Allocating assistance funds to other agencies

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1. Moving assistance money between agencies

Section 632 of the Foreign Assistance Act of 1961, codified at 22 U.S.C. 2392, lets assistance money follow the work (22 U.S.C. 2392). The President may allocate or transfer to any federal agency any part of the funds available for the Act’s purposes (22 U.S.C. 2392(a)). That includes advances paid to the government by any country or international organization to procure commodities, defense articles, military education and training, or services, including defense services. The receiving agency may obligate and spend the money for its authorized purposes, under the Act or under its own governing authority.

Any officer carrying out functions under the Act may use the services, including defense services, and facilities of any federal agency (22 U.S.C. 2392(b)). The officer may also procure commodities, defense articles, or military education and training from any agency. This happens as the President directs, or with the consent of the agency head. Funds allocated to an agency for this may be set up in separate appropriation accounts on the Treasury’s books.

2. Paying agencies for economic assistance

When an agency supplies a commodity, service or facility to carry out subchapter I of the Act, it is paid from funds available for that subchapter (22 U.S.C. 2392(c)). The price is replacement cost, or actual cost if the law requires. For Defense Department services under part VIII of subchapter I, the price is the additional cost the Department incurs. Any other price authorized by law and agreed by the supplying agency may also be used.

The payment is credited to the supplying agency’s current accounts, from which replacements may be bought (22 U.S.C. 2392(c)). The exception is where those accounts are reimbursable only because of this rule and the supplying agency decides replacement is unnecessary. In that case the money goes to the Treasury as miscellaneous receipts.

3. Paying agencies for military assistance

Military assistance follows a different reimbursement rule (22 U.S.C. 2392(d)). Except as section 2318 provides for drawdowns, any agency that furnishes assistance under subchapter II, the military assistance part of the Act, is reimbursed from subchapter II funds. The amount equals the value of the defense articles, defense services or other assistance furnished, excluding salaries of members of the armed forces. Expenses arising from or incident to subchapter II operations are added, again excluding military salaries and the unfunded estimated costs of civilian retirement and other benefits.

Value for this purpose has the meaning given in section 644(m) of the Act, codified at 22 U.S.C. 2403(m) (22 U.S.C. 2392(d)). That definition sets value by type of item (22 U.S.C. 2403(m)). For an excess defense article, value is the gross cost of repairing, rehabilitating or modifying it, since its actual value is not counted for this reimbursement rule. For a nonexcess article from inventory, it is acquisition cost adjusted for condition and market value. For a nonexcess article from new procurement, it is the contract or production cost, and for a defense service it is the government’s cost. Other categories have their own rules. The reimbursement is credited to the agency’s current applicable accounts. Drawdowns are covered in drawdowns and peacekeeping assistance.

4. Letters of commitment and special accounts

Accounts for furnishing assistance may be set up on the books of any federal agency (22 U.S.C. 2392(e)). On terms approved by the Secretary of the Treasury, they may also be set up in American banking institutions. Letters of commitment issued against these accounts are recordable obligations of the United States. Money due under them can be assigned under the Assignment of Claims Act of 1940. Disbursements or withdrawals may be made to or by recipient countries, agencies, organizations or persons on presentation of contracts, invoices or other appropriate documents.

Spending through these accounts is accounted for on standard government documentation (22 U.S.C. 2392(e)). Spending on commodities, defense articles, military education and training, services or facilities bought outside the United States may instead be accounted for solely on a certification set by regulations the Comptroller General approves.

5. Charging expenses for now and settling later

Any appropriation or account for subchapter I may first be charged, within available funds, for expenses that belong to another subchapter I account (22 U.S.C. 2392(g)). By the end of the fiscal year, the expenses must be charged finally to the right account, with credit to the account first used. The administering agency need not make that final charge where it is determined that the accounting cost of identifying the right account would be disproportionate to the advantage gained. That exception does not reach expenses provided for under section 2397(a). Credits the Export-Import Bank makes with funds allocated to it do not count toward its statutory limit on outstanding loans and guarantees (22 U.S.C. 2392(f)).

6. Services for friendly countries and relief agencies

Where the President finds it consistent with subchapter I, any federal agency may furnish services and commodities on an advance-of-funds or reimbursement basis (22 U.S.C. 2357(a)). The recipients may be friendly countries, international organizations, the American Red Cross, and registered and approved voluntary nonprofit relief agencies. Foreign relief agencies qualify only when no American one is available. Payments may be credited to the agency’s current accounts if received within 180 days after the end of the fiscal year of delivery (22 U.S.C. 2357(a)(1)).

Longer repayment is allowed under an agreement that charges interest at a rate set under the Export-Import Bank statute and is repaid within three years of signing (22 U.S.C. 2357(a)(2)). Funds for such agreements may not exceed $1,000,000 a year of part I of subchapter I funds, and are available only as provided in appropriation acts. Interest runs from the date of disbursement. An agency providing such services may contract with individuals, abroad or in the United States, to do the work or to replace staff assigned to it (22 U.S.C. 2357(b)). Those individuals are not federal employees for laws administered by the Office of Personnel Management.

Key terms

Allocation	The transfer of assistance funds to another agency to carry out the Act.
Replacement cost	The standard price for items an agency supplies for economic assistance.
Letter of commitment	An instrument issued against a special account that is a recordable obligation.
Advance of funds	Payment before an agency furnishes services or commodities.
Personal services contract	A contract with an individual who is not treated as a federal employee.

Every statement above links to the document behind it. The full source list for this piece is on the sources page.

This page describes public United States government programs for general information. It is not legal, regulatory or procurement advice, and it does not address the facts of any particular case.

How Sentfore supports this

Funds that move between agencies still end in delivery on the ground. Sentfore works at the delivery end of defense programs in difficult environments, providing secure movement, protective security, facilities and life support. Requirements can be sent through the contact page.