Implementation of the Library of Congress FEDLINK Revolving Fund, B-288142, September 6, 2001

B-288142 Sep 06, 2001 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights We conclude that Public Law 106-481 will not permit the Library to retain any deobligated. Is not needed for costs the Library incurred in filling the order. FEDLINK is a cooperative procurement. The payments are based on estimates rather than actual costs. Any amount not obligated for FEDLINK services or contracts before the end of the period of availability of the customer agency funds is returned to the agency as required by section 1535(d). /1/ After the Library completes performance of a customer agency's order. The FEDLINK revolving fund is intended to be self-sufficient and to use deposits to cover the costs of providing FEDLINK products and services. For orders placed before October 1 but not reconciled until after October 1. /4/ Section 103(c)(2) authorizes advance payments for orders placed after October 1: "Participants in the FEDLINK program and the Federal Research program shall pay for products and services of the program by advance of funds- A. if the Librarian determines that amounts in the Revolving Fund are otherwise insufficient to cover the costs of providing such products or services. View Decision Implementation of the Library of Congress FEDLINK Revolving Fund, B-288142, September 6, 2001 DIGEST DECISION The Library of Congress (LOC) has requested an advance decision concerning its proposed implementation of the Library of Congress Fiscal Operations Improvement Act of 2000, Pub. L. No. 106-481, 114 Stat. 2187 (2000), as it applies to the Federal Library and Information Network (FEDLINK) revolving fund. Specifically, LOC asks whether Public Law 106-481 authorizes it to retain in the revolving fund, without fiscal year limitation, deobligated, unexpended balances of customer funds advanced to FEDLINK with orders for services, placed prior to or after the effective date of Public Law 106-481, to cover the cost of customer orders in future fiscal years. For the reasons discussed below, the Act does not provide the Library with the authority to retain deobligated, unexpended balances without fiscal year limitation. BACKGROUND The LOC has operated FEDLINK under the authority of the Economy Act, 31 U.S.C. Sec. 1535, for over 25 years. FEDLINK is a cooperative procurement, accounting, and training program designed to provide access to online databases, periodical subscriptions, books and non-print materials and other library and information support services. Under the program, LOC has negotiated contracts with commercial suppliers to take advantage of volume discounts. In addition, FEDLINK provides an accounting of customer agency funds, training in the use of library systems, and management of federal library and information services. Because FEDLINK customer agencies make payments in advance, the payments are based on estimates rather than actual costs. Frequently, FEDLINK customer agencies transfer payments to the Library greater than the estimated cost to ensure coverage of any cost overruns that might occur. Upon receipt of customer payments, the Library enters into an agreement with vendors, obligating the payments as it receives them. Any amount not obligated for FEDLINK services or contracts before the end of the period of availability of the customer agency funds is returned to the agency as required by section 1535(d). /1/ After the Library completes performance of a customer agency's order, often after the end of a fiscal year, it closes the customer agency's account, and reconciles all liabilities associated with the account. At that time, an excess of funds may remain, sometimes, for example, because of over-budgeting by the customer, and the Library deobligates this amount. /2/ Currently, the Library returns these deobligated, unexpended balances to the customer for credit to the proper appropriation account. Congress enacted Public Law 106-481 to improve the financial management of the Library and to increase savings for the LOC and its FEDLINK customer agencies. 146 Cong. Rec. H10015-02, H10017. Section 103 of Public Law 106-481 established a revolving fund within the LOC for FEDLINK and the Federal Research Program. /3/ By virtue of section 105, the revolving fund becomes available to the Library at the beginning of fiscal year 2002, i.e., October 1, 2001. As relevant here, section 103(b) directs LOC to maintain separate accounts within the revolving fund for FEDLINK and the Federal Research program. Section 103(c)(1) authorizes the Librarian to charge a fee for FEDLINK services and deposit such fees into the FEDLINK account. The FEDLINK revolving fund is intended to be self-sufficient and to use deposits to cover the costs of providing FEDLINK products and services. The question that LOC has asked us to address arises in two contexts-for orders placed after October 1, 2001, and for orders placed before October 1 but not reconciled until after October 1.