Can State Agencies carry over encumbered monies from year to year? May a state agency require a vendor, who has breached on a scheduled (pre-fiscal year end) delivery date, to reimburse that agency for funds it was unable to expend (in the prior fiscal year) as a direct result of that breach? ANSW

STATE OF ARKANSAS OFFICE OF THE ATTORNEY GENERAL JUSTICE BUILDING, LITTLE ROCK 72201 STEVE CLARK . (501) 371-2007 ATTORNEY GENBMINTON NO. 85-23 . January 23, 1985 Mahlon A. Martin, Director Department of Finance and Administration P. O. Box 3278 Little Rock, AR 72203 Dear Mr. Martin: | This is in response to your letter of August 28, 1984, | requesting an opinion. Your question is as follows: May a State agency require a vendor, who has hreached on a scheduled (pre fiscal year-end) delivery date, to reimburse that agency for funds it was unable to expend (in the prior fiscal year) as a direct result of that breach? / -We understand that the agency accepted the commodities and accompanying invoice but failed to process the latter prior to the end of the fiscal year. Thus it appears not only that the agency has waived the breach, the vendor's delay in performance, but also that the agency was at fault in not processing the payment before fiscal year~end. The request does not indicate the invoice was received too late to be processed before fiscal year-end. Based upon the above, it appears that the agency cannot require the vendor to reim- burse funds not used in the prior fiscal year because the agency waived the vendor's breach and the agency's inaction was the proximate cause of any alleged damage. The foregoing opinion, which I hereby approve, was prepared by Assistant Attorney General Thomas S. Gay. Sinceyely, | STEVE CLARK | Attorney General SC:T8G:jkb