If a contracting officer awards a $500,000 contract with an "accounting and appropriation
data" number = $500,000, does that agency have to
spend the entire $500,000 with the contractor?
In other words, can the agency spend less than
the $500,000 without losing the money from next year's budget? Does the answer depend on whether the funds are expiring or non-expiring funds?

By joel hoffman on Wednesday, January 10, 2001 - 05:14 pm:

I keep getting an "internal error message". I certainly hope that there aren't a pile of duplicate messages in a queue, somewhere.

Dear Anon, I believe we need some more info to better answer your question. The answer to your last question is "generally, but not always yes". happy sails! joel

By John Ford on Thursday, January 11, 2001 - 12:29 pm:

Anon, without getting into the specifics of your situation, I think you are asking about the old myth that an agency will have its budget reduced if it does not obligate all funds appropriated to it.
Unless there is a serious under obligation, this generally will not happen. When it does happen, there are usually other factors at play, such as discontinuance of programs or transfer of programs to another agency. There are always unobligated balances left in appropriations at the end of each fiscal year. Because of the budgetary cycles, this usually has no effect on next year's appropriation. This is particularly true of multi-year funds, that is funds that are available for obligation for more than one year. Therefore, the idea of spending for the sake of spending is wrongheaded.

By Kennedy How on Thursday, January 11, 2001 - 01:02 pm:

Having seen the budgetary game internally for our own little group who had a "favorite son" status for a time, I think that you want to budget and spend what you can, when you can. A lot of times, at the end of a FY, the money that's been saved for "a rainy day", which never came, is now being obligated to cover those "nice to haves". The funding is budgeted for that sort of thing, and now, since we have it, and since we do need the the "nice to have", we go about and put it on contract. At that time, yes, it's spent all with one contractor, or it could be spread out to multiple sources for say a family of items.

I remember a couple years ago, the budget folks came by my office and said "We have $500K to spend, do you have any projects that need funding?" Our office was developing Electronic Commerce initiatives, and we had a laundry list of projects that had been compiled since the current contract was awarded, but not acted upon. So, we got into the projects queue, and we got a share of it.

Not to mention we had somebody come to us and said "We have $100K of expiring money, we were told to do this, we know you've been working on it for your agency, can you help us?" They ended up MIPRing US money!

There's always a little left over, here and there. For our sustainment accounts, we're usually short, so even if we don't spend it all, it's always the extra they give us that we don't spend; we've already spent the yearly budget. For the ancilliary accounts for projects, etc., it's a bit different, but our wish list is pretty comprehensive, and we normally only get funded for the most important stuff.

Kennedy

By Anonymous on Thursday, February 15, 2001 - 12:53 pm:

ANON, Expired appropriation are funds no longer available for new obligations, but still may be used to pay valid obligations, incurred before the funds expire. Unexpired Funds are funds that remain available for new obligations. Agencies do not have free reign to spend appropriated funds. The restrictions can be in the form of other legislative action on the amount of time that funds are available or on the tpe of programs that an appropriation may fund. Congress places further limitations on the use of appropriate funds by placing restrictin on the length of time funds are available for obligation or spending. Annual funds are available for obligation during one specific fiscal year. A contract that is funded by annual appropriations may not cross fiscal years, except in accordance with statutory authorization, or when the contract calls for an end item that cannot feasibly be subdivided for separate performance in each fiscal year. In short, if you do not spend the money, I do not think you can keept it. Use or Lose I think that is the Federal Government's motto.

By Anonymous on Thursday, February 15, 2001 - 02:44 pm:

If the bona fide need turns out to be less than expected the agency does not have to spend all the money obligated on the contract. John ford and anon 12.53 are correct.

By John Ford on Thursday, February 15, 2001 - 03:56 pm:

Anon 12:53, I need to correct some things you have said. It is contracts for severable services that may not cross fiscal years without specific authorization. This should not be a problem now as Congress has passed two laws, one for civilian agencies and the other for DoD that allow service contracts to cross fiscal years whether those contracts are for severable services or not. However, those contracts cannot exceed 12 months Severability does not apply to contracts for supplies. The key for supplies is that the contract must meet a bona fide need of a fiscal year for which the funds are available for obligation. Thus, a proper obligation can be made in one fiscal year and the supplies delivered in another fiscal year, not necessarily the next fiscal year.
Another point, when you say "spend" the money, I presume you are talking about obligating funds. In fiscal jargon, an expenditure occurs when the contractor bills and is paid for work done. Until that time you have obligated but unexpended funds.