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Overview. Antideficiency Act RequirementsAdministrative control of appropriationsPreliminary reviewFormal investigationsInvestigative reportLeading causes of violationsPreventionCase Examples. Antideficiency Act. What are ADA Violations?. Antideficiency Act. A violation of the Antideficiency Act is a serious matter as it represents a violation of Federal statute.Results in an administrative investigation report.Between FY 1987 and FY 1998, 69 ADA violations investigated
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1.
2. Overview Antideficiency Act Requirements
Administrative control of appropriations
Preliminary review
Formal investigations
Investigative report
Leading causes of violations
Prevention
Case Examples This module is to acquaint you with the purpose of the ADA, introduce basic policies for administrative control and to discuss ADA investigative procedures.
Administrative control means simply knowing where your money is at all times 31 USC 1514
Establish and maintain accounting and financial management systems
ASN(FM&C) is responsible for financial systemsThis module is to acquaint you with the purpose of the ADA, introduce basic policies for administrative control and to discuss ADA investigative procedures.
Administrative control means simply knowing where your money is at all times 31 USC 1514
Establish and maintain accounting and financial management systems
ASN(FM&C) is responsible for financial systems
3. Antideficiency Act What are
ADA
Violations?
IN 1982 the ADA (revised statutes 3679) were codified in Title 31 of USCIN 1982 the ADA (revised statutes 3679) were codified in Title 31 of USC
4. Antideficiency Act A violation of the Antideficiency Act is a serious matter as it represents a violation of Federal statute.
Results in an administrative investigation report.
Between FY 1987 and FY 1998, 69 ADA violations investigated & reported to OSD
From FY 1999 to present, 34 ADA investigations initiated
Preliminary Reviews Pending
Represents 50+ percent increase in potential violations identified in a four year period as opposed to the previous 11 years
WHY?
IN 1982 the ADA (revised statutes 3679) were codified in Title 31 of USCIN 1982 the ADA (revised statutes 3679) were codified in Title 31 of USC
5. Antideficiency Act DoN and DoD reorganizations, Base Realignment and Closure (BRAC) actions, and personnel downsizing had seriously weakened a number of DoN Comptroller organizations.
Result is that Comptrollers had lost autonomy and/or capability to provide sound financial advice to leadership and maintain adequate fiduciary control of appropriated funds.
Impact reflected in increased Antideficiency Act violations and Congressional criticism of financial management practices.
6. Leading Causes of DoN ADA Violations Expense/investment criteria
Military construction/family housing
Availability as to purpose
Exceeding authorized amount
Obligations in advance of an appropriation
Bona fide needs
Person not doing their job
7. ADA Prohibitions Making or authorizing an expenditure or obligation of money ---
In excess of the amount available in an appropriation or fund. 31 USC 1341(a)(1)(A)
Involve the Government in a contract
or obligation for the payment of money
before an appropriation is made,
unless authorized by law.
31 USC 1341 (a)(1)(B)
8. ADA Example Violation Type
31 USC 1341(a)(1)(A)
Case 88-9 $1,466.190.24
Ship Stores Profits, Navy
Did not transfer sufficient funds to SSP,N account
31 USC 1341(a)(1)(B)
Case 97-4 $2,955,000 FISC Norfolk Detachment Washington, DC
Contracting services in Advance of an Appropriation
The Ship’s Stores Profit, Navy account is used to allow a financing medium to pass profits from ship’s stores to the Morale and Welfare Fund (a non-appropriated fund account) aboard each ship. Most sales from ships stores are initially credited to the Navy Stock Fund (NSF), not the SSPN account. The SSPN account operates on a four-month cycle. At the end of each cycle, the individual ships conduct physical inventories and generate financial statements. They immediately pull their profits out of the SSPN for their MWF. The violation occurred when ships charged the SSPN account in June 1987 for their share of the profits and the Fleet Accounting and Disbursing Center, Atlantic Fleet (FAADCLANT) unexpectedly reversed $650,000 of erroneous reimbursement transactions. In June and July 1987, expenditures exceeded available cash balances in the SSPN trust. Therefore a violation of 31 U.S.C. 1341 (a) occurred.
On 19 September 1996, FISC NORDET awarded a contract to Marine Safety International for ship handling training services. The COMNAVSURFLANT Ship Handling Complex was to be contractor constructed, owned, and operated, and fully available to the government nine months after the award date. The contract was structured consisting of a base year FY 1997 and nine subsequent and separate option years beginning FY 1998. When the contract was awarded, FISC also exercised an option for training services to be provided in FY 1998. The contract cited FY 1997 and 1998 O&M,N funding respectively that. However this contract created a liability for the government in FY 1996 for services to be rendered in FY 1997 and 1998. The FY 1997 and 1998 appropriations had not been approved as of the date of this award, and no FY 1996 funding was made available on this contract; therefore an ADA violation occurred. The Ship’s Stores Profit, Navy account is used to allow a financing medium to pass profits from ship’s stores to the Morale and Welfare Fund (a non-appropriated fund account) aboard each ship. Most sales from ships stores are initially credited to the Navy Stock Fund (NSF), not the SSPN account. The SSPN account operates on a four-month cycle. At the end of each cycle, the individual ships conduct physical inventories and generate financial statements. They immediately pull their profits out of the SSPN for their MWF. The violation occurred when ships charged the SSPN account in June 1987 for their share of the profits and the Fleet Accounting and Disbursing Center, Atlantic Fleet (FAADCLANT) unexpectedly reversed $650,000 of erroneous reimbursement transactions. In June and July 1987, expenditures exceeded available cash balances in the SSPN trust. Therefore a violation of 31 U.S.C. 1341 (a) occurred.
On 19 September 1996, FISC NORDET awarded a contract to Marine Safety International for ship handling training services. The COMNAVSURFLANT Ship Handling Complex was to be contractor constructed, owned, and operated, and fully available to the government nine months after the award date. The contract was structured consisting of a base year FY 1997 and nine subsequent and separate option years beginning FY 1998. When the contract was awarded, FISC also exercised an option for training services to be provided in FY 1998. The contract cited FY 1997 and 1998 O&M,N funding respectively that. However this contract created a liability for the government in FY 1996 for services to be rendered in FY 1997 and 1998. The FY 1997 and 1998 appropriations had not been approved as of the date of this award, and no FY 1996 funding was made available on this contract; therefore an ADA violation occurred.
9. ADA Prohibitions
In excess of an apportionment or allocation.
31 USC 1517
Accept voluntary services, except in
emergencies involving human life and
protection of property. 31 USC 1342.
10. ADA Example Violation Type
31 USC 1517
Case 96-2 $34,591,099 BRAC II and III
Awarded CPFF contract above $25,000 contrary to recurring General Provision in Military Construction Appropriation Acts.
NAVAIR
NAVSEA
SPAWAR
PACFLT
31 USC 1342 - No cases
Since 1959, a recurring general provision of the annual Military Construction
Appropriations Act has prohibited the expenditure of funds appropriated in those Acts for payments under cost-plus-fixed-fee (CPFF) contracts for work—when cost estimates exceed $25,000-- without the specific written approval of the Secretary of Defense (SECDEF). The exceptions to this provision are those contracts performed within Alaska and FY 1996 contracts for environmental restoration projects. Since BRAC funds are included in the Military Construction Appropriations Act, the $25,000 restriction also applies to the expenditure of BRAC funds under such contracts. The CPFF contracts in question were service contracts providing various planning, engineering, logistics and implementation support and other technical services at the Navy activities identified above. Based on the nature of the support requirements, CPFF was determined to be the most appropriate contract type. However Navy contracting personnel who normally did not execute construction contracts were unaware that BRAC funds were subject to the same MILCON restrictions.
Since 1959, a recurring general provision of the annual Military Construction
Appropriations Act has prohibited the expenditure of funds appropriated in those Acts for payments under cost-plus-fixed-fee (CPFF) contracts for work—when cost estimates exceed $25,000-- without the specific written approval of the Secretary of Defense (SECDEF). The exceptions to this provision are those contracts performed within Alaska and FY 1996 contracts for environmental restoration projects. Since BRAC funds are included in the Military Construction Appropriations Act, the $25,000 restriction also applies to the expenditure of BRAC funds under such contracts. The CPFF contracts in question were service contracts providing various planning, engineering, logistics and implementation support and other technical services at the Navy activities identified above. Based on the nature of the support requirements, CPFF was determined to be the most appropriate contract type. However Navy contracting personnel who normally did not execute construction contracts were unaware that BRAC funds were subject to the same MILCON restrictions.
11. ADA Administrative Controls 31 USC 1514(a): The head of each executive agency shall prescribe by regulation a system of administrative control designed to --
Restrict obligations or expenditures from each appropriation to the amount of apportionments…
Enable the official to fix responsibility for an obligation or expenditure exceeding an apportionment or reapportionment.
12. ADA Causes Appropriations shall be applied only to the objects for which the appropriations were made except as otherwise provided by law. 31 USC 1301(a)
An appropriation or fund limited for obligation to a definite period is available only for payment of expenses properly incurred during the period of availability or to complete contracts properly
made within that period of availability.
31 USC 1502(a)
13. ADA Example Violation Type
31 USC 1301(a)
Case 87-2 $45,775.95 Expense/Investment Error
Enlisted Personnel Management Center, New Orleans
(Caused a 1517 violation as activity had no OPN)
31 USC 1502(a)
Case 97-4 $2,955,000 FISC Norfolk Detachment Washington, DC
Contracted FY 1997 and FY 1998 education services financed with FY 1996 funds in error
(Caused a 1341 violation as in advance of appropriation)
Two requisitions were approved for items over $5,000 each using O&M,N funds. The Director of the Resource Management Office approved each request because he incorrectly believed that the FY 1987 investment threshold had been raised to $25,000. EPMAC was completing a data processing project that required two IBM computers to communicate. The first request was for three software packages to achieve this. The second request was for an envelope folder/sealer machine to replace a ten-year old model that needed repairs on a weekly basis. Both purchases should have been made using OPN funds.
Two requisitions were approved for items over $5,000 each using O&M,N funds. The Director of the Resource Management Office approved each request because he incorrectly believed that the FY 1987 investment threshold had been raised to $25,000. EPMAC was completing a data processing project that required two IBM computers to communicate. The first request was for three software packages to achieve this. The second request was for an envelope folder/sealer machine to replace a ten-year old model that needed repairs on a weekly basis. Both purchases should have been made using OPN funds.
14. Administrative Actions
Administrative Discipline: -- up to removal.
31 USC 1349 & 31 USC 1518
Criminal Penalties:
31 USC 1350 and 31 USC 1519
Knowing and willful
2 years/ $5,000 or both - NCIS
Reports to OMB, Congress & the President
15. ADA Statistics Within the 69 cases between FY 1987 – FY 1998
223 individuals were found responsible
Military 107 - including COs and Flag Positions
Civilian 116 - including comptrollers and PMs
129 violations identified - only ten findings of no violation
Violations ranged from $93.35 to $68,582,708.00
Case 90-4 Naval Station Philadelphia Security Dept Purchased blank ammunition with OMN
Case 93-2 Naval Forces Central Command
Desert Storm/Desert Shield – exceeded allocated funds
90-4: NAVSTA Philadelphia Security Department was scheduled to undergo a Law Enforcement Physical Security (LEPS) inspection which required the training of Military Working Dogs under simulated firing conditions using blank cartridges. Due to the urgency of the requirement, the Naval Station Security Department submitted a request for open purchase (vice standard stock) from a local gun shop. The Naval Station Supply Department determined that request was properly chargeable to O&M,N because blank rounds meet the definition of a consumable. The contract was then forwarded to the Navy Regional Contracting Center (NRCC) who awarded the contract. The cartridges should have been procured as standard stock through the Ships Parts Control Center (SPCC), Mechanicsburg, PA with OP,N funds. FY 1989 Funds
93-3: During and subsequent to Operation Desert Shield/Desert Storm, operations for U.S. Naval Forces Central Command (USNAVCENT), both combat and follow-on in-theater support, rapidly expanded at the direction of the Joint Chiefs of Staff. Due to this rapid buildup of forces and expanding operations, funding requirements quickly exceeded amounts allocated to the Commander, USNAVCENT, Commander, Middle East Forces (CMEF), and the Administrative Support Unit (ASU) Bahrain, who each held 1517 responsibility. Individuals at these activities were unaccustomed to fiscal management under wartime and post-war conditions. Due to the time-sensitive need to support contingency operations, these individuals mistakenly believed that they were not constrained by allocated funding, and that subsequent funding augmentations would mitigate any accumulated deficiencies. As a result, over obligation of available funds occurred at various times during FY 1991, FY 1992, and FY 1993.
90-4: NAVSTA Philadelphia Security Department was scheduled to undergo a Law Enforcement Physical Security (LEPS) inspection which required the training of Military Working Dogs under simulated firing conditions using blank cartridges. Due to the urgency of the requirement, the Naval Station Security Department submitted a request for open purchase (vice standard stock) from a local gun shop. The Naval Station Supply Department determined that request was properly chargeable to O&M,N because blank rounds meet the definition of a consumable. The contract was then forwarded to the Navy Regional Contracting Center (NRCC) who awarded the contract. The cartridges should have been procured as standard stock through the Ships Parts Control Center (SPCC), Mechanicsburg, PA with OP,N funds. FY 1989 Funds
93-3: During and subsequent to Operation Desert Shield/Desert Storm, operations for U.S. Naval Forces Central Command (USNAVCENT), both combat and follow-on in-theater support, rapidly expanded at the direction of the Joint Chiefs of Staff. Due to this rapid buildup of forces and expanding operations, funding requirements quickly exceeded amounts allocated to the Commander, USNAVCENT, Commander, Middle East Forces (CMEF), and the Administrative Support Unit (ASU) Bahrain, who each held 1517 responsibility. Individuals at these activities were unaccustomed to fiscal management under wartime and post-war conditions. Due to the time-sensitive need to support contingency operations, these individuals mistakenly believed that they were not constrained by allocated funding, and that subsequent funding augmentations would mitigate any accumulated deficiencies. As a result, over obligation of available funds occurred at various times during FY 1991, FY 1992, and FY 1993.
16. What do you do If?????? SOMETHING DOESN’T SEEM RIGHT
TELL THE COMPTROLLER OR THE COMMANDING OFFICER
THEY ARE RESPONSIBLE FOR ALL FUNDS
RECEIVED
THERE IS NO ONE WHO WANTS TO DO IT WRONG! FMR VOL 14, CH 3
ASN(FM&C) memo of 25 Jun 96
SUBMIT REPORT OF PRELIMINARY REVIEW TO OASN(FM&C)
Report must be accompanied by supporting documentation
Formal review shall be initiated within 15 business days of preliminary review approval
No violation = No further actionFMR VOL 14, CH 3
ASN(FM&C) memo of 25 Jun 96
SUBMIT REPORT OF PRELIMINARY REVIEW TO OASN(FM&C)
Report must be accompanied by supporting documentation
Formal review shall be initiated within 15 business days of preliminary review approval
No violation = No further action
17. Preliminary Review PURPOSE
Gather basic facts and determine whether a violation has apparently occurred
DOCUMENT FINDINGS
Review includes gathering documentation on questionable transaction(s), applicable unobligated funds status at the time of the questionable transaction, any applicable statutory constraints, policies, etc.
Determine whether a potential violation has occurred or a report of “no violation”
Preliminary Reviews completed by Command personnel
FMR VOL 14, CH 3
ASN(FM&C) memo of 25 Jun 96
SUBMIT REPORT OF PRELIMINARY REVIEW TO OASN(FM&C)
Report must be accompanied by supporting documentation
Formal review shall be initiated within 15 business days of preliminary review approval
No violation = No further actionFMR VOL 14, CH 3
ASN(FM&C) memo of 25 Jun 96
SUBMIT REPORT OF PRELIMINARY REVIEW TO OASN(FM&C)
Report must be accompanied by supporting documentation
Formal review shall be initiated within 15 business days of preliminary review approval
No violation = No further action
18. Formal Investigations FMR VOLUME - 14 (DOD 7000.14-R)
Outside investigator
Assign responsibility
Discipline
19. Key Report Elements Dates of discovery and occurrence of violation(s)
Circumstances leading up to violation
Responsibility
Statements from responsible individual(s)
Assessment of “knowing and willful”
Disciplinary action
Elimination of status of violation
Corrective action
FMR VOL 14; CH 5; PARA “I”
“A conclusion that no one could be determined to be responsible for a violation is NOT acceptable”
PERSONS NAMED RESPONSIBLE MAY BE ASSESSED ADMINISTRATIVE DISCIPLINARY ACTION COMMENSURATE WITH SEVERITY OF VIOLATION
FMR VOL. 14; CH 5; PARA “K”; & CH. 9
Disciplinary official must acknowledge in writing that the disciplinary action taken is commensurate with severity of violation
FMR VOL. 14; CH. 9; Para B.1
“NO DISCIPLINARY ACTION”
MUST BE JUSTIFIED IN WRITING
FMR VOL 14; CH 5; PARA “I”
“A conclusion that no one could be determined to be responsible for a violation is NOT acceptable”
PERSONS NAMED RESPONSIBLE MAY BE ASSESSED ADMINISTRATIVE DISCIPLINARY ACTION COMMENSURATE WITH SEVERITY OF VIOLATION
FMR VOL. 14; CH 5; PARA “K”; & CH. 9
Disciplinary official must acknowledge in writing that the disciplinary action taken is commensurate with severity of violation
FMR VOL. 14; CH. 9; Para B.1
“NO DISCIPLINARY ACTION”
MUST BE JUSTIFIED IN WRITING
20. Prevention Address local weaknesses
Implement internal controls
Ensure personnel are trained in financial management principles and fiscal law
Ensure compliance with requirements of the Antideficiency Act
When in doubt, consult with FMB-5 or your Command Counsel
21. Resources DOD FMR www.dtic.mil/comptroller/fmr
FMB www.navweb.secnav.navy.mil
ASN(FM&C) Budget Policy and Procedures Division
meadows.linda@hq.navy.mil
maguire.maggie@hq.navy.mil
patrick.stephen@hq.navy.mil
ASN(FM&C) Office of Counsel
olsen.margaret@hq.navy.mil
wood.bryan@hq.navy.mil
wenderoth.valerie@hq.navy.mil