1. Contracting Officer Podcast Slides
Knowledge & Insights From Contracting Officers

2. 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

3. 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

4. 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.

5. 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“No money shall be withdrawn from the Treasury, but in consequence of appropriations made by law”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

6. 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

7. 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

8. 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!

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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?

15. 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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