17.502-2 The Economy Act
Source: FAR 17.502-2 on acquisition.gov
The Economy Act allows agencies to acquire supplies or services from other agencies only when justified by a formal determination and findings, ensuring cost-effectiveness and proper documentation.
Overview
FAR 17.502-2 outlines the requirements and procedures for using the Economy Act (31 U.S.C. 1535) to obtain supplies or services from another federal agency. The regulation applies when an agency uses another agency’s contract, unless a more specific statutory authority exists (such as Federal Supply Schedules or GWACs). It mandates that each Economy Act order be supported by a determination and findings (D&F) justifying the use of interagency acquisition, including statements on best interest, convenience, and applicable circumstances. The D&F must be approved by an authorized official and provided to the servicing agency. Payment procedures are specified, including provisions for advance payment, cost adjustments, and prohibitions on fees exceeding actual costs. The section ensures proper justification, documentation, and financial controls for interagency acquisitions under the Economy Act.
Key Rules
- Applicability of the Economy Act
- Applies when no more specific statutory authority exists for interagency acquisitions; FAR applies only if a contract or order results.
- Determinations and Findings (D&F) Requirement
- Each order must be supported by a D&F stating best interest, convenience, and specific qualifying circumstances.
- Approval and Documentation
- D&F must be approved by an authorized contracting officer or designated official and furnished to the servicing agency.
- Payment Provisions
- Advance payments may be requested; payments must not exceed actual or estimated costs; no pre-payment audit or certification required.
Responsibilities
- Contracting Officers: Prepare, approve, and provide D&F; ensure compliance with payment and documentation requirements.
- Contractors: Not directly involved, but agencies must ensure compliance when using interagency contracts.
- Agencies: Oversee proper use of the Economy Act, maintain documentation, and adhere to payment rules.
Practical Implications
- Ensures interagency acquisitions are justified and cost-effective.
- Requires clear documentation and approval processes.
- Prevents agencies from charging or paying more than actual costs.
- Common pitfalls include missing D&F, improper approvals, or exceeding cost limits.
(a) The Economy Act (http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title31-section1535&num=0&edition=prelim" target="_blank">31 U.S.C. 1535) authorizes agencies to enter into agreements to obtain supplies or services from another agency. The FAR applies when one agency uses another agency’s contract to obtain supplies or services. If the interagency business transaction does not result in a contract or an order, then the FAR does not apply. The Economy Act also provides authority for placement of orders between major organizational units within an agency; procedures for such intra-agency transactions are addressed in agency regulations.
(b) The Economy Act applies when more specific statutory authority does not exist. Examples of more specific authority are http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title40-section501&num=0&edition=prelim" target="_blank">40 U.S.C. 501 for the Federal Supply Schedules (subpart 8.4), and 40 U.S.C. 11302(e) for Governmentwide acquisition contracts (GWACs).
(c) Requirements for determinations and findings.
(1) Each Economy Act order to obtain supplies or services by interagency acquisition shall be supported by a determination and findings (D&F). The D&F shall-
(i) State that use of an interagency acquisition is in the best interest of the Government;
(ii) State that the supplies or services cannot be obtained as conveniently or economically by contracting directly with a private source; and
(iii) Include a statement that at least one of the following circumstances applies:
(A) The acquisition will appropriately be made under an existing contract of the servicing agency, entered into before placement of the order, to meet the requirements of the servicing agency for the same or similar supplies or services.
(B) The servicing agency has the capability or expertise to enter into a contract for such supplies or services that is not available within the requesting agency.
(C) The servicing agency is specifically authorized by law or regulation to purchase such supplies or services on behalf of other agencies.
(2) The D&F shall be approved by a contracting officer of the requesting agency with authority to contract for the supplies or services to be ordered, or by another official designated by the agency head, except that, if the servicing agency is not covered by the FAR, approval of the D&F may not be delegated below the senior procurement executive of the requesting agency.
(3) The requesting agency shall furnish a copy of the D&F to the servicing agency with the request for order.
(d) Payment.
(1) The servicing agency may ask the requesting agency, in writing, for advance payment for all or part of the estimated cost of furnishing the supplies or services. Adjustment on the basis of actual costs shall be made as agreed to by the agencies.
(2) If approved by the servicing agency, payment for actual costs may be made by the requesting agency after the supplies or services have been furnished.
(3) Bills rendered or requests for advance payment shall not be subject to audit or certification in advance of payment.
(4) In no event shall the servicing agency require, or the requesting agency pay, any fee or charge in excess of the actual cost (or estimated cost if the actual cost is not known) of entering into and administering the contract or other agreement under which the order is filled.