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Audit (A-03-10-03114)

04-20-2011
Appropriations Funding for National Institute of Allergy and Infectious Diseases Contract HHSN266-2006-00011C With SRI International

Executive Summary

Our review found that during fiscal years 2006 through 2009, NIH's National Institute of Allergy and Infectious Diseases (NIAID) did not comply with the time requirements and may not have complied with the amount requirements specified in appropriations statutes in administering Contract HHSN266-2006-00011C (the Contract) with SRI International. An agency may obligate appropriations for goods and services when (1) the purpose of the obligation or expenditure is authorized, (2) the obligation occurs within the time limits for which the appropriation is available, and (3) the obligation and expenditure are within the amounts provided by Congress. Federal statutes specify that a fiscal year appropriation may be obligated only to meet a legitimate, or bona fide, need arising in or continuing to exist in the appropriation's period of availability. The Antideficiency Act prohibits an agency from obligating or expending funds in advance of or in excess of an appropriation unless specifically authorized by law.

NIAID funded only $21.7 million of the $56.9 million Contract obligation with fiscal year 2006 appropriations. NIAID obligated a total of $16.8 million in violation of the bona fide needs rule: $11.6 million of fiscal year 2007 appropriated funds, $2.4 million of fiscal year 2008 appropriated funds, and $2.8 million of fiscal year 2009 appropriated funds. NIAID planned to obligate funds appropriated for the following year as well. Because the Contract was a nonseverable service contract (a single undertaking that provides for a single outcome chargeable to the fiscal year in which the contract was awarded), NIAID was required to record the full amount of the Contract using fiscal year 2006 appropriated funds. By not doing so, NIAID potentially violated the Antideficiency Act. (When services are severable they are continuing and recurring and chargeable to the fiscal year in which the services are provided.) NIAID complied with the purpose requirements of appropriations statutes.

We recommended that NIAID (1) deobligate $11.6 million of fiscal year 2007 funds, $2.4 million of fiscal year 2008 funds, and $2.8 million of fiscal year 2009 funds; (2) deobligate any additional funds appropriated for years other than fiscal year 2006 that NIAID may have obligated for the Contract after our audit; (3) record the remaining $35.2 million of the $56.9 million Contract obligation against fiscal year 2006 funds; and (4) report an Antideficiency Act violation if fiscal year 2006 funds are not available.

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