DATE: May 29, 2003

SUBJECT: Office of Management and Budget (OMB); Final Revision of OMB Circular No. A-76, Performance of Commercial Activities

SOURCE: Federal Register, May 29, 2003, Vol. 68, No. 103, page 32134

AGENCIES: Office of Management and Budget (OMB)

ACTION: Final Revision

SYNOPSIS: OMB is revising OMB Circular No. A-76 to expand the use of public-private competitions to improve performance of commercial activities, and to incorporate the principles of Federal Acquisition Regulation (FAR) Part 15, Contracting by Negotiation, into the public-private competition process.

EDITOR'S NOTE: The revised OMB Circular No. A-76 is available at http://www.whitehouse.gov/omb/circulars/a076/a76_rev2003.pdf.

For more on the proposed revisions to OMB Circular No. A-76, see the November 19, 2002, FEDERAL CONTRACTS DISPATCH "Office of Management and Budget (OMB); Revision of OMB Circular No. A-76, Performance of Commercial Activities."

EFFECTIVE DATE: May 29, 2003.

FOR FURTHER INFORMATION CONTACT: Office of Federal Procurement Policy, NEOB Room 9013, Office of Management and Budget, 725 17th Street, NW, Washington, DC 20503; 202-395-3501 or 7807.

SUPPLEMENTARY INFORMATION: Federal agencies rely on a mix of public and private sector sources to perform a wide variety of commercial activities. OMB Circular No. A-76 establishes the policies and procedures for identifying commercial activities and determining whether these activities should be provided by a private sector provider through a contract, by government personnel, or by another federal agency through a fee-for-service agreement.

Historically, before an agency shifts commercial work from one source to another (for example, to or from performance by government personnel to performance by a contractor or another agency), A-76 has required the agency to conduct a public-private competition in which the cost of performance is compared between the public and private sectors. A-76 has traditionally required agencies to perform a "cost comparison" by:

In addition, A-76 has recognized a variety of circumstances in which agencies are not required to conduct cost comparisons -- for example, A-76 has allowed agencies to directly convert work to or from the private sector without cost comparison under certain circumstances, such as where an activity was or would be performed by an aggregate of 10 or fewer "full-time-equivalent" (FTE) employees.

One of the initiatives in President Bush's management agenda calls for public-private sector competition of 20% of the non-inherently governmental activities required to be compiled by Public Law 105-270, Federal Activities Inventory Reform Act of 1998 (FAIR Act) by the end of Fiscal Year 2003 (September 30, 2003). The government has identified 850,000 FTEs as performing commercial activities -- nearly half of all federal employees. The government could not achieve this goal using the old A-76 because it was cumbersome and very time-consuming.

In conjunction with the president's management agenda, Section 832 of the Fiscal Year 2001 National Defense Authorization Act (Public Law 106-398) required the convening of a panel of experts (the "Commercial Activities Panel") to study the policies and procedures governing the transfer of commercial activities for the federal government from government personnel to a federal contractor. Section 832 required the panel to submit to Congress, by May 1, 2002, a report of the panel on the results of the study, including recommended changes with regard to implementing policies and enactment of legislation. On May 1, 2002, the panel issued its final report, "Improving the Sourcing Decisions of the Government," and it recommended that the government adopt a procedure based on FAR Part 15. (EDITOR'S NOTE: For more on this panel and its final report, see the May 1, 2002, FEDERAL CONTRACTS DISPATCH "General Accounting Office; Commercial Activities Panel Final Report.")

On November 19, 2002, OMB published a proposal for major revisions to A-76. The proposed changes were very similar to those proposed by the Commercial Activities Panel. More than 700 public comments were submitted to OMB (for copies of the comments on the proposed revisions, see http://www.whitehouse.gov/omb/circulars/a076/comments/a76_list.html for e-mail comments, and http://www.whitehouse.gov/omb/circulars/a076/comments/faxed.html for faxed comments). As a result of these comments, significant changes have been made to the final version of A-76.

The organization of A-76 has changed dramatically, with the actual circular consisting of a mere three pages and describes the overarching policy tenets and the scope of agency responsibilities. The procedures for carrying out these policies are contained in three attachments:

A fourth attachment, Attachment D, Acronyms, Definitions, and Index, provides a detailed glossary and index of key terms used in A-76 and its attachments.

The following are the significant changes between the old A-76 and the new A-76 (as well as with the proposed A-76):

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

Copyright 2003 by Panoptic Enterprises. All Rights Reserved.

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