Informational Guidance |
IG5317.5
Interagency Acquisitions Under the Economy Act
27 January 2005
IG5317.500 Scope of Subpart.
(a) The Economy Act permits a Federal Agency to order supplies and services from another federal agency under certain conditions as prescribed in the Federal Acquisition Regulation (FAR) 17.5. The Act was designed to promote economy in Government operations by permitting interagency use of resources and contracts.
(b) Contracts or orders for supplies or services may also be placed with or by other agencies under authorities other than the Economy Act. Orders placed under these authorities are not subject to the requirements of the Economy Act. Additional authorities include (but are not limited to):
(1) Acquisitions from required sources as described in FAR 8;
(2) Acquisitions from Federal Supply Schedules pursuant to FAR 8.4;
(3) Coordinated acquisitions prescribed in DFARS 208.70;
(4) Acquisitions of Information Technology through a multi-agency contract or a government-wide acquisition contract (GWAC), which specifically allow multi-agency ordering; and
(5) Project orders (41 U.S.C. 23). Project orders are authorized for use when one Government agency wishes to procure a supply or service from another Government agency. Volume 11A, Chapter 2 of Department of Defense (DoD) 7000.14-R, governs the use of project orders within the DoD. There are several conditions for use of the project order, including the requirements that the servicing agency must be capable, be authorized, and produce the item or perform the service in-house. Only an incidental portion of a project order may be contracted out by the servicing agency.
(6) Contracts placed by the General Services Administration (GSA) under the authority of the Federal Property and Administrative Services Act of 1949.
(c) Relationships with a servicing agency can involve one order or many orders over an extended time period. When using the servicing agency’s contract to place and administer direct orders with a vendor, the requirements of the Economy Act still apply. Where the Air Force desires to enter into a long term, continuing relationship by placing orders with a servicing agency under the authority of the Economy Act, the requiring activity should ensure that the resulting interagency agreement includes, in addition to any other requirements of this section, the following:
(1) Enhanced management controls, as appropriate for the circumstances, to ensure that the interagency agreement is only used for its intended purpose(s). Such controls should include a mechanism for periodic reassessment of the interagency agreement, at intervals not exceeding every five years, to determine its continuing need and relevancy. The review can be conducted by the same personnel that review similar requirements that are being separately procured by the Air Force. The reassessment should include review by a contracting officer to ensure that the agreement complies with appropriate business practices;
(2) A well-defined scope of work that includes clear objectives, work areas, and, where appropriate, reports and deliverables; and
(3) A definitive term of agreement.
(d) The following procedures should be considered when orders are placed with the Air Force as a servicing agency under the Economy Act:
(1) The Air Force is not required to accept the requesting agency’s order, if accepting the order will prevent the Air Force from fulfilling its mission or the requesting agency fails to provide appropriate supporting information, funding, and evidence of an appropriate level of requesting agency approval;
(2) The Air Force should process the order in accordance with normal internal policies and procedures for similar contract actions. This includes complying with the Competition in Contracting Act;
(3) The Air Force contracting officer should execute and issue all Determination and Findings (D&Fs) or Justification & Approvals (J&As) required by Air Force regulations to place the order on contract, just as if the requirement was generated by an Air Force activity; and
(4) Before allowing a non-sponsoring agency to use a Federally Funded Research and Development Center (FFRDC), the Air Force should ensure that the work falls within the purpose, mission, general scope of effort, or special competency of the FFRDC. (See FAR 17.504(e) and FAR 35.017; also see FAR 6.302 for procedures to follow when using other than full and open competition.) If the order does not conform to these requirements, the Air Force may not place the order with the FFRDC. The order also may not be placed with the FFRDC if the sponsoring agreement does not permit work from other than the sponsoring agency.
IG5317.503 Determinations and Findings Requirements.
(a) The FAR requires that requesting agencies complete and execute a Determination and Finding (D&F) before placing an order for supplies or services with another Government agency. This D&F documents the specific rationale and required justification that use of an interagency acquisition is in the best interest of the Government. In accordance with DoDI 4000.19, Interservice and Intragovernmental Support, paragraph 4.4, the head of the major organizational unit ordering the support must approve D&Fs for support from non-DoD Federal activities. This authority may be delegated, although designees may not be lower than Senior Executive Service (SES), Flag, or General Officers. The Secretary of Defense issued a memorandum on 8 Feb 1994 establishing requirements for approval of a written determination before Economy Act orders could be released outside of DoD for contracting action; therefore, the interpretation of “agency” as it relates to the Economy Act (and as implemented by FAR Part 17.5) has been that the Department of Defense is an “agency”. The implication is that an Economy Act D&F is not required before releasing funds within DoD for contracting action. When an Air Force contracting office is acting as the servicing agency for a non-DoD organization, a copy of the executed D&F shall be obtained from the requesting agency and placed in the contract file for the Economy Act order. A sample D&F template is provided below for use by requiring offices as needed. The outline provided by the template is intended to suggest areas of consideration in order to develop language and rationale that is tailored specifically for each given transaction. It provides a format and inclusionary language that meets the requirements of the Economy Act, FAR, and DoD/Air Force required procedures regarding “Proper Use of Non-DoD Contracts”:
DETERMINATION AND FINDING
ON
INTERAGENCY ORDER UNDER THE ECONOMY ACT
1. I have reviewed the requirement for [insert description of supply or service to be procured] that [insert Air Force requiring activity] intends to place with [insert agency] as an interagency order under the Economy Act. My review produced the following findings:
a. The proposed acquisition is authorized under the authority of the Economy Act;
b. The Air Force is legally authorized to acquire the supplies or services;
c. Adequate funds are available and the appropriation is legal and proper for this acquisition;
d. The action does not conflict with any other agency’s authority or responsibility (see FAR 8);
e. The supplies or services cannot be obtained as conveniently or economically by contracting directly with a private source;
f. The servicing agency has unique expertise or ability not available within the Department of Defense (DoD);
g. The servicing agency will accept the order and can satisfy the requirement;
h. The supplies or services are clearly within the scope of activities of [insert agency] and that agency normally contracts for (and/or produces in-house) those supplies or services for itself;
i. The supplies or services are clearly within the scope of the contract to be used by the assisting agency.
j. All required DoD or Air Force-unique terms and conditions applicable to this acquisition will be incorporated into the resulting contract.
k. The cost to the Air Force for the requirement, including the administrative fees charged by [insert agency] appears to be reasonable. The fees proposed to be paid to the servicing agency do not exceed the servicing agency’s actual cost (or estimated costs if actual costs are unknown) of entering into and administering the contract or other agreement under which the order is filled;
l. The contract administration procedures related to [insert agency]’s contract are adequate for Air Force requirements (or the order contains additional contract administration requirements that will result in contract administration procedures that comply with Air Force and DoD regulations and policies);
m. All approvals and authorizations required by Air Force and/or DOD policies for acquiring the supplies or services have been obtained; and
n. The requirement is a bona fide need of the Air Force;
o. [Insert the following if the work will be performed by a Federally Funded Research and Development Center:] The work will be performed by a Federally Funded Research and Development Center (FFRDC). Performance by the FFRDC will not place the servicing agency and its FFRDC in direct competition with private sources;
2. Given the findings outlined above, I hereby determine that it is in the best interest of the Government to place an order for [insert requirement] with [insert agency] under the authority of the Economy Act.
Signature of Approving Authority
(b) The specific Air Force requiring office should draft and coordinate the D&F. DFARS 217.503(c) requires that the D&F may, if requested, be reviewed by the Air Force contracting officer who would otherwise have procured the requirement. The contracting officer will review the proposed D&F and supporting documentation as a “business advisor” to the approval authority. This review should include compliance with FAR requirements, an assessment of total cost to the Air Force (including administrative fees), as well as an assessment of other potential contracting alternatives. When assessing the cost of obtaining the supplies or services through an interagency agreement, the Approving Official will consider any administrative fees charged by the servicing agency as part of the total cost of the order. In accordance with Section 844 of the Fiscal Year 1994 National Defense Authorization Act, fees paid to the servicing agency will not exceed the actual cost or, if actual costs are unknown, the estimated costs of entering into and administering the contract or other agreement under which the order is filled. The administrative cost of providing the supplies or services through Air Force contracting procedures should also be considered. The contracting office should retain a record copy of each Economy Act D&F in a central file.
(c) Additional D&Fs are not required to incrementally fund an existing order or to administratively modify an order, if the scope of work remains the same throughout the order’s period of performance.
IG5317.504 Ordering Procedures.
(b)(6) Complete contract administration requirements and contract audit responsibilities
appropriate for the type of contract and scope of work on all orders placed outside of the DoD;
(7) If it is necessary for the servicing agency to award a contract or modify an existing contract to accommodate the Air Force’s order, the Air Force requiring activity should supply all supporting data necessary to prepare the required contract documentation; and
(8) The Air Force requiring activity should also provide special contract terms or other requirements applicable to Air Force funds. This includes information such as special funds tracking and reporting requirements, additional contract administration requirements, special delivery or packaging instructions, a copy of the executed determination, and any other supporting documents.
(d)(1) The requiring activity should include with the Military Interdepartmental Procurement Request (MIPR) any documentation required to support the D&F. Examples include independent cost estimates and documentation of urgency of need. Copies of the documentation should be retained with the requiring activity’s file copy of the MIPR and provided to the servicing agency upon request.
(3)(iii) If the work was previously performed by Government personnel and will now be performed by a contractor under a servicing agency’s contract (or if the work was previously performed under a contract and will now be performed in-house by the servicing agency), the
requiring activity will have complied with the requirements of FAR 7.3. This will be documented in the D&F.
(iv) The servicing agency is responsible for complying with the Competition in Contracting Act when it awards the original contract. Therefore, the requesting agency is not required to compete the requirement between potential servicing agencies.