B-200039.OM, OCT 30, 1980

B-200039.OM: Oct 30, 1980

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YOU ASKED WHETHER IT WAS PROPER TO OBLIGATE 1979 MONEY FOR THESE CONTRACTS. THE ANSWER IS THAT ONLY THAT PART OF THE CONTRACTS TO BE PERFORMED IN FISCAL 1979 SHOULD BE FUNDED WITH 1979 MONEY. WOULD HAVE TO BE ENTERED INTO. THE BASIC RULE ON OBLIGATING APPROPRIATIONS IS SET OUT IN 31 U.S.C. 712A. WE HAVE HELD THAT IN ORDER TO OBLIGATE A FISCAL YEAR APPROPRIATION FOR PAYMENTS TO BE MADE IN A SUCCEEDING YEAR. THE CONTRACT IMPOSING THE OBLIGATION NOT ONLY MUST HAVE BEEN MADE WITHIN THE FISCAL YEAR SOUGHT TO BE CHARGED. IT ALSO MUST HAVE BEEN MADE TO MEET A BONA FIDE NEED OF THE FISCAL YEAR TO BE CHARGED. 33 COMP.GEN. 57. WE HAVE FOUND THAT A BONA FIDE NEED FOR SERVICES DOES NOT ARISE UNTIL THE SERVICES ARE RENDERED.

B-200039.OM, OCT 30, 1980

SUBJECT: USE OF 1979 MONEY TO FUND 1980 INDIAN HEALTH CARE SERVICES (FILE B-200039)

SUB-TEAM LEADER, DENVER REGIONAL OFFICE - FLOYD JUSTICE:

RECENTLY, YOU REQUESTED OUR ASSISTANCE IN YOUR REVIEW OF CONTRACTS TO PROVIDE HEALTH CARE SERVICES TO HANDICAPPED INDIANS. YOU SAID THAT THE INDIAN HEALTH SERVICE, DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE (NOW DEPARTMENT OF HEALTH AND HUMAN SERVICES), ENTERED INTO SEVERAL CONTRACTS DURING THE LAST MONTH OF FISCAL YEAR 1979 FOR SERVICES TO BE RENDERED DURING THE REMAINING PART OF FISCAL 1979 AND THROUGHOUT MOST OF FISCAL 1980. YOU ASKED WHETHER IT WAS PROPER TO OBLIGATE 1979 MONEY FOR THESE CONTRACTS. THE ANSWER IS THAT ONLY THAT PART OF THE CONTRACTS TO BE PERFORMED IN FISCAL 1979 SHOULD BE FUNDED WITH 1979 MONEY. FOR SERVICES TO BE PERFORMED IN 1980, A NEW CONTRACT, FUNDED WITH 1980 FUNDS, WOULD HAVE TO BE ENTERED INTO.

THE BASIC RULE ON OBLIGATING APPROPRIATIONS IS SET OUT IN 31 U.S.C. 712A.

"EXCEPT AS OTHERWISE PROVIDED BY LAW, ALL BALANCES OF APPROPRIATIONS CONTAINED IN THE ANNUAL APPROPRIATION BILLS AND MADE SPECIFICALLY FOR THE SERVICE OF ANY FISCAL YEAR SHALL ONLY BE APPLIED TO THE PAYMENT OF EXPENSES PROPERLY INCURRED DURING THAT YEAR, OR TO THE FULFILLMENT OF CONTRACTS PROPERLY MADE WITHIN THAT YEAR."

IN INTERPRETING 31 U.S.C. 712A, WE HAVE HELD THAT IN ORDER TO OBLIGATE A FISCAL YEAR APPROPRIATION FOR PAYMENTS TO BE MADE IN A SUCCEEDING YEAR, THE CONTRACT IMPOSING THE OBLIGATION NOT ONLY MUST HAVE BEEN MADE WITHIN THE FISCAL YEAR SOUGHT TO BE CHARGED, BUT IT ALSO MUST HAVE BEEN MADE TO MEET A BONA FIDE NEED OF THE FISCAL YEAR TO BE CHARGED. 33 COMP.GEN. 57, 61 (1953); 35 COMP.GEN. 320, 321 (1955); B-187881, OCTOBER 3, 1977; AND B-133001, MARCH 9, 1979. GENERALLY, WE HAVE FOUND THAT A BONA FIDE NEED FOR SERVICES DOES NOT ARISE UNTIL THE SERVICES ARE RENDERED. SEE, E.G., B-174226, MARCH 13, 1972; B-187881, OCTOBER 3, 1977; B-133001, MARCH 9, 1979; AND B-192518, AUGUST 9, 1979. THE EXCEPTION TO THIS WOULD APPEAR TO BE WHERE THE SERVICES ARE PART OF A CONTRACT FOR AN END PRODUCT AND IT IS NOT FEASIBLE TO DIVIDE THE CONTRACT BETWEEN FISCAL YEARS. IN THAT CASE, THE NEED FOR THE SERVICES WOULD COINCIDE WITH THE NEED FOR THE PRODUCT. SEE B-187881, OCTOBER 3, 1977. THE HEALTH CARE SERVICES BEING PERFORMED IN THE PRESENT CASE SEEM TO FIT WITHIN THE GENERAL RULE - I.E., THEY MEET BONA FIDE NEEDS ARISING AT THE TIME THE SERVICES ARE RENDERED. SEE 58 COMP.GEN. 321, 324 (1979) (NORTON SOUND), WHERE WE EFFECTIVELY SO HELD.

THE APPROPRIATION BEING OBLIGATED IN THE PRESENT CASE IS THE 1979 APPROPRIATION FOR THE INDIAN HEALTH SERVICE, CONTAINED IN THE DEPARTMENT OF THE INTERIOR AND RELATED AGENCIES APPROPRIATION ACT, 1979, PUB. L. NO. 95-465, OCTOBER 17, 1978. SECTION 308 OF THAT ACT REINFORCES 31 U.S.C. 712A BY PROVIDING:

"NO PART OF ANY APPROPRIATION CONTAINED IN THIS ACT SHALL REMAIN AVAILABLE FOR OBLIGATION BEYOND THE CURRENT FISCAL YEAR UNLESS EXPRESSLY SO PROVIDED HEREIN."

THE APPROPRIATION ACT DOES EXPRESSLY PROVIDE THAT FUNDS MADE AVAILABLE THROUGH CONTRACTS AUTHORIZED BY THE INDIAN SELF-DETERMINATION AND EDUCATION ASSISTANCE ACT OF 1975 (25 U.S.C. 450) SHALL REMAIN AVAILABLE UNTIL SEPTEMBER 30, 1980. THIS PROVISION SATISFIES THE REQUIREMENT OF THE APPROPRIATIONS LIMITATION QUOTED ABOVE AND OVERRIDES 31 U.S.C. 712A (WHICH SPECIFICALLY SAYS "EXCEPT AS OTHERWISE PROVIDED BY LAW ***"). 58 COMP.GEN. 321, (1979). ANY CONTRACT AUTHORIZED BY THE INDIAN SELF DETERMINATION AND EDUCATION ASSISTANCE ACT THAT IS ENTERED INTO IN FISCAL 1979, OBLIGATING 1979 MONEY, THUS MAY COVER SERVICES TO BE RENDERED IN FISCAL 1980. HOWEVER, YOU INFORMED US THAT THE CONTRACTS IN QUESTION ARE NOT UNDER THE INDIAN SELF- DETERMINATION AND EDUCATION ASSISTANCE ACT. THEREFORE, THESE CONTRACTS MAY NOT GO BEYOND FISCAL 1979. A CONTRACT FOR HEALTH SERVICES ENTERED INTO DURING FISCAL YEAR 1979 (OTHER THAN THOSE UNDER THE INDIAN SELF- DETERMINATION ACT) WOULD HAVE TO TERMINATE BY SEPTEMBER 30, 1979, THE END OF THE FISCAL YEAR, AND A NEW CONTRACT, FUNDED FROM FISCAL 1980 FUNDS, WOULD HAVE TO BE ENTERED INTO FOR SERVICES TO BE RENDERED DURING FISCAL 1980. SEE 58 COMP.GEN. 321, 324, MARCH 14, 1979.

THIS MEMORANDUM IS A DISCUSSION OF LAW AS IT APPLIES TO THE GENERAL FACTS YOU GAVE US. BEFORE REACHING ANY FIRM CONCLUSIONS IN YOUR AUDIT REPORT ON THE BASIS OF THIS INFORMATION, YOU ADVISED US YOU WOULD WRITE A LETTER TO THE AGENCY IN ORDER TO FURTHER DEVELOP AND CONFIRM THE FACTS, AND TO GET THE AGENCY'S LEGAL JUSTIFICATION FOR ITS ACTION. PLEASE LET US KNOW WHEN YOU ARE READY TO SEND THE LETTER TO THE AGENCY.