1801 Overview

This chapter establishes the Department of Veterans Affairs’ (VA) financial policies for the obligation of reimbursements and allowances to state approving agencies (SAAs) for education and training institutions oversight.

Key points covered in this chapter:

• In accordance with 38 U.S.C. § 3674, VA can establish contracts or agreements with SAAs that oversee training and education programs to reimburse expenses for monitoring educational institution compliance with VA and Department of Defense training requirements;
• As reimbursements and allowances, VA will recognize obligations when payments are approved in response to certified SAA reports of expenses over monthly or quarterly periods. These obligations are excepted from Federal Acquisition Regulation (FAR)-based contract requirements; and
• The use of a miscellaneous vendor code is not permitted for SAA obligations. All SAA payees must be individually vendorized.

1802 Revisions

Section	Revision	Office	Reason for Change	Effective Date
Various	New policy	OFP	Reorganized chapter layout	July 2026

1803 Definitions

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.

Non-Contractual Obligation (NCO) – Obligations with special statutory authority or other regulatory authority to exempt the obligation from Federal Acquisition Regulations (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 procedures.

State Approving Agencies (SAA) – State and local agencies that VA establishes contracts with and reimburses to assess, oversee, and report on competence of educational institutions and their training programs to educate Veterans and Service members.

1804 Roles and Responsibilities

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

1805 Policies

180501 General Policies

1. State approving agencies (SAAs) will review, evaluate, and approve education and training programs under state and Federal criteria, including requirements in 38 U.S.C. Chs. 30 through 34, and 10 U.S.C. Ch. 1606. SAAs transmit their approval decisions to VA so VA can verify eligibility for VA education and training benefits upon student enrollment.
2. In accordance with 38 U.S.C. § 3674, VA may reimburse an SAA for reasonable and necessary expenses of salary, travel, outreach activities, and administrative costs (using the formula contained in 38 U.S.C. § 3674(b)) to monitor and supervise education and training institutions for continued compliance with State and Federal criteria. VA may also reimburse such agencies for work performed by their subcontractors where such work directly relates to the requirements of title 38, United States Code and has prior VA approval.
3. VA will allow an SAA to calculate an allowance for administrative costs based upon the amount of reimbursable salary expense for the period.
4. SAAs will submit reimbursement and allowance requests, identifying expenses incurred, on a monthly or quarterly basis, as determined by VA.
5. VA will review and approve SAA reimbursement and allowance requests to ensure  expenses and administrative costs are reasonable and necessary.
6. VA will, after the SAA reimbursement and allowance request is approved, use an obligate and pay transaction to record SAA transactions.
7. VA will charge the VBA Readjustment Benefits Fund appropriation for SAA reimbursements and allowances.
8. SAA obligations under 38 U.S.C. § 3674 are not subject to Federal Acquisition Regulation (FAR)-based contract requirements.
9. Obligations pursuant to this policy must follow the requirements for all Government obligations, established for VA in Volume III, Chapter 2 – Obligations.
10. SAAs will be individually vendorized. The use of “Miscellaneous Vendor” is not permitted.
11. SAAs will submit a completed VA Form 10091 to VA’s Financial Services Center’s (FSC’s) Nationwide Vendorizing Team to establish their account information or identify changes to receive payment via EFT.

180502 Integrated Financial and Acquisition Management System (iFAMS)

1. When recording obligations for SAA activities, a Non-Contractual Obligation (NCO) document must be used.
2. The approved document type for SAA activities is PBE (Enterprise Payment Authorization – Obligate and Pay) for payment by Electronic Funds Transfer (EFT) through iFAMS.

180503 Financial Management System (FMS)

1. SAA obligations will use VA Form 1358 approved use / authority code 23 when recording the obligation in FMS.
2. Payment will be made following the standard process for EFT payment.

1806 Authorities and References

• United States Code (U.S.C.)
  • 10 U.S.C. Ch. 1606, Educational Assistance for Members of the Selected Reserve, §§ 16131-16137
  • 31 U.S.C. § 1501, Documentary evidence required for Government obligations
  • 38 U.S.C. Part III, Readjustment and Related Benefits, Chapters 30 through 34, §§ 3001-3564
  • 38 U.S.C. § 3674, Reimbursement of expenses
• Federal Acquisition Regulation
• VA Financial Policy
  • Volume III, Chapter 2 – Obligations
  • Volume III, Chapter 4 – 1358 Obligations
• VA Form 1358, Obligation or Change in Obligation
• VA Form 10091, VA-FSC Vendor File Request Form (Link) Web Form

1807 Rescissions

None.

Appendix A: Previous Policy Revisions

None.