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Redskin Fan

Multiple-Year Funding

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I have a question regarding multiple-year appropriations.  With the end of the fiscal year coming, I’m getting requests to spend money, do extensions, etc.  I’m not comfortable with one particular request.  Unfortunately, I have no access to an appropriations attorney or another individual that can help out.  So here I am.
 
I have a severable services contract that was awarded last September using FY16/17 funds.  It’s set to expire before the end of the month and we need an extension for a short period pending a re-compete.  The existing T-M contract has funds remaining (no delays etc.- the work has just gone easier than anticipated).  Program is asking to use the funds remaining on the contract to fund the extension into FY18.  My Finance Office indicates the money can be used to fund performance into FY18 (though I have been given no specific reason why).
 
I took a look at the Red Book and at GAO cases.  I found one GAO opinion (B-317636, Subject: Severable Services Contracts) that seems on-point.  It indicates “severable services are considered a bona fide need of the appropriation current at the time rendered. Consequently, an agency using a multiple year appropriation would not violate the bona fide needs rule if it enters into a severable services contract for more than 1 year as long as the period of contract performance does not exceed the period of availability of the multiple year appropriation.”  That seems straight-forward to me that these FY16/17 funds cannot fund performance beyond September 30, 2017. 
 
I’d appreciate comments in the event I’m taking these few sentences out of context.
 
Thanks

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12 hours ago, Redskin Fan said:

I have a severable services contract that was awarded last September using FY16/17 funds.  It’s set to expire before the end of the month and we need an extension for a short period pending a re-compete.  The existing T-M contract has funds remaining (no delays etc.- the work has just gone easier than anticipated).  Program is asking to use the funds remaining on the contract to fund the extension into FY18.  My Finance Office indicates the money can be used to fund performance into FY18 (though I have been given no specific reason why).

Despite the title that you gave to this thread, it sounds like you have annual funds. When you wrote "FY16/17," I presume that the slash between 16 and 17 stands for and and that you meant that you used FY16 funds for one part of the contract period and FY 17 funds for another. (Otherwise, with respect to annual appropriations, there is no such thing as "FY16/17" funds. There are FY 16 funds and there are FY 17 funds.) If, in fact, you have multiple year appropriations, then disregard this post.

The extension is a new procurement, even if you accomplish through supplemental agreement under the existing contract. If you (1) have FY17 funds, (2) make the extension a separate line item, and (3) accomplish the extension before the end of September 30, 2017, then you can use FY17 funds to fund an extension for up to 12 more months. See FAR 32.703-3(b) and the GAO Red Book, Vol. I, Ch. 5, Sec. 9a.

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I do not know whether FAR 32.703-3(b) applies to multiple year appropriations. You can use FY16-17 funds for the needs of FY17, but I don't know if you can use them for the needs of FY18. Severable services performed during FY18 would be needs of FY18.

It seems that you ought to be able to rely on the guidance provided by your Finance Office. I would get that guidance in writing, document the file, and proceed accordingly.

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21 hours ago, Vern Edwards said:

You can use FY16-17 funds for the needs of FY17, but I don't know if you can use them for the needs of FY18.

It appears that you cannot use the FY 16/ 17 funds in FY 18. See B-317636, April 21, 2009.

https://www.gao.gov/special.pubs/appforum2010/contract_law.pdf

Go to the bottom of page 3 and the top of page 4:

Quote

The bona fide needs rule is derived from the so-called time statute, 31 U.S.C. § 1502(a). B-308010, Apr. 20, 2007. Section 1502(a) provides that—

 “an appropriation . . . limited for obligation to a definite period is available only for payment of expenses properly incurred during the period of availability . . . . However, the appropriation . . . is not available for expenditure for a period beyond the period otherwise authorized by law.”

 Section 1502(a) applies to appropriations limited to a definite period, and no-year funds are not so limited. Thus, neither it, nor the bona fide needs rule derived from it, applies to no-year funds. While a multiple year appropriation is available for a definite period of time, it is available by its very terms for the bona fide needs of the agency arising during that multiple year period. As stated above, severable services are considered a bona fide need of the appropriation current at the time rendered. Consequently, an agency using a multiple year appropriation would not violate the bona fide needs rule if it enters into a severable services contract for more than 1 year as long as the period of contract performance does not exceed the period of availability of the multiple year appropriation.

 

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I have read the GAO letter to Senators Lieberman and Collins, and I agree with napolik's conclusion, but rely on different language in the letter. I think that the letter indicates that FAR 32.703-3(b) and the statutes on which it is based, 10 USC 2410a and 41 USC 3902, apply only to annual appropriations. See the letter, page 4:

Quote

Sections 2410a and 253l establish a statutory exception to the constraints of the so-called bona fide needs rule...

When subsections (a) and (b) of sections 2410a and 253l [41 USC 253l is now 41 USC 3902] are read together, it is clear that they were intended to provide contracting flexibility in the use of fiscal year funds. Each subsection (a) contains the grant of authority to agencies to contract for severable services across fiscal years for up to 1 year. Each subsection (b) authorizes agencies to obligate their funds for the contracts authorized by subsection (a) in a manner that constitutes an exception to the bona fide needs rule. The reference in subsection (b) to "[f]unds made available for a fiscal year" as the kind of funds that may be so obligated clearly indicates that the sections cover contracts funded by annual funds.

Emphasis added.

If I am reading that correctly, then contracts for severable services that are funded with multiple year appropriations cannot cross into fiscal years other than the years for which the funds were appropriated. The bona fide needs rule applies to such funds, and Redskins Fan cannot use FY16-17 funds for severable services performed in FY18.

 

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Three individuals have reached what I also think is the right conclusion so I'll add my voice to the chorus.  The exception to utilize an appropriation for severable services beyond its period of availability was passed specifically for annual appropriations, not multiple year appropriations, (as evidenced by the language "a fiscal year") in order to allow agencies reliant on annual appropriations more flexibility for funding contracts for severable services.  As a result, it had/has no impact on the use of multiple year appropriations.

Do the acquisition community a favor by saving and circulating the GAO letter (B-317636) and the corresponding analysis/conclusion amongst your fellow acquisition professionals - from my own experiences, this nuance is not widely understood as I've heard this question before on multiple occasions.

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I agree with Vern and Napolik's conclusion and rationale.  It is consistent with the guidance we provide to COs within our agency regarding the use of multi-year funds for severable services.

"The above authority (FAR 32.703-3(b)) for severable services specifically applies to contracts funded by annual (single year) appropriations.  If a contract is funded by multi-year funds, those funds are only available to fund severable services during their period of availability.  For example, if FY 17/18 funds are used, those funds may pay for severable services between 10/1/2016 and 9/30/2018."

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