Economy Act Payments After Obligated Account is

B-260993 Jun 26, 1996 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights After an Economy Act agreement is completed and the ordering agency's appropriation obligated by the agreement is closed. The DOE and OSM entered into a Memorandum of Understanding pursuant to which the Oak Ridge National Laboratory (ORNL) was to implement a national inventory capability and provide an analysis and maintenance function for the abandoned mines program. The work was to be performed in four phases (with each phase involving a number of separate tasks) from March 1979 through September 1982. OSM has questioned its obligation to pay since the agreement was completed in 1983 and the appropriation used to fund the interagency agreement has been closed and is no longer available for payment. View Decision Matter of: Economy Act Payments After Obligated Account is Closed File: B-260993 Date: June 26, 1996 After an Economy Act agreement is completed and the ordering agency's appropriation obligated by the agreement is closed, i.e., canceled, an audit of the performing agency's contractor (engaged to provide the ordered services under the agreement) discloses that the performing agency owed the contractor additional amounts. Using no year funds, the performing agency pays the contractor and seeks reimbursement from the ordering agency. Since the Economy Act requires the ordering agency to reimburse the performing agency its actual costs, the ordering agency should reimburse the performing agency for payments made to the contractor using current appropriations available for the same general purpose. 31 U.S.C. Sec. 1551 note. DECISION The Chief Financial Officer, Department of Energy (DOE), has requested a decision on the liability of the Office of Surface Mining (OSM), Department of the Interior (an ordering agency under the Economy Act) to reimburse the DOE (a performing agency under the Economy Act) additional amounts owed for work performed roughly 10 years earlier and after the appropriation OSM obligated to perform the agreement has closed. As explained below, OSM should reimburse DOE for costs properly incurred to perform an Economy Act agreement even though the appropriation obligated by the agreement has closed. BACKGROUND The Surface Mining Control and Reclamation Act of 1977, Pub. L. No. 95-87, 91 Stat. 447 (1977) (30 U.S.C. Sec. 1201 et seq. (1994)), established the OSM with responsibility to identify and reclaim abandoned coal mines and land or waters affected by the mining process. In March 1979, under the Economy Act, the DOE and OSM entered into a Memorandum of Understanding pursuant to which the Oak Ridge National Laboratory (ORNL) was to implement a national inventory capability and provide an analysis and maintenance function for the abandoned mines program. OSM agreed to reimburse DOE for actual costs under the agreement. The work was to be performed in four phases (with each phase involving a number of separate tasks) from March 1979 through September 1982. OSM modified the agreement to authorize various tasks and accordingly raised the total estimated cost for the agreement by the amount of the estimated costs of each modification. The fifth and final modification dated December 20, 1982, raised the total amount of funds obligated for the agreement to $5,867,500. The DOE contractor operating and managing ORNL [1] executed a cost-plus- fixed-fee contract with Lockheed Missiles and Space Company, Inc., to perform the OSM Economy Act agreement. The DOE and OSM considered the work complete in 1983 and closed the project. Approximately 10 years later, the Defense Contract Audit Agency (DCAA) audited the subcontract and issued a Contract Audit Closing Statement dated March 1, 1993. As a result of DCAA audit, DOE determined that it owed Lockheed an additional payment of $27,763, and paid this amount to Lockheed. According to DOE, OSM has questioned its obligation to pay since the agreement was completed in 1983 and the appropriation used to fund the interagency agreement has been closed and is no longer available for payment. We have been informally advised by a DOE official that DOE made the contract/subcontract payments to implement the interagency agreement (and for which it seeks reimbursement) using no-year appropriations. THE ECONOMY ACT The Economy Act, 31 U.S.C. Sec. 1535, 1536 (1994), authorizes one agency to perform services or provide items to another government agency either directly or by contract with a private party. An Economy Act agreement represents a valid obligation against the ordering agency's appropriations under 31 U.S.C. Sec. 1501(a)(1) (1994), in an amount (1) equal to the value of services performed for, or items provided to, the ordering agency during the fiscal year, or (2) equal to the cost of a contract entered into by the performing agency to provide the ordered service or item. 31 U.S.C. Sec. 1535(d).