At first glance, it appeared to me that the recent changes to FAR subpart 17.5 apply to all non-Economy Act agreements. According to the information at http://www.regulations.gov/#!documentDetail;D=FAR-2010-0107-0008 , the changes strengthen 17.5 by "Broadening the scope of coverage to address all interagency acquisitions that result in a contract action".
I suspect my confusion is from the exemptions described in 17.500(c)(1). Does the second half, "interagency activities where contracting is incidental to the purpose of the transaction", refer to the requesting agency's local contracting office? If that is the case, is this where the subpart is saying it doesn't apply if no contracting action is required for the requesting agency? Is there any guidance that states this is more explicit terms?
Yes, FAR 17.5 applies anytime a Defense agency is getting supplies or services from another Defense agency rather than contracting for them on its own. FAR subpart 17.7 adds requirements when a Defense agency is getting supplies or services from a federal agency other than a Defense agency. Yes, this means Departments of Education, Forestry, Transportation, Veteran Affairs, and even General Services (GSA). In order for this to make sense we need to untangle three conceptual threads of definitions and lines of authority.
Open full Question Details
The first thread to unwind is what comes first: FAR or The Economy Act? The trick here is that all interagency acquisitions are enabled by the Economy Act. Remember, FAR is the easy to read compendium summarizing and harmonizing a whole bunch of sometimes conflicting pieces of legislation. The Economy Act is the legislation that lets agencies get stuff from other agencies. Without the Economy Act, agencies must buy all their own stuff. The language, “Non-economy Act acquisitions,” comes from the definition in FAR 2.101, “Interagency acquisition,” (2). Read the definition and notice that all instances of getting stuff from other agencies is an Economy Act enabled acquisition unless it is covered by some other statutory requirement. Think of it as an Economy Act scenario that gets trumped by a more applicable law. Refer to FAR 8 – Required Sources of Supplies and Services for more on the other statutory requirements. That’s the first thread to unwind.
The second thread to pull on is the confusion that sometimes arises from FAR 17.502-2(a),
“The Economy Act (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’ 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.”
Notice how it is the FAR that does not apply if there is no contract action. Again, this means exactly what it says. If there is no contracting going on, there is no need to involve the FAR. The Economy Act still applies because it authorizes the agency to fill a requirement without having to go out and buy it on a new contract action each time the need arises. The goal is to balance the desire to provide industry opportunity to get the business with the desire to make the best use of limited taxpayer dollars. Not always an easy equation to balance but this is the best solution we have.
The last thread to pull is to recognize that all the rest of FAR subparts 17.5 and 17.7 cover the steps we must take to ensure agencies are not unfairly withholding opportunity for industry to get the business just for the sake of administrative convenience. Documenting decisions is how we make sure adequate consideration is given to both sides of the equation, taxpayer interest vs. industry interest. FAR 17.500(a) states, “This subpart prescribes policies and procedures applicable to all interagency acquisitions under any authority, except as provided for in paragraph (c) of this section.” The way to interpret this is in the most straight forward way possible. “All…, except.” Sometimes it can seem difficult to understand why the FAR seems contradictory in this area. This is resolved by approaching the discussion from the contracting pillars of, “Always seek competition,” and, “Support small businesses.” Viewed through the lenses of FAR Part 5 – Publicizing Contracting Actions and FAR Part 6 – Competition Requirements, it makes sense that care is taken to ensure an opportunity to give private industry a crack at the business is not passed up unless there is a greater benefit to the other side of the equation. In other words, the savings to the taxpayer outweighs the lost business opportunity to industry. If that is the situation, document it and drive on.
Now that we have those three threads straight, your situation is directly addressed by DFARS 217.5(a) which says you will be using Department of Defense Instruction 4000.19 – Support Agreements. Also notice, DFARS drops the $500,000 threshold for application of the requirements to document decisions in the contract file down to the micro-purchase threshold, including task and delivery orders placed with other agencies (think FAR Part 8). They really want to make sure thought and consideration is taken before DoD agencies take away a chance for industry to get the business on a DoD issued contract. DoDI 4000.19 covers all those situations where agencies get stuff from other agencies and there is no primary contracting actions generated. An example could be when the Air Force sends a helicopter to an Army Depot for overhaul rather than contracting to have it done by private industry. The incidental contracting mentioned in FAR 17.500(c)(1) is like the shop towels, cleaners and lubricants the Army will use while they work on the Air Force helicopter. The shop supplies were bought on contract at some point but they were not bought specifically because the Air Force helicopter came in. The shop supplies were bought because the Army has a Depot which requires them. All the matters of who owes who in the reimbursable realm is discussed in DoDI 4000.19 – Support Agreements.