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  • Question

    Is scenario possible if funding is FY13 executed under Defense Authorization Act Title 10, U.S. Code Section 2410a and awarded Mid August 2013. Funding crossed fiscal year. Would Bona Fide need exist because funding crossed fiscal year? If so what year is the Bona Fide need since only 6 weeks remained in the FY? Would the 12 month period of performance of performance be considered the year of need and negate the year of appropriation if a "no cost extension" is required to complete a non-severable requirement (deliverable) established in the year of the period of performance -- or -- would that non-severable requirement (not out of scope, clearer defining of requirement) have to be funded with the current year appropriation. NOTE: Funding for the deliverable is totally funded at beginning of the contract but not clearly defined until after the year of appropriation ended Sep 2013.


    Answer

    Unfortunately, in your background, you have not told me what appropriation, or “color” of money, is being used for this effort.  The reason why that is important is because if it were anything other than one of the annual appropriations (i.e. O&M, MILCON, or MILPERS) this whole question would be a moot point as all other appropriations have more than one FY in which to obligate them.  Therefore, I will have to assume that you are using the FY13 O&M appropriation on your contract.
     
    With that assumption given, your question really has two parts.  The first is: Does this effort fit within the Title 10, U.S. Code, Section 2410(a) definition for being allowed to cross Fiscal Years?  And the second is: Is this effort a bona fide need of FY13 or FY14, or some other time period?
     
    With regards to the first question, the annual funding policy applies to appropriations that are only available for obligation for one year, that is, the Operations & Maintenance (O&M) and Military Personnel appropriations.  Simply stated, the policy requires that you request budget only for the estimated cost of the goods and services needed in a given fiscal year.
     
    A notable exception to the annual funding policy concerns DoD financing of services contracts whose period of performance crosses fiscal years.  If the contract period is 12 months or less in duration, or if the contract produces a single outcome, product or report (that is, is nonseverable), DoD may finance the entire period of performance with budget authority available for obligation at the time of the contract award (Title 10, U.S. Code, Section 2410(a)).
     
    However, note that the component, agency, or lower-level authorities can prohibit the use of this exception as a matter of policy, strictly limiting O&M budget requests to the needs of a particular fiscal year.
     
    With regard to the second question, bona fide need is the year in which the requirement was recognized as necessary.  Since the original contract was awarded in FY13, using FY13 funds, I must assume that the effort is a bona fide need of FY13 as defined in Title 31, U.S. Code, Section 1502.  This is true regardless of how much time remained in FY13 when the contract was awarded.  I can only hope that the first monthly report was set to deliver in September 2013.  If the effort is not a bona fide need of FY13, your contract would be forward funding a FY14 bona fide need in direct violation of Title 31, U.S. Code, Section 1502(a).  And drawing into question a potential Anti-Deficiency Act violation as contained in Title 31, U.S. Code, Sections 1341 and 1517.
     
    Any “in scope” changes to this effort, therefore, must likewise be considered a bona fide need of FY13.  This makes perfect sense in your case given that you have said that the change is a “non-severable requirement (not out of scope, clearer defining of requirement).”  Thus, with this set of facts there is simply no way that justification could be made for using FY14 funds to pay for this requirement.
     
    Summary:  Since, you have stated that the final deliverable has been determined to be nonseverable, Title 10, U.S. Code, Section 2410(a) is quite clear with regards to the use of O&M funding for contracts that cross fiscal years. Therefore, with regards to the first question it appears to fit with statutory definitions.  With regards to the second question, while I am quite confused why you have a “no cost extension” that you are trying to determine how to fund, the effort seems to be pretty clearly an FY13 bona fide need that must be funded using the FY13 O&M appropriation.
    Suggestion:  We most strongly recommend that you contact your local comptroller organization and your legal counsel for their interpretation with regards to your effort and contract, particularly in light of Title 10, U.S. Code, Section 2410(a), Title 31, U.S. Code, Section 1502, and Title 31, U.S. Code, Sections 1341 and 1517.

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