U.S. Geological Survey Instructional Memorandum
No. APS 2004-13
Issuance Date: August 6, 2004
Expiration Date: September 30, 2005
Archive Date: October 24, 2008
Subject: Business Rules for Reimbursable Agreements with Other Federal Agencies
Reference: This IM has been replaced by the Financial Operating Procedures Handbook Chapter 4.2 Federal Agreements.
Instructions: This Instructional Memorandum (IM) replaces IM APS 2003-18. The changes in this IM are effective on the above Issuance Date.
1. Purpose. A. This IM describes and implements Office of Management and Budget (OMB) Memorandum M-03-01 "Business Rules for Intragovernmental Transactions" (Business Rules) applicable to reimbursable agreements with or orders from other Federal agencies (where the customer Federal agency is the buyer of U.S. Geological Survey (USGS) goods and services). In addition, the IM addresses the USGS goal of improving billing practices and billing more in line with the recognition of expenditures. For procedures covering transactions in which USGS is the "buyer"; i.e., USGS purchases goods and services from other Federal agencies, see SM 405.7, IM OAG 2002-01, and the interagency agreement decision tree.
B. New requirements include data elements required on all federal reimbursable agreements, data elements required on all federal bills, and time limitations for new federal reimbursable agreements. The IM provides a checklist for reimbursable agreements with Federal agencies (See Appendix A).
2. Background. A. The President's Management Agenda emphasizes E-Government as a key foundation for providing quality services to the public. To this end, the President, wanted to "address the most apparent deficiencies where the opportunity to improve performance is greatest". One such deficiency is intra-governmental transactions that the General Accountability Office has classified as a government-wide material weakness. A major contributing factor to this problem is the lack of standardization in processing and recording these transactions. As a step toward resolving this weakness, OMB and the Integrated Acquisition Environment (IAE) steering committee established basic requirements for processing and recording intragovernmental transactions. On October 4, 2002, OMB issued Memorandum M-03-01. The Business Rules mandate the use of common data elements to standardize the way government agencies process and record intragovernmental activities. The data elements include detailed information on points of contact with federal trading partners to facilitate the process of identifying and reconciling transactions.
B. In addition to the Business Rules, OMB and the IAE steering committee developed and are testing an electronic commerce portal that enables the exchange of acquisition and payment data to execute intragovernmental transactions. The Intragovernmental Transaction Exchange (IGTE) will be responsible for handling financial transactions for federal agencies that acquire goods or services from another federal agency. The Federal Agency Registration System supplies the portal system with information about each federal trading partner to each transaction, using the Dun and Bradstreet Universal Numbering System (DUNS) as the unique identifiers for individual federal locations. Use of the portal increases information about federal trading partners and will help to automate the eliminations process needed to prepare government financial statements. During testing, the portal was only used to process Information Technology orders that equal or exceed $100,000 per order or agreement and all General Services Administration (GSA) rent. OMB will issue further guidance in October 2004, after studying the results of the testing. Eventually, OMB envisions that all intragovernmental transactions will be processed and tracked through this central exchange system.
3. Preparing/Reviewing Reimbursable Agreements with Other Federal Agencies
A. Effective immediately USGS-initiated agreements for reimbursable work will be prepared using the required Appendix B data elements.
B. IM No. OFS 2002 - 007, "Guide for Reimbursable Agreements" issued a checklist for reimbursable agreements. The checklist attached as Appendix A is revised to include the elements needed for valid federal reimbursable agreements. To verify that each element is contained in the agreement, a cost center representative must initial by each item, and the Project Chief/Principal Investigator and the Cost Center Financial Reviewer must sign and date the form. Cost centers will be required to amend agreements when they do not contain the required data elements. To facilitate review of agreement documents, checklist preparers are required to record the document name and page numbers in the comments sections where the element appears in the agreement package. Headquarters cost centers must submit a signed copy of the reimbursable agreement and the signed Checklist to the Discipline Team Lead in the Office of Fiscal Services; and cost centers in regions must submit the same documents to the discipline Team Lead in the regional Branch of Fiscal Services. A copy of the signed Checklist must be filed with the agreement.
C. DUNS Numbering.
(1) The DUNS has been adopted Government-wide to identify all Federal entities buying and selling goods or services with other Federal entities. Therefore, it is required that Federal entities obtain a DUNS number. Once the DUNS number has been obtained, Federal agencies must register their information in the Business Partners Network (BPN). USGS has obtained and registered DUNS numbers for each USGS cost center. A list of USGS' DUNS numbers is available on the web at the following address:
(2) Each cost center is responsible for ensuring the accuracy of their respective BPN registration data. Revisions to your data should be forwarded to Hyma Nair in the Office of Accounting and Financial Management (OAFM).
(3) The applicable USGS DUNS number must be cited in the agreement/order and all billings.
D. Intragovernmental orders may not exceed 5 years nor can the performance period of an existing order be modified to go beyond 5 years. Agreements that have been in existence for 5 years as of the issuance date of this IM must be reissued or canceled prior to December 31, 2004. It is preferred that intragovernmental agreements do not exceed one year; however, if the agreement is for more than 3 years, then it should contain a provision for review within 3 years to determine the continuing need for the agreement and whether the agreement should be revised, renewed, or canceled.
E. Prohibition on Advance Payments. (1) Federal agencies shall not make or accept advance payments from other Federal agencies for service orders (e.g., stream gauging) unless explicitly required by law. Federal agencies may make and accept progress payments and periodic payments.
(2) Advances will be permitted for orders for goods (e.g., maps) that exceed $1 million. The advance may not exceed 50% of the order amount. Unless explicitly required by law, there will be no advances for orders for goods that are less than $1 million.
(3) For advance payments that are permitted, the buyer will record the payment as an "advance to USGS." USGS will record the payments as an "advance from [the customer agency]". The cost center will provide monthly status reports to the buyer (customer) reflecting revenue earned. As USGS makes expenditures, using part of the advance, and reports to the buying agency, the buyer and USGS will make appropriate adjustments to their respective accounts.
(4) OAFM will not accept payments from Federal agencies that create advances. If a cost center bills a Federal agency for an amount greater than the expenditures incurred and the Federal agency tenders payment, OAFM will place the overpayment/surplus in a suspense account and act to return it to the customer. IM APS 2004-08 describes the procedures for identifying advance payments from other Federal agencies and for returning advance payment to Federal agencies.
F. When the buying agency cancels an intragovernmental order that has been accepted by USGS, USGS is authorized to collect costs incurred prior to cancellation of the order plus any termination costs.
4. Identifying Intragovernmental Transactions in FFS.
A. The buying agency will assign each intragovernmental order a number. The order number assigned by the buying agency is the document control number (DCN). Agencies may not assign the same DCN to more than one order.
B. When acting as the selling agency, the USGS will record the buyer's intragovernmental order number (i.e., DCN) in BASIS + and the Federal Financial System (FFS). The buying agency's DCN will be the reimbursable agreement number in BASIS + and FFS.
5. Billing Federal Agencies for Goods and Services.
A. In the auditor's report on our FY 2003 Financial Statements, KPMG noted that our controls over accounts receivables and deferred revenue related to reimbursable agreements were inadequate. KPMG recommended that we standardize our agreements and develop consistent billing practices that permit recovery of unbilled accounts as expenditures are incurred. Billing practices should be more in line with the bureau's normal vendor payment cycle, which is currently 30 days as required under the Prompt Payment Act.
All future reimbursable agreements with Federal agencies will require that expenditures be billed on a monthly, quarterly, semi-annual, or annual basis. Monthly or quarterly billings are preferred. The "end of project" or "upon delivery" billing cycles will no longer be used for reimbursable agreements with Federal customers. In addition, the "final" bill for expenditures will be issued according to the terms of the agreement but not later than the month-end billing cycle after delivery of the goods or services provided. Therefore, all associated open documents must be paid or accrued by the end of the performance period of the agreement. To facilitate this process purchase orders charged to reimbursable accounts must have completion dates that do not occur after the reimbursable agreement's performance period. Where cost centers have established agreements to be billed via PC-Bill, the bill will be issued at the next billing cycle.
By adopting the business practice of timely billings, we improve the accuracy of our quarterly financial statements and maintain the relevance and value of financial information management uses to control operations and make decisions.
B. During fiscal year 2004, USGS cost centers and Fiscal Services offices began setting up new agreements with Federal customers to use PCBill. This practice will continue during subsequent fiscal years. PCBill, an automated feature of FFS, is used to facilitate the process of billing Federal reimbursable agreements coded for automated bills. For customers that accept automated bills through the Treasury's Inter-governmental Payment and Collection (IPAC) system, PCBill will automatically generate the IPAC billing documents without the need to enter information into FFS. The Instructions for PC Bill can be found at the following APS website:
Through PCBill, FFS generates bills in accordance with the terms of the agreement and based on expenditures incurred since the last bill. As a result, PCBill eliminates billing another Federal agency based on obligations and thus eliminates advance payment to USGS.
C. Until further notice, USGS will process intragovernmental bills through the IPAC system.
D. Only the responsible billing party may initiate the IPAC transaction. Responsibility for initiating the IPAC transfer may be negotiated between the buyer and USGS, and the responsible billing party must be explicitly stated on the order. If no responsible billing party is specified in an agreement or order initiated by a Federal customer, then USGS, as the seller will be deemed the party responsible for initiating the IPAC transfer.
E. In addition to other required elements, an IPAC transaction includes the buying agency's DCN, the agency location code, the DUNS number for the buyer's site location, the appropriation symbol associated with the account from which the buying agency will make payment, USGS' bill number, site-specific DUNS number, and the appropriation symbol associated with the account to which USGS will record the collection. All data elements required on a bill are listed in Appendix C.
The cut-off date for new bills for each fiscal year will be in accordance with the operating schedule. Revenue that is earned but not billed will be recorded as an accrued asset and USGS will provide a detailed notification of the revenue recognized to the buyer within five business days after the end of the fiscal year. The buyer will recognize an equivalent expense or asset and will record an accrued liability for the future payment. There will be no intragovernmental, unbilled accounts receivable for USGS at year-end.
USGS cost centers must follow the Federal guidelines described above for billing other Federal agencies as well as the SM 336.1, Billing Other Federal Agencies.
6. Resolving Disputes with Federal Agencies
The buying agency and USGS are expected to resolve any dispute within 30 business days of the billing date using existing dispute mechanisms identified in the interagency agreement/order. If the dispute cannot be resolved using these mechanisms, then the matter must be referred on the next business day to a dispute resolution task force for a binding decision. Administrative costs and penalties may be levied on the agencies involved in the dispute referral.
7. Other Guidance
When processing intragovernmental orders, USGS cost centers should also observe the following internal directives:
SM 500.3: Policy on Work for Other Federal Agencies
SM 205.13, Appendix A: Delegation of Authority to Enter into Agreements and Accept Contributions
IM OFM 2003-08: Allocating Burden from Reimbursable Accounts
IM OFM 92-02: Interagency Billings and Payments
IM APS 2004-02: Entering Agreements in the Budget and Science Information System Plus - BASIS+
(signed) Karen D. Baker for Carol F. Aten
Chief, Office of Administrative Policy and Services
A: Checklist for Reimbursable Agreements with Federal Customers
Appendix B: Required Data Elements for Intragovernmental Orders
Appendix C: Required Data Elements for Intragovernmental Bills