Contracts & Legal

Economy Act

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The Economy Act (31 U.S.C. 1535) authorizes agencies to enter into agreements to obtain supplies or services by Interagency Acquisition. 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. The Economy Act applies when more specific statutory authority does not exist.

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 state that:

  1. Use of an interagency acquisition is in the best interest of the Government; and
  2. The supplies or services cannot be obtained as conveniently or economically by contracting directly with a private source

If the Economy Act order requires contract action by the servicing agency, the D&F must also include a statement that at least one of the following circumstances applies:

  1. 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.
  2. 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.
  3. The servicing agency is specifically authorized by law or regulation to purchase such supplies or services on behalf of other agencies.

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 Federal Acquisition Regulation, approval of the D&F may not be delegated below the senior procurement executive of the requesting agency.

In order to establish a multi-agency contract in accordance with Economy Act authority, a business-case analysis must be prepared by the servicing agency. The business-case analysis shall:

  1. Consider strategies for the effective participation of small businesses during acquisition planning (see 7.103(s));
  2. Detail the administration of such contract, including an analysis of all direct and indirect costs to the Government of awarding and administering such contract;
  3. Describe the impact such contract will have on the ability of the Government to leverage its purchasing power, e.g., will it have a negative effect because it dilutes other existing contracts;
  4. Include an analysis concluding that there is a need for establishing the multi-agency contract; and
  5. Document roles and responsibilities in the administration of the contract

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. If the Economy Act order requires use of a contract by the servicing agency, then in no event shall the servicing agency require, or the requiring 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.

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