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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. [6]
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With FA awards,the bona fide need rule is met at the time of the award's obligation.
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HT: https://www.adr.gov/adrguide/afmc.html
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Frequently Asked Questions
How does this apply to Inter-/Intra-Agency Agreements (IAAs) and the Economy Act?
The Economy Act (31 U.S.C. § 1535-1536) gives broad authority to Federal government-wide engagement in inter- and intra-agency reimbursable agreements, which result in a more economical or convenient transaction for the customer agency over the use of commercial services. Under these agreements, the bona fide need rule, as explained above, still exists. In other words, the appropriation year time limits on the funds is still in place within these agreements, and the bona fide need is met at the time the requesting agency obligates those funds in a financial assistance award.
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References
[1] Principles of Federal Appropriations Law, Vol. II, p.10-39 (Feb. 2006).
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