Cyclopedia of Congressional Budget Law

Economy Act


The Economy Act provides authority for federal agencies to order goods and services from other federal agencies and to pay the actual costs of those goods and services. The Congress passed the Act in 1932 to obtain economies of scale and eliminate overlapping activities of the federal government.

An Economy Act purchase is permitted only if:

(1) amounts for the purchase are actually available,

(2) the purchase is in the best interest of the Government,

(3) the ordered goods or services cannot be provided by contract from a commercial enterprise (a private entity) as conveniently or cheaply as could be by the Government, and

(4) the agency or unit to fill the order is able to provide or get by contract the ordered goods or services.

GAO Glossary of Terms and Definition (September 2005)

Economy Act

A common reference to section 1535 of title 31 of the United States Code that provides general authority for one agency or unit thereof to obtain goods and services from another agency or unit. Payment may be made in advance or upon the provision of the goods and services ordered. [GPO Link to 31 U.S.C. 1535]

[PAGES 47]

Economy Act of 1932 and the Economy Act of 1933


The Economy Act of 1932 is distinct from the Economy Act of 1933 (Pub.L. 73–248 Stat. 8). The earlier Act was enacted by Congress and signed by President Herbert Hoover in February 1933, one of his last actions as President. Where the Economy Act of 1932, the subject of this entry, gives authority and guidance to the Federal Government agency purchasing, the Economy Act of 1933 cut the salaries of federal workers and reduced benefit payments to veterans, moves intended to reduce the federal deficit in the United States.




Elastic Clause


Text of 31 U.S.C. 1535
§1535. Agency agreements

(a) The head of an agency or major organizational unit within an agency may place an order with a major organizational unit within the same agency or another agency for goods or services if-

(1) amounts are available;

(2) the head of the ordering agency or unit decides the order is in the best interest of the United States Government;

(3) the agency or unit to fill the order is able to provide or get by contract the ordered goods or services; and

(4) the head of the agency decides ordered goods or services cannot be provided by contract as conveniently or cheaply by a commercial enterprise.

(b) Payment shall be made promptly by check on the written request of the agency or unit filling the order. Payment may be in advance or on providing the goods or services ordered and shall be for any part of the estimated or actual cost as determined by the agency or unit filling the order. A bill submitted or a request for payment is not subject to audit or certification in advance of payment. Proper adjustment of amounts paid in advance shall be made as agreed to by the heads of the agencies or units on the basis of the actual cost of goods or services provided.

(c) A condition or limitation applicable to amounts for procurement of an agency or unit placing an order or making a contract under this section applies to the placing of the order or the making of the contract.

(d) An order placed or agreement made under this section obligates an appropriation of the ordering agency or unit. The amount obligated is deobligated to the extent that the agency or unit filling the order has not incurred obligations, before the end of the period of availability of the appropriation, in-

(1) providing goods or services; or

(2) making an authorized contract with another person to provide the requested goods or services.

(e) This section does not-

(1) authorize orders to be placed for goods or services to be provided by convict labor; or

(2) affect other laws about working funds.