(1) If there are no current year replacement funds (for whatever reason) for the $20K, no ability to de-scope or T4C as work is complete; and contractor has invoiced everything can invoice subject to final rates, and the funds cancel on 9/30 -- at what point is there an ADA violation -- given it's not clear if Govt will owe the $20K or contractor may owe Govt some amount, or it could be a break even?
(2) It's after 9/30 and the funds cancelled; now it's Oct 2, and the audit is near complete - Can the Govt now use the funding that became available Oct 1 to cover the $20K that cancelled on 9/30 before the audit is completed that would finalize the rates? (NOTE: it still not known if Govt owes, contractor owes or break even, but the contract value has a not changed despite the cancelled funds.)
Our Understanding of the situation:
Open full Question Details
The original obligated but unexpended funds will move to cancelled phase of the appropriation’s life cycle at the end of the current fiscal year, i.e., no longer available for obligation, obligation adjustments or expenditure.
Final indirect rates are under review and agency does not expect them to be finalized before the end of the current fiscal year.
At the beginning of the next fiscal year, the unexpended $20K is returned to the general fund of the Treasury
Situation: Final rates may result in the government owing some amount to the contractor not greater than $20K*.
An Anti-Deficiency Act (31 U.S.C. Chapter 13, Subsection III) violation does not occur if three conditions are met: (1) the value of rate adjustment submitted in a valid invoice does not exceed the balance of the unexpended amount that was previously available to pay the bill ($20K); (2) the invoice value is not greater than 1% of the current (available for obligation) “total amount of the appropriation for that purpose” and (3) the current appropriation for that purpose has sufficient budget authority with which to pay the invoice, budget authority either unobligated or able to be deobligated.
If the rate determination is in favor of the contractor, the contractor will submit an invoice. If those cited conditions are met when the agency received the invoice, no ADA violation occurs and the agency can pay the invoice from any current appropriation available for the same purpose. Given that you have shown the foresight to anticipate the possibility of a violation, you are also in a position to determine in advance if both of those conditions will be met. Good of you to get ahead of the possible outcomes.
An ADA violation does occur when the agency determines that it cannot meet those condition, e.g., it determines that the closed account’s previously unexpended balance is less than the value of the invoice it must pay out of current funds, it determines that it no longer has a current appropriation for the same purpose (the rate adjustment is for the IDIQ to supported flying desks but DoT no longer has or supports flying desks nor does it have the associated appropriation). Let the agency comptroller make that determination since it will be s/he with whom a final statutorily-compliant resolution rests. The comptroller will also determine and initiate any internal or external reporting, usually citing a date “that the agency became aware.” “Determination” isn’t as exact as when a medical practitioner looks at the clock and calls out a time for the birth certificate.
Be mindful that this answer is based on incomplete agency information, and as with any matter of fiscal law, always consult your agency comptroller and your agency legal advisor.
*Assumption that the cost-reimbursement IDIQ contract contained FAR 52.232-20, Limitation of Cost clause, which limits the government's liability if the contractor exceeds the total estimated cost.