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HHS Reference Tool for Contract Funding, Formation and Appropriations Law Compliance

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Case Study - Contracting in Advance of a Bona Fide Need

Scenario:

In June 2010, a Project Officer (PO) approaches the Centers for Disease Control and Prevention’s Contracting Office with acquisition documentation requesting award of a simplified acquisition estimated at $90,000 to purchase maintenance services for a copier for the period October 1, 2010 through September 30, 2011.

The PO indicates that s/he has the funding now, but is uncertain whether s/he will have funding available at the beginning of FY11 to fund this order.

Discussion:

The Contracting Officer cannot place the order using FY 10 funds for services that are a bona fide need of FY 11, as this would be an Anti-Deficiency Act violation.

These types of services should be procured on a different schedule to avoid the issues of funding at the beginning of a fiscal year and of contracting in advance of a bona fide need. Even though these are severable services, i.e., continuing and recurring in nature where tasks can be separated into components (in this case, service calls), the Federal Acquisition Streamlining Act (FASA) (41 U.S.C 253l, implemented by FAR 32.703-3(b) and 37.106(b)) gave agencies greater flexibility in their use of fiscal year appropriations. As a result, this order could be awarded to cross fiscal years, i.e., begin in one fiscal year and end in the next fiscal year, and be fully funded from the initial year’s (in this case FY 10) appropriation, as long as the period of performance does not exceed 1 year.

 

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