DoD Financial Management Regulation Volume 11A, Chapter 18

Ë August 2008

SUMMARY OF MAJOR CHANGES TO

DOD 7000.14-R, VOLUME 11A, CHAPTER 18

“NON-ECONOMY ACT ORDERS”

All changes are denoted by bold blue font

Substantive revisions are denoted by a Ë preceding the section, paragraph, table, or

figure that includes the revision

Hyperlinks are identified by underlined, bold, italic, blue font

PARA EXPLANATION OF CHANGE/REVISION PURPOSE

180302A.2. Clarifies guidance for when delivery of goods can occur in

the year subsequent to funds availability.

Update

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TABLE OF CONTENTS

NON-ECONOMY ACT ORDERS

1801 General

1802 Initiating a Non-Economy Act Order

1803 Fiscal Policy

1804 Non-Economy Act Order Follow-up Procedures

Figure 1 Non-Economy Act Acquisition Package Checklist

Figure 2 Requesting Official Responsibilities

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CHAPTER 18

NON-ECONOMY ACT ORDERS

1801 GENERAL

180101. Purpose

. This chapter prescribes policies and procedures applicable to

transactions where goods or services are procured from Non-Department of Defense (DoD)

agencies under statutory authorities other than the Economy Act (Volume 11A, Chapter 3).

180102. Overview

. Non-Economy Act orders are for intra-governmental support,

where a DoD activity needing goods and services (requesting DoD agency/customer) obtains

them from a Non-DoD agency (assisting/servicing agency/performer). Specific statutory

authority is required to place an order with a Non-DoD agency for goods or services, and to pay

the associated cost. If specific statutory authority does not exist, the default will be the Economy

Act, 31 U.S.C. 1535 which is discussed in Volume 11A, Chapter 3 of the “DoD Financial

Management Regulation” (“DoDFMR”). The more commonly used non-Economy Act

authorities include, but are not limited to:

Acquisition Services Fund. The Acquisition Service Fund was established

by the General Service Administration Modernization Act that merged the General Supply Fund

and the Information Technology Fund to carry out functions related to the uses of the

Acquisition Services Fund including any functions previously carried out by the Federal Supply

Service and the Federal Technology Service managed by the General Service Administration.

Franchise Funds. Franchise Funds were first established by P.L. 103-356,

Title IV, Section 403 to provide common administrative support services on a competitive and

fee basis. Franchise fund programs originated within the Environmental Protection Agency,

Department of Commerce, Department of Veterans Affairs, Department of Health and Human

Services, Department of Interior, and Department of the Treasury.

1802 INITIATING A NON-ECONOMY ACT ORDER

180201. Non-Economy Act orders in excess of the simplified acquisition threshold

shall comply with Federal Acquisition Regulation (FAR) Part 7, “Acquisition Planning,” and

DoD Components’ procedures for the “Proper Use of Non-DoD Contracts.” Use of the “Non-

Economy Act Acquisition Package Checklist” at Figure 1 and the list of “Requesting Official

Responsibilities” at Figure 2 will assist in ensuring that statute, policy, and regulation are

complied with under non-Economy Act orders.

180202. Justification

. Non-Economy Act orders may be placed with a non-DoD

agency for goods or services if:

Proper funds are available;

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B. The order does not conflict with another agency’s designated

responsibilities (e.g., real property lease agreements with GSA);

The requesting agency or unit determines the order is in the best interest

of the Department; and

D. The performing agency is able and authorized to provide the ordered

goods or services.

180203. Order. Non-Economy Act orders for work and services outside the DoD

should be executed by issuance of a DD Form 448, “Military Interdepartmental Purchase

Request (MIPR)” and accepted using DD Form 448-2, “Acceptance of MIPR.” If an alternative

execution document is used, it must provide information consistent with the MIPR to include the

purchase request number and the Activity Address Code (DODAAC). A non-Economy Act

order shall comply with the documentation standards in Volume 11A, Chapter 1 of the

“DoDFMR,” and supported with the items identified in Figure 1. Non-Economy Act orders

must include:

A. A firm, clear, specific, and complete description of the goods or services

ordered. The use of generic descriptions is not acceptable;

B. Specific performance or delivery requirements;

C. A proper fund citation;

D. Payment terms and conditions (e.g., direct cite or reimbursement, and

specific appropriation or law authorizing advanced payments);

E. A specific non-Economy Act statutory authority citation such as those

referenced in paragraph 180102 above;

F. The following statement on funding documents for severable services:

“These funds are available for services for a period not to exceed one year from the date of

obligation and acceptance of this order. All unobligated funds shall be returned to the ordering

activity no later than one year after the acceptance of the order or upon completion of the order,

which ever is earlier.”;

G. The following statement on funding documents for goods: “I certify that

the goods acquired under this agreement are legitimate, specific requirements representing a

bona fide need of the fiscal year in which these funds are obligated.”; and

H. DoD Activity Address Code (DODAAC).

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180204. Best Interest Determination. Each requirement must be evaluated in

accordance with DoD Components’ procedures to ensure that non-Economy Act orders are in the

best interest of DoD. Factors to consider include:

A. Satisfying customer requirements;

B. Schedule, performance, and delivery requirements;

C. Cost effectiveness, taking into account the discounts and fees; and

D. Contract administration, to include oversight.

180205. Specific, Definite and Certain. For non-Economy Act orders in excess of

the simplified acquisition threshold, the requesting official must provide:

A. Evidence of market research and acquisition planning;

B. A statement of work that is specific, definite, and certain both as to the

work encompassed by the order and the terms of the order itself; and

C. Unique terms, conditions, and requirements to comply with applicable

DoD-unique statues, regulations, directives, and other requirements.

180206. Contracting Officer Review. All non-Economy Act orders greater than

$500,000 shall be reviewed by a DoD warranted contracting officer prior to sending the order to

the funds certifier or issuing the MIPR to the Non-DoD activity. In addition to the review by the

contracting officer, the requesting official shall further review the acquisition package to ensure

compliance with the FAR Part 7, and the DoD Component’s procedures.

180207. Certification of Funds

. Non-Economy Act orders are subject to the same

fiscal limitations that are contained within the appropriation from which they are funded.

Because the performing entity may not be aware of all the appropriation limitations, the DoD

certifying official must certify that the funds cited on the order are available, meet time

limitations, and are for the purpose designated by the appropriation.

180208. Bona Fide Need

. Non-Economy Act orders citing an annual or multiyear

appropriation must serve a bona fide need arising, or existing, in the fiscal year (or years) for

which the appropriation is available for new obligations. Otherwise, a valid obligation is not

accomplished. An interagency agreement may not be used in the last days of the fiscal year

solely to prevent funds from expiring or to keep them available for a requirement arising in the

following fiscal year. Bona fide need generally is a determination of the requesting activity and

not that of the servicing activity. A servicing activity can, however, refuse to accept a non-

Economy Act order if it is obvious that the order does not serve a need existing in the fiscal year

for which the appropriation is available.

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180209. Payment Procedures. Payment shall be made promptly upon the written

request (or billing) of the performing agency. Unless the DoD Component is specifically

authorized by law, legislative action or Presidential authorization, funds are not to be advanced

to non-DoD federal entities, or be used to pay for advance billings without the receipt of goods

or services. (Refer to FMR Volume 4, Chapter 5 for the conditions and requirements related to

advances and prepayments.) For those few exceptions where DoD is specifically authorized by a

specific appropriation or law to advance funds, the specific appropriation or law authorizing the

advance must be cited on the obligating and/or interagency agreement documents and orders,

and any unused amounts of the advance shall be collected from the performing agency

immediately and returned to the fund from which originally made.

A. The requesting official must be fully aware of the non-DoD federal

agency’s billing practices and methods. The official must also take appropriate action to ensure

DoD funds are not disbursed in advance of contract performance. Additionally, Components

must work with their servicing disbursement sites to ensure trading partner agreements restrict

other federal agencies’ ability to withdraw funds prior to the delivery of goods or performance of

services.

B. Payments made for services rendered or goods furnished may be credited

to the appropriation or fund of the agency performing the reimbursable work.

1803 FISCAL POLICY

180301. Obligation. The provisions of 31 U.S.C. 1501 govern the recording of the

obligation. An amount shall be recorded as an obligation only when supported by documentary

evidence of an order required by law to be placed with an agency or upon meeting all the

following criteria:

A. Binding agreement (funding vehicle) between an agency and another

person (including an agency);

B. Agreement is in writing;

C. For a purpose authorized by law;

D. Serves a bona fide need arising, or existing, in the fiscal year or years for

which the appropriation is available for obligation;

E. Executed before the end of the period of availability for new obligation of

the appropriation or fund used; and

F. Provides for specific goods to be delivered, real property to be bought or

leased, or specific services to be supplied.

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180302. Deobligation. Funding under non-Economy Act orders shall be

deobligated as outlined below.

A. Goods. Funds provided to a performing agency for ordered goods where

the funds period of availability thereafter has expired shall be deobligated and returned by the

performing agency unless the request for goods was made during the period of availability of the

funds and the item(s) could not be delivered within the funds period of availability because of

delivery, production or manufacturing lead time, or unforeseen delays that are out of the control

and not previously contemplated by the contracting parties at the time of contracting.

1. Where materials cannot be obtained in the same fiscal year in

which they are needed and contracted for, provisions for delivery in the subsequent fiscal year do

not violate the bona fide need rule as long as the time intervening between contracting and

delivery is not excessive and the procurement is not for standard commercial off the shelf

(COTS) items readily available from other sources.

Η2. The delivery of goods may not be specified to occur in the year

subsequent to funds availability unless delivery meets the exceptions cited above and a

justifiable bona fide need exists in the year funds are available for obligation.

B. Severable Services. An agreement for severable services that are

continuing and recurring in nature and provide the Department a benefit each time the service is

performed (e.g., maintenance and repair services, scientific, engineering, and technical services)

is based on statutory authority other than the Economy Act. 10 U.S.C. 2410a permits the

performance of severable services to begin in one fiscal year and end in the next provided the

period of performance does not exceed one year.

1. The performance of severable services must begin during funds

period of availability and may not exceed one year.

2. Annual appropriations provided to a performing agency that have

expired shall be deobligated unless the performance of the services requested began during the

funds period of availability and the period of performance does not exceed one year.

3. The annual appropriation from the earlier fiscal year may be used

to fund the entire cost of the one-year period of performance; however, annual appropriations

may not be used to enter into a severable services agreement where the period of performance

for services requested is entirely in the following fiscal year.

4. In no instance may the period of performance extend beyond

September 30 of the subsequent year for services funded with annual appropriations.

C. Non-Severable Services

. Non-severable services contracts must be funded

entirely with appropriations available for new obligations at the time the contract is awarded, and

the period of performance may extend across fiscal years. Funds provided to a performing

agency that become excess shall be deobligated as identified.

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D. Excess or Expired Funds. Activities shall reconcile all obligations and

remaining funds available for orders. The purpose of this reconciliation is to ensure the proper

use of funds and to identify and coordinate the return of expired or excess funds. Excess or

expired funds must be returned by the performing agency and deobligated by the requesting

agency to the extent that the performing agency or unit filling the order has not (1) provided the

goods or services (or incurred actual expenses in providing the goods or services), or (2) entered

into a contract with another entity to provide the requested goods or services. Expired funds

shall not be available for new obligations.

180303. Prohibitions. Non-Economy Act orders may not be used to violate

provisions of law, nor may they be used to circumvent conditions and limitations imposed on the

use of funds to include extending the period of availability of the cited funds.

1804 NON-ECONOMY ACT ORDER FOLLOW-UP PROCEDURES

180401. Non-Economy Act Order Oversight. The requesting official must

establish quality surveillance plans, for non-Economy Act orders in excess of the simplified

acquisition threshold, and ensure execution that would facilitate the oversight of the goods

provided or services performed by the performing agency. The plans should include:

A. Contract administration oversight in accordance with the surveillance

plan;

B. Processes for receipt and review of receiving reports and invoices from the

performing agency;

C. Reconciliation of receiving reports and invoices; and

D. Requirements for documenting acceptance of the goods received or

services performed.

180402. Monitor Fund Status

. The requesting official must monitor fund status to:

A. Monitor balances with the performing agency;

B. Conduct triannual reviews of non-Economy Act orders in accordance with

the Financial Management Regulation, Volume 3, Chapter 8, Section 0804, “Triannual Reviews

of Commitments and Obligations” and include a specific attestation on the triannual review

certification that all existing interagency agreements are consistent with DoD policy;

C. Confirm open balances with the performing agency;

D. Coordinate the return of funds from the Non-DoD performing agency in

accordance with paragraph 180302 above; and

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E. Coordinate with the accounting office to ensure timely deobligation of

funds.

180403. Non-Economy Act Order Close-Out

. All non-Economy Act orders shall

be reviewed by the requesting official to determine if they are complete. Completed orders shall

be fiscally closed out. The requesting official shall reconcile funds and coordinate the return of

excess or expired funds held by the performing agency. As part of this review, the requesting

official will:

A. Identify and determine if there are outstanding invoices;

B. Identify and determine the existence of excess or expired funds;

C. Coordinate the return of funds from the non-DoD performing agency in

accordance with paragraph 180302 above; and

D. Coordinate with the accounting office to ensure the deobligation of funds.

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NON-ECONOMY ACT

ACQUISITION PACKAGE CHECKLIST

A. Documented evidence of market research and acquisition planning performed.

B. Package includes a specific, definite, and concise statement of work documenting a bona fide need in

the fiscal year that the funds are available for new obligations.

C. Package includes specific performance and/or delivery requirements.

D. Package identifies the statutory authority permitting the performing agency to support the DoD

Component for the goods/services required.

E. Package includes the purchase request number and the Activity Address Code (DODAAC).

F. Package includes written justification for the Non Economy Act order in accordance with DFARS

Part 217.78 and the DoD Components’ procedures.

G. Package documents review of fees/surcharges/contract administration/discounts to ensure the cost is

reasonable and consistent with task to be accomplished by performing agency.

H. Package includes specific statutory authority authorizing advance payment or billing.

I. Package documents evidence that DoD competition requirements were followed in accordance with

DFARS.

J. Order identifies DoD unique terms & conditions to the performing agency.

K. Order identifies unique reporting requirements not otherwise specified to the performing agency.

Figure 1

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REQUESTING OFFICIAL RESPONSIBILITIES

A. Market Research

B. Acquisition Planning

C. Independent Government Cost Estimate (IGCE)

D. Statement of Work (SOW) to include evaluation criteria.

E. Ensure receipt and compliance of MIPR acceptance.

F. Assist in Technical Evaluation.

G. Quality Assurance Plan

1. Contracting Officer Representative (COR), Contracting Officer Technical

Representative (COTR) (Receiving Reports/Invoices - Inspection & Acceptance)

2. Contract Data Requirements List (CDRL) Procedural/Required Reports/Deliverables

Report/Contract Performance

3. Property/Equipment Management

4. Perform Contract Oversight

H. Funds Management/Record Keeping

1. Draw Down

2. Contract Reconciliation

3. Initiate Deobligation

4. Oversight of Billing/Reporting

I. Update all Points of Contract (POCs) as necessary throughout acquisition.

Figure 2