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    Can a federal agency act as a subcontractor to a company? Exceptions to the miscellaneous receipts statute (31 U.S.C. 3302(b)) allow an agency to retain money if it has statutory authority to do so or if it is a form of repayment to include reimbursements and refunds. GAO's Principles of Federal Appropriations Law Volume II defines Reimbursements as sums received as a result of commodities sold or services furnished either to the public or to another government account, which are authorized by law to be credited directly to a specific appropriation. Based on this information, and the fact that my agency does has authority to retain money and also we would be getting reimbursed for services provided, can we provide this service to the company? Does it matter that the company may be using funds from another federal agency under an awarded contract? If it is allowed, what instrument would be used to allow for the transfer of funding?


    Answer

    In this scenario,  a federal agency awards a contract to a civilian contractor.  The contractor in turn wants to subcontract out a portion of the work to another government agency. The targeted servicing agency is authorized to receive funds based on work performed.  So your  first question could be "Why not descope the work? The portion to be subcontracted can be performed directly between the two government entities as an interagency acquisition. Interagency acquisition” (FAR 2.101) is defined as "a procedure by which an agency needing supplies or services (the requesting agency) obtains them from another agency (the servicing agency), by an assisted acquisition or a direct acquisition."  As a result, a benefit is the contractor would not be involved to charge unnecessary and expensive pass-through, and the requiring activity would demonstrate being good stewards of government funds.

    However, if we descope the contract, there would be no contractual relationship between the requiring agency and the serving agency. It would be just an agreement between 2 govt agencies.  The Economy Act would apply (See FAR 17.502-2).  Also the requiring agency would have to provide oversight to the servicing agency, which could be a disincentive. 
     
    If descoping is not preferred, another option is to follow the guidance at 10 USC 2563, (Articles and Services of industrial facilities: sale to persons outside the DoD), since your organization is authorized to receive funds.  However,  please review the conditions in paragraph (c ) that may cause an exception.  Each agency may differ on the documentation and procedures  used to transfer funds between the contractor and government agency, so I would consult your legal department.  See this link (https://www.law.cornell.edu/uscode/text/10/2563). 


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