BPC

The Bona Fide Needs Rule is a fundamental fiscal law principle requiring that appropriated funds may only be obligated to meet a legitimate need arising during the period of availability of those funds. The rule ensures agencies use current-year funds for current-year requirements and do not obligate funds for needs that will arise in future fiscal years.

Understanding bona fide needs is critical for contract timing and period of performance. Severable services may be funded with current-year funds if they benefit the current period, while non-severable services must be funded entirely with funds available when the contract is awarded. Violations can result in Antideficiency Act issues and require corrective reporting.