Can I obligate the government to purchase a supply (asphalt, concrete and other construction material) that will be use on the project that crosses the fiscal year? The first delivery of the item will be in September and partial delivery will be completed in FY 22 depending when will the project will be completed. Am I violating the bona fide need rule and ADA?
We get this question often at AAP; you can access our full Q&A repository using Search, located in the top-right corner of our site. There are some great answers to questions very similar to yours. As a result, I will keep this short and to the point.
For your scenario, you would only be violating the Anti-Deficiency Act (Title 31, U.S. Code, Sec 1341 & 1517) if you obligated money in excess of the amount you have available or you obligated in advance of having the appropriation (e.g. obligated FY22 money in FY 21. September per your example above). See our great Aquipedia article on Anti-Deficiency.
Bona Fide Need Rule: “The balance of an appropriation or fund limited for obligation to a definite period is available only for payment of expenses properly incurred during the period of availability…” 31 USC §1502(a).
Construction contracts have different rules to help agencies determine the bona fide need; for us in DoD, we follow the statutory guidance at 10 USC §§ 2801 and 2811.
The following is from the 2019 Fiscal Law Desk Book (Chapter 3): Contracts for construction are considered as similar to non-severable service contracts. Construction contracts may constitute a bona fide need of the fiscal year in which the contract is awarded even though performance is not completed until the following fiscal year. However, the requirement to enter into the contract must exist during the funds’ period of availability. The contracting agency must intend for the contractor to begin work without delay.
A determination of what constitutes a bona fide need of a particular year depends upon the facts and circumstances of a particular year (e.g. weather). Associate General Counsel Kepplinger, B-235086, Apr. 24, 1991. In analyzing bona fide needs for construction contracts, the agency should consider the following factors:
- Normal weather conditions. A project that cannot reasonably be expected to commence on-site performance before the onset of winter weather is not the bona fide need of the prior fiscal year.
- The required delivery date.
- The date the government intends to make facilities, sites, or tools available to the contractor for construction work.
- The degree of actual control the government has over when the contractor may begin work.
For example, suppose a barracks will not be available for renovation until 27 December 2016 because a brigade is deploying on 20 December and cannot be disrupted between 1 October and 20 December. If the normal lead-time for starting a renovation project of this type is 15 days, then the renovation is a bona fide need of FY 2017 and the contract should be awarded in FY 2017 using FY 2017 funds. Accordingly, use of FY 2016 funds under these facts violates the Bona Fide Needs Rule.
For your scenario; if the materials you are ordering in September need to be ordered in September to meet the construction schedule, you would not be violating the bona fide need rule.