The Anti-Deficiency Act (Revised Statutes 3679) and Funding Federal Contracts: An Analysis

• Author: Major Gary L. Hopkin and Lieutenant Colonel Robert M. Nuti
• Pages: 03

In this article the authors provzde a eomprehenszve reuiexm of one of the least well understaodfederal statutes. the Anti.Deficieney Act, SI U.S.C 5 665, commonly ?e-ferred to by its older deszgmtion, Revised Statwtes 3679 Several related Statutes eoneerntng fiscal matters are discussed, together icith determznatzon of responsibility foor utolat~ons of the Anti-Defieteney Act, and other eon. sderations. The authors conclude that violattons cax be avoided through reasonable staff coordination dunng the procurement process

*The opinion8 and ~~ncluiionsexpressed in this ani& are those of the authors

md do not neeesaarlly represent the view8 af The Judge Advocate Generays Sehoolo? any other governmentd agency**JAW. U.S. Army. Senior Initrucfor. Contract Lnu Division. The Judge Adracate General's School. B.A , 1967. and J D , 1970, University of Oklahoma; LL M , 1976. George Wnahington University Member of the Bars of Oklahoma. the Uniwd Stares Caun af Military Appeals. the United Sfitea Court of Claims. and the United State8 Supreme Court Author of Lagal lmplteoltona dRrmoti Senringa/EaiihReaourc?s 6ySoidizir. I8 MIL L REV 67 (1911). and Contiarf mg wiih the Dieadvantagd Sei Bfal end the Small Busmess Adrrnzalrotion. I PUB COST L J 169 119763*.'JAGC, U.S Army Chief. Confraef Law Division, The Judge Advocate Generays School B.A.. 1861. and J D , 1962. Univeraify of Arkansan, LL M , 1973. George Washington Unwerany inember of the Bars of Arkanaas, the United States Court of Claims, and the United States Supreme Caun.

TABLE OF CONTENTS

I .

I1 .

I11 .

IV . V .

VI .

INTRODUCTION .................................. 55HISTORY ......................................... 56THE ACT .......................................... 60A . Punitive Sections. .............................. 60B . Nonpunitive Sections ............................

IMPLEMENTATION OF THE ACT .................

OBLIGATION OTHERWISE AUTHORIZED BY LAW ...........................................

RELATED STATUTES ............................

A . Bana Fide Needs (31 U.S.C. B 712al ..............

B . Revised Statutes 3678 (31 U.S.C. B 6281 ...........

C . The Minor Construction Act (10 U.S.C. B 2674) ....

D . Proiect Orders (41 U.S.C. B 23) ..................

72 73

91 94 95 105 116 121

E . Seetion 601 of the Economy Act. a8 amended (31

U.S.C. 5 686) ..................................... 123DETERMINING RESPONSIBILITY FOR VIOLATIONS OF THE ANTI-DEFICIENCY ACT ....... 127MISCELLANEOUS CONSIDERATIONS ........... 130A . Other Liability .................................. 130B . Investigations of Potential R.S. 3679 Violations .... 131C . Mitigation of Violations of R.S. 3679 .............. 132D . Penalties far Violation of R.S. 3679 ............... 133RECOMMENDATIONS AND CONCLUSIONS ...... 134APPENDICES

.\ PPESUIX A . DEFISITI~ISS . . . . . . 131APPLSDIX B.31 C S.c t 665 . . . . . . . . . 13PAPPFSDIX C

. F~ASIL' PR3\'1Sii)SSirF R S . 81;-9 144 APPESDIX D FCSI) DISTRIRCTIuS L'HART llti

VI1 .

VI11

IX .

19781 ANTI-DEFICIENCY ACT

1. INTRODUCTION

   "You are advised that you are responsible far an over-obligation of Operation and Maintenance, Army funds in violation of Revised Statutes 3679. . . , "

   Thus commences the investigation of a potential violation of the statute commonly referred to as the Anti-Deficiency Act, an act that was until recently often cited but seldom invoked. However, in 1974, with the revelation of violations in the Army procurement accounts, great attention was focused on the Anti-Deficiency Act.' Alleged violations of every kind began to show up as a r e d l of audits by the U.S. Army Audit Agency and inspections conducted by the Inspector General. Table 1, below, illustrates the growing

   TABLE 1

   Humbe of All@ Violatiora d

   P 3 3879 ~y~iulyean'

   PY mrfi NO UNDER REPORTED ALLEGED ViOLATiON ViOLATiON REVISION/

   CONSIDERATION

   FY 70-74 2 3 7 IS 0PY 7 5 28 I4 1 3 I PY 76 64 I1 15 38 PY 77 77 7 41 29 PY 78 5 0 0 5

   I31 U.S.C. 666 (1970 6 Supp. Y i9761, eommanly referred to by it8 older deslgna.

   fmn. Xeviaed Statute8 3679. The Revised Ststutes were the h t codification of

   the general and peimanent ISWB of the United States. Thx codifleation was cari:::: i:' %'did?zo%? ? ~ ~ ~ ~ ~ b&%%%%w?m t8h?eS;a%t?&

   preienl United States Code ~yatern began with the Act of Jvne 30 1828 44 Stat. 1. Moat titiea of the United States Code, including titis 31, hive n&r been enacted into pmitwe law, and eitafiona to those tltles m e uaeful only for findmg The text of the statute8 ineluded therein. Revised Stnfutes 3879 IS thu8 the correct name for the iflute found today at 31 U.5 C 8665. The same applies fa Revised StatYtes 3678, st 31 u s.c 1628*R.S. 3619 violations inventory prepared by Olliee af the Comptroller of the Army. dnted 31 Jan 1978.

   awareness in the Army of potential violations of the Anti-Deficiency Act. A need exists for better understanding and appreciation of the provisions of Revised Statues 3679, and of the associated legal aspects of funding

   11. HISTORY

   The Anti-Deficiency Act is the cornerstone of Congressional ef-farta to bind the Executive branch of government to the limits on expenditure of appropriated funds set by appropriation acts and related statutes. It 1s an attempt to protect and preserve the Congressional power of the purse. Section 8, Article I of the Constitution grants to Congress the power to " . . , lay and collect taxes, duties, imports, and excises, to pay the debts and provide for the common defense and general welfare of the Umted States . . . ''4

   Section 9 of the same Article provides that " . . . no money shall be drawn from the treasury but in consequence of an appropriation made by law."s The limitations are absolute. No executive agency is empowered to obligate or expend public monies until Congress has exercised its authority under these two sections.

   However, notwithstanding the powers granted to Congress in Article I, for many yeara after the adoption of the Constitution the executive departments exercised little 02- no control over the mmiez appropriated to them. Various techniques were used to avoid eonpessimal spending limitations. Funds were obligated without or in advance of They were commingled and used for

   purposes other than those for which they were appropriated.' Finally, the executive departments would obligate or expend their appropriations during the first few months of the year and then seeka deficiency appropriation from Congress to continue to operate.8

   Congress became increasingly restive as executive abuses grew. AB early as 1819, Senator Henry Clay lamented executive disregard of the appropriations process:

   Are *e [Congress 1 to lose our rightful emfro1 ever the public purse'

   It 18 dail) urested from us [by offlais18 of executive drpnrtmental. under high sounding terms. which ere calculated to deceive "8. I" rueh a manner a8 appears to call far approbation rather than eenbuie af the pmcfxe e

   Efforts were made to place tighter controls on executive spending. For instance, a provision in the military appropriations act of 1820 required the Secretaries af War and Navy to report annually to Congress balances under each specific heading of the preceding year's In 1834 Congress passed an act requiring the Navy to report any transfers af appropriations to another executive branch of government.l' Other statutory devices designed to tighten fiscal controls were employed by Congress over the years until the advent of the War Between the States. That conflict caused Congress to remove fiscal restraints to insure support for the war effort.

   All of the old executive abuses reasserted themselves during the war years. Funds were commingled. Obligations were made without appropriations. Unexpended balances from prior years vere used to augment current appropriations. The cessation of hostilities did not result in a Concomitant cesmtion of abuses. If anything, the executive departments redoubled their efforts to override the right of Congress to ''control of the public purse."

   addressing rhe ~ame subject befare the Committee of the Whole of the HOY~P

   of

   Representatives. Calhovn commented that. slthavgh W ~ O Y B erprnditvres were for

   good objects, 'I. the money had not been applied to the objects for which It was qpmppriated. It WBQ a sheer abuse af pmer~WILMERDIID.

   W~LMEROINC,oupm at 80.

   'Id at 90.

   "Id. nt 73. 213 Slmilsr contide in prior appropriation acts had not proved uni. formly successful See 11 ANYALS OF CON0 22. 28, 81, 448 (1810)

   "Act of June 30. 1884. eh. 171. 4 Stat. 142

   " 1. at 99117 . ."

   QUO_

   Finally in 1868 Congreas determined ta reassert its constitutional perogatives. The first step in this direction was taken with the passage of a statute an February 12, 1868 which provided:

   Sa much of the firit section of the sei of March third eighteen

   hundred and nine entitled "An act further to amend the ~ewral acta

   for the establishment and regulation of the Treasur), War, and Nary Departments " 8% authariiea the President, on the application of the secretary of any department. to trsnafer the m m y s appnpmfed far a p a ~ f m l w branch of that department to another branch of expenditure ~n the same department. be, and the ~ a m e

   IS hereby. repealed. and all acts or parrs of seis authoriiing such transfers of apprapns-fimi be and the same am herebi repealed and no money appropriated for me purpose shall hereafter be uaed for any other purpose than that for Khxh if 1% appropriated

   This Statute was intended to end two abuses: (1) the commingling of current appropriations and (2) the diversion of old appropriations to purposes for which they were not intended.I3

   After enactment of the statute of 1868, only one loophole re-mained in the wall that Congress was erecting about its spending powers-the executive habit of creating obligation8 without appro. priations. often called "coercive deficiencies." This loophole was filled in 1870 with the enactment of the statute that, with amendments, became known a8 the...