Use of FY 2009/2010 Funds by the General Services
Administration to Assist the Department of Veterans
Affairs in Acquiring Human Resources for FY 2012
The Department of Veterans Affairs properly obligated its Fiscal Year 2009/2010 funds
when it and the General Services Administration signed an interagency agreement in
August 2010, under which GSA agreed to assist the VA in obtaining a new contract for
the provision of human resources.
GSA may use those funds in Fiscal Year 2012 to perform its obligations under the
interagency agreement without running afoul of the requirement, developed by the
Government Accountability Office, that servicing agencies acting under interagency
agreements perform within a “reasonable time.”
March 2, 2012
MEMORANDUM OPINION FOR THE GENERAL COUNSEL
DEPARTMENT OF VETERANS AFFAIRS
AND THE GENERAL COUNSEL
GENERAL SERVICES ADMINISTRATION
The Department of Veterans Affairs (“VA”) and the General Services
Administration (“GSA”) have asked whether, consistent with federal
appropriations law, they may undertake certain activities contemplated by
an interagency agreement between the VA and GSA. This opinion memo-
rializes the advice we provided in response to that question.
In the interagency agreement, GSA agreed to assist the VA in obtaining
a new contract for the provision of human resources (“HR”) services.
Under Part B of the agreement, signed on August 3, 2010, the VA pur-
ported to obligate funds from its Fiscal Year (“FY”) 2009/2010 appropria-
tion to GSA. However, as of November 2011, GSA had not engaged in
any meaningful services under that agreement because the VA and GSA
have, until recently, been waiting for the Office of Management and
Budget (“OMB”) and the Office of Personnel Management (“OPM”) to
review and approve the VA’s decision to proceed with a competition
among private shared service centers to select the new HR services pro-
vider. Those approvals were finally granted in September 2011. The VA
would now like to proceed with the acquisition.
Given the fact that it is now FY 2012, both agencies have asked
whether GSA may still properly use the VA’s FY 2009/2010 funds to
59
36 Op. O.L.C. 59 (2012)
provide the agreed-upon assisted acquisition services. More specifically,
they have asked whether, in using the VA’s funds, GSA would satisfy the
requirement, developed by the Government Accountability Office
(“GAO”), that servicing agencies acting under interagency agreements
perform within a “reasonable time.” They also have asked whether the
“reasonable time” construct applies at all in this unique context, where
the delay in performing the tasks specified in an interagency agreement
was caused not by the servicing agency but rather by the time required
for the requesting agency—here, the VA—to meet conditions that had to
be satisfied prior to performance. 1
We informally advised that under the unusual circumstances presented
here, the VA properly obligated its FY 2009/2010 funds when the VA and
GSA signed Part B of the interagency agreement in August 2010, and that
GSA may use those funds without running afoul of the “reasonable time”
limitation developed by the GAO. Initially, we hesitated to extend the
“reasonable time” concept to delay by requesting as well as servicing
agencies in the absence of clear guidance from the GAO. But the logic of
the GAO’s concept is that an unreasonable delay by the servicing agency
may cast doubt on whether the requesting agency had a bona fide need in
the year of the appropriation and may suggest that the requesting agency
was attempting to “park” funds for use during a later fiscal year. We
believe that this logic may also apply when the requesting agency itself
has unreasonably delayed performance of its assigned responsibilities, if
that delay hinders the servicing agency’s ability to use the funds, and
circumstances suggest that the requesting agency did not have a bona fide
need in the fiscal year of the appropriation. However, on the facts pre-
sented here—where the VA had an uncontested bona fide need for a
nonseverable service in FY 2010; where neither the VA nor GSA had any
reason or incentive to delay the use of the funds; and where the delay was
attributable to a new, untried regulatory review process conducted by
1 See Letter for Virginia A. Seitz, Assistant Attorney General, Office of Legal Counsel,
from Will A. Gunn, General Counsel, Department of Veterans Affairs, and Kris E.
Durmer, General Counsel, General Services Administration (Nov. 10, 2011), with accom-
panying Memorandum for Virginia A. Seitz, Assistant Attorney General, Office of Legal
Counsel, from Will A. Gunn, General Counsel, Department of Veterans Affairs (“VA
Memo”), and GSA Position Paper on VA Human Resources IT Procurement (“GSA
Paper”).
60
Use of FY 2009/2010 Funds by GSA to Assist VA in FY 2012
OMB and OPM—we conclude that neither the VA nor GSA failed to use
the funds within a reasonable time and that the VA cannot be charged
with having improperly “parked” its FY 2009/2010 funds with GSA.
I.
As noted above, the VA and GSA have entered into an interagency
agreement in which GSA agreed to assist the VA in selecting a new
provider of HR information systems services, which, in addition to
providing new HR services, would migrate the VA’s current HR system to
the new system. GSA has the authority to perform these services for the
VA under 40 U.S.C. § 501 (2006 & Supp. IV 2010), which authorizes
GSA to perform services for executive agencies, and 40 U.S.C. § 321
(2006), which establishes the Acquisition Services Fund that finances
GSA’s Federal Acquisition Service. 2 The agreement was formed in two
parts. The VA and GSA entered into Part A of the agreement on April 30,
2009. That part set out the purpose of the agreement and the respective
roles and responsibilities of the two agencies. See Interagency Agreement
Between Department of Veterans Affairs and General Services Admin-
istration, Federal Acquisition Service (“IA”) pt. A (General Terms and
Conditions). No fiscal obligations were created through the execution of
Part A. See id. § A.1 (Purpose).
On August 3, 2010, the agencies signed Part B of the interagency
agreement, which served as the funding document. The purpose of Part B
was “to establish an agreement with the Servicing Agency [GSA] to assist
the Requesting Agency [the VA] in obtaining a new contract to support the
selection of a provider of Human Resources Information Systems (HRIS)
services and migrate the VA to that provider for those services.” IA pt. B
(Requirements and Funding Information), § B.1 (Purpose). Part B speci-
fied that GSA would procure IT support for the VA and provide acquisi-
tion support services, including, among other things, preparing a solicita-
tion, conducting a competition, and administering the contract, in order to
assist the VA in migrating to “an HR system that is mandated by OMB.”
Id. §§ B.6, B.9. Part B purported to obligate to GSA $36,710,332.66 of the
VA’s information technology systems funds, from a two-year appropria-
2 Accordingly, GSA was acting under statutory authority independent of the Economy
Act, 31 U.S.C. § 1535 (2006).
61
36 Op. O.L.C. 59 (2012)
tion that expired on September 30, 2010. Id. § B.12; see Consolidated
Security, Disaster Assistance, and Continuing Appropriations Act, 2009,
Pub. L. No. 110-329, div. E, tit. II, 122 Stat. 3574, 3706–07 (2008). 3 That
total included a fee for GSA of $1,105,000. Part B of the interagency
agreement did not condition the obligation of funds on any contingency or
the need for regulatory approval.
Section B.9 of Part B incorporated by reference section A.6 of Part A,
which set forth the specific roles and responsibilities of the VA and GSA.
That section specified, among other things, that the VA, as the requesting
agency, had to “comply fully with applicable procurement regulations
and policies in all matters related to this IA.” IA § A.6, Requesting
Agency Roles and Responsibilities, #4. Among these applicable policies
was the requirement, set out in relevant OMB and OPM guidance regard-
ing so-called Human Resources Line of Business (“HRLoB”) migrations,
that an agency seeking to conduct a less than fully-open competition
(such as a private-private or public-public competition) submit a full
justification for that approach, set out in an Excepted Business Case
(“EBC”), to OMB and OPM. 4 See Memorandum for Chief Human Capi-
tal Officers et al. from Linda M. Springer, Chairman & Director, Office
of Personnel Management, and Clay Johnson III, Vice Chairman &
Deputy Director for Management, Office of Management and Budget,
Re: Competition Framework for Human Resources Management Line of
Business Migrations at 4 (May 21, 2007) (“Agencies that wish to conduct
a non-competitive migration or a migration based on private-private (if
authorized) or public-public competition shall prepare a full justification,
generally including the type of information called for by section 6.303-2
of the FAR [Federal Acquisition Regulations System]. . . . Agencies shall
confer with OMB prior to proceeding with a migration through other than
3 Section B.12 of the interagency agreement incorrectly stated that the appropriation
expired in 2011. The VA and GSA agree that this statement was a clerical error. Section
B.11 states that the agreement was for a “severable service.” The agencies agree that this
statement, too, was in error. As we discuss below, we agree that the services to be per-
formed by GSA were plainly nonseverable, or “entire.”
4 Because a congressional rider was construed as barring public-private competitions
for HRLoB services, see Omnibus Appropriations Act, 2009, Pub. L. No. 111-8, § 737,
123 Stat. 524, 691, federal agencies seeking to migrate to new HR shared service centers
were required to conduct either a public-public or a private-private competition, either of
which involved a less than full competition. Thus, an EBC was required in any event.
62
Use of FY 2009/2010 Funds by GSA to Assist VA in FY 2012
a public-private competition.”); OPM, Migration Planning Guidance,
§ 7.1, Selection Guidance: Migration Competition Framework (“Migra-
tion Competition Framework”), http://www.opm.gov/egov/documents/
MPG/selectionguidance.asp#7.1 (last visited ca. Mar. 2012) (“Agencies
that wish to conduct a non-competitive migration or a migration based on
private-private competition or public-public competition shall prepare a
full justification. . . . Agencies may wish to use the Exception Business
Case Template . . . in preparing their justification to the Office of Man-
agement and Budget.”); see also Migration Competition Framework
(incorporating by reference the May 21, 2007 OMB memorandum).
Although the precise timing of its choice is unclear, either by the time
the VA signed Part B of the interagency agreement or shortly thereafter,
the VA had decided to use a private-private competition to select its HR
service provider. The extent to which OMB and OPM had the authority
to veto that decision is also unclear, but both the VA and GSA under-
stood that the VA was required to submit a justification for its decision
to OMB and OPM to obtain these agencies’ approval. That understand-
ing was not only supported by the OMB-OPM guidance requiring mi-
grating agencies contemplating a public-public or private-private com-
petition to submit an EBC to and “confer” with OMB before proceeding,
but also was apparently confirmed in a meeting in August 2010 in
which, according to subsequent VA e-mails, OMB and OPM provided
the VA guidance on how to proceed with its HR services acquisition and
suggested that the VA submit an EBC justifying its choice of either a
public or private sector provider. VA Memo app. A, ¶ 16; see E-mail for
Tonya Deanes from Robert Baratta, Re: OMB/OPM Meeting on HRIS
(Aug. 2, 2010, 3:24 PM); E-mail for Carol A. Bales from Robert Bar-
atta, Re: VA’s Plan for Selecting an HR LoB Shared Services Center
(Aug. 23, 2010, 3:24 PM). In addition, the memorandum from OPM
ultimately recommending that the VA be allowed to proceed with its
planned private-private competition states that agencies seeking to select
and migrate to a new HR service provider “must seek OPM’s and
OMB’s approval of their selection and migration decision”; and at the
end of the memorandum, a box next to “Approve” is checked. Memo-
randum for Matthew E. Perry, Chief Information Officer, Office of
Personnel Management, from Elizabeth A. Mautner, Program Manager,
Office of Personnel Management, Re: Human Resources Lines of Busi-
63
36 Op. O.L.C. 59 (2012)
ness, Department of Veterans Affairs—Exception Business Case at 1, 2
(Sept. 29, 2011) (“OPM Approval Memo”).
The VA’s submission of an EBC to OMB and OPM to justify a pri-
vate-private competition was the first such submission ever made under
the HRLoB process. The VA and GSA expected relatively quick approv-
al, but the process of preparing an EBC and obtaining OMB and OPM
approval was new and untried and took far longer than the VA and GSA
had expected. See VA Memo at 6 (“It is important to note that no other
federal agency has ever undertaken this exact private-private competition
to modernize and migrate its HRLoB systems. No agency has gone
through the OMB/OPM review process. There are no benchmarks, no
regulatory deadlines, or temporal boundaries to guide the HRLoB migra-
tion.”); GSA Paper at 2 (“The time it took for VA to obtain final approv-
al of its EBC was substantially longer than either VA or GSA anticipated
when they entered the IA[].”). The VA submitted a draft EBC to OPM in
September 2010, VA Memo app. A, ¶ 17, but the VA needed both to
conduct further market research before the EBC could pass muster with
OMB and OPM, and to obtain necessary internal approvals. VA Memo
at 6. Various unexpected developments delayed the necessary market
research and vendor demonstrations, and the VA did not submit a final
EBC for review until June 2011, followed by an updated version in
August 2011. Id. at 6 & app. A, ¶¶ 27, 31. In the meantime, in November
2010, GSA advised the VA by letter that it would be unable to proceed
with the issuance of a solicitation for bids until the VA’s EBC was ap-
proved. Letter for Robert Baratta, Director, HR Line of Business/HRIS
Program Office, Department of Veterans Affairs, from Bjorn Miller,
Contracting Officer, General Services Administration, Re: Approval of
Exception Business Case (Nov. 4, 2010).
On or about September 12, 2011, OMB notified the VA that it had ap-
proved its planned private-private competition. VA Memo app. A, ¶ 32.
On September 29, 2011, at the very end of FY 2011, the HRLoB (OPM)
program manager also recommended that the VA be allowed to proceed
with its plan. Id. ¶ 33; OPM Approval Memo. As of that date, GSA had
engaged in no meaningful services under the interagency agreement and
had made no charges against the obligated funds. The VA and GSA are
ready to proceed with the acquisition, but prior to doing so have asked
64
Use of FY 2009/2010 Funds by GSA to Assist VA in FY 2012
this Office whether GSA may properly use the VA’s FY 2009/2010 funds
in FY 2012.
II.
Under the VA and GSA’s interagency agreement, the VA obligated FY
2009/2010 funds in order to obtain “acquisition services” from GSA—in
particular, GSA’s assistance in selecting a new HR provider for the VA
and administering the contract with that provider. We advised that GSA
may properly use those funds to perform its obligations under the inter-
agency agreement, for three principal reasons. First, we think that the
funds were validly obligated to procure nonseverable services for which
the VA had a bona fide need in FY 2010 (during the availability of its
appropriation), and it is settled law that such validly obligated funds can
be used in subsequent fiscal years. Second, we do not think that the fact
that the VA had to navigate a novel regulatory approval process before
GSA could begin work renders the obligation invalid. And third, we
conclude that the “reasonable time” doctrine does not prohibit GSA from
using the funds, even though they are FY 2009/2010 funds that would be
used in FY 2012.
A.
The recording statute, 31 U.S.C. § 1501 (2006), contemplates that
agencies may enter into binding agreements creating recordable obliga-
tions with other agencies. See id. § 1501(a) (“An amount shall be record-
ed as an obligation of the United States Government only when support-
ed by documentary evidence of . . . (1) a binding agreement between an
agency and another person (including an agency)[.]”). It is settled fiscal
law that where, as here, an interagency agreement is based on statutory
authority other than the Economy Act, 5 an obligation under the agree-
5 The Economy Act provides authority for agencies to contract with other agencies
for goods or services. That Act requires that an amount obligated by one agency to
another be deobligated if the agency filling the order has not incurred obligations to
“provid[e] goods or services” or “mak[e] an authorized contract with another person to
provide the requested goods or services,” “before the end of the period of availability of
the appropriation.” 31 U.S.C. § 1535(d). As GSA points out, however, see GSA Paper at 1
n.1, the interagency agreement between the VA and GSA rests on authority independent
65
36 Op. O.L.C. 59 (2012)
ment “will remain payable in full from the appropriation initially
charged, regardless of when performance occurs, in the same manner as
contractual obligations generally” if it satisfies “the bona fide needs rule
and . . . any restrictions in the legislation authorizing the agreement.”
2 Government Accountability Office, Principles of Federal Appropria-
tions Law 7-30 (3d ed. 2006) (“Federal Appropriations Law”). “An
interagency agreement . . . is akin to a contract and the obligational
consequences are the same as if it were a contract.” Chemical Safety and
Hazard Investigation Board—Interagency Agreement with the General
Services Administration, B-318425, 2009 WL 5184705, at *1 n.6 (Comp.
Gen. Dec. 8, 2009). 6
For contracts generally, as well as interagency agreements, funds may
be obligated for the provision of services beyond the fiscal year of a
time-limited appropriation only to the extent that a bona fide need exist-
ed in the year that obligational authority existed, and that the services
constitute a single nonseverable undertaking. See Transfer of Fiscal
Year 2003 Funds from the Library of Congress to the Office of the
Architect of the Capitol, B-302760, 2004 WL 1146276, at *5 n.9, *7
(Comp. Gen. May 17, 2004) (“Library of Congress”) (Library of Con-
gress’s FY 2003 funds obligated to the Architect of the Capitol through
an interagency agreement are available for use in FY 2004 and 2005 to
redesign and renovate a loading dock); Interagency Agreement—
Administrative Office of the U.S. Courts, 55 Comp. Gen. 1497, 1498,
1500–01 (1976) (interagency agreement for automatic data processing
services constitutes a valid obligation against the FY 1976 appropriation
even though the necessary work would be performed in both FY 1976
of the Economy Act (40 U.S.C. §§ 321, 501), and thus is not subject to this restriction.
See, e.g., National Park Service Soil Surveys, B-282601, 1999 WL 795735, at *2 (Comp.
Gen. Sept. 27, 1999) (“Where an interagency agreement is based on specific statutory
authority independent of the Economy Act, the funds do not expire at the end of the
period of availability if they have been otherwise properly obligated.”).
6 In addressing issues of fiscal law, we give serious consideration to the views of the
Comptroller General, although they are not “controlling for executive branch officers.”
Use of General Agency Appropriations to Purchase Employee Business Cards, 21 Op.
O.L.C. 150, 151 (1997); see also id. (“[T]he opinions and legal interpretations of the
Comptroller General, although useful sources on appropriations matters, are not binding
upon departments or agencies of the executive branch.”). In addressing the issues here, we
agree with the GAO’s general approach.
66
Use of FY 2009/2010 Funds by GSA to Assist VA in FY 2012
and 1977); see also Independent Statutory Authority of Consumer Prod-
uct Safety Commission to Enter Into Interagency Agreements, B-289380,
2002 WL 31628522, at *2 (Comp. Gen. July 31, 2002); National Park
Service Soil Surveys, 1999 WL 795735, at *3; Obligation of Funds for
Purchase of Oil for Strategic Petroleum Reserve, B-193005, 1978 WL
11174, at *3 (Comp. Gen. Oct. 2, 1978); HUD—Corps of Engineers
Flood Insurance Studies, B-167790, 1977 WL 12105, at *2 (Comp. Gen.
Sept. 22, 1977). Appropriated funds remain available to liquidate obliga-
tions properly chargeable to that account for five fiscal years after the
period of availability. Library of Congress, 2004 WL 1146276, at *5
n.9 (citing 31 U.S.C. §§ 1552(a), 1553(a) (2000)).
Here, we believe that the VA had a bona fide need in FY 2010, when
its obligational authority still existed, and that the services for which it
was contracting were nonseverable. We discuss each conclusion in turn.
The bona fide needs rule is a longstanding gloss by the GAO on the
requirements of 31 U.S.C. § 1502 (2006). 7 The rule is that “[a] fiscal year
appropriation may be obligated only to meet a legitimate, or bona fide,
need arising in, or in some cases arising prior to but continuing to exist in,
the fiscal year for which the appropriation was made.” 1 Federal Appro-
priations Law 5-11 (3d ed. 2004); see also Funding of Grants by the
National Institutes of Health, 10 Op. O.L.C. 19, 21 (1986) (“Funding of
Grants”); National Park Service Soil Surveys, 1999 WL 795735, at *3.
Consistent with this rule, delivery of goods or performance of services in
a fiscal year subsequent to the year in which a contract is executed does
not necessarily preclude charging earlier fiscal year funds with the full
cost of the goods or services. The test is whether the goods or services
meet a bona fide need during the period in which obligational authority
exists, regardless of when the work is actually performed. EEOC—
Payment for Training of Management Interns, B-257977, 1995 WL
7 The statute provides in relevant part:
The balance of an appropriation or fund limited for obligation to a definite period is
available only for payment of expenses properly incurred during the period of availa-
bility or to complete contracts properly made within that period of availability and ob-
ligated consistent with section 1501 of this title. However, the appropriation or fund is
not available for expenditure for a period beyond the period otherwise authorized by
law.
31 U.S.C. § 1502(a).
67
36 Op. O.L.C. 59 (2012)
683813, at *2 (Comp. Gen. Nov. 15, 1995); see also Library of Congress,
B-302760, 2004 WL 1146276, at *5 & n.9.
The VA maintains that it had a clear bona fide need in FY 2010, during
the availability of its two-year appropriation, to migrate its HR systems to
a modern shared service center. VA Memo at 2; see also IA § B.6 (describ-
ing the VA’s bona fide need to provide continuous HR services and sup-
port to its employee population and to migrate those services and support
to an approved third-party provider by direction from OMB under the
HRLoB initiative). Consistent with this contention, the VA’s Determina-
tions and Findings supporting the interagency agreement, signed by the
VA in June 2010, expressed the VA’s goal of selecting a new provider as
soon as possible in FY 2010. Determinations and Findings for Project
Entitled Human Resources Information Systems (HRIS) Human Resources
Migration at 3. GSA does not dispute that the VA had a bona fide need for
GSA’s acquisition assistance services at the time the agencies signed Part
B of the interagency agreement; indeed, GSA believes that the VA validly
obligated its FY 2009/2010 funds at that time. GSA Paper at 3. GSA
likewise does not dispute that the VA’s bona fide need continues to exist.
A bona fide need, moreover, may arise in one fiscal year for services
that by their nature cannot be separated for performance in separate fiscal
years. The GAO has explained that the question whether to charge the
appropriation current on the date the contract is made or the funds current
at the time services are rendered depends upon whether the services are
“severable” or “entire.” 1 Federal Appropriations Law at 5-23; see also
Funding of Grants, 10 Op. O.L.C. at 22. “The term ‘severable services’
refers to those services which are continuing and recurring in nature, such
as window cleaning, maintenance or security services”; they are services
“that can be separated into components that independently provide value
to meet agency needs.” National Park Service Soil Surveys, 1999 WL
795735, at *3. Under the bona fide needs rule, any portion of severable
services completed in a subsequent fiscal year is chargeable only to ap-
propriations available in the subsequent year. Id.
By contrast, an entire, or nonseverable, service is one that is not re-
curring in nature; such a service is more akin to a single project, the
components of which do not individually provide value to the agency.
For example, training tends not to be severable. 1 Federal Appropria-
tions Law at 5-27; Proper Appropriation to Charge for Expenses Relat-
68
Use of FY 2009/2010 Funds by GSA to Assist VA in FY 2012
ing to Nonseverable Training Course, 70 Comp. Gen. 296, 297 (1991);
Payment for Training of Management Interns, 1995 WL 683813, at *2.
A nonseverable service for which an agency had a bona fide need at the
time the agency orders or contracts for the service is properly charged to
an appropriation current when the agency enters into the contract. Inter-
agency Agreement with the General Services Administration, 2009 WL
5184705, at *3; see, e.g., Library of Congress, 2004 WL 1146276, at *5
n.9 (construction of building loading dock was nonseverable undertak-
ing) ; Incremental Funding of U.S. Fish and Wildlife Service Research
Work Orders, 73 Comp. Gen. 77, 79–80 (1994) (research work order
was “entire” for purposes of the bona fide needs rule and thus chargea-
ble to the appropriation available at execution rather than funds current
when the research was performed); Proper Fiscal Year Appropriation to
Charge for Contract and Contract Increase, 65 Comp. Gen. 741, 743
(1986) (study on adjustment needs of Vietnam veterans was not severa-
ble and should have been charged to the appropriation available when
the contract was executed).
We agree with the VA and GSA that, in this instance, the VA contracted
with GSA to obtain indivisible acquisition assistance services that would
culminate in the selection of and migration to a new HR services provider.
The individual activities in which GSA is to engage pursuant to the inter-
agency agreement will be of no independent value to the VA; the point of
the agreement, and its entire value to the VA, will be realized only when
the migration of the VA’s HR systems to the new provider is complete.
Under these circumstances, we think that GSA’s services are nonseverable.
See Financial Crimes Enforcement Network—Obligations Under a Cost-
Reimbursement, Nonseverable Services Contract, B-317139, 2009 WL
1621304, at *5 (Comp. Gen. June 1, 2009) (contract called for delivery of
a defined end product—the design, development, and deployment of a data
retrieval system—and thus was for a nonseverable services contract).
Because the VA had a bona fide need in the year that obligational authority
existed, and the services for which it contracted with GSA constitute a
single nonseverable undertaking, GSA can perform services under the
interagency agreement in a later fiscal year so long as the VA otherwise
properly obligated the funds. See Continued Availability of Expired Ap-
propriation for Additional Project Phases, B-286929, 2001 WL 717355,
at *4 (Comp. Gen. Apr. 25, 2001) (“Nothing in the bona fide needs rule
69
36 Op. O.L.C. 59 (2012)
suggests that expired appropriations may be used for a project for which a
valid obligation was not incurred prior to expiration merely because there
was a need for that project during that period.”).
B.
GSA agrees that the VA successfully obligated its FY 2009/2010
funds when the agencies signed Part B in August 2010. GSA Paper at 3.
Although the agencies do not dispute that the funds were validly obli-
gated, we considered whether the agreement satisfied the various statu-
tory and GAO requirements for a valid obligation, including specificity,
certainty, and definiteness. We also considered whether the existence of
a required regulatory approval process post-dating the execution of Part
B of the interagency agreement—through which the VA had to secure
OMB and OPM concurrence before GSA could issue a solicitation and
begin providing its assisted acquisition services—rendered the VA’s
attempt to obligate its funds in August 2010 invalid. As we now explain,
we conclude that the obligation satisfied these requirements and that the
regulatory approval process did not render the obligation invalid.
Part B of the interagency agreement, which purports to obligate the
VA’s FY 2009/2010 funds to GSA, satisfies the basic criteria for an
“obligation” under the recording statute—namely, that an amount to be
recorded as an obligation of the United States be supported by “documen-
tary evidence of . . . a binding agreement between an agency and another
person (including an agency) that is . . . in writing, in a way and form, and
for a purpose authorized by law” and “executed before the end of the
period of availability for obligation of the appropriation or fund used for
specific . . . work or service to be provided.” 31 U.S.C. § 1501(a).
In our view, Part B also satisfies the basic definition of “obligation”
set out in a long line of GAO authorities. See, e.g., 2 Federal Appropria-
tions Law at 7-3 (defining “obligation” as “a definite commitment which
creates a legal liability of the Government for the payment of appropri-
ated funds for goods and services ordered or received”); see also Gov-
ernment Accountability Office, GAO-05-734SP, A Glossary of Terms
Used in the Federal Budget Process 70 (2005); To the Administrator,
Agency for International Development, 42 Comp. Gen. 733, 734 (1963).
To be valid, an obligation of appropriations must be “definite and cer-
tain,” 2 Federal Appropriations Law at 7-3, and the agreement must be
70
Use of FY 2009/2010 Funds by GSA to Assist VA in FY 2012
for “specific” goods or services, id. at 7-17; 31 U.S.C. § 1501(a)(1)(B).
As the Comptroller General has explained, “Congress did not want
agencies to record obligations against current appropriations based on
inchoate agreements—whether with vendors or other agencies.” Expired
Funds and Interagency Agreements between GovWorks and the Depart-
ment of Defense, B-308944, 2007 WL 2120292, at *7 (Comp. Gen. July
17, 2007) (“GovWorks”).
While the need for a regulatory step to be taken during the pendency of
the VA’s and GSA’s agreement adds a complication on which we have
found little guidance, the interagency agreement between the VA and
GSA was, in our view, sufficiently definite, certain, and specific within
the meaning of those terms as articulated by the GAO to create a binding
obligation. Part B specifies the acquisition-related services the VA en-
gaged GSA to perform. Part A, incorporated by reference in Part B, fur-
ther delineates the roles and responsibilities of both the VA and GSA.
Although the VA was required to obtain advance OMB-OPM approval of
its plan to conduct a private-private competition, and although Part B of
the agreement does not specify that GSA would be assisting the VA in
conducting a private-private (as opposed to some other form of ) competi-
tion, the services the VA asked GSA to provide were not so vague, con-
tingent, tentative, or uncertain that they would cause the agreement to fail
the GAO’s specificity test. Rather, the VA hired GSA to provide “acquisi-
tion services” that consisted of conducting a competition for a new HR
services provider for the VA.
In providing this specific, definite description of the tasks the servicing
agency was to perform, the interagency agreement between the VA and
GSA stands in contrast to other situations in which the GAO has found an
agreement too indefinite or inchoate to form a valid obligation. See, e.g.,
To Betty F. Leatherman, Department of Commerce, 44 Comp. Gen. 695,
697–98 (1965) (no “firm and complete” order for printing of sales promo-
tion materials when a manuscript was not provided until more than seven
months after the end of the fiscal year); Natural Resources Conservation
Service—Obligating Orders with GSA’s AutoChoice Summer Program,
B-317249, 2009 WL 2004210, at *5–6 (Comp. Gen. July 1, 2009) (agen-
cy’s order for motor vehicles was not “firm and complete” because the
agency could not finalize its order until the following fiscal year when the
next-year model car information first became available); GovWorks, 2007
71
36 Op. O.L.C. 59 (2012)
WL 2120292, at *7 (three of four interagency agreements were too vague
in their descriptions to establish the rights and duties of the Department of
Defense and GovWorks—e.g., “equipment through the Pentagon IT
Store”); Status of Purchase Order as Obligation, B-196109, 1979 WL
11928, at *1 (Comp. Gen. Oct. 23, 1979) (order lacking a description of
the products to be provided, but which relied on “requisitions” to be sent
under separate cover, was not “firm and complete”); Director, Interna-
tional Operations Division, B-155708-O.M. (Comp. Gen. Apr. 26, 1965),
http://redbook.gao.gov/4/fl0016226.php (last visited ca. Mar. 2012) (loan
agreement between United States and Brazil was not sufficiently “definite
or specific” in providing that the funds would be used to finance programs
in certain areas “as may, from time to time, be agreed upon in writing by
A.I.D. and the Government”); To the Honorable Secretary of State,
B-147196, 1965 WL 2883, at *2–4 (Comp. Gen. Apr. 5, 1965) (contracts
were not specific as to services to be rendered when they provided for
funds for refugee assistance “as determined by the supervising officer”).
As we have noted, the fact that a particular regulatory step had to be
taken after the agencies signed Part B of the interagency agreement com-
plicates our assessment of the agreement’s specificity and definiteness.
We have not found definitive analysis on this point by the Comptroller
General. For purposes of discussion, we accept the VA’s and GSA’s view
that review and concurrence by OMB and OPM in the VA’s planned
private-private competition was a necessary regulatory step to be com-
pleted in the process before GSA was free to use the funds in conducting
the acquisition. This step appears to have been the responsibility of the
VA, the requesting agency. See IA § A.6, Requesting Agency Roles and
Responsibilities, #4 (requesting agency must “comply fully with applica-
ble procurement regulations and policies in all matters related to this IA”).
Nevertheless, we do not perceive the requirement that the VA pursue this
consultation-concurrence step as negating either the certainty or definite-
ness of the obligation the VA undertook with GSA. In at least one in-
stance, the Comptroller General concluded that a contract with an express
regulatory contingency was nonetheless sufficiently definite to create a
valid obligation. See Lawrence W. Rosine Co., 55 Comp. Gen. 1351,
1354–55 (1976) (award to a business on the condition that the contract
would be terminated at no cost if the Small Business Administration
found that it was not a small business was sufficiently definite to create a
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Use of FY 2009/2010 Funds by GSA to Assist VA in FY 2012
binding agreement supporting the obligation of funds). Here, the VA
obligated its FY 2009/2010 funds to GSA without even imposing an
express condition in Part B—the obligation, in other words, was more
certain and definite than the one at issue in Rosine because it was not
expressly conditioned on OMB-OPM approval, which seems instead to be
part of an assumed regulatory background for the contract. Furthermore,
under Part A of the interagency agreement, section A.12, both agencies
retained the right to terminate the agreement upon 30 days’ written notice,
enabling either agency to cancel the agreement in the event that a failure
by OMB or OPM to approve the contemplated competition or conditions
placed on that competition prevented GSA from carrying out the duties
imposed on it under the interagency agreement. Thus, the agreement was
definite, certain, and specific as written and understood by the agencies,
but in the event that OMB or OPM interceded with a requirement that
would have prevented GSA’s performance, the agreement could have
been terminated by either agency. We conclude, therefore, that the VA’s
obligation to comply with the OMB-OPM review process did not preclude
it from entering into a binding agreement with GSA.
C.
Finally, although GSA agrees that the VA validly obligated its FY
2009/2010 funds when it signed Part B of the interagency agreement,
GSA asks whether it will have acted within a “reasonable time” of the
obligation of the funds if it renders services under the agreement more
than one fiscal year after the funds’ expiration. It also asks whether the
“reasonable time” for a servicing agency to perform applies only to the
time required for the servicing agency to fulfill its duties or whether it
also includes time required by the requesting agency to satisfy conditions
necessary for the servicing agency to begin performance. See GSA Paper
at 2–4. We believe that on the facts presented here, the “reasonable time”
requirement developed by the GAO would not prevent GSA from per-
forming under the interagency agreement and using the funds in FY 2012.
The GAO has adopted a requirement, as a further gloss on the bona fide
needs rule, that the servicing agency in an interagency agreement award a
contract to a third party or otherwise perform within a “reasonable time.”
Although we have discovered little fiscal law from the Comptroller Gen-
eral on this point, the GAO appears to use a “reasonableness” standard to
73
36 Op. O.L.C. 59 (2012)
evaluate the timeliness of a performing agency’s actions. For example, in
answering the question how long a performing agency has to execute a
contract with a third party, consistent with the bona fide needs rule, the
GAO has explained: “There is no hard and fast rule in this regard. Rather,
the GAO uses a ‘reasonableness’ standard when evaluating the timeliness
of a performing agency’s actions, examining the circumstances surround-
ing transactions on a case-by-case basis.” See Government Accountability
Office, Interagency Transactions: Roles and Responsibilities—Frequently
Asked Questions #3 (Mar. 13, 2008) (“GAO FAQ”), http://www.gao.gov/
special.pubs/appforum2008/interagencytransactions.pdf. The Comptroller
General has applied this test in circumstances in which an unreasonable
delay on the part of the servicing agency might cast doubt on whether the
requesting agency had a bona fide need for the goods or services during
the fiscal year in which the funds were obligated.
The GAO’s decision in GovWorks, an example of an agency’s failure to
satisfy the reasonable time requirement, involved circumstances wholly
distinguishable from those here. In that case, the Department of Defense
incurred an obligation against its FY 2004 appropriation in April 2004,
when it transferred FY 2004 funds to GovWorks to obtain laser printers.
GovWorks did not execute the contract to acquire those printers until
almost 17 months later and 11 months after the end of FY 2004. The GAO
had “no information suggesting that the printers GovWorks purchased on
DOD’s behalf [were] anything but readily available commercial items that
GovWorks could have purchased on DOD’s behalf with little lead time.”
2007 WL 2120292, at *8. As such, the GAO found it “unreasonable” that
GovWorks took 17 months to execute the contract to purchase the print-
ers. Id. The GAO treated the passage of time prior to execution of the
contract for the printers as strong evidence that, rather than fulfilling a
bona fide need of FY 2004, the contract at best fulfilled a need of FY
2005. Moreover, the GAO concluded that, by transferring funds to
GovWorks under several inadequate interagency agreements, three of
which lacked specificity, the Department of Defense had improperly
“parked” funds at GovWorks in an effort to extend the availability of
time-limited appropriated funds. Id. at *10; Federal Appropriations Law,
Annual Update of the Third Edition 5-3 (Mar. 2011), http://www.gao.gov/
special.pubs/appforum2011/d11210sp.pdf (discussing the GovWorks de-
cision). In this instance, by contrast, the VA was not contracting for the
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Use of FY 2009/2010 Funds by GSA to Assist VA in FY 2012
purchase of a readily available commodity or service but for a major
project, the migration of its HR system to a new provider. Nor, the agen-
cies agree, was the delay in the use of the funds within the control of the
servicing agency, GSA.
We know of no GAO decision applying the “reasonable time” re-
striction to delays on the part of the requesting, rather than the servicing,
agency. But we also see no reason in principle why the logic of this GAO
standard would not extend to unreasonable delays by the requesting
agency, including delays that would cast doubt on whether the agency
entered into an interagency agreement to fulfill a bona fide need of that
first fiscal year and delays that would suggest that the agency was “park-
ing” funds to prevent their lapse. We are not required to decide whether
the “reasonable time” doctrine extends to delays on the part of the re-
questing agency, however, because even assuming it does, under the
unusual circumstances present here, the VA has satisfied any such re-
quirement.
In procuring a new HR system, the VA was proceeding under a new
and untried regulatory process that involved obtaining approval from
OMB and OPM to conduct a private-private competition. At the time the
VA and GSA signed Part B of the interagency agreement, there were no
benchmarks or settled expectations about the amount of time it would take
to prepare an EBC that would pass muster and for OMB and OPM to
concur. VA Memo at 6; GSA Paper at 2. The VA and GSA believed that
the process would be reasonably quick, and certainly not as long as a year.
Indeed, the VA’s Determinations and Findings supporting the interagency
agreement, signed by the VA in June 2010, expressed the VA’s goal of
selecting a new provider as soon as possible in FY 2010. Neither the VA
nor GSA had any incentive to delay the performance of the agreement or
the issuance of the solicitation. The VA’s immediate need for the HR
migration in FY 2010 was clear and undisputed; and, as noted above, the
agreement was definite and intended for the acquisition of a unique, rather
than routinely available, product. We have been given no basis to believe
that the delay in OMB’s and OPM’s approval was attributable to dilatori-
ness by the VA. On these facts, and in the absence of any reason the VA
should have expected the EBC process to take an entire fiscal year to
complete, we conclude that the VA acted reasonably, that the delay was
not attributable to any fault on its part, and that the lapse of time did not
75
36 Op. O.L.C. 59 (2012)
throw into question the VA’s bona fide need for GSA’s services in FY
2010, when it obligated the funds.
Finally, we find that GSA would not run afoul of the “reasonable time”
requirement by further contracting the VA’s funds in FY 2012, two fiscal
years after the VA incurred the obligation, rather than in the following
year. See, e.g., Library of Congress, 2004 WL 1146276, at *8 (FY 2003
funds could be applied to cover costs incurred in FY 2004 and 2005).
Again, our understanding of the reasonable time concept is that it is
contextual and imposes no rigid standard regarding the time in which a
servicing agency must perform under an interagency agreement. See GAO
FAQ #3. Because the OMB and OPM approvals have only recently been
issued, and because we do not think the delay in obtaining those approvals
violates the “reasonable time” requirement, we also conclude that GSA’s
reasonably timely performance following issuance of those necessary
approvals would not violate that requirement.
For all of these reasons, we conclude that, in the unique circumstances
here, the “reasonable time” requirement would not be violated by GSA’s
use of the VA’s FY 2009/2010 funds in FY 2012, even if that requirement
applies to delay by a requesting agency.
VIRGINIA A. SEITZ
Assistant Attorney General
Office of Legal Counsel
76