# SECTION 300---PLANNING, BUDGETING, ACQUISITION, AND MANAGEMENT OF CAPITAL ASSETS CONSIDER THIS A 95 PERCENT SOLUTION DOCUMENT. THERE ARE MINOR CHANGES THAT COULD BE MADE PRIOR TO THE DIRECTOR SIGNING A-11 IN JUNE.

Table of Contents

1.  What is the purpose of this section?

300.2 Does this section apply to me?

300.3 What background information must I know?

300.4 What special terms must I know?

300.5 How will agencies manage capital assets?

300.6 How are capital asset acquisitions funded?

300.7 What is exhibit 300 and how is it organized?

300.8 What other requirements does exhibit 300 fulfill?

9.  What must I report on exhibit 300 and when?

10. How will OMB evaluate the business cases in the exhibits 300?

300.11 What additional information should I know?

Ex--300 Capital Asset Plan and Business Case

Appendix 300A: Principles of Budgeting for Capital Asset Acquisitions

Appendix 300B: Selected OMB Guidance and Other References Regarding
Capital Assets

Summary of Changes

## 300.1 What is the purpose of this section?

Part 7 (section 300) of this Circular establishes policy for planning,
budgeting, acquisition and management of Federal capital assets, and
instructs you on budget justification and reporting requirements for
major IT investments. OMB provides procedural and analytic guidelines
for implementing specific aspects of these policies as appendices and
supplements to this Circular and in other OMB Circulars. For information
technology, this is a companion section to section 53.

## 300.2 Does this section apply to me?

The policy and budget justification and reporting requirements in this
section apply to all agencies of the Executive Branch of the government
that are subject to Executive Branch review (see section 27.1).

**300.3 What background information must I know?**

The Federal Government must effectively manage its portfolio of capital
assets to ensure that scarce public resources are wisely invested.
Capital programming integrates the planning, acquisition and management
of capital assets into the budget-decision-making process, and is
intended to assist agencies improve asset management and to comply with
the results-oriented requirements of:

-   The Government Performance and Results Act of 1993, which
    establishes the foundation for budget decision-making to achieve
    strategic goals in order to meet agency mission objectives.
    Instructions for preparing strategic plans, annual performance plans
    and annual program performance reports are provided in part 6 of
    this Circular (see section 220.11(d)).

```{=html}
<!-- -->
```
-   The Federal Managers Financial Integrity Act of 1982, Chief
    Financial Officers Act of 1990 and Federal Financial Management
    Improvement Act of 1996, which require accountability of financial
    and program managers for financial results of actions taken, control
    over the Federal government\'s financial resources, and protection
    of Federal assets. OMB policies and standards for developing,
    operating, evaluating, and reporting on financial management systems
    are contained in Circular A--127, *Financial Management Systems* and
    Section 52 of this Circular.

-   The Paperwork Reduction Act of 1995, which requires that agencies
    perform their information resource management activities in an
    efficient, effective and economical manner.

-   The Clinger-Cohen Act of 1996 requires agencies to use a disciplined
    capital planning and investment control process to acquire, use,
    maintain and dispose of information technology. OMB policy for
    management of Federal information resources is contained in Circular
    A--130, *Management of Federal Information Resources*, and Section
    53 of this Circular.

-   The Federal Acquisition Streamlining Act of 1994, Title V (FASA V),
    which requires agencies to establish cost, schedule and measurable
    performance goals for all major acquisition programs, and achieve on
    average 90 percent of those goals. OMB policy for performance-based
    management is also provided in this section.

```{=html}
<!-- -->
```
-   The Federal Information Security Management Act (FISMA), which
    requires agencies to integrate IT security into their capital
    planning and enterprise architecture processes at the agency,
    conduct annual IT security reviews of all programs and systems, and
    report the results of those reviews to OMB.

```{=html}
<!-- -->
```
-   The E-government Act of 2002 (P.L. 107-347), requires agencies to
    develop performance measures for implementing e-government. The Act
    also requires agencies to support government-wide e-government
    initiatives and to leverage cross-agency opportunities to further
    e-government.

## 300.4 What special terms must I know?

***Capital assets*** are land, structures, equipment, intellectual
property (e.g., software), and information technology (including IT
service contracts) that are used by the Federal government and have an
estimated useful life of two years or more. See Appendix One of the
Capital Programming Guide for a more complete definition of capital
assets. Capital assets do not include items acquired for resale in the
ordinary course of operations or items that are acquired for physical
consumption, such as operating materials and supplies. Capital assets
may be acquired in different ways: through purchase, construction, or
manufacture; through a lease‑purchase or other capital lease (regardless
of whether title has passed to the Federal Government); through an
operating lease for an asset with an estimated useful life of two years
or more; or through exchange. Policy on leases is contained in part I,
section 33.4. Capital assets may or may not be capitalized (i.e.,
recorded in an entity\'s balance sheet) under Federal accounting
standards. Capital assets do not include grants to State and local
governments or other entities for acquiring capital assets (such as
National Science Foundation grants to universities or Department of
Transportation grants to AMTRAK) or intangible assets, such as the
knowledge resulting from research and development or the human capital
resulting from education and training. For more discussion on capital
assets, you should consult the *Capital Programming Guide* (June 1997),
a Supplement to this Circular.

***Capital planning and investment control* (CPIC)** is the same as
capital programming and is a decision-making process for ensuring that
information technology (IT) investments integrate strategic planning,
budgeting, procurement, and the management of IT in support of agency
missions and business needs. The term comes from the Clinger-Cohen Act
of 1996 and generally is used in relationship to IT management issues.

*Capital programming* means an integrated process within an agency for
planning, budgeting, procurement and management of the agency's
portfolio of capital assets to achieve agency strategic goals and
objectives with the lowest life-cycle cost and least risk.

***Capital project*** means the acquisition of a capital asset and the
management of that asset through its life-cycle after the initial
acquisition. Capital projects may consist of several useful segments.

***Earned value management (EVM)*** is a project management tool that
effectively integrates the project scope of work with schedule and cost
elements for optimum project planning and control. The qualities and
operating characteristics of earned value management systems are
described in American National Standards Institute (ANSI)/Electronic
Industries Alliance (EIA) Standard --748--1998, *Earned Value Management
Systems*, approved May 19, 1998. A copy of Standard 748 is available
from Global Engineering Documents (1-800-854-7179). Information on
earned value management systems is available at
http://www.acq.osd.mil/pm.

***E-business*** (Electronic Business) means doing business online.
E-business is often used as an umbrella term for having an interactive
presence on the Web. A government e-business initiative or project
includes web-services type technologies, component based architectures,
and open systems architectures designed around the needs of the customer
(citizens, business, governments, and internal Federal operations).

***E-Government*** is the use by the government of web-based Internet
applications and other information technologies, combined with processes
that implement these technologies.

***Federal Enterprise Architecture (FEA)*** is a framework for
describing the relationship between business functions and the
technologies and information that support them. Major IT investments
will be aligned against each reference model within the FEA framework.
The reference models required to be used during the FY 2005 budget
formulation process are briefly described below.

*Performance Reference Model (PRM)* The PRM is a standardized
performance measurement framework to characterize performance in a
common manner where necessary. The PRM will help agencies produce
enhanced performance information; improve the alignment and better
articulate the contribution of inputs, such as technology, to outputs
and outcomes; and identify improvement opportunities that span
traditional organizational boundaries.

*Business Reference Model (BRM)* The BRM is a function-driven framework
to describe the Lines of Business and Internal Functions performed by
the federal government independent of the agencies that perform them.
Major IT investments are mapped to the BRM to identify collaboration
opportunities.

*Service Component Reference Model (SRM)* The SRM provides a common
framework and vocabulary for characterizing the IT and business
components that collectively comprise an IT investment. The SRM will
help agencies rapidly assemble IT solutions through the sharing and
re-use of business and IT components. A Component is a self-contained
process, service, or IT capability with pre-determined functionality
that may be exposed through a business or technology interface.

*Technical Reference Model (TRM)* -- The TRM provides a foundation to
describe the standards, specifications, and technologies supporting the
delivery, exchange, and construction of business (or Service) components
and e-Gov solutions. The TRM unifies existing Agency TRMs and electronic
Government (e-Gov) guidance by providing a foundation to advance the
re-use of technology and component services from a Government-wide
perspective.

***Full acquisition*** means the procurement and implementation of a
capital project or useful segment/module of a capital project. Full
acquisition occurs after all planning activities are complete and the
agency\'s Executive Review Committee or Investment Review Board selects
and approves the proposed technical approach and project plan, and
establishes the baseline cost, schedule and performance goals for this
phase of the investment.

***Full funding*** means that appropriations---regular annual
appropriations or advance appropriations---are enacted that are
sufficient in total to complete a useful segment of a capital project
before any obligations may be incurred for that segment. When capital
projects or useful segments are incrementally funded, without certainty
if or when future funding will be available, it can result in poor
planning, acquisition of assets not fully justified, higher acquisition
costs, project delays, cancellation of major projects, the loss of sunk
costs, or inadequate funding to maintain and operate the assets. Budget
requests for full acquisition of capital assets must propose full
funding (see section 31.4).

***Information technology*,** as defined by the Clinger-Cohen Act of
1996, sections 5002, 5141, and 5142, means any equipment or
interconnected system or subsystem of equipment that is used in the
automatic acquisition, storage, manipulation, management, movement,
control, display, switching, interchange, transmission, or reception of
data or information. For purposes of this definition, equipment is
\"used\" by an agency whether the agency uses the equipment directly or
it is used by a contractor under a contract with the agency that (1)
requires the use of such equipment or (2) requires the use, to a
significant extent, of such equipment in the performance of a service or
the furnishing of a product. Information technology includes computers,
ancillary equipment, software, firmware and similar procedures, services
(including support services), and related resources. It does not include
any equipment that is acquired by a Federal contractor incidental to a
Federal contract.

***Integrated project team (IPT)*** means a multi-disciplinary team led
by a program manager responsible and accountable for planning,
budgeting, procurement and life-cycle management of the project to
achieve its cost, schedule and performance goals. Team skills include:
budgetary, financial, capital planning, procurement, user, program,
value management, earned value management, and other staff as
appropriate.

***Life-cycle costs*** means the overall estimated cost, both government
and contractor, for a particular program alternative over the time
period corresponding to the life of the program, including direct and
indirect initial costs plus any periodic or continuing costs of
operation and maintenance.

***Major acquisition*** means a capital project that requires special
management attention because of its: (1) importance to an agency\'s
mission; (2) high development, operating, or maintenance costs; (3) high
risk; (4) high return; or (5) significant role in the administration of
an agency\'s programs, finances, property, or other resources. The
agency\'s documented capital programming process should include the
criteria for determining when a project is classified as major.

***Major IT Investment*** means a system or project that requires
special management attention because of its importance to an agency
mission; Project was a major project in the FY 04 submission and is
continuing; Project is financial management and spends more than
\$500,000; Project is directly tied to the top two layers of the Federal
Enterprise Architecture (Services to Citizens and Mode of Delivery);
Project is an integral part of the agency's modernization blueprint
(EA); Project has significant program or policy implications; Project
has high executive visibility; Project is defined as major by the
agency's capital planning and investment control process. OMB may work
with the agency to declare other IT investments as major IT investments.
All major IT investments must be reported on Exhibit 53 and must submit
a \"Capital Asset Plan and Business Case,\" Exhibit 300. IT investments
that are E-Government in nature or use e-business technologies must be
identified as major IT investments regardless of the costs. If you are
unsure about what systems to consider as \"major,\" consult your agency
budget officer or OMB representative. IT investments not considered
\"major\" are \"non-major.\"

***Mixed life-cycle project*** means a project that has both
development/modernization/enhancement (DME) and steady state aspects.
For example, a mixed life-cycle project could include a prototype or
module of a system that is operational with the remainder of the system
in DME stages; or, a service contract for steady state on the current
system with a DME requirement for system upgrade or replacement.

***Non-major IT Investment*** means any initiative or project not
meeting the definition of major defined above but that is part of the
agency\'s IT investments.

***On-going project*** means a project that has been through a complete
budget cycle with OMB and represents budget decisions consistent with
the President\'s Budget for the prior year (BY-1).

*Operational (steady state) asset* means an asset or part of an asset
that has been delivered and is performing the mission.

***Performance-based acquisition management*** means a documented,
systematic process for program management, which includes integration of
program scope, schedule and cost objectives, establishment of a baseline
plan for accomplishment of program objectives, and use of earned value
techniques for performance measurement during execution of the program.
EVMS is required for those parts of the project where developmental
effort is required. This includes prototypes and tests to select the
most cost effective alternative during the Planning Phase, the work
during the Acquisition Phase, and any developmental, modification or
upgrade work done during the Operational/Steady State Phase. EVMS is to
be applied to both government and contractor efforts. For
operational/steady state systems, an operational analysis system as
discussed in Phase IV of the Capital Programming Guide is required. A
performance-based service contract/agreement with a defined quality
assurance plan should be the basis for monitoring contractor or in-house
performance of this phase.

***Planning*** means preparing, developing or acquiring the information
you will use to design the project; assess the benefits, risks, and
risk-adjusted life-cycle costs of alternative solutions; and establish
realistic cost, schedule, and performance goals, for the selected
alternative, before either proceeding to full acquisition of the capital
project or useful segment or terminating the project. Planning must
progress to the point where you are ready to commit to achieving
specific goals for the completion of the acquisition. Information
gathering activities may include market research of available solutions,
architectural drawings, geological studies, engineering and design
studies, and prototypes. Planning is a useful segment of a capital
project. Depending on the nature of the project, one or more planning
segments may be necessary.

***Risk adjusted Life-cycle costs*** means the overall estimated cost
for a particular program alternative over the time period corresponding
to the life of the program, including direct and indirect initial costs
plus any periodic or continuing costs of operation and maintenance, that
has been adjusted to accommodate any risk identified in the risk
management plans.

***Section 508*** refers to Section 508 of the Rehabilitation Act of
1973 (29 U.S.C. 794d), which requires Federal agencies to develop,
procure, maintain, or use electronic and information technology (EIT)
that is accessible to Federal employees and members of the public with
disabilities.

***Useful segment/module*** means an economically and programmatically
separate component of a capital project that provides a measurable
performance outcome for which the benefits exceed the costs, even if no
further funding is appropriated.

Additional budget terms and definitions are included in the Glossary in
Appendix 300A, APrinciples of Budgeting for Capital Asset Acquisitions.@

## 300.5 How will agencies manage capital assets?

Agencies must establish and maintain a capital programming process that
links mission needs and capital assets in an effective and efficient
manner. Effective capital programming requires long-range planning and a
disciplined budget decision-making process as the basis for managing a
portfolio of assets to achieve performance goals and objectives with
minimal risk, lowest life-cycle costs, and greatest benefits to the
agency\'s business. The process will integrate the agency\'s capital
investments; strategic and performance plans prepared pursuant to the
Government Performance and Results Act of 1993; financial management
plans prepared pursuant to the Chief Financial Officer Act of 1990 (31
U.S.C. 902a5); information resource management plans prepared pursuant
to the Clinger-Cohen Act (Pub. L. 104--106, Division E); method for
performance-based acquisition management under the Federal Acquisition
Streamlining Act of 1994, Title V; and budget formulation and execution
processes.

The documented capital programming process defines how an agency will
select capital projects included in the agency\'s capital asset
portfolio for funding each year; how capital projects, once initiated,
will be controlled to achieve intended cost, schedule, and performance
outcomes; and how once the asset is operational the agency will continue
to evaluate asset performance to maintain a positive return on
investment. A cross-functional executive review committee acting for or
with the Agency Head must be responsible for managing the agency\'s
entire capital asset portfolio, making decisions on the best allocation
of assets to achieve strategic goals and objectives within budget
limits. This process must also leverage opportunities for collaboration
across agencies on capital assets that support common lines of business
to serve the citizens, businesses, governments, and internal Federal
operations.

The *Capital Programming Guide,* which supplements this part, provides
guidance on the principles and techniques for effective capital
programming. Appendix 300A of this part explains the principles of
financing capital asset acquisitions. Section 8b of OMB Circular A--130
establishes additional requirements for enterprise architectures,
planning and control of information systems and technology investments
and performance management. Agencies must develop, implement and use a
capital programming process to develop their capital asset portfolio,
and must:

-   Evaluate and select capital asset investments that will support core
    mission functions that must be performed by the Federal government
    and demonstrate projected returns on investment that are clearly
    equal to or better than alternative uses of available public
    resources;

-   Initiate improvements to existing assets or acquisitions of new
    assets only when no alternative private sector or governmental
    source can more efficiently meet the need;

-   Simplify or otherwise redesign work processes to reduce costs,
    improve effectiveness, and make maximum use of commercial services
    and off-the-shelf technology;

-   Reduce project risk by avoiding or isolating custom designed
    components, using components that can be fully tested or prototyped
    prior to full implementation or production, ensuring involvement and
    support of users in the design and testing of the asset;

-   Structure major acquisitions into useful segments with a narrow
    scope and brief duration, make adequate use of competition and
    appropriately allocate risk between government and contractor. The
    Agency Head must approve or define the cost, schedule and
    performance goals for major acquisitions, and the agency\'s Chief
    Financial Officer must evaluate the proposed cost goals;

-   Institute performance measures and management processes that monitor
    and compare actual performance to planned results. Agencies must use
    a performance-based acquisition management system, based on the
    ANSI/EIA Standard 748, to obtain timely information regarding the
    progress of capital investments. The system must also measure
    progress towards milestones in an independently verifiable basis, in
    terms of cost, capability of the investment to meet specified
    requirements, timeliness, and quality. Agencies are expected to
    achieve, on average, 90 percent of the cost, schedule and
    performance goals for major acquisitions. Agency heads must review
    major acquisitions that are not achieving 90 percent of the goals to
    determine whether there is a continuing need and what corrective
    action, including termination, should be taken;

-   Ensure that information technology systems conform to the
    requirements of OMB Circular No. A--130, \"Management of Federal
    Information Resources;\"

-   Ensure that financial management systems conform to the requirements
    of OMB Circular No. A--127, \"Financial Management Systems;\"

-   Conduct post-implementation reviews of capital programming and
    acquisition processes, and projects to validate estimated benefits
    and costs, and document effective management practices, i.e.,
    lessons learned, for broader use; and

-   Establish oversight mechanisms that require periodic review of
    operational capital assets to determine how mission requirements
    might have changed, and whether the asset continues to fulfill
    ongoing and anticipated mission requirements, deliver intended
    benefits to the agency and customers, and meet user requirements.

## 300.6 How are capital asset acquisitions funded?

\(a\) Background.

Good budgeting requires that appropriations for the full costs of asset
acquisition be enacted in advance to help ensure that all costs and
benefits are fully taken into account when decisions are made about
providing resources. For most spending on acquisitions, this rule is
followed throughout the Government. When capital assets are funded in
increments, without certainty if or when future funding will be
available, it can and occasionally does result in poor planning,
acquisition of assets not fully justified, higher acquisition costs,
project delays, cancellation of major projects, the loss of sunk costs,
or inadequate funding to maintain and operate the assets.

\(b\) Full funding policy.

The full funding policy (see section 31.4) requires that each useful
segment (or module) of a capital project be fully funded with either
regular annual appropriations or advance appropriations. For definitions
of these terms, see section 300.4 or the Glossary to Appendix 300A.
Appendix 300A elaborates on the full funding concept (see the Principles
of Financing section).

For the initial budget submissions, you are required to request full
budget resources for all ongoing and new proposals for capital assets or
at least for each useful segment of a capital project.

Identify in the initial budget submission any additional budget
authority required to implement full funding for existing projects.
Adjustments to your planning guidance levels will be considered based on
your budget submissions.

## 300.7 What is exhibit 300 and how is it organized?

The exhibit 300 is a format for the IPT to demonstrate to agency
management and OMB that it has employed the disciplines of good project
management, represents a strong business case for the investment, and
met other Administration priorities to define the proposed cost,
schedule, and performance goals for the project if funding approval is
obtained. The information you report on exhibit 300 helps management:

-   Determine adherence to the agency's capital programming and
    investment decision-making process;

-   Ensure that spending on capital assets directly supports your
    agency=s mission and will provide a return on investment equal to or
    better than alternate uses of funding;

-   Identify poorly performing projects, i.e. projects that are behind
    schedule, over budget, or lacking in capability; and

-   Identify capital assets that no longer fulfill ongoing or
    anticipated mission requirements or do not deliver intended benefits
    to the agency or its customers.

-   For IT, ensure that strong business cases are provided for IT
    investments. These business cases should include security, privacy,
    enterprise architecture, and provide the effectiveness and
    efficiency gains planned by the business lines and functional
    operations.

Exhibit 300 consists of two parts, each of which is designed to collect
information that will assist agency management and OMB during budget
review. Agencies must review their portfolio of capital assets each year
to determine whether it continues to meet agency mission needs
reconciled with existing capabilities, priorities and resources. Capital
asset investments should be compared against one another, rated and
ranked using decision criteria (such as investment size, complexity,
technical risk, expected performance benefits or improvement) to create
a prioritized portfolio. You should request funding only for priority
capital asset investments that demonstrate compliance with the
requirements for managing capital assets described in this section and
the agency\'s capital programming process. As a general presumption, OMB
will only consider recommending for funding in the President\'s budget,
priority capital asset investments that comply with the policies for
good capital programming described in section 300.5, and the Capital
Programming Guide.

New projects must be justified based on the need to fill a gap in the
agency\'s ability to meet strategic goals and objectives (including
those identified in Section 53) with the least life-cycle costs of all
the various possible solutions and provide risk-adjusted cost and
schedule goals and measurable performance benefits. Projects that are
still in the planning or full acquisition stages must demonstrate
satisfactory progress toward achieving baseline cost, schedule and
performance goals. Assets that are in operation (steady state) must
demonstrate how close actual annual operating and maintenance costs are
to the original life-cycle cost estimates, and whether the level or
quality of performance/capability meets the original performance goals
and continues to meet agency and user needs.

OMB will present investments for the President's E-Government
initiatives, as well as new E‑Government investments identified through
the Federal Enterprise Architecture, using an integrated budget process
that complements each agency's investment portfolio. OMB will work with
agencies to build from the IT and E-Government strategy outlined in
Section 53 of OMB Circular A-11 in identifying these cross-agency
investments. Accordingly, where one agency's activities should be
aligned with those of another agency in order to serve citizens,
businesses, governments, and internal Federal operations, OMB will give
priority to agencies that have worked collectively to present and
support activities in an integrated fashion. The FY 2005 Budget will
appropriately reflect such interagency collaboration, and agencies will
be expected to use the exhibit 300 to demonstrate these efforts.

## 300.8 What other requirements does exhibit 300 fulfill?

Exhibit 300 is designed to coordinate OMB=s collection of agency
information for its reports to Congress required by the Federal
Acquisition Streamlining Act of 1994 (FASA) (Title V) and the
Clinger-Cohen Act of 1996; to ensure that the business case for
investments are made and tied to the mission statements, long‑term goals
and objectives, and annual performance plans that you developed pursuant
to the Government Performance and Results Act of 1993 (GPRA); and for IT
Exhibit 300s are used as one-stop documents for a myriad of IT
management issues such as business cases for investments, IT security
reporting, Clinger Cohen Act implementation, E-Gov Act implementation,
Government Paperwork Elimination Act implementation, agency's
modernization efforts, and overall project management.

## 300.9 What must I report on exhibit 300 and when?

Capital asset plans and business cases (exhibit 300s) are products of
your capital programming and/or capital planning and investment control
process and should be developed for all capital assets. Capital asset
plans for major acquisitions, projects, or systems are reported to OMB.
You must submit a capital asset plan for each major new and on-going
major project, system, or acquisition, and operational (steady state)
asset included in your agency\'s capital asset portfolio. A major
project requires special management attention because of its: (1)
importance to an agency\'s mission; (2) high development, operating, or
maintenance costs; (3) high risk; (4) high return; or (5) significant
role in the administration of an agency\'s programs, finances, property,
or other resources.

Major IT investments are also defined as projects, systems, or
initiatives that employ e-business or E-Government technologies thereby
supporting the expanding E-Gov initiative of the President\'s Management
Agenda. Major IT projects must have the concurrence of the Chief
Information Officer (see section 53.3 for more information about major
information technology projects). Your documented capital planning and
investment control process must also define a major IT project.

Exhibit 300 requires information that demonstrates compliance with the
capital programming and capital planning and investment control policies
of this section and, for IT, OMB Circular A--130, and justifies new or
continued funding for major acquisitions by demonstrating: a direct
connection to your agency\'s strategic plan; a positive return on
investment for the selected alternative; sound acquisition (program and
procurement) planning; comprehensive risk mitigation and management
planning; and realistic cost and schedule goals and measurable
performance benefits. Detailed information to substantiate the portfolio
of major projects included in your justification will be documented in
accordance with your agency\'s capital programming process. An
electronic version of exhibit 300 is available at *www.cio.gov*.

For information technology, the funding stages for \"Planning\" plus
\"Full acquisition\" are the same as the
\"Development/modernization/enhancement\" entry described in exhibit 53,
and \"Maintenance\" is the same as \"Steady state\" in exhibit 53. For
further details on IT and IT reporting please see section 53. Detail on
information technology reported in exhibit 300 should be aggregated and
used to prepare exhibit 53.

The information you must report will depend on whether you are reporting
a new project or an ongoing project (see the exhibit heading in part I).

New Investments

If you are reporting a new investment, i.e., proposed for BY or later,
you must complete part I, except for sections I.H.3 and I.H.4. For IT,
you must also complete part II. Investments in initial concept or
planning phase will have less detail and defined specificity than
investments moving into the acquisition or operational phase. However,
these investments should identify through life-cycle documentation dates
that these issues will be addressed as the investment matures. Where
prototypes are acquired as part of the planning process, they must be
reported as full acquisitions. All of the areas on the exhibit 300 must
be part of an agency\'s planning and the business case (exhibit 300)
updated as soon as the information is known. While exhibit 300s are
officially submitted to OMB twice yearly, they should be management
tools used within an agency and updated as the information is available.

Office Automation, Infrastructure, and Telecommunications Investments

Agencies are required to create and manage department-wide IT programs
for office automation, infrastructure, and telecommunications, IT
investments (major and non-major) in these areas should be coordinated
through an agency-wide process and reported in September as a single
business case for the department. If you are unsure what investments
should be included in this area contact your OMB representative for
clarification.

Ongoing Investments

If you are reporting an ongoing investment that is other than IT, you
must complete part I all sections as appropriate for the phase of the
project. IT investments, both ongoing and pre-existing investments that
have never been reported through the budget process, must complete parts
I and II. If any of the cost, schedule or performance variances are a
negative 10 percent or more you must provide a complete analysis of the
reasons for the variances, the corrective actions that will be taken and
the most likely estimate at completion (EAC). Use the EVMS system to
identify the specific work packages where problems are occurring.
Discuss why the problems occurred and corrective actions necessary to
return the program as close as feasible to the current baseline goals.
Based on the above analysis, provide and discuss the rationale for the
IPT's latest EAC as the most likely EAC. In addition, provide the
contractor's EAC and EAC's derived from at least two common prediction
formulas (see paragraph I.H.4 in exhibit 300) from the EVMS system and
discuss the differences with the IPT EAC. EAC's are subjective in nature
and contractor and government EAC's are often quite optimistic in an
attempt to favor project continuation. Using the prediction formulas
will give the IPT some proven parameters to structure the discussion.
The objective is to provide a realistic EAC for management decisions, to
continue, restructure or terminate the project.

Ongoing IT Investment and the Agency's Modernization Blueprint

If you are reporting an Ongoing IT Investment that is in operational
mode (Steady State), you must demonstrate that the investment has
undergone an E-Government Strategy Review as part of the agency's
modernization blueprint. An E-Government review is a comprehensive
review and analysis performed on legacy systems and IT investments with
a strategy for identifying smarter and more cost effective methods for
delivering the performance. The Exhibit 300 must demonstrate that either
the existing investment is meeting the needs of the agency and
delivering the expected performance or that the investment is being
modernized and replaced consistent with the modernization blueprint. All
of the sections of the business case should be used for completing an
E-Gov review including:

-   The business case for these type investments are not designed to
    recreate answers and analysis for projects that should have been
    performed at the inception of the project but rather answer the
    questions and criteria with a focus toward using web services, XML,
    J2EE, .NET technologies and other e-business type tools.

-   When addressing the justification questions, you must indicate
    whether the current way of doing business and performing the
    function is the most advantageous and cost-effective to the
    government.

-   The section on performance goals must identify the performance goals
    for the project as it stands today; project management must address
    the four questions identified in exhibit 300.

-   Alternatives analysis must be performed with a future-focus included
    in your E-Gov strategy rather than an alternatives analysis that was
    performed several years ago and no longer valid.

-   The section on actual performance and variances from the
    OMB-approved baseline provide information from the operational
    analysis system to show whether the asset is meeting program
    objectives and the needs of the owners and users, as well as
    performing within baseline cost, schedule and performance goals.

-   The sections in part II, must be answered in their entirety with a
    focus on the E-Gov strategy review. All of your answers must
    demonstrate that you have reviewed alternative ways to perform the
    business with a specific focus on E-Government or e-business
    technologies and supporting the President\'s Management Agenda.

Exhibit 300 must be submitted with your initial budget submission, which
is due by September 8, 2003 (see section 27.1). In alignment with the
President\'s Management Agenda Item, \"Expanding E-Gov\", During the FY
2004 Budget process, OMB began migrating all IT reporting (exhibits 53
and 300s) to Extensible Markup Language (XML). For the FY2005 Budget,
all reporting on IT must be submitted via XML. For capital projects
other than IT, agencies are encouraged to submit the exhibit 300
electronically, following the same instructions provided above.

Multi-Agency Business Cases and Capital Asset Plans

The managing partner (lead agency) will take the lead for the business
case and capital asset plan to include managing it through the agency
capital planning and budget process and submitting the Exhibit 300 to
OMB. The partnering agencies information on funding and milestones is
reflected in the project and funding plan section of the Exhibit 300.
The project and funding plan will identify all participating agencies,
the milestones they are responsible for, and the appropriation/funding
source information for the partner agencies.

Partnering agencies will reflect a line item on their Exhibit 53 (see
Section 53) indicating that the funds are part of a multi-agency
business case. The description provided on their Exhibit 53 will
describe where to find the business case in the managing partner's
budget submission. Partnering agencies should ensure that their
collaboration is indicated in the appropriate sections of the business
case before it is submitted to OMB. The requirement for Investment
Review Board for these projects is met by the managing partner agency's
IRB review of the entire project and participating agencies report their
participation via their Exhibit 53 through individual agencies' capital
planning process.

In those cases where individual agency investments should be part of a
multi-agency business case but have not yet begun the migration process,
the project and funding plan of the business case should reflect the
migration strategy to solution identified in the multi-agency business
case. If an agency has agreed to partner on a business case and
solution, only one business case is required for the initiative or
project. However, partnering agency must ensure their participation is
demonstrated in the multi-agency business case.

300.10 How will OMB evaluate the business cases in the exhibits 300?

There are two distinct elements to evaluating business cases and capital
asset plans; 1) program and budget review, and 2) assessment of business
cases. Budget decisions are made based upon both of these criteria. All
business cases are scored against a core set of criteria and the results
are provided to the agency via the budget pass-back process. While one
size scoring does not fit all categories, this scoring is meant to
ensure that agency planning and management of assets is consistent with
OMB policy and guidance. For projects other than IT, the IT specific
categories are awarded full points as they are not applicable. The
scoring of a business case is two-fold. The business case is scored
based upon the criteria listed below and then a programmatic review is
done for the investment. A business case may score very high based on
the criteria listed below but if the program it supports is deemed
ineffective there may be no business case that can be made for the
investment. Business case scoring is as follows:

Business Case (BC) (composite of all categories) Total Score for
Business Case

Projects scoring 5 and meeting program requirements are automatically
recommended for funding. Projects scoring an overall 4, meeting
performance goals, and scoring a 4 on the performance based management
criteria and security, will be recommended for funding, but will be
instructed to continue improvements in the areas identified as needing
work. Projects scoring 3 or below have the opportunity to improve to a 4
or degrade to a 2 rather easily. Projects scoring a 2 or below are not
recommended for funding.

Score Definition

5 41-50 Strong documented business cases (including all sections as
appropriate).

4 31-40 Very few weak points within the BC but still needs
strengthening.

3 21-30 Much work remains to solidify and quantify BC. BC has the
opportunity to either

improve or degrade very quickly.

2 11-20 Significant gaps in the required categories of the BC.

1 1-10 Inadequate in every category of the required BC.

Acquisition Strategy (AS) (Part I, Section I.G)

5 Strong Acquisition Strategy that mitigates risk to the federal
government, accommodates Section 508 as needed, and contracts and
statements of work (SOWs) are performance based. Implementation of the
Acquisition Strategy is clearly defined.

4 Strong Acquisition Strategy that mitigates risk to the federal
government, accommodates Section 508 as needed, Contracts and SOWs are
performance based, acquisition strategy has very few weak points that
agency is strengthening and implementation of the AS is clearly defined.

3 Acquisition strategy does not appear to successfully mitigate risk to
the federal government, accommodates Section 508 as needed, much work
remains to solidify and quantify the AS and contracts and SOWs do not
appear to be performance based.

2 Acquisition strategy does not appear to successfully mitigate risk to
the federal government, does not accommodate Section 508, does not
appear to use performance based contracts and SOWs and there is no clear
implementation of the acquisition strategy.

1 There is no evidence of an AS.

Project Management (PM) (Part I, Sections I.D and I.H, and overall
business case)

5 Project is very strong and has resources in place to manage it.

4 Project has few weak points in the area of PM and agency is working to
strengthen PM.

3 Much work remains in order for PM to manage the risks for this
project.

2 There is some understanding of PM for this project but it is very
rudimentary.

1 There is no evidence of PM.

Enterprise Architecture (EA) (Part II, Section II.A) for IT Only.

5 This project is included in the Agency EA and CPIC process. Project is
mapped to and supports the Federal Enterprise Architecture and clearly
links to the FEA Reference Models (BRM, PRM, SRM, and TRM). BC
demonstrates business, data, and application, and technology layers of
the EA in relationship to this project.

4 This project is included in the Agency EA and CPIC process. Project is
mapped to and supports the Federal Enterprise Architecture, clearly
links to the BRM and work is continuing to map to the PRM, SRM, and TRM.
BC demonstrates weaknesses in the business, data, and application, and
technology layers of the EA in relationship to this project.

3 This project is not included in the Agency EA and CPIC process or was
not approved by the agency EA committee and does not link to the FEA. BC
demonstrates a lack of understanding on the layers of the EA (business,
data, application, and technology).

2 While the agency has an EA Framework, it is not implemented in the
agency and does not include this project.

1 There is no evidence of a comprehensive EA in the agency.

Alternatives Analysis (AA) (Part I, Section I.E)

5 AA includes three viable alternatives, alternatives were compared
consistently, and alternative chosen provides benefits and reasons.

4 AA includes three viable alternatives, however work needs to continue
in terms of the alternative chosen and the accompanying analysis.

3 AA includes fewer than three alternatives and overall analysis needs
strengthening.

2 AA includes weak AA information overall, significant weaknesses exist.

1 There is no evidence that an AA was performed.

Risk Management (RM) (Part I, Section I.F)

5 Risk Assessment was performed for all mandatory elements and risk is
managed throughout the project.

4 Risk assessment addresses some of the Risk, but not all that should be
addressed for this project.

3 Risk Management is very weak and does not seem to address or manage
most of the risk associated with the project.

2 Risk Assessment was performed at the outset of the project but does
not seem to be part of the program management.

1 There is no evidence of a Risk Assessment Plan or Strategy.

Performance Goals (PG) (Part I, Section I.C)

5 Performance Goals are provided for the agency, are linked to the
annual performance plan, the project discusses the agency mission and
strategic goals, and performance measures are provided.

4 Performance Goals are provided for the agency, are linked to the
annual performance plan, the project discusses the agency mission and
strategic goals, and performance measures are provided yet work remains
to strengthen the PG.

3 Performance Goals exist but linkage to the agency mission and
strategic goals is weak.

2 Performance Goals are in their initial stages and are not appropriate
for the type of project. Much work remains to strengthen the PG.

1 There is no evidence of PG for this project.

Security and Privacy (SE) (Part II, Section II.B)

5 Security and privacy issues for the project and all questions are
answered, detail is provided about the individual project throughout the
life-cycle to include budgeting for SE.

4 Security and privacy information for the project is provided but there
are weaknesses in the information that need to be corrected.

3 Security and privacy information for the project is provided but fails
to answer the minimum requirements.

2 Security and privacy information points to an overall Agency Security
Process with little to no detail at this project level.

1 There is no security or privacy information provided for the project.

Performance Based Management System (PB) (Part I, Section I.H)

5 Agency, will use, or uses an Earned Value Management System (EVMS)
that meets ANSI/EIA Standard 748 and project is earning the value as
planned for costs, schedule, and performance goals.

4 Agency uses the required EVMS is within the variance levels for two of
the three criteria and needs work on the third issue.

3 Agency uses required EVMS but the process within their agency is very
new and not fully implemented or there are weaknesses for this
individual project\'s EVMS information.

2 Agency seems to re-baseline rather than report variances.

1 There is no evidence of PB.

Life-Cycle Costs Formulation (LC) (Multiple Sections)

5 Life-cycle costs seems to reflect formulation that includes all of the
required resources and is risk-adjusted to accommodate items addressed
in the RM. It appears that the project is planned well enough to come in
on budget.

4 Life-cycle costs seem to reflect formulation of some of the resources
and some of the issues as included in the risk adjustment strategy but
work remains in order to ensure that LC costs are accurately portrayed.

3 Life-cycle costs seem to reflect formulation of the resources but are
not risk adjusted based upon the risk management plan.

2 Life-cycle costs seem to include some of the resource criteria and are
not risk adjusted.

1 Life-cycle costs do not seem to reflect a planned formulation process.

Supports the President\'s Management Agenda Items (AI) (Multiple
Sections)

5 This is a collaborative investment that includes multiple agencies,
state, local, or tribal governments, uses e-business technologies and
the project is governed by citizen needs. If the investment is a steady
state investment, then an E-Gov strategy review is underway and includes
all of the necessary elements. If appropriate, this investment is fully
aligned with one or more of the President\'s E-Gov initiatives.

4 This is a collaborative investment that includes multiple agencies,
state, local, or tribal governments, uses e-business technologies though
work remains to solidify these relationships. If investment is in steady
state, then an E-Gov strategy review is underway but needs work in order
to strengthen the analysis. If appropriate, project supports one or more
of the President\'s E-Gov initiatives but is not yet fully aligned.

3 This is not a collaborative investment though it could be and much
work remains to strengthen the ties to the President\'s Management
Agenda. If a steady state project and no E-Gov strategy is evident, this
project will have a difficult time securing continued or new funding
from OMB. If appropriate, this project supports one or more of the
President\'s E-Gov initiatives but alignment is not demonstrated.

2 This is not a collaborative investment and it is difficult to
ascertain support for the AI. If steady state investment no E-Gov
strategy was performed or is planned.

1 There does not seem to be any link to the AI and no e-Gov strategy.

  ------------------------ ----------- ----------------------- -----------
  Scoring Element          Score       Scoring Element         Score

  Business Case (BC) Total                                     

  Acquisition Strategy                 Performance Goals (PG)  
  (AS)                                                         

  Program Management (PM)              Security (SE)           

  Enterprise Architecture              Performance Based       
  (EA)                                 Management System (PB)  

  Alternatives Analysis                Life Cycle Costs        
  (AA)                                 Formulation (LC)        

  Risk Management (RM)                 Supports the            
                                       President\'s Management 
                                       Agenda Items (AI)       
  ------------------------ ----------- ----------------------- -----------

## 300.11 What additional information should I know?

You are encouraged, but not required, to provide additional information
on the following or other topics related to improving planning,
budgeting, and acquisition of capital assets. These topics may be
included in the OMB budget review process on capital assets, which may
affect policy decisions on asset acquisition. You are encouraged to
raise any issues you consider relevant.

\(a\) Lumpiness or spikes.

Lumpiness or spikes (i.e., large, one‑time increases in year‑to‑year
appropriations) may create bias against acquiring assets. Give special
attention to these spikes for justified, cost‑beneficial acquisitions,
keeping in mind that the budget authority and outlay limits under the
government‑wide discretionary caps will continue to constrain resources.
This issue is addressed in Appendix 300A, \"C. Principles of
Financing.\"

\(b\) Account structure.

Certain types of accounts may be preferred to help ensure there is no
bias against the acquisition of capital assets. You are encouraged to
review the account structure to ensure that the most appropriate
accounts are being used for the acquisition of capital assets. This
issue also is addressed in Appendix 300A, \"C. Principles of
Financing.\"

*(1) Mixed accounts.* Mixed accounts have spending for both operating
and capital asset acquisition in the same account, allowing for
competition between the two. Demands for one may \"crowd out\" the
other.

*(2) Asset acquisition accounts.* These accounts are devoted exclusively
to the acquisition of capital assets. This type of account may be one
way of avoiding lumpiness, if there is a roughly similar level of
fully‑funded budget authority for asset acquisition each year.

*(3) Revolving funds.* These accounts can also avoid lumpiness,
depending on how they are structured. They purchase assets that are
\"rented\" to other accounts, so that the accounts and programs using
the assets have a roughly steady year‑to‑year payment.

\(c\) Multi‑year availability of appropriations.

You should ensure that the availability of the requested appropriation
allows enough time to complete the acquisition process. If the
acquisition process requires more than one year, the appropriations
should be made available for the number of years necessary (see part I,
section 31.7).

\(d\) Other observations.

You are invited to suggest other methods to improve planning, budgeting,
and acquisition of capital assets.

<table>
<colgroup>
<col style="width: 26%" />
<col style="width: 36%" />
<col style="width: 0%" />
<col style="width: 11%" />
<col style="width: 1%" />
<col style="width: 2%" />
<col style="width: 0%" />
<col style="width: 8%" />
<col style="width: 0%" />
<col style="width: 3%" />
<col style="width: 0%" />
<col style="width: 9%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="12">Exhibit 300: Part I: Capital Asset Plan and Business
Case (All Assets)</td>
</tr>
<tr class="even">
<td>Date of this Submission</td>
<td colspan="11"></td>
</tr>
<tr class="odd">
<td>Agency</td>
<td colspan="11"></td>
</tr>
<tr class="even">
<td>Bureau</td>
<td colspan="11"></td>
</tr>
<tr class="odd">
<td>Location in the Budget</td>
<td colspan="11"></td>
</tr>
<tr class="even">
<td>Account Title</td>
<td colspan="11"></td>
</tr>
<tr class="odd">
<td>Account Identification Code</td>
<td colspan="11"></td>
</tr>
<tr class="even">
<td>Program Activity</td>
<td colspan="11"></td>
</tr>
<tr class="odd">
<td>Name of Project</td>
<td colspan="11"></td>
</tr>
<tr class="even">
<td>Unique Project Identifier: (IT only)(See section 53)</td>
<td colspan="11">UPI should be created the same for all projects.</td>
</tr>
<tr class="odd">
<td>Project Initiation Date</td>
<td colspan="11"></td>
</tr>
<tr class="even">
<td colspan="3">Project Planned Completion Date</td>
<td></td>
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="12"><p>This Project is: Initial Concept____ Planning____
Full Acquisition____ Steady State____</p>
<p>Mixed Life Cycle____</p></td>
</tr>
<tr class="even">
<td colspan="3"></td>
<td></td>
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="3">Project/useful segment is funded:</td>
<td colspan="2">Incrementally</td>
<td colspan="2"></td>
<td colspan="2">Fully</td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="even">
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="2">Was this project approved by OMB for previous Year
Budget Cycle?</td>
<td colspan="3">Yes</td>
<td></td>
<td colspan="2">No</td>
<td colspan="2"></td>
<td colspan="2"></td>
</tr>
<tr class="even">
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="3">Did the Executive/Investment Review Committee approve
funding for this project this year?</td>
<td colspan="2">Yes</td>
<td colspan="2"></td>
<td colspan="2">No</td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="even">
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="3">Did the CFO review the cost goal?</td>
<td colspan="2">Yes</td>
<td colspan="2"></td>
<td colspan="2">No</td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="even">
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="3">Did the Procurement Executive review the acquisition
strategy?</td>
<td colspan="2">Yes</td>
<td colspan="2"></td>
<td colspan="2">No</td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="even">
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="3">Did the Project Manager identified in Section 1.D review
this exhibit?</td>
<td colspan="2">Yes</td>
<td colspan="2"></td>
<td colspan="2">No</td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="even">
<td colspan="3">Is this investment included in your agency’s annual
performance plan or multiple agency annual performance plans?</td>
<td colspan="2">Yes</td>
<td colspan="2"></td>
<td colspan="2">No</td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"><p id="section" class="heading"></p></td>
<td></td>
</tr>
<tr class="even">
<td colspan="3"><p>Indicate by corresponding number which homeland
security mission area(s) this project supports?</p>
<p>1 – Intelligence and Warning;</p>
<p>2 – Border and Transportation Security;</p>
<p>3 – Defending Against Catastrophic Threats;</p>
<p>4 – Protecting Critical Infrastructure and Key Assets;</p>
<p>5 – Emergency Preparedness and Response; or</p>
<p>6 – Other.</p></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"><p id="section-1" class="heading"></p></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="even">
<td colspan="3">Is this project information technology? (See Section 53
for definition)</td>
<td colspan="2">Yes</td>
<td colspan="2"></td>
<td colspan="2">No</td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="12"></td>
</tr>
<tr class="even">
<td colspan="12">For information technology projects only:</td>
</tr>
<tr class="odd">
<td colspan="3">a. Is this Project a Financial Management System? (see
section 53.2 for a definition)</td>
<td colspan="2">Yes</td>
<td colspan="2"></td>
<td colspan="2">No</td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="even">
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="3">If so, does this project address a FFMIA compliance
area?</td>
<td colspan="2">Yes</td>
<td colspan="2"></td>
<td colspan="2">No</td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="even">
<td colspan="3"></td>
<td colspan="8"></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="3">If yes, which compliance area?</td>
<td colspan="2"></td>
<td colspan="6"></td>
<td></td>
</tr>
<tr class="even">
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="3">b. Does this project implement electronic transactions
or record keeping that is covered by the Government Paperwork
Elimination Act (GPEA)?</td>
<td colspan="2">Yes</td>
<td colspan="2"></td>
<td colspan="2">No</td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="even">
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="3">If so, is it included in your GPEA plan (and does not
yet provide an electronic option)?</td>
<td colspan="2">Yes</td>
<td colspan="2"></td>
<td colspan="2">No</td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="even">
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="3">Does the project already provide an electronic
option?</td>
<td colspan="2">Yes</td>
<td colspan="2"></td>
<td colspan="2">No</td>
<td colspan="2"><h6 id="section-2"></h6></td>
<td></td>
</tr>
<tr class="even">
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="3">c. Was a privacy impact assessment performed for this
project?</td>
<td colspan="2">Yes</td>
<td colspan="2"><p id="section-3" class="heading"></p></td>
<td colspan="2">No</td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="even">
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="3">d. Was this project reviewed as part of the FY 2003
Federal Information Security Management Act review process?</td>
<td colspan="2">Yes</td>
<td colspan="2"></td>
<td colspan="2">No</td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="even">
<td colspan="3"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="3">d.1 If yes, were any weaknesses found?</td>
<td colspan="2">Yes</td>
<td colspan="2"></td>
<td colspan="2">No</td>
<td colspan="2"><p id="section-4" class="heading"></p></td>
<td></td>
</tr>
<tr class="even">
<td colspan="3">d.2. Have the weaknesses been incorporated into the
agency’s corrective action plans?</td>
<td colspan="2">Yes</td>
<td colspan="2"></td>
<td colspan="2">No</td>
<td colspan="2"><p id="section-5" class="heading"></p></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="3">e. Has this project been identified as a national
critical operation or asset by a Project Matrix review or other agency
determination?</td>
<td colspan="2">Yes</td>
<td colspan="2"></td>
<td colspan="2">No</td>
<td colspan="2"><p id="section-6" class="heading"></p></td>
<td></td>
</tr>
<tr class="even">
<td colspan="3">e.1 If no, is this an agency mission critical or
essential service, system, operation, or asset (such as those documented
in the agency's COOP Plan), other than those identified as above as
national critical infrastructures?</td>
<td colspan="2">Yes</td>
<td colspan="2"></td>
<td colspan="2">No</td>
<td colspan="2"><p id="section-7" class="heading"></p></td>
<td></td>
</tr>
<tr class="odd">
<td colspan="3">f. Was this project included in a Performance Assessment
Rating Tool (PART) Review?</td>
<td colspan="2">Yes</td>
<td colspan="2"></td>
<td colspan="2">No</td>
<td colspan="2"><p id="section-8" class="heading"></p></td>
<td></td>
</tr>
<tr class="even">
<td colspan="3">f.1. Does this project address a weakness found during
the PART Review?</td>
<td colspan="2">Yes</td>
<td colspan="2"></td>
<td colspan="2">No</td>
<td colspan="2"><p id="section-9" class="heading"></p></td>
<td></td>
</tr>
</tbody>
</table>

<table style="width:100%;">
<colgroup>
<col style="width: 24%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 9%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 9%" />
<col style="width: 8%" />
<col style="width: 0%" />
<col style="width: 8%" />
<col style="width: 8%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="11"><p>SUMMARY OF SPENDING FOR PROJECT STAGES</p>
<p>(In Millions)</p>
<p>(Estimates for BY+1 and beyond are for planning purposes only</p>
<p>and do not represent budget decisions)</p></td>
</tr>
<tr class="even">
<td></td>
<td>PY-1 and Earlier</td>
<td><p>PY</p>
<p>2003</p></td>
<td><p>CY</p>
<p>2004</p></td>
<td><p>BY</p>
<p>2005</p></td>
<td><p>BY+1</p>
<p>2006</p></td>
<td><p>BY+2</p>
<p>2007</p></td>
<td colspan="2"><p>BY+3</p>
<p>2008</p></td>
<td><p>BY+4&amp;</p>
<p>Beyond</p></td>
<td>Total</td>
</tr>
<tr class="odd">
<td>Planning:</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>Budgetary Resources</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td>Outlays</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="even">
<td>Acquisition :</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td>Budgetary Resources</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="even">
<td>Outlays</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td>Total, sum of stages:</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="even">
<td>Budgetary Resources</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td>Outlays</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="even">
<td>Maintenance:</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td>Budgetary Resources</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="even">
<td>Outlays</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td>Total, All Stages:</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="even">
<td>Budgetary Resources</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="odd">
<td>Outlays</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
</tr>
<tr class="even">
<td>Government FTE Costs</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td colspan="2"></td>
<td></td>
</tr>
</tbody>
</table>

Note: Government FTE Costs shall include the salaries plus fringe
benefits of 32.85% of the government personnel considered to be direct
and indirect labor in support of this project. This includes the project
management IPT and any other government effort (e.g., programming effort
for part of the overall project development effort) that contributes to
the success of the project.

## I. A. Project Description

1\. Provide a brief description of this project and its status through
your capital planning and investment control (CPIC) or capital
programming \"control\" review for the current cycle.

2\. What assumptions are made about this project and why?

3\. Provide any other supporting information derived from research,
interviews, and other documentation.

## I.B. Justification (All Assets)

> In order for IT investments to successfully address support of the
> President's Management Agenda and justification of the project, the
> investment should be collaborative and include multiple agencies,
> state, local, or tribal governments, use e-business technologies and
> be governed by citizen needs. If the investment is a steady state
> investment, then an E-Gov strategy review is underway and includes all
> of the necessary elements. If appropriate, this investment is fully
> aligned with one or more of the President\'s E-Gov initiatives.

1\. How does this investment support your agency\'s mission and
strategic goals and objectives?

2\. How does it support the strategic goals from the President\'s
Management Agenda?

3\. Are there any alternative sources in the public or private sectors
that could perform this function? 4. If so, explain why your agency did
not select one of these alternatives.

5\. Who are the customers for this project?

6\. Who are the stakeholders of this project?

7\. If this is a multi-agency initiative, identify the agencies and
organizations affected by this initiative.

7.a. If this is a multi-agency initiative, discuss the partnering
strategies you are implementing with the participating agencies and
organizations.

8\. How will this investment reduce costs or improve efficiencies?

9\. List all other assets that interface with this asset\_\_\_\_\_\_.
Have these assets been reengineered as part of this project? Yes\_\_\_,
No\_\_\_.

## I.C. Performance Goals and Measures (All Assets)

In order to successfully address this area of the business case,
performance goals must be provided for the agency, linked to the annual
performance plan, and the investment discusses the agency mission and
strategic goals, and performance measures are provided. These goals need
to map to the gap in the Agency\'s strategic goals and objectives that
this project is designed to fill. They are the internal and external
performance benefits this project is expected to deliver to the agency
(e.g., improve efficiency by 60%, increase citizen participation by 300%
a year to achieve an overall citizen participation rate of 75% by FY
2\_\_\_, etc.). The goals must be clearly measurable project outcomes,
and if applicable, project outputs. They do not include completion date
of the module or project, or general goals, such as, significant,
better, improved that do not have a quantitative or qualitative measure.

Agencies must use Table 1 below for reporting performance goals and
measures for projects through 2004. All IT investments where reporting
includes 2005 and beyond must use table 2.

Table 1

+-----+-------+------+----------+----------+---------+--------------+
| Fis | Stra  | Exis | Planned  | Actual   | Planned | Actual       |
| cal | tegic | ting | Per      |          |         |              |
|     | Go    | Base | formance | Per      | Perf    | Performance  |
| Y   | al(s) | line | Imp      | formance | ormance |              |
| ear |       |      | rovement |          |         | Metric       |
|     | Supp  |      | Goal     | Imp      | Metric  | Results      |
|     | orted |      |          | rovement |         |              |
|     |       |      |          |          |         |              |
|     |       |      |          | Results  |         |              |
+-----+-------+------+----------+----------+---------+--------------+
| 2   |       |      |          |          |         |              |
| 003 |       |      |          |          |         |              |
+-----+-------+------+----------+----------+---------+--------------+
| 2   |       |      |          |          |         |              |
| 003 |       |      |          |          |         |              |
+-----+-------+------+----------+----------+---------+--------------+
| 2   |       |      |          |          |         |              |
| 004 |       |      |          |          |         |              |
+-----+-------+------+----------+----------+---------+--------------+
| 2   |       |      |          |          |         |              |
| 004 |       |      |          |          |         |              |
+-----+-------+------+----------+----------+---------+--------------+

All IT investments must use Table 2 below for 2005 and beyond and are
required to use the FEA Performance Reference Model. PRM Version 1.0,
available at [www.feapmo.gov](http://www.feapmo.gov/), includes detailed
guidance about how to incorporate PRM Indicators into the performance
goals and measures table below. Please use the table below and the PRM
to identify the performance information that pertains to the major IT
Investment. Ensure there is a complete tie-in to the strategic goals and
objectives described in I.B.1.

Table 2

  -------- ------------- ------------- ------------- ---------- -------------- ----------
  Fiscal   Measurement   Measurement   Measurement   Baseline   Planned        Actual
  Year     Area          Category      Indicator                Improvements   Results
                                                                to the         
                                                                Baseline       

  2005                                                                         

  2005                                                                         

  2005                                                                         

  2005                                                                         

  2006                                                                         

  2006                                                                         

  2006                                                                         

  2006                                                                         
  -------- ------------- ------------- ------------- ---------- -------------- ----------

## I.D. Project Management \[All Assets\]

The OMB Circular A-11, Part 7, Capital Programming Guide, and the OPM
Project Management Guidance "Interpretive Guidance for Project Manager
Positions, discuss project management structures, responsibilities, and
qualifications that contribute to successful achievement of cost,
schedule, and performance goals.

  ------------------------------------------------------ ----- ---- ---- ----
  1\. Is there a project manager assigned to the         Yes        No   
  project? If so, what is his/her name?                                  

                                                                         

  1.A. Identify the members, roles, qualifications, and                  
  contact information of the in-house and contract                       
  project managers for this project.                                     

  2\. Is there a contracting officer assigned to the     Yes        No   
  project? If so, what is his/her name?                                  

  3\. Is there an Integrated Project Team?               Yes        No   

  3.A. If so, list the skill set represented.                            

  4\. Is there a sponsor/owner for this project?         Yes        No   

  4.A. If so, identify the sponsor/process owner by name                 
  and title and provide contact information.                             
  ------------------------------------------------------ ----- ---- ---- ----

## I.E. Alternatives Analysis \[All Assets\]

In order to successfully address this area of the business case, you
must include three viable alternatives that were compared consistently,
and alternative chosen provides benefits and reasons. Agency must
identify all viable alternatives and then select and report details on
the top three viable alternatives. The Clinger Cohen Act and OMB
Circular A-94, include minimum criteria to be applied in considering
whether to undertake a particular investment, including criteria related
to the quantitatively expressed projected net, risk-adjusted return on
investment and specific quantitative and qualitative criteria for
comparing and prioritizing alternative investments*.*

1\. Describe the alternative solutions you considered for accomplishing
the agency strategic goals or for closing the performance gap that this
project was expected to address. Describe the results of the
feasibility/performance/benefits analysis. Provide comparisons of the
returns (financial and other) for each alternative.

1.A. Discuss the market research that was done to identify innovative
solutions for this project (e.g., used an RFI to obtain 4 different
solutions to evaluate, held open meetings with contractors to discuss
project scope, etc.,). Also describe what data was used to make
estimates: past or current contract prices for similar work, contractor
provided estimates from RFIs or meetings, general market publications,
etc.

  ------------------ ----------------------------------------------------
  Alternative        Description

  Alternative 1 --   

  Alternative 2 --   

  Alternative 3 --   
  ------------------ ----------------------------------------------------

2\. Summarize the results of your life-cycle cost analysis performed for
each investment and the underlying assumptions.

[]{.mark}

  ------------- ----------------- ------------------ ----------------------
  Cost Elements Alternative 1     Alternative 2      Alternative 3

  Element 1                                          

  Element 2                                          

  Element 3                                          

  Element 4                                          

  Element 5                                          

  Total                                              
  ------------- ----------------- ------------------ ----------------------

3\. Which alternative was chosen and why? Define the Return on
Investment (ROI).

3\. A. Are there any quantitative benefits that will be achieved through
this investment (e.g., systems savings, cost avoidance, stakeholder
benefits, etc)?

## 3. B. For alternative selected, provide financial summary, including Net Present Value by Year and Payback Period Calculations:

  ---------- ------ ------ ------ ------ ------ ------ ------- ------- -------
                                                                       

  YEAR =     FY     FY     FY     FY     FY     FY     FY      FY      FY

                                                                       

                                                                       

                                                                       

                                                                       

                                                                       
  ---------- ------ ------ ------ ------ ------ ------ ------- ------- -------

4\. What is the date of your cost benefit analysis?

## I. F. Risk Inventory and Assessment (All Assets)

In order to successfully address this issue on the business case and
capital asset plan, you must have performed a Risk Assessment at initial
concept, included the mandatory risk elements defined below and
demonstrate active management of the risk throughout the life-cycle of
the investment.

For all investments, both IT and non-IT, you must discuss each of the
following risks and discuss your plans, with milestones and completion
dates, to eliminate, mitigate, or manage the risk. If there is no risk
to the investment achieving its goals from a risk category, say this. If
there are other risks identified, include them. Risk assessments should
be performed at the initial concept stage and then monitored and
controlled throughout the life-cycle of the investment, and should
include risk information from all stakeholders. Risk assessments for all
investments must include 1) schedule, 2) initial costs, 3) life-cycle
costs), 4) technical obsolescence, 5) feasibility, 6) reliability of
systems, 7) dependencies and interoperability between this investment
and others, 8) surety (asset protection) considerations, 9) risk of
creating a monopoly for future procurements, 10) capability of agency to
manage the investment, and 11) overall risk of project failure.

In addition, for IT investments, risk must be discussed in the following
categories 12) Organizational and Change Management, 13) Business, 14)
Data/Info, 15) Technology, 16) Strategic, 17) Security, 18) Privacy, and
19) Project Resources. For security risks, identify under the
description column the level of risk as high, medium, or basic. What
aspect of security determines the level of risk, i.e., the need for
confidentiality of information, availability of information or the
system, reliability of the information or system?

  ------------ ----------- ------------- ------------- ------------ -----------
  Date         Area of     Description   Probability   Strategy for Current
  Identified   Risk                      of Occurrence Mitigation   Status as
                                                                    of the date
                                                                    of this
                                                                    exhibit

                                                                    

                                                                    

                                                                    

                                                                    

                                                                    

                                                                    
  ------------ ----------- ------------- ------------- ------------ -----------

1\. What is the date of your risk management plan?

## I.G. Acquisition Strategy 

In order to adequately address this area of the business case and
capital asset plan you must employ a strong acquisition strategy that
mitigates risk to the federal government, accommodate Section 508 as
needed, and use performance based contracts and (SOWs). If you are not
using performance based contracts and statements of work, your
acquisition strategy should clearly define the risks that prompted use
of other than performance based contracts and SOWs. Finally, your
implementation of the Acquisition Strategy must be clearly defined.

1\. Will you use a single contract or several contracts to accomplish
this project?

1.A. What is the type of contract/task order if a single contract is
used?

1B. If multiple contract/task orders will be used discuss the type, how
they relate to each other to reach the project outcomes, and how much
each contributes to the achievement of the project cost, schedule and
performance goals. Also discuss the contract/task order solicitation or
contract provisions that allow the contractor to provide innovative,
transformational solutions.

2\. For other that firm-fixed price, performance-based contracts, define
the risk not sufficiently mitigated in the risk mitigation plan, for
that contract/task order, that requires the Government to assume the
risk of contract achievement of cost, schedule and performance goals.
Explain the amount of risk the government will assume.

3\. Will you use financial incentives to motivate contractor performance
(e.g. incentive fee, award fee, etc.)?

4\. Discuss the competition process used for each contract/task order?

5\. Will you use commercially available or COTS products for this
investment?

5.A If not, to what extent will these items be modified to meet the
unique requirements of this investment?

5.B What prevented the use of COTS without modification?

6\. What is the date of your acquisition plan?

7\. How will you ensure Section 508 compliance?

8\. Acquisition Costs:

8.A. For budget year, what percentage of the total investment is for
hardware acquisition?

8.B. For budget year, what percentage of the total investment is for
software acquisition?

8.C. For budget year, what percentage of the total investment is for
services acquisition?

## I.H. Project and Funding Plan

In order to successfully address this section of the business case, you
must demonstrate use of an Earned Value Management System (EVMS) that
meets ANSI/EIA Standard 748, for those parts of the investment that
require development efforts (e.g., prototypes and testing in the
planning phase and development efforts in the acquisition phase) and
show how close the investment is to meeting the approved cost, schedule
and performance goals. Information on EVMS is available at
<http://www.acq.osd.mil/pm>. For those projects in the operations/steady
state phase, you must perform an operational analysis as defined in the
Capital Programming Guide to demonstrate how close the investment is to
achieving the expected cost, schedule and performance goals for this
phase. Program status information in this section must include the both
the contractor's part of the projects overall costs and milestone
requirements as well as the government's costs and milestone
requirements to successfully complete the project phase, segment or
module being reported.

I.H.1. Description of performance-based management system (PBMS):

Name the software program that you are using, or will use, to analyze
contractor provided EVMS information. Describe the process you used to
verify that the contractor\'s project management system follows the
ANSI/EIA Standard 748-A. If the project is operational (steady state),
define the operational analysis system that will be used. If this is a
mixed life-cycle project with both operational and
development/modernization/enhancement (DME) system improvement aspects,
EVMS must be used on the system improvement aspects of the contract and
operational analysis on the operations aspects. Using information
consistent with the work breakdown structure (WBS), provide the
information requested in all parts of this section.

I.H.2. Original baseline (OMB-approved at project outset):

What are the cost and schedule goals for this phase or segment/module of
the project (e.g., what are the major project milestones or events; when
will each occur; and what is the estimated cost to accomplish each one)?
Also identify the funding agency for each milestone or event if this is
a multi-agency project. If this is a multi-agency project or one of the
President\'s E-Gov initiatives, use the detailed project plan with
milestones on the critical path, to identify agency funding for each
module or milestone. (This baseline must be included in all subsequent
reports, even when there are OMB‑approved baseline changes shown in
I.H.3).

+-------------------+----+----+------+-----------------+------------+
| ### Cost and Sch  |    |    |      |                 |            |
| edule Goals: Orig |    |    |      |                 |            |
| inal Baseline for |    |    |      |                 |            |
|  a Phase/Segment/ |    |    |      |                 |            |
| Module of Project |    |    |      |                 |            |
+-------------------+----+----+------+-----------------+------------+
| Description of    | Sc |    |      | Planned Cost    | Funding    |
| Milestone         | he |    |      |                 | Agency     |
|                   | du |    |      |                 |            |
|                   | le |    |      |                 |            |
+-------------------+----+----+------+-----------------+------------+
|                   | S  | E  | Dura |                 |            |
|                   | ta | nd | tion |                 |            |
|                   | rt | Da | (in  |                 |            |
|                   | Da | te | d    |                 |            |
|                   | te |    | ays) |                 |            |
+-------------------+----+----+------+-----------------+------------+
|                   |    |    |      |                 |            |
+-------------------+----+----+------+-----------------+------------+
| 1\.               |    |    |      |                 |            |
+-------------------+----+----+------+-----------------+------------+
| 2\.               |    |    |      |                 |            |
+-------------------+----+----+------+-----------------+------------+
| 3\.               |    |    |      |                 |            |
+-------------------+----+----+------+-----------------+------------+
|                   |    |    |      |                 |            |
+-------------------+----+----+------+-----------------+------------+
|                   |    |    |      |                 |            |
+-------------------+----+----+------+-----------------+------------+
| Completion date:  |    |    |      | Total cost      |            |
|                   |    |    |      | estimate at     |            |
|                   |    |    |      | completion:     |            |
+-------------------+----+----+------+-----------------+------------+

I.H.3. Proposed baseline/current baseline (applicable *only* if
OMB-approved the changes):

Identify in this section a proposed change to the original or current
baseline or an OMB-approved baseline change. What are the new cost and
schedule goals for the project (e.g., what are the major project
milestones or events; when will each occur; and what is the estimated
cost to accomplish each one)? Also identify the funding agency for each
milestone or event if this is a multi-agency project. If

this is a new project in the FY 2005 budget year, this section will be
blank for your initial submission.

+-------------------+----+----+------+-----------------+------------+
| ### Cost an       |    |    |      |                 |            |
| d Schedule Goals: |    |    |      |                 |            |
|  Proposed\_\_\_\_ |    |    |      |                 |            |
| \_ or Current (OM |    |    |      |                 |            |
| B-Approved)\_\_\_ |    |    |      |                 |            |
| \_\_ Baseline for |    |    |      |                 |            |
|  a Phase/Segment/ |    |    |      |                 |            |
| Module of Project |    |    |      |                 |            |
+-------------------+----+----+------+-----------------+------------+
| Description of    | Sc |    |      | Planned Cost    | Funding    |
| Milestone         | he |    |      |                 | Agency     |
|                   | du |    |      |                 |            |
|                   | le |    |      |                 |            |
+-------------------+----+----+------+-----------------+------------+
|                   | S  | E  | Dura |                 |            |
|                   | ta | nd | tion |                 |            |
|                   | rt | Da | (in  |                 |            |
|                   | Da | te | d    |                 |            |
|                   | te |    | ays) |                 |            |
+-------------------+----+----+------+-----------------+------------+
|                   |    |    |      |                 |            |
+-------------------+----+----+------+-----------------+------------+
| 1\.               |    |    |      |                 |            |
+-------------------+----+----+------+-----------------+------------+
| 2\.               |    |    |      |                 |            |
+-------------------+----+----+------+-----------------+------------+
| 3\.               |    |    |      |                 |            |
+-------------------+----+----+------+-----------------+------------+
|                   |    |    |      |                 |            |
+-------------------+----+----+------+-----------------+------------+
|                   |    |    |      |                 |            |
+-------------------+----+----+------+-----------------+------------+
| Completion date:  |    |    |      | Total cost      |            |
|                   |    |    |      | estimate at     |            |
|                   |    |    |      | completion:     |            |
+-------------------+----+----+------+-----------------+------------+

## I.H.4 Actual performance and variance from OMB-approved baseline (original or current):

A. This section is always filled in to reflect current status of the
project. It compares the OMB approved baseline and actual results for
this phase, segment, or module of the project. Show for each major
project milestones or events you planned (scheduled) to accomplish and
the cost and what work was actually done and the cost. If this is a new
project in the FY 2005 budget year, this section will be blank for your
initial submission. OMB may ask for latest information during the budget
review process.

<table style="width:100%;">
<colgroup>
<col style="width: 20%" />
<col style="width: 6%" />
<col style="width: 6%" />
<col style="width: 10%" />
<col style="width: 9%" />
<col style="width: 10%" />
<col style="width: 8%" />
<col style="width: 8%" />
<col style="width: 10%" />
<col style="width: 10%" />
</colgroup>
<thead>
<tr class="header">
<th colspan="10">Comparison of OMB-Approved Baseline and Actual Outcome
for Phase/Segment/Module of a Project</th>
</tr>
<tr class="odd">
<th></th>
<th colspan="5">OMB-Approved Baseline</th>
<th colspan="4">Actual Outcome</th>
</tr>
<tr class="header">
<th rowspan="2">Description of Milestone</th>
<th colspan="3">Schedule</th>
<th rowspan="2">Planned Cost</th>
<th rowspan="2">Funding Agency</th>
<th colspan="2">Schedule</th>
<th rowspan="2">Percent Complete</th>
<th rowspan="2">Actual Cost</th>
</tr>
<tr class="odd">
<th>Start Date</th>
<th>End Date</th>
<th><h1 id="duration-in-days">Duration (in days)</h1></th>
<th>Start Date</th>
<th>End Date</th>
</tr>
</thead>
<tbody>
<tr class="odd">
<td>1.</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td>2.</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td>3.</td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td colspan="6">Completion date: OMB-approved baseline:</td>
<td colspan="4">Estimated completion date:</td>
</tr>
<tr class="odd">
<td colspan="6">Total cost: OMB-approved baseline:</td>
<td colspan="4">Estimate at completion:</td>
</tr>
</tbody>
</table>

B. Provide the following project summary information from your EVMS
software: As of : [(date)]{.underline}

B.1. Show the budgeted (planned) cost of work scheduled (BCWS):
\$\_\_\_\_\_\_\_\_\_\_\_\_\_\_

B.2. Show budgeted (planned) cost of work performed (BCWP):
\$\_\_\_\_\_\_\_\_\_\_\_\_\_\_

B.3. Show the actual cost of work performed (ACWP):
\_\_\_\_\_\_\_\$\_\_\_\_\_\_\_\_\_\_\_\_\_\_ \_\_\_\_\_\_

## B.4. Provide a cost curve graph plotting BCWS, BCWP and ACWP on a monthly basis from inception of this phase or segment/module through the latest report. In addition, plot the ACWP curve to the estimated cost at completion (EAC) value, and provide the following EVMS variance analysis.

  ------------------------------------------------------------- ---------
  PROJECT SUMMARY (CUMULATIVE)                                  

                                                                Value

  Cost Variance = (BCWP-ACWP) =                                 

  Cost Variance % = (CV/BCWP) x 100% =                          

  Cost Performance Index (CPI) = (BCWP/ACWP) =                  

  Schedule Variance = (BCWP-BCWS) =                             

  Schedule Variance % = (SV/BCWS) x 100% =                      

  Schedule Performance Index (SPI) = (BCWP/BCWS) =              

  Two independent Estimates at Completion (EAC) = ACWPcum =     
  (Performance Factor (PF) X (BAC minus BCWPcum)), where PF1 =  
  1/CPI, and PF2 = 1/(CPI X SPI). =                             

  Variance at Completion (VAC) = (BAC minus EAC) for both EACs  
  above =                                                       

  Variance at Completion % = (VAC/BAC) x 100% for both EACs     
  above =                                                       

  Estimated Cost to Complete (ETC)=                             

  Expected Completion Date =                                    
  ------------------------------------------------------------- ---------

Definitions for Earned Value Management System:

ACWP -- Actual Cost for Work Performed -- What you paid.

BAC -- Budget At Completion -- The baseline (planned) budget for the
project.

BCWP -- Budgeted Cost for Work Performed -- The earned value.

BCWS -- Budgeted Cost for Work Scheduled -- The planned costs.

CPI -- Cost Performance Index -- The ratio of the budgeted to actual
cost of work performed.

CV -- Cost Variance -- The difference between planned and actual cost of
work performed.

EAC -- Estimate At Completion -- The latest estimated cost at
completion.

ETC -- Estimate to Completion -- Funds needed to complete the project.

PF -- Performance Factor -- The cost to earn a dollar of value, or
ACWP/BCWP, or 1/CPI.

SPI -- Schedule Performance Index -- The percent of the project that has
been completed.

SV -- Schedule Variance -- The variance between the actual and planned
schedules.

VAC -- Variance at Completion -- The variance between the baseline and
actual budget at completion.

C. If cost and/or schedule variance are a negative 10 percent or more at
the time of this report or EAC is projected to be 10 percent or more,
explain the reason(s) for the variance(s).

D. Provide performance variance. Explain whether, based on work
accomplished to date, you still expect to achieve your performance
goals. If not, explain the reasons for the variance.

E. For projects using EVMS, discuss the contractor, government, and at
least the two EAC index formulas in I.H.4.B, current estimates at
completion. Explain the differences and the IPT's selected EAC for
budgeting purposes. This paragraph is not applicable to
operations/steady state projects.

F. Discuss the corrective actions that will be taken to correct the
variances, the risk associated with the actions, and how close the
planned actions will bring the project to the original baseline. Define
proposed baseline changes, if necessary.

G. If the project cost, schedule or performance variances are 10% or
greater, has the Agency Head concurred in the need to continue the
program at the new baseline?

Yes\_\_\_\_ No\_\_\_\_

+-----------------------------------------------------------------------+
| # Exhibit 300:                                                        |
| Part II: Additional Business Case Criteria for Information Technology |
+-----------------------------------------------------------------------+

## II. A. Enterprise Architecture 

In order to successfully address this are of the business case and
capital asset plan you must ensure that the project is included in the
Agency EA and CPIC process, and ensure that the investment is mapped to
and supports the Federal Enterprise Architecture. You must also ensure
that the business case demonstrates business, data, and application, and
technology layers of the EA in relationship to this investment.

II.A.1 Business

A. Is this investment identified in your agency\'s enterprise
architecture? If not, why?

A.1 Will this investment be consistent with your agency's "to be"
modernization blueprint?

B. Was this investment approved through the EA Review committee at your
agency?

C. What are the major process simplification/reengineering/design
projects that are required as part of this IT investment?

D. What are the major organization restructuring, training, and change
management projects that are required?

E. Please list all the Lines of Business and Sub-Functions from the FEA
Business Reference Model that this IT investment supports. (Note: the
*primary* BRM mapping for this initiative should be identified with the
last six digits of the Unique Project Identifier in Section 53.8). For a
list of the BRM Lines of Business and Sub-Functions, as well as guidance
on mapping to the BMR, please see www.feapmo.gov.

  ------------------------------ ----------------------------------------
  Line of Business               Sub-function

                                 

                                 

                                 

                                 

                                 
  ------------------------------ ----------------------------------------

II.A.2 Data

A. What types of data will be used in this project? Examples of data
types are health data, geospatial data, natural resource data, etc.

B. Does the data needed for this project already exist at the Federal,
State, or Local level? If so, what are your plans to gain access to that
data?

C. Are there legal reasons why this data cannot be transferred? If so,
what are they and did you address them in the barriers and risk sections
above?

D. If this initiative processes spatial data, identify planned
investments for spatial data and demonstrate how the agency ensures
compliance with the Federal Geographic Data Committee standards required
by OMB Circular A-16.

E. If this activity involves the acquisition, handling or storage of
information that will be disseminated to the public or used to support
information that will be disseminated to the public, explain how it will
comply with your agency's Information Quality guidelines (Section 515
requirements)?

F. Managing business information means maintaining its authenticity,
reliability, integrity, and usability and providing for its appropriate
disposition. Address how the system will manage the business information
(records) that it will contain throughout the information life cycle.

II.A.3 Applications, Components, and Technology

A. Discuss this major investment in relationship to the Service
Component Reference Model Section of the FEA. Include a discussion of
the components included in this major IT investment (e.g., Knowledge
Management, Content Management, Customer Relationship Management, etc).
For detailed guidance regarding components, please refer to
http://www.feapmo.gov and the SRM Release Document.

B. Are all of the hardware, applications, components, and web technology
requirements for this project included in the Agency EA Technical
Reference Model? If not, please explain.

C. Discuss this major IT investment in relationship to the Technical
Reference Model Section of the FEA. Identify each Service Area, Service
Category, Service Standard, and Service Specification that collectively
describes the technology supporting the major IT investment. For
detailed guidance regarding the FEA TRM, please refer to
[http://www.feapmo.gov](http://www.feapmo.gov/).

D. Will the application leverage existing components and/or applications
across the Government (i.e., FirstGov, Pay.Gov, etc). If so, please
describe.

E. Financial Management Systems and Projects, as indicated in Part One,
must be mapped to the agency's financial management system inventory
provided annually to OMB. Please identify the system name(s) and system
acronym(s) as reported in the most recent systems inventory update
required by Circular A-11 Section 52.4.

## II. B. Security and Privacy 

In order to successfully address this area of the business case, each
question below must be answered at the investment (system/application)
level, not at a program or agency level. Simply referring to security
plans or other documents is not an acceptable response. For IT
investments under development, security planning must proceed in
parallel with the development of the system to ensure that IT security
requirements and costs for the lifecycle of the investment are
identified and validated. All IT investments must have up-to-date
security plans and be fully certified and accredited prior to becoming
operational. Anything short of a full certification and accreditation
indicates that identified IT security weaknesses remain which need to be
remediated and is therefore not adequate to ensure funding for the
investment. Additionally, to ensure that requests for increased IT
security funding are appropriately addressed and prioritized, the agency
must identify: 1) current costs; 2) current IT security performance
gaps; and 3) how the funding request will close the performance gaps.
This information must be provided to OMB through the agencies' plan of
action and milestone developed for the system and tied to the IT
business case through the unique project identifier.

II.B.1. How is security provided and funded for this project (e.g., by
program office or by the CIO through the general support
system/network)?

A. What is the total dollar amount allocated to IT security for this
investment in FY 2005? Please indicate whether an increase in IT
security funding is requested to remediate IT security weaknesses,
specifying the amount and a general description of the weakness.

II.B.2 Please describe how the investment (system/application) meets the
following security requirements of the Federal Information Security
Management Act, OMB policy, and NIST guidelines:

A. Does the investment (system/application) have an up-to-date security
plan that meets the requirements of OMB policy and NIST guidelines? What
is the date of the plan?

B. Has the investment been certified and accredited (C&A)? Note:
Certification and accreditation refers to a full C&A and does not mean
interim authority to operate. Additionally, specify the C&A methodology
used (e.g., NIST guidelines) and the date of the last review.

C. Have the management, operational, and technical security controls
been tested for effectiveness? When were most recent tests performed?

D. Have all system users been appropriately trained in the past year,
including rules of behavior and consequences for violating the rules?

E. How has incident handling capability been incorporated into the
system or project, including intrusion detection monitoring and audit
log reviews? Are incidents reported to DHS' FedCIRC?

F. Is the system operated by contractors either on-site or at a
contractor facility? If yes, does any such contract include specific
security requirements required by law and policy? How are contractor
security procedures monitored, verified, and validated by the agency?

II.B.3 How does the agency ensure the effective use of security controls
and authentication tools to protect privacy for those systems that
promote or permit public access?

II.B.4 How does the agency ensure that the handling of personal
information is consistent with relevant government-wide and agency
policies.

II.B.5 If a Privacy Impact Assessment was conducted, please provide a
copy to OMB at PIA@omb.eop.gov.

## II. C. Government Paperwork Elimination Act (GPEA) 

# II.C.1 If this investment supports electronic transactions or record-keeping that is covered by GPEA, briefly describe the transaction or record-keeping functions and how this investment relates to your agency\'s GPEA plan.

II.C.2 What is the date of your GPEA plan?

II.C.3 Identify any OMB Paperwork Reduction Act (PRA) control numbers
from information collections that are tied to this investment.

# APPENDIX 300A---PRINCIPLES OF BUDGETING FOR CAPITAL ASSET ACQUISITIONS

Introduction and Summary

The Administration plans to use the following principles in budgeting
for capital asset acquisitions. These principles address planning, costs
and benefits, financing, and risk management requirements that should be
satisfied before a proposal for the acquisition of capital assets can be
included in the Administration\'s budget. A Glossary describes key
terms. OMB has also published the *Capital Programming Guide* (June
1997), a Supplement to this Circular. The *Guide* is a basic reference
on principles and techniques for planning, budgeting, acquisition, and
management of capital assets. Agencies should consult the *Guide* when
preparing their capital plans and developing their budget requests from
their capital plans.

The principles are organized in the following four sections:

A.  *Planning.* This section focuses on the need to ensure that capital
    assets support core/priority missions of the agency; the assets have
    demonstrated a projected return on investment that is clearly equal
    to or better than alternative uses of available public resources;
    the risk associated with the assets is understood and managed at all
    stages; and the acquisition is implemented in phased, successive
    segments, unless it can be demonstrated there are significant
    economies of scale at acceptable risk from funding more than one
    segment or there are multiple units that need to be acquired at the
    same time.

B.  *Costs and Benefits.* This section emphasizes that the asset should
    be justified primarily by benefit‑cost analysis, including
    life‑cycle costs; that all costs are understood in advance; and that
    cost, schedule, and performance goals are identified that can be
    measured using an earned value management system.

C.  *Principles of Financing.* This section stresses that useful
    segments are to be fully funded with regular or advance
    appropriations, or both; that as a general rule, planning segments
    should be financed separately from procurement of the asset; and
    that agencies are encouraged to aggregate assets in capital
    acquisition accounts and take other steps to accommodate lumpiness
    or \"spikes\" in funding for justified acquisitions.

D.  *Risk Management.* This section is to help ensure that risk is
    analyzed and managed carefully in the acquisition of the asset.
    Strategies can include separate accounts for capital asset
    acquisitions, the use of apportionment to encourage sound
    management, and the selection of efficient types of contracts and
    pricing mechanisms in order to allocate risk appropriately between
    the contractor and the Government. In addition, cost, schedule, and
    performance goals are to be controlled and monitored by using an
    earned value management system; and if progress toward these goals
    is not met, there is a formal review process to evaluate whether the
    acquisition should continue or be terminated.

As defined here, capital assets are generally land, structures,
equipment, and intellectual property (including software) that are used
by the Federal Government, including weapon systems. Not included are
grants to States or others for their acquisition of capital assets. A
complete definition is provided in section 300.4.

A. Planning

Investments in major capital assets proposed for funding in the
Administration\'s budget should:

1.  Support core/priority mission functions that need to be performed by
    the Federal Government;

2.  Be undertaken by the requesting agency because no alternative
    private sector or governmental source can support the function more
    efficiently;

3.  Support work processes that have been simplified or otherwise
    redesigned to reduce costs, improve effectiveness, and make maximum
    use of commercial, off‑the‑shelf technology;

4.  Demonstrate a projected return on the investment that is clearly
    equal to or better than alternative uses of available public
    resources. Return may include: improved mission performance in
    accordance with measures developed pursuant to the Government
    Performance and Results Act; reduced cost; increased quality, speed,
    or flexibility; and increased customer and employee satisfaction.
    Return should be adjusted for such risk factors as the project\'s
    technical complexity, the agency\'s management capacity, the
    likelihood of cost overruns, and the consequences of under‑ or
    non‑performance.

5.  For information technology investments, be consistent with Federal
    and agency enterprise architectures, which: integrate agency work
    processes and information flows with technology to achieve the
    agency\'s strategic goals; reflect the agency\'s technology vision;
    specify standards that enable information exchange and resource
    sharing, while retaining flexibility in the choice of suppliers and
    in the design of local work processes; and ensure that security is
    built into and funded as part of the enterprise architecture in
    accordance with OMB Memorandum M--00--07: \"Incorporating and
    Funding Security in Information Systems Investments (February 28,
    2000).\"

6.  Reduce risk by: avoiding or isolating custom‑designed components to
    minimize the potential adverse consequences on the overall project;
    using fully tested pilots, simulations, or prototype implementations
    when necessary before going to production; establishing clear
    measures and accountability for project progress; and, securing
    substantial involvement and buy‑in throughout the project from the
    program officials who will use the system;

7.  Be implemented in phased, successive segments as narrow in scope and
    brief in duration as practicable, each of which solves a specific
    part of an overall mission problem and delivers a measurable net
    benefit independent of future segments, unless it can be
    demonstrated that there are significant economies of scale at
    acceptable risk from funding more than one segment or there are
    multiple units that need to be acquired at the same time; and

8.  Employ an acquisition strategy that appropriately allocates risk
    between the Government and the contractor, effectively uses
    competition, ties contract payments to accomplishments, and takes
    maximum advantage of commercial technology.

Prototypes require the same justification as other capital assets.

As a general presumption, OMB will recommend new or continued funding
only for those capital asset investments that satisfy these criteria.
Funding for those projects will be recommended on a phased basis by
segment, unless it can be demonstrated that there are significant
economies of scale at acceptable risk from funding more than one segment
or there are multiple units that need to be acquired at the same time.

OMB recognizes that many agencies are in the middle of ongoing projects,
and they may not be able immediately to satisfy the criteria. For those
projects that do not satisfy the criteria, OMB will consider requests to
use FY 2002 and FY 2003 funds to finance additional planning, as
necessary, to support the establishment of realistic cost, schedule, and
performance goals for the completion of the project. This planning could
include: the redesign of work processes, the evaluation of alternative
solutions, the development of information system architectures, and, if
necessary, the purchase and evaluation of prototypes. Realistic goals
are necessary for agency portfolio analysis to determine the viability
of the project, to provide the basis for fully funding the project to
completion, and setting the baseline for management accountability to
deliver the project within goals.

Because OMB considers this information essential to agencies\' long‑term
success, OMB will use this information both in preparing the
Administration\'s budget and, in conjunction with cost, schedule, and
performance data, as apportionments are made. Agencies are encouraged to
work with their OMB representative to arrive at a mutually satisfactory
process, format, and timetable for providing the requested information.

B. Costs and Benefits

The justification of the project should evaluate and discuss the extent
to which the project meets the above criteria and should also include:

An analysis of the project\'s total life‑cycle costs and benefits,
including the total budget authority required for the asset, consistent
with policies described in OMB Circular A--94: *Guidelines and Discount
Rates for Benefit‑Cost Analysis of Federal Programs* (October 1992);

An analysis of the risk of the project including how risks will be
isolated, minimized, monitored, and controlled, and, for major programs,
an evaluation and estimate by the Chief Financial Officer of the
probability of achieving the proposed cost goals;

If, after the planning phase, the procurement is proposed for funding in
segments, an analysis showing that the proposed segment is economically
and programmatically justified\--that is, it is programmatically useful
if no further investments are funded, and in this application its
benefits exceed its costs; and

Cost, schedule, and performance goals for the project (or the planning
segment or useful asset being proposed) that can be measured throughout
the acquisition process using a performance-based management system,
e.g., Earned Value Management.

#### C. Principles of Financing

Principle 1: Full Funding

Budget authority sufficient to complete a useful segment of a capital
project (or the entire capital project, if it is not divisible into
useful segments) must be appropriated before any obligations for the
useful segment (or project) may be incurred.

*Explanation:* Good budgeting requires that appropriations for the full
costs of asset acquisition be enacted in advance to help ensure that all
costs and benefits are fully taken into account at the time decisions
are made to provide resources. Full funding with regular appropriations
in the budget year also leads to tradeoffs within the budget year with
spending for other capital assets and with spending for purposes other
than capital assets. Full funding increases the opportunity to use
performance‑based fixed price contracts, allows for more efficient work
planning and management of the capital project, and increases the
accountability for the achievement of the baseline goals.

When full funding is not followed and capital projects or useful
segments are funded in increments, without certainty if or when future
funding will be available, the result is sometimes poor planning,
acquisition of assets not fully justified, higher acquisition costs,
cancellation of major projects, the loss of sunk costs, or inadequate
funding to maintain and operate the assets.

Principle 2: Regular and Advance Appropriations

Regular appropriations for the full funding of a capital project or a
useful segment of a capital project in the budget year are preferred. If
this results in spikes that, in the judgment of OMB, cannot be
accommodated by the agency or the Congress, a combination of regular and
advance appropriations that together provide full funding for a capital
project or a useful segment should be proposed in the budget.

*Explanation:* Principle 1 (Full Funding) is met as long as a
combination of regular and advance appropriations provide budget
authority sufficient to complete the capital project or useful segment.
Full funding in the budget year with regular appropriations alone is
preferred because it leads to tradeoffs within the budget year with
spending for other capital assets and with spending for purposes other
than capital assets. In contrast, full funding for a capital project
over several years with regular appropriations for the first year and
advance appropriations for subsequent years may bias tradeoffs in the
budget year in favor of the proposed asset because with advance
appropriations the full cost of the asset is not included in the budget
year. Advance appropriations, because they are scored in the year they
become available for obligation, may constrain the budget authority and
outlays available for regular appropriations of that year.

If, however, the lumpiness caused by regular appropriations cannot be
accommodated within an agency or Appropriations Subcommittee, advance
appropriations can ameliorate that problem while still providing that
all of the budget authority is enacted in advance for the capital
project or useful segment. The latter helps ensure that agencies develop
appropriate plans and budgets and that all costs and benefits are
identified prior to providing resources. In addition, amounts of advance
appropriations can be matched to funding requirements for completing
natural components of the useful segment. Advance appropriations have
the same benefits as regular appropriations for improved planning,
management, and accountability of the project.

Principle 3: Separate Funding of Planning Segments

As a general rule, planning segments of a capital project should be
financed separately from the procurement of a useful asset.

*Explanation:* The agency must have information that allows it to plan
the capital project, develop the design, and assess the benefits, costs,
and risks before proceeding to procurement of the useful asset. This is
especially important for high risk acquisitions. This information comes
from activities, or planning segments, that include but are not limited
to market research of available solutions, architectural drawings,
geological studies, engineering and design studies, and prototypes. The
construction of a prototype that is a capital asset, because of its cost
and risk, should be justified and planned as carefully as the project
itself. The process of gathering information for a capital project may
consist of one or more planning segments, depending on the nature of the
asset. Funding these segments separately will help ensure that the
necessary information is available to establish cost, schedule, and
performance goals before proceeding to procurement.

If budget authority for planning segments and procurement of the useful
asset are enacted together, OMB may wish to apportion budget authority
for one or several planning segments separately from procurement of the
useful asset.

Principle 4: Accommodation of Lumpiness or \"Spikes\" and Separate
Capital Acquisition Accounts

To accommodate lumpiness or \"spikes\" in funding justified capital
acquisitions, agencies, working with OMB, are encouraged to aggregate
financing for capital asset acquisitions in one or several separate
capital acquisition budget accounts within the agency, to the extent
possible within the agency\'s total budget request.

*Explanation:* Large, temporary, year‑to‑year increases in budget
authority, sometimes called lumps or spikes, may create a bias against
the acquisition of justified capital assets. Agencies, working with OMB,
should seek ways to avoid this bias and accommodate such spikes for
justified acquisitions. Aggregation of capital acquisitions in separate
accounts may:

Reduce spikes within an agency or bureau by providing roughly the same
level of spending for acquisitions each year;

Help to identify the source of spikes and to explain them. Capital
acquisitions are more lumpy than operating expenses; and with a capital
acquisition account, it can be seen that an increase in operating
expenses is not being hidden and attributed to one‑time asset purchases;

Reduce the pressure for capital spikes to crowd out operating expenses;
and

Improve justification and make proposals easier to evaluate, since
capital acquisitions are generally analyzed in a different manner than
operating expenses (e.g., capital acquisitions have a longer time
horizon of benefits and life‑cycle costs).

#### D. Risk Management

Risk management should be central to the planning, budgeting, and
acquisition process. Failure to analyze and manage the inherent risk in
all capital asset acquisitions may contribute to cost overruns, schedule
shortfalls, and acquisitions that fail to perform as expected. For each
major capital project, a risk analysis that includes how risks will be
isolated, minimized, monitored, and controlled may help prevent these
problems.

The project cost, schedule and performance goals established through the
planning phase of the project are the basis for approval to procure the
asset and the basis for assessing risk. During the procurement phase,
performance‑based management systems (earned value or similar system)
must be used to provide contractor and Government management visibility
on the achievement of, or deviation from, goals until the asset is
accepted and operational. If goals are not being met, performance‑based
management systems allow for early identification of problems, potential
corrective actions, and changes to the original goals needed to complete
the project and necessary for agency portfolio analysis decisions. These
systems also allow for Administration decisions to recommend meaningful
modifications for increased funding to the Congress, or termination of
the project, based on its revised expected return on investment in
comparison to alternative uses of the funds. Agencies must ensure that
the necessary acquisition strategies are implemented to reduce the risk
of cost escalation and the risk of failure to achieve schedule and
performance goals. These strategies may include:

1\. Having budgetary resources appropriated in separate capital asset
acquisition accounts;

2\. Apportioning budget authority for a useful segment;

3\. Establishing thresholds for cost, schedule, and performance goals of
the acquisition, including return on investment, which if not met may
result in cancellation of the acquisition;

4\. Selecting types of contracts and pricing mechanisms that are
efficient and that provide incentives to contractors in order to
allocate risk appropriately between the contractor and the Government;

5\. Monitoring cost, schedule, and performance goals for the project (or
the planning segment or useful asset being proposed) using a
performance-based management system, e.g., Earned Value Management
System.

6\. If progress is not within 90 percent of goals, or if new information
is available that would indicate a greater return on investment from
alternative uses of funds, instituting senior management review of the
project through portfolio analysis to determine the continued viability
of the project with modifications, or the termination of the project,
and the start of exploration for alternative solutions if it is
necessary to fill a gap in agency strategic goals and objectives.

#### E. Glossary

Appropriations, regular annual or advance, provide budget authority that
permits Government officials to incur obligations that result in
immediate or future outlays of Government funds.

Regular annual appropriations are:

Enacted normally in the current year;

Scored entirely in the budget year; and

Available for obligation in the budget year and subsequent years if
specified in the language. (See \"*Availability,*\" below)

*Advance appropriations* may be accompanied by regular annual
appropriations to provide funds available for obligation in the budget
year as well as subsequent years. Advance appropriations are:

Enacted normally in the current year;

Scored after the budget year (e.g., in each of one, two, or more later
years, depending on the language); and

Available for obligation in the year scored and subsequent years if
specified in the language. (See \"*Availability,*\" below.)

*Availability* refers to the period during which appropriations may be
legally obligated. Appropriations made in appropriations acts are
available for obligation only in the budget year, unless the language
specifies that an appropriation is available for a longer period. If the
language specifies that the funds are to remain available until the end
of a certain year beyond the budget year, the availability is said to be
\"multi‑year.\" If the language specifies that the funds are to remain
available until expended, the availability is said to be \"no‑year.\"
Appropriations for major procurements and construction projects are
typically made available for multiple years or until expended.

APPENDIX 300B B SELECTED OMB GUIDANCE AND OTHER REFERENCES

REGARDING CAPITAL ASSETS

EXECUTIVE ORDERS

Executive Order No. 12893, \"Principles for Federal Infrastructure
Investments,\" provides principles for the systematic economic analysis
of infrastructure investments and their management. OMB Bulletin No.
94--16, Guidance on Executive Order No. 12893, \"Principles for Federal
Infrastructure Investments\" (March 7, 1994), provides guidance for
implementing this Order and appends the Order itself.

OMB CIRCULARS AND MEMORANDA

OMB Circular No. A--11, Preparing and Submitting Budget Estimates (June
2002):

Part 2: Preparation and Submission of Budget Estimates

Section 31.4, Full funding, requires that the agency request include
full funding for procurement and construction. See section 300.6 for
more discussion of this policy.

Section 33.22, Systems acquisitions, states that agencies should develop
their estimates of major systems acquisitions, including information
technology systems, consistent with guidance in the *Capital Programming
Guide*, the requirements of Title V of the Federal Acquisition
Streamlining Act of 1994 (FASA), and the Clinger-Cohen Act of 1996

Section 52, Information on financial management, requires agencies to
submit data on financial management plans, systems and resources.

Section 53, Information technology, requires agencies to submit data on
information technology projects.

Section 84, Character classification, requires information on different
kinds of investment and grants to State and local governments.

Part 6: Preparation and Submission of Strategic Plans, Annual
Performance Plans, and Annual Program Performance Reports

Section 220.11, Description of means and strategies, and identifying
required resources, processes and technologies, requires information on
the various resources, skills, technologies and processes that agencies
will need to achieve their annual performance goals.

Part 7: Planning, Budgeting, Acquisition, and Management of Capital
Assets

*Capital Programming Guide* (June 1997). The *Guide* is a Supplement to
this Circular.

OMB Circular No. A--94, *Guidelines and Discount Rates for Benefit‑Cost
Analysis of Federal Programs* (October 1992, with periodic revisions of
the discount rate benefit‑cost, cost‑effectiveness, and lease‑purchase
analysis for you to use in evaluating Federal activities including
capital asset acquisition. It includes guidelines on the discount rate
to use in calculating the present value of future benefits and costs,
the measurement of benefits and costs, the treatment of uncertainty, and
other issues. This guidance must be followed in all analyses you submit
to OMB in support of legislative and budget programs.

OMB Circular No. A--127, *Financial Management Systems* (revised July
23, 1993), prescribes policies and standards for you to follow in
developing, operating, evaluating, and reporting on financial management
systems. Revised further in Transmittal Memorandum #2 (June 10, 1999).

OMB Circular No. A--130, *Management of Federal Information Resources*
(revised November 20, 2000), provides principles for internal management
and planning practices of information systems and technology.

OMB Memorandum M--00--10, *OMB Procedures and Guidance on Implementing
the Government Paperwork Elimination Ac*t (April 25, 2000). This
memorandum provides guidance implementing on the Government Paperwork
Elimination Act (GPEA), which requires agencies, by October 21, 2003, to
provide for the (1) option of electronic maintenance, submission, or
disclosure of information, when practicable as a substitute for paper;
and (2) use and acceptance of electronic signatures, when practicable.

OMB Memorandum M--00--13, *Privacy Policies and Data Collection on
Federal Websites* (June 22, 2000). This memorandum reminds agencies that
they are required by law and policy to establish clear privacy policies
for its web activities and to comply with those policies.

Update with FISMA

OMB Memorandum M--02--03, *2002 Discount Rates for OMB Circular A--94*
(January 29, 2002). This memorandum provides the annual update of
discount rates in Appendix C of OMB Circular A--94. These rates will be
in effect February 2002 through the end of January 2003.

PUBLICATIONS

American National Standard Institute, *Earned Value Management Systems*,
ANSI/EIA--748--1998, (approved May 19, 1998). Electronic Industries
Alliance. Arlington, VA 22201.

Best Practices Committee, Federal Chief Information Officers Council,
three separate documents: 1) *Smart Practices in Capital Planning*
(October 2000), and 2) *First Practices in Portfolio Management*
(February 2002), 3) *ROI and the Value Puzzle* (April 1999) (see
[www.cio.gov)]().

U.S. General Accounting Office, Assessing Risks and Returns: A Guide for
Evaluating Federal Agencies\' IT Investment Decision‑Making,
GAO/AIMD--10.1.13 (February 1997).