Contracting Officer Podcast Slides Knowledge & Insights From Contracting Officers

What are the Colors of Money? Episode 019 What are the Colors of Money? Original Air Date: March 22, 2015 Hosts: Kevin Jans & Paul Schauer

Formatting notes Hyperlinks: Blue font indicates hyperlinks – presentation must be in ‘Slide Show’ mode to activate the link Red bold font indicates a point of emphasis Green bold font indicates CO’s personal comment or perspective

Introduction Purpose of this podcast: To provide an overview of the different types of funds used in government acquisition What are they? When do they matter? Why does the Government (and Industry) care about different funds? DISCLAIMER: We are not lawyers – fiscal law is a large, complex topic – this podcast is merely an introductory overview.

What are the ‘Colors of Money?’ Big picture: Type of Appropriations Congress authorizes the spending of public funds. “No money shall be withdrawn from the Treasury, but in consequence of appropriations made by law” What did Congress say the agency can spend the money on? Little picture: These colors are a simple way to describe how public money is allocated and spent

What are the ‘Colors of Money?’ Funding is allocated by types These are often called “colors of money” Those types are based on what it can be used for: Operations & Maintenance Procurement R&D Construction

The ‘Bona Fide Need’ Rule Purpose of this rule: Ensure that the ‘Need’ matches what Congress appropriated the money for Use personnel money to pay personnel Use construction money to pay for construction, etc. Requirement -> Request -> Authorization -> Appropriation -> Obligation The ‘Need’ must remain constant throughout

The ‘Bona Fide Need’ Rule Time Appropriation first, THEN obligation! Must have funds approved before signing the contract Duration of funds: One year, multi-year, “no-year” Amount $2M is appropriated = max of $2M is obligated – Do not bounce checks!

Example (Dep’t of Defense – DoD) Procurement funds: Good for 3 years Production and modification of things, systems, etc. Must be fully funded (do you really want half of a airplane?) Operations and Maintenance (O&M): Good for 1 year Day to day operations (Think ‘consumables’ and services) May be incrementally funded

Example (Dep’t of Defense – DoD) RDT&E funds (Research, Development, Test & Evaluation): Good for 2 years Basic and applied RDT&E Huge part of weapon systems development – leads to procurement (production manufacturing) Can be incrementally funded

When do the Colors of Money happen? Acquisition Time Zones (from Podcast Episode 003) Requirements Zone Market Research Zone RFP Zone (proposal zone) Source Selection Zone Execution Time Zones (from Podcast Episode 084) Kick Off Zone Performance Zone Re-compete Zone Wrap-up Zone

Why are the Colors of Money important? The Colors of Money are: Another KEY difference between public and private sector Why Sept 30 matters! (End of Government’s fiscal year – funds expire!) Why it takes “longer” to get things done This is part of the checks and balances Some funds take a LONG time to get approved

Why Should Government Care? First: Do no harm (do not bounce checks!) Second: Does your acquisition strategy optimize your color of money? Do offerors know the type of money? You want educated vendors Do all your customers know this? Ask them - you may be surprised

Why Should Industry Care? Know your customers’ concerns Why the time of year matters, why certain things are not permitted based on type of funds, why the process takes longer than expected (funding approval) It is more than just “tight budgets” – it is THE LAW and must be followed Understand it is not all “green” to COs like it is to industry What “color of money” does your target agency use?

Summary Government funds (public funds) come in different types These funds must be spent according to their authorization Funding ‘streams’ may not be crossed – personnel funds for personnel expenses, construction for construction expenses, etc. Mandated by law – not negotiable or waiverable Severe penalties may result from improper execution of these policies Part of federal system of ‘checks and balances’

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