FAR 42.002—Interagency agreements.
Plain-English Summary
FAR 42.002 addresses how federal agencies should coordinate when more than one agency has oversight or audit-type interests in the same contractor or subcontractor. It covers three related topics: avoiding duplicate audits, reviews, inspections, and examinations through interagency agreements; reimbursing a servicing agency for work it performs for another agency under the Economy Act and the agencies’ fiscal rules; and, when an agreement is in place, encouraging the agencies to set up procedures for resolving disputes or other issues that arise under the agreement. In practice, this section is about reducing unnecessary burden on contractors, preventing agencies from duplicating oversight work, and making sure interagency support arrangements are financially and administratively proper. It matters because multiple agencies may otherwise independently request the same information or perform the same oversight activity, which wastes government resources and can create conflicting demands on contractors. The reimbursement requirement also ensures the servicing agency is paid in accordance with law and applicable fiscal controls. Finally, the dispute-resolution encouragement helps agencies manage coordination problems before they disrupt contract administration or oversight.
Key Rules
Avoid duplicate oversight
Agencies should use interagency agreements to prevent more than one agency from conducting the same audits, reviews, inspections, or examinations of contractors or subcontractors. The goal is to coordinate oversight so the contractor is not subjected to unnecessary repeated government scrutiny.
Reimburse servicing agency
When one agency performs services for another under an interagency agreement, the requesting agency must reimburse the servicing agency, subject to each agency’s fiscal regulations and the terms of the agreement. Reimbursement must also comply with the Economy Act, 31 U.S.C. 1535.
Follow fiscal regulations
Any reimbursement or interagency support arrangement must be consistent with the fiscal regulations of both agencies. This means the agencies cannot rely on the agreement alone; they must also satisfy appropriations law and internal fiscal controls.
Plan for issue resolution
When agencies establish an interagency agreement, they are encouraged to include procedures for resolving issues that may arise under the agreement. While this is phrased as encouragement rather than a mandatory requirement, it is an important governance practice for avoiding delays and disputes.
Responsibilities
Agencies
Coordinate oversight activities through interagency agreements to avoid duplicative audits, reviews, inspections, and examinations of contractors or subcontractors. They should also consider building dispute-resolution procedures into the agreement.
Requesting Agency
Reimburse the servicing agency for services rendered under the interagency agreement, consistent with the Economy Act, applicable fiscal regulations, and the agreement’s terms.
Servicing Agency
Perform the agreed-upon services for the requesting agency and bill or otherwise seek reimbursement in accordance with the interagency agreement and fiscal requirements.
Contracting Officers / Acquisition Officials
Use interagency agreements and coordination mechanisms to reduce redundant contractor oversight and ensure any interagency support arrangement is properly documented, authorized, and fiscally compliant.
Practical Implications
Contractors should not be subjected to repeated, overlapping government audits or inspections when agencies can coordinate through an interagency agreement; if that happens, it may signal poor interagency coordination.
Agencies need to confirm that reimbursement authority exists and that the arrangement fits the Economy Act and agency fiscal rules before relying on another agency’s services.
A well-written interagency agreement should spell out who does what, how costs are reimbursed, and how disagreements will be handled; leaving these issues vague often leads to delays and disputes.
This section is mainly about administrative coordination, but it has real cost and schedule effects: duplicate oversight can slow performance, increase compliance burden, and create inconsistent findings.
Contracting personnel should watch for situations where multiple agencies are asking for the same reviews or data, and should push for a single coordinated approach whenever possible.
Official Regulatory Text
(a) Agencies shall avoid duplicate audits, reviews, inspections, and examinations of contractors or subcontractors, by more than one agency, through the use of interagency agreements. (b) Subject to the fiscal regulations of the agencies and applicable interagency agreements, the requesting agency shall reimburse the servicing agency for rendered services in accordance with the Economy Act ( 31 U.S.C. 1535 ). (c) When an interagency agreement is established, the agencies are encouraged to consider establishing procedures for the resolution of issues that may arise under the agreement.