Normally, we can't execute funds (perform) until we have received funding from up the HQ chain that tells us that we have our appropriation (Time rule).
In reimbursable operations, the same should hold true, no performance until the customer has provided funding.
In instances where the funds haven't been provided, but we still perform, is that an ADA?
Would that also constitute an UAC on the ordering activity?
In order to answer this question, two assumptions have to be made. The first is that the MIPRs in question are NOT direct citation documents where the requestor’s funding data from the MIPR will be put directly on a contract that the performing organization has, or will award. If that were the case, this scenario would clearly be an Anti-Deficiency Act (ADA) violation. The second assumption that has to be made is that the performing organization has gone through the process to obtain 10 USC § 2208(a) authorization to perform reimbursable work and has submitted an estimate of the anticipated reimbursable work that it will perform in the fiscal year. The second assumption is of paramount importance to this particular question.
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While the DoD Financial Management Regulation (FMR) 7000.14-R, Volumes 3, 11A, and 11B address reimbursable activities, Air Force Instruction (AFI) 65-601V1, Chapter 5, Section 5A, Paragraph 5.1 does perhaps the most succinct job of distilling the FMR language to explain the concept and how the process works once all of the permissions have been obtained. AFI65-601V1 states (underlining added):
5.1. General Reimbursement Guidance:
5.1.1. The appropriation reimbursement concept avoids duplicating services, facilities, personnel, and stocks of supplies and materiel, and requires the agency requesting these services or supplies to budget for the cost and to defend its requirements to the President and the Congress.
5.1.2. The Office of Management and Budget (OMB) includes anticipated appropriation reimbursements as part of approved apportionments. SAF/FMB transmits this funding authority to the commands, in addition to, and separate from, funds appropriated exclusively for Air Force mission requirements.
5.1.3. MAJCOMs will not allot anticipated reimbursements unless they have reasonable assurance that the reimbursements will be collected. Even when reimbursements are apportioned and allotted, these estimates do not become budgetary resources available for obligation unless you have valid orders (including written agreements), have furnished goods or services and there is entitlement, or in the case of orders from the public (that is, financed by other than federal government sources), the requester has made advance payment. EXCEPTION: in the case of the Consolidated Sustainment Activity Group – Supply, under the Defense Working Capital Fund (DWCF), 10 U.S.C. 2210(b) authorizes, with OMB approval, incurring obligations against anticipated reimbursements.
5.1.5. Financial Management and Comptroller offices will credit reimbursements to appropriations based on the type of work done. Finance reimbursements from appropriations that fund similar direct program requirements. For example, Research Development Testing and Evaluation (RDT&E) appropriation finances reimbursable RDT&E efforts.
5.1.6. DoD FMR 7000.14-R, Volume 11A lists the types of costs that are reimbursable and the amounts to recoup when DoD components do work or sell property within the Department of Defense, to other U.S. Government agencies, and to private parties when allowed by legal authority.
Therefore, since funds are allotted to the performing organization for the anticipated reimbursable work (for which the requesting activity’s funds will reimburse), as long as there is a letter of intent (which would constitute an obligation of the ordering activity), the reimbursable work may commence in advance of receipt and acceptance of a formal order (i.e. MIPR). However, FMR, Volume 11B, Chapter 11, Paragraph 110108 says, “While there may be some services furnished by a DWCF activity prior to receiving a funded order, this should be a rare occurrence. Whenever this occurs these services are performed on the basis of anticipated orders or for programs included in approved budget requests.” This paragraph goes on to describe the process that the performing organization can utilize to request the authorization to directly bill the customer’s appropriation account should the customer fail to provide a funded order.
Conclusion: While it may be a less than stellar business decision to begin reimbursable work prior to receipt of a funding document, i.e. a MIPR, agreement, etc., doing so does not constitute an ADA violation.
Suggestions: First, for a better understanding of reimbursable activities and requirements, read DoD Financial Management Regulation (FMR) 7000.14-R, Volume 3, Chapters 8 and 15, Volume 11A, Chapters 1, 2 and 3, and Volume 11B, Chapter 11. Second, read your Service’s financial management regulation, paying particular attention to those areas that deal with reimbursable activities. Finally, We most strongly recommend that you contact your local comptroller organization, and legal counsel for more information on your specific reimbursable work authorization process and their policy interpretation of this issue.