FAR 17.502-2—The Economy Act.
Plain-English Summary
FAR 17.502-2 explains when and how agencies may use the Economy Act to obtain supplies or services from another agency, including interagency acquisitions and certain intra-agency transactions. It covers the basic authority under 31 U.S.C. 1535, when the FAR applies and when it does not, and the rule that the Economy Act is a fallback authority used only when more specific statutory authority is unavailable. The section also sets out the required determination and findings (D&F), including the best-interest finding, the finding that direct contracting is not as convenient or economical, and the required basis for using another agency. It addresses who must approve the D&F, how the requesting agency must transmit it to the servicing agency, and the payment rules for advance payment, post-performance payment, audit/certification, and limits on fees or charges. In practice, this section is important because it controls whether an interagency buy is legally supportable, who may approve it, and how money may flow between agencies without overpaying for administrative support.
Key Rules
Economy Act authority
The Economy Act authorizes one agency to obtain supplies or services from another agency. It also allows orders between major organizational units within the same agency, but those intra-agency procedures are governed by agency-specific regulations.
FAR applies only to contracts or orders
The FAR applies when one agency uses another agency’s contract to obtain supplies or services. If the transaction does not result in a contract or an order, this FAR section does not govern the arrangement.
Use only when no specific authority exists
The Economy Act is a residual authority and applies only when a more specific statutory authority is not available. Examples of more specific authority include the Federal Supply Schedules and GWAC authority.
D&F is required for each order
Each Economy Act interagency order must be supported by a determination and findings. The D&F must state that the interagency acquisition is in the Government’s best interest, that direct contracting is not as convenient or economical, and that one of the listed statutory circumstances applies.
Required basis for using another agency
The D&F must identify at least one qualifying circumstance: use of an existing servicing agency contract, the servicing agency’s unique capability or expertise, or specific legal/regulatory authority for the servicing agency to buy on behalf of others.
Approval must be by authorized official
A contracting officer of the requesting agency with authority to buy the supplies or services, or another official designated by the agency head, must approve the D&F. If the servicing agency is not subject to the FAR, approval cannot be delegated below the requesting agency’s senior procurement executive.
Copy of D&F must accompany request
The requesting agency must provide the approved D&F to the servicing agency when it submits the order request. This ensures the servicing agency has the legal basis for the interagency action before accepting or performing the order.
Payment limited to actual cost
The servicing agency may request advance payment, and the agencies may agree to adjust later based on actual costs. The requesting agency may also pay after performance if the servicing agency agrees, but in all cases the servicing agency may not charge more than actual cost, or estimated cost if actual cost is not yet known, for entering into and administering the underlying agreement.
No advance audit or certification
Bills or advance payment requests under this section are not subject to audit or certification before payment. This streamlines interagency payment processing, but it does not eliminate the requirement to comply with the cost and payment limits in the rule.
Responsibilities
Requesting Agency
Determine whether the Economy Act is the proper authority, prepare the required D&F, ensure the acquisition is in the Government’s best interest, show that direct contracting is not more convenient or economical, obtain the required approval, and send the approved D&F with the order request to the servicing agency. The requesting agency must also make payment only as allowed and only for actual cost or estimated cost when actual cost is not yet known.
Contracting Officer of the Requesting Agency
Approve the D&F if the officer has authority to contract for the supplies or services being ordered. The contracting officer must ensure the statutory findings are complete and that the interagency acquisition is properly supported before the order is placed.
Agency Head or Designated Official
If the agency head designates another official to approve the D&F, that official may approve it subject to the limits in the rule. When the servicing agency is not covered by the FAR, approval authority may not be delegated below the senior procurement executive of the requesting agency.
Servicing Agency
Accept and perform the order only when the Economy Act basis is proper, the D&F is provided, and the servicing agency has the ability or authority to fulfill the requirement. The servicing agency may request advance payment, may agree to post-performance payment, and may charge only actual cost or estimated cost if actual cost is not known.
Servicing Agency Contracting/Acquisition Officials
Use the existing contract or other agreement appropriately, administer the order, and ensure any fee or charge does not exceed the actual cost of entering into and administering the underlying contract or agreement. They must also avoid imposing unauthorized markup or profit.
Agency Regulations for Intra-Agency Units
Establish procedures for orders between major organizational units within the same agency, since the FAR leaves those intra-agency transaction procedures to agency-specific regulations.
Practical Implications
This section is often used as a legal gatekeeper for interagency buys, so the first practical question is always whether a more specific authority applies instead. If a schedule, GWAC, or other specific statute fits, the Economy Act should not be used as the default.
The D&F is not a formality; missing one of the required findings or the required approval can make the order vulnerable to challenge or payment problems. Agencies should document why the interagency route is best and why direct contracting is not as convenient or economical.
Cost control matters. The servicing agency may recover actual costs, but it cannot add profit or an extra fee beyond the cost of entering into and administering the agreement. Contractors and acquisition staff should watch for hidden markups in interagency support arrangements.
Payment timing must be agreed to up front. Advance payment is allowed, but only if requested in writing by the servicing agency, and later adjustments should be handled as the agencies agree; post-performance payment is allowed only if the servicing agency approves it.
Because bills and advance payment requests are not subject to prepayment audit or certification, agencies need strong internal controls and clear documentation. The lack of prepayment audit does not reduce the need to verify that the order is properly authorized and that charges stay within allowable cost limits.
Official Regulatory Text
(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’s 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. (b) The Economy Act applies when more specific statutory authority does not exist. Examples of more specific authority are 40 U.S.C. 501 for the Federal Supply Schedules (subpart 8.4 ), and 40 U.S.C. 11302 ( e) for Governmentwide acquisition contracts (GWACs). (c) Requirements for determinations and findings. (1) Each Economy Act order to obtain supplies or services by interagency acquisition shall be supported by a determination and findings (D&F). The D&F shall- (i) State that use of an interagency acquisition is in the best interest of the Government; (ii) State that the supplies or services cannot be obtained as conveniently or economically by contracting directly with a private source; and (iii) Include a statement that at least one of the following circumstances applies: (A) The acquisition will appropriately be made under an existing contract of the servicing agency, entered into before placement of the order, to meet the requirements of the servicing agency for the same or similar supplies or services. (B) The servicing agency has the capability or expertise to enter into a contract for such supplies or services that is not available within the requesting agency. (C) The servicing agency is specifically authorized by law or regulation to purchase such supplies or services on behalf of other agencies. (2) The D&F shall be approved by a contracting officer of the requesting agency with authority to contract for the supplies or services to be ordered, or by another official designated by the agency head, except that, if the servicing agency is not covered by the FAR, approval of the D&F may not be delegated below the senior procurement executive of the requesting agency. (3) The requesting agency shall furnish a copy of the D&F to the servicing agency with the request for order. (d) Payment. (1) The servicing agency may ask the requesting agency, in writing, for advance payment for all or part of the estimated cost of furnishing the supplies or services. Adjustment on the basis of actual costs shall be made as agreed to by the agencies. (2) If approved by the servicing agency, payment for actual costs may be made by the requesting agency after the supplies or services have been furnished. (3) Bills rendered or requests for advance payment shall not be subject to audit or certification in advance of payment. (4) In no event shall the servicing agency require, or the requesting agency pay, any fee or charge in excess of the actual cost (or estimated cost if the actual cost is not known) of entering into and administering the contract or other agreement under which the order is filled.