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Each year Congress passes an appropriations bill which authorizes the federal government to expend public funds in specified ways. This is a constitutional requirement, often referred to as the ‘power of the purse’, which means the federal government cannot spend federal funding funds without express congressional approval.

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The Economy Act (31 U.S.C. § 1535-1536) gives broad authority to Federal government-wide engagement in inter- and intra-agency reimbursable agreements, which result in a more economical or convenient transaction for the customer agency over the use of commercial services. Under these agreements, the bona fide need rule, as explained above, still exists. In other words, the appropriation year time limits on the funds is still in place within these agreements, and the bona fide need is met at the time the requesting agency obligates those funds in a financial assistance award. 

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