Article 1, Section 9 of the U.S. Constitution states that “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law….” The Antideficiency Act (ADA), originally enacted in 1884 and most recently codified at 31 U.S.C. § 1341, is one means by which Congress enforces this fundamental principle. The Act’s central prohibition states that “An officer or employee of the United States Government or the District of Columbia government may not—(A) make or authorize an expenditure or obligation exceeding an amount available in an appropriation or fund for the expenditure or obligation;” or “(B) involve either government in a contract or obligation for the payment of money before an appropriation is made unless authorized by law.”
More simply put, the ADA maintains that the federal government cannot enter into any contract for which it has not set aside the appropriate budget monies to fund the contract. This explains why many federal contracts are cancelable—and why we so often read about the government canceling or cutting back on contracts. Because federal real estate leases are, essentially, long-term contracts spanning multiple fiscal years, they are very difficult to fund. This, in turn, explains why the Federal Buildings Fund is so important. This revolving fund allows GSA to enter into long-term contracts on behalf of agencies without violating the ADA.
When an ADA violation occurs or is suspected, federal agency heads are required “to report immediately to the President and Congress all relevant facts and a statement of actions taken.” Officials who violate the ADA may be subject to both administrative and penal sanctions. The U.S. Government Accountability Office (GAO) publishes a summary of agency ADA reports each fiscal year. Each report entry includes a brief description of the violation, remedial actions taken and links to individual agency reporting letters. The FY 2012 reports are available here. Several involve the Department of Defense (DoD) using operating funds to construct facilities, rather than MILCON funds as required; the Securities and Exchange Commission (SEC) also makes the list as a result of its 2010 Constitution Center lease.
The ADA, by the way, also requires federal agencies to cease operations—except in emergency situations—when Congress and the President have failed to reach a funding agreement, thus mandating government shutdowns.