Obligation of Revolving Funds Requiring Reimbursement from Time-Limited Funds Under the Anti-Deficiency Act
Background
- GSA-FAS used the Acquisition Services Fund (a revolving fund) to pay two task orders for severable services on Sept. 30, 2010 — the last day Recovery Act (time-limited) funds were available to reimburse GSA for those expenditures.
- At least one task order’s original performance period exceeded one year; GSA-FAS later modified both task orders so performance ended within one year.
- The Acquisition Services Fund statute requires customer agencies (here, GSA-PBS/DHS) to promptly reimburse the fund from their appropriations; DHS had designated Recovery Act funds for that reimbursement, but those funds expired after one year.
- GSA’s OIG concluded the initial task orders violated the bona fide needs rule and the Anti-Deficiency Act (ADA) because obligating the revolving fund in those circumstances effectively obligated time-limited funds beyond their availability.
- OLC was asked whether (1) awarding a severable-services contract lasting more than one year that obligates revolving funds reimbursable with time-limited funds violates the ADA, and (2) whether later shortening the contract cures the violation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether obligating revolving funds that must be reimbursed with time-limited funds for a severable-services contract >1 year violates the Anti-Deficiency Act | Awarding such a contract violates ADA because it effectively obligates time-limited funds beyond their period of availability | Revolving funds may be lawfully obligated for any period so long as the revolving fund has cash; reimbursement can be deferred until future appropriations | Held: Yes — when a revolving fund is legally required to be reimbursed with time-limited funds that cannot be obligated beyond one year, obligating the revolving fund in those circumstances effectively obligates time-limited funds in advance and violates 31 U.S.C. § 1341 |
| Whether subsequently modifying the contract to limit performance to one year cures the ADA violation | Modifying to one year can cure or at least eliminate ongoing injury and therefore cure the violation | Shortening the term should cure the violation because no prohibited future obligation will remain | Held: No — shortening terminates ongoing improper obligation but does not cure the initial ADA violation because no legally available appropriations existed to cover the reimbursable obligation when it was incurred; the original violation remains and must be reported/treated as such |
Key Cases Cited
- Public Printer—Four-Year Contract for Purchase of Paper for Postal Cards, 27 Op. Att’y Gen. 584 (1909) (holding entering into a multiyear contract can violate the Anti-Deficiency Act even if no current-year expenditure beyond appropriation is required)
- Appropriations—Availability—Contracts—Future Needs, 42 Comp. Gen. 272 (1962) (Comptroller General rejecting advance obligations for future appropriations under multi-year contract)
- Contracts—Federal Supply Schedule—Multi-Year Procurement, 48 Comp. Gen. 497 (1969) (discussing limits on contracting that obligate funds beyond appropriations)