can I accept their funds on a reimbursable basis and then replenish my stock by using my mission funds? Or do I have to place their funds on contract after providing them the equipment out of my stock.?
This was a very interesting question. My only experience with reimbursable funds was to pay labor costs for civilian personnel. In that case, it was easy, since the providing activity set up a charge number that the employees used to directly draw from the reimbursable funds. This issue of using reimbursable funds for parts was intriguing, so I set out to do some research and here is what I found out.
I started by looking at DoD Financial Management Regulation (FMR) 7000.14-R, Volume 3, Chapter 8, paragraph 080703, and paragraph 080703 section B which say:
Reimbursable orders with other DoD activities for specific supplies, material, equipment, work, or services, may be placed under the Project Order statute (41 U.S.C. 23), the Economy Act (31 U.S.C. 1535), or other applicable authority. Reimbursable orders with Non-DoD activities may be placed under the Economy Act or other applicable statutory authority. The obligation reimbursable orders shall be recorded against the appropriation of the ordering DoD entity as follows.
B. Economy Act Orders. Unless more specific statutory authority is applicable, the Economy Act, codified at 31 U.S.C. 1535, provides authority that allows DoD Components to order goods and services from other federal agencies (including other DoD Components) and from major organizational units within the same DoD Component. Economy Act orders citing an annual or multiyear appropriation must serve a bona fide need arising, or existing, in the fiscal year (or years) for which the appropriation is available for obligation. The requesting DoD activity must obligate funds when the performing activity accepts the order in writing. The work to be performed under Economy Act orders shall be expected to begin within a reasonable time after its acceptance by the servicing DoD Component or organizational unit. Funds must be deobligated by both the requesting and servicing agency to the extent that the servicing agency or unit filling the order has not, before the end of the period of availability of the appropriation of the requesting or ordering agency, (1) provided the goods or services, or (2) entered into an authorized contract with another entity to provide the requested goods or services. As specified in paragraph 0804, review all unliquidated obligations and deobligate all unsubstantiated obligations and excess funds. See Volume 11A, Chapter 3 of this Regulation.
This told me what the statutory authority for an Economy Act Order is and a little about how to execute one, but it did not get me any closer to being able to answer your question. However, since section B referenced FMR Volume 11A, Chapter 3, I decided to look there next.
DoD Financial Management Regulation (FMR) 7000.14-R, Volume 11A, Chapter 3 deals entirely with Economy Act Orders. Specifically, FMR Volume 11A, Chapter 3, paragraph 030104, sections B and C say:
B. 31 U.S.C. §1536 provides for the crediting of payments from purchases between executive agencies so as to be available to replace stocks on hand, unless:
1. Another law authorizes the amount to be credited to some other appropriation or fund, or
2. The head of the performing agency decides that replacement is not necessary, in which case, the amount received is deposited in the Treasury as miscellaneous receipts.
C. Reimbursements made to DoD appropriations under 31 U.S.C. §1535 and §1536 for services rendered or supplies furnished, may be credited to the appropriation or fund of the activity performing the reimbursable work (10 U.S.C. §2205) .
FMR Volume 11A, Chapter 3, paragraph 030104, section B does a pretty good job of paraphrasing 31 U.S.C. §1536 and it seems to make it pretty clear that the reimbursable funds that you are working with should be put on contract and used to replenish your stock. The only concern that I had was what was being addressed in section C. So, I went to take a look at 10 U.S.C. §2205. It says:
(a) AVAILABILITY OF REIMBURSEMENTS.—Reimbursements made to appropriations of the Department of Defense or a department or agency thereof under sections 1535 and 1536 of title 31, or other amounts paid by or on behalf of a department or agency of the Department of Defense to another department or agency of the Department of Defense, or by or on behalf of personnel of any department or organization, for services rendered or supplies furnished, may be credited to authorized accounts. Funds so credited are available for obligation for the same period as the funds in the account so credited. Such an account shall be accounted for as one fund on the books of the Department of the Treasury.
While I have to admit that I am not a lawyer, it appears to me that 10 U.S.C. §2205 is the statutory authority for what are routinely referred to as “Working Capital Funds.” That is why the last sentence talks to having one fund on the Treasury books.
Conclusion: From my reading of FMR Volume 11A, Chapter 3, paragraph 030104, section B, it appears that you would have to put those reimbursable funds on a contract to replenish your stock as opposed to using your mission funds. That makes some sense from the stand point that by using your mission funds you put into question the issue of bona fide need. Your mission funds are to be used for a bona fide need that arises during their period of availability for obligation. However, the need to replenish the stock came from the fact that another organization needed the parts, not that there was a bona fide need based on your mission.
Suggestion: First, review FMR Volume 11A, Chapter 3 for a full discussion of Economy Act Orders and the concept and policies involved in utilizing and funding them. In addition, since your e-mail address indicates that you work for the Army, we most strongly recommended that you contact your local Army comptroller organization and legal counsel for more information and their policy interpretation of this issue.