr. Edwards: The funds are not gifts, but the following passage in International Line Builders decision may help shed some light on the situation:

"We find no merit in Bonneville's argument that it is not using appropriated funds to finance its construction program. While Bonneville's funds appear to be generated by rate-payers rather than the result of an annual appropriation by Congress, we do not consider them to be nonappropriated. Where Congress has authorized the collection or receipt of certain funds by an agency and has specified or limited the purposes of those funds, the authorization is a "continuing appropriation" regardless of the fund's private origin. Monarch Water Systems, Inc., 64 Comp.Gen. 756 (1985), 85-2 CPD Par. 146"

We collect funds from vendors in order to determine their credit worthiness for loans. My suspicion (I have further research to do) is that Congress requires us to collect these funds. I do know that someone, somewhere has set limits on how much we can collect. That could make them "continuing appropriations" rather than NAF.

Looks like I need to find out the basis for the program. Thanks for the clarifications.

Share this post


Link to post
Share on other sites

"Looks like I need to find out the basis for the program. Thanks for the clarifications."

I think you are right. You need to find the authority to collect the funds, and the authority to use the funds rather than turn them into the Treasury as miscellaneous receipts, to determine what you can do and how you can do it.

Share this post


Link to post
Share on other sites

"Looks like I need to find out the basis for the program. Thanks for the clarifications."

I think you are right. You need to find the authority to collect the funds, and the authority to use the funds rather than turn them into the Treasury as miscellaneous receipts, to determine what you can do and how you can do it.

Looks like I found my answer: 45 USC 823 paragraph (k) makes me believe these funds are "continuing appropriations." Thanks again to WIFCON.

Share this post


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

×
×
  • Create New...