Golden Rules of Fiscal Law: Purpose, Time & Amount

This week, the VA Inspector General reported that the certain government officials illegally used funds to develop a claims processing system that were intended to be used for  medical support and compliance.    This is what is called a “fiscal law” problem.

What is Fiscal Law?  Fiscal law is the body of law that governs how federal agencies may use the funds appropriated to it by congress that, believe it or not, are grounded in the U.S. Constitution.  This post highlights the golden rules of fiscal law:  Purpose, Time & Amount.

Purpose, Time & Amount 101.  Purpose (or the “necessary expense rule”) is what contracts/programs the agencies may fund as defined by congress in appropriations, continuing resolutions, and/or authorizations.  Time (or the “bona fide needs rule”) is how long money is available for agencies to fund those contracts/programs – this is why September is always crazy with awards.  Amount is how much an agency can spend on those contracts/programs and, if the limit is busted, that is known “Antideficiency Act violation.”

Why do I care?  Because fiscal law impacts every single government procurement!  A common misnomer is that agencies can fund whatever contract they see fit.  This is not true.  In fact, if it is discovered that an agency improperly uses its money for the wrong purpose , it is very likely that all contracts supporting that program will be terminated.  In addition, the mere fact that federal funds are involved may trigger a variety of compliance and reporting mandates relative to false claims, social programs, and cost/pricing (despite if is a federal, state, or local contract).

BOTTOM LINE. Knowing the fiscal environment allows you to identify what program funds may be available, whether your program is potentially at risk for termination, and/or reporting requirements that your government customer may or may have not told you about.