Scenario 1 The FY 2019 National Defense Authorization Act (1 Oct 2018 – 30 Sep 2019)

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Scenario 1

The FY 2019 National Defense Authorization Act (1 Oct 2018 – 30 Sep 2019). The general had two questions concerning two of Conrad’s contracts. First, Fort Outpost’s installation base support services contract (for security, recreation activities, vehicle maintenance, janitorial services, and the like) with General Doall, Inc., was of the utmost concern to the general. He wondered why Conrad had not exercised General Doall options for base support services beginning 1 October 2018 through 30 September 2019 (FY2019)

 

Second, the general said Mr. Einstein, director of the U.S. Special Operations Test and Evaluation Command (USSOTEC), a tenant activity on Fort Outpost, had $250,000 of FY2018 RDT&E funds available to fund maintenance support for his laboratory equipment for FY2019. General Doall provides laboratory equipment maintenance to USSOTEC under a services contract. There is an option in the contract for laboratory equipment maintenance services. The general wanted the option exercised and the $250,000 obligated by the next day, 28 September 2019 (FY2019).

 

Assuming all of the contractual issues are resolved in favor of exercising the option, Conrad wants to know if using the RDT&E funds to exercise the option is allowable.

 

Conrad came to me for advice as to whether he could accommodate the general’s requests. I told him that I thought we could.

 

Scenario Questions:

 

1.         What is the difference between an authorization and an appropriation?

 

2.         May Conrad exercise Doall’s options for base support services beginning 1 October 2018 through 30 September 2019?  DON

 

3.         If the answer to Question 2 is “no,” what law would he be exercising the option violate?

 

4.         May Conrad exercise the laboratory maintenance option and obligate the $250,000 by September 28th? DON

 

Why or why not?

 

Scenario 2

 

BSD has available for use only the following appropriations: (1) O&M, (2) Civilian Personnel,

(3)        Other Procurement, and (4) Military Construction. In July 2017, BSD’s contracting office awarded a firm-fixed-price (FFP) supply contract for the purchase of 500 battery packs. The battery packs are initial spare parts for bio-sensor equipment used by the user community that Conrad Special supports and are specially manufactured in accordance with government- provided specifications. The battery packs are to be delivered over the next 12 months with a final delivery in July 2018. In December 2017, the program office informed Conrad that the battery packs had been very useful in the war effort; however, there was a need for some minor changes in the specifications to maintain the expected level of performance. Specifically, they needed to be made more heat resistant for use in desert conditions. In response, Conrad issued a change order and negotiated an equitable adjustment that increased the contract price.

 

In April 2018, the program manager informed Conrad that due to the ongoing war on terror, there is a need for an additional 75 battery packs. These battery packs are needed as soon as possible but no later than 30 September 2018. Conrad is not very experienced in fiscal law matters. He asked my advice as to the correct appropriation accounts— appropriation category and year—that should have been used for each described contract action. I am no FMR expert, but I think there may be special definitions or rules or exceptions that apply. I also wonder if it makes any difference whether the changes are in scope or out of scope.

 

Scenario 2: Questions

 

1.         Which appropriation (account and FY) must be charged when awarding the original contract?

 

 

2.         Which appropriation (account and FY) should be charged to pay for the upward adjustment in the contract price resulting from the change order issued by the government in December?

 

 

3.         Which appropriation (account and FY) must be charged for the purchase of the additional 75 units in April 2018?

 

4.         Are there any special issues raised by the addition of the 75 units that I should consider?

 

 

Scenario 3

 

BSD’s customer, Fort Outpost, has identified the need for a new aircraft painting facility. Because of the intense competition for limited MILCON funds and the length of time required to obtain approval for a MILCON project, it has been decided to pursue the use of (O&M funding for the project. Two contracts will be awarded: one to construct the new facility and another to purchase the fixtures that will be housed in the new facility. The estimated cost of the building structure is $1,725,000. The estimated cost of the capital equipment to be installed as permanent fixtures in the facility is $280,000.

Conrad assures me we don’t have to combine the two purchases into one contract. Even if he is correct from a contractual perspective, I am not sure this plan is allowable from a fiscal law perspective. Conrad is ready to move forward because he recalls one scenario where we were able to use O&M funds for a construction project that was over $2 million. I hope he is right; I sure don’t want us to violate any fiscal laws.

 

1.         What fiscal laws would potentially be violated if this plan is improper? Explain.

 

 

2.         Can separate contracts be awarded?

 

3.         If your answer to Question 2 is "yes," can they both be funded out of the O&M appropriation?

Why or why not?

 

4.         Is there any situation where O&M funds can be used to fund a construction project of more than $2 million?

Bona Fide Needs Rule – Responses should discuss:

a.         A summary of statute substance Title 31, US Code, Sec 1502

b.         The application to supply contracts

c.         An example of a violation and potential corrective action

d.         An example of exceptions