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Appropriations Funding for National Institute of Allergy and Infectious Diseases Contract N01-AI-30068 With PPD Development, LP

During fiscal years 2003 through 2008, NIH's National Institute of Allergy and Infectious Diseases (NIAID) did not comply with the time and amount requirements specified in appropriations statutes in administering contract N01-AI-30068 (the Contract) with PPD Development, LP. 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 violated the bona fide needs rule when it recorded expenditures against the wrong fiscal years. NIAID failed to deobligate the unneeded fiscal year 2003 funds remaining from program year 1. Instead, NIAID inappropriately used the remaining fiscal year 2003 funds for program year 2 expenditures. Subsequently, NIAID recorded expenditures for each program year against funds obligated for 1 or more previous program years. Because it recorded expenditures on a first-in-first-out basis against inappropriate fiscal year funds, NIAID failed to identify and properly obligate funds for its bona fide need in succeeding program years. In addition, NIAID violated the Antideficiency Act by obligating funds in advance of an appropriation. NIAID funded the Contract in compliance with the purpose requirements of the appropriations statutes.

We recommended that NIAID (1) record expenditures for each program year against the appropriate fiscal year appropriations; (2) deobligate $7.3 million of fiscal year 2003 funds and return those canceled funds to the Treasury; (3) resolve its bona fide needs violations; (4) report an Antideficiency Act violation for obligating fiscal year funds in advance of an appropriation for all program years reviewed, if not previously reported; (5) report an Antideficiency Act violation if $10.3 million (estimated) of fiscal year 2008 funds, sufficient fiscal year 2009 funds, and $20.2 million of current fiscal year funds are unavailable, if not previously reported; and (6) report, in accordance with 31 U.S.C. § 1554, any adjustment to the Contract using current fiscal year appropriations.

NIH concurred with the findings and agreed that the Contract is severable and should have been funded with the appropriation that was current when the services were performed. HHS reported the Antideficiency Act violation as required by 31 U.S.C. § 1351. However, NIH did not concur with our recommendations to correct the improper funding for the Contract. NIH stated that the Contract had expired and was being closed.

Filed under: Center for Medicare and Medicaid Services