Principles of Federal Appropriations Law - US Government ...

Chapter 2
The Legal Framework
As noted above, appropriations constitute budget authority. An
appropriation to liquidate contract authority, however, is not new budget
authority, since contract authority itself constitutes new budget authority.
This treatment is necessary to avoid counting the amounts twice. B-171630,
Aug. 14, 1975.
Since the contracts entered into pursuant to contract authority constitute
obligations binding on the United States, Congress has little practical
choice but to make the necessary liquidating appropriations. B-228732,
Feb. 18, 1988; B-226887, Sept. 17, 1987. As the Supreme Court has put it:
“The expectation is that appropriations will be
automatically forthcoming to meet these contractual
commitments. This mechanism considerably reduces
whatever discretion Congress might have exercised in the
course of making annual appropriations.”
Train v. City of New York, 420 U.S. 35, 39 n.2 (1975). A failure or refusal by
Congress to make the necessary appropriation would not defeat the
obligation, and the party entitled to payment would most likely be able to
recover in a lawsuit. E.g., B-211190, Apr. 5, 1983.
c. Borrowing Authority “Borrowing authority” is authority that permits agencies to incur
obligations and make payments to liquidate the obligations out of
borrowed moneys. 5 Borrowing authority may consist of (a) authority to
borrow from the Treasury (authority to borrow funds from the Treasury
that are realized from the sale of public debt securities), (b) authority to
borrow directly from the public (authority to sell agency debt securities),
(c) authority to borrow from (sell agency debt securities to) the Federal
Financing Bank, or (d) some combination of the above.
Borrowing from the Treasury is the most common form and is also known
as “public debt financing.” As a general proposition, GAO has traditionally
expressed a preference for financing through direct appropriations on the
grounds that the appropriations process provides enhanced congressional
control. E.g., B-301397, Sept. 4, 2003; B-141869, July 26, 1961. The
Congressional Budget Act met this concern to an extent by requiring
generally that new borrowing authority, as with new contract authority, be
5 Glossary at 22.
Page 2-7 GAO-04-261SP Appropriations Law—Vol. I