1. Antideficiency Act : What NOT to Do! Overview, Examples, Avoidance Bill Arnold, CDFM-A President, Arnold Federal Consulting, Inc Copyright 2016 Arnold Federal Consulting, Inc

2. Agenda Antideficiency Act (ADA) Overview – History – 31 USC 1341/1517 – 31 USC 1342 – Augmentation – Indemnification – Relationship to Purpose and Time Copyright 2016 Arnold Federal Consulting 2

3. Agenda - continued Violations Reported 2005-2015 – How many – How much – Who – Nature of violations – Latest Trends – FY10 - FY15 – Discipline taken – Examples Preventing ADA Violations Copyright 2016 Arnold Federal Consulting 3

4. History of ADA Congressional “Power of the Purse” – Agencies routinely overspent – “Deficiency” appropriations common – ADA is greatest power that Congress has over the Executive Branch Series of acts starting in 1870. – Additional provisions in 1905, 1906, 1951, 1956 Copyright 2016 Arnold Federal Consulting 4

5. ADA Provisions 31 USC 1341 and 1517 – Prohibits obligation or expenditures in advance of or in excess of an appropriation (1341) or an apportionment or other amount permitted by agency regulation (1517). 31 USC 1342 – Prohibits accepting voluntary services or employing personal services unless authorized by law or in emergencies involving protection of life or property Copyright 2016 Arnold Federal Consulting 5

6. ADA Provisions Augmentation – Receiving funds from a source without statutory authority, then obligating those funds, is a violation – Extension of: Miscellaneous Receipts Statute (31 USC 3302) Purpose Law (31 USC 1301) Supplementation of salary (18 USC 209) Indemnification – Unlimited indemnification = automatic violation Copyright 2016 Arnold Federal Consulting 6

7. Relationship to Purpose and Time Violations of Purpose Law and Bona Fide Needs rule – MAY --- or MAY NOT violate the ADA – Correctable Purpose and Time violations that do not result in an Amount problem are considered accounting adjustments – November 2010 change to FMR Was 3-Part test – Now 2-Part test – Some Purpose and Time violations automatically are ADA violations Copyright 2016 Arnold Federal Consulting 7

8. Violations Reported 2005-2015 How many – Total of 202 violations How much – Mean = $40,743,000 – Median = $701,000 – Largest = $1,636,620,000 – Smallest = $0.00 Copyright 2016 Arnold Federal Consulting 8

9. . 9 We’re Number 1!

10. . Copyright 2016 Arnold Federal Consulting 10

11. Latest Trends – FY 10 - 15 91 Reports – 47 were DoD (52%) 18 (17 – DoD; 1 – VA) were O&M/R&D/Proc/DWCF/MC in lieu of MILCON/Construction !! 8 were O&M/DWCF Ops/Procurement in lieu of R&D, Procurement or Capital Budget Authority Copyright 2016 Arnold Federal Consulting 11

12. Improper MILCON/Construction FY 10-15 AgencyAccountAmount ArmyO&M$ 914,596 ArmyO&M$11,806,993 ArmyO&M$15,449,992 ArmyR&D$ 843,030 ArmyO&M; R&D$ 968,273 ArmyO&M; OPA$ 5,800,000 NavyProc, MC$ 810,982 NavyO&M, MC$ 8,640,903 NavyO&M$ 6,900,000 Air ForceO&M; Proc, AF $ 5,272,449 DISAO&M; DWCF$ 1,923,460 NGAO&M; Proc; R&D$64,331,238 JIEDDOR&D; Iraq Freedom$13,750,000 ArmyO&M$ 2,957,489 USACEO&M$ 8,000,000 Air ForceO&M$18,300,000 ArmyO&M$18,833,979 VAMinor Construction $14,911,468 Copyright 2016 Arnold Federal Consulting 12

13. O&M/DWCF vs. R&D/Proc/Capital Budget FY 10 - FY15 Reports Account Proper Agency UsedAccount Amount NavyO&M, NProc, N$ 8,215,989 NGAO&M, DWProc, DW$ 8,633,146 Air ForceDWCF, AFCapital Bud$ 22,425,702 ArmyO&M, ARDT&E$ 8,926,804 ArmyO&M, ARDT&E$ 2,000,000 NavyDWCF, NCapital Bud$ 100,318 SOCOMProcRDT&E$136,261,239 ArmyO&M, ARDT&E$ 51,524,769 Copyright 2016 Arnold Federal Consulting 13 I used OMA instead of OPA?

14. . Copyright 2016 Arnold Federal Consulting 14

15. ADA Violation Examples “Those who cannot remember the past are condemned to repeat it.” – George Santayana There are many ways to violate the ADA The following examples are representative Copyright 2016 Arnold Federal Consulting 15

16. System Modernization: Certification/Approval 10 USC 2222(a): Certification and approval prior to obligation > $1M for business system modernization 10 USC 2222(b): Failure to obtain certification and approval is a violation of the ADA – Army Combat Readiness/Safety Center -- $2M – Madigan Army Medical Center -- $2.4M – Bureau of Naval Personnel -- $8.2M – Tinker Air Force Base -- $23.3M GAO # 11-18, 11-19, 11-20, & 12-16 Copyright 2016 Arnold Federal Consulting 16

17. Food Agency/Account: Air Force O&M Amount: $21,730 Description: Purchased light refreshments over a five year period for regional studies events. Refreshments not authorized under these circumstances. GAO # 09-03 Copyright 2016 Arnold Federal Consulting 17

18. Food/Gifts Agency/Account: Navy/O&M (OMN) Amount: $19,337 Description: O&M funds used to purchase meals and gifts for employees at a banquet. Event was not an award ceremony, training conference, or recruiting function. GAO # 07-19 Copyright 2016 Arnold Federal Consulting 18

19. Bottled Water Agency/Account: Navy/Working Capital Fund Amount: $701,480 Description: Navy WCF used to purchase bottle drinking water, for which appropriations were not available. None of the exceptions for water purchase were met. GAO # 08-04 Copyright 2016 Arnold Federal Consulting 19

20. Coins Agency/Account: Army/Chemical Munitions Destruction Amount: $13,420 Description: “Metallic information products” – or coins, were purchased for ceremonial events as gifts. No appropriation available for such gifts. GAO # 07-15 Copyright 2016 Arnold Federal Consulting 20

21. Government Purchase Card Misuse Agency/Account: Army/CoE Revolving Funds Amount: $186,529 Description: Two cardholders used GPC for personal, non-government purchases. No appropriation is available for such purchases, therefore an ADA violation was incurred. GAO # 07-13 Copyright 2016 Arnold Federal Consulting 21

22. Hired Non-US Citizen Agency/Account: Dept of Labor/Salaries & Expenses Amount: $29,102 Description: Dept of Labor paid compensation to an employee who was a Mexican citizen. Non-US citizens may not be paid unless certain exceptions are met. GAO # 07-08 Copyright 2016 Arnold Federal Consulting 22

23. Failure to Bill for Reimbursement Agency/Account: Army National Guard/ Milpers & O&M Amount: $521,790 Description: The Virgin Islands Army National Guard performed hurricane relief support efforts and did not bill the Territory of the Virgin Islands for reimbursement. GAO # 07-12 Copyright 2016 Arnold Federal Consulting 23

24. Ineligible Recipients Agency/Account: DoD Small & Disadvantaged Business Utilization Office/Procurement Amount: $9,046,076 Description: Funds allocated for Historically Black Colleges and a mentor/protege program went to organizations ineligible to receive such awards. GAO # 06-20 Copyright 2016 Arnold Federal Consulting 24

25. No Legitimate Government Need Agency/Account: HQ Army Accessions Command/O&M Amount: $1,653,084 Description: Army supported the Partnership for All Students Success (PASS) program, for at-risk students to increase graduation rates and pool of qualified Army applicants. Program is “too far removed” from legitimate recruiting activity. GAO #12-09 Copyright 2016 Arnold Federal Consulting 25