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    Since extended overhead will have to be paid due to the government-caused delays, can current year funds (FY 14) be utilized? I know antecedent liability refers to liability incurred at time of contract award. Is money paid to contractor as a result of a delay a "new" liability? Upward obligation requests to obtain prior year money is ridiculously cumbersome and detrimental to taxpayers. Please advise.


    Answer

    This is a most unusual question.  Most of the time, I have organizations asking if there is any way that they can use expired funds to pay a bill and avoid having to use their current appropriations.  However, I must agree that too often the process to request expired funds for an Upward Obligation Authority (UOA) can be very time consuming and troublesome.  With that being said, there are very good reasons why the Components are so careful when using expired funds to pay for bills.  The idea has been, and will continue to be, to not wind up in situations where the Component is put in the undesirable position of having to use current appropriations for bills that were rightfully incurred either in a previous year or by a requirement that was contracted for in a previous year.  When the Components request their budgets, they do so with the understanding that those funds will be utilized for “current” requirements, i.e. new work scope.

    For your specific question, there are at least three issues.  First, can expired funds be used for new obligations?  Second, does a schedule delay constitute new work scope (and thus a new obligation)?  And third, if a schedule delay occurs is it a “bona fide need” of a time period other than the one for which the original work was contracted for?

    Per FMR, Volume 3, Chapter 10, Paragraph 100201, section A, states, “Expired funds are not available for new obligations.” So the answer to the first issue is clearly, “No!”

    With regards to the second issue, FMR, Volume 3, Chapter 10, Paragraph 100202, section B, says, “Obligation adjustments, such as incentive or award fees and price inflation (escalation or economic price adjustments), are not considered contract changes for purposes of subparagraph 100202.A.”  The background of your question leads me to believe that you are experiencing price inflation (regardless of the reason for its incurrence) and as such it is not a contract change (i.e. not new scope).  However, FMR, Volume 3, Chapter 10, Paragraph 100202, section B, also says, “To the extent otherwise appropriate, such amounts may be charged to applicable accounts that otherwise have expired for incurring new obligation but have not yet been closed/canceled.”  It uses the word “may”, not the word “shall.”  That would indicate to me that there is no definitive prohibition on the use of current year appropriations to pay this bill.  I just do not know why a Component would want you to!


    If the door remains open just a little, because of the use of the word “may,” we must turn to the third issue because that will determine if the use of current funds are appropriate.  Does a schedule delay change what fiscal year the requirement is a “bona fide need” of?  Title 31, U.S. Code, Sec 1502 (a) says, “…
    or to complete contracts properly made within that period of availability and obligated consistent with section 1501 of this title.”  I interpret this to mean that a contract that is in place for a good or service does not change the period of “bona fide need” just because of a schedule delay.  The requirement (i.e. the “bona fide need”) was recognized in FY11, which is why the effort was put on contract at that time.  Just because a schedule delay occurred, does not indicate that the date of the need changed.  You needed it earlier but the delay has altered the execution, not the need!  

    Therefore, it is my belief that FY14 funds CANNOT be used to pay for increased costs due to a schedule delay on a FY11 effort.  However, discuss the issue your comptroller as he/she may see it differently!


    Suggestion:
      First, review FMR Volume 3, Chapter 10, Paragraphs 100201, and 100202. In addition, review FMR Volume 3, Chapter 13, Paragraph 130208 Section B.  Second, read 31 U.S.C. 1502 (a) for the details of the Bona Fide Need Rule. 

    Finally, since your e-mail address indicates that you work for the Navy, we
    most strongly recommend that you contact your local Navy comptroller organization and your legal consul for more information and their policy interpretation of this issue.

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