[Request for Decision About Proper Fiscal Year Appropriation To Charge for VA Contract]

A Veterans Administration (VA) certifying officer requested a decision concerning the proper fiscal year appropriation to charge for: (1) a 1984 cost-reimbursement-fixed-fee contract; and (2) a 1985 contract modification providing for an increase in the contract's cost. The officer maintained that, since the contract would take several years to complete, applicable regulations would prohibit the use of 1984 appropriations to fund the entire contract, while the VA Office of the General Counsel maintained that the contract was not severable and VA should fund its entire cost from 1984 appropriations. GAO held that: (1) no agency may obligate an appropriation for the needs of a limited period of time, such as a fiscal year, for the needs of subsequent years; and (2) amounts for increases in cost-reimbursement contracts that exceed the original contract ceiling price and are not based on an enforceable antecedent liability, may be charged to funds available when a contracting officer grants a contract price increase. GAO found that: (1) VA should have charged the full original contract price to 1984 appropriations, since it executed the contract then; and (2) the contract modification was properly chargeable to the appropriation available when VA approved the modification in 1985, since the amount involved exceeded the original contract ceiling price. Accordingly, VA should pay the cost increase from its 1985 appropriations.