HHS Reference Tool for Contract Funding, Formation and Appropriations Law Compliance
No-year appropriations are available for obligation without fiscal year limitation. The standard language used by Congress is that such funds "remain available until expended" (40 Comp Gen 694 (1961), B-271607, June 3, 1996). Without a prescribed period of availability, there is no fixed period during which the bona fide need must arise, nor a fixed period in which the funds must be obligated and subsequently disbursed. Thus, the bona fide needs rule, in terms of the timing of the obligation, does not apply to a no-year appropriation (B-317636, Apr. 21 2009) except as follows:
- The general rule that a non-severable service is considered a bona fide need at the time the agency orders the service applies, regardless of the appropriation source charged. Thus a contract for non-severable services using a no-year appropriation must be fully funded upon award or use multi-year contracting procedures (FAR Subpart 17.1); incremental funding (pursuant to FAR Subpart 32.7 and HHSAR Subpart 332.7) cannot be used.
- If an agency chooses to use the multi-year contracting authority provided by 41 U.S.C 254c* (passed as part of FASA and implemented in FAR Subpart 17.1) and obligate no-year funds on an annual basis, the contract must obligate the full cancellation ceiling in the first year and cannot continue beyond the statutorily authorized term—5 years for HHS and other agencies operating under the general authority conferred by FASA.
For more information about appropriation types, see GAO-04-261SP, Principles of Federal Appropriations Law - Volume I, pp. 5-4—5-7.
* Re-codified as 41 U.S.C. 3903 by Public Law 111-350, January 4, 2011. This new citation is not yet available as a hyper-link in the United States Code web site maintained by the Office of the Law Revision Counsel, U.S. House of Representatives.
Content last reviewed on April 16, 2014