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B-206283-O.M. 1 (1983-02-17)

handle is hein.gao/gaobadpsd0001 and id is 1 raw text is: LTITED STATES GOVE. rENT GENERLIL _ ; &Yi NG OFFICE ilfern orandum Yebrlary 17, _C TO Acting Regional Manager, Los Angeles - George Grant FROM Acting General Counsel - Harry 14 Van Cleve SUBJECT: Contract restructuring due to underfunding at Army Missile Comand (File B-206283-O.M.) This iremorandum is in response to several questions raised by Assis- tant Regional Manager J. W. Dorris concerning the propriety of certain contract restructuring actions taken by the Army Missile Co:riand in con- nection with the Stinger missile program. The questions and our answers follow. Question 1: Does the practice, required by Army Regulation (AR) 37-21 S 2-8(b) (May 26, 1977), of recording fixed-orice incentive con- tract obligations at target price, instead of at ceiling price, violate the Antideficiency Act, 31 U.S.C. § 1341 (a) (recently recodified from 31 U.S.C. § 665(a))? Answer: No, this practice does ,ot violate the Antideficiency Act. Army Regulation AR 37-21 § l-7(b)(1) requires, however, that, for fixed- price incentive contracts, contingent liabilities for contract price in- creases over target arrount be recorded as outstanding cowniitments at an amount estimated to be sufficient to cover thne additional obliqations which may materialize, based upon judgment and experience. It is unclear whether the Army cor plied with this regulation. Question 2: By restructuring the Stinger missile procurenmant to delete from one fiscal year's production an remount of missiles whose costs, due to overruns, exceeded available appropriations, and by using a later year's appropriations to repurchase aurrunts thus cancelled, did the Army Missile Coranand violate the bona fide needs rule of 31 U.S.C. § 1502(a) (recently recodified from 31 U.S.C. § 712a)? Answer: No. The bona fide needs rule restricts the use of appro- priations to expenditures required for the service of the particular period for which they were made. we do not consider the actions taken by the Army Missile Comand to have violated this rule, so long as the can- celled missiles that were repurchase<d with later year's appropriaticns were bona fide needs of the fiscal year whose funds were actually used. Question 3: Did the use of fiscal year 1981 funds to purchase mis- siles cancelled from creviois years' productions violate the fiscal year 1981 appropriation act?