Chapter 2

Purpose

This chapter introduces the concept of the “availability” of appropriations. Comptroller general decisions are often stated in terms of whether appropriated funds are or are not “legally available” for a given obligation or expenditure. This is just another way of saying that a given item is or is not a legal expenditure. Legal availability depends on three factors:¹

1. The purpose of the obligation or expenditure must be authorized.

2. The obligation must occur within the time limits applicable to the appropriation.

3. The obligation and expenditure must be within the amounts Congress has established.

Thus, three elements—purpose, time, and amount—control availability. All three must be met for the transaction to be legal. This chapter discusses availability in terms of purpose; Chapters 3 and 4 cover time and amount.

28. Is there a specific statute that prescribes the “purpose” element of availability?

The most fundamental statute dealing with purpose is the so-called “purpose law,” found at 31 U.S.C. 1301(a):

This law is simple and concise, yet it is the source of more Comptroller General decisions than the time and amount elements combined. Very simply, it says that public funds may be used only for the purposes for which they were appropriated. It prohibits charging authorized items to the wrong appropriation, and it also prohibits charging unauthorized items to any appropriation.³

29. What is meant in the purpose law by the term object?

Objects include programs, projects, and activities carried out by agencies. Included are all physical goods, services, and even intangible items like patents, mineral rights, and the like. An object is anything the government wants to acquire—the resources an agency needs to carry out its functions.

30. How much latitude does an agency have in interpreting the purpose of an appropriation?

The more general the language of the appropriation, the more latitude, or discretion, the agency may employ. However, as discussed in the previous chapter, agencies are bound by the language in the appropriations act and may not use creative and far-fetched interpretations if the statutory language is clear. For example, funds appropriated for “modification of existing dams” may not be used to build new dams, even if doing so improves safety.⁴ If an agency wants to build a new dam, it needs Congress to appropriate some “new dam money.”

31. Suppose there would be a big cost savings to the government if an agency slightly sidesteps the language of the appropriation. Is that justification to do something different?

Saving money is not an excuse to break the law. If the proposed use of funds is inconsistent with statutory language, it is improper, regardless of any savings that might accrue.⁵ For example, the Federal Aviation Administration (FAA) had an appropriation to construct its own roads for access to FAA facilities. Because of the restrictive language in the appropriation, the FAA could not use the funds to improve existing county-owned roads, even though the improved roads would have provided the necessary access and would have been much less expensive. In such instances, agencies may request that Congress modify the appropriation language to garner the savings. Failing that, the appropriation language must be followed.

32. I work in a working capital fund and have often heard that we can use our money for most any purpose. In other words, because working capital fund balances were not directly appropriated by Congress, they are just cash, to be used at the discretion of the agency. Is that true?

That is not true. Although working capital funds do not normally receive direct appropriations from Congress, they are still appropriated funds. Remember the discussion in the previous chapter: No funds may be disbursed from the Treasury without an appropriation. Working capital fund balances are defined as appropriations. If they weren’t, they couldn’t be spent. For revolving funds, which include all working capital funds and many other funds, the purposes for which their money may be spent are defined in the statutory charter that set up the fund. If a working capital fund is set up by Congress to perform accounting and finance services for government agencies, money in such a fund may not be used for another purpose—say, overhauling an aircraft. The bottom line: Revolving funds are subject to the purpose law just like those operations funded by direct appropriations.

33. What if I have a need for an item I’m prohibited from buying with my appropriation. May I send my money off to another agency that has no such prohibition and have that agency buy it for me?

An agency may not do indirectly what it may not do directly.⁶ You can’t do an end-run around the law. An agency may not use a contract, grant, or agreement to accomplish a purpose it could not accomplish by direct expenditure.

34. Our appropriation simply funds a series of programs. It isn’t specific about what sorts of items we may purchase. How do we know what is authorized?

It is common for appropriations to fund specific programs. For example, the Department of the Interior receives a separate appropriation to carry out the Payments in Lieu of Taxes Act (PILT), 31 U.S.C. 6901-6904. In this case the appropriation, while specific in its intent to fund PILT, is insufficient for an agency to use for further guidance. So the agency would need to look beyond the appropriation language and examine the PILT statute to determine what expenditures are authorized to support that program.⁷

35. The previous chapter discussed the general versus specific rule and the pick and stick rule. Are these rules part of the purpose law domain?

They are directly related to this discussion of purpose, and they bear repeating. The general versus specific rule states that even an expenditure that might be reasonably related to a general appropriation may not be paid out of that appropriation if there is a more specific appropriation available to cover it.⁸ Pick and stick says that when two appropriations are available for the same purpose, the agency must select which one to use and continue to use that appropriation for that purpose unless the agency advises Congress of its intent to change to the other appropriation.

NECESSARY EXPENSE DOCTRINE

36. My agency gets a very general appropriation for “operating expenses,” and it specifies only a few examples of specific purpose. How do we determine what is authorized under such an appropriation?

Almost every agency gets at least one such general appropriation. These are called “lump sum” appropriations. Congress is not required to, nor could it, specify every item of expenditure in the appropriations acts. The spending agency has reasonable discretion in determining how to carry out the objects of the appropriation. This concept, known as the “necessary expense doctrine,” is what gives an agency some amount of flexibility or “wiggle room” in determining what it may or may not purchase. A 1927 comptroller general decision stated this doctrine as follows:⁹

The meaning of the above sentence is not immediately obvious to anyone. The following discussion will break down the elements of the necessary expense doctrine and demonstrate its use.

The necessary expense doctrine is a combination of two closely related but slightly different concepts:¹⁰

1. An appropriation made for a specific object is available for expenses necessarily incident to accomplishing that object unless prohibited by law or otherwise provided for. For example, an appropriation to erect a monument at the birthplace of George Washington may also be used to construct a fence around the monument to protect it. Thus, expenses incidental to the basic object may be purchased with the same appropriation.

2. Appropriations, even for such broad categories as salaries, frequently use the term necessary expenses. As used in this context, the term refers to “current or running expenses of a miscellaneous character arising out of and directly related to the agency’s work.”

There is no precise formula for applying the necessary expense doctrine. Determinations must be made on a case-by-case basis. When applying the necessary expense doctrine, an expenditure may be justified after meeting a three-part test:¹¹

1. The expenditure must bear a logical relationship to the appropriation to be charged. In other words, it must make a direct contribution to carrying out either a specific appropriation or an authorized agency function for which more general appropriations are available.

2. The expenditure must not be prohibited by law.

3. The expenditure must not be otherwise provided for. That is, it must not be an item that falls within the scope of some other appropriation or statutory funding scheme.

37. Can you elaborate on the first test for justifying an expenditure—logical relationship to the appropriation?

This is the test with the greatest amount of ambiguity and the one that generates most of the questions to GAO. The rule does not require that a given expenditure be “necessary” in the sense that the object of the appropriation could not be fulfilled without it. So “necessary” does not mean “critical.” On the other hand, it has to be more than merely desirable or even important. An expenditure may not be justified merely because an agency official thinks it is a good idea, nor may it be justified simply because it is a practice engaged in by private business.¹²

What the expenditure must do is contribute to accomplishing the purposes of the appropriation the agency wishes to charge. Agencies are granted a large degree of discretion in making the determination that an expenditure furthers the purposes of the appropriation. But this discretion is not unlimited. The determination must be reasonable and must be based on a permissible interpretation of the statute.¹³

An often referenced example of administrative discretion is the case of the marauding woodpeckers. In 1951, marauding woodpeckers were causing considerable damage to government-owned transmission lines, and the Southwestern Power Administration of the Department of the Interior wanted to buy guns with which to shoot the woodpeckers. Interior asked GAO if this was permissible. The comptroller general held that, if administratively determined to be necessary to protect the transmission lines, Interior could buy the guns and ammunition from the Southwestern Power Administration’s construction appropriation. The views of the woodpeckers were not solicited.¹⁴

38. The second test for justifying an expenditure—must not be prohibited by law—seems fairly obvious. Can you give an example?

The Air Force asked GAO whether it could use its appropriation to install and maintain water pipelines carrying recycled storm and waste water to support a military base golf course. The idea was to support water conservation efforts in a dry, southwestern location. The comptroller general ruled that such use of their appropriation was not permissible because 10 U.S.C. 2246 specifically prohibits the use of appropriated funds to “equip, operate, or maintain” a golf course.¹⁵ Thus, the desirability to participate in water conservation efforts by recycling water does not overcome a specific statutory prohibition.

39. The third test for justifying an expenditure—not otherwise provided for—sounds like a restatement of the specific versus general rule on the use of appropriation, wherein a more general appropriation may not be used for an object if a more specific appropriation is available for that purpose. Is that a correct interpretation?

Yes, it is. Even if the agency can make a logical case for using a particular appropriation for an expenditure, such a payment would be improper if the expenditure falls within the scope of another appropriation. The rule applies even if the more specific appropriation belongs to some other agency or if the proper appropriation is exhausted.

In 1959 the Navy could not use its shipbuilding appropriation to dredge a channel in the Singing River in Pascagoula, Mississippi, to permit submarines under construction to move to deep water in the Gulf of Mexico.¹⁶ River dredging is a function for which the Corps of Engineers, not the Navy, receives an appropriation from Congress. Two facts of the case: (1) The appropriation to dredge rivers comes from a different appropriations act (Energy and Water Development) than the act by which the Navy is funded (Defense), and (2) no funds were available in the river dredging appropriation for the Singing River project. Both facts were irrelevant.

SPECIFIC CATEGORIES OF EXPENDITURES—THE RULES

The remainder of this chapter explores the questions most commonly asked about various categories of expenses. Each category has a general rule about its use, as well as one or more exceptions. The objective is to describe what is authorized, the limitations or restrictions of that authorization, and what is not authorized. Refer to GAO’s Principles of Federal Appropriations Law, Chapter 4, for additional information on expenses included in this book, as well as other kinds of expenses addressed by GAO but not included here because of a determination that they were not of common interest to most readers.

Training

40. Is there specific statutory authority to use federal funds to conduct training?

Training of government employees is governed by the Government Employees Training Act found in Title 5 of the United States Code.¹⁷ Military members’ training is governed by Title 10. Both titles specify what constitutes training under the statute and authorize the expenditure of government funds for training, both on a contractual basis and by using in-house resources.

Training of nonfederal personnel, where necessary to implement a federal program, is a “necessary expense” question under the relevant program appropriation.¹⁸ It is possible to train contractors under the necessary expense doctrine. Agencies are warned to ensure that providing such training to contractors does not conflict with existing contractual language.

Travel

41. Does reimbursement for travel expenses have a statutory basis?

Reimbursement for travel expenses incurred on official travel is authorized by statute (5 U.S.C. 5702). Agency discretion is broad, bounded only by the requirement that expenses are reimbursable to the extent authorized by statute and implementing regulations.¹⁹

42. May appropriated funds be used for officials’ travel for political purposes?

To the extent it is possible to determine that a trip is for political purposes, the answer is “No”—appropriated funds should not be used for political travel. The Justice Department has observed it is often impossible to neatly categorize travel as purely business or purely political.²⁰ GAO on occasion has conducted reviews in this area and has commented on the lack of legally binding guidelines in this area. Agencies need to be careful in this area because even the perception that business travel (funded by appropriations) was done for political purposes can create controversy in the media or Congress.

Books and Periodicals

43. What is the authority for purchasing books and periodicals?

Expenditures for books and periodicals are evaluated under the necessary expense doctrine. Agencies have broad discretion. For example, the Department of the Interior determined that subscribing to the Federal Employees News Digest was necessary in carrying out the agency’s statutory functions.²¹ Discretion is limited, however. The fact that a director, an avid golfer, wants a subscription to Golf Digest does not make it an authorized expenditure (unless, of course, the agency’s mission includes golf).

Charities and Civic Programs

44. May appropriated funds be used to support charities or civic programs (such as adopt-a-school programs)?

Agencies may spend their appropriations, within reason, to cooperate with government-sanctioned fund-raising campaigns, including such things as permitting solicitations during working hours, preparing and printing campaign instructions, and distributing campaign materials.²² Also, some use of employee time and agency equipment may occur to assist with adopt-a-school programs.²³ The authority does not extend, however, to buying T-shirts to be given to each Combined Federal Campaign contributor. Such T-shirts were considered unauthorized gifts. Items may be purchased to “stimulate interest” in the campaign, but not as rewards for contributions.

Meetings

45. May appropriated funds be used to send government employees to meetings?

The answer to this rather simple question is quite complicated. Let’s begin by defining the word meeting. For our discussion the term includes such descriptions as conference, congress, convention, seminar, symposium, and workshop.²⁴ Generally speaking, a meeting occurs when two or more people convene for interaction on a particular matter. What we call such a gathering is irrelevant; for our purposes, they are all “meetings.”

We start with federally sponsored meetings. When a federal agency sponsors a meeting, it normally does so under the necessary expense doctrine. Consequently, the travel, salaries, and expenses of government employees attending such a meeting are also authorized as necessary expenses. So-called “staff retreats” are becoming more common. So long as an agency official with the authority to do so determines that the retreat is a necessary expense, it is an authorized and legal expense of the agency exercising its administrative discretion. Although such retreats might at times be criticized as wasteful or extravagant, they are not inherently illegal.²⁵

Now we turn the discussion to meetings that are not federally sponsored. A law passed in 1912, still on the books and found at 5 U.S.C. 5946, prohibits the use of appropriated funds to pay the expenses of attendance at meetings or conventions of members of a society or association. GAO consistently disallowed expenses for attendance at any such meeting of societies or associations.²⁶ Then, in 1958, Congress passes the Government Employees Training Act, which includes two provisions that apply to meetings. 5 U.S.C. 4109 authorizes payment of expenses in connection with authorized training. 5 U.S.C. 4110 authorizes expenses for meetings “which are concerned with the functions or activities for which the appropriation is made or which will contribute to improved conduct, supervision, or management of the functions or activities.”²⁷

With the above discussion completed, it is possible to summarize the rules.

1. Government employees may attend a federally sponsored meeting at government expense.

2. Government employees may attend a non-federally sponsored meeting at government expense if:

3. If neither 5 U.S.C. 4109 nor 5 U.S.C. 4110 applies, and the meeting is a meeting of a “society or association,” then the prohibition of 5 U.S.C. 5946 applies and expenses may not be paid from government funds.²⁸

46. May appropriated funds be used to pay the meeting expenses of non-federal personnel?

In 1935 Congress passed a statute, now found at 31 U.S.C. 1345, that states:

Clearly this law was aimed at using government funds to pay the expenses of non-federal people. Although GAO has not attempted to define exactly what sort of activities qualify as a “meeting” under the law and makes its determinations on a case-by-case basis, GAO has consistently denied expenses in matters brought to its attention by interpreting the statutory language quite broadly. Examples where payment was denied include:³⁰

The U.S. Environmental Protection Agency was not authorized to pay for state officials to attend a National Solid Waste Management Association Convention.

The Mine Safety and Health Administration was not allowed to pay for miners and mine operators attending safety and health training.

The National Highway Traffic Safety Administration could not pay the expenses of state officials at a workshop on odometer fraud.

Note that although an agency may have the authority to put on a meeting, such as those listed above, such authority is not sufficient to pay the expenses of attendance for non-federal personnel. Thus, an agency may rent a room, hire speakers, and pay for its own personnel to attend, but the non-federal attendees are on their own to finance their attendance.

47. Suppose an agency wants to have a non-federal person speak at a federally sponsored meeting. May the agency pay travel expenses in that instance?

Yes. Another statute, enacted in 1946 and found at 5 U.S.C. 5703, applies to the so-called “invitational travel” situation, wherein a private party is called upon by the government to confer or advise on government business. This represents a limited exception to the prohibition against paying expenses for non-federal personnel. A critical prerequisite, however, is that the person must be performing a direct service to the government.³¹ Thus, making a presentation at a meeting suffices.

The exception does not apply when there is only an indirect benefit to the government, as in the previously cited example of state environmental officials attending a federal meeting on waste management. Although there certainly might be some real benefits to the government in having the state officials attend, the invitational travel exception did not apply because the state officials were providing no direct service to the government at the meeting.

48. My agency administers grant funds, and our grantees often sponsor meetings and pay for nonfederal personnel to attend. Are they violating the prohibition found in 5 U.S.C. 1345?

Once a grant has been made for an authorized grant purpose, the funds now in the hands of the grantee are not subject to many of the restrictions that apply to the direct expenditure of appropriations. This is the case for 31 U.S.C. 1345, which does not apply to grant funds in the hands of a grantee.³² Thus, grantees may use such grant funds to pay expenses for attendance at meetings by non-federal personnel.

However, an agency may not use the grant mechanism for the sole purpose of circumventing 31 U.S.C. 1345, that is, to do indirectly that which it could not do directly. Thus, an agency may not make a grant for the express purpose of sponsoring a conference at which non-federals attendance would be paid for.³³

Entertainment

49. Are appropriated funds available to pay for entertainment?

The general rule is that appropriated funds may not be used for entertainment except when specifically authorized by statute and also authorized or approved by proper administrative officers. The basis for this rule is that entertainment is a personal expense, even when it occurs in some business-related context. Entertainment cannot normally be said to be necessary to carry out the purposes of the appropriation.³⁴

50. Entertainment is considered a legitimate business expense in the private sector. Can’t the same rationale be applied in a government setting?

Clearly there is a different standard for government funds. GAO summarized this difference in B-223678, June 5, 1989:

B-2888266, January 27, 2003, puts it another way:

51. The term entertainment is quite broad. What sorts of objects are included in its definition?

GAO has not precisely defined the term entertainment. However, various courts and comptroller general decisions have given several examples that indicate its meaning. Following are examples of entertainment:³⁷

Source or means of amusement, a diverting performance, as a concert, drama, or the like

A pleasurable occupation of the senses

Dancing, sports, or music

Food and drink, either formal meals or snacks or refreshments

Receptions, banquets and the like

Music, live or recorded

Live artistic performances

Recreational facilities

Liquor

Cocktail parties, banquets and dinners, theater attendance, sightseeing parties.

These examples cut a wide swath. A good rule of thumb: If there is any question about whether a particular expense is entertainment, it probably is not.

52. Buying food with appropriated funds is an ongoing debate in my agency. What is the rule on buying food, and what are the exceptions?

The general rule is that appropriated funds may not be used to provide free food to government employees at their official duty stations, unless specifically authorized by law. Food is a personal expense, and government salaries are presumed adequate to enable employees to eat regularly. The prohibition applies to snacks and refreshments (including coffee) as well as meals.³⁸

There are exceptions:

Meals of employees in travel status

Employees working in emergency situations

Government Employees Training Act

Government Employees Incentive Awards Act

Cultural awareness programs

Necessary expense of carrying out the agency mission.

53. Can you elaborate on each of the exceptions to the rule on buying food?

Employees in travel status. There is specific statutory authority to reimburse employees for meals when they are in travel status. One must remember, however, that being in a travel status involves two components—distance and time. The employee must have traveled outside the area defined by the agency as the official duty station, and the travel must have exceeded 12 hours. If the distance and time criteria are not both met, the employee is considered to be “at the duty station” and food would not be authorized. Traveling across town to a conference at a local hotel would not put the employee in travel status.

Employees working in emergency situations. This is a very limited exception that agencies often try to stretch to include working under unusual or extreme conditions. Examples where reimbursement has been denied include:³⁹

Federal mediators required to conduct mediation sessions after regular hours

District of Columbia police officers involved in cleanup work after a fire

Inspectors at offshore oil rigs who had few alternatives to buying lunch from private caterers at excessive prices

Law enforcement personnel retained at staging areas for security purposes prior to being dispatched to execute search warrants.

The exception applies to situations where there is an emergency that involves imminent danger to human life or the destruction of federal property. One example was a cadre of General Services Administration (GSA) police who spent the night in alert status at a building that had been occupied by unauthorized individuals. Sandwiches and coffee for the security personnel were considered incidental to the protection of government property during this emergency that involved danger to human life and the destruction of federal property.⁴⁰ The exception is limited, however. Merely being required to remain on duty for a 24-hour period is not enough. Dangerous conditions are not enough. Finally, inclement weather that does not rise to the level of an emergency situation does not support an exception to the rule.

Government Employees Training Act. The Act authorizes agencies to pay for the necessary expenses of training as well as expenses for attendance at meetings that are concerned with the functions or activities for which the appropriation is made. The comptroller general has issued decisions that provide for paying the costs of meals and refreshments at meetings and training events under specific circumstances.⁴¹

1. Attendance at meeting and conferences⁴²

2. Training⁴³

When real training, as defined by the Government Employees Training Act, occurs, the government may pay or reimburse for necessary expenses incident to the training. This rule applies whether the training is sponsored by a nongovernmental organization or the government itself. As with meetings, an agency may pay for the cost of meals and refreshments if they are included as an incidental and nonseparable portion of a training or attendance fee. If the cost of the food is not included in a registration or attendance fee, the government may provide meals or refreshments if the agency determines that providing such food is necessary to achieve the objectives of the training program. The government may also furnish meals to nongovernment speakers as an expense of conducting the training.

Award ceremonies.⁴⁴ Appropriations may be used to provide meals or refreshments at award ceremonies under the Government Employees Incentive Awards Act. It is important to note that the ceremony must include public recognition of the award recipients in order to qualify for the providing of meals or refreshments. Further, although it is possible to combine an awards ceremony with a social event, say, a dance or picnic, agencies must be cautious because such expenditures would be subject to greater scrutiny than expenditures made in connection with more traditional awards ceremonies.

Cultural awareness programs.⁴⁵ Small samples of ethnic foods served during a formal ethnic awareness program as part of an agency’s equal employment opportunity program may be purchased with appropriated funds. These tidbits must be true “samples” and not rise to the level of refreshments or meals.

Necessary expense to carry out the agency mission. Examples of this exception are rare. It is difficult to imagine many scenarios where an agency must provide food to an employee in order to carry out its mission. One example would be a human research laboratory studying the effects of various foods or liquor on employee performance. To test the effect of alcohol on reaction time of an airplane pilot, it might be necessary to purchase a supply of vodka, which the pilot would consume during a study. Such a situation would meet the tests of the necessary expense doctrine and be an authorized expenditure.

54. What about entertainment for government personnel that does not involve food? Is that an authorized expenditure?

There are very few decisions in this area, presumably because there are very few situations where such entertainment could conceivably be authorized.⁴⁶ One exception is the previously mentioned cultural awareness programs. In addition to providing food samples, such cultural awareness programs, which are designed to further the agency’s equal opportunity program, may include live artistic performances, such as dance troupes or singers. An agency may expend appropriated funds for such entertainment, so long as the planned performances advance Equal Employment Opportunity objectives.

55. If we can’t normally use appropriated funds for entertaining government employees, does it follow that entertaining nongovernment personnel is also prohibited?

Correct. The basic rule is the same regardless of who is being entertained. Appropriated funds are not available for entertainment, including food, except under specific statutory authority.⁴⁷

The Department of Veterans Affairs justified the purchase of refreshments for nongovernment employees—veterans—using the necessary expense doctrine. GAO agreed that the VA could purchase refreshments as an incentive to get veterans to attend focus groups where the agency satisfies its legislative mandate to measure and evaluate its programs.⁴⁸ Because the refreshments increased participation in the focus groups, the quality of the information gathered by the VA was improved.

56. One subject not mentioned yet is Official Representation Funds. Can’t these funds be used for entertainment, including food?

The rule we’ve been looking at says that government funds may not be used for entertainment, unless specifically authorized by law. Congress recognizes that many agencies have a legitimate need for items that would otherwise be prohibited as entertainment, and responds by making limited amounts of funds available for official entertainment.⁴⁹

Entertainment appropriations take many forms and have various names. The names include Reception and Representation Funds, Official Representation Funds, Representation Allowances, and Protocol Funds; the Department of Defense (DoD) receives earmarks in its Operation and Maintenance appropriations for Emergencies and Extraordinary Expenses. These appropriations may take the form of permanent, indefinite appropriations; annual or multiyear appropriations; no-year appropriations; or earmarks within an agency’s fixed-term appropriations.

Unless specifically bound by appropriation language, agencies have wide discretion in the use of their Reception and Representation funds. There must be some connection with official agency business,⁵⁰ but having satisfied that criterion, the agency determines how it will administer its R&R funds. Because these funds are very limited, agencies typically place strong internal controls on their use, and approvals are kept at a high level within the agency.

57. This discussion on food has been very complex. Is there a way to summarize what agencies are and are not allowed to buy with appropriated funds?

GAO created a decision tree that simplifies the analysis process considerably. You can find it at Appendix 1 of this book. When using the decision tree, make sure you carefully read the cited decision to ensure it applies to your particular situation.

58. Although agencies may not generally purchase food for employees, may they use appropriated funds to purchase equipment to cook or store food? This would include such items as coffee makers, refrigerators, and microwaves.

GAO has allowed such purchases in some instances. When the agency has determined that providing such equipment and facilities is significant in hiring and retaining employees, it has been allowed. Likewise, when no eating facilities are readily available due to distance, 24-hour operations, or security concerns, GAO has allowed refrigerators and microwaves.

In 2004 GAO retreated from its previous stance that such items are generally personal in nature and left it up to agencies to justify their purchase under the necessary expense doctrine. GAO recognized that the workplace has changed over time and such food-related equipment is common in many workplaces. If agencies demonstrate that providing such equipment is reasonably related to efficient performance of agency activities and provides other benefits, such as a safer workplace, agencies may justify the use of appropriated funds. GAO made it clear that such equipment needs to be in a common area available for use by all personnel and that the cost of food items and coffee remained personal expenses that fall upon each employee.⁵¹

Child Care and Elder Care

59. Some agencies provide child care facilities or subsidize child care. Do employees have an entitlement to receiving such child care support?

Employees do not have an entitlement to child care at government expense. Under the necessary expense doctrine, an agency may provide child care support when it has determined that such expenditures would contribute materially to recruitment, retention, morale, and hence efficiency and effectiveness.

In 1985 Congress enacted legislation that authorizes, but does not require, federal agencies to provide space and services for child care centers. The term services includes utilities, equipment, appliances, and security systems. Space and services may be provided with or without charge.⁵²

Congress provided permanent authority in 2001 for agencies to use appropriated funds “to improve the affordability of child care for lower income Federal employees.”⁵³ The Office of Personnel Management has issued regulations governing such support to lower income employees (5 CFR 792).

60. If appropriated fund support is available for child care, what about elder care?

So far, GAO has ruled that elder care is not a necessary expense and agency appropriations are not available for such costs. As previously mentioned, Congress has authorized support for child care. GAO has opined that it was “for the Congress to decide whether agency appropriations could be used to support eldercare centers.”⁵⁴

As demographics change and the need for elder care increases over time, expect this topic to be revisited by the Congress and GAO in the future.

Fines and Penalties

61. I inadvertently parked a government vehicle in a “No Parking” zone. I returned just as a policeman was finishing the ticket. My agency refused to reimburse me for the cost of the ticket even though I was operating the vehicle for official business. Why wasn’t I reimbursed?

Generally speaking, an agency may not use appropriated funds to pay fines and penalties assessed against its employees.⁵⁵ Employees are expected to comply with the law in carrying out their duties. Violating laws, even parking laws, is outside the scope of their employment, and employees must therefore take personal responsibility for any resulting liability.

One exception is when the agency determines that paying a fine or penalty levied on an employee is a necessary expense. In the case of Sam Giancana v. J. Edgar Hoover, an FBI agent had been instructed by the agency to refuse to testify and was fined for contempt of court. In this case there was a legitimate government interest in his compliance with the instructions not to testify. Because he was without fault in incurring the fine, the FBI could reimburse him under the necessary expense doctrine.⁵⁶

62. If a fine or penalty is levied directly on a federal agency, may the agency pay it?

Under the concept of sovereign immunity, the general answer is “No.” Sovereign immunity would need to be waived by statute for such an expenditure to be authorized.⁵⁷

One example of such a waiver is the Clean Air Act. It makes federal agencies liable for violation of the Act, and paying state and locally imposed civil penalties for such violation is therefore authorized.⁵⁸

63. Do federal agencies pay fines or penalties levied by other federal agencies, for example, by the Internal Revenue Service?

Absent specific statutory authority, federal agencies may not use their appropriated funds to pay fines or penalties to other federal entities.⁵⁹

Gifts and Awards

64. What is the difference between a gift and an award?

An award is something given in recognition of previous accomplishments, and usually with the expectation of future positive accomplishments benefiting the agency. Thus, an award involves a give and take, with government benefit part of the “taking.” A gift involves no such give and take. A gift is not based on prior accomplishment and has no expectation of future actions.

65. May an agency buy gifts for employees or members of the public?

Without specific statutory authority, agencies may not purchase personal gifts with appropriated funds.⁶⁰ Exceptions to this general statement all involve some government benefit from the purchase of what otherwise seem to be personal gifts. Given the large sums of money agencies have available, the potential for abuse is enormous. Therefore, GAO has taken a very strict approach in its decisions on gifts. There are more decisions where the purchase of gifts has been denied than where it has been approved.

66. What are some of the exceptions on gift giving?

One exception is gifts used as recruiting tools. For example, an item of nominal value, such as a pen or refrigerator magnet containing a phone number or website address, might be an effective way of providing potential employees with information they need to contact the agency should they be interested in employment.⁶¹ However, items without such contact information have been determined to be nothing more than “favorable reminders” of the agency that did not facilitate recruiting efforts.⁶²

Agencies involved in direct sales to the public might also be able to give something to customers to compensate them for previous poor service. GAO found that the U.S. Mint could give complimentary commemorative coins to customers whose orders the mint had mishandled. This goodwill gesture of giving the complimentary coins would contribute to the success of the Mint’s commemorative sales program.⁶³

Another exception is when the gift is purely informational and has no intrinsic value to the recipients. For example, buttons or magnets inscribed with messages related to agency programs would fall into this category.⁶⁴ Such items benefit the agency, not the employee, by disseminating agency information.

A memento, such as a plaque to a guest speaker, would also be allowable. The government received the benefit of the guest speaker’s message, and a nominal gift is an appropriate gesture of thanks for their services. The speaker ought not be a government employee or anyone being paid under contract, however.

67. What about awards? May an agency use its appropriated funds to award its employees or others?

The Government Employees Incentives Awards Act allows agencies to award employees for their “suggestion, invention, superior accomplishment, or other personal effort” that contributes to the efficiency and effectiveness of government operations. Under the Act, agencies may also incur necessary expenses associated with issuing such incentive awards.⁶⁵

68. Under the Government Employees Incentive Awards Act, what forms may the awards take?

Awards may be in the form of cash, time off, or merchandise. Among the merchandise items found allowable are the following:⁶⁶

Plaques

Jackets

Coffee mugs

Tickets to sporting events and amusement parks

Meals or gift certificates for meals.

Remember, however, that awards must be based upon an act or service related to official employment.

69. Are length of service or retirement awards authorized?

Cash awards for length of service or retirement are not authorized. Honorary noncash awards are permissible.⁶⁷

70. We have an employee who hasn’t used any sick leave in the past ten years. May the agency give him an award under the Act?

GAO has ruled that the use of incentive awards for good sick leave usage is inappropriate.⁶⁸ The employee has already been compensated by having a large sick leave balance available should it be needed in the future.

71. Several contractors work in our office on a continuous basis. Our agency has Teamwork Awards that often include such contractors. May the contractors receive the same awards as the government employees on the team?

Remember the law is called the Government Employees Incentives Awards Act. It does not apply to contractors, nor does it apply to state or local government officials who might be involved with a federal program.⁶⁹ Such personnel are not authorized to receive cash or merchandise under the Act. Publicly recognizing such personnel along with the government employees, and providing a letter or certificate to them, is about as far as an agency may go.

72. In a previous answer there was mention of “necessary expenses associated with issuing such incentive awards.” Of what might those expenses consist?

One such associated expense would be travel of the employee to the location where the award is to be presented. Agencies may also pay the travel expenses for those accompanying the employee to the ceremony. Also allowable are the travel expenses of someone receiving the award on behalf of a deceased recipient.⁷⁰

Another necessary expense is the cost of the incentive awards ceremony itself. As mentioned previously under the “food” section, such ceremonies may include refreshments.⁷¹ Other expenses of the ceremony might include rental of a facility and flowers or other decorations.

Remember that simply distributing one or more awards in conjunction with an event or function designed to achieve other objectives does not make it an awards ceremony where refreshments would be authorized. The underlying purpose of the event must be awards, and the refreshments must facilitate public recognition of the award recipients. Agencies are given considerable discretion in carrying out their awards programs, but that discretion is not unlimited.

Insurance

73. I’ve heard that the federal government is self-insured—that it doesn’t buy insurance. Is that true?

Generally speaking, yes. The rule is that unless there is specific statutory authority, appropriated funds are not available for the purchase of insurance to cover loss or damage to government employees or the liability of government employees.⁷²

74. What is the rationale for the government’s policy on insurance?

There are two basic aspects. First, the federal government has more money (or at least, access to more money through its taxing authority) than anyone else. It has more money than all the insurance companies put together. Thus, if it wrecks a government-owned car, it just buys another one. Second, given the amount of government resources available, it doesn’t make sense to purchase private insurance, which would include amounts for operating expenses, overhead, and the company’s profits. It is more economical for the government to insure itself against loss.⁷³

75. Are there exceptions to the rule regarding insurance?

Of course there are. For example, the government contributes to the cost of health and life insurance under the Federal Employees’ Health Benefits Program and the Federal Employees’ Group Life Insurance. Agencies are also required by statute to pay half of the cost incurred by qualified employees for professional liability insurance. Also, in the course of paying for contracts, grants, and leases, the government is paying for insurance that is indirectly passed on by vendors and grantees as a cost of doing business.⁷⁴

Congress may also specifically authorize the purchase of insurance in certain cases. Even in those cases, the agency normally has the discretion to purchase, or not purchase, the insurance.

In addition, there are nonstatutory exceptions where the underlying policy considerations do not apply. These are summarized by GAO as follows:⁷⁵

Where the economy sought by self-insurance would be defeated

Where sound business practice indicates that a savings can be effected

Where services or benefits not otherwise available can be obtained by purchasing insurance.

Insurance is occasionally purchased as an incidental expense of purchasing some other authorized object. For example, travel agents who charge the government a flat fee for issuing airline tickets often include some level of free flight insurance as part of their service. The cost of the flight insurance is not priced separately. Thus, the flight insurance is incidental to the purchase of the plane ticket, and the government has paid for it in the course of having the ticket issued. However, the government may not pay for flight insurance when it must be purchased separately, for example on non-ticketed flights taken by National Transportation Safety Board employees investigating accidents. Flight insurance is considered a personal expense.⁷⁶

76. May an agency pay for insurance, or a surety bond, to cover employees who handle cash or other valuables?

In 1972 Congress passed legislation specifically prohibiting the government from requiring or paying for surety bonds for civilian employees or military members in conjunction with the performance of their official duties. The purpose of the legislation was to observe the aims of the self-insurance rule and to substitute the practice of self-insurance for the previous practice of obtaining surety bonds on such employees.⁷⁷

Memberships and Dues

77. I belong to a professional association that is related to my government job. May my agency pay the annual membership dues?

No. A 1912 prohibits the use of appropriated funds to pay membership fees of an employee in a society or association.⁷⁸

78. My association offers discounts on training to members that would exceed the cost of the membership. Given the economies to be had, could the agency buy the membership using cost savings as a justification?

No. Regardless of the resulting benefit to the agency, membership fees for individuals may not be paid.⁷⁹ An agency may purchase a membership in the name of the agency, however, if doing so would let the agency receive the reduced cost as a benefit of membership.⁸⁰

79. My agency has appointed me as its national representative to the Federally Employed Women program. Since this is directly related to my job, can the agency pay my annual membership fee to FEW, Inc.?

GAO has ruled that the fact the membership is job-related does not overcome the statutory prohibition.⁸¹ So the agency may not pay your dues.

80. Are there any exceptions to the prohibition against paying for individual memberships?

Other than an appropriation specifically passed for that purpose, the only exception is under the Government Employees Training Act. If the agency determines that training from a particular membership organization for an employee is required, and if that organization requires individual membership to receive such training, then the agency could pay for the membership as a necessary expense of obtaining the required training.⁸² Public speaking training through Toastmasters International is an example.

Business Cards

81. What is the rule on the purchase of business cards?

As a general rule, business cards are considered personal expenses and government funds are not available for their purchase. However, the agency may, using the “necessary expense” analysis, determine that such purchase is allowable for employees who regularly deal with the public or organizations outside their immediate office.⁸³ Recruiters and customer service representatives are among the employees who would fall within this exception.

Medical Care and Health-Related Items

82. May an agency provide medical care to employees using appropriated funds?

Except for illness directly resulting from the nature of the employment, medical care is considered a personal expense and government funds may not be used.⁸⁴

Some further exceptions have been granted when the expense primarily benefited the government, rather than the employee. These involved physical examinations and inoculations.⁸⁵

In addition, an agency is authorized to establish and run health service programs to promote and maintain the physical and mental fitness of its employees. Such authorized health service programs are limited to:⁸⁶

Treatment of on-the-job illness and dental conditions requiring emergency attention

Pre-employment and other examinations

Referral of employees to private physicians and dentists

Preventive programs relating to health.

Thus, the government may pay for smoking cessation classes but not for the treatment of any medical problems associated with a person’s smoking habit.

83. What about health-related items, such as prescription eyeglasses? May appropriated funds be used for those?

Health-related items are considered personal equipment and therefore personal expenses.⁸⁷ If an employee needs prescription eyeglasses to perform the job, the employee is expected to provide them.

However, there are exceptions. For example, if the employee works in a machine shop running a metal lathe, Occupational Safety and Health Act standards would apply and the purchase of prescription safety goggles would be authorized.⁸⁸

In addition, the Rehabilitation Act of 1973* applies to federal agencies. “Reasonable accommodations” for employees with disabilities are required and could include health-related items.⁸⁹

Office Decorations

84. Appropriations are obviously available to purchase office furnishings such as tables and chairs. But what about office decorations that serve no real utilitarian purpose?

This is a “necessary expense” question. Agencies may determine that office decorations are necessary for the public purpose. Such decorations may take the form of pictures, art objects, plants, flowers (both real and artificial), and similar items. Purchases must be justified because they enhance the morale or productivity of the organization, not because they are for the personal convenience or desire of a given employee.⁹⁰

85. Would the same rule apply to seasonal decorations such as pumpkins, trees, lights, and ornaments?

Yes. In 1987 GAO concluded that the rule for office decorations is the same whether the decorations are permanent or temporary.⁹¹ However, agencies need to be sensitive with respect to the display of religious symbols. Agencies buying such seasonal decorations should closely review B-226011, B-226900, November 17, 1987 (one decision) before proceeding.

Greeting Cards

86. If seasonal decorations are authorized, then what about seasonal greeting cards?

GAO has made a clear distinction between seasonal decorations and greeting cards. Such greeting cards, even those that are “agency to agency,” are not authorized to be purchased from government funds. Likewise, GAO has found that seasonal or holiday “letters” are also not authorized to be produced or mailed at government expense.⁹²

Ceremonial Items

87. What about such items as ribbons and scissors for a ribbon-cutting ceremony or champagne for launching a ship?

Agencies may purchase items associated with such traditional ceremonies. In addition to ribbon, scissors, and champagne (to break on the hull, not for the reception afterwards), engraved and chrome-plated shovels for a ground-breaking ceremony, and flowers and printed invitations for such ceremonies are allowable.⁹³

Certifications and Licenses

88. May an agency pay for certifications, licenses, and examinations necessary to obtain such certifications or licenses?

Historically, employees were always expected to bear the expense of qualifying themselves for their position. Thus, government funds were not generally available for such personal qualification expenses. In 2001, however, Congress enacted legislation permitting agencies to use appropriated funds for such expenses. These may include state-imposed and professional licenses, expenses for professional accreditation and professional certification, and examinations to obtain such credentials. The statute did not create an entitlement; agencies use their discretion to determine whether to pay for such expenses.⁹⁴

89. Does the law concerning personal qualification expenses cover driver’s licenses?

That is unclear. If an agency wants to use the 2001 law as its authority to pay for an employee’s driver’s license, the agency would have to classify the license as a professional credential, professional accreditation, state-imposed and professional license, or professional certification.⁹⁵ Failing that, the agency would have to fall back on the necessary expense doctrine to justify the expense. In such cases the license would need to benefit the agency, rather than the employee. One could likely make a case that purchase of an International Driver’s License (IDL) for employees traveling to countries requiring the IDL in addition to a state-issued license is a necessary expense. Renewal of an employee’s state-issued license, on the other hand, doesn’t seem to meet the necessary expense criteria.

Clothing

90. Employee clothing appears to be a personal expense. When may the government pay for clothing?

Let’s start with the general rule and work from there. The general rule is that “every employee of the Government is required to present himself for duty properly attired according to the requirements of his position.”⁹⁶

Keeping that general rule in mind, we then ask the question: Is the employee unable to perform the job satisfactorily without the proposed piece of clothing or equipment? This is another way of asking: Is the item “necessary”? If the answer is “no,” the employee is expected to furnish the item because any benefit accrues to the employee, not the government.

If the answer is “yes,” the follow-up question is: Is it reasonable to require the employee to furnish the item? Criteria for answering this question include whether the item is to be used by the employee in connection with his regular duties or only in emergencies or at infrequent intervals, and whether the item is assigned to an employee for individual use or is intended for and actually to be used by different employees. If it is reasonable to require the employee to furnish the item, the government doesn’t pay for it. If it is not reasonable, the government may buy it but retains ownership of the item.⁹⁷

91. Are there specific statutes that allow the purchase of wearing apparel?

There are three general statutory provisions that allow agencies to purchase such items, in certain limited circumstances.

First is the Administrative Expenses Act of 1946. To satisfy this statute, three tests must be met:⁹⁸

1. The item must be “special” and not part of the ordinary and usual furnishings an employee would reasonably be expected to provide.

2. The item must be for the benefit of the government—essential to the safe and successful accomplishment of the work and not solely for the protection of the employee.

3. The employee must be engaged in hazardous duty.

Second is the Occupational Safety and Health Act of 1970 (OSHA). An agency may furnish protective clothing if it determines that it is necessary under OSHA and its implementing regulations.⁹⁹

Often, an item could be justified under either of these two statutes. Following are some examples where the purchase of clothing items was permissible:¹⁰⁰

Snowmobile gear for employees required to operate snowmobiles in remote forest areas

Down-filled parkas for employees temporarily assigned to Alaska or the high country of western states

Cooler coats and gloves for Department of Agriculture meat graders

Steel-toed safety shoes for an employee required to move heavy objects.

Conversely, here are some examples that do not meet the criteria of either law, and purchase of the items is not allowed:¹⁰¹

Rubber boots and coats for custodial employees in flood-prone areas

Coats and gloves for government drivers

Insulated coveralls for employees working outside in near-freezing temperatures

Raincoats and umbrellas for employees who must frequently go out in the rain

Coveralls for mechanics.

The third statute that allows for the purchase of wearing apparel is the Federal Employees Uniform Act. The Act authorizes agencies to prescribe uniforms for employees and either pay a cash allowance or furnish the uniform.¹⁰² Some agencies have additional specific authority to prescribe and provide uniforms to their employees.

It is important to remember that a “uniform” is an item of distinctive design that allows an observer to identify the wearer as part of a particular group. Business suits, and even tuxedos, do not fit the definition. Calling a business suit a uniform doesn’t make it one.

Commuting, Parking, and Flexiplace

92. My agency moved its location across town, greatly increasing my commute to and from work. Further, there was ample free parking at the old location, but now I have to pay for parking at a commercial garage. May the agency pay for some or all of my commuting and parking expenses?

Employees are expected to get to work. How they do that is up to each employee, and the cost of doing so is considered a personal expense. So the cost of your commute, even though it is longer, cannot be reimbursed by your agency.¹⁰³

Parking is also considered a personal expense. The government doesn’t owe employees a parking spot. However, an agency may provide for parking if it is determined to be a necessary expense because the lack of parking will impair operating efficiency and be detrimental to the hiring and retention of personnel. Thus, the agency may provide parking even though it is not required to do so.¹⁰⁴

93. Occasionally I’m called back to work in the evening after working my normal shift. Shouldn’t the agency reimburse me for the second commute to and from work?

You are being compensated for the time you spend at work when called back. Commuting is commuting, whether it happens once, twice, or more times per day. So the agency may not reimburse you for these additional trips.¹⁰⁵

94. Some of my co-workers ride mass transit to work and get a subsidy to help pay the cost. Isn’t that a violation of the rule stated above?

It would be—except there is specific legislation that allows it. In 1993 Congress authorized agencies to establish programs to encourage the use of other than single-occupancy vehicles. The purpose is to reduce road congestion and improve air quality. Such programs may include transit passes or cash reimbursement for passes, the furnishing of space or services to bicyclists, and nonmonetary incentives. In 2000 Executive Order 13150 required agencies to implement a transportation fringe benefit program under the 1993 law.¹⁰⁶

95. Flexiplace, or teleworking, is becoming more and more prevalent. What expenses may the agency pay for in relation to such work from home arrangements?

The agency may purchase and furnish equipment (computers, fax machines, etc.) and telephone and data lines and may pay monthly fees for such lines for an employee authorized to work from home. Equipment so furnished remains the property of the government.¹⁰⁷

96. May I ask for reimbursement from my agency for the portion of my heating, air-conditioning, and lighting costs that reflects the amount of time I spend teleworking and the portion of my house where I work?

You can ask, but the agency won’t pay. These are considered personal expenses and may not be reimbursed, absent specific statutory authority. Although you might suffer some additional utility costs, they are more than covered by reduced commuting, child care, meal, and/or clothing expenses. Even if the work at home arrangement is mandatory rather than voluntary, incremental costs of utilities associated with the residence may not be reimbursed.¹⁰⁸ However, additional out-of-pocket costs incurred making official long distance phone calls are reimbursable.

Motor Vehicles

97. I’ve noticed that many appropriations contain specific authority to buy a given number of cars. Why is that?

Statutory controls over the acquisition and use of motor vehicles date back to 1914 with the enactment of what is now 31 U.S.C. 1343(b). The 1914 law required specific authority to use appropriated funds “for the purchase of any motor-propelled or horse-drawn passenger-carrying vehicle for the service of any of the executive departments or other Government establishments, or any branch of the Government service.” The law was amended in 1946 to delete the reference to horses; to expand the prohibition to “purchase or hire;” and to exempt vehicles for the use of the President, secretaries to the President, or the heads of cabinet departments.¹⁰⁹ It also requires specific authority to use appropriations, other than those of the armed forces, to buy, maintain, or operate aircraft. In 1982 the word hire became lease. Thus, an agency may not use its appropriated funds to purchase or lease any passenger-carrying vehicle.

98. Can you provide examples of passenger-carrying vehicles?

Many decisions came out after this legislation was passed in 1914. Here are some examples of passenger-carrying vehicles subject to the restriction: sedans, limousines, station wagons, ambulances, and motorcycles.

Not governed by the law are trucks, jeeps, motor boats, and passenger automobiles used for testing.

The test is one of construction and design, rather than intended use. Even though a truck might be used to carry passengers, its design is for hauling cargo.¹¹⁰ Therefore, the restriction does not apply.

99. How restrictive is the prohibition against leasing?

The prohibition against leasing was inserted to prevent agencies from dodging the prohibition against purchasing vehicles by merely leasing them. It does not apply to the rental of taxicabs or other vehicles on a “per trip” basis incident to normal day-to-day business. It also does not apply to the rental of vehicles by employees on official travel.¹¹¹

Rewards

100. May a government employee be paid a reward for providing information to capture someone who is wanted by the law?

It depends on the scope of the employee’s duties. Consider the following examples:¹¹²

A Deputy U.S. Marshall apprehended a military deserter. He could not be paid the reward because he had been acting in his official capacity (it was his job to capture deserters).

A patrol inspector for the Immigration Service apprehended a military deserter. A reward was payable because he was acting in the capacity of a private citizen, outside the scope of his official duties.

Taxes and Fees

101. Does the federal government pay taxes?

Agencies do pay federal taxes. They pay taxes to foreign governments if required by terms of the treaty with the foreign government. State and local taxes are another matter.

The doctrine of sovereign immunity and the Supremacy Clause of the Constitution prohibit states from taxing the federal government.¹¹³ Although this is an easy rule to understand, applying it to the myriad complex state and local tax codes is confusing and often litigated.

Three broad categories constitute the basis for a discussion on taxes:

1. Taxes linked to business transactions involving the federal government, typically sales and use taxes

2. Federal employees incurring the payment of taxes while performing government business

3. Property-oriented taxes linked to ownership or use of various types of real and personal property.

102. I’ve heard that the federal government doesn’t pay sales or use taxes. Is that true?

It depends on whom the tax is levied. If the requirement to pay a tax falls on a vendor or seller, and the seller alone is obligated to pay it, the federal government may reimburse the seller for the total cost, including the tax. On the other hand, if the tax is levied directly on the federal government as the buyer, it cannot be required to pay.¹¹⁴

In the first instance, a vendor pays sales tax to a state to purchase materials to complete a federal contract. Those taxes are part of the cost of doing business, and the government ends up paying the taxes when the vendor invoices for the work.

The second instance is illustrated by a simple Government Purchase Card transaction in a store, where the store clerk tries to add on state sales tax. Because this tax would fall directly on the federal government as the buyer, it should not be paid.

103. Following the same logic as with a vendor, if a federal employee pays a tax while conducting official business, then shouldn’t the government reimburse the employee for the amount of the tax?

Exactly. A common example is when federal employees in travel status pay state and local hotel taxes. They are fully reimbursed for the amount of the taxes paid.

104. How are property taxes handled?

Federal land located within state borders is also exempt from state property taxes on the same basis that the government is immune to sales taxes.¹¹⁵

In addition, state and local entities may not levy assessments against federal land for local improvements, even if the improvements would be made to federal land. These improvements are normally for paving streets and installing sewers. Such assessments are involuntary and fit the definition of a tax.¹¹⁶ However, after an analysis of the work done and the benefits provided, it may be possible to pay for such improvements on a quantum meruit basis.¹¹⁷ A complete discussion of performing the quantum meruit analysis is beyond the scope of this book, and the reader is advised to read the complete exposition provided in Chapter 4 of the Redbook.

105. What is a possessory interest tax? I’ve heard it has something to do with property taxes.

Some local taxing authorities, unable to assess property taxes against federal land, have changed their property tax to a possessory interest tax. This means the tax falls on the person who has a “possessory interest” in the property. Thus, federal employees living in housing owned by the Forest Service were presented with possessory interest tax bills. Because the tax was on the federal employees, the government had to reimburse the employees for the amount of the taxes paid.¹¹⁸

106. Does the federal government have to pay fees levied by state and local governments?

If it truly is a fee, the government pays it. A fee means there is some value received for the services rendered and the charge is commensurate with the level of service provided. For example, the government will pay for city water consumed by the government. Toll roads charge fees, which the government pays. Tolls are considered a fee because if you don’t drive on the road, you don’t pay the fee.

Taxing authorities often try to call their taxes “fees.” The nature of the transaction must be examined before a determination of whether to pay it can be made. Remember, agencies pay fees, but not taxes levied directly on the government.

107. Suppose a government employee driving a government vehicle uses a Government Purchase Card to fill the tank. The state tax on gasoline is included in the price per gallon. Clearly, the employee is not in a position to refuse to pay the state tax. How are these transactions handled?

Most gas station clerks would not take kindly to someone’s refusal to pay the entire amount shown on the pump. So customers pay the entire amount, including the state tax. Then, after the fact, the government bills each state for the amount of tax it has been improperly paid. When the state sends in the money, it is considered a refund and is applied back to the appropriation account from which the original transaction took place.

UNANSWERED PURPOSE QUESTIONS

108. A tremendous number of topics have been covered in this chapter on purpose. However, there are still a few topics that were not covered that I have questions on. Where do I go for the answers?

This book’s aim is to answer the most frequently asked questions—those related to situations that occur in nearly every organization, again and again. Your first source of research should be Chapter 4 of the Redbook. The table of contents for Chapter 4 should reveal whether your topic is covered. If the Redbook doesn’t hold your answer, go to www.gao.gov and use its search function against your key words. After that, expand your search to OMB Circulars, particularly Circular A-11. Finally, a global search of the Internet might lead you to the answer. Your agency’s office of general counsel is also a valuable source of information because it has access to a broad range of legal materials and the skills needed to search them.

NOTES

1. U.S. Government Accountability Office, Principles of Federal Appropriations Law, Volume I (GAO-04-261SP), Chap. 4, 4-6.

2. Ibid.

3. Ibid.

4. Ibid., 4-7.

5. Ibid.

6. Ibid., 4-9.

7. Ibid., 4-10.

8. Ibid., 4-12.

9. Ibid., 4-20.

10. Ibid.

11. Ibid., 4-21.

12. Ibid., 4-22.

13. Ibid., 4-23.

14. Ibid., 4-27.

15. Ibid., 4-28.

16. Ibid., 4-29.

17. Ibid., 4-30.

18. Ibid., 4-31.

19. Ibid.

20. Ibid.

21. Ibid., 4-33.

22. Ibid.

23. Ibid., 4-34.

24. Ibid., 4-36.

25. Ibid., 4-41.

26. Ibid., 4-37.

27. Ibid., 4-38.

28. Ibid., 4-39.

29. Ibid., 4-38.

30. Ibid., 4-44.

31. Ibid., 4-48.

32. Ibid., 4-50.

33. Ibid., 4-51.

34. Ibid., 4-100.

35. Ibid.

36. Ibid.

37. Ibid., 4-102.

38. Ibid., 4-103.

39. Ibid., 4-105.

40. Ibid., 4-106.

41. Ibid., 4-108.

42. Ibid.

43. Ibid., 4-115.

44. Ibid., 4-116.

45. Ibid., 4-120.

46. Ibid.

47. Ibid., 4-123.

48. U.S. Government Accountability Office decision, B-304718, November 9, 2005.

49. U.S. Government Accountability Office, Principles, Chap. 4, 4-135.

50. Ibid., 4-140.

51. U.S. Government Accountability Office decision, B-302993, June 25, 2004.

52. U.S. Government Accountability Office, Principles, Chap. 4, 4-132.

53. Ibid., 4-133.

54. Ibid., 4-134.

55. Ibid., 4-140.

56. Ibid., 4-142.

57. Ibid., 4-144.

58. Ibid., 4-145.

59. Ibid.

60. Ibid., 4-155.

61. Ibid., 4-156.

62. Ibid., 4-159.

63. Ibid.

64. Ibid., 4-160.

65. Ibid., 4-166.

66. Ibid., 4-169.

67. Ibid.

68. Ibid.

69. Ibid., 4-170.

70. Ibid., 4-167.

71. Ibid., 4-168.

72. Ibid., 4-176.

73. Ibid.

74. Ibid.

75. Ibid., 4-180.

76. Ibid., 4-179.

77. Ibid., 4-187.

78. Ibid., 4-234.

79. Ibid., 4-235.

80. Ibid., 4-236.

81. Ibid., 4-235.

82. Ibid., 4-234.

83. Ibid., 4-243.

84. Ibid., 4-245.

85. Ibid.

86. Ibid., 4-246.

87. Ibid., 4-250.

88. Ibid., 4-252.

89. Ibid.

90. Ibid., 4-257.

91. Ibid., 4-263.

92. Ibid., 4-262.

93. Ibid., 4-264.

94. Ibid., 4-259.

95. Ibid., 4-260.

96. Ibid., 4-265.

97. Ibid.

98. Ibid., 4-266.

99. Ibid., 4-269.

100. Ibid.

101. Ibid., 4-267.

102. Ibid., 4-268.

103. Ibid., 4-271.

104. Ibid., 4-272.

105. U.S. Government Accountability Office decision, B-307918, December 20, 2006.

106. U.S. Government Accountability Office, Principles, Chap. 4, 4-272.

107. Ibid., 4-274.

108. Ibid.

109. U.S. Government Accountability Office, Principles of Federal Appropriations Law, Volume III (GAO-08-978SP), Chap.12, 12-196.

110. Ibid., 12-197.

111. Ibid., 12-199.

112. U.S. Government Accountability Office, Principles, Chap. 4, 4-285.

113. Ibid., 4-286.

114. Ibid., 4-289.

115. Ibid., 4-296.

116. Ibid., 4-297.

117. Ibid., 4-298.

118. Ibid., 4-306.

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