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Are recurring supplies treated like severable services in terms of funding the need?


Sam101

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Are recurring supplies treated like severable services in terms of funding the requirement if I'm using annual one-year funds? If I have a contract where the contractor delivers 1 bottle of water per month (commercial item) to my office and the period of performance is 07/01/2021 - 06/30/2022, can I fund the entire 12 months with FY21 funds like I can with severable services?

I see the Principles of Federal Appropriations page 5-13 says "We do not mean to suggest that an agency may purchase only those supplies that it will actually use during the fiscal year. Agencies normally maintain inventories of common use items. The bona fide needs rule does not prevent maintaining a legitimate inventory at reasonable and historical levels, the “need” being to maintain the inventory level so as to avoid disruption of operations" but I take this to mean that it's OK to purchase more supply "as a one-time bulk buy" than is going to be used this fiscal year but I'm not sure that it means that I can treat recurring supplies like severable services, does it? I can buy 12 bottles of water and keep them in the fridge and drink one bottle per month, but can I get the water bottles delivered one month at a time and still fund all of it with current year funds?

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11 hours ago, Sam101 said:

I can buy 12 bottles of water and keep them in the fridge and drink one bottle per month, but can I get the water bottles delivered one month at a time and still fund all of it with current year funds?

Yes, if your appropriated funds are otherwise available to buy bottled water (bottled water might be seen as refreshments, and funds may be unavailable for that reason).

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If this is a supply contract I would suggest that if you know you will not drink the water until next fiscal year you don't have a bona fide need for the water this fiscal year. Supplies are generally a bona fide need in the period in which they are used.

There are two exceptions to the bona fide needs rule for supplies: stock-level exception, which would absolutely apply if you purchase a year's worth of bottles and kept them in your fridge and drank one per month; and lead-time exception for deliver lead-time or production lead-time, neither of which seem applicable here.

I'm not necessarily convinced that it is a supply contract though. Maybe you are really paying a service contractor to maintain the water supply in your various buildings as a service, not simply ordering a supply delivered, in which case if you have a statutory exception to the bona fide needs rule for severable services (10 U.S.C. § 2410a for DOD or 41 U.S.C. § 3902 for non-DOD).

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On 7/2/2021 at 6:03 AM, ji20874 said:

Yes, if your appropriated funds are otherwise available to buy bottled water (bottled water might be seen as refreshments, and funds may be unavailable for that reason).

This might be a hypothetical example. However, consider that appropriations might not be available under the Purpose Statutes for bottled drinking water:

” Principles of Federal Appropriations Law
Fourth Edition, 2017 Revision
Page 3-205“

“One basic example is drinking water. Appropriations are available to federal agencies so they may provide their employees with safe, clean drinking water. 21 Comp. Dec. 739 (1915). Once the government has met its responsibility to provide safe clean water, any additional expense to satisfy employee taste or preference is personal to the employee. In particular, appropriations generally are not available to pay for bottled water where the public water supply is safe for drinking purposes. 17 Comp. Gen. 698 (1938); 22 Comp. Dec. 31 (1915). However, an agency may purchase bottled water where a building’s water supply is unpotable. For example, a problem with the water supply system in a building caused lead content to exceed the Environmental Protection Agency’s “maximum contaminant level” and justified the purchase of bottled water for employees until the problems with the system could be resolved. B-247871, Apr. 10, 1992. See also B-324781, Dec. 17, 2013 (an agency that had numerous problems with its potable water supply as the result of water main breaks, a building explosion, and repeated instances of contaminated water may use it appropriations to purchase bottled water for use in responding to these legitimately anticipated dangers and exigencies). In contrast, GAO denied relief to a certifying officer who improperly approved payments for bottled water for employees where there was no evidence that drinking water in the building posed a health risk. B-303920, Mar. 21, 2006. For remote work sites that have no access to potable water, it is within the agency’s discretion to decide how best to provide its employees with access to potable water, whether by providing coolers or jugs for transporting water or by providing bottled water. B-310502, Feb. 4, 2008. See also B-318588, Sept. 29, 2009.”

I’ve worked at several construction sites over the years where there was no potable water supply for the construction office(s), which are temporary facilities. In those cases, the government or contractor provided the standard five gallon jug water coolers/heaters in lieu of water fountains or potable sink water. 

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On 7/8/2021 at 12:31 PM, Witty_Username said:

Supplies are generally a bona fide need in the period in which they are used.

@Witty_UsernameThat depends on what you meant by "used." The nuclear warheads sitting on top of Minuteman and Trident missiles are items of supply, and they are not "in stock" in any meaningful sense of that phrase. In one sense, they are in use; but they have yet to be "used."

The GAO's "rules" are not always crystal clear.

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I'm not necessarily convinced that it is a supply contract though. 

See the definition of service contract at FAR 37.101. Sam101 is buying water in bottles, not time and effort. The water and the bottles are property, so it's a supply contract. Deliveries are just that, not a service, even if the supplier calls it a service.

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