During the recent Government shutdown, a law commonly associated with Federal contracting was thrust into the spotlight when the Executive Branch discussed using appropriated funds to cover other purposes. Let us talk about this law and why it matters to vendors and Contracting Officers alike.
Overview:
The first version of the Act was passed after the Civil War. Before the law, agencies (particularly the military branches) would spend their appropriated funds as quickly as possible to run out of money before the end of the fiscal year, creating an “artificial emergency” to force Congress to provide more funds. The Act reached its modernized form in 1950 and has since been amended to include additional restrictions and rules as a reaction to issues raised by agencies over time.
Major Points:
While rules and reporting requirements have been added over the years, there are three main things an agency must not violate:
- An agency cannot obligate funds in advance of an appropriation. In short, it cannot spend money it does not already have. This is one of the reasons why you may see FAR 52.232-18, Availability of Funds in solicitations posted in one fiscal year that do not start until the next one. The Government is stating that they do not want to incur an obligation by asking industry to do something that would result in a claim.
- An agency cannot spend more than what has been appropriated for that purpose. It has to stay within its budget. This is why the Government tries its best to get a clear picture of how much the product or service they want is and have that amount on hand before a procurement starts. Remember when I mentioned that prior to the original Act agencies would spend as much as they could to compel Congress to give them more money?
- An agency cannot accept voluntary services on behalf of the United States (with some exceptions for the protection of life and property, expressed in the Act). This is the main reason an agency will furlough civil servants during a shutdown if statutory relief/exception does not exist to allow them to work without pay as long as the shutdown lasts, even if the employee offers to work. The Act also prohibits agencies from employing personal services that are not authorized by law (if you are interested in what counts as a “personal service,” I will cover that soon).
These rules work in concert with other key fiscal law rules, such as the Necessary Expense Doctrine and the Bona Fide Need Rule, which I discussed in a previous blog post.
Violation Fallout: What Happens Next
The short answer: a lot. The Act requires an investigation and a subsequent report to Congress. Internal to an agency, specific names of violators are reported during the investigation, and discipline can be administrative, penal or both for violators. Agency heads are required to report to Congress on the nature of the violation and actions taken. The Government Accountability Office helpfully compiles a report every fiscal year for public consumption.
Has anyone been charged with a felony for an ADA violation? I could not find any records in the years of reports I had access to. This is likely because the average violation is done through simple vice willful negligence, and training on the Act has become commonplace for anyone working even adjacent to Federal acquisitions, such as Government Purchase Card holders.
The ADA in its various forms has served as a guard rail to protect taxpayers (and Congress) from reckless spending for over 150 years. It is an important and certainly enduring type of legislation.
