HHS Reference Tool for Contract Funding, Formation and Appropriations Law Compliance
HHS Reference Tool Content
- I. Basic Appropriations Law Concepts
- II. Decision Factors
- A. No-Year Appropriation
- B. Bona Fide Needs Rule
- C. Acquiring Severable Services
- 1. Annual Appropriation
- 2. Multiple-Year Appropriation
- 3. Modifications
- D. Acquiring Non-severable Services
- 1. Funded in Full
- 2. Multi-year Contracting
- 3. Options After Initial Requirement
- 4. Modifications
- E. Acquiring both severable and non-severable services
- III. Case Studies
- IV. Frequently Asked Questions
Basic Appropriations Law Concepts
The Supreme Court has expressed the guiding principle of "appropriations law" as follows: "The established rule is that the expenditure of public funds is proper only when authorized by Congress, not that public funds may be expended unless prohibited by Congress" (United States v. MacCollom, 426 U.S. 317, 321 (1976); see also B-288266, Jan. 27, 2003). Thus, the concept of "legal authority" is central to the spending of federal money.
The term "federal appropriations law" or "federal fiscal law," refers to the body of law that governs the availability and use of federal funds. Federal funds are made available for obligation and expenditure by means of appropriation acts (or occasionally by other legislation) and the subsequent administrative actions that release appropriations to the spending agencies. The use or "availability" of appropriations once enacted and released (that is, the rules governing the purpose, amounts, manner, and timing of obligations and expenditures) is controlled by various authorities: the terms of the appropriation act itself; legislation, if any, authorizing the appropriation; the "organic" or "enabling" legislation, which prescribes a function or creates a program that the appropriation funds; general statutory provisions that allow or prohibit certain uses of appropriated funds; and general rules that have been developed largely through decisions of the Comptroller General and the courts. These sources, together with certain provisions of the Constitution, form the basis of "appropriations law" — an area where questions may arise in as many contexts as there are federal actions that involve spending money.
The legal availability and use of federal appropriations is based on three core elements – purpose, time, and amount. This tool, however, limits its focus to the principles of federal appropriations law related to the second element – time – because of vulnerabilities in this area. The other two core elements, while essential to establishing the legality of a particular obligation, are not addressed in this tool. HHS staff must take all necessary steps to comply with all three elements to ensure that contract obligations and expenditures are legally sufficient.
A brief summary of the purpose and amount elements is provided below:
- Purpose – The "purpose statute" (31 U.S.C. 1301(a)) prohibits federal officials from using appropriated funds for purposes other those for which the funds were appropriated. In the GAO reference provided below, Chapter 4, Availability of Appropriations: Purpose, addresses the "purpose statute" in great depth with numerous examples and case references. If the user has any doubt about a purpose issue, please consult with OGC and budget/finance officials.
- Amount – All obligations and expenditures must be within the amount established by Congress. HHS budget processes place additional limits on appropriated amounts through use of internal allotments and allocations of funds as part of the Department’s controls to ensure compliance with the Anti-Deficiency Act.
Fundamental concepts that are key to understanding the time element of federal appropriations law are highlighted throughout the tool. These concepts include the severability of services, appropriation types, the Anti-Deficiency Act and the Bona Fide Needs rule.
The authoritative source for guidance on these matters is GAO’s Principles of Federal Appropriations Law, commonly referred to as the "Red Book". Although this publication incorporates some other relevant authorities, its primary focus is on the decisions and opinions of the "accounting officers of the government" — the Comptroller General of the United States and the GAO. As a result, the principles governing Federal appropriations law are constantly evolving as new GAO decisions are issued.