4 FAM 050
OBLIGATION VALIDITY CRITERIA
(CT:FIN-453; 07-03-2019)
(Office of Origin: CGFS/FPRA/FP)
4 FAM 051 POLICY AND PURPOSE
(CT:FIN-451; 06-27-2019)
This subchapter provides the fiscal policy for evaluating
the validity of obligations incurred and the specific requirements and/or
procedures relative to this policy. It is applicable for day-to-day operations
and year-end closings.
4 FAM 051.1 Legal Background
(CT:FIN-451; 06-27-2019)
The authority to incur liabilities on behalf of the United
States of America originates with the Constitution itself and in laws passed
and amended from time-to-time as well as the statutory authority of the
Comptroller General to issue regulations and render decisions which have the
effect of law. For authority to obligate, see 4 FAM 080,
Administrative Control of Funds, which includes the provisions of section 1311
(31 U.S.C. 1501) of Public Law 663, 83d Congress (Supplemental Appropriation
Act of 1955), as amended. This law provides that no amount shall be recorded
as an obligation unless it meets specific criteria and that statements of
obligations furnished to the Congress or to any of its committees shall include
only amounts representing valid obligations as so defined.
4 FAM 051.2 Rules for Use of Funds
(CT:FIN-451; 06-27-2019)
a. The use of funds is governed by specific legal
authority and is represented by various types of transactions and related
documents which are executed by duly authorized officers. The documents must
indicate the amounts to be expended or legally reserved for the performance of
services and/or the acquisition of real or personal property. These rules
apply equally to grants and administrative claims.
b. The general rule for lawfully obligating funds is
that the items or services ordered must fill a bona fide need for the fiscal
year in which the purchase or service is established, including stock
replenishment, and that the obligation is not incurred at a date earlier than
is necessary for the successful conduct of the Governments business.
c. The authority to obligate under a joint resolution
carries with it the criteria applicable to the appropriation for funds covered.
4 FAM 052 OBLIGATION TYPES AND
DOCUMENTS
4 FAM 052.1 Applicability
(CT:FIN-451; 06-27-2019)
Obligations incurred are defined as amounts of orders
placed, contracts awarded, services rendered, and similar transactions during a
given period requiring the expenditure of funds. Such amounts include payments
not preceded by recorded obligations, except travel advances, and reflect
adjustments for differences between obligations and actual payments. In those
cases where the exact amount of an obligation is not known at the time it is
incurred, the best estimate of the amount to be paid subsequently is used.
4 FAM 052.2 Obligation Types
(CT:FIN-451; 06-27-2019)
a. The amounts obligated are subject to adjustment up
to the time of final settlement and must be adjusted as changes become known. When
it is anticipated that an obligation applicable to a specific month is to be
liquidated within the same month, it is permissible to record the obligation
concurrently with the liquidation. However, all obligations must be recorded
to the accounting records prior to the end of the reporting period, including
those to be liquidated in subsequent reporting periods.
b. Obligations are classified primarily as:
(1) Recurring, or of a repetitive nature, covering
amounts on either an estimated or fixed basis. Examples are:
(a) Payrolls;
(b) Rental of facilities or equipment;
(c) Utilities and communications; and
(d) Custodial and other contractual services; and
(2) Nonrecurring, one-time or occasional transactions,
covering amounts on either an actual or estimated basis.
4 FAM 052.3 Obligation Documents
(CT:FIN-453; 07-03-2019)
The following are commonly used obligating documents, most of which have been incorporated as virtual forms
within the Department's financial management system:
(1) Form OF-245, Miscellaneous Obligation Document
(MOD), for recurring obligations and also for use as a control sheet where
multiple payments are involved regarding a nonrecurring obligation. The MOD is
used primarily at posts. Other formats are used at regional centers and
domestically under automated procedures. The practice of covering every
obligating document under manual operations with a MOD is optional, but is
discouraged;
(2) Form DS-2076 (formerly OF-206), Purchase Order,
Receiving Report and Voucher, is a general purpose document (for overseas use
only) for most nonrecurring obligations;
(3) Form JF-144 (formerly OF-144 and DS-144),
Temporary Duty (TDY) Official Travel Authorization, for other than (1)
assignment travel or (2) continuous or intermittent travel covered by a
memorandum;
(4) Form SF-1103, U.S. Government Bill of Lading
International and Domestic Overseas Shipments, for shipment of Government-owned
property, including subsequent conversion from commercial and ocean bills of
lading. The latter also serve as obligating documents. Carrier transportation
of employee effects under any type of bill of lading is obligated as part of
the official authorization;
(5) Other obligating documents include contracts,
agreements, and memoranda. Forms may differ because of special requirements
including source data automation and other automated data processing.
4 FAM 053 CATEGORIES OF OBLIGATIONS
(CT:FIN-451; 06-27-2019)
The major categories of obligations are listed below in
the sequence of the object classes prescribed by the Office of Management and
Budget. Four digit object categories (object and subobject) for Department of
State use are contained in 4 FAH-1, Department of State Account Structure and
Classifications Codes. Specific criteria for the application of accounting
classification codes to funding, obligation, liquidation and adjustment
documents, and the level at which both obligations and liquidations are
established are set forth under 4 FAH-1 H-100. Expenses
applicable to all object categories are defined in 4 FAH-1 H-600.
4 FAM 053.1 Personal Services and
Benefits
(CT:FIN-451; 06-27-2019)
a. Fund managers or financial management officers
responsible for allotments and/or operating allowances, containing funds for personal
services and benefits, must ensure that monthly cost estimates for all such
items of expense are prepared.
b. Monthly cost estimates for personal services and
benefits should:
(1) Be prepared at the beginning of each month;
(2) Determine relationship of cost to the approved
financial plan; and
(3) Document obligations during the accounting period
on the appropriate formats.
c. Estimated obligations are supported by notices of
personnel actions reflecting accessions and separations, time and attendance
records, and other appropriate source data, such as within-class and
within-grade salary increases, pay act increases, and overtime authorizations. Consideration
must be given to the following factors in determining amounts to be obligated:
(1) Regular pay, based on the product of the average
daily rate of pay obtained from the latest available pay period, multiplied by
the number of working days and paid holidays occurring within the month.
(2) Night differential, Sunday and holiday pay, and
regularly scheduled overtime, whether paid on regular or supplementary
payrolls.
(3) Lump-sum leave, severance pay, Christmas bonus
(for some locally employed staff), and other periodic lump-sum payments, when
it is known that employee(s) will be separated and/or when payments are due
during the month.
(4) Benefits including allowances, where applicable,
and employers contributions.
(5) Miscellaneous overtime, part-time, When Actually
Employed (WAE), and temporary pay at applicable rates in accordance with approved
administrative procedures.
d. The estimated obligations are adjusted as required
to reflect the latest liquidations (payroll vouchers supported by computed
payrolls). Total obligations and expenditure transactions, applicable to
payroll periods beginning in one fiscal year and ending in another, are
prorated between the two fiscal years on the basis of the number of working
days occurring within each fiscal year. However, lump-sum leave and lump-sum
severance payments are charged in their entirety to the appropriation current
at the effective date of separation of the employee.
4 FAM 053.2 Travel Abroad
(CT:FIN-451; 06-27-2019)
a. This category includes travel and transportation of
personnel as well as transportation of things and transportation services,
related to employees personal effects, such as unaccompanied baggage (UAB),
household effects (HHE), and privately owned vehicles (POV). It includes both
temporary duty (TDY) travel and post assignment travel (PAT) involving points
of origin and destination and enroute travel. It excludes domestic travel
confined within or between the 50 States and the District of Columbia.
b. International PAT is centrally obligated in
Washington on an individually priced average-cost or cost-factor basis, depending
upon the fund involved.
c. The amounts established are construed as valid
obligations chargeable to the fiscal year in which the authorization is issued
and obligated, provided an expense is incurred prior to midnight September 30
in the same fiscal year as the obligation, and travel must begin (departure)
within the first quarter of the following fiscal year (no later than December
31).
d. The purchase of personnel transportation in one
fiscal year, where the actual departure begins within a reasonable period of
time in the following fiscal year, provided an expense is incurred prior to
midnight September 30, is construed as an obligation in the fiscal year of
purchase. The phrase reasonable period of time is construed to be within the
first quarter of the following fiscal year. This means that travel (departure)
must begin no later than December 31.
4 FAM 053.2-1 Permanent Change of
Station (PCS) Travel
(CT:FIN-451; 06-27-2019)
a. The incurred expenses include, but are not
necessarily limited to, inoculations, passport photos, passport fees, health
certificates, copies of birth and/or marriage certificates, purchase of
personnel transportation, transportation services (packing, hauling, storage,
delivery, etc.), and transportation of things (UAB, HHE, and POV).
b. Storage under the Personnel Action and Travel
Authorization (TMFOUR) is limited to initial placement into storage or
temporary storage awaiting shipment. See continuous storage (4 FAM 054.2
(1) and (2)) for excluded storage under TMFOUR.
4 FAM 053.2-2 Temporary Duty
(TDY) Travel Abroad
(CT:FIN-451; 06-27-2019)
This covers TDY abroad under official travel orders for
individuals, or under authority of a continuous or intermittent authorization
(couriers, inspectors, etc.), covered by telegram or memorandum. The amounts
established are construed as valid obligations chargeable to the fiscal year in
which the authorization is issued and obligated, provided an expense is
incurred prior to midnight September 30 in the same fiscal year as the obligation,
and travel must begin (departure) within the first quarter of the following
fiscal year (no later than December 31). For TDY abroad at fiscal year end,
Department policy requires the purchase of airline tickets prior to fiscal year
end (September 30).
4 FAM 053.2-3 Transportation
Supporting Documentation
(CT:FIN-453; 07-03-2019)
Supporting documentation, in the form of
sub-authorizations, consists of Forms OF-1169,
U.S. Government Transportation Request, for personnel transportation; SF-1103,
U.S. Government Bill of Lading (GBL) International and Domestic Overseas
Shipments, for transportation of personal effects (UAB, HHE, and POV),
commercial or ocean bills of lading; Form DS-2076 (formerly OF-206), Purchase
Order, Receiving Report and Voucher, in lieu of the foregoing, or other forms
as appropriate. In any case, these sub-authorizations are not obligation
documents, but support the basic obligation.
4 FAM 053.3 Transportation of
Things
(CT:FIN-451; 06-27-2019)
a. Government property being transported is an
obligation at the time shipment is turned over to the carrier. The amount of
the obligation must include all costs while in the hands of the carrier.
b. Government property being transported is represented
by Forms DS-2076 and SF-1103, commercial or ocean bills of lading, or
equivalent, and is an obligation at the time shipment is turned over to the
carrier. The amount of the obligation includes all costs while in the hands of
the carrier. Where a shipment is made by other than GBL (SF-1103) and
subsequently converted to a GBL, the obligation must be as of the date of
receipt of shipment by the carrier and not the date the GBL is issued
c. Personal effects are covered by sub-authorizations
under the basic travel authorization, using the same type of documents referred
to in paragraph b, above.
4 FAM 053.4 Transportation Services
(CT:FIN-451; 06-27-2019)
Packing, crating, handling, hauling, storage, unpacking,
delivery, and other such items of expense (including processing of motor
vehicles for shipment or delivery) are covered as follows:
(1) Government property is not involved when shipment
is Freight on Board (F.O.B.) destination and the purchase price includes
transportation services. If not F.O.B. destination, transportation services
are covered by Form DS-2076 or equivalent document, which is a valid obligation
at the time it is issued;
(2) Personal effects are covered by sub-authorizations
under the basic travel authorization. Sub-authorizations for transportation
services are covered by Form DS-2076 (for use in foreign countries only) and
DS-1573, Packer's Authorization; and
(3) Enroute transportation services are included under
4 FAM 053.3,
and cover temporary storage, repacking, etc., while in the hands of a carrier.
4 FAM H-053.5 Rentals
(CT:FIN-451; 06-27-2019)
Rentals are obligated on the basis of contracts, leases,
and agreements for the occupancy of facilities and/or use of equipment. Since
rentals are normally of a recurring nature, the Miscellaneous Obligation
Document (MOD) is used and supported by the basic document. Obligations are
established as follows:
(1) Prepayments are obligated at the time the document
is executed where the basic document stipulates an advance payment, even though
extending into future years;
(2) Periodic payments are obligated at the beginning
of the period when each payment is due, where the basic document stipulates
periodic payments; and
(3) Termination payments are obligated in accordance
with the stipulations of the basic document. Where an amount other than a
repayment is stipulated as due on termination, it is obligated at the time of
the agreement.
4 FAM 053.6 Communications and
Utilities
(CT:FIN-451; 06-27-2019)
Obligations for communications and utilities are represented
by various forms of contracts, leases, agreements, published rates, monthly
billings, etc. Expenses are usually obligated on the basis of monthly
estimates using the MOD. In the absence of a binding agreed-to amount,
obligations are estimated on the basis of past experience subject to
adjustment. Where monthly bills are submitted, the amounts can be concurrently
obligated and liquidated in the month of payment rather than estimated in
advance and adjusted at time of payment; this applies whether the bill covers
all or part of a prior month or even extends over two fiscal years:
(1) Communications include telephone, telegraph,
Internet, postage, and under certain circumstances, contractual personal
services and use-rental of equipment; and
(2) Utilities include purchased water (except bottled
water), electricity (power and light), gas (except bottled gas), and sanitation
services (sewerage, drainage, garbage and, trash removal).
4 FAM 053.7 Purchasing
(CT:FIN-451; 06-27-2019)
Obligations are required for the acquisition of supplies,
material, equipment, and contractual services under procedures (not requiring
formal contracts). Upon authorization of acquisition of supplies, material,
equipment and contractual services, obligations occur as indicated below:
(1) Standard procurements are obligated follows:
(a) Requisitions (using Form DS-2092, formerly OF-263,
Requisition for Equipment Supplies, Furniture, etc., and Services, or other
authorized forms) are an obligation only when submitted to other U.S.
Government agencies for catalog stock or mandatory source items, as well as
Working Capital Fund (WCF) items. Otherwise, the Requisition is a request
for procurement action and, as such is not an obligation until a purchase order
is issued. Mandatory items are those which are purchased from specified
sources;
(b) Job orders, when used, are construed the same as
requisitions;
(c) Purchase orders, Form DS-2076 (formerly OF-206),
OF-347, Order for Supplies or Services, and other documents including SF-1449,
Solicitation/Contract/Order for Commercial Items, SF-26, SF-30, SF-33, etc. are
obligations at the time they are issued: the term issued carries with it the
provision that it is duly approved by a contracting officer and validated as to
funds being available. The amounts shown may be estimated or actual; however,
they are subject to adjustment at the time services are rendered and/or the
goods are delivered. The execution of a purchase order carries with it the
bona fide intent of the contractor or supplier to fulfill the stated
requirements;
(d) Subscriptions for periodicals are obligated at the
time of issuance of a purchase order covering specific periods of time that may
extend beyond the end of the fiscal year; and
(e) Printing purchase orders are not valid obligations
unless the manuscript or copy is submitted concurrently;
(2) Special procurements are obligated as follows:
(a) General Services Administration (GSA) items are
procured by Form DS-2092 or OF-347 placed directly with GSA, for stock catalog
items; these are obligations as of the time the requisition is issued;
(b) GSA special procurement of non-stock items is not an
obligation until the date of the award, as notified by GSA that a contract has
been awarded; the obligation may include both packing and shipping charges;
(c) Public Health Service (PHS) items requisitioned from
the Public Health Service Supply Center, for stock catalog items, are
obligations at the time the requisition is issued. They may include packing
and shipping charges;
(d) Petty cash purchases are obligated monthly by the
MOD on an estimated basis, and subject to month-end adjustments based on
replenishment vouchers or a review of unprocessed petty cash receipts. Cashier
expenditures come under the same provisions. Prompt submission of
replenishment vouchers is essential at fiscal year-end; and
(e) Blanket Purchase Agreements (BPA) are not valid
obligating documents. Obligations are established monthly by MOD on an
estimated basis similar to paragraph (d), above. Orders are placed against the
BPA by authorized ordering officials.
4 FAM 053.8 Contracting
(CT:FIN-451; 06-27-2019)
a. Contract obligations are fixed-price contracts or
cost type contracts.
b. Contract obligations are governed by the following:
(1) Fixed-price contracts, where the total amount is
stated, are obligations at the time of execution. When a statement is included
as to fund availability, only that portion (for which funds are available) is
an obligation at the time of execution; the balance of the contract becomes an
obligation when validated as to fund availability;
(2) Escalation, price redetermination, or incentive
clauses, when contained in a contract, are subject to prevalidation of fund
availability; only the full stated amount, not subject to these special
clauses, is an obligation. Any amounts under special clauses are obligations
when the special clauses are determined to apply;
(3) Cost-type contracts are obligated in the estimated
amount of the total contract at the time of execution; any increases are
subject to prevalidation of fund availability;
(4) Indefinite delivery, open-end or option contracts
do not represent an obligation at the time of execution, except to the extent
of any required minimum purchase guarantee; only such amounts supported by a
subsequent purchase order, job order, requisition, or other purchasing document
represent obligations as they come into being;
(5) When a letter contract is sufficiently specific as
to coverage and evidenced by acceptance, the stated amount is obligated when
the document is executed; and
(6) For over-run and under-run contracts where a
specific quantity is designated, but containing provisions as to performance
and/or delivery for a greater or lesser amount/quantity under normal commercial
practice, the stated amount is an obligation at the time the document is
executed. Any increase is subject to prevalidation of fund availability.
4 FAM 053.9 Miscellaneous Other
(CT:FIN-451; 06-27-2019)
In addition to the foregoing, the following items apply as
appropriate:
(1) Representation expenses are obligated on the basis
of past experience on the Miscellaneous Obligation Document (MOD), and are
reflected by the special function codes as provided for in 4 FAH-1 H-500. When
the officers expenditures exceed available funds, the obligation is adjusted
on the basis of quarterly funds availability;
(2) Official residence expenses are obligated on an
estimated basis, usually monthly, by means of the MOD;
(3) Other expense items not specifically provided for
elsewhere are obligated on an estimated basis (by means of a MOD or other
appropriate document), and subject to adjustments based on progressive
experiences;
(4) Payable claims are obligations at the time of
approval and certification by the duly authorized officer; and
(5) Litigation liability constitutes an obligation
when a written statement is executed by a contracting officer that states an
amount as a contingent liability in existence and under pending litigation; the
amount is subject to adjustment at the time of settlement.
4 FAM 054 SPECIAL DOMESTIC CRITERIA
(CT:FIN-451; 06-27-2019)
In addition to the foregoing items, which are applicable
to both travel abroad and domestically, the following apply to domestic
obligations.
4 FAM 054.1 Domestic TDY Travel
(CT:FIN-451; 06-27-2019)
a. Per diem and other expenses involving two fiscal
years are charged to the respective fiscal year in which actually incurred. The
exception is that personnel transportation is chargeable to the fiscal year in
which travel begins (including transportation involving the following fiscal
year) if purchased in the prior fiscal year; i.e., return portion of a
round-trip ticket. However, additional personnel transportation purchased in
the subsequent fiscal year is chargeable to the fiscal year in which the
additional expense is incurred.
b. As opposed to travel abroad, both assignment travel
and TDY travel expenses within or between the 50 States and the District of
Columbia are applicable to the year in which incurred.
4 FAM 054.2 Transportation Services
of Personal Effects
(CT:FIN-451; 06-27-2019)
The obligation for transportation services related to
employee and dependent assignment to, from, or between overseas locations involves
the following domestic transactions not provided for under 4 FAM 053:
(1) Continuous storage domestic, beyond the initial
placement into storage, is obligated quarterly in the fiscal year of storage
(based on in-place inventory listings by the storage company and by the
employee) and the adjustment is based on liquidations. This is provided for
under a special domestic, centrally controlled, automated procedure.
Continuous storage includes permanent, continuing (taken over as part of an
interagency transfer of an employee) and storage renewal. It excludes
temporary storage while awaiting shipment;
(2) Continuous storage abroad is centrally obligated
domestically by post of storage with non-obligated sub-authorizations
(effected overseas between the post and the storage company), and payments made
against the centrally controlled account; same type of coverage as in paragraph
(1), above;
(3) Residence-to-residence is included under the
obligating procedure of the TMFOUR assignment travel process;
(4) Privately owned vehicle (POV) transportation
services between residence and port of embarkation or debarkation are covered
under the TMFOUR authorization, and include preparation for shipment, and/or
delivery and drive-away services; and
(5) Form DS-1573, Packer's Authorization is used
domestically as a sub-authorization for packing, crating, hauling, initial or
temporary storage. It is a sub-authorization, under the TMFOUR as well as the
control document (for placements into and withdrawals from storage) under the
special Continuous Storage Domestic procedure referred to in paragraph (1),
above.
4 FAM 054.3 Other Agency Items
(CT:FIN-451; 06-27-2019)
a. Obligations are required for GSA self storage; GSA
mandatory items; Public Building Services (PBS), as required by law or
regulation; Public Building Services nonmandatory items; and other agency items
such as Government Printing Office, Federal Prison Industries, or Public Health
Service Center as required by law and regulations.
b. Special domestic other agency items are:
(1) GSA self service storage, for which purchases are
obligated monthly on an estimated basis (using prior experience as a guide) and
adjusting to actual credit card purchase from monthly bills rendered;
(2) GSA mandatory items, required by law and
regulation to be purchased from GSA, are obligated on the basis of requisitions
(Form DS-2092, formerly OF-263) submitted to them;
(3) PBS mandatory building services, as required by
law or regulation, are obligations at the time of requisition, job order or
work order submitted to PBS. Included are the operation, maintenance,
alterations, and other services for buildings. Amounts are obligated
either on a firm price or estimated basis;
(4) PBS non-mandatory items cover services that PBS is
in a position to render but not required to furnish. Such services are
furnished, on a request basis, by means of a memorandum, requisition, work
order, or equivalent. However, an obligation does not exist until PBS executes
a contract or issues a work order; the amount specified is an obligation as of
the date of their issuance or the contract or work order against an
open-contract or a specific new contract; and
(5) Other agency items include, but are not
necessarily limited to (a) Government Printing Office, (b) Federal Prison
Industries, or (c) Public Health Service Supply Center, where required by law
or regulation. Under these circumstances, the obligation exists at the time
the requisition or request is submitted to the other agency.
4 FAM 054.4 Working Capital Fund
(WCF)
(CT:FIN-451; 06-27-2019)
WCF items, except for year-end requisitions, are governed
by the provisions of 4 FAM 053.7,
Purchasing.
4 FAM 054.5 Grants and Subsidies
(CT:FIN-451; 06-27-2019)
Grant and subsidy agreements are obligations in the
amounts stated in the documents at the time of execution.
4 FAM 054.6 Miscellaneous Items
(CT:FIN-451; 06-27-2019)
Other items, represented by any form of document issued by
a duly authorized official, are obligations at the time the document is issued,
whether the stated amount is estimated or actual.
4 FAM 055 THROUGH 059 UNASSIGNED