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Contract and
Fiscal Law
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Fiscal Law for Commanders
A. Introduction
1. Source of Funding and Fund Limitations
The US. Constitution gives Congress the authority to raise revenue, borrow funds, and appropriate proceeds to federal agencies. This power of the purse includes the power to establish restrictions and conditions on the use of appropriated funds. Congress primarily exerts its power of the purse through three fiscal limitations purpose, time and amount An agency may obligate and expend appropriations only fora proper purpose An agency may obligate only within the time limits applicable to the appropriation (e.g., Operations and Maintenance (OM) funds are available for obligation for one fiscal year and An agency may not obligate more than the amount appropriated by the Congress.
2. The Fiscal Law Philosophy
The expenditure of public funds is proper only when authorized by Congress, not that public funds maybe expended unless prohibited by Congress. Therefore, fiscal law requires positive authority (unlike criminal law, which permits actions unless they are specifically prohibited. Fiscal law requires the finding of a positive authority that states one can do something, rather than finding an authority that states one cannot do something.
B. Availability as to Purpose
The Purpose Statute provides that agencies shall apply appropriations only to the objects for which the appropriations were made, except as otherwise provided bylaw. Where a particular expenditure is not specifically provided for in the appropriation act, it is permissible if it is necessary and incident to the proper execution of the general purpose of the appropriation. The Government Accountability Office (GAO) applies a three-part test to determine whether an expenditure is a necessary expense of a particular appropriation 1) The expenditure must bear a logical relationship to the appropriation sought to be charged (i.e. it must make a direct contribution to carryout either a specific appropriation or an authorized agency function for which more general appropriations are available 2) the expenditure must not be prohibited bylaw and 3) the expenditure must not be otherwise provided for that is, it must not bean item that falls within the scope of some other appropriation or statutory funding scheme. Agencies have reasonable discretion to determine how to accomplish the purposes of appropriations. An agency’s determination that a given item is reasonably necessary to accomplishing an authorized purpose is given considerable deference. In reviewing an expenditure, the GAO examines

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