ARDEC customers from within DOD should be requested to use Economy Act Orders for ordering ARDEC services where ARDEC will perform less than 51% of the total cost of the order. These orders should be issued on a DD448 MIPR, and depending on the wording of the DD448, accepted by ARDEC COCP on a
DD448-2 MIPR Acceptance as either a) Category I (Reimbursable), or b) Category I & II (Reimbursable and Direct Cite). However, ARDEC personnel may not use reimbursable funds provided under Economy Act Orders to obtain goods and services from OGAs and contractors even if those items are attributable to the ordered services; funding for such items must be provided via Direct Cite.
Federal Acquisition Regulation (FAR) Subpart 17.5 deals with Interagency Acquisitions. The specific sections are FAR 17.500 through FAR 17.504, with FAR 17.502-2 speaking directly to Economy Act orders.
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There is nothing in FAR 17.5 that specifically addresses that either direct or reimbursable citations must be used, or cannot be used, when obtaining goods and/or services from OGAs and contractors (even if those items are attributable to the ordered service). However, FAR 17.502-1(b)(1)(i) states, “Prior to the issuance of a solicitation, the servicing agency and the requesting agency shall both sign a written interagency agreement that establishes the general terms and conditions governing the relationship between the parties, including roles and responsibilities for acquisition planning, contract execution, and administration and management of the contract(s) or order(s). The requesting agency shall provide to the servicing agency any unique terms, conditions, and applicable agency-specific statutes, regulations, directives, and other applicable requirements for incorporation into the order or contract; for patent rights, see 27.304-2. In preparing interagency agreements to support assisted acquisitions, agencies should review the Office of Federal Procurement Policy guidance, Interagency Acquisitions, available at http://www.whitehouse.gov/omb/assets/procurement/iac_revised.pdf”
Next, I went to the Office of Federal Procurement Policy guidance, Interagency Acquisitions, to see if that provided any specific guidance, one way or the other, on the use of direct or reimbursable citations when obtaining goods and/or services from OGAs and contractors. Unfortunately, there is nothing specific there, but it has a wealth of guidance on what should be in the Interagency Agreement (IA) that is mentioned in FAR 17.502-1(b)(1)(i). In particular, Section III.B.2 discusses the requirements and funding information that should be addressed in the IA. Of particular interest, was a comment in Appendix 1, Checklist of Roles and Responsibilities in Assisted Acquisitions, under General Stewardship Responsibility. Under the category of Servicing Agency’s Responsibility, one of the bullets states, “Be a good steward of the Requesting Agency's funds by ensuring appropriate internal controls, and applying sound project management, contracting, and fiscal practices.”
Therefore, the answer to your question has to be drawn from the interpretation of FAR 17.5 and the guidance provided by the Office of Federal Procurement Policy guidance, Interagency Acquisitions. Given those resources, I would argue that, as long as it is clearly laid out in advance in the IA between the requesting agency and the servicing agency, you can say that you cannot use reimbursable funds under the Economy Act orders to obtain goods and services from OGAs and contractors but must use Direct Cite orders. The worst case scenario is that the requesting agency does not like it, at which time they can chose to use another servicing agency or procure the goods and/or services themselves.
As a practical matter, as far as being a good steward of the requesting agency’s funds, I would say that any comptroller who allows the use of anything but direct citations when obtaining goods and/or services from OGAs and contractors (even if those items are attributable to the ordered service) is absolutely asking for problems. The reason being, that at that point, the comptroller has lost control of how those funds will be utilized. What would prevent the requesting agency from procuring whatever goods and services they wanted and just charging the reimbursable citation, which routinely has less control and scrutiny put on it? Having done financial management for the Navy for more years that I care to admit, we only ever used reimbursable citations for the servicing agency’s services. And if goods and/or services were required from OGAs or contractors (even if those items are attributable to the ordered service), you can be guaranteed that we were using direct citations for them.
Suggestions: It is definitely worth your time to take a look at FAR 17.500-504 and the Office of Federal Procurement Policy guidance, Interagency Acquisitions. In addition, since your email address indicates that you are assigned to an Army organization, it is most strongly recommended that you contact your local Army comptroller organization for more information and their policy interpretation of this issue.