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  • Question

    Are we allowed to put banked money for fees on a contract? It was done last year, but I believe that was improper. Please advise and cite the location in the FAR/DFARS. Thank you!


    Answer

    Banked money or parking of funds is restricted  by 31 U.S. C 1501 - Documentary evidence requirement for Government obligations. "An amount shall be recorded as an obligation of the USG only when supported by documentary evidence of a binding agreement between an agency and anothger person that is (A) ... (B) executed before the end of hte period of availability for obligation of the appropriation or fund used for specific goods to be delivered, real property to be bought or leased, or work or service to be provided;..."   Notice how it does not authorized for future unknown contingencies or banking or parking.  Then head over to 48 CFR 32.703-1 General. "(a) If the contract if fully funded, funds are obligated to cover the price or target price of a fixed-price contracdt or the estmated cost and any fee of a cost-reimbursement contract." Again, no mention at all about how we should park or bank funds. 

    10 USC Parking of funds: prohibition; penalties states, "

    (a)Prohibition.—

    An officer or employee of the Department of Defense may not direct the designation of funds for a particular purpose in the budget of the President, as submitted to Congress pursuant to section 1105 of title 31, or the supporting documents of the Department of Defense component of such budget, with the knowledge or intent that such funds, if made available to the Department, will not be used for the purpose for which they are designated.

    (b)Penalties.—

    The direction of the designation of funds in violation of the prohibition in subsection (a) shall be treated for purposes of chapter 13 of title 31 as a violation of section 1341(a)(1)(A) of such title.

    Even further to the point, is the discussion one must have focused on bona fide need. Please see the following for the bona fide need rule https://acqnotes.com/acqnote/careerfields/bona-fide-need-rule and DoD Financial Management Regulation, V3, Ch8. https://comptroller.defense.gov/Portals/45/documents/fmr/archive/03arch/03_08.pdf

     

    I also encourage you to read this AAP question from a previous inquiry. https://www.dau.edu/aap/pages/ArticleContent.aspx?itemid=17678

     

     

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