# Presentation: 392823

## Revised OMB Circular A-76DOC TrainingFall 2003

***Jefferson Consulting Group, LLC***
***1401 K Street, NW, Suite 900***
***Washington, DC 20005***
***202-626-8550***
***www.jeffersonconsulting.com***

## The New Circular

- Effective May 29,  2003 (Publication Date In *Federal Register)*
- Applies to Inventories
- Applies to A-76 Competitions Initiated but not Completed
- Initiated = Competitions With a Start Date
- Date of Public or Employee Notification (Teams formed, etc.)
- DoD:   Congressional Notification per 10 USC 2461
- Not Completed = Competitions without an End Date
- Date of a Tentative Cost Comparison Decision
- A-76 Competitions
- Cost Comparisons
- Streamlined Cost Comparisons
- Direct Conversions

## Transition to the New Circular

- Transition & Make Public Announcement By 30 June 2003
_**Direct Conversions**_
- Convert To Standard or Streamlined Competitions
_**Streamlined Cost Comparisons**_
- Convert To Streamlined or Standard Competitions
_**Cost Comparisons Without Issued Solicitations**_
- Convert To Standard or Streamlined Competitions
_**Cost Comparisons With Issued Solicitations**_
- Use Previous Circular _**OR **_
- Convert To Standard or Streamlined Competitions
- Cannot Selectively Combine Guidance from Old and New Circular
- Must Use New Circular for Competitions Transitioned to New Circular
- Must Use Old Circular for Competitions Not Transitioned to New Circular

## Competitive Sourcing Policies

- 	_**Basic Policy**_:  “To ensure that the American people receive maximum value for their tax dollars, commercial activities should be subject to the forces of competition.”
- 	Using the Circular. Including Attachments A-D, agencies shall:
- Identify all activities performed by Government personnel as either commercial or inherently governmental.
- Perform Inherently governmental activities with government personnel

## Competitive Sourcing Policies (cont.)

- Use a streamlined or standard competition to determine if government personnel should perform a commercial activity.
- Apply the Federal Acquisition Regulation (FAR), the Circular and procurement integrity/standards of conduct rules when performing streamlined and standard competitions.
- Designate an assistant secretary or equivalent official as the competitive sourcing official (CSO) with responsibility for implementing the Circular.

## Competitive Sourcing Policies (cont.)

- Require accountability of agency implementing officials through inclusion of performance standards in annual performance evaluations.
- Centralize oversight responsibility.
- Develop government cost estimates for standard and streamlined competitions in accordance with Attachment A using the COMPARE costing software.
- Track execution of streamlined and standard competitions.
- Assist adversely affected federal employees in accordance with 5 C.F.R. Parts 330 and 351.
- Not perform work as a contractor or subcontractor to the private sector, unless specific statutory authority exists or OMB approval is obtained

## Inventory ProcessAttachment A

- By June 30 of each year, each agency shall submit to OMB:
- An inventory of commercial activities performed by government personnel.
- An inventory of inherently governmental activities performed by government personnel
- An inventory summary report.
- OMB reviews inventory and consults with the agency.
- After OMB consultation, both inventories are made available to Congress and the public unless classified or otherwise protected for national security reasons.  OMB publishes a notice of availability in the *Federal Register.*

## Inherently Governmental Activities

- The CSO must justify, in writing, any designation of government personnel performing inherently governmental (IG) activities and make the justification available to OMB and the public upon request.
- Inherently governmental criteria are contained in Paragraph B.1. of Attachment B.
- IG activities fall into two categories:
- Exercise of sovereign government authority _or_
- Establishment of procedures and processes related to the oversight of monetary transactions or entitlements

## Inherently Governmental Activities (cont.)

- An inherently governmental activity involves:
- Binding the United States to take or not take some action by contract, policy, regulation, authorization, order, or otherwise;
- Determining, protecting and advancing economic, political, territorial, property or other interests by military or diplomatic action, civil or judicial proceedings, contract management or otherwise;
- Significantly affecting the life, liberty or property of private persons; or
- Exerting ultimate control over the acquisition, use or disposition of United States property (real or personal, tangible or intangible), including establishing policies or procedures for the collection, control, or disbursement of appropriated and other federal funds.

## Inherently Governmental Activities (cont.)

- IG activities require the exercise of *substantial discretion *but not every exercise is evidence  that an activity is inherently governmental>
- 	“Rather, the use of discretion shall be deemed inherently governmental if it commits the government to course of action when two or more alternative courses of action exist and decision making is not already limited or guided by existing policies, procedures, directions, orders and other guidance that (1) identify specified ranges of acceptable decisions or conduct and (2) subject the discretionary authority to final approval or regular oversight by agency officials.”
- Activity may be provided by contract where the contractor does not have the authority to decide the course of action, but to develop options or implement a course of action with agency oversight.

## Commercial Activities

- A commercial activity:
- Is a recurring service that could be performed by the private sector and is resourced, performed, and controlled by the agency through performance by government personnel, a contract, or a fee-for service-arrangement.
- Is not so related to the public interest as to mandate performance by government personnel.
- May be found within or throughout organizations that perform inherently governmental activities or classified work.

## Reason Codes and Definitions for Commercial Activities Inventory

| Codes | Definitions |
| --- | --- |
| A | Is not appropriate for private sector performance pursuant to a written determination by the CSO. |
| B | Is suitable for a streamlined or standard competition. |
| C | Is the subject of an in-progress streamlined or standard competition. |
| D | Is performed by government personnel as a result of a standard or streamlined competition (or a cost comparison, streamlined cost comparison, or direct conversion) within the past 5 years. |
| E | Is pending an agency approved restructuring decision (e.g., closure, realignment). |
| F | Is performed by government personnel due to a statutory prohibition against private sector performance. |

## Inventory Challenge Process

- Agency designates:
-  Inventory challenge authority>officials at the same level or higher than the individual who prepared the inventory.
- Appeal authority>officials who are independent and at a higher level than challenge authorities
- Inventory challenges:  After publication of OMB’s notice in the *Federal Register* an interested party has 30 working days to submit a written inventory challenge related to the reclassification of an activity as inherently governmental or commercial or the application of reason codes.

## Inventory Challenge Process (cont.)

- Within 28 working days of receipt of a challenge, the challenge authority shall validate the commercial or inherently governmental categorization or reason code designation in a written decision, its accompanying rationale and appeal rights (if the decision is adverse).
- Upon receipt of an adverse challenge decision, an interested party has 10 working days to submit a written appeal to the agency appeal authority.
- Within 10 working days of receipt, the appeal authority shall transmit a written decision and accompanying rationale to the interested party.
- When the challenge process results in a change to the inventory, a copy of the change shall be sent to OMB and Congress, made available to the general public and published in the *Federal Register.*

## Public-Private CompetitionAttachment B

- Preliminary Planning Steps (Completed prior to public announcement):
- Scope>Determine activities and full time equivalent (FTE) positions to be competed.
- Grouping>Determine appropriate grouping of activities as business units (e.g. consistent with market and industry structures)
- Workload Data and Systems>Assess the availability of workload data/performance standards and establish necessary data collection systems.
- Baseline costs>Determine costs as performed by incumbent service provider.

## Preliminary Planning Steps (cont.)

- Type of Competition:
- Use a standard competition if on the start date, a commercial activity is performed by the agency with an aggregate of more than 65 FTE or by a private sector or public reimbursable source and the agency tender will include an aggregate of more than 65 FTE.
- Use a streamlined (or standard competition) if on the start date, a commercial activity is performed by the agency with an aggregate of 65 or fewer FTE or by a private sector or public reimbursable source and the agency cost estimate or agency tender will include an aggregate of 65 or fewer FTE.

## Preliminary Planning Steps (cont.)

- Schedule>Develop preliminary competition and completion schedules.
- Roles and Responsibilities of Participants>Determine roles/responsibilities and availability for the duration of competition.
- Competition officials>Appointed by the CSO for each standard competition (and as appropriate for streamlined competition) Officials include:
- Agency Tender Official (ATO)
- Contracting Officer
- Performance Work Statement (PWS) Team Leader
- Human Resource Advisor (HRA)
- Source Selection Authority (SSA)
- Inform incumbent service providers of the date the public announcement will be made.

## Public Announcements

- The agency announces the start date of a standard or streamlined competition by publication at the local level and via *FedBizOpps.gov*.
- The agency announces the end date (the performance decision date for a streamlined or standard competition) by publication at the local level and via *FedBizOpps.gov*.

## Streamlined Competitions

- After public announcement, complete the Streamlined Competition Form (SLCF) by calculating, comparing and certifying:
- Cost of Agency Performance>may be based on the incumbent activity or a more/most efficient organization.
- Cost or Private Sector/Public Reimbursable Performance>Agency shall determine estimated price using market research or soliciting cost proposals in accordance with the FAR.
- Detailed rules and guidance for calculating Public-Private Competition Costs are contained in Attachment C of the Circular and incorporated in the COMPARE software.

## Streamlined Competitions (cont.)

- Firewalls>Different individuals preparing agency cost estimate and private sector/public reimbursable cost estimate who shall not share information about the estimates.
- Time Limit:
- 90 calendar days from start to end date
- CSO may grant a waiver (prior to public announcement) of up to 45 additional calendar days if the agency expects to create a MEO or solicit private sector offers.
- If agency cannot complete the competition within the authorized time limit, the agency must convert to a standard competition or request a waiver from OMB.

## Summary of the Streamlined Competition Form

| Cost of Agency Performance |
| --- |
| SLCF Line 1:  Personnel Costs.  Agency labor costs for direct and indirect labor necessary to meet the requirements in the solicitation. |
| SLCF Line 2:  Material and Supply Costs.  Agency cost of materials and supplies such as office supplies, including handling and inflation.  |
| SLCF Line 3:  Other Specifically Attributable Costs.  Other agency costs such as the cost of capital, depreciation capital assets, rent, utilities, insurance, and MEO subcontracts.   |
| SLCF Line 4:  Overhead Costs.  Twelve percent of agency personnel costs reflected on SCF Line 1.  |
| SLCF Line 6:  Total Cost of Agency Performance.  The sum of SCF Lines 1-4.  |
| COST OF PUBLIC REIMBURSABLE PERFORMANCE  |
| The guidance for a public reimbursable source to complete SLCF Lines 1a-4a and 6a is the same as the guidance to complete SLCF Lines 1-4 and 6.  |
| ADJUSTED COST OF PRIVATE SECTOR OR PUBLIC REIMBURSABLE PERFORMANCE |
| SLCF Line 7:  Contract Price or Public Reimbursable Cost Estimate.  The contract price (based on the type of acquisition, source selection process, and contract type required by the solicitation), or the public reimbursable cost on SLCF Line 6a. |
| SLCF Line 8:  Contract Administration Costs:  Costs for administering the contract. |
| SLCF Line 12:  Federal Income Tax Adjustment.  Revenue for the government when a private sector provider pays federal income tax.
SLCF Line 13:  Total Adjusted Cost of Private Sector or Public Reimbursable Performance.  The sum of Lines 7, 8 and 12. |

## Summary of the Streamlined Competition Form (cont.)

| COST OF PERFORMANCE DECISION CALCULATIONS
 |
| --- |
| SLCF Line 17:  Cost Difference.  SLCF Line 6 is subtracted from SLCF Line 13 to reflect the “cost difference” on SLCF Line 17.  A positive number indicates performance decision for agency performance and a negative number indicates a performance decision for a private sector or public reimbursable provider.  |
| SLCF Line 18:  Low-Cost Provider. The low-cost provider based on the calculations on the SLCF. |

## Streamlined Competitions (cont.)

- Performance Decision>
- 3 different individuals certify on the SLCF
- Incumbent service providers are allowed to review the SLCF consistent with procurement integrity, ethics and standards of conduct rules.
- Formal announcement of the decision at the local level and in *FedBizOpps.gov.*

## Streamlined Competitions (cont.)

- Implementation of the decision>
- Private Sector or Public Reimbursable Performance Decision>The CO may issue a solicitation to determine a private sector or public reimbursable service provider.  For a private sector decision, the CO shall award a contract in accordance with the FAR and implement the right of first refusal provisions.  For a public reimbursable performance decision, the CO shall execute a fee-for-service agreement with the public reimbursable source.
- Agency Performance Decision>The CO executes a letter of obligation with an official responsible for performing the commercial activity.

## Standard Competition

- Time Limit of 12 Months
- CSO may grant waiver allowing additional 6 months for particularly complex competitions
- Team Designations
- PWS
- Directly affected parties can participate
- Team members can not be members of MEO team
- MEO
- Directly affected parties can participate
- Team members cannot be member of PWS team
- SSEB
- Directly affected personnel and anybody with knowledge of the agency tender shall not participate in any manner on the SEB.

## Standard Competition

- Solicitation Requirements
- Review & Release of Information
- FAR Provisions
- Acquisition Process & Source Selection Provisions
- Unique Provisions to Agency Tender
- Solicitation Closing Date
- Compliance Matrix
- Performance Periods
- Government-Furnished Property
- Common Costs
- Performance Bond
- Incentive and Award Fees
- Phase-in Plan
- Quality Control Plan
- Quality Assurance Surveillance Plan
- Competition File

## Standard Competition

- Agency Tender
- Development
- Most Efficient Organization (MEO)
- Agency Cost Estimate
- Quality Control Plan
- Phase-in Plan
- Submission
- Changes
- Procurement Sensitivity
- Private Sector Offers
- Public Reimbursable Tenders
- No Satisfactory Private Sector or Public Reimbursable Source

## Standard Competition

- Source Selection Processes
- Sealed Bid Acquisition
- Negotiated Acquisition
- Lowest Price Technically Acceptable
- Phased Evaluation
- Tradeoff
- Low Cost Performance Decision
- Other Than Low Cost Performance Decision
- Special Considerations During Source Selection
- Evaluation of Offers and Tenders, Use of COMPARE
- Exchanges with Sources
- Deficiencies in an Offer or Tender
- Price Analysis & Cost Realism of Cost Proposals & Estimates

## Summary of the Standard Competition Form

| Cost of Agency Performance |
| --- |
| SCF Line 1:  Personnel Costs.  Agency labor costs for direct and indirect labor necessary to meet the requirements in the solicitation. |
| SCF Line 2:  Material and Supply Costs.  Agency cost of materials and supplies such as office supplies, including handling and inflation.  |
| SCF Line 3:  Other Specifically Attributable Costs.  Other agency costs such as the cost of capital, depreciation capital assets, rent, utilities, insurance, and MEO subcontracts.   |
| SCF Line 4:  Overhead Costs.  Twelve percent of agency personnel costs reflected on SCF Line 1.  |
| SCF Line 5:  Additional Costs.  Agency costs not otherwise accounted for on SCF Lines 1-4, such as phase-in costs and one-time conversion costs for an expansion, new requirement, or conversion from a private sector or public reimbursable provider to agency performance.  |
| SCF Line 6:  Total Cost of Agency Performance.  The sum of SCF Lines 1-5.  |
| COST OF PUBLIC REIMBURSABLE PERFORMANCE  |
| The guidance for a public reimbursable source to complete SCF Lines 1a-6a is the same as the guidance to complete SCF Lines 1-6.  |
| ADJUSTED COST OF PRIVATE SECTOR OR PUBLIC REIMBURSABLE PERFORMANCE |
| SCF Line 7:  Contract Price or Public Reimbursable Cost Estimate.  The contract price (based on the type of acquisition, source selection process, and contract type required by the solicitation), or the public reimbursable cost on SCF Line 6a. |
| SCF Line 8:  Contact Administration Costs.  Costs for administering the contract.  |
| SCF Line 9:  Additional Costs.  Costs incurred by the agency that are added to the private sector or public reimbursable provider’s price/cost.  |

## Summary of the Standard Competition Form (cont.)

| SCF Line 10:  One-time Conversion Costs.  Costs based on 5% of Line 1, incurred by the agency as a result of awarding a contract. 
SCF Line 11:  Gain on Assets.  Revenue generated from the sale/transfer of agency assets when converting from agency performance. 
SCF Line 12:  Federal Income Tax Adjustment.  Revenue for the government when a private sector provider pays federal income tax. |
| --- |
| COST OF PERFORMANCE DECISION CALCULATIONS
 |
| SCF Line 14:  Conversion Differential.  The lesser of 10% of agency labor costs or $10 M is added to the non-incumbent provider.  |
| SCF Line 15:  Adjusted Total Cost of Agency Performance.  If a private sector or public reimbursable source is the incumbent provider, the conversion differential is added to the cost of agency performance (SCF Line 6) and the sum is the “adjusted total cost of agency performance” on SCF Line 15.  |
| SCF Line 16:  Adjusted Total Cost of Private Sector or Public Reimbursable Performance.  If the agency is the incumbent provider, the conversion differential is added to SCF Line 13 and the sum is the “adjusted total cost of private sector or public reimbursable performance” on SCF Line 16.  |
| SCF Line 17:  Cost Difference.  SCF Line 15 is subtracted from SCF Line 16 to reflect the “cost difference” on SCF Line 17.  A positive number indicates performance decision for agency performance and a negative number indicates a performance decision for a private sector or public reimbursable provider.  |
| SCF Line 18:  Low-Cost Provider. The low-cost provider based on the calculations on the SCF. |

## Standard Competition

- Performance Decision
- Certification
- End Date of Competition
- Public Announcement of Performance Decision
- Debriefing
- Release of Certified Standard Competition Form
- Release of Agency and Public Reimbursable Tenders
- Implementing the Performance Decision
- Awarding the Contract and the Right of First Refusal
- Issuing the Letter of Obligation to the MEO Official
- Issuing the Fee-For-Service Agreement to a Public Reimbursable Provider

## Post Competition Accountabilityfor Streamlined and Standard Competitions

- Best Practices and Lessons Learned
- Execution Tracking
- OMB Quarterly Reporting
- Performance Monitoring
- Option Years of Performance
- Follow-on Competition
- Terminations
- Based on Failure to Perform
- Notification, Termination, and Temporary Remedies
- Based on Reasons Other Than Failure to Perform

## Contests

**Standard Competitions** (Governed by FAR Subpart 33.103) Directly interested party (ATO, single individual appointed by majority of directly affected employees, private sector offeror or official who certifies public reimbursable tender) may contest the following:
- A solicitation
- Cancellation of a solicitation
- A determination to exclude a tender or offer from a standard competition
- A performance decision, including compliance with the costing provisions of the Circular and other elements of an agency’s evaluation of offers or tenders.
- A termination or cancellation of a contract or letter of obligation if the challenge contains an allegation that the cancellation is based in whole or part on improprieties concerning the performance decision.
**Streamlined Competitions**
- Not Permitted