Page History

...

Background

...

Each year Congress passes an appropriations bill which authorizes the federal government to expend public funds in specified ways. This is a constitutional requirement, often referred to as the ‘power of the purse’, which means the federal government cannot spend federal funds without express congressional approval.

...

Frequently Asked Questions

...

How is the bona fide need rule met with financial asisstance awards (grant and cooperative agreements)?

With FA awards, the 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. [8]

With FA awards, expenditures against the obligation, even though after the appropriation expiration itself, are valid for the award’s entire period of performance (which could be more than one year), or the cancellation of the appropriation, whichever is earlier. Unless, of course, a specific legislation states otherwise.

Briefly stated, the "obligational event" for a grant generally occurs at the time of grant award. Therefore, this is when the grantor agency must record an obligation under 31 U.S.C. § 1501(a)(5), not when the grantee draws down the funds or when the grantee incurs its own obligations. See B-300480, Apr. 9, 2003, affd, B-300480.2, June 6, 2003.[9]

An appropriation account expires “[a]t midnight on the last day of an appropriation’s period of availability” and is “no longer available for incurring new obligations.” However, an expired appropriation “remains available for 5 years for the purpose of paying obligations incurred prior to the account’s expiration and adjusting obligations that were previously unrecorded or under recorded.” Following the five-year period, the account is closed, and “[a]ny remaining balance (whether obligated or unobligated) in the account shall be cancelled and shall thereafter not be available for obligation or expenditure for any purpose.” This means that the funds are “returned to the general fund of the Treasury.” “Collections authorized or required to be credited to ... [the] appropriation account, but not received before closing of the account ... shall be deposited in the Treasury as miscellaneous receipts.” In the event that obligations or adjustments to obligations that should have been charged to an account are discovered after the account is closed, they “may be charged to any current appropriation account of the agency available for the same purpose” as the closed account as long as they are “not chargeable to any current appropriation account of the agency.” Congress may exempt appropriations from these rules through specific legislation. [10]

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 

For example, if NOAA issues appropriated funds to a FWS program via an IAA, and the FWS program issues an FA award with those funds, the FWS program must obligate the funds prior to the expiration date of the appropriation for NOAA funds obligated from the IAA. 

Learning Aids

...

View file
name Resource Mgmt Approp in FA 3.15.2017.pdf height 250

HT: https://www.adr.gov/adrguide/afmc.html

Resources

...

References

...