May 21 / Rob Persons

Reimbursable Work Defined: What It Is, Why Agencies Use It, and the Economy Act

If you are new to federal reimbursable work, the terminology alone can be a barrier. Sellers, buyers, offsetting collections, anticipated reimbursements, the Economy Act. This post takes the time to define each piece carefully so the accounting (covered in the no-advance walkthrough) actually makes sense when you get there.
This is part of a larger guide. The main pillar post on federal reimbursable work gives you the high-level picture if you want context first.

The simple definition

Federal reimbursable work is when one federal agency provides goods or services to another federal agency and is paid back for that work.
That is the whole concept. The complications come from how the budget authority is structured, how the accounting entries have to mirror across two sets of books, and how revenue recognition has to follow accrual rules. We will work through each.
The federal government is enormous, and some agencies are genuinely better at certain things than others. The FBI and components of DOD and DHS run background checks at scale. NASA has launch capacity. Treasury's Bureau of the Fiscal Service runs shared financial services. When another agency needs that capability, it does not always make sense to build it from scratch. Reimbursable work is the mechanism that lets the requesting agency pay for the service while the providing agency does the work.

What a reimbursable agreement actually is

A reimbursable agreement is a mutually agreed arrangement between two federal entities that spells out:
• Scope. What goods or services are being provided.
• Terms and conditions. The general rules of engagement between the agencies.
• Deliverables and timing. When the work happens, what gets delivered, and to what standard.
• Payment mechanics. How and when the buyer reimburses the seller. This includes whether there is an advance.
In practice, most modern reimbursable agreements are documented in Treasury's G-Invoicing platform. G-Invoicing is where agencies record their general terms and conditions (GT&Cs) and place orders against them. The reason it matters is that G-Invoicing keeps buyer-side and seller-side records in sync, which makes intragovernmental elimination at the consolidated level dramatically cleaner than it used to be.

The two roles: buyer and seller

Every reimbursable transaction has two sides, and the accounting only works if both sides get their entries right.
The seller (also called the provider or servicing agency) performs the work. They pay their staff, pay their contractors, buy their supplies, and deliver the service. They are the ones earning the revenue.
The buyer (also called the ordering agency or requesting agency) needs the service. They place the order, they fund it through their own appropriation, and they pay the seller after the work is performed (or in advance, depending on the agreement).
The reason this distinction matters so much is that the budget authority is different on each side.
Role Budget authority used Where the money comes from
Buyer Appropriation Congress directly
Seller Spending authority from offsetting collections The buyer's payment

The seller is not spending its own appropriation to perform reimbursable work. The seller is spending against a separate type of budget authority that only becomes available once the buyer's order comes in. This is the single most important conceptual point in reimbursable accounting.

What reimbursable work is not

Three things people sometimes confuse with reimbursable work:
It is not a grant. A grant is one entity transferring funds to another to accomplish a purpose, with no expectation of goods or services flowing back. Reimbursable work involves an exchange: the seller delivers something specific in return for payment.
It is not a standard FAR procurement. Reimbursable work is an agreement between two federal agencies, not between an agency and a commercial contractor. There is no competitive bidding process. The Federal Acquisition Regulation does not apply to the inter-agency agreement itself (though it may apply to contracts the seller has in place to actually perform the work).
It is not a direct appropriation for the seller. This is the trap. Even though the seller has new money flowing in from the buyer, that money does not get recorded as appropriation. It flows through as spending authority from offsetting collections. The apportionment schedule and the budget execution reports treat the two very differently.

Why agencies use reimbursable work

Four practical reasons drive most reimbursable work across the federal government.

Shared services

Some agencies operate as centers of excellence for specific functions. Treasury's Bureau of the Fiscal Service handles financial management services for dozens of agencies. The Department of the Interior's Interior Business Center handles human resources and acquisition support. Instead of every agency building its own version of these capabilities, agencies pay an existing provider to handle it.

Specialized capacity

Background checks are the textbook example. The FBI, OPM, and certain DOD and DHS components have the infrastructure, the cleared personnel, and the databases to do background investigations at scale. If you are the Department of Agriculture, you do not stand up a parallel capability. You pay the agency that already has it.

Procurement efficiency

If ten agencies all need the same specialized service, you can end up with ten contracting officers running ten parallel solicitations. That is a tax on the entire federal government. Concentrating the procurement in one agency, and letting other agencies buy through that vehicle on a reimbursable basis, removes the duplication.

Avoiding duplication

This is really the umbrella reason. The federal government is large enough that without some mechanism for one agency to leverage another's capabilities, every agency would be building everything in-house. Reimbursable work is the lubrication that lets specialization actually function across agency boundaries.

The legal foundation: the Economy Act

You cannot just decide to start doing reimbursable work. The authority comes from public law. The most common authority is the Economy Act, codified at 31 U.S.C. § 1535. Agencies can also operate under specific statutory authorities outside the Economy Act when Congress has authorized them to provide services to other agencies (NASA's space act agreements and certain DOD authorities are examples).
Under the Economy Act, three conditions have to hold before one agency can order from another.

Condition 1: Best interest of the government

The arrangement has to be in the government's overall interest. This sounds like boilerplate, but it is a determination that has to be made and supported. It is not "we already have a relationship with that agency, so it must be fine."

Condition 2: Cannot be obtained as conveniently or economically by contracting

This is the condition people gloss over most often. If a commercial contract through the FAR would be faster and cheaper, you cannot route the work through another agency just because the relationship is convenient.
The Economy Act is not an easy button to avoid contracting. The fact that another agency is willing to do the work does not, by itself, justify using the Economy Act.

Condition 3: One of three specific situations

At least one of these has to be true:
• The order is placed under an existing contract that the servicing agency already holds.
• The servicing agency has the capacity to perform and the requesting agency does not.
• The servicing agency is specifically authorized by law or regulation to provide the goods or services to other agencies.
The last bullet is what authorizes most shared services arrangements. Treasury, OPM, GSA, and others have statutory authorities to provide specific services to other agencies, which removes the second-condition analysis for those arrangements.

Common examples of reimbursable work

A non-exhaustive list of what reimbursable work looks like in practice:
• Launch services. NASA providing rocket launches for satellites owned by other agencies (this is the example used in the no-advance accounting walkthrough)
• Background investigations. FBI, OPM, DOD, and others performing investigations for requesting agencies
• IT support and infrastructure. Some agencies provide cloud hosting, cybersecurity monitoring, or specialized IT services to others
• Training. Agencies with specialized training capabilities (FLETC for law enforcement, for instance) delivering training to other agencies
• Financial management shared services. Payroll, financial reporting, accounting operations
• Engineering and scientific support. Agencies with technical expertise providing analysis or development support

Why the accounting matters more than it looks like it should

Once you understand the buyer-seller setup and the legal foundation, the next question is why reimbursable accounting causes so many problems. Four reasons.

Budget authority is different on each side

The buyer is using appropriation. The seller is using spending authority from offsetting collections. These look different on the SF 132, behave differently in apportionment, and report differently on the SF 133 and Statement of Budgetary Resources.

Revenue accounting is unusual in government

Most federal accountants spend most of their time on the spending side. Revenue accounting is comparatively rare, and reimbursable work is one of the few places it shows up at scale. The accrual rules for revenue recognition (earned when the service is performed, not when billed) are well established but routinely violated in practice because some legacy systems were built around billing-based recognition.

Buyer-seller entries have to mirror

The federal government consolidates its financial statements. A payable on Agency A's books has to match a receivable on Agency B's books, or the consolidation does not eliminate. This is why Treasury invested in G-Invoicing in the first place.

Internal controls and the apportionment process

The seller cannot just accept orders and start spending. There is a sequence: anticipate the reimbursable authority, get it apportioned, allot it, then obligate against it. Skip a step and you have an Antideficiency Act risk.

What is coming next

Now that you have the definitions, the legal foundation, and the conceptual framework, the next step is to see the accounting flow end to end. The no-advance walkthrough takes the NOAA-NASA launch services example and works through every USSGL entry from initial appropriation through year-end closeout. A third post (coming soon) covers the same flow with an advance, which changes the entries meaningfully.

Frequently asked questions

What does it mean to be the seller in federal reimbursable work?

The seller (also called the provider or servicing agency) is the agency that performs the work in a reimbursable agreement. The seller pays its staff and contractors, buys supplies, and delivers the service. The seller earns the revenue and records the accounts receivable. The seller does not use its own appropriation to perform the work. It uses spending authority from offsetting collections, which depends on the buyer's order coming in.

Why can't an agency just use its appropriation to perform reimbursable work?

Appropriations are the budget authority Congress provides for an agency's direct mission. Reimbursable work is, by definition, work performed for another agency, funded by that other agency's payment. If the seller used its own appropriation, the buyer's payment would have nowhere to go in the budget structure and the transaction could become an Antideficiency Act issue. Spending authority from offsetting collections is the separate type of budget authority designed for this exact purpose.

Does the Economy Act apply to all reimbursable work?

No. The Economy Act is the most common authority, but it is not the only one. Some agencies have specific statutory authorities that let them provide goods or services to other agencies outside the Economy Act framework. Examples include NASA's space act agreements and certain DOD authorities. When a specific statutory authority applies, the three Economy Act conditions do not have to be met in the same way.

What is G-Invoicing and why does it matter for reimbursable work?

G-Invoicing is the Treasury platform where federal agencies formally document their general terms and conditions (GT&Cs) and place orders against them. It matters because it keeps buyer-side and seller-side records in sync. When the federal government consolidates its financial statements, a payable on one agency's books has to match a receivable on the other's. G-Invoicing exists in large part to enforce that alignment and reduce the elimination errors that historically plagued intragovernmental reporting.

Why does the buyer use a different type of budget authority than the seller?

They are doing different things. The buyer is spending its appropriation to acquire something it needs (like any other obligation). The seller is performing work and earning revenue that flows back through its own books. Reflecting these as different types of budget authority is what lets the federal government track the two flows separately, apportion them separately, and report them correctly on the SF 132, SF 133, and Statement of Budgetary Resources.

Recap

Reimbursable work is federal-to-federal exchange of goods or services for payment. The buyer uses appropriation; the seller uses spending authority from offsetting collections. The Economy Act authorizes most arrangements under three specific conditions, with additional statutory authorities covering shared services. The accounting is complicated mainly because it touches revenue recognition, intragovernmental elimination, and a separate type of budget authority all at once.

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Related posts

• Federal Reimbursable Work: The Complete Guide

• Reimbursable Accounting Without an Advance: A NOAA-NASA Walkthrough

• Reimbursable Accounting With an Advance (coming soon)

Sources

• 31 U.S.C. § 1535 (Economy Act)
• OMB Circular A-11
• GAO Principles of Federal Appropriations Law (Red Book), Chapter 12