Fiscal Year Appropriation Chargeable for Contract Modifications

B-202222: Dec 31, 1981

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GAO was asked whether the fiscal year appropriation for 1980 or 1981 should be charged for the costs of modifications to a contract with a school district. The contract and the modifications provided for the necessary facilities and staff to operate nonresidential youth camps of 8 weeks in duration. Under the terms of the original contract, the school district was to provide the necessary facilities and staff for the program from January to September 1980. In the modification, the contract was extended until May 1981 and the school district would perform payroll services as well. The agency contended that these modifications should be charged to its 1980 appropriation. The agency's appropriation act overrode the program's authorizing act which provided that the funds were to remain available for obligation for 2 fiscal years. No part of any appropriation contained in the act should remain for obligation beyond the current fiscal year unless expressly provided for. The modifications could be charged to the 1980 appropriation only if the agency had a bonafide need for them in fiscal year 1980. The agency's need for payroll services, staff, and facilities arose only when those services had to be performed, between October 1980 and May 1981. Therefore, the cost of services to be performed in 1981 could only be charged to the agency's 1981 appropriation. The Antideficiency Act forbids the incurring of obligations in advance of available appropriations to pay for them. An attempt to extend performance of a contract into a subsequent fiscal year before appropriations for that year have become available is a violation of that Act. To provide for continued performance in a subsequent fiscal year, the agency may include renewal options in its contracts which would enable it to extend the period of performance of these contracts. However, the agency may only exercise the options when the appropriation for the subsequent fiscal year becomes available.

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