Obligation
A legally binding commitment by the government to spend money — the point at which funds are formally committed to a contract, grant, or other agreement.
How It Works
An obligation occurs when the government enters into a contract, issues a purchase order, or awards a grant. It represents a legal promise to pay. Obligations are different from outlays (actual payments) — the government may obligate funds in one year but pay them out over several years as work is completed. USASpending.gov primarily tracks obligations because they represent the government's spending decisions. Total federal obligations include contracts, grants, loans, direct payments, and other financial assistance.
Related Terms
- Outlay — The actual payment of money by the U.S. Treasury — the moment dollars leave government accounts and go to a contractor, grantee, or beneficiary.
- Federal Contract — A legally binding agreement between the U.S. government and a private company to provide goods or services — from fighter jets to IT consulting.
- Appropriation — A law passed by Congress that authorizes federal agencies to spend a specific amount of money for a specific purpose during a defined period.
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About This Definition
This definition is part of the TaxDollarData Federal Spending Glossary — 31 terms explaining how the U.S. government spends taxpayer money. All definitions are written in plain language for taxpayers, journalists, contractors, and researchers.