Appropriations Funding for National Heart, Lung, and Blood Institute Contract HHSN268-2008-00012C With Information Management Services, Inc.

Our review found that during fiscal years 2008 and 2009, NIH's National Heart, Lung, and Blood Institute (NHLBI) did not comply with the time requirements and may not have complied with the amount requirements specified in appropriations statutes in administering contract HHSN268-2008-00012C (the Contract) with Information Management Services, Inc. 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.

NHLBI funded only $0.7 million of the $3.4 million Contract obligation with fiscal year 2008 appropriations. NHLBI obligated $0.7 million of fiscal year 2009 appropriated funds in violation of the bona fide needs rule and planned to obligate funds appropriated for future years as well. Because the 2008 Contract was a nonseverable service contract, which represents a single undertaking and provides for a single outcome, NHLBI was required to record the full amount of the Contract using fiscal year 2008 appropriated funds. By not doing so, NHLBI potentially violated the Antideficiency Act. NHLBI complied with the purpose requirements of appropriations statutes.

We recommended that NHLBI (1) record the remaining $2.7 million of the $3.4 million Contract obligation against fiscal year 2008 funds and deobligate funds appropriated for years other than fiscal year 2008 and (2) report an Antideficiency Act violation if fiscal year 2008 funds are not available. NIH concurred with our findings and recommendations.