Circular Billing

The effort aims to end organizations within the same Treasury Account Symbol (TAS) from billing each other.

Purpose

This memorandum proposes the elimination of inter-office billing within the Department's Working Capital Fund (WCF), which is funded through Treasury Account Symbol (TAS) 4523. Inter-office billing can also be referred to as ‘circular billing.’ This practice currently results in unnecessary administrative burden, inefficient use of resources, and policy misalignment, while providing no added financial or operational benefit. This practice, when attention is drawn to it, has led to OMB dismantling other Federal Working Capital Funds in the past.

Background

The WCF model is designed to enhance operational flexibility and cost recovery by enabling offices to charge for goods and services rendered. However, within our specific fund—TAS-4523—all participating offices draw from the same source of funding. Despite this shared funding structure, offices are routinely billing one another for internal services, including application of overhead rates.

This is operationally equivalent to members of a household with a joint checking account issuing checks or digital transfers to one another while charging a fee for each exchange. It is an unnecessary and inefficient way to manage shared resources.

Issues with Current Practice

Redundant Financial Activity
These transactions in FBMS create the illusion of cost recovery while resulting in no actual movement of funds between distinct financial entities. They generate internal "revenue" and "expenditures" that do not reflect true resource usage.
Administrative Burden
Each transaction requires creation, tracking, reconciliation, and auditing—consuming valuable staff time across multiple offices. Invoices, journal entries, dispute resolution, and approvals all add to the workload without delivering value.
Misaligned Overhead Charges
Overhead rates are being applied to inter-office billing, resulting in fees being charged within the same fund—essentially charging ourselves for internal transactions. There is a level of inconsistency here as well. There is not a standard overhead rate across the WCF. Instead, offices and shared service providers calculate their own individual overhead rates to assess on customer bills.
Distorted Financial Reporting
Intra-fund billing obscures the actual cost of delivering services and complicates performance reporting, budget forecasting, and audit readiness.
No Incentive to Cut Costs
Often, other shared service providers funded within the DOI WCF are growing budgets and spending due to the fact that a WCF is not subject to the same level of scrutiny overseeing spending levels as appropriated funds. While appropriated funded offices are subject to budget cuts and constraints, a challenge is presented when the WCF does is not impacted in the same way.

Proposal

Eliminate all inter-office billing within the WCF funded by TAS-4523, effective October 1, 2026

In its place, we propose a centralized resource management model that includes:

Service-level usage tracking for internal performance management and reporting
Enterprise-level overhead allocation, avoiding internal pass-through charges
Clear service catalogs with established metrics for demand and delivery—absent financial transactions
Enhanced governance, using internal councils or boards to prioritize services and resolve disputes
Benefits

Operational Efficiency: Reduces unnecessary workload and frees staff time for mission-critical activities
Transparency: Provides a clearer picture of actual service costs and resource usage
Governance and Accountability: Shifts focus from internal transactions to service delivery performance
Audit Readiness: Simplifies internal controls and reduces financial statement complexity
Next Steps

If approved, we recommend the following phased implementation:

Discussion with Budget Office: Explain concern
Policy Update: Revise internal guidance and billing policies
Transition Planning: Identify all current inter-office billing arrangements and develop sunset plans
Communication: Notify affected offices and provide training/resources
Governance Adjustment: Formalize a non-financial mechanism for tracking service levels and resolving conflicts
Conclusion

Eliminating inter-office billing within TAS-4523 will streamline operations, improve financial clarity, and allow the Department to focus on mission execution rather than unnecessary internal transactions. I recommend leadership approval of this proposal and am available to support implementation planning upon request.