Congress first enacted federal appropriations law in 1809. It’s kept lawyers, contractors, and judges busy ever since. A question arising in many sellers’ minds at this time of year is, what money is available for contracts in more than one fiscal year?
Typically Congress appropriates the bulk of contracting dollars to be obligated and disbursed in a single fiscal year. But given the reality of continuing resolutions, threats of funding lapses, and the natural desire to maintain steady revenue, contractors look for funds agencies can legitimately carry over and obligate.
It’s not a bad idea to obtain a survey-level knowledge of Chapter 31 of the U.S. Code, the law governing finance administration of the federal government. Over the eons, it has incorporated items like the Anti-Deficiency Act and the Economy Act, the latter of which governs interagency purchases.
It is also important to keep in mind the distinction between procurement law and appropriations law. A huge amount of discretion and choice is available to program, IT and, contracting personnel under procurement law and regulation. They have many paths to securing goods and services, sometimes at the risk of a protest. But a misstep in the expenditure of funds can land them in jail.
The model I mentioned of appropriating, obligating and spending money in one fiscal year is only part of the story. In reality, federal funds come in several “colors”.
● One-Year Appropriation: available for obligation only during a specific fiscal year.
● Multiple-Year Appropriation: available for obligation for a definite period in excess of one fiscal year, and generally not more than three.
● No-year Appropriation: available for obligation for an indefinite period until it is expended.
An example of a no-year appropriation is last month’s Navy award to Boeing for the design and development of four refueling, unmanned aerial vehicles. The notice contained this sentence: “Fiscal 2018 research, development, test and evaluation (Navy) funds in the amount of $79,050,820 will be obligated at time of award, none of which will expire at the end of the current fiscal year.” Typically DOD’s RTD&E funds are two-year appropriations, unlike operations and maintenance, which are typically single-year appropriations.
Money is also classified according to where it is in its lifecycle. Some funds may not be multiyear, but they don’t necessarily go away after September 30th.
● Indefinite appropriations are based on receipts from variable sources, with specific amounts determined later. Such funding mechanisms don’t typically relate to contracting. The same goes for “permanent” appropriations that apply for some entitlement programs. They use standing accounts not requiring action from Congress.
● Unexpired appropriation can carry over from one fiscal year to the next, becoming available for incurring new obligations.
● Expired appropriations are not available for incurring new obligations, but remain available for disbursement because of a contract action completed with the legal time period of the funds.
Finally, it is important to keep in mind that multi-year programs don’t always come with multi-year appropriations. Indeed, Congress is often whimsical about following through on long-term programs.
Unfortunately, it’s not easy to obtain a detailed summary of which funds are which colors. Often a program office itself is uncertain. To find the information requires research and communications with all members in the chain of sales—program, source selection, contracting officer and finance.
It’s wise to obtain the appropriations bills for the programs into which you wish to sell. For example, a reading of the 2019 Department of Homeland Security House budget bill shows that for the Management Directorate for procurement, construction, and improvements, the House would appropriate $74.9 million, available until September 30th, 2021—two-year money. Members would appropriate $2.5 million for research and development, but it would expire September 30, 2020—one-year money.
Bottom line: Not all money in a given fiscal year is use-it-or-lose-it. But it takes digging to find those multi-year and carry-over dollars.
For more information on how DLT can help you this Federal Fiscal Year End, visit dlt.com/fast.