Refunds

Agencies/organizations have the opportunity to earn refunds.

Refunds are a monetary payment provided by the contractor bank to agencies/organizations that can directly fund and support mission critical efforts.

Please note the following about refunds:

An agency’s refund rate range has been established by the GSA SmartPay® 3 Master Contract.
Minimum refunds are a single rate that considers both volume of spend and speed of pay.
Minimum refunds may vary by Contract Line Item Number (CLIN) and business line.
An agency and the GSA SmartPay contractor bank can negotiate additional refund incentives and document it in their task order.
Agencies can maximize refunds earned by using GSA SmartPay payment solutions rather than convenience checks, personal payments (like cash or personal credit cards) and traditional contract payments.

Example refund calculations can be found in section B.3.3 of the GSA SmartPay 3 Master Contract.

Refunds Background

Unless an agency has specific statutory authority to handle funds received, 31 U.S.C. § 3302 states that incoming funds are to be deposited into the Treasury general fund. The exception to this rule is when funds qualify as “refunds” which are defined as “repayments for excess payments.” Or, refunds can be defined as “amounts collected from outside sources for payments made in error, overpayments or adjustments for previous amounts disbursed.” Under either definition, these “refunds” must go back to the appropriation or fund account(s) from which the excess payment were made.¹ ²

GSA originally looked into the use of refunds as part of the travel management company contracts. The Comptroller General found that if the contractor agreed to discount services to the federal government, the Government Accountability Office saw no reason to prohibit agencies from depositing savings to the credit of the appropriation against which the initial cost of the employee travel was charged.

As receipts are actually a return of a portion of a prior agency payment and may be deposited to the credit of the appropriation against which the payment was initially charged rather than to a general fund receipt account. If the appropriation initially charged has not expired, the refund is available to support new obligations. If the appropriation account initially charged has expired, but has not yet closed, the refund is deposited to the credit of the expired account where it is available for recording or adjusting obligations properly incurred before the appropriation expired.³

This same analysis and reasoning applies to the GSA SmartPay program refunds. Under the GSA SmartPay program, refunds are discounts offered by the banks, which may be deposited to the credit of the appropriation against which the initial cost was charged. If that appropriation has expired, but not yet closed, the refund may be credited to the expired account where available. If the appropriation has expired, and the expired account has been closed, the refund would be properly credited to the appropriate Treasury general fund.

The exception permitting the deposit of refunds to the appropriation initially charged is permissive in nature. If an agency declines the refund, it should be deposited to the Treasury general fund.

Sources

Rebates from Travel Management Center Contractors, B-217913, 65 Comp. Gen. 600, May 30, 1986.
Accounting for Rebates from Travel Management Center Contractors, B-217913.3, 73 Comp. Gen. 210, June 24, 1994.
71 Comp. Gen. 502 (1992); B-217913.2, Feb. 19, 1993; GAO, Policy and Procedures Manual for Guidance of Federal Agencies, title 7, §§ 4.3, 5.4; 31 U.S.C. § 1552(b).