Does the Economy Act apply in this situation?
1. The references quoted below in pertinent part are applicable to this response.
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A. FAR 17.502-2 – The Economy Act
(a) 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 intraagency transactions are addressed in agency regulations.
B. DoD Financial Management Regulation, Chapter 3 – Economy Act Orders
030101. Purpose. This chapter prescribes policies and procedures applicable to transactions where goods or services are procured from other federal agencies under the Economy Act, Title 31, United States Code (U.S.C.), sections 1535 and 1536. Transactions include interservice and intragovernmental support, where an activity needing supplies or services (requesting agency/customer) obtains them from another activity (servicing agency/performer). Within the Department of Defense (DoD), Economy Act orders typically are executed by issuance of a DD Form 448, “Military Interdepartmental Purchase Request (MIPR).”
030102. Overview. … Within the Department, an activity within a DoD Component may place an order with another activity within the same DoD Component, another DoD Component or with another federal agency for goods or services. References on the use of Economy Act orders include: DoD Instruction 4000.19, “Interservice and Intragovernmental Support” … .
030203. Interservice Support. DoD activities shall render requested support to other DoD activities when the head of the requesting activity determines that it would be in the best interest of the U.S. Government, and the head of the servicing activity determines that capabilities exist to render the support without jeopardizing assigned missions. These determinations are accomplished by signing a Support Agreement (blocks 8 and 9 on DD Form 1144, “Support Agreement”). No further written determinations generally are required for agreements between DoD activities.
C. DoD Instruction 4000.19, “Interservice and Intragovernmental Support”
4.3. Interservice Support. DoD activities shall provide requested support to other DoD activities when the head of the requesting activity determines it would be in the best interest of the United States Government, and the head of the supplying activity determines capabilities exist to provide the support without jeopardizing assigned missions. These determinations are signified by signing a support agreement (blocks 8 and 9 on DD form 1144) -- no further written determinations are required for agreements between DoD activities. The quality of support services provided to other DoD activities shall be equivalent to the quality of support the supplier furnishes to its own mission, unless otherwise requested or approved by the receiver. DoD activities may request support from other DoD activities when in-house capabilities do not exist, or when support can be obtained more efficiently or effectively from other existing DoD capabilities.
2. As stated in FAR 17.502-2(a), the Economy Act applies to the placement of orders between major organizational units within an agency. Therefore, the Economy Act would apply to this situation because the contemplated transaction is between the USAF and the USA, both major organizational units within DoD. Also, pursuant to this FAR 17.502-2(a), DoD regulations would govern this transaction (i.e., references 1B and 1C described above).
3. As described in the Background statement, the contemplated transaction appears to be compliant with the requirements specified in reference 1C, wherein DoD activities may request support from other DoD activities when in-house capabilities do not exist, or when support can be obtained more efficiently or effectively from other existing DoD capabilities. Furthermore, the regulations referenced above make no distinction between non-FMS and FMS-related transactions. Therefore, in accordance with references 1B and 1C described above, the contemplated inter-service transaction may be accomplished by the initial execution of a formal DD Form 1144 Support Agreement between the USAF and the USA covering the contemplated weapon system sustainment services, followed by the issuance of DD Form 448, “Military Interdepartmental Purchase Requests (MIPRs) by the USAF to the USA for these services.