H.R. 2528

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85B00552R001000080031-0
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 10
• Document Creation Date: December 20, 2016
• Document Release Date: July 12, 2007
• Sequence Number: 31
• Publication Date: March 29, 1982
• Content Type: OPEN SOURCE

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2 9 ill, .1 '982
97TH CONGRESS H
2D SESSION
Union Calendar No. 275
. R. 2528
[Report No. 97-456]
To amend the Economy Act to provide that all departments and agencies may
obtain materials or services from other agencies by contract, and for other
purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 17, 1981
Mr. BRooKs introduced the following bill; which was referred to the Committee
on Government Operations
MARCH 11, 1982
Reported with an amendment, committed to the Committee of the Whole House
on the State of the. Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed in italic]
A BILL
To amend the Economy Act to provide that all departments and
agencies may obtain materials or services from other agen-
cies by contract, and for other purposes.
1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 T4wA seetien 74-83 of the Ae of 24-, 1920, entitle 14a
4 Aet fei fortifications a-nd ether works
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2
1 of de?eesc, ?er the armament cof, a ?er the preetrre-
2 eat of heavy efdnanee ?er tfW a" se ee, ?er the (seal
3 year ending Jere 39; 1921, a4 ?er other perpeses" (4
4 U.S.C. 686(a)), as ame by the Aet of June 98; !982,
5 eeniffienly, rr-efeffed to a the Eeenefi+y Aet of 4982, is
6 amended
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14 That section 7(a) of the Act of May 21, 1920, entitled "An
15 Act making appropriations for fortifications and other works
16 of defense, for the armament thereof, and for the procurement
17 of heavy ordnance for trial and service, for the fiscal year
18 ending June 30, 1921, and for other purposes" (31 U.S.C.
19 686(a)), as amended by the Act of June 30, 1932, commonly
20 referred to as the Economy Act of .1932, is amended-
21 (1) by striking out "in a position to supply or
22 equipped to render" and inserting in lieu thereof "in a
23 position or equipped to supply, render, or obtain by
24 contract "
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3.
1 (2) by striking out the first proviso in such sec-
2 tion, and by striking out "further" in the second provi-
3 so;
4 (3) by striking. out "competitive bids" in such
5 second proviso and inserting in lieu thereof "contract
6 and
7 (4) by adding at the end thereof the following new
8 sentence: "Any condition or limitation applicable to the
9 procurement funds of any executive department, inde-
10 pendent establishment, bureau, or office which places
11 an order or lets a contract under the provisions of this
12 section shall be applied in placing such order or letting
13 such contract. '
HR 2528 RH
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97TH CONoBEss I HOUSE OF REPRESENTATIVES I REPORT
2d Session j No. 97-456
ECONOMY ACT AMENDMENTS
MAucH 11, 1982.-Committed to the Committee of the Whole House
on the State of the Union and ordered to be printed
Mr. BROOKS, from the Committee on Government Operations,
submitted the following
REPORT
[Including cost estimate of the Congressional Budget Office]
The Committee on Government Operations, to whom was referred
the bill (H.R. 2528) to amend the Economy Act to provide that all
departments and agencies may obtain materials or services from other
agencies by contract, and for other purposes, having considered the
same, report favorably thereon with an amendment and recommend
that the bill as amended do pass.
The amendment strikes out all after the enacting clause and inserts
a new text which appears in italic type in the reported bill.
EXPLANATION OF AMENDMENT
Inasmuch as all after the enacting clause of H.R. 2528 was stricken
and all language incorporated into the amendment, this report con-
stitutes an explanation of the amendment.
H.R. 2528 is a technical amendment to the Act which is commonly,
referred to as the Economy Act of 1932. This a.mendlrielit h" the effect;
of authorizing' all agencies of the Feder"a1',Government to obtain goods.
and services by contract in orderto fulfill requisitions placed with them.
by any other agency in the Federal government. Currently this author-
ity exists for the benefit of only five agencies. These agencies, listed
in section 7(a) of the Act (31 USC 686(a) ), are the "Department of
the Army, Navy Department, Treasury Department, Federal Aviation
Administration, and the Federal Maritime Commission."
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HEARINGS
A hearing on H.R. 2528 was held 'by the Subcommittee on Lea sla-
tion and National Security on October 28. 1981. Testimony was re-
ceived from the Comptroller General of the United States and the
Deputy Director of flue Office of Management and Budget, both of
whom support the legislation.
Co3I1 rrr :i: Aurlo.N
H.R. 2528 was introduced by Chairnuul Jack Brooks. The Com-
mittee on Government Operations ordered the bill reported on Malcll
4, 1982, by a unanimous voice. vote with a quorum present.
The Economy Act, enacted in 1932, permits government departments
to place orders with one another "for materials. supplies, equipment,
work, or services, of any kind that such requisitioned Federal agency
"Illy be in a, position to supply or equipped to render ...," but makes
no Mention of interagency requisitioning of nlatei?ials or services to be
obtained by contract. In his decision at 19 Comp. Gen. 541 (1939), the
Comptroller General held that:
Section 601 of the Economy Act. of June 30, 1932 (I7 Stat.
417) does not authorize the transfer of funds from one Fed-
eral agency to another for the purpose of having- the second
agency procure the performance of work for the first agency
by outside contracts, the authority being limited to orders that
the requisitioned agency may be in it. position to supply or
In 1942 the Economy. Act was amended to allow agencies which
had been requested to furnish supplies or to perform. work for one
of 5 specifically named agencies (the Departments of the Arnly, Navy
and Treasury and the Federal Maritime Commission and the Fed-
eral Aviation Administration) ' to do so by entering into a contract
with at, private contractor. As originally introduced, the 1942 amend-
ment would have extended authority to contract out in order to bene-
fit all agencies. The amendment was narrowed to cover only 5 agen-
cies after concern was voiced that a general grant of such authority
would result in transactions among two many agencies.
Since then, however, other statutes have authorized other agencies
to enter into agreements for the performance of joint projects in-
1-olving procurement by contract. For other than the five named agen-
cies, however, the Comptroller General has held in 52 Comp Gen. 128
equipped to render.
although contracts may be used in the case of joint agency
research and study projects authorized by laaw. the end prod-
last must be needed and used by both agencies involved; but
(1912), that
i The departments and agencies are listed by their current names. The listing as it ap-
peared in the lnugnuge of the 1942 amendment Is as follows: ". . . the war Department.
Nary Department, Treasury Department, Civil Aeronautics .Administration. and the Mari-
time Cununission. . . .
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that, wire only one agency needs work performed by con-
tract, and the agency letting the contract does not itself need
the product of the contract, then the restrictions of the
Economy Act apply. I)iscussIoN
The Economy Act of 1932 permits agencies to place orders with
other agencies for goods and services. However. only five named agen-
cies-the Department of the Arn-v, Navy and Treasury, the Federal
Aviation Administration and the Federal Maritime Commission-arc
allowed to requisition goods and services that the servicing agency
could supply "by contract." H.R. 2528, which would amend the Econ-
omy Act to extend this authority to allow Federal agencies to con
tract out for goods and services on behalf of all other agencies, was
introduced by Chairman Brooks after information had been received
that the restrictions in the Economy Act were adversely affecting ef-
forts to operate the Government economically and efficiently.
During hearings of the Legislation and \ ational Security Sub-
committee in October 1981, witnesses from both the Office of .Man-
agement and Budget and the General Accounting Office supported
enactment of the measure. As stated by Milton Socolar, then Acting
Comptroller General:
The Act was designed to promote economy in Government
operations by makinit possible to use the most efficient Gov-
r5
ernment resources available regardless of which agency pos-
sessed them.
* *
It seems axiomatic that economy and efficiency in Govern-
ment will be furthered by allowing Federal agencies with
greater capabilities in given areas to provide related serv-
ices or procure specialized materials for other agencies
with less experience.
In answer to a request from Chairman Brooks for examples of pro-
curement problems caused by the general prohibition against con-
tracting out, the Director of the Office of Management and Budget
cited the difficulty experienced by the'Coast Guard in placing orders
with the Department of Defense, since the Coast Guard is not. among
the 5 listed agencies exempted from the provisions of the Economy
Act that prohibit agencies from contracting out to fulfill requisitions
of other agencies.
The prohibition in the Economy Act, of course, does not preclude
agencies from obtaining necessary goods or services through their
own resources. Agencies are already authorized to have necessary
work performed by contracting directly for work or services with out-
side parties,, rather than by requesting, another agency to act as mid-
cllenian. On occasion, however, it is. more economical to have their
orders executed through contracts with outside parties if such con-
tracts are placed by another agency which already possesses the ap-
propriate expertise.
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Since 1942, when the Economy Act was amended to allow agencies
to contract out for goods and services on behalf of only 5 specified
agencies, numerous areas of agency expertise have been developed.
With the authority extended to allow agencies to contract out on be-
half of any other Federal agency, an agency having only an occa-
sional requirement in a specific area could turn to an agency with sub-
stantial experience in: the area for assistance. This would eliminate
the need to duplicate the requisite expertise.. For instance, if the Im-
migration and Naturalization Service has a requirement for night
sensors for border protection, that agency could seek assistance from
the Department of Defense which presumably has already developed
expertise in that area. Or. if the Coast Guard had a requirettent for
navigational equipment, it could seek assistance from the Department
of the Navy to acquire such, rather than duplicate research and de-
Veloprnent already under way or completed. Various statutes now
permit such interagency requisitioning in specific areas; however, re-
moval of the general restriction allows the maximum utilization by
the Government of valuable expertise developed over the years in
the various Government agencies. In addition, such generally-avail-
able authority creates the potential for wider use by the Government
of quantity discounts or other benefits which may not have been avail-
able in the past. It will also permit an agency to use another agency
which has some, though not all, of the capability to do the requisi-
tioned work by allowing the requisitioned agency to simply contract
out the part of the work that it cannot do.
In order to assure that the authorization/appropriation process is
not circumvented, the amendment specifically requires that both the
requisitioning agency and the requisitioned agency are otherwise
authorized to procure the item or service in question.
ANALYSIS or H.R. 2528
r:. ,.
H.R. 2528 amends section 7 (a) of the Act of May 21, 1920, entitled
"An Act malting appropriations for fortifications and other works of
defense, for the armament thereof, and for the procurement of heavy
ordnance for trial and service, for the fiscal year ending June 30, 1921,
ahcl.for other purposes" (31 U.S.C. 686(a) ),as amended by the Act of
.:,June 30,1932, commonly referred to as the Economy Act of 1932-
:, .(1) By striking out "in a position to supply or equipped to render"
acid inserting in lieu ilieieo'f. "in a position or equipped to supply,
render,'or obtain by contract";
This provision has the effect of allowing a requisitioned agency to
.,contract out for goods and services ordered by any other agency in
the Federal Government. It is important to note that. the requisitioned
agency in.nst, by virtue of its operating authority, be already able-
"in a position or equipped"-to supply such goods or services, whether
through its own resources' or by contract with outside parties. The
Comptroller General of the United States, in a letter to Chairman
Brooks dated December 18, 1980 indicated that the law
was intended to authorize the procurement of additional
equipment, supplies, materials and services by a performing
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agency so long as the work was within the scope of the activi-
ties normally performed by the agency and adequate facilities
already existed to perform the work.
Therefore, in our opinion, an agency may accept an order
under the Economy Act for work or service which is within
the scope of activities normally performed by the agency and
for which it possesses adequate facilities to perform the work
or service, even though the performing agency may find it
necessary to procure additional supplies, materials or
equipment.
Concerning the requisitioned agency's authority to hire additional
personnel, the Comptroller General wrote,
In the absence of a clear expression of legislative intent on
this matter, we will adopt the interpretation that best serves
the purpose of the legislation in question, that is, to effect
economy in the Government. 58 Comp. Gen. 674, 681 (1978).
Therefore, since permitting agencies to add additional tem-
porary personnel in order to perform work for which it al-
ready possesses facilities and expertise serves to effect econ-
omv in the Government, we hold that it is authorized under
theeEconomy Act.. (Letter to Chairman Brooks dated Decem-
ber 18, 1980.) .
(2) By striking out the first proviso in such section, and by striking
out "furtker" in the second proviso;
This provision deletes the sentence which restricts a requisitioned
agency's contracting out authority to that which would benefit only
five agencies. This deletion extends for the benefit of all Federal agen-
cies authority for a requisitioned agency to contract out in order to
fulfill orders from other Federal agencies.
(3) By striking out "competitive bids" in such second proviso and
inserting in lieu thereof "contract;" and
The effect of this provision is to allow the requisitioned agency to
use any method of procurement which is allowed by other laws govern-
ing Government procurement. Since the drafting of the "competitive
bid" language, a separate body of law governing contracting out by
Government agencies has developed. Implementing procurement regu-
lations require that agencies obtain materials and services by competi-
tive sealed bids whenever possible. When not possible, the regulations
permit negotiation, again requiring competition whenever possible.
Written justification and approval are required for any non-competi-
tive procurement. These alternatives should be available when one
agency is requisitioned by another, and the continued specifying of
only one method of contracting could, in some cases, impede or prevent
the carrying out of a requisition.
(4) By adding at the end thereof the following new sentence:
Any condition or limitation applicable to. the funds of any
executive department, independent establishment, bureau, or
office which places an order or lets a contract under the provi-
sions of this section shall be applied in placing such order or
letting such contract.
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This provision precludes any interagency activity which could result
in the circumvention of conditions and limitations applicable to either
the ordering or the requisitioned agency on the use of Government
funds which are otherwise available for the procurement of goods or
services. The Committee adopted the above language in order to elim-
inate any confusion or any possible doubt concerning the intent of
H.R. 2528 as it relates to this issue.
ESTIMATE OF THE CONGRESSIONAL BUDGET OFFICE
The following estimate prepared by the Congressional Budget Office
in accordance with section 403 of the Congressional Budget Act is sub-
mitted as required by subdivision (c) of clause (2) (1) (3) of House
Rule XI:
IIon. JACK BROOKS,
U.S. CONGRESS,
CONGRLSs1o`AL BUDGET OFFICE,
Washington, D.C., March. 5,1982.
C1ua .r,n an, Co'itunuattee on Goeerrnnent Operations,
Howse of Relrre8en.tativets, lVash.ington, D.C.
DEAR Mn. CIIAiIr L N : Pursuant to Section 403 of the Congressional
Budget Act of 19'74, the Congressional Budget Office has reviewed
H.R. 2528, a bill to amend the Economy Act to provide that all de-
partnlents and agencies may obtain materials or services from other
agencies by contract, and for other purposes, as ordered reported by
the House Committee on Government Operations, March 4, 19152.
The bill will allow departments and agencies to utilize the existing
expertise and/or economies in procuring goods and materials of other
departments and agencies. It also allows for partial fulfillment of
inter-agency orders by contract, for work or services with outside
parties. It is expected that this bill will result in no additional costs
to the government, and may result in some cost savings, although the
magnitude of such savings cannot be estimated on the basis of avail-
able information.
Sincerely,
RAYMOND C. SCI-ITPPACH
(For Alice M. Rivlin, Director).
Co11DIrrrEh Es-T1 M.1TE OF COST
The committee agrees with the cost estimate contained in the sub-
mission of the Congressional Budget office above and presents that
estimate as the Committee's pursuant to the requirements of Clause 7
of House Rule XIII.
INFLATIONARY IMPACT
In compliance with clause 2(1) (4) of House Rule XI, it is the
opinion of this Committee that the provisions of this bill will have
no inflationary impact on prices and costs in the operation of the
national economy.
OVERSIGIIT FINDINGS
The Committee has maintained continuous oversight, of the agencies
affected by this legislation but has made no detailed findings and
recomendations other than those contained elsewhere in this report.
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NEW BUDGET AUrhIORITY AND T.\x ExrFN!)ITCIIEs
No new budget authority or tax expenditures are contained in this
legislation.
Rt:vi :w or EXISTING L.-,w
During consideration of this legislation all applicable laws, includ-
ing the Economy Act of 1932, were reviewed.
CHANGES IN EXISTING LAw MADF BY THE BILL? As REPORTED
In compliance with clause 3 of rule XIII of the Rules of the House
of Representatives, changes in existing law made by the bill, as re-
ported, are shown as follows (existing law proposed to be omitted is
enclosed in black brackets, new matter is printed in italic, existing law
in which no change is proposed is shown in roman)
SEC. 7. (a) Any executive department or independent establish-
ment of the Government, or any bureau or office thereof, if funds are
available therefor and if it is determined by the head of such execu-
tive department, establishment, bureau, or office to be in the interest
of the Government so to do; may place orders with any other such
department, establishment, bureau, or office for materials, supplies,
equipment, work, or services, of any kind that such requisitioned Fed-
eral agency may be [in a position to supply or equipped to render] in
a position. or equipped to supply, render, or obtain by contract, and
shall pay promptly by check to such Federal agency as may be requi-
sitioned, upon its written request, either in advance or upon the fur-
nishing or performance thereof, all or part of the estimated or actual
cost thereof as determined by such department, establishment, bureau.
or office as may be requisitioned; but proper adjustments on the basis
of the actual cost of the materials, supplies, or equipment furnished,
or work or services performed, paid for in advance, shall be made as
may be agreed upon by the departments, establishments, bureaus, or
offices concerned [: Provided, That the Department of the Army, Navy
Department, Treasury Department, Federal Aviation Agency, and the
Federal Maritime Commission may place orders, as provided therein,
for materials, supplies, equipment, work, or services, of any kind that
any requisitioned Federal agency may be in a position to supply, or
to render or to obtain by contract] : Provided [further], That if such
work or services can be conveniently or more cheaply performed by
private agencies such work shall be let by [competitive bids] contract
to such private agencies. Bills rendered, or requests for advance pay-
ments made, pursuant to any such order, shall not he subject to audit
or certification in advance of payment. Any condition or limitation
applicable to the proeurenu'nt funds of any executive department, in-
dependent establishment, bureau, or office v,h.ich v7aces an order or
lets a contract under the provisions of this section shall be Opld;ed in
placing such order or letting such contract.
* * * * *
O
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