Frequently Asked Questions
Introduction: Meeting DoD Requirements Through Interagency Acquisition
On August 24, 2009, the Director, DPAP signed out a memorandum regarding Interagency Acquisition which included a comprehensive list of FAQs.
Much attention has been focused on the Department’s use of Interagency Acquisitions to meet DoD requirements for supplies and services. For years, Department policy has encouraged the use of Interagency Acquisitions to meet DoD requirements. That has not changed. In Section 801 of the 2008 NDAA, “INTERNAL CONTROLS FOR PROCUREMENTS ON BEHALF OF THE DEPARTMENT OF DEFENSE BY CERTAIN NON-DEFENSE AGENCIES” (Section 801), Congress set the stage for follow-up audits by the Department’s Inspectors General (DoD IG) in 2010 and beyond of DoD requirements met utilizing assisting agencies such as GSA, Interior, Treasury, National Institutes of Health (NIH), Commerce, and others. Additionally, in Section 801 Congress specifically directed the Department issue comprehensive guidance on the use of interagency contracting methods by the Department of Defense that addresses the circumstances in which it is appropriate for DoD acquisition officials to procure goods or services through a contract entered into by an agency outside the Department of Defense. This document addresses the specific Congressional concerns and other relevant areas related to Interagency Acquisition.
A. Frequently Asked Questions:
The following policy amplification is provided in direct response to requirements levied in Section 801 of the 2008 NDAA.
What are the circumstances in which it is appropriate to use direct acquisitions?
DoD contracting officers are encouraged to utilize existing contracts of non-DoD agencies when supplies or services under contract meet or exceed DoD schedule and performance requirements. DoD contracting officers must ensure that the prices obtained for such goods and services are fair and reasonable and that all statutory, regulatory, and policy requirements of the Department are met. As is the case with any procurement this business decision must be sufficiently documented in the contract file. Examples of a direct acquisition include the placement of an order against a General Services Administration Schedule contract or the National Aeronautics and Space Administration’s (NASA) Scientific and Engineering Workstation Procurement (SEWP) contract by a DoD contracting officer.
What are the circumstances in which it is appropriate to use assisted acquisitions?
DoD requirements may be met utilizing the assisted services of non-DoD agencies. Utilizing an assisted acquisition may be appropriate when requirements are well defined, the bona fide need standard is met, when the fees paid are considered fair and reasonable, when there is a complete understanding between the parties of roles and responsibilities, especially with regard to contract oversight and administration, and when it is determined to be in the best interest of the Department. Sufficient and appropriate funds must be utilized for the tasks to be accomplished for the time period of performance. All Interagency Acquisitions should have an Interagency Agreement (IA) regardless of dollar value. See the Director of Defense Procurements memo of October 31, 2008. However, the memo notes that an abbreviated IA may be appropriate for acquisitions less than $500,000.
What are the circumstances in which it is appropriate to use interagency contracting to acquire items unique to the Department of Defense? What are the procedures for approving such interagency acquisitions?
Organizations such as GSA’s Office of Assisted Acquisition Services, Federal Acquisition Service and the Department of the Interior’s (DoI) Acquisition Services Directorate (AQD), and others, have authority to acquire goods and services on behalf of the Department. Supplies or services that are “unique” to the Department of Defense may be acquired from non-DoD agencies if it is in the best interest of the Department to do so. The following requirements apply to the business decision on whether or not to acquire a DoD requirement via an interagency acquisition:
- It must be in the best interest of the Department to acquire the supply and/or service via an interagency acquisition. (See DFARS 217.7800)
- There must be an Interagency Agreement (IA) for each interagency acquisition.
- If the interagency acquisition exceeds $500,000 the corresponding IA should follow the format as prescribed by OFPP and endorsed by DoD.
- If the interagency acquisition exceeds $500,000 a warranted DoD contracting officer must review the package before it is sent to an assisting agency for execution.
- If the assisting agency has not certified in accordance with the requirements of Section 801 of the 2008 NDAA, then approval is required from USD(AT&L).
The business decision to utilize a non-DoD agency for acquisition support must be well documented in the contract file.
Note: DoD Components have established their own approval requirements for using the assisted services of a non-DoD agency.
What are the circumstances in which it is appropriate for DoD acquisition officials to use interagency contracting to acquire items that are already being provided under a contract awarded by the Department of Defense
In general, the Department should not utilize an assisting agency to acquire supplies or services that have been established under a DoD contract. However, there can be exceptions. For example, when a DoD organization utilizes the assisted services of another Agency to acquire multiple sub-systems or components that will result in the delivery of one total system, it may be appropriate for the assisting agency to procure a component from an existing DoD contract. It also may be appropriate when the assisting agency is providing the total acquisition solution and a portion of the requirement can be satisfied via an existing DoD contract. Factors to consider:
Does this solution provide:
- More favorable or better pricing.
- Potential for greater competition and therefore potentially more favorable pricing or technical solutions.
- Potential for more advantageous terms or conditions including delivery schedule.
Once again, this is a business decision to be made by the requirements organization. As is always the case, the use of an assisted acquisition must be in the best interest of the Department and the costs for assisted acquisition services must be reasonable.
What tools should be used by DoD acquisition officials to determine whether items are already being provided under a contract awarded by the Department of Defense?
Requirements and contracting officials should consult the capabilities within FPDS-NG under https://contractdirectory.gov/contractdirectory/
What procedures should be followed to ensure that defense procurement requirements are identified and communicated to outside agencies involved in interagency contracting?
On June 6, 2008, Mr. Paul A. Denett, Administrator, Office of Federal Procurement Policy (OFPP), Office of Management and Budget, issued a memorandum entitled “Improving the Management and Use of Interagency Acquisitions” to help define and assist in establishing roles and responsibilities in the interagency acquisition process.
Office of Federal Procurement Policy Memorandum dated June 6, 2008
The Department participated in the development of the guide and endorses its use in Interagency Acquisitions. The use of a standardized Interagency Agreement will alleviate many of the issues raised in audits conducted by the Department’s Inspectors General and the Government Accountability Office (GAO). The Department already has a requirement that any non-Economy Act interagency acquisition above the simplified acquisition threshold be supported by a best interest determination (Policy memo of October 29, 2004). More specific rules apply for Interagency Acquisitions under the Economy Act at FAR 17.5 and DFARS 217.50. In accordance with the request of the Administrator, OFPP, effective no later than November 3, 2008, all components must ensure that new interagency agreements for assisted acquisitions contain the elements enumerated in Appendix 2 of reference (a) (attached) or follow the model agreement in Appendix 3 of reference (a) (attached).
However, notwithstanding the content of the OFPP guide, the requirements of DFARS 217.78, “Contracts or Delivery Orders Issued by a Non-DoD Agency” must be met. For example, while the guide establishes a presumption that direct acquisition under a General Services Administration Federal Supply Services contract is in the best interest of the Government, and that a "requesting" agency only has to document why the acquisition vehicle is suitable for the agency's need, the Department must still address the cost effectiveness of the action. In addition, the guide requires the requiring office to notify the head of the acquisition office of a planned assisted acquisition valued over $200K and to get concurrence for requirements over $500K. However, current DoD policy, as set forth in the USD(C) memo of October 16, 2006, and the Director of Defense Procurement and Acquisition Policy’s (DPAP) memo of January 18, 2008, only requires contracting officer review of interagency acquisitions in excess of $500K.
Do I need an Interagency Agreement for every assisted acquisition?
Yes. In accordance with DPAP policy memo of October 31, 2008, all assisted acquisitions must be supported by an Interagency Agreement (IA). An IA serves multiple purposes in an interagency acquisition, among them are:
o The IA establishes the general terms and conditions that govern the relationship between the requesting agency and the servicing agency.
o The IA provides information that is required to demonstrate a bona fide need and authorize the transfer and obligation of funds.
o The IA clearly defines the roles and responsibilities of the requiring, assisting, and contracting activities.
If your IA falls below the $500,000 threshold you have flexibility in the complexity of the IA. The October 31, 2008 DPAP policy memo says the following:
“Regardless of the dollar value, all assisted acquisitions must be supported by an Interagency Agreement (IA). In drafting IAs that are not subject to the OFPP guidance, DoD activities should use the OFPP guidance as a starting point for tailoring an agreement that addresses the specific types of information that is needed for the acquisition. At a minimum, IAs should define clearly the roles and responsibilities of the requiring and assisting activities, address procedures that will be used if problems arise, and provide information that is required to demonstrate a bona fide need and authorize the transfer and obligation of funds.”
Where can I find the most recent and relevant information on Interagency Acquisition pertaining to DoD requirements?
The best source for current information is on DPAP’s Interagency Acquisition Web page:
B. Information on the following relevant topics related to the general topic of Interagency Acquisition follows:
- “Fees, Fees, Fees”
- Time and Material (T&M) and Labor Hour Contracts (Is there a better choice?)
- Document, Document, Document
- FAR 8.4, FAR 16.5, and NASA SEWP
- GSA and Other non-DoD Agency End of Fiscal Year Support
- Direct Acquisitions
“Fees, Fees, Fees”
DFARS 217.7802 requires an evaluation be conducted to determine whether using a non-DoD contract is in the best interest of DoD. In addition, DFARS 217.7802 says that cost effectiveness, including taking into account discounts and fees, are factors in the best interest decision. The best interest determination should also address the basis for concluding that the fees charged are:
- fair and reasonable for the effort and expertise provided; and
- commensurate with the tasks to be accomplished.
Ultimately the decision to utilize the services of another agency to meet program needs is a business decision. Interagency contracting organizations such as DOI’s Acquisition Services Directorate (AQD) and the General Services Administration (GSA) charge a “fee” for their service. The fee covers the cost of work performed in the pre-award, award, and post-award phases to include contract administration through close-out or as specified in the accompanying interagency agreement. The fee may include additional “customized” services such as invoice review, payment, and the performance of contracting officer representative (COR) functions. Other administrative services may also be provided.
DoD agencies should consider the following when comparing the cost of interagency contracting to those contracting services provided by organizations internal to DoD:
- The availability of assigned DoD contracting offices to provide needed services within the required time.
- The total cost of using a DoD contracting office vs. that of using the services or contract vehicles of another agency. The total cost to purchase by a DoD contracting office is sometimes transparent to the requiring activity since often there is no direct charge or fee for some of the services provided internally
Administratively DoD contracting offices frequently delegate responsibilities and authority to DoD centrally funded internal assisting organizations/agencies such as the Defense Contract Management Agency (DCMA), the Defense Contract Audit Agency (DCAA), and the Defense Finance and Accounting Service (DFAS). Some of the optional services provided by these DoD internal assisting agencies include on-site quality surveillance, production surveillance, pre-award surveys, audits, invoice and payment services, among others. An assessment should be made as to the requirement/necessity of these additional functions and their impact on total cost to the Department when determining which administrative functions are necessary and should be performed for the instant procurement.
In February 2008, the Defense Acquisition University launched an on-line class entitled “Essentials of Interagency Acquisition/Fair Opportunity” (CLC 030). The class is available to all on the DAU website. Anyone involved in interagency acquisition, regardless of your vantage point, is encouraged to complete this course .
Time and Material (T&M) and Labor Hour Contracts (Is there a “better” choice?)
On July 14, 2008 the Director, DPAP issued a policy memorandum entitled “Management of Contractor Performance under Time and Material and Labor Hour Contracts for Services.” When performing the contracting officer review required on interagency acquisitions in excess of $500,000 (DPAP policy memo of January 18, 2008), contracting officers must advise program officials on the risks inherent in T&M and labor hour contracts and encourage conversion of the effort to a more preferred contract type such as fixed price, where appropriate.
Link to July 14, 2008 Memo on T&M and Labor Hour Contracts for Services.
Document, Document, Document (Did we say document?)
One of the primary issues identified by the DoD IG ion their review of interagency acquisitions is the lack of documentation in the contract files. The requirement to demonstrate a bona fide need and ensure that proper funds are utilized applies in all procurements, including interagency acquisitions. The requirement to document contract files, sufficient for auditability, is a shared responsibility of the requiring organization and the assisting agency.
FAR 8.4, FAR 16.5 and NASA SEWP (National Aeronautics and Space Administration Scientific and Engineering Workstation Procurement)
DoD requirements officials and contracting officers are reminded that Federal Acquisition Regulation (FAR) Subpart 8.4, “Federal Supply Schedules,” applies only to the General Services Administration’s Federal Supply Schedule (FSS) and other Federal schedules, to which General Services Administration has delegated the authority.
When utilizing multiple award indefinite-delivery, indefinite quantity contracts to meet DoD requirements, Contracting officers are required to follow FAR 16.5, DFARS 216.5 and DFARS PGI 216.5 procedures when placing orders. Contracting officers must provide a fair opportunity to all vendors in a multiple-award contract and contract files must contain award selection documents that explain the basis for award (See FAR 16. 505, “Ordering”).
Similarly, when placing orders against Federal Supply Schedules for or on behalf of DoD, contracting officers must follow the procedures in FAR 8.4, DFARS 208.4 and DFARS PGI 208.4.
FAR Subpart 8.4 does not apply to direct DoD acquisitions placed under the National Aeronautics and Space Administration’s Scientific and Engineering Workstation Procurement (NASA SEWP) contracts.
GSA and Other non-DoD Agency End of Fiscal Year Support
Every year, usually towards the end of the third quarter of the fiscal year, the General Services Administration provides notice to its customers that based on contract lead time it can no longer meet customer requirements for obligations that must occur before the fiscal year ends. Below is the link to this year’s end of the fiscal year “Cut-Off Memo.”
Scan in and post on the DPAP webpage
Add url here
Other non-DoD agencies also have limits as to when they can continue to receive DoD requirements and still comply with fiscal limitations. Plan accordingly.
What is a reimbursable IGT?
An IGT is an order for goods or services between DoD or Federal entities. A reimbursable IGT occurs when the seller procures goods or services for a buyer, and is reimbursed upon performance or delivery.
Examples of reimbursable IGTs are:
* Navy orders environmental engineering services from the Army. The Army contracts with a vendor to provide the services, and the Army bills the Navy when the services are performed.
* Air Force procures IT hardware through the DOI's National Business Center, Acquisition Services Directorate (AQD). AQD contracts with a firm to provide the hardware, and bills the Air Force upon delivery of the hardware to the requested Air Force location.
What do you mean by reconciliation?
The need to reconcile IGT is no different then the need of large corporation to reconcile Intra Company orders between different lines of business or operational divisions and avoid overstating revenue or expenses. The only difference is that government is much larger, has more transactions, is more dispersed, and has much more complex funding rules associated with appropriations.
Contracting officials are reminded that when utilizing a non-DoD contract to meet DoD requirements compliance with regard to contract type preference, documentation for single-award contracts and preferences for multiple-awards above certain thresholds must be adhered to unless exceptions are properly approved and documented.