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Appropriated funds expire following their period of availability (or, period of obligational availability) established in the Appropriations Bill.
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Spending appropriated funds beyond after their period of availability violates the Anti-Deficiency Act (ADA) and is monitored closely by the Office of Management and Budget (OMB).
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Federal awarding agencies are directed by congressional law to expend appropriated funds properly and within the legally set time-frame.
Spending appropriated funding outside of its period of availability is a violation of the Anti-Deficiency Act (ADA) and is monitored closely by the Office of Management and Budget (OMB). Federal agencies spend appropriated funds properly via application of what is know as "the bona fide need rule", which establishes that an appropriation is available for obligation only to fulfill a genuine, or bona fide, need of the period of availability for which it was made.(2)
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With financial assistance awards,the obligation requirement bona fide need rule is met at the time of the award's obligation.
An agency's compliance with the bona fide need rule is measured at the time the agency incurs an obligation. In the grant context, the obligation occurs at the time of award. Bona fide need pdf, p2.
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This remains true with FA awards that have periods of performances for spanning multiple years (e.g. three-to-five year awards). This is slightly different from contracts, which has caused some confusion in the past among those with contracting backgrounds working with FA.
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