Oversight Hearing - The Economy Act

Days within which to revise and extend the remarks and insert into uh extraneous material into the record. I now recognize myself for an opening statement. I'd like to welcome both of our witnesses here today, and for taking the time to be here. Today's oversight hearing is intended to help us better understand the origins of the and the use of the Econom- Economy Act since it's enactment. The policy behind the Economy Act is simple. allows government agencies to order goods or services from other agencies. An agency can utilize the Economy Act when funds are available. If it is in the best interest of the government, another agency can fill the order, and the head of an agency decides the goods cannot be provided as conveniently or cheaply by a commercial enterprise. The Economy Act provides powerful flexibility that allows government agencies to take advantage of another agency's expertise, potentially saving taxpayer money and leading to better policy outcomes. These transactions occur all over government for a variety of purposes and there are substantial benefits. It is important for Congress to understand how these agreements work and whether the act can and should be strengthened. We are always encouraged by ways to save the government money and to utilize the federal government's vast resources to be more efficient. From an appropriation standpoint, it is important to understand how Economy Act transactions are being used and impact current see current agency operations and funding levels. As policy makers, we need to understand the Economy Act's limitations and its strengths, so that Congress can ensure the Economy Act is effective. We want to make sure that we support agencies that are undertaking additional work under the Economy Act. I look forward to learning more from our experts here today. And I now recognize the ranking member, Mister Hoyer, for his opening statement.

Thank you very much, Mr. Chairman. Uh, I'm pleased that we're having hearings uh i'm pleased we're having a hearing on the economy act while nearing a century old it is relevant today as it has ever been while its original attempt was to help the federal government economize and become more efficient it is now increasingly being used in my view as a loophole to get around congress's authority over appropriations it has become a tool of executive overreach exploited in ways congress never intended A prime example has been the administration's effort to purge the federal workforce through doge. The trump administration used the economy act to move funds from the consumer financial protection bureau, to pay doge employees. Another example is the department of education, which has used the economy act to outsource critical department specific functions to other departments and agencies. The economy act does not authorize such transfers or functions only transfer of funds under very limited specific circumstances which have not been met in this case it's clear mister chairman that the economy act is being misused and misapplied as an institution congress cannot and should not allow it to be exploited in such a way as to circumvent our power of the purse and seize control over key aspects of the appropriations process yes no administration should be able to use an an efficiency statue as a substitute for coming here and asking the people's representatives to determine how taxpayers funds should be spent we cannot and must not allow the executive branch to make congressional restrictions or directions uh disappear by routing implementing uh implement implementation through agency's other than the original recipient of funds. This is especially serious given the current administration's rampant disregard for law and constitutional norms, and its track record of seeking any and every loophole possible through which they can make an end run around Congress. This is the unitary presidency that vote must speak so often about. I'm looking forward to hearing from our expert witnesses today. i hope they can help us shed some light for ourselves and for the american people on the mechanisms by which this administration is using the economy act to engage in actions that undermine our system of checks and balances and i hope i'll be hearing your observations on that specific issue and i hope we will take away from today's hearing both a greater understanding of the problem and a determination to fix it

interesting great

Thank you very much, Mister Chairman, I yield back the balance of my time.

Thank you very much, Mister Speaker. Thank you very much, Mister Hoyer. Today we welcome the testimony of Dominic Fiorentino. All right. Analyst in Government Organization and Management, Congressional Research Service, and Shirley Jones, managing Associate General Counsel, US Government Accountability Office. Without objection, your written testimonies will be entered into the record. With that in mind, we ask you to please summarize your opening statement in five minutes or less. uh mr. ferentino you are now recognized

good morning chairman joyce ranking member hoyer and members of the committee thank you for the opportunity to testify on the economy act i will summarize my written statement the following brief remarks the economy act authorizes an agency to either place an order for goods or services provided directly from another agency or to use another agency's contracts or contracting operations the agency ordering the goods or services is the requesting agency and the agency providing the goods or services is the servicing agency the economy act applies the economy act applies when no other when no other specific statutory authority is available authority is available legislation to provide generally applicable inter-agency transaction authority was introduced in nineteen thirty was introduced in nineteen thirty and later reintroduced and ultimately enacted in nineteen thirty two and later reintroduced and ultimately enacted in nineteen thirty two as a part of a larger legislative As a part of a larger legislative package package uh to reduce government spending during the great depression to reduce government spending during the great depression contemporaneous committee reports stated that the intent of this provision

uh

uh was to help agencies save money by relying on existing agency contracts and generate economies of scale by reducing redundant activities the original economy act provided for like work unassisted acquisitions which authorizes an agency to use another agency's existing contracts in nineteen forty two uh the act was amended to allow certain defense agencies to perform assisted acquisitions such as awarding and administering a contract on another agency's behalf in nineteen eighty two the assisted acquisition authority was expanded to all agencies the economy act has also been amended to place additional guardrails on its use and the early nineteen nineties reported misuse of contracting authority under the economy act led congress to pass provisions that required updates to the federal acquisition regulation or the far economy act agreements are subject to the far when the transaction results in one agency using another agency's procurement contract or contracting operations far what if yeah the far updates included a requirement that the servicing agency either be have an existing contract for the good or service or be better qualified to administer the contract on the requesting agency's behalf in two thousand eight

eight

congress directed another far update to require assisted acquisitions to include a written agreement assigning responsibility for contract administration and management agency use of the economy act is subject to the following statutory on statutory conditions conditions the requesting agency must have the funds available available the order must be in the best interest of the united states states the servicing agency must be able to provide the goods or services and the goods or services must be available more conveniently or cheaply than from a private contractor economy act transactions are typically documented in the form of an interagency agreement economy act orders subject to the far must also be supported by a determination and findings document the interagency agreements and determination and findings documents are internal to the agency and are not always made publicly available the economy act does not define the variety of goods and services that it authorizes agencies to provide examples of categories of work performed of the under the economy act include interagency acquisitions detailing personnel property management and other services there is no publicly available government-wide data on agency use of the economy act there is no publicly available data nor is there a government-wide requirement that agencies regularly report on their use of the economy act to congress mmm oh i see congress given concerns over agency use of the economy act congress may consider options that would limit the use of these transactions or create new reporting requirements ok requirements congress may consider we need to consider instituting a requirement making all economy act transactions subject to limitations or notification requirements the importance of the requirement similar to reprogramming or transfer of funds limiting the use of the economy act above a certain threshold requiring agencies to affirmatively provide inter-agency agreements to congress requiring Congress or requiring the establishment of a database to provide the ability to of economy act and other inter-agency transactions transact alternatively congress may weigh these options negatively against the value of current agency flexibilities this concludes my brief remarks thank you for the opportunity to testify and i look forward to your questions

good morning chairman joyce ranking member hoyer and members of the subcommittee good morning thank you for the opportunity to discuss the economy act and its legal requirements thank you for the opportunity to discuss the economy act and its legal requirements my written testimony submitted for the record my written testimony submitted for the record starts with the history of the enactment of the economy act in nineteen thirty two starts with the history Of the enactment of the economy act in nineteen thirty two i'd like to start my oral statement by discussing why this topic still matters i would like to start my oral statement by saying that i feel like i feel like it matters and that's why i feel like it's important and why continued congressional oversight is still important so i feel like it's important in fact in fact this topic is so important that it spent several years on gaol's high-risk list i feel like it's important because it events in several years since the beginning of the gaol's high-risk list from two thousand five until two thousand thirteen from two thousand five until two thousand thirteen because inter-agency transactions require sufficient two thousand three is just enough

mmm

internal controls to ensure that statutory requirements are met we were particularly that the that the concerned with the lack of data on these contracts we have our exactly yeah and we unclear lines of accountability between customer and servicing agencies and the potential we have the potential for out of scope work for the provision of out of scope work in our two thousand thirteen report and we have in our report we removed it from the high risk list we removed it from the high risk list based on the progress made by agencies at that time in addressing previously identified deficiencies and steps right science right and taken to address the need for better data among other efforts right ok congressional oversight congressional oversight was noted as being vital in addressing the issues oversight right that oversight continues to be particularly important that oversight continues to be particularly important for us for economy act transactions which have requirements so we we have to that some other interagency contracting statutes may lack

mmm

the economy act itself provides some guardrails but principles of appropriations law provide even more the act itself provides some guardrails but the principles of appropriations law provide even more first and foremost an agency must have an available appropriation most must have an appropriation law available in this context has two meanings first there must be sufficient budget authority the act's purpose in this context has two meanings first there must be sufficient budget authority to cover the cost of the agency's order so that the agency does not violate the anti-deficiency act the cost of ordering a meal violate the anti-deficiency act second due to the purpose statute the ordered goods or services must advance second the purpose statute the order must advance the purpose of the appropriation of the customer agency the purpose of the appropriation of the customer agency used uses for the transaction use an agency may not use an economy act transaction an agency may not use an economy act transaction to do something it is not already authorized to do they are uh-huh similarly a precondition to all economy act transactions is that the performing agency so only all economy act transactions is that the performing agency the forms must be able to provide must be able to provide the goods or provide the service either in house or by contract uh by contract it's a it's a in addition to these requirements requirement the customer agency must determine that the agreement is in the best for it to be determined yeah interest of the government and that the ordered goods or services could not be obtained as cheaply or conveniently on the private market and the order the product once these preconditions are met a customer agency may enter into a written the the product the product the product economy act agreement with another federal entity documented the product in accordance with the recording statute which prescribes the requirements for a valid obligation the product the product

ok

under the written agreement the economy act requires that the ordering agency reimburse under the written agreement the economy act requires that the order agency reimburse the performing agency for its actual cost no more no less the performing agency for its actual cost no more no less this rule ensures that neither the customer agency's nor the servicing agency's this rule ensures that neither the customer agency's nor the servicing agency'S appropriations are improperly augmented thereby infringing upon congress's power of the purse appropriations are improperly augmented thereby infringing upon congress's power of that purse when an agency pays for the goods or services under the economy act the transferred funds are subject under the economic act the transfer of the bonds to the limitations and restrictions that apply to the original appropriation is subject to the appropriation of the bonds that apply to the original appropriation importantly the economy act requires that any amount obligated and so mmm from the ordering agency's appropriation will be deobligated to the extent that the performing agency has not

mmm

incurred obligations before the end of their appropriations period of availability. In closing, the economy act is a useful tool when these guardrails are respected. As said out here, As said out here. and more fully in my written testimony, agencies must carefully follow the requirements of the act and appropriations law principles to ensure that inter-agency transactions are indeed appropriate. thank you thank you and i'm happy to respond to any questions you may have and i'm happy to answer any questions you may have

thank you right on time with that five minutes god bless um i now recognize myself for questions mister fiorentino would you talk a little bit about the origins of the economy act and why was the economy act needed

the economy act was enacted because agencies at the time lacked the specific statutory authority to enter into inter-agency agreements to acquire goods and services from other agencies uh there was a limited provision in the nineteen twenties um which was later amended by the economy act in nineteen thirty two to make this authority broader uh the idea behind it was that uh it would introduce efficiencies save the government money and reduce redundant activities by allowing if a one particular agency specialize in a particular service for instance another agency would be able to buy from that agency as opposed to duplicating that service

thank you uh mrs. jones there are variety of ways that agencies contract for goods would you talk about the process agencies go through in deciding when to use the economy act

thank you sir i am sure that agencies there's a time put in the time to you need to decide decide which process is best for them by what's the best but as was noted in my testimony and in my colleague's testimony time if an agency has a agency specific statute they should use that statute and follow the requirements of that statute and any limitations in included in that statute and any limitations included in their authorizing statutes and any limitations included in appropriations acts

fair enough are there any common pitfalls that agencies need to be aware of with the economy act

the common pitfall that is most talked about is common pitfall uh yeah the requirement the deobligation requirement some consider that a pitfall of course we consider it

oh

mmm uh good appropriations principles so that the agency is not allowed to extend the obligational life of the appropriations of course that deobligation that's that's obligation of life of the appropriator provision as i noted in the testimony provides that if the performing agency has not obligated during that appropriations period of availability those funds must be deobligated it is not allowed to retain those funds and extend the obligational life

so miss jones in your work have you observed trends with respect to the use of the economy act by agencies

right gao has has some ongoing work related to the economy act we have some previous work um for the most part the common trends that we have seen is that agencies have used it for details and for common services those have been the trends in the past for the use of the economy act

do you have any recommendations for congress

recommendations for congress of course i don't wanna get ahead of the work that we are currently doing on the economy act with specific agencies but of course the gao is always interested in greater transparency more than one year but more than one year and it will always be an important part in the development of the economy and so there are opportunities for that gao is also always uh interested in encouraging and there are opportunities for that gao to always be one year and it will always be an important part in the development of this country greater written documentation as my colleague here uh noted in his testimony specifically uh and there are also many other areas

mmm

um the contracts must be subject to the far in order for the agency to be required to do those terminations and findings documents. That's why you're talking about the But even with that, those are not publicly available, and so I would uh suggest not getting ahead of the work that we are currently doing that might have some recommendations that there are opportunities for greater transparency.

Well, Mister Fiorentino, that leads to as Congress monitored the use of the Economy Act in the past, and if they did, how?

Uh, so there were eh there was an investigation and a report that came out of the senate in the early nineteen nineties about agency use of the economy act um that resulted in some of those changes related to um the federal acquisition regulation uh the concern was that agencies were engaging engaging what the report termed offloading mmm yes offloading um so basically uh using other agencies contracting services which in and of itself is not necessarily a problem basically which in and of itself was a terrible problem but the report found that agencies were doing it in such a way to avoid certain management or administrative responsibilities um engaging in non-competitive practices avoid um so it resulted in greater uh requirements for documentation

so

for uh economy act transactions subject to the far that greater document in greater detail agency responsibilities when there is assisted acquisitions happening

mmm

uh greater justification for why they are engaging in an economy act transaction um in terms of there is limited data on the use of the economy act um which may pose additional challenges for continued congressional oversight

thank you uh uh chair now recognizes ranking member heuer for any questions he may have

uh thank you very much mr. chairman um i wanna ask this to both of you do you agree that the economy act cannot give an agency authority to accomplish something through another agency that it could not lawfully accomplish with its own appropriation

i agree

i agree uh yes the agency's statutory authorization or its appropriation will limit the agency from engaging in such activities

do you uh also to both of you do you agree that uh government wide savings do not by themselves make an otherwise unavailable appropriation legally available

i would agree with that as well under the purpose statute the agency must be using its appropriations to further its mission that's correct

has gao looked at gao

look at

um over the last uh

gao's

twenty four months

reports

at whether or not such activity has occurred

on right not globally gao has not looked at interagency agreements across all of the government we do have some requests related to specific so globally we have not looked at on the gao's website requests agencies that is ongoing

now i have i'm i must admit i have not read your very copious comments i hope to read them all but i have not read them to date uh are there anything is there anything in your testimony that refers to uh violations uh that both of you have spoken to uh over the past twenty four months in other words the misuse of this uh bill which you said ought to have guardrails and ought to have oversight uh you said it was on the high risk list and now it's been taken off the high risk list why was it taken off the high risk list

it was taken off the high risk list in two thousand thirteen because we were able to see that agency the specific agencies that we were looking at had addressed the the deficiencies that we identified we also noted in that report that both omb and gsa had made uh certain um oversight vehicles available to the agencies to use

in your testimony you specifically uh lamented the lack of transparency sufficient transparency to be able to do your job fully um in light of that do you have confidence that uh the high risk that was originally i don't know when the year was, but you referenced um applied to this have not been reinstated or do you believe it is no longer a high risk

well i definitely don't wanna get ahead of anything that my colleagues at ga are doing related to our high risk work our last report was issued in twenty twenty five and our next one will be issued at the beginning of the next congress of course as i noted we do have uh some report some engagements that are currently looking at of course yeah yeah so so far so so far yeah inter-agency transactions and the economy act and i do know that my colleagues across gao will be looking at yeah yeah got it got it what we find in those reports to determine if inter-agency transactions would need to be got it determined put back on the on the high-risk list

from your knowledge miss jones uh has there been any focus on the reference that i made to doge uh being funded by the consumer protection funds

in our in our ongoing work ongoing work

yes

our ongoing work is uh in the early stages i can't say whether or not doge is doge is uh uh anything related to doge is in that work doge is yeah it is in the very early stages of it and i definitely don't wanna get ahead of anything that my colleagues at gar are doing yeah i really don't know

uh maybe you're ngl

oh absolutely but i am not on the the teams that are doing the audits yes exactly and so

no i'm not i understand that um based upon when you say in the early stages i i'm not sure exactly what early stages means how long has that been going on at this point in time

mmm

we have some request that came in uh in the june time frame and in the august time frame and those engagements have been staffed and the work is beginning on those

ok uh i have short time left uh i'm hopeful that gao will be taking its responsibilities very seriously and that we will have uh numerous oversight hearings on that issue i may not be here uh but uh my belief is that this administration has very substantially misused both the act itself and uh abuse the appropriations uh regard rails to which you refer very very substantially because of their belief that the president has the authority to spend uh and sequester money consistent with his own beliefs and not with that uh directed by law so i hope you will look at that

thank you sir

thank you mr.

thank you mr. hoyer uh chair now recognizes mr. edwards for questions

thank you mr. chair to uh our witnesses thanks for being with us this morning miss jones the economy act was intended to allow agencies to take advantage of existing government capabilities when doing so is more economical than going to the private sector does ga gao have evidence that agencies are consistently demonstrating actual cost savings when they use the economy act agreements

as i noted gao does have some ongoing work do we still need to do we still need to work in that regard and i'm sure my colleagues at gao during these audits that i just mentioned will be on the gao gao audit looking at at those those factors globally globally we do not need to work on that

mmm

i would say no we do not because we have not looked globally across the government at inter-agency agreements under the economy act and of course as i think we do need to work on the gao uh we have noted here the determinations and finding statements that the agencies are required to make under the economy act are not publicly available

are they available to congress

um certainly congress could request them but they're not made available as a matter of course

in your in your opinion who would be responsible for uh making requests of those

uh certainly whichever um committee had jurisdiction over the particular agency um in question. Um certainly congress could request that inter-agency agreements be made available just generally to the relevant authorizing and appropriating committees.

Thank you for that. Uh the whole point of the law is is is supposed to be saving taxpayers' dollars but not going to a private contractor. Does anyone actually check after the fact whether that assumption held up or are the savings just assumed upfront and never verified and i recognize you don't report that to congress but how do you know how do you know uh whether or not we're looking at this after the fact either either one of you can answer

so i i don't believe we have that data or i'm not aware of that being done in any systematic way um it would be incumbent upon the agency to have cost estimates um based on their industry research and market research and then that would help them make a determination that the economy actors in the government's best interest which should be documented in the determination and findings document um but again i'm not aware of any systematic review of that

mister chair sounds like it might be a loophole for fsgg to close uh in our quest to provide oversight. Um Miss Jones, what information do you think Congress should be asking agencies to provide, to demonstrate that an Economy Act agreement is actually cheaper or more efficient than a commercial alternative?

Uh, well currently the statute does not require that the terminations and findings agreement be made publicly available. and so that could be one change that could be made um if the um ok so then you have to if the interaction or interagency agreement is subject to to the it would be to the far then they do have to submit those um written agreements but otherwise they do not oh ok ok uh-huh and and even then they're not publicly available so that would be um adding greater transparency ok that would be that would be a greater transparency

thank you i think i believe i see another legislative opportunity before us uh mr. chair i'll yield

thank you very much mr. ervers chair now recognize mr. pokan for his five minutes questions

great thank you mr. chairman and thanks for having this hearing cause this is truly like nonpartisan bipartisan however you wanna describe it but it's about congress and i think we're all working together on this and i'm gonna build on mr. ervers's questions um can you either of you tell us how many interagency agreements under the economy act are currently in place

uh no that there is no data that would allow us to answer that

gao

gao does not have that information

ok um do you know how many interagency agreements under the economy act were in place in the most recent completed fiscal year

gao does not have that i would defer to omb or gsa to have that information but gao does not have that

i think mr. vote's gonna have a permanent chair here in the near future um he's gonna have plenty of opportunities um do you know how much funding was transferred between

that information is not available to us

yeah i have that do you have any idea the magnitude of the funding that was transferred between offices or agencies under the economy act last year was it millions hundreds of millions billions

we do not have that information

no idea

we don't have that information

so i think it this builds on mr. edwards questions which is just you know congress i mean congress we could request but we don't even know where to request cause we don't know anything about any of these uh for transparency and if they're not automatically reported to us it makes it even harder is there any kind of real time reporting that congress can get uh short of making request of something it may not know has been requested

so certainly congress could uh require that agencies proactively notify congress in advance of entering into such agreements um in terms of like the agencies of course are accounting for these transactions the treasury also has a system called g invoicing that is tracking government to government invoicing which would include economy act and other inter-agency agreements that are not necessarily subject to the economy act um in terms of implementation there may be a way to use that data to provide information in a way that is legible and useful to congress

is g invoicing public is that presented to congress

uh i do not believe it is publicly available

so basically this is about as non-transparent as anything right cause you can't tell me the amount of money who's doing it the last fiscal year the current the number of contracts that are out there right am i correct all of these we don't have any idea

that's correct that information is not available to the public or to congress that i'm aware of

that's correct so help me understand a little bit the right now there's a as i understand it three hundred and eighty five million of taxpayer funding available that omb made for the ballroom project at the white house and i know uh miss jones you mentioned in particular it's used for details and common services do we know what details or common services that three hundred and eighty five million dollars is being used for

now when i mentioned details and common services i meant that

yeah but did you know three hundred and eighty five let's worry about that not the semantics yeah

right ok so i meant historically that's what we've seen the economy act use for i mean it's an actual project

sure right so let me go back to the three hundred and eighty five do we have any idea what that money is

yes no

ok um

um

and do we have we seen the inter-agency agreement on that we don't

no

no um do we know if it's the terms and conditions or anything have been publicly put out there

i am not aware of those being made publicly available

gotcha is there uh so is there anywhere that the public could actually see this

no

ok so congress could we request it

yes

that would be the only way so something like this

yes

um alright so that's that's part of the problem right so when you take it off the high risk list was because it was not being abused for a period of time but the fact that right now it seems to be used much more frequently and maybe in slightly interesting ways um could put it back on a high risk list correct

that is absolutely possible and as i noted GAO does have some ongoing work that we recently started related to the ballroom

sure gotcha you do ok when will that come out

we don't yet have a timeline on it as i noted the request came in in june and then august and uh we're starting up our work of course the most important thing is to develop the record and that's why agency cooperation is so important

sure can you can you have any estimate cause they're building right now with this funding that no one knows how they're able to move

i do not have an estimate

ok gotcha and then i think um

mmm

uh, mister Lora will come in and probably ask more about this, but I think there was an issue that got a lot of attention where some NIH money national institute of health money went to the department of defense, and now it may be. Do you know anything about this particular amount of money?

I am well, I am aware of it, but we do not have a a request for it, and so we do not have any engagement related to that.

Thank you. I yield back, mister chairman.

Uh, thank you very much, mister Polkin. The chair now recognizes uh, miss Hinson for her.

Thank you, Mister Chairman, thank you to our ranking member, and thank you uh to our witnesses for being here today. Uh, Mister Fiorentino and Miss Jones, appreciate you joining us to to share some insight on the Economy Act. Um, when it's uh used as intended, I think it is a great tool for uh making government more efficient and saving taxpayers' money. Um, and I think it's really important for agencies to be able to have the flexibility to obtain goods and services from another agency. Uh, we know presidents of both parties have used this tool very effectively over the years, um, but that makes uh strong congressional oversight very important in the process so um uh particularly for this subcommittee of course um which oversees many of the agencies that do frequently use uh these provisions in the economy act and these agreements so um i guess i'd start by kind of just a a general question um how do agencies most commonly use it um uh in terms of practical application just so so iowans who are watching who are maybe not familiar with the economy act how are agencies just typically using this

i can start by just uh reiterating how yeah ok that historically what we've seen in some of our prior decisions and some of our prior work agencies have so one thing one yeah work yeah uh more commonly used it for details so that yeah the details of the that one agency's success one agency shares it's expertise with another agency we've also seen it commonly used for agencies yeah uh to get common services that another agency has or even an interagency like the common service yeah um common service agreement as long as uh each agency has its own appropriation for that

do you think it's a practical tool to reduce redundancies are you seeing that in actual application what are some of the i guess the good results that you've seen um uh previous administrations use where the economy act led to some really good results

certainly i think it's uh allowing an agency to utilize another agency's uh particular expertise in a particular area um maybe for digital services, IT digital services or other very specialized activities where it does

Mm-hmm.

not make sense for the agency to necessarily stand up that activity on its own.

Mm-hmm.

So it would maybe eliminate the need to hire an outside contractor or um reduce that cost for that agency if they can rely on someone else's expertise.

Correct.

OK. Uh what documentation is maintained um when those uh agreements are in place uh for Economy Act transactions between agencies?

so there would be an agreement between the two the requesting and servicing agency the inter-agency agreement if the agreement were also subject to the federal acquisition regulation so it's resulting either in a ok the servicing agency engaging in a contract with an outside party contract with an outside party then there would be a determination and findings document that's gonna say why are we engaging in the economy act is this in the best interest of the government um is there a cost saving involved here um neither of as we had said before neither of those documents made publicly available as a matter of course.

OK. Um,

So.

so basically it's a justification for the need to to have the agreement. Um, why do you think that it it would serve the public to have those be available?

Yeah.

Or uh, what what do you think why why wouldn't they be available to the public?

Cert- I mean, one of the challenges of course could be that there would be there could be sensitive information on those documents that might need to be redacted. Um, but certainly that has not prevented agencies from sharing other information with Congress or the public. um, assuming that the right security protocols are in place. Um, but certainly from a congressional oversight perspective, having access to those documents would allow Congress to have greater visibility.

Mm-hmm.

As to, cause we have been able to provide you with anecdotes of how agencies have used this,

Mm-hmm.

but the challenge is we don't have an overarching view of how agencies have used this, um, authorization.

Yeah. Uh, how would you say it's evolved over the years? I mean, obviously you mentioned IT and and technology uh sharing agreements um what are some of the ways where um this this tool has evolved as these agencies have progressed

well it's definitely evolved past agencies just using it for details and common services the agencies are using it in a variety of ways of course we're seeing that in the engagements they will that gao will be looking at uh specifically related to the ballroom and um education of course the department of education has made some of its inter-agency agreements publicly available on his website.

OK. Um, so that's up to each individual agency if they are choosing to make them available?

Yes.

So in some cases they are publicly available just at the agency's discretion? So you have to submit them to the agency.

Correct.

OK. Um, and what happens when um an agency maybe overspends? Um, you know, if if that agreement is uh not adhered to or there's an overspend,

Mm-hmm.

what happens? What's the accountability there? Cuz obviously if we're not necessarily privy to that document, um, is that just sorted out between the agencies or what's that step? is there action that's taken

so if the they have to be actual cost incurred so if an agency were to over the requesting agency were to overpay the servicing agency would be required to uh return those funds to the the requesting agency

ok

so and then would they be i'm sorry i'm almost i know i'm out of town uh would they be invoice for that additional expense or how does that work

uh i don't know exactly what the mechanics would

ok OK, if you could get back to me on what that process kind of would look like in practical application, I'd appreciate it. Thank you, Mister Chairman.

Thank you, Miss Sensen. Chair now recognize Mister Bishop for five minutes.

Thank you, Mister Chairman. Uh, let me uh welcome uh uh Mister Fiorentino and um uh Spell house sister Miss Jones. Uh, one of the uh inter-agency agreements announced on March nineteenth, twenty twenty six, that the treasury department manage the federal student loan portfolio and start to assume operational responsibility for collecting on defaulted student loans uh one of the requirements of the economy act is that the agency must determine that private commercial services cannot provide the goods and services as conveniently or as economically uh what metrics or criteria uh should be used to determine uh that the department of treasury will manage the contracts and collect on default the student loans more cheaply and more economically than private energies uh and the use of the economy act requires an agency to determine the use of the agreement will provide the services needed more conveniently or economically than currently uh being provided is that criteria met if the treasury department merely enters into agreements with the same or similar entities that provide those services now uh for the department of education

uh thank you sir for that question thank you sir for the question that goes back to the point that we have been making about determinations and findings statements if those uh were more publicly available we would all have information related to the points that you're making here i would note that gao does have an engagement underway looking at the uh education department in particular and and some of their interagency transactions so uh of course as i noted earlier i don't wanna get ahead of our findings there because of course our first order of business is in fact developing the record so that we can have um adequate information

so and tino

yeah i would i would agree with my colleague here that that information um is not available so we would not be able to know how it's being implemented um and whether there are cost savings being achieved or not

so that frustrates our ability as well as yours uh for oversight and and investigation there uh let me ask uh another question when congress created the department of homeland security uh it took legislation to merge twenty two different federal agencies and departments such as fema and ins into the new unified department uh it seems unprecedented that the trump administration can use the economy act to break up the federal education bureaucracy and allegedly return education to the states historically has the economy act ever been used to dismantle a federal agency to your knowledge and what percentage is left of the department of education's appropriated available funds after these uh inter-agency agreements

i can't speak to how much of the appropriations is left but i can say that both gao and the department of justice have said that the economy act cannot be used to transfer an agency's core administrative functions. So if that is the case, it is inconsistent with what both gao and doj have said. As i noted, gao does have an engagement looking at the department of education's use of inter-agency transactions in particular.

uh what what are the potential administrative costs for states districts or public or private universities from this reorganization of the department of education under the economy act and should uh those administrative uh costs uh be taken into account uh or or they rightly be considered uh unfunded mandates

i can't speak to the uh cost associated with it hopefully we will get that information in conjunction with the audits that we are doing