I have to preface this with the fact that agency lawyers have told me I am wrong about my interpretation of this issue. But if I've learned anything after being around this forum for 15 or so years, I don't always trust agency lawyer interpretation. That said, I'm 85% sure I'm wrong about this and the lawyers are right. But I want to pose the question here to double check.

Question One: You have funds appropriated for three years (3 year money). Can you issue a contract for severable services on the last day of the third year of availability with a period of performance for three years?

Attorneys point me to 41 USC 3902, which, to be frank, limits the period of performance for severable services that cross fiscal years to one year. But I don't think that statute makes a lot of sense where you have multiple year appropriations. Did Congress intend to limit 3 year appropriations in that manner? My reading of B-317636 makes me wonder. If annual appropriations have a one year severable services limit, why wouldn't three year appropriations come with a three year limit? (Again, willing to be wrong here, but I'm struggling with the logic.)

Question Two: Same scenario, but it is an other transaction instead of a procurement contract. Does that change the analysis?

It seems clear to me that 41 USC 3902 wouldn't apply here, but bona fide need would. But what's the bare minimum an agency needs to do to comply with bona fide need? I am not even willing to concede that severability need to be read into other transactions.

In your research did you find these?

https://www.wifcon.com/bona/bonafide8.htm

https://www.gao.gov/products/b-333150

7 hours ago, KeithB18 said:

You have funds appropriated for three years (3 year money). Can you issue a contract for severable services on the last day of the third year of availability with a period of performance for three years?

See GAO, Principles of Federal Appropriations Law, Volume 1, Chapter 5, Availability of Appropriations: Time, Section B: The Bona Fide Needs Rule.

To the best of my knowledge, OTs are not exempt from the bona fide needs rule. But it might depend on the specific transaction.

2 hours ago, Vern Edwards said:

See GAO, Principles of Federal Appropriations Law, Volume 1, Chapter 5, Availability of Appropriations: Time, Section B: The Bona Fide Needs Rule.

To the best of my knowledge, OTs are not exempt from the bona fide needs rule. But it might depend on the specific transaction.

I'm definitely interpreting the Redbook differently (potentially incorrectly) than others. (I've scoured it over the last couple of days.) For example, page 5-7 of the Redbook says:

"Apart from the extended period of availability, multiple year appropriations are subject to the same principles applicable to annual appropriations and do not present any special problems."

A principle of annual appropriations is that there is a one year exception that allows severable services to cross fiscal years. I would argue that the one year exception is tied to the period of availability of the appropriation, not the cardinal number "1." If you follow this logic, an annual appropriation attaches a one year exception while a three year appropriation attaches a three year exception.

At this point the attorneys point me to 41 USC 3902. It says what it says. But I having trouble understanding why Congress would appropriate funds for three years, offering the agency significant flexibility, and then restrict that flexible appropriation in this manner. Essentially, in the last year of its period of availability, three year money becomes annual money (when contracting for severable services). Maybe that really is the intent, but I don't think it makes sense. (A lot of things don't make sense though.)

I run into the same problem reading B-317636, which concludes:

"...federal agencies may use multiple year or no-year funds to enter into contracts for severable services for a period of performance longer than 1 year and an agency using multiple year or no-year funds is free to contract for the full period of availability the statute appropriating those funds allows."

Is the "full period of availability of the statute appropriating those funds" a cardinal number or is it the specific fiscal year(s) called for in the law? If it is the latter, a lot of us have been sloppy with our language in saying things are "3 year money." They aren't, they are FY2024, 2025, and 2026 monies (for example).

I definitely agree that bona fide need attaches to OTs. But I also think the analysis that GAO did in the case referenced by C_Culham is misguided. They applied grant and procurement principles in order to analyze OTs. They said "This one looks more like a grant and that one looks more like a contract and we'll evaluate them on those grounds." That kind of thinking is just going to make OTs grants or procurement contracts. OTs need to be thought of as separate thing outside of grants and procurement. (Recognizing there is a lot of debate about OTs and their use, but if they are going to be a thing, they need to be a different thing than what we already have.)

FAR 32.703-3(a) only applies to annual appropriations. 41 USC 3902 is the implementation of FAR 32.730-3(b) that authorizes agency heads to allow annual appropriations to cross fiscal years. Paragraph (b) and 41 USC 3902 only exists because of paragraph (a).

If the appropriation is not annual then FAR 32.703-3 as a whole is not applicable. This makes 41 USC 3902 not applicable to an appropriation that is not annual.

11 hours ago, KeithB18 said:

You have funds appropriated for three years (3 year money). Can you issue a contract for severable services on the last day of the third year of availability with a period of performance for three years?

The GAO Redbook:

The bona fide needs rule is one of the fundamental principles of appropriations law: A fiscal year appropriation may be obligated only to meet a legitimate, or bona fide, need arising in, or in some cases arising prior to but continuing to exist in, the fiscal year for which the appropriation was made. Citations to this principle are numerous. See, e.g., 33 Comp. Gen. 57, 61 (1953); 16 Comp. Gen. 37 (1936); B-289801, Dec. 30, 2002; B-282601, Sept. 27, 1999; B-235678, July 30, 1990.

1 hour ago, Don Mansfield said:

@KeithB18 My experience is with DoD and a multi-year appropriation to fund a severable service seems weird to me. What is the color of money?

It's definitely weird and the whole thing was entirely avoidable with better management (It's no one's fault, everyone involved was doing their best with the facts as they understood them at the time.) I have come into the problem very late--two plus years late.

It's 3 year research and development money. Generally, R&D is non-severable, but these funds were obligated on a consortium management other transaction. I'm squinting hard at it but I'm struggling to conclude that services related to managing a consortium are non-severable. The intent of the funding was to fund R&D projects through the consortium, but the projects didn't materialize until basically right now.

So, a three year appropriation made in FY22. Funds obligated in FY23. It's now FY26. I think the obligation was properly made in the period of availability and that the consortium management firm can invoice against the funds. Others disagree.