0801 Overview

This chapter establishes the Department of Veterans Affairs’ (VA) financial policies for the obligation of Tort Settlements, Equal Employment Opportunity (EEO) Settlements, Attorney Fees, and Office of Inspector General (OIG) confidential and investigative services.

Key points covered in this chapter:

• VA has legal authority to settle claims for money/damages under 28 U.S.C. § 2672 and 38 U.S.C. § 515;
• The Inspector General Act of 1978 authorizes OIG to conduct investigations of allegations of wrongdoing in the Federal Government. OIG confidential and investigative services are necessary for Governmental purposes (e.g., criminal investigations) and are not considered commercial items/services subject to Federal Acquisition Regulation (FAR) or VA Acquisition Regulation (VAAR);
• The use of a miscellaneous vendor code is not permitted for legal and OIG investigative service obligations. Individuals and vendors must be vendorized; and
• All non-contractual obligations must comply with requirements for obligation controls in Volume III, Chapter 2 – Obligations.

0802 Revisions

Section	Revision	Office	Reason for Change	Effective Date
Various	New policy	OFP	Reorganized obligation chapters layout	August 2025

0803 Definitions

Non-Contractual Obligation – This term encompasses obligations with special statutory authority or other regulatory authority to exempt the obligation from Federal Acquisition Regulation (FAR) and formal acquisition procedures required by FAR. There are instances where these obligations may be generally defined as a contract (agreement between two parties), but these obligations do not follow FAR-based procurement procedures.

Obligation – A legally binding agreement that will result in outlays, immediately or in the future. An obligation is a legal liability of the Government against an available appropriation.

Settlement Amount – The amount agreed-upon in a legally binding settlement or determined through the legal process, or an estimated amount if the Government has been found legally liable but the final amount is still unresolved.

0804 Roles and Responsibilities

Administration and Staff Office Chief Financial Officers (CFOs) are responsible for ensuring the proper processing of legal and OIG investigative services obligations in accordance with the guidelines in this policy.

Office of General Counsel (OGC) is responsible for representing VA’s interest related to litigation activities, submitting for payment required documents related to settlements and judgements and keeping the finance office apprised promptly of adjustments or significant changes.

Office of the Inspector General (OIG) is responsible for monitoring non-contractual spending authority to ensure OIG obligations are within purpose, time, and amount limits authorized, maintaining segregation of duties in approval of obligations, submitting required documents supporting transactions, and keeping the finance office apprised promptly of adjustments or significant delays impacting apportioned spending.

0805 Policies

080501 General Policies

1. VA has legal authority to settle a claim for money/damages under 28 U.S.C. § 2672 and 38 U.S.C. § 515. No contract or acquisition activity is required for these legal obligations.
2. Legal Obligations related to the settlement of claims fall into one of three categories:
   • Tort settlements;
   • Equal Employment Opportunity (EEO) settlements; or
   • Attorney fees.
3. Office of Inspector General (OIG) confidential and investigative services-related obligations authorized under the Inspector General Act of 1978 are necessary for Governmental purposes (e.g., criminal investigations) and are not considered commercial items/services subject to Federal Acquisition Regulation (FAR) or VA Acquisition Regulation (VAAR) competitive procurement practices.
4. Obligation for the full amount of the legal settlement will be recorded within seven business days following the date that the legal decision-maker (e.g., court) determines that the Government is liable or that VA’s Office of General Counsel is notified of the decision.
   1. If the amount is not immediately known (e.g., VA is found liable for an action but the full amount due is not immediately available), VA will record an estimated obligation and will adjust the obligation when the amount is determined; see 35 Comp. Gen. 185.
   2. OIG services will be recorded when VA enters into an agreement for investigative services, or in accordance with Government Purchase Card (GPC) requirement.
   3. OIG obligations for confidential services and investigative purchases that qualify for payment by GPC will comply with Volume XVI, Chapter 2 – Government Purchase Card for Micro-Purchases. A convenience check for payment up to $5,000 may be issued when justification meets Treasury exceptions to EFT requirement in 31 C.F.R. § 208.4.
5. Legal obligations may include amounts payable to reimburse Treasury’s Judgment Fund where that fund promptly issues the Government payment on VA’s behalf as directed under an authoritative ruling. For additional information, refer to Volume VI, Chapter 12 – Judgment Fund.
6. OIG and OGC will ensure that non-contractual obligations pursuant to this policy follow the requirements for all VA obligations established in Volume III, Chapter 2 – Obligations.
7. The documentation required for legal obligations includes the legally binding settlement document finding the Government liable, along with the Judgment Fund claim for reimbursement, when applicable.
8. The documentation required for OIG confidential or investigative services includes the legally binding agreement with the servicing entity, or document substantiating, the service.
9. “Miscellaneous Vendor” use is not permitted. The payee must be identified in the description or vendor field. In certain settlement cases, the payee may be the representative of the claimant.
10. Payment recipients must be vendorized to facilitate issuance of the appropriate version of Internal Revenue Service Form 1099, required to identify recipients of taxable payments.

080502 Integrated Financial and Acquisition Management System (iFAMS)

1. For legal obligations:
   1. For tort settlements, OST (Obligation with two levels of approval) will be used as the obligation document type; PAE (Enterprise Payment Authorization) will be used as the payment document type.
   2. For judgement fund reimbursements, OEE (Enterprise External Obligation) will be used as the obligation document type for reimbursement to a Federal vendor. PIE (Enterprise IPAC Payment – Inbound) or POE (Enterprise IPAC Payment – Outbound) will be used as used for IPAC payment.
   3. For EEO (Equal Employment Opportunity) settlements, EEO will be used as the obligation document type (including applicable attorney fees); PEO (Enterprise Payment Authorization) will be used as the document type for payments manually created in iFAMS; payments are issued by Electronic Funds Transfer (EFT) via iFAMS (not using the Integrated Payment Processing System (IPPS)).
   4. For other attorney fees, OST will be used as the obligation document type; PAE will be used as the payment document type.
2. For OIG confidential and investigative services-related obligations:
   1. OPE (Purchase Card Order) will be used as the obligation document type for GPC payment.
   2. OEG (G-Invoicing External Obligation) will be used as the obligation document type for G-invoicing-enabled obligations to Federal vendors, and PIG (Payment, G-Invoicing In-Bound) will be used as the payment document type.

080503 Financial Management System (FMS)

1. Legal obligations, related attorney fees, and OIG confidential and investigative services-related obligations will use form 1358 approved use / authority code 8 when recording the obligation in FMS.
2. Payment will be made following the standard process for EFT or GPC payment.

0806 Authorities and References

• United States Code (U.S.C.)
• 28 U.S.C. § 2672, Administrative adjustment of claims
• 38 U.S.C. § 515, Administrative settlement of tort claims
• Inspector General Act of 1978
• Code of Federal Regulations (C.F.R.)
• 31 C.F.R. § 208.4, Waivers
  • 48 C.F.R. Chapter 1, Subchapter A, Federal Acquisition Regulation System
  • 48 C.F.R. Chapter 8, VA Acquisition Regulation (VAAR)
• Comptroller General Decision: B-124268 (35 Comp. Gen. 185, October 3, 1955), Obligation when a legal decision-maker (e.g., court) determines that the government is liable
• VA Financial Policy
  • Volume III, Chapter 2 – Obligations
  • Volume VI, Chapter 12 – Judgment Fund
  • Volume XVI, Chapter 2 – Government Purchase Card for Micro-Purchases

0807 Rescissions

None