Tuesday, September 12, 2017

What is the Anti-Deficiency Act (ADA)?

The Anti-Deficiency Act is not something that Government contractors need to worry about but contractors, subcontractors, and grantees have most certainly heard of it and perhaps have felt the impact of it. Government shutdowns and the potential for shutdowns have brought the Anti-Deficiency Act to light. The inability to obligate and spend money has affected the awarding of contracts and grants and modifications and extensions.

The concept of Federal appropriations law is framed by three major fiscal limitations; purpose, time and amount. A Government agency may obligate and expend appropriations only for a proper purpose. The expenditures must be made within the time limits applicable to the appropriations (that's why there is always a push to spend funds at year-end). And an agency may not obligate more than the amount appropriated by Congress. The Anti-Deficiency Act generally addresses the "amount" limitation. In short, agencies may not;

  1. obligate more funds than are made available to them in an appropriation or in a form subdivision of funds (allocation, allotment, sub-allotment, or other formal designation of a limitation)
  2. make obligations that exceed the amount permitted by agency actions/regulations
  3. obligate funds in advance of receiving an appropriation or allotment.
Violations of the Anti-Deficiency Act are taken seriously. Unintentional violations can result in reassignment or suspension without pay. Intentional violations can result in a fine and imprisonment. Responsibility for Anti-Deficiency Act violations is usually fixed at the highest level that know about or should have known about the violation.

Examples of ADA violations include:
  1. Actions, including clerical recordings or reporting errors, which result in an over-commitment, over-obligation, or over-expenditure of funds in any appropriation.
  2. An official involves the Government in a contract or obligation either in advance of appropriations or without adequate funding authority.
  3. Attempts to avoid an over-obligation or over-expenditure 
    • by failure to post to accounting records, 
    • by delay in posting until funds are received; 
    • by not properly charging he appropriated fund or by transferring charges or funds between accounts
Agencies that violate the Anti-Deficiency Act must report to the President, Congress, and the GAO all relevant facts and a statement of actions taken. In Fiscal Year 2016, there were about 15 such reports submitted to the GAO (see Anti-deficiency Act Reports - Fiscal Year 2016).

Interestingly enough, the Anti-Deficiency Act also prohibits federal employees from accepting voluntary services for the United States. We doubt this would ever be a problem and we haven't seen reported violations of this prohibition in any of the GAO summaries. 

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