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    If we are to buy equipment and we get bids form firms and some offer 1 year, 2 year or 3 year warranties can we use 3400 money, so long as the contract is NOT funded over a milt-year basis? In other words, can 3400 money be used to purchase something that will "perform" beyond the FY it was purchased in.


    Answer

    FM Answer:
     
    The question revolves around the purchase of services/warranties in advance of the actual need, i.e. purchasing a 3 year warranty when it is not required using O&M (3400) funding.  The issue that is presented is a violation of the Bona Fide Need Rule.  The Bona Fide Needs Rule (which is actually a law - Title 31, US Code, Sec 1502) requires that appropriated funds be used only for needs or services that arise in the year(s) of the appropriation’s obligation availability period.  Since O&M obligation availability period is one 1 year then you would be purchasing services/warranties past that period.  The situation you described appears to violate the Bona Fide Need Rule.
     
    It is strongly suggested you speak with the BFM and/or Comptroller to ensure there are no additional policies set forth through your Command/Service.
     

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