(a) Certification of funds. Non-Economy Act orders are subject to the same fiscal limitations that are contained within the appropriation from which they are funded. Because the performing entity may not be aware of all appropriation limitations, the DLA certifying official in the Financial Management/J-8 organization must certify that the funds leaving the Agency that are cited on the order -
(1) are available;
(2) meet a need of the requesting entity, and are currently available for obligation; and
(3) are for the purpose designated by the appropriation, or may properly be used for the intended purpose.
(b) Prohibitions. Non-Economy Act orders may not be used to violate provisions of law, nor may they be used to circumvent conditions and limitations imposed on the use of funds, to include extending the period of availability of the cited funds.
(c) Bona fide need.
(1) Non-Economy Act orders citing an annual or multi-year appropriation must serve a bona fide (that is, legitimate) need arising, or existing, in the fiscal year or years for which the appropriation is available for new obligations.
(2) If the requiring activity is providing operations and maintenance (O&M) funds (“one-year money”) or other annual appropriations that are only available for obligation for a specific period, the facts that the requirement is submitted to a Revolving Fund (e.g., Defense Working Capital Fund (DWCF)) activity on a reimbursable basis, and that the Revolving Fund activity will obligate “no-year money” for the actual acquisition, do not extend the life of the requiring activity’s funds. In the following situations, the order must be placed or an agreement entered into before the requiring activity’s appropriation expires (i.e., is no longer available for new obligations):
(i) The transaction between the requiring activity and the Revolving Fund activity is an Economy Act transaction (this is not applicable if the transaction is pursuant to DLA’s IMM authority under DOD 4140.1-R and 4140.26-M); or
(ii) The requiring activity’s funds will be cited on the order or agreement with the non-DOD activity.
When DLA accepts a MIPR (generally via return of the DD Form 448-2 to the customer) or other requisition (i.e., the DD Form 1348-1 or -6), and the customer’s requirements are specified in the MIPR or requisition with sufficient detail to satisfy 31 U.S.C. 1501 (see (d), below), this creates a binding obligation between the two Defense entities, and obligates the customer’s funds to DLA. In the situations in (2)(i) and (ii), above, DLA must, in turn, obligate funds to the non-DOD agency during the fiscal year for which the customer’s funds are available. If these situations are not applicable (e.g., if DLA is obligating DWCF), it may be done during the fiscal year for which the customer’s funds are available, or as soon thereafter as reasonably possible.
(d) Obligation. In accordance with 31 U.S.C. 1501, an amount shall be recorded as an obligation only when supported by documentary evidence of an order required by law to be placed with an agency, or upon meeting all the following criteria:
(1) There is a binding agreement between an agency and another person (including an agency).
(2) The agreement is in writing. This writing must be specific, definite, completely descriptive of the goods or services being acquired, and traceable to the ultimate transaction for fulfillment of the requirement. If more than one document is involved (as with manual requisitions), each should refer to the other(s) in order to constitute a complete requirements package. The MIPR or manual requisition must include the signature of a person authorized to certify funds (availability and usage), or otherwise demonstrate that the funds have been properly certified by a person authorized to certify funds.
(3) The agreement is for a purpose authorized by law.
(4) It serves a bona fide need arising, or existing in, the fiscal year or years for which the cited appropriation is available for obligation.
(5) In the situations described in (c)(2)(i) and (ii), above, it is executed before the end of the period of availability for new obligation of the appropriation or fund used.
(6) It provides for specific goods to be delivered or specific services to be supplied.
(e) Deobligation.
(1) Although funds deobligation, per se, is not a contracting function, the deobligation process for interagency acquisitions must be set in motion by a contracting official or program manager. The contracting officer who contributed to or reviewed the acquisition plan IAW 7.9001(a)(90), 7.9002(a), 7.9003(a), and 17.9603, above, or post-award personnel from that contracting officer’s office, shall be responsible for, or shall ensure that the program manager or other requirements generator is aware of his/her responsibility for, tracking funds’ “burn rate” and usage commensurate with contractor performance. These parties (contracting officer, post-award contracting official and/or program manager) will also provide notice to the Comptroller organization to proceed with funds deobligation, as applicable.
(2) Supplies. In an assisted acquisition, if goods are ordered but not delivered, and the availability of the funds provided to a non-DOD performing agency for the supplies thereafter expires, the funds shall be deobligated and returned by the performing agency, unless the request for goods was made during the period of availability of the funds AND the item(s) could not be delivered within the funds’ period of availability solely because of delivery, production or manufacturing lead time, or unforeseen delays that are out of the control of, and not previously contemplated by, the contracting parties at the time the contracting action was taken. Therefore, where materials cannot be obtained in the same fiscal year in which they are needed and contracted for, provisions for delivery in the subsequent fiscal year do not violate the bona fide need rule, as long as the time intervening between contracting and delivery is not excessive, and the procurement is not for standard commercial off-the-shelf (COTS) items readily available from other sources. The “reasonable period” of performance should, if possible, be limited to the first quarter of the next fiscal year. The delivery of goods may not be specified to occur in the year subsequent to funds availability.
(3) Severable services. An agreement for severable services may, according to 10 U.S.C. 2410a, begin in one fiscal year and end in the next, provided that the period of performance does not exceed one year (exclusive of options). Thus, the performance of severable services may begin during the funds’ period of availability, and end one year from the beginning date (see DFARS 232.703-3(b)). Therefore, annual appropriations provided to a non-DOD performing agency in an assisted acquisition that have expired must be deobligated, unless the performance of the services requested began during the funds’ period of availability, and the period of performance does not exceed one year. The annual appropriation from the earlier fiscal year may be used to fund the entire cost of the one-year period of performance; however, an annual appropriation may not be used to enter into a severable services agreement where the period of performance for services requested is entirely in the following fiscal year. In no instance may the period of performance extend beyond September 30th of the subsequent year for services funded with annual appropriations.
(4) Non-severable services. Non-severable services contracts must be funded entirely with appropriations available for new obligations at the time the contract is awarded; nevertheless, the period of performance may extend across fiscal years. Funds provided to a non-DOD performing agency that become excess (e.g., a requirement has been fully satisfied and funds remain obligated but unexpended for that requirement) shall be deobligated.
(5) Excess or expired funds. (A) Activities shall reconcile all obligations and remaining funds available for orders. This is the responsibility of the contracting officer, post-award contracting official or of the program manager or other requirements generator, as applicable. The purpose of this reconciliation is to ensure the proper use of funds and to identify and coordinate the return of expired or excess funds. In an assisted acquisition, excess or expired funds must be returned by the non-DOD performing agency and deobligated by the requesting agency to the extent that the performing agency or unit filling the order has not:
(i) provided the goods or services, or incurred actual expenses in providing them; or
(ii) entered into a contract with another entity to provide the requested goods or services.
(B) Expired funds shall not be available for new obligations.
