Contingency Funding Chapter 3 Nov 11, v5. Learn. Perform. Succeed. Nov 11, v5 Learning Objectives Enabling Objectives Identify types of contingency funding.

Contingency Funding

Chapter 3

Nov 11, v5

Learn. Perform. Succeed. Nov 11, v5

Learning Objectives

Enabling Objectives• Identify types of contingency funding• Discriminate between various lines of accounting• Explain the contract board review process • Explain the contract ratification process

Terminal Objectives• Verify that a Purchase Request document is properly

documented and certified


Funding Contingency Operations

FISCAL LAW CONSTRAINTSAppropriated funds are subject to three basic fiscal constraints: Time, Purpose and Amount.“Time” control includes two major elements. First, appropriations have a definite life span. Second, appropriations normally must be used for the needs that arise during their period of availability. The general rule is that “current funds must be used for current needs.”

“Purpose statute”, prohibits spending money on objects other than those for which appropriations were made. The purpose statute typically refers to the concept of “color of money”,

Amount, of paramount concern is ensuring that the DoD complies with the "Anti-Deficiency Act," 31 USC § 1341(a), which prohibits obligating or spending money before it is appropriated or in amounts in excess of the amount appropriated


Time: Appropriations Availability

APPROPRIATIONS AVAILABILITY

funds made available in FYX1 Appropriations Act

Annual/ Appropriations O&M (3400)

Multiple Year Appropriations RDT&E (3600)

Procurement (3010, 3020, 3080)

Current Year

Prior year, but still available for new obligations

Expired - Available for Disbursement and Adjustment Only

Cancelled - Not Available for any Purpose. Must use Currently Available Funds for Disbursements

FY1 FY2 FY3 FY4 FY5 FY6 FY7 FY8 FY9


Time & Purpose: “Color” of Money

APPROPRIATION CATEGORIES OBLIGATION TIME LIMITS

Procurement Three (3) Years

Research, Development, Test and Evaluation (RDT&E) Two (2) Years

Operations and Maintenance (O&M) One (1) Year

Military Construction Five (5) Years

Military Personnel One (1) Year


Appropriation Act [Title 31, U.S. Code, Sec 1301] • Requires funds to be used only for the purposes and programs for which the

appropriation was made• AKA “The Purpose Statute”• Violations are misappropriations

Anti-Deficiency Act [Title 31, U.S. Code, Sec 1341 & 1517 ] • Prohibits making or authorizing an obligation in excess of the amount

available• Forbids obligation to pay money from the US Treasury in advance of an

appropriation• Requires agency to fix responsibility for violations of the Act

Bona Fide Needs Rule• Requires funds to be used only for needs or services in the year of the

appropriations obligation period

Fiscal Law Constraints


Typical funds seen by a CCO

• O&M (1-yr money)• Procurement (systems, vehicles, major equipment >$250K)• Construction (MILCON)• Overseas Humanitarian, Disaster, and Civic Aid (OHDACA)• Non Appropriated Funds (NAF)• Official Representation Funds (ORF)• Combatant Commander Initiative Fund (CCIF)• Foreign Disaster Assistance (FDA)• Commanders Emergency Response Program (CERP)• Stafford Disaster Relief & Emergency Assistance Act (FEMA)


O&M Sub-Appropriations

Emergency and Extraordinary Expenses – Funds to pay for any emergency or extraordinary expense which

cannot be anticipated or classifiedOfficial Representation Funds

– Used to maintain the standing and prestige of the US by extending courtesies to guests of the DoD

CINC Initiative Funds – Fund contingencies, selected operations, special training,

humanitarian assistance, and civic assistanceHumanitarian and Civic Assistance

– Promotes security interests of U.S. and country in which activities are carried out . Not to be used for military of Para-Military activities


MILCON

Obligation Availability of 5 YearsUnspecified Minor Construction Projects (UMMC)–$750K to $3M per project–Most common

Specified Military Construction (MILCON)–Projects exceeding $3M–Requires Congressional approval


Construction Funding Con’t


Purchase Request

Army DA 3953

Air Force AF Form 9, AF Form 4009, AF Form 616

Navy NAVCOMPT 2276 and 1250-2

Interagency DD Form 448 (MIPR)

Generic DD Form 1348-1A Issue Release/Receipt Document

• Actions always initiated by “PR”


MIPR – DD Form 448

DD Form 448, Military Interdepartmental Purchase Request (MIPR)• Contract Offloading: Process whereby an agency requests supplies or

services via contract action from another agency• Two Kinds:

– CAT I Contracting organization uses their own funds on contractual instrument

– CAT II Contracting organization directly cites requesting unit’s funds on the contractual instrument

• Each order must be supported by a Economy Act Determination and Finding (D&F) demonstrating best interest of the government

• Comptroller functionally responsible, coordinates with requesting activity


Discussion

DD 448 MIPR Example


Preparing a PR

• What should the PR describe?

• Who should write the PR?

• Who should be available for questions?

• What if there are problems with the PR?

• Who writes the SOW/ PWS?

• Who approves the PR?


How to read a fund cite

Accounting classification codes (also referred to as a fund cites) are required on all purchase requests

Example

571340030867A22310100159290503000ESP8ZPosition #: 1-2 3-4 5 6-9

ACRN Agency FYAppropriation

57-1-3400-30867A22310100159290503000ESP8Z57 = USAF1 = FY 2001 or 20113400 = O&MNote: ACRN is not yet included


• ACRN Accounting Classification Reference Number (#1-2)– Alphabetic; serves as reference identifier to line of accounting– A second line of accounting begins AB

• Agency (#3-4):– 17 Dept of the Navy (includes USMC)– 21 Dept of the Army– 57 Dept of the Air Force– 97 Dept of Defense

• Fiscal Year (FY) denoted with one digit (#5):– FY11 = 1

• Appropriation (#6-9):– Specific to serviceAA571340030867A22310100159290503000ESP8Z

LOA Funding Citations


Appropriations

704070307020Family Housing Construction

330012052050Military Construction

0400360013192040Research, Development, Test & Evaluation (RDT&E)

030030801810/11092035Other Procurement

N/AN/A1611N/AShipbuilding & Conversion

N/AN/AN/A2034Procurement (Ammunition)

N/AN/A15072033Procurement (Weapons & Tracked Vehicles)

N/A3020N/A2032Procurement (Missiles)

N/A301015062031Procurement (Aircraft)

N/A704570357025O&M, Family Housing

N/AN/AN/A2065O&M, National Guard

N/A37401806/11072080O&M, Reserve

010034001804/11062020O&MN/AN/AN/A2060National Guard Personnel

N/A37001405/11082070Reserve Personnel

N/A35001453/11052010Military Personnel

OSDAIR FORCENAVY/MCARMY

Stock Fund *(Also known as Navy Work Capital Fund) *4930


Test Yourself

• AA2102020…

ACRN = First (or only) LOA21 = Department of the Army0 = FY102020 = Operations and Maintenance


Test Yourself

• Second LOA on same document• Department of the Navy• FY 2010• Military Construction

AB1701205


What is a JARB?

In general, each requirement will require prioritization from the commanders in the field The JARB's main role is to approve and prioritize JFC-designated, high-value and/or high-visibility requirements and determine the proper source of support for these requirements.

• Once the PR is approved by the Service process, the requirement will be sent to the JARB


State Department

Arms Export Control Act– Permits DoD to provide defense articles and services to

foreign countries to enhance self defense.

Foreign Assistance Act– Permits the US to provide foreign assistance and

military/ security assistance . Similar to AECA but allows more flexible terms.


Foreign Funding Options

Section 607 of Foreign Assistance Act • Authorizes US government to furnish commodities and services to friendly

foreign countries, includes peacekeeping and disaster relief efforts on a reimbursable basis

UN Section 7 of United Nations Participation Act (UNPA)• Authorizes US to furnish services, facilities, or other assistance when

requested by the United Nations on a reimbursable basis, unless waived by the SECSTATE (after consulting with SECDEF)

Acquisition and Cross Servicing Agreement, NATO Mutual Support Act(Public Law 96-323)

• Provides DoD with simplified authority to acquire logistics support without resorting to AECA

http://images.google.com/imgres?imgurl=http://www.theodora.com/flags/new14/nato_flag.jpg&imgrefurl=http://www.theodora.com/flags_12b.html&h=396&w=500&sz=19&hl=en&start=9&um=1&tbnid=fGgF6LOo_Ds1EM:&tbnh=103&tbnw=130&prev=/images?q=NATO&svnum=10&um=1&hl=en&safe=active&sa=N

http://images.jupiterimages.com/common/detail/12/16/22561612.jpg


PEPFAR Funding

• National HIV/AIDS Prevention Program– $ millions being spent each month around the world by

DoD contracting officers. Funds are unique, sent via MIPR and don’t expire.

http://www.pepfar.gov

http://www.pepfar.gov/


Practical Exercise

Purchase Request DocumentsTraining Practical ex. # 1


Practical Exercise

Funding Contingency Operations


Contractor Payment Options

• The full spectrum of government financing should be considered to facilitate business partnerships and economic growth based on your location, to include: progress payments, payments for partial deliveries, performance based payments and commercial interim payments.

• Advance payments present greatest risks• Factors to consider before awarding advance payments:

(1) Conditions that warrant the request (e.g., lack of an established/robust banking system, unstable commercial environment, hostilities),

(2) Consideration of other financing options (e.g., progress payments, partial payments),

(3) Tangible risks and mitigation plan, and (4) Adequate security to protect the Government’s interest.


Unauthorized Commitments & Ratifications

• The term “unauthorized commitment” is an agreement that is nonbinding solely because the government representative who made it lacked the authority to enter into that agreement (See FAR 1.602-3).

• Ratification is the act of approving an unauthorized commitment by an official who has the authority to do so, for the purpose of paying for supplies or services provided to the government as a result of an unauthorized commitment (FAR 1.602-3(a)).


Ratification Checklist

Supplies or services have been provided to and accepted by the Government, or the Government otherwise has obtained or will obtain a benefit resulting from performance of the unauthorized commitment

The ratifying official has the authority to enter into a contractual commitment; The resulting contract would otherwise have been proper if made by an

appropriate contracting officer; The contracting officer reviewing the unauthorized commitment determines the

price to be fair and reasonable; The contracting officer recommends payment and legal counsel concurs in the

recommendation, unless agency procedures expressly do not require such concurrence;

Funds are available and were available at the time the unauthorized commitment was made; and

The ratification is in accordance with any other limitations prescribed under agency procedures. (FAR 1.602-3(c)).


Practical Exercise

Unauthorized Commitment


Work on your Group Projects

Contingency Funding Chapter 3 Nov 11, v5. Learn. Perform. Succeed. Nov 11, v5 Learning Objectives Enabling Objectives Identify types of contingency funding.

Documents

current funds

needs rulerequires funds

extraordinary expenses

v56 typical funds

spending money

appropriations availability

v55 appropriation act

purpose statuteviolations