Not every expense that appears to be prohibited under federal appropriations law actually is. Many expenditures that seem questionable at first glance may in fact be authorized, depending on the appropriation, the purpose of the spending, the contracting environment, and the specific circumstances involved. Understanding how to evaluate these situations, and where to look for guidance, is a practical necessity for anyone working with federal funds.
- Why some seemingly prohibited expenses may be authorized depending on context
- How meetings, conventions, and invitational travel affect what can be paid
- The rules around membership fees, professional licenses, and certifications
- How the federal government handles taxes and fees
- Telephone, IT, and communications expenses, including CONUS and OCONUS considerations
- Why the Red Book is the essential tool for evaluating borderline situations
The following sections walk through the major categories of situational prohibitions and explain the framework agencies should use to determine whether spending is appropriate in a given context.
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Before concluding that a transaction is prohibited, the first step is to consult the GAO's Red Book. It contains extensive documentation of situations that have arisen across the federal government, along with the legal analysis and decisions that resolved them. In many cases, what appears to be a clear prohibition turns out to have a recognized exception backed by statute or case law. Conversely, what seems like a routine expenditure may have been found improper in a specific context. The Red Book is the reference that resolves these questions.
Meetings, Conventions, and Invitational Travel
Certain expenditures that would normally be unauthorized can become authorized when they occur in the context of a meeting, convention, or training event. Food, for example, is generally not an authorized use of appropriated funds, but within a properly structured meeting or convention environment, the Red Book recognizes circumstances where it may be permissible. The same applies to other costs associated with bringing groups together for government purposes.
Invitational travel is a related category. When the government invites outside participants to attend a meeting or training at a specific location, there may be full appropriations authority to cover the associated costs, including travel and related expenses, depending on the terms of the appropriation and the nature of the event. Each situation requires a careful review of what the applicable appropriation actually authorizes.
Membership Fees, Professional Licenses, and Certifications
Whether appropriated funds can be used to pay for professional membership fees, such as CPA dues or attorney licensing fees, depends on the specifics of the position and the applicable human resources criteria. If maintaining a particular certification or license is a genuine requirement of the position, and the employee cannot perform their assigned duties without it, there may be a legitimate basis for covering those costs with appropriated funds.
The analysis is not automatic. Agencies must evaluate the nature of the position, the necessity of the credential, and the governing statutory framework before making this determination. The Red Book contains relevant guidance on membership fee situations, and agencies should review it carefully before proceeding.
Taxes and Fees
As a general rule, the federal government does not pay taxes. This applies to most state and local taxes on federal procurements, and there is documentation available that agencies can use to establish their tax-exempt status in many situations. However, the rule is not absolute.
In some overseas environments, local taxes or fees may apply to the federal government and may need to be paid. Similarly, certain fees associated with construction or facility requirements may be considered part of the cost of meeting a government obligation and may therefore be permissible. Each situation requires individual analysis. Agencies should review the Red Book and consult legal counsel to determine whether a specific tax or fee is payable under their appropriation.
Telephone and IT Communications Expenses
The rules governing telephone and communications expenses, including cell phones, long-distance charges, and data services, continue to evolve alongside changes in technology. Each agency is responsible for establishing its own criteria for how it will handle personal cell phone reimbursement, government-issued devices, and related costs. There is no single government-wide rule that covers every scenario.
Geography adds another layer of complexity. The rules that apply within the contiguous United States may differ from those that apply outside of it. For these purposes, OCONUS, meaning outside the contiguous United States, includes not only foreign locations but also Hawaii and Alaska. Agencies operating in those areas should be aware that different criteria may apply and should verify what is authorized under their specific appropriation and agency policy before incurring communications costs.
A Framework for Evaluating Borderline Situations
When facing an expenditure that seems questionable, the right approach is to slow down and analyze the situation rather than proceed on assumption or avoid the transaction entirely out of uncertainty. The key questions are: what does the applicable appropriation authorize, what is the purpose of the expenditure, what does the Red Book say about similar situations, and is there a GAO decision that addresses this category of expense? Answering these questions will, in most cases, lead to a defensible conclusion one way or the other.
The goal is not to find a justification for spending but to determine accurately whether the spending is legally appropriate. When it is, proceeding confidently with proper documentation is the right outcome. When it is not, the same analysis protects the agency and the individuals involved from an improper transaction.
