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 NEED PREMISE 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 CONTRACTS TWO 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

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 EXAMPLES ARE BASED UPON THE FACT THE SUPPLY/EQUIPMENT WILL NOT BE MOVED TO ANOTHER SUPPORTED COOPERATIVE AGREEMENT 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 1 The 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