fiscal principles - property adminstration. acquisition of goods and services obtained through the...

FISCAL PRINCIPLES - PROPERTY ADMINSTRATION

ACQUISITION OF GOODS AND SERVICES OBTAINED THROUGH THE COOPERATIVE AGREEMENT WILL BE IN ACCORDANCE WITH

STATE CONTRACTING PROCEDURES

ACQUISITION

PRIVATE vs PUBLIC EXPENDITURE OF FUNDS

•Private funds can be expended for any purpose not prohibited

•Public funds must have specific statutory authority in order to expend

QUESTION?

DOES EVERYTHING WE PURCHASE HAVE SPECIFIC STATUTORY AUTHORITY?

YES/NO/MAYBE

ANSWER

“NECESSARY EXPENSE RULE”

Under this test, an expenditure is

permissible if it is reasonably necessary

in carrying out an authorized function or

will contribute materially to the effective

accomplishment of the function, and if it

is not otherwise prohibited by law.

Cooperative Agreements are subject to the same statutes

controlling the obligation, use, and payment of federal funds as applied to federal procurement

contracts

RESTRICTION

FISCAL LAW CONCERNS(Three Elements)

(PURPOSE, TIME, AMOUNT)

The basic analysis applicable to obligating federal funds is applicable to Cooperative

Agreements

CONGRESS PLACES SPECIFIC LIMITATIONS ON THE

PURPOSES FOR WHICH AN APPROPRIATION MAY BE USED

FIRST ELEMENT

(PURPOSE)

A valid obligation must be made to a Cooperative Agreement

within the period the funds are available

SECOND ELEMENT

(TIME)

BONA FIDE NEED

• Has meaning in context of Fiscal Law

• Focuses on timely obligation of funds

• Obligation is for a current need

BONA FIDE NEEDPREMISE

The needs of the government and the availability of funds

are the same fiscal year

CONSTRUCTION CONTRACTS

Contracts for construction must fulfill a bona fide need

arising within the funds’ period of availability

SUPPLY CONTRACTSTWO EXCEPTIONS

• Stock level exception

• Lead time exception

SEVERABLE COOPERATIVE AGREEMENT

• Federal Program Managers must complete all transactions prior to 30 September

• The State must obligate funds prior to 30 September

• Federal Program Managers must recover unused funds prior to 30 September

NON-SEVERABLE COOPERATIVE AGREEMENT

• State obligation of funds not necessarily required at end of fiscal year.

• Needs to be a “bona fide” need for the fiscal year the cooperative agreement is executed.

Adequate funding must be available to cover the amount obligated in the cooperative

agreement

THIRD ELEMENT

(AMOUNT)

EXPENSE/INVESTMENT CRITERIA effective 20 February 2003

• < $250,000 - O/M DOLLARS

• > $250,000 - OPA

CASE STUDIES

CASE STUDY MODULE #5 This State’s Weapons of Mass Destruction (WMD) unit received federal funding to construct a new building that would house their operation. Since this facility will be built on state property it was decided by the Facility Management Officer that this construction would be accomplished by utilizing state contracting procedures. The federal funds were provided to the state using a cooperative agreement. The state advertised the project and made the award to Harmon Construction in the amount of $680,000.00. A notice to proceed was issued on 15 July 2003 (FY03) with a performance period to 1 May 2004 (FY04). During the bid process the users developed their furniture requirement to meet the needs of the team members and their mission. The estimated cost of this new furniture, based upon separate estimates, was $116,000.00. Funding for furniture was not provided in the construction award. On 15 September the USPFO was notified by the OIC of the WMD unit that, through his coordination with individuals at the National Guard Bureau, he could get FY 03 funds provided to the USPFO to procure the furniture. He also had coordinated with the USPFO Contracting Officer and determined that the potential supplier had a GSA contract, which would not require competition. Also, the NGB Program Manager said that there would be no FY 04 funds to support this requirement. The supplier stated that once he received a purchase order it would take him 60 days to deliver the furniture. As the USPFO what concerns do you have and would you accept the funds and procure the furniture?

CASE STUDY MODULE #5

The Facility Management Officer of this State has a requirement to upgrade the installation of the Army Aviation Support Facility to meet threat level conditions. This project will consist of installing gates with openers, fencing, an access control system, closed circuit televisions with recorders and monitors, intrusion detection system and lighting of the storage compound. The breakdown of the costs are as follows:

A. Closed circuit televisions (includes external cameras): $43,000.00

B. Hangar access control systems: $75,000.00

C. Gates and fencing: $75,000.00

D. Poles/lights/wire: $50,000.00

E. Electronics (intercom system, control panel with software): $18,000.00

All subsystems can operate independently, but due to the design they will be tied together to a dual transmission medial digital communicator system for dispatch of a response force. The Facility Management Officer was notified by the USPFO that the project could not be approved as he considered it a system and the total purchase price exceeded the expense/ investment criteria. The project would have to be funded with funds other than o/m. Was the USPFO right in his decision?

PROPERTY ADMINISTRATION

PROPERTY ADMINISTRATION

AUTHORITY

TITLE 32 CFR, PART 33

EQUIPMENT DEFINED

• Tangible, non-expendable personal property

• Useful life > 1 year

• Unit acquisition cost of $5,000 or more

RULES OF OWNERSHIP EQUIPMENT

• Equipment purchased by State is property of State.

• Equipment purchased by USPFO for use by State under the CA is considered to be Federal Government Furnished Equipment (GFE) and remains the property of the USPFO.

DISPOSAL OF EQUIPMENT

• Move to other Cooperative Agreement Programs

• If equipment is retained by State, the Federal Government will be reimbursed their proportional share.

• Government Furnished Equipment will be processed through the Defense Reutilization and Marketing Service (DRMS)

SUPPLIES DEFINED

• Tangible personal property with unit acquisition cost < $5,000

• Tangible personal property which is expendable

• Tangible personal property which has a useful life of less than one year

RULES OF OWNERSHIP SUPPLIES

• Supplies purchased by State - Property of State

• Supplies purchased by USPFO as “In Kind” - Property of State

DISPOSAL OF SUPPLIES

• Move to other Cooperative Agreement Programs

• If supplies are retained by State, the Federal Government will be reimbursed their proportional share.

PROPERTY RECORDS

• Government Furnished Equipment is accounted for on Federal Property Book.

• State must maintain property records on State acquired equipment.

• State will inventory equipment once every two years.

MANAGEMENT CONTROLS

• Is the State Accounting for Property Acquired thru the Cooperative Agreements?

• Is the State Property Inventoried as Required?

• Is State Acquired Property Disposed of Properly?

EXAMPLES!

THE FOLLOWING EXAMPLESARE BASED UPON THE FACT

THE SUPPLY/EQUIPMENT WILLNOT BE MOVED TO ANOTHER

SUPPORTED COOPERATIVEAGREEMENT PROGRAM.

Example 1

The Cooperative Agreement was 75% funded by the Federal

Government. At the end of the CA the total amount of unused supplies acquired under the CA is $4,000.

What is the disposition/reimbursement required

if any?

DISPOSITION OF SUPPLIES

Example 1

The Cooperative Agreement was 75% funded by the Federal Government. At the end of the CA the total amount of unused supplies acquired under the

CA is $4,000.

The State keeps the supplies and does not have to reimburse the Federal

Government (USPFO) for the Federal Government’s share of the value of the

supplies.

DISPOSITION OF SUPPLIES

Example 2

The Cooperative Agreement was 75% funded by the Federal

Government. At the end of the CA the total amount of unused supplies acquired under the CA is $10,000.

What is the disposition/reimbursement required

if any?

DISPOSITION OF SUPPLIES

Example 2: The Cooperative Agreement was 75% funded by the Federal Government.

At the end of the CA the total amount of unused supplies acquired under the

CA is $10,000.

The State keeps the supplies. However, the state must reimburse the Federal Government (USPFO)

$7,500 for the Federal Government’s share of the value of the supplies.

DISPOSITION OF SUPPLIES

Example 1The State acquired a widget for

$10,000 through the agreement. After 3 years the widget was no longer

needed for the supported program. The State sold the unneeded widget at

auction for $4,000. What is the disposition/reimbursement

required if any?

DISPOSITION OF EQUIPMENT

Example 1 The State acquired a widget for

$10,000 through the Cooperative Agreement. After 3 years the widget

was no longer needed for the supported program. The State sold the unneeded widget at auction for

$4,000.

The $4,000 remains the property of the State for whatever use it wants.

DISPOSITION OF EQUIPMENT

Example 2

The State acquired a widget for $20,000 through the agreement. After 3 years the

widget was no longer needed for the supported program. The current per unit

fair market value of the widget is $10,000. The Cooperative Agreement is 75% funded

by the Federal Government. What is the disposition/reimbursement

required if any?

DISPOSITION OF EQUIPMENT

Example 2

The State acquired a widget for $20,000 through the agreement. After 3 years the

widget was no longer needed for the Cooperative Agreement supported program. The current per unit fair market value of the

widget is $10,000. The Cooperative Agreement is 75% funded by the Federal

Government.

If the State wants to retain the widget, it must reimburse the Federal Government

(USPFO) $7,500.

DISPOSITION OF EQUIPMENT