Should you be concerned over OMB’s decision that GAO’s antideficiency determinations are non-binding?

Back in September the Government Accountability Office released a 25-page report to House and Senate leaders describing nine new violations of the Antideficiency Act, some dating back to spending in 2000.

The Government Accountability Office said the Defense Department, including the Army, had three violations worth more than $13 million, and the Commerce Department had two violations worth more than $35 million. The departments of Justice, Veterans Affairs and Agriculture also reported breaches of the law.

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On the same day, Sept. 23, GAO also wrote to Congressional leaders about the Office of Management and Budget’s change to Circular A-11 in which the administration departed from long-standing policy. In the June circular, OMB tells agencies if GAO finds a possible violation of the law, agencies must submit a report to lawmakers if, in consultation with OMB, they agree with the findings.

Six weeks later, OMB General Counsel Mark Paoletta sent a letter to agency general counsels further clarifying the A-11 change and the administration’s expectation going forward.

“When an agency of the Legislative Branch interprets a law differently than the Executive Branch, the Executive Branch is not bound by its views. ADA reporting requirements should reflect this principle,” Paoletta wrote. “OMB respects GAO’s opinions as those of an agency of a coequal branch of government. However, under the constitutional doctrine of separation of powers, a legal opinion by a Legislative Branch agency cannot bind the Executive Branch.”

OK, so what does all this mean? Well as agencies are finalizing their fiscal 2019 financial statements and face the possibility of another government shutdown — though a lot less likely than previously thought — the Antideficiency Act becomes front-and-center.

And OMB’s policy change will impact decisions made by CFOs and deputy secretaries as well as program managers and many others in government.

The Antideficiency Act underpins federal spending processes and violating the law puts agency managers at risk.

First, let’s start with the definition of the Antideficiency Act, which has origins dating back to 1884 and which was updated twice: In 1950 and again in 1982. The Congressional Research Service offered this helpful explanation in a 2018 report:

“The act, which evolved over time and is located in Title 31 of the U.S. Code, prohibits federal officials from obligating funds before an appropriations measure has been enacted, except as authorized by law. The act also prohibits federal officials from accepting voluntary services or employing personal services exceeding what has been authorized by law. Therefore, the Antideficiency Act generally prohibits agencies from continued operation in the absence of appropriations.”

$5,000 fine, 2 years in jail for violation

Before you roll your eyes and say this is some archaic minutiae of appropriations legislation, keep in mind, federal employees who “knowingly and willfully” violated the law “shall be fined not more than $5,000, imprisoned for not more than 2 years, or both.”

The American Action Forum, which describes itself as a center-right think tank on economic, domestic, and fiscal policy issues, writes that GAO says while no federal employee ever appears to have been prosecuted or convicted under this statute, the mere potential for criminal, indeed felony, prosecution does appear to enhance compliance with the act.

Some in Congress want to increase the penalties for violations. In 2018, Rep. Paul Mitchell (R-Mich.) introduced the Antideficiency Reform and Enforcement Act, which would’ve let agency leaders fire or suspend employees who violated the law and offered cash incentives for those who report violations. The House Oversight and Reform Committee passed the bill, but it never advanced to the full body.

Let’s go back to OMB’s decision now that we’ve established why you need to know about this law.

Multiple current and former federal officials say OMB’s decision is questionable at best and bad government at worst.

Shirley Jones, the GAO’s managing associate general counsel, said there are examples going back as far as 1987 of agencies having to report to GAO violations of the Antideficiency Act so for OMB to change course is unusual.

Shirley Jones, Government Accountability Office
Shirley Jones is the GAO’s managing associate general counsel.

She said the decision by OMB hasn’t changed how GAO will analyze and report violations to Congress.

“OMB did not come to GAO before it revised A-11, which specifically sets out how the executive branch will report violations,” Jones said. “What is striking for me is the fact that OMB sites opinions and Supreme Court cases that go back over 30 years. They speak to separations of powers, but GAO has always been in the Legislative Branch, but OMB’s own guidance for years has said they should report to the President and Congress when GAO determined there was a violation.”

Historically, OMB gave deference

David Walker, the former Comptroller General of the U.S., said the OMB memo is another example of the Trump administration’s continued resistance to providing timely information to oversight bodies.

“Technically OMB is accurate that GAO opinions are not legally binding, but the same can be said about OMB’s general counsel opinions. Historically the executive branch has given great deference to GAO opinions,” said Walker in an interview with Federal News Network. “Any federal employee should be very concerned if they are doing something that may violate the law given the civil and criminal penalties that come from violating the Antideficiency Act.”

Doug Criscitello, a former CFO at the Department of Housing and Urban Development and now a managing director of the public sector for Grant Thornton, said OMB’s decision may put agencies in a tough place of spending in a manner that is inconsistent with GAO’s views.

“More broadly, the emphasis on the principle of separation of powers seems a bit overblown in the memo. Clearly, the notion of separation of powers isn’t absolute given that executive and legislative powers and responsibilities intentionally intersect and are too interconnected to be completely separate,” Criscitello said in an email to Federal News Network. “To illustrate the point, when GAO reports Antideficiency Act violations to the Congress, the transmittal letter is sent to the Speaker of the House and the President of the Senate – who is the Vice President of the U.S. Rather than full separation of powers, the branches compete and disagree on various matters under their perceived purviews. The budget process is one area where there’s obvious overlap given Congress has the power of the purse and the President is responsible for budget execution. Having GAO serve as an agent of the Congress in ensuring funds are spent in accordance with the Antideficiency Act would appear to be a reasonable check on the executive branch.”

OMB is clear in the memo that agencies still must report violations of law, but only based on Executive Branch determinations.

“It is silent as to how an agency is to act when the agency disagrees with GAO’s finding of an ADA violation,” the OMB letter stated. “This silence does not constitute or equate to OMB directing the agency to refrain from responding to GAO or to Congress. Rather, the intent of the change was to emphasize the fact that providing a report to Congress under such circumstances is at the agency’s discretion. The agency is free to correspond with Congress to address these matters, and Congress is free to inquire of the agency to ask for the agency’s views on any such GAO report.”

The decision not to report or if OMB disagrees with the agency’s conclusion becomes much more risky and probably not worth endangering your career.