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Handbook 09-27
April 2009

Chapter 2

Fiscal Law and Contracting

Fiscal law and contracting are two vital components of money as a weapons system. Three key players serve the commander when contemplating using money to accomplish his mission: the contracting officer, the field ordering officer, and/or the project purchasing officer; the resource manager and/or the paying agent; and the staff judge advocate. Each provides knowledge of fiscal, contracting, and procurement laws required to prevent fraud, waste, and abuse of funds (U.S. government and other funds available).

Working with these three individuals enables commanders to maintain awareness of changes to laws. For example, Congress waived a portion of the Federal Acquisition Regulation (FAR) that applies to the Commander's Emergency Response Program which allows commanders to give preference to Iraqi and Afghan contractors and does not require commanders to undertake the traditional bidding process to identify the lowest cost to the government. General fiscal prudence and local guidance balance this waiver by stating that commanders will not deliberately overpay for products and will pay reasonable prices for supplies and services that yield a modest, functional standard.

Fiscal law spans the whole field of financial management and requires familiarity with the following:

  • Constitutional authority for the obligation and expenditure of funds.
  • Specificity of purpose, time, and amount of appropriations.
  • Anti-Deficiency Act and its penalties.
  • Use of funds under a continuing resolution authority.
  • Responsibilities of an accountable officer.
  • Applicable comptroller general decisions.
  • Allotment or project executions.

Fiscal law establishes limitations on expending and obligating funds. An officer or employee of the U.S. government may not:

  • Make or authorize an expenditure or obligation exceeding an amount available in an appropriation or fund for the expenditure or obligation.
  • Involve the government in a contract or obligation for the payment of money before an appropriation is made unless authorized by law (for example, the Feed and Forage Act).

The basic axiom of fiscal law is that the expenditure of public funds is proper only when authorized by Congress, and not that the expenditure of public funds is proper unless prohibited by Congress.

Contract and procurement laws are contained in the FAR and deal with creating, interpreting, and enforcing written agreements. The basic guidance, stated in the Feed and Forage Act, is as follows:

No contract or purchase on behalf of the United States shall be made, unless the same is authorized by law or is under an appropriation adequate to its fulfillment, except in the Department of Defense and in the Department of Homeland Security with respect to the Coast Guard when it is not operating as a service in the Navy, for clothing, subsistence, forage, fuel, quarters, transportation, or medical and hospital supplies, which, however, shall not exceed the necessities of the current year.


 

Last Reviewed: May 18, 2012

 
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