Transcript Slide 1
ESSENTIAL PRINCIPLES OF
FISCAL LAW
Mike McGregor
Office of the General Counsel
[email protected]
703-681-8974
What to Take Away:
AFFIRMATIVE AUTHORITY - PARADIGM SHIFT – “What gives me the authority
to spend these public funds?”
PTA ANALYSIS
Purpose – 31 U.S.C. 1301
Time – 31 U.S.C. 1341 & 1502
Amount – 31 U.S.C. 1341, 1517 & 3302
ANTIDEFICIENCY ACT - Do not spend, or commit to spend, in advance of or in
excess of appropriations - 31 U.S.C. 1341
MISCELLANEOUS RECEIPTS - Need authority to retain proceeds from sources
other than congressional appropriations 31 U.S.C. 3302(b)
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Sources of Law
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U.S. CONSTITUTION
PUBLIC LAWS
- U.S. CODE
AUTHORIZATION ACTS
APPROPRIATION ACTS
COURT, DOJ and GAO OPINIONS
ADMINISTRATIVE REGULATION
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Congressional Power of the Purse
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Congress shall “make all laws which shall be necessary and proper for
carrying into Execution the foregoing Powers . . .”
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“No money shall be drawn from the Treasury, but in Consequence of
Appropriations made by law . . . “
U.S. Constitution, Article I, section 9, clause 7
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“…[T]he expenditure of public funds is proper only when
established by Congress, not that public funds may be
expended unless prohibited by Congress.”
U.S. v. MacCollom, 426 US 317 (1976)
Affirmative Authority
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Sources of Law: U.S. Code
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Purpose Statute
- 31 USC 1301(a)
Antideficiency Act
- 31 USC 1341, 1342, 1349-1351, 1511-1519
Adequacy of Appropriations Act
- 41 USC 11
Miscellaneous Receipts Statute
- 1 USC 3302
Bona Fide Needs Statute
- 31 USC 1502(a)
Account Closing Statutes
- 31 USC 1551-1558
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Sources of Law: Authorization Acts
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An Act of Congress that authorizes the appropriation of funds to
implement programs
- Not an appropriation of public funds
- Enacts permanent legislation
- House and Senate Armed Services Committee (HASC and SASC)
- National Defense Authorization Act (NDAA FYXX)
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Sources of Law: Appropriations Acts
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An Act of Congress that permits Federal agencies to incur
obligations and to make payments out of the Treasury for
specified purposes
- An appropriation of public funds – provides budget authority
- Generally temporary in nature (for FY in which it is enacted)
- House and Senate Appropriations Committee (HAC and SAC)
- Defense Appropriations Act for FYXX
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The Structure of the DoD
Appropriations Act
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Title I - Military Personnel
Title II - Operations and Maintenance
Title III - Procurement
Title IV - Research & Development
Title V - Revolving Funds
Title VI - Other DoD Programs
Title VII - Related Agencies
Title VIII - General Provisions
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Continuing Resolutions
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LEGISLATION PERMITTING OPERATIONS IN THE ABSENCE OF
AN APPROPRIATION
- GENERALLY AT CURRENT OR LOWER RATE
- GENERAL PROVISIONS OF PRIOR YEAR CONTINUE TO APPLY
- NO NEW STARTS
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PURPOSE – time - amount
Purpose Statute
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Appropriations shall be applied only to the
objects for which the appropriations were made
except as otherwise provided by law
31 USC 1301(a)
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The Necessary Expense Rule:
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Congress can’t anticipate every necessary
expense
Appropriations Acts often contain broad
categories (i.e., Operations and Maintenance)
- Defense Health Program: “For expenses, not
otherwise provided for, $30.5 B shall be for
the operation and maintenance…” (FY12
Appropriations Act)
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The Necessary Expense Rule:
Rule:
An appropriation is available for those expenses which are
necessary or incident to the proper execution or
achievement of the object of the appropriation
Test:
• Is there a logical relationship between the proposed
expenditure and the appropriation?
• Is the expenditure prohibited by law?
• Is the expenditure otherwise provided for?
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Necessary Expense Test:
Logical Relationship
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Extent to which the expenditure will contribute to
accomplishing the purposes of the appropriation
- Agency discretion/determination given considerable
deference
- Consider authorized mission/responsibilities of agency
- Must be reasonable
- Not just desirable/good idea/someone else is doing it
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GOVERNMENT FUNDS FOR
GOVERNMENT PURPOSES
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CAUTION – CAUTION - when expending agency funds for
items of a personal nature
Examples: food, bottled water, clothing, trinkets,
command coins, ceremonies, and decorations
What is authority: Appropriations Act, U.S. Code,
Regulation, Necessary Expense Rule
Benefit to the agency versus benefit to the individual
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FOOD - PERSONAL EXPENSE
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Exceptions:
- emergencies - imminent danger to human life or
destruction to government property
- training, conferences - necessary to obtain full benefit
of the training event; non-segregable portion of
registration fee; no internal meetings
- cultural awareness ceremonies - samples
- awards ceremonies - refreshments as part of public
recognition ceremony
- travel
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BOTTLED WATER – PERSONAL EXPENSE
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Appropriated funds may be used only upon a
showing of necessity; i.e., there is no potable
water available.
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CLOTHING – PERSONAL EXPENSE
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Official Civilian DOD Uniforms: 10 U.S.C. § 1593
Administrative Expenses Act: 5 U.S.C. § 7903
- Special/unusual clothing
- Item must be for the benefit of the government,
essential to the safe and successful
accomplishment of the work, and not solely for the
protection/comfort of employee
- Must involve hazardous duty
OSHA Compliance: 29 U.S.C. § 668
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TRINKET - GIVEAWAY ITEMS
PERSONAL EXPENSE
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Permissible in some limited circumstances:
- Approved awards programs
- Items of nominal or modest value for
recruitment/retention (10 USC 2261)
- Direct connection to agency mission
- No intrinsic value and item assists achieving an
internal management objective
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COMMANDER’S COINS
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PROPER USE DETERMINED BY FUNDING
- Appropriated funds (O&M)
- Awards pursuant to approved awards program
- Recognition for reenlistment/retention
- Appropriated funds (ORF)
- IAW SECNAVINST 7042.7K
- PERSONAL FUNDS
- All others
Cautions
- Be wary of bona fide need
- Policy strongly discourages personalization - increases
risk of obsolete stock upon departure
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TRADITIONAL CEREMONIES
(i.e., Retirement, Change of Command)
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Authorized to use appropriated funds, government
personnel, and other resources
• Includes cost of printing/addressing/sending
reasonable number of invitations, as appropriate
• Does not include cost of food, beverages, or other
entertainment
Presentation of award during a traditional ceremony does
not permit use of appropriated funds to purchase food at
follow-on reception or ceremony
Traditional ceremonies are considered official events
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Decorations
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Permissible where consistent with work-related
objectives (such as enhancement of morale),
agency or other applicable regulations, and the
agency mission, and is not primarily for the
personal convenience or satisfaction of a
government employee. 67 Comp. Gen. 87 (1987)
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Agencies should be appropriately sensitive with
respect to display of religious symbols
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Does not apply to Christmas cards, which remain
considered a personal expense. B-247563.4,
December 11, 1996
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Purpose, TIME, amount
AVAILABILITY OF APPROPRIATIONS
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Annual – 1 October to 30 September
- Annual assumed unless specified otherwise
- Definite period of availability
- Example: O&M
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Multiple Year
- More than 1 Fiscal Year
- Definite period of availability
- Example: RDT&E funds 2 FYs; Procurement 3 FYs; MILCON 5 FYs
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No Year
- Available until expended
- Indefinite
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THE LIFE OF A DEFINITE ACCOUNT
(Annual / Multiple Year)
CURRENT
EXPIRED
5 YEARS
CLOSED
FOREVER
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BONA FIDE NEEDS (BFN) RULE
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Appropriation is available for:
- Payment of expenses properly incurred during
the period of availability (needs of the agency
that arise during the period of availability); and,
- Complete contracts properly made within the
period of availability (even if appropriation has
expired – not closed)
- Period of availability is the time period during
which appropriation is current – available to incur
new obligations
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GENERAL RULES OF AVAILABILITY
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Future Year’s Needs: appropriations are not
available for needs in fiscal years beyond availability.
Continuing Need: unfulfilled BFN of one FY may be
carried forward to the next FY.
Severable Services: BFN of FY when service
performed (10 USC 2410a exception).
Non-severable: BFN of FY of contract execution.
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GENERAL RULES OF AVAILABILITY
Multiyear Contracts: only if multiyear or no year
appropriations or specific statutory authority exists.
Lead Time: item is BFN of current FY but cannot be
delivered until future FY (not a standard commercial
item).
Inventory: replacement of stock inventory is BFN of
current FY (no stockpiling).
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EXPIRED ACCOUNTS
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Funds retain identify.
No new obligations.
Available Only for:
- Recording, adjusting, liquidating obligations
properly chargeable,
- Settlements,
- Re-procurement actions.
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CLOSED ACCOUNTS
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Account closed after 5 years.
All balances cancelled.
No longer available for obligation or expenditure
for any purpose.
Current appropriation of same purpose may be
used to liquidate properly chargeable bills.
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Purpose, Time, AMOUNT
Basic Concept
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Whether sufficient budgetary authority from the
proper fiscal year and appropriation is available
at the time of obligation or expenditure to pay
the liability.
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Obligating or expending in excess of amounts
available violates the Anti-Deficiency Act (ADA).
31 USC §§ 1341 & 1517
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DETERMINING AMOUNT
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APPROPRIATION - Congress
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APPORTIONMENT – OMB
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ALLOCATION - Agency
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THE APPROPRIATION
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THE ACT
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STATUTORY SUBDIVISIONS OF THE ACT
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EARMARKS (in the act or incorporated into the
act)
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REDUCTIONS/RESCISSIONS
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OTHER STATUTORY RESTRICTIONS
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APPORTIONMENT
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Apportionment is required by 31 USC 1512.
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Concept is to prevent expenditures at rates
that will cause a deficiency.
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OMB apportions funds to DoD.
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Obligation in excess of apportionment is an
Anti-deficiency Act (ADA) violation.
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ALLOCATION
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Allocation is required by 31 U.S.C. 1514.
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Designed to restrict obligations from
exceeding appropriation, apportionment, or
amounts permitted under agency
administrative controls.
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Obligation in excess of allocation is an ADA
violation.
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AUGMENTATION
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Amounts appropriated for a purpose
represent a limitation Congress has fixed
for that purpose; may not exceed that
amount absent express statutory
authority.
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No agency may augment its appropriations
from outside sources or from improper
internal sources unless statutorily
authorized to do so.
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AUGMENTATION: GENERAL RULES
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31 U.S.C. § 3302(b)— “Miscellaneous Receipts”
- Funds received by Agency from outside
sources must be deposited into General Fund
of the Treasury unless receipt constitutes
authorized by law
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Economy Act, Project Orders, Gift statute
Funds from the “wrong” appropriation may not
be used to augment the “right” appropriation
- Can’t use O&M for Procurement
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Voluntary Services
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Voluntary Services are a form of augmentation of
resources and may not be accepted without authority.
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31 USC 1342 allows accepting voluntary services in
emergencies involving human life and property.
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10 USC 1588 and 10 USC 2601 provide authority to accept
certain voluntary services (see SECNAVINST 5380.1).
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Voluntary services are different from gratuitous services.
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ANTIDEFICIENCY ACT (ADA)
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31 U.S.C. § 1341: prohibits obligations or
expenditures in excess of appropriations and
contracting in advance of an appropriation
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31 U.S.C. § 1342: prohibits government
employees from accepting voluntary services
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31 U.S.C. §§ 1511-1517: requiring
apportionment/ administrative subdivision of
funds and prohibits obligations or
expenditures in excess of apportionment or
administrative subdivision of funds
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Reporting Suspected ADA Violations
Preliminary Investigation
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Purpose is to gather basic facts and determine
whether a violation appears likely. Completion of the
review is usually required within 14 weeks of the
date of discovery.
Focus is on the potential violation, not possible
corrective actions.
In all cases, the reviewer shall request and obtain
advice of legal counsel on legal issues raised during
the preliminary review and legal office reviews for
legal sufficiency.
Preliminary Report must be forwarded to the
Assistant Secretary (Financial Management &
Comptroller) of the Military Department or the
equivalent for DoD activities.
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Formal Investigation
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If the preliminary report determines that a violation
occurred, an Investigating Officer must be appointed
and a formal investigation must be initiated within 2
weeks of approval of the preliminary investigation.
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Purpose is to determine the relevant facts and
circumstances of the potential violation, assign
responsibility and discipline/corrective action.
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Final report must reach the office of USD
(Comptroller) within 12 months 2 weeks from the
date the preliminary review ended.
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Reports to the President and Congress
The Secretary of Defense must report violations to the
President and Congress (31 U.S.C. §1351, 1517(b)). The report
must also be transmitted to the Comptroller General and Office
of Management and Budget.
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Criminal Penalties
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A knowing and willful violation of the Antideficiency
Act is a Class E felony (18 U.S.C. § 3559(a)(5).
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Punishment may include a $5,000 fine, confinement
for up to two years, or both.
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ADA CASES
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The Naval Observatory (USNO) received $842,857.00
from private parties for astronomical data and related
services, credited those funds to the USNO O&M(N)
account, and then used the funds for USNO purposes
without statutory authority. The result was an ADA
violation for the improper augmentation of USNO’s
O&M(N) account. Discipline included a letter of
caution and required fiscal law training.
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ADA CASES (cont)
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The Marine Corps Logistics Command used
$87,492.00 to purchase future training. No specific
content or dates for the training were established and
the training subsequently took place in the following
fiscal year. The result was an ADA violation for an
expenditure that failed to meet the bona fide needs
rule. Discipline included letters of caution.
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ADA CASES (cont)
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The AF Air Warfare College used $21,730.76 of
O&M(AF) between FY99 and FY05 to purchase light
refreshments in relation to the hosting of regional
studies events. The result was an ADA violation for
using O&M(AF) funds for an unauthorized purpose.
Discipline included a letter of counseling.
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What to Take Away:
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AFFIRMATIVE AUTHORITY - PARADIGM SHIFT – “What gives
me the authority to spend these public funds?”
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PTA ANALYSIS
Purpose – 31 U.S.C. 1301
Time – 31 U.S.C. 1341 & 1502
Amount – 31 U.S.C. 1341, 1517 & 3302
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ANTIDEFICIENCY ACT - Do not spend, or commit to spend,
in advance of or in excess of appropriations - 31 U.S.C. 1341
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MISCELLANEOUS RECEIPTS - Need authority to retain
proceeds from sources other than congressional
appropriations 31 U.S.C. 3302(b)
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FOR OFFICIAL USE ONLY
Michael McGregor
Counsel to the Surgeon General of the Navy
Office of General Counsel
[email protected]
703.681.8974