Volume II - Appropriations Funds and Related Information
Chapter 02I – Major Construction Working Reserve
Questions concerning this policy chapter should be directed to:
- Veterans Health Administration
- Veterans Benefits Administration
- National Cemetery Administration
- Debt Management Center
- Financial Services Center
- Construction and Facilities Management
- All others
0201 Overview
This chapter establishes the Department of Veterans Affairs’ (VA) financial policies regarding the accounting and reporting of funds related to Major Construction Working Reserves.
Key points covered in this chapter:
- The Major Construction Working Reserve allows VA to capture available major construction funds and redirect them to other construction projects, (38 U.S.C. § 8104);
- When VA determines that previously obligated funds will not be necessary to complete a major construction project, the funds (i.e., bid savings) will be transferred to the Major Construction Working Reserve;
- Congressional notification is required when a major project realizes bid savings in excess of $5 million (M) or 5 percent (%) of the programmed amount of the project and before such bid savings are reprogrammed;
- Subsequent reprogramming of reserve funds (bid savings) that is less than or equal to $7M for a major construction project or program may be done without Congressional approval; and
- Each instance of a reprogramming reserve funds (bid savings) in excess of $7M for a major construction project or program requires approval of the SECVA and the committees on appropriations of both houses of Congress.
0202 Revisions
| Section | Revision | Office | Reason for Change | Effective Date |
|---|---|---|---|---|
| 0203 | Update the threshold amount of major construction projects from $20M to $30M. | OFP (047G) | P.L.118-31 Title L, § 5001 | April 2024 |
See Appendix A for a complete listing of policy revisions.
0203 Definitions
Bid Savings – Funds in excess of the estimated needs of a major construction project as calculated at the time of the last award on a major construction project.
Major Construction Projects – Construction, alteration, extension or improvement of any VA facility, including planning, architectural and engineering services, construction management services, maintenance or guarantee period services costs associated with equipment guarantees provided under the project, services of claims analysts, offsite utility and storm drainage system construction costs and site acquisition, where the estimated cost of the project is more than the amount set forth in section 8104(a)(3)(A) of title 38, United States Code, currently greater than $30,000,000.
Major Construction Working Reserve – Account to capture available major construction funds, allowing for the redirection of those funds to other construction projects, upon approval.
Project Reserve – Funds remaining after the last construction contract award that are held for the project until a decision is made that the remaining funds are no longer required for the project.
Reprogramming – Shifting funds within an appropriation or fund to use them for purposes other than those contemplated at the time of appropriation; it is the shifting of funds from one project or program activity to another.
Programmed Amount – Total amount of funding for any VA major project that has been approved by Congress in the budget process in conjunction with an appropriations act, plus the amount of funding that has been reprogrammed to the project by a reprogramming action that complies with Congressional notification or approval requirements.
0204 Roles and Responsibilities
Secretary of VA (SECVA) is responsible for approving and requesting Congressional approval of all reprogramming in excess of $7M. SECVA is also responsible for providing Congressional notification of bid savings and the intent to obligate any previously reported bid savings 14 days prior to the obligation.
Assistant Secretary for Management/Chief Financial Officer (VA CFO) will approve the reprogramming of Major Construction Working Reserve funds with a cumulative value over $500,000 but less than or equal to $7M and review requests needing SECVA approval.
Under Secretaries, Assistant Secretaries, Chief Financial Officers, Fiscal Officers, Chief Accountants, Chief Engineers, and other key officials are responsible for ensuring compliance with the policies in this chapter.
Office of Construction and Facilities Management (CFM) oversees major construction activities and funding for construction projects and programs, including the Major Construction Working Reserve, which can be used to finance the construction, alteration, extension, and improvement of VA facilities for any of the purposes in various sections of Title 38 of the United States Code.
CFM Executive Director will review and approve the reprogramming of Major Construction Working Reserve with a value less than or equal to $500,000 and review all other reprogramming requests prior to seeking the appropriate level of approval.
Associate Executive Director, Office of Resource Management, CFM will chair the WRB and is responsible for overseeing the preparation of reprogramming information and disbursing Working Reserve Balance reports.
Major Construction Working Reserve Board (WRB) reviews and recommends reprogramming requests for Major constructions projects. The board is comprised of a program and CFO representative from each of the three Administrations (VHA, VBA, NCA,), a representative from the Office of Asset and Enterprise Management (OAEM) and chaired by the Associate Executive Director, Office of Resource Management, CFM.
0205 Policies
020501 General Policies
- The amount set forth in Title 38, U.S.C. § 8104(a) (3) (A) establishes the threshold that defines a major construction project. The funds for specific major construction projects or programs are appropriated annually by Congress. Per the annual appropriations act language, the threshold applies to all types of major construction projects.
- As major construction projects can span several years, VA is authorized to carry forward fund balances from year-to-year in its construction accounts. Excess project or program funds are transferred to the Major Construction Working Reserve until the associated fund is closed.
020502 Bid Savings
- VA will calculate bid savings after all costs associated with a project have been considered (e.g., design and construction, construction period services, construction management services, testing labs, contingencies, impact funds) and the award for the last phase is made on a major construction project. Bid savings will be held and tracked as project reserves on a project until it is determined that they are no longer needed to complete the project.
- The VA Secretary will notify the committees on appropriations of both houses of Congress within 14 days when a major construction project realizes bid savings that total $5M or 5% of the programmed amount of the project, whichever is less.
020503 Bid Savings Moved to Project Reserve
- VA will maintain bid savings as project reserves on a major construction project until such time as it appears that additional funding will not be necessary to complete the project. After this determination has been made, project reserves will be transferred to the Major Construction Working Reserve. CFM will notify the Executive Director, Office of Asset Enterprise Management (OAEM) of the intent to transfer funds before the transfer occurs.
- The Associate Executive Director, Office of Resource Management, CFM will track and manage major construction project and program account balances to ensure that any excess funds are transferred to the Working Reserve.
020504 Reprogramming of Major Construction Projects or Programs
- The Associate Executive Director, Office of Resource Management, CFM, is responsible for overseeing the preparation of reprogramming requests for submission to the Major Construction Working Reserve Board (WRB).
- The WRB members will review and recommend reprogramming requests to add funds to a project or program and provide their concurrence with the request. Recommendations of the Board will be forwarded to the Executive Director, CFM, for approval.
- VA can reprogram funds from the Major Construction Working Reserve to defray the costs of completing major construction projects.
- VA will only reprogram funds from the Major Construction Working Reserve to defray construction costs that are within the Congressionally approved scope of the project or program.
- VA will reprogram five-year funds to the maximum extent practicable, prior to using no-year funds. (See Appendix B: Fund Availability).
- Approvals for reprogramming are based on the amounts being reprogrammed:
- The Executive Director, CFM, will approve the reprogramming from the Major Construction Working Reserve with a value less than or equal to $500,000.
- The VA CFO will approve each instance of a reprogramming from the Major Construction Working Reserve with a value over $500,000 but less than or equal to $7M.
- Reprogramming in excess of $7M by project or program per instance, per fiscal year requires Congressional approval.
- The Associate Executive Director, Office of Resource Management, CFM, and the VA CFO will ensure that all available funds from major construction projects are properly reprogrammed and accounted for within the Major Construction Working Reserve.
- Reprogramming for a change in scope of the original project or program regardless of dollar amount requires notification and approval of SECVA and the committees on appropriations of both houses of Congress, regardless of dollar amount. The notification sent to Congress should include at a minimum:
- The major construction project for which the Secretary intends to revise the purpose;
- A description of the change;
- The reason for change;The amount the Secretary intends to obligate for the purpose; and
- The major project that would be the source of the funds, if applicable.
- In accordance with Office of Management and Budget (OMB) Circular A-11 guidance, VA is required to submit budget-related materials for reprogramming requests and Congressional notifications to OMB for clearance prior to transmittal to congressional committees.
020505 Obligating Bid Savings
- SECVA will notify the committees on appropriations of both Houses of Congress of the intent to obligate previously reported bid savings 14 days prior to the obligation of such bid savings. The notification sent to Congress should include at a minimum:
- The major construction project that is the source of the bid savings;
- If the major construction project that is the source of the bid savings is not complete then:
- The amount already obligated by the Department or available in the project reserves for such project;
- The percentage of such project that has been completed; and
- The amount available to the Department to complete such project.
- The other major construction project for which the bid savings amounts are being obligated; and
- The bid savings amounts being obligated for such other major construction project.
- Obligations that would result in a total amount obligated for a project in excess of 10% above the amount previously authorized, must also comply with 38 U.S.C. § 8104 (c) and provide a 30-day notification to the committees of both houses of Congress prior to the reprogramming.
- Unobligated amounts that are a direct result of bid savings from a major construction project may only be obligated for major construction projects authorized for that fiscal year or a previous year.
- CFM will provide a quarterly report of reprogramming and obligation activities for the Major Construction Working Reserves to the Working Reserve Board.
0206 Authorities and References
- 38 U.S.C. § 8104, Congressional approval of certain medical facility acquisitions
- OMB Circular A-11, Preparation, Submission and Execution of the Budget – Revised
- OMB Circular A-136, Financial Reporting Requirements – Revised
- P.L.115-182, VA MISSON Act of 2018
- P.L. 117-328, Consolidated Appropriations Act, 2023
- P.L. 118-122, Consolidated Appropriations Act 2024
- P.L. 118-31, National Defense Authorization Act for Fiscal Year 2024
0207 Rescissions
Volume II, Chapter 2I, Major Construction Working Reserve Accounts, May 2023.
0208 Policy Approval
This policy was approved by the VA Chief Financial Officers’ Council on April 18, 2024.
Appendix A: History of Policy Revisions
| Section | Revision | Office | Reason for Change | Effective Date |
|---|---|---|---|---|
| Various | Reformatted to new policy format and completed five-year update | OFP (047G) | Reorganized chapter layout | May 2023 |
| 0204 Roles and Responsibilities | Added Major Construction Working Reserve Board (WRB) Management | OFP (047G) | Identify specific tasks, expectations, and team members of the WRB | May 2023 |
| 020504 Reprogramming of Major Construction Projects or Programs | Added Circular A-11 requirement for submission of budget- related reprogramming requests to OMB prior to Congressional submission | OFP (047G) | OMB A-11 submission requirement | May 2023 |
| 020505 Obligating Bid Savings | Added Section 020505 Obligating Bid Savings | OFP (047G) | Distinction between reprogramming and obligating guidance | May 2023 |
| 0201 Overview & 0203 Definitions | Update the threshold amount in the definition of major construction projects from $10M to $20M. | OFP (047G) | P.L.115-182 Title V, § 503 | April 2019 |
| Overall | The Secretary of Veterans Affairs may not reprogram funds among major construction projects or programs if such instance of reprogramming will exceed $7,000,000, unless such reprogramming is approved by the Committees on Appropriations of both Houses of Congress. | OFP (047G) | P.L. 115-141 Div. J, § 231 | June 2018 |
| Overall | Removed the restriction of 5% of the Total Estimated Cost (TEC) as related to approval by Congress. Added the definition of programmed funds and used it for the bid savings discussion. | OFP (047G) | 38 USC 8104 § 234 superseded previous legislation | March 2018 |
| Various | Reformatted to the latest policy format and reorganized policy section. | OFP (047G) | For additional clarity | March 2018 |
| Various | Reformatted to new policy format and completed 5year review. | OFP (047G) | Reorganized chapter layout | July 2017 |
| Overall | Changed the title to “Major Construction Working Reserves Line Items”. Used the phrase “line item” instead of “accounts” to identify funds tracked to a project. Changed the term “total project cost” to “total estimated cost (TEC)”. | APS (047GA) | New regulation, Consolidated Appropriations Act (P.L.114-223; 114-113; P.L. 113-235; P.L. 113-76; and P.L. 113-6 | July 2017 |
| 0201 Overview | Replaced the word “account” with “fund”, or “line item” and replaced the word “transferred” with “redirected” because of the legal connotation. Added a sentence to reflect new 5-year appropriation funding for construction. Updated the sentence, “VA has the authority to reprogram funds up to 10 percent of total appropriated funds for its major construction projects.”, to “VA has the authority to reprogram funds cumulatively, up to 5 percent (%) of the total estimated cost (TEC) or $5M, whichever is less, for its major construction projects without notifying Congress. Reprogramming cumulatively greater than $5M or 5% of TEC requires notification of Congress”. | APS (047GA) | Consolidated Appropriations Act (P.L.114-223; 114-113; 113-235; 113-76; and 113-6 | July 2017 |
| 0203 Definitions | Added definition for Bid Savings, Reprogramming, and Release of Claims. Revised the definition for Major Construction Projects to be consistent with Vol. V Ch. 9, General PPE. | APS (047GA) | Consolidated Appropriations Act (P.L.114-223; 114-113; 113-235; 113-76; and 113-6 | July 2017 |
| 0204 | Updated the role of VA CFO to standard language. Updated the responsibilities of CFM to by adding “The Executive Director is responsible for overseeing the compilation of reprogramming packages”. | APS (047GA) | 5 year review | July 2017 |
| 0205 Policies | Reorganized policy section chronologically beginning with bid savings policy. Removed outdated policy about moving funds prior to the completion of construction. Clarified reprogramming 5-year funds prior to no-year funds from the Reserve. Added policy related to upward adjustments for within scope changes. Added requirement for Congressional authorization for expanded scope requests. Updated titles and levels of approval by Major Construction Working Reserve Board, Executive Director CFM, VA CFO, and the Secretary. Added VA Working Reserve Board membership. Revised paragraph 020502 as: “VA will move the bid savings to the project reserve at the time of contract award. VA will maintain the project reserve on any major construction project until such time as it appears unlikely that additional funding will be necessary to complete the project. Once this occurs, the project reserve funds will be deposited into the applicable Major Construction Working Reserve Line Item. Prior to the movement of funds, CFM will provide email notification to the Office of Asset Enterprise Management (OAEM).” Revised paragraph 02050405 by adding word “Cumulatively”: All Major Construction Working Reserve fund reprogramming requests cumulatively over $5,000,000 will be sent to the VA Secretary for approval upon concurrence of the Executive Director, CFM, Executive Director, OALC, and the Working Reserve Board. Deleted paragraph 020503, After agreeing with the contractor to the release of claims for a completed major project, any additional excess funds remaining on the project will be moved to the applicable Major Construction Working Reserve Line Item. Deleted paragraph 020508, VA must account for the use of the Major Construction Working Reserve funds in the same fashion as is accomplished with all other obligations and expenditures of appropriated funds. | APS (047GA) | New Regulations: P.L. 114-315 & Consolidated Appropriations Act (P.L.114-223; 114-113; 113-235; 113-76; and 113-6) | July 2017 |
| 0206 Authorities and References | Added the references for Consolidated Appropriations Act (P.L. 114-223; 114-113; 113-235; 113-76; 113-76); and P.L.114-315. | APS (047GA) | 5 year review & Consolidated Appropriations Act (since 2013) | July 2017 |
| 0207 Rescissions | Added VA Directive 7511, Management of Major Construction Reserve Accounts and Working Reserve Board, November 2009. | APS (047GA) | 5 year review & Consolidated Appropriations Act (since 2013) | July 2017 |
| 0208 Questions | Updated title for CFM questions to Associate Executive Director, Office of Resource Management, CFM | APS (047GA) | 5-year update | July 2017 |
| Appendix A | Added Appendix A, Fund Availability | APS (047GA) | 38 USC 8104 | July 2017 |
Appendix B: Fund Availability
- This appendix provides guidance for the source of funds from the Major Construction Working Reserves to support completion of a major project needing additional funds.
- The below chart and examples provide availability for allocating funds from the Major Working Reserve. VA will reprogram five-year funds to the maximum extent practicable, prior to using no-year funds.
| Year of Funding | Fiscal Year of Execution | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 24 | 25 | 26 | 27 | 28 | 29 | 30 | 31 | 32 | 33 | 34 | 35 | 36 | 37 | 38 | |
| No Year | A | A | A | A | A | A | A | A | A | A | A | A | A | A | A |
| 21-25 | A | A | E | E | E | E | E | C | C | C | C | C | C | C | C |
| 22-26 | A | A | A | E | E | E | E | E | C | C | C | C | C | C | C |
| 23-27 | A | A | A | A | E | E | E | E | E | C | C | C | C | C | C |
| 24-28 | A | A | A | A | A | E | E | E | E | E | C | C | C | C | C |
| 25-29 | A | A | A | A | A | E | E | E | E | E | C | C | C | C | |
| 26-30 | A | A | A | A | A | E | E | E | E | E | C | C | C | ||
| 27-31 | A | A | A | A | A | E | E | E | E | E | C | C | |||
| 28-32 | A | A | A | A | A | E | E | E | E | E | C | ||||
| 29-33 | A | A | A | A | A | E | E | E | E | E | |||||
| 30-34 | A | A | A | A | A | E | E | E | E | ||||||
A – Available – for new obligations and for upward adjustments of obligations or contracts executed during the period of availability of the funds
E – Expired – available for upward adjustments for within scope changes to an existing obligation or contract that was made during the period of availability of the funds.
C- Canceled – not available for any adjustments. *
* There is a VA-specific exception, the Recurring Expenses Transformation Fund (RETF), which allows VA to transfer unobligated balances of expired discretionary funds appropriated in FY 2016 or later to the RETF when an account closes.
- Examples of Availability
- Funds returned in FY 30 to the Working Reserve from a project obligated in FY 27 with FY 27-31 funds. FY 27-31 funds will be available for new obligations in FY 30 or FY 31, and available for upward adjustments for any contracts initiated in FY27 thru FY31.
- A project obligated in FY 30 with FY 30-34 funds could receive additional funds from: No-year, FY 26-30; FY 27-31 FY28-32; and FY 29-33, or any other year that has a period of availability within FY30.
