EXECUTIVE OFFICE OF THE PRESIDENT 

OFFICE OF MANAGEMENT AND BUDGET 

WASHINGTON, DC 20503 

November 14, 2002 

CIRCULAR NO. A-76 (REVISED) 

TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS 

SUBJECT: Performance of Commercial Activities 

1. Purpose. This Circular establishes federal policy for the competition of commercial activities. 

2. Supersession. This Circular supercedes Office of Management and Budget (OMB) Circular No. A76 (Revised), August 4, 1983; OMB Circular No. A-97 (Revised), March 1981; Office of Federal 

Procurement Policy (OFPP) Policy Letter 92-1, “Inherently Governmental Functions,” September 23, 

1992; and OMB Transmittal Memoranda 1 through 24, Performance of Commercial Activities. 

3. Authority. 31 U.S.C. § 1111, Reorganization Plan No. 2 of 1970 (P.L. 97-258, § 5(b)) and Executive 

Order 11541; the Office of Federal Procurement Policy Act (41 U.S.C. § 405); and the Federal 

Activities Inventory Reform (FAIR) Act of 1998 (P.L. 105-270; 31 U.S.C. § 501 note). 

4. Policy. The longstanding policy of the federal government has been to rely on the private sector for 

needed commercial services. The competitive enterprise system, characterized by individual freedom 

and initiative, is the primary source of national economic growth. The federal government has grown 

to perform a myriad of commercial activities, in addition to providing citizens with a range of 

programs from law enforcement to stewardship of federal lands. Services in these and other areas are 

provided by a blend of federal government and private sector sources. For the American people to 

receive maximum value for their tax dollars, all commercial activities performed by government 

personnel should be subject to the forces of competition, as provided by this Circular. In accordance 

with Attachments A-F, agencies shall: 

a. Perform inherently governmental activities with government personnel. 

b. Presume all activities are commercial in nature unless an activity is justified as inherently 

governmental. 

c. Use a Competition or Direct Conversion process to determine the providers of commercial 

activities. 

d. Comply with the Federal Acquisition Regulation (FAR), 48 C.F.R. Chapter 1 and this Circular 

for Competition, Direct Conversion, and the management of commercial activities. 

e. Designate, in writing, an assistant secretary or equivalent level official with responsibility for 

implementing this Circular (hereafter referred to as the 4.e. official). Except as otherwise 

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provided by this Circular, the 4.e. official may delegate, in writing, responsibilities to comparable 

officials in the agency or agency components. 

f. Centralize oversight responsibility in one or more offices. 

g. Require full accountability of agency officials designated to implement and comply with this 

Circular through annual performance evaluations. 

5. Scope. 

a. Except as otherwise provided by law, this Circular shall apply to executive departments named in 5 

U.S.C. 101 and independent establishments as defined in 5 U.S.C. 104. These departments and 

independent establishments are referred to in the Circular as “agencies”. Except as otherwise 

provided by law, this Circular shall apply to military departments named in 5 U.S.C. 102. 

b. As provided by Attachment A, the 4.e. official may exempt an agency performed commercial 

activity from performance by the private sector. 

6. Attachments. 

a. Attachment A - Inventory Process 

b. Attachment B - Public-Private Competition 

c. Attachment C - Direct Conversion Process 

d. Attachment D - Inter-Service Support Agreements (ISSA) 

e. Attachment E - Calculating Public-Private Competitions Costs 

f. Attachment F - Glossary of Acronyms and Definitions of Terms 

7. Effective Date. This Circular is effective upon publication in the Federal Register and shall apply to 

all Direct Conversions and for Standard Competitions where the solicitation date is on or after 

January 1, 2003. 

Mitchell E. Daniels, Jr. 

Director 

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Attachment A 

OMB Circular No. A-76

INVENTORY PROCESS

3⁄4Annual inventories identify all agency performed activities and categorize 

these activities as either commercial or inherently governmental. 

3⁄4Activities are presumed commercial unless justified as inherently 

governmental.

3⁄4The inventory process is the initial step necessary for determining 

commercial activities subject to competition. 

A. INVENTORY REQUIREMENTS. 

1. Agencies. Agencies shall, on an annual basis, inventory activities performed by agency

personnel as either commercial or inherently governmental. Commercial activities may be found within 

larger organizations that perform inherently governmental or classified work. 

2. OMB. OMB shall review each agency inventory, consult with the agency regarding the content 

of the inventory, and publish a notice in the Federal Register that annual agency inventories are available. 

B. INVENTORY SUBMISSIONS.

1. Annual Inventories. Agencies shall submit the following by electronic mail (e-mail) to OMB by

June 30 of each year: (a) an inventory of agency performed commercial activities subject to the FAIR 

Act, (b) an inventory of agency performed commercial activities not subject to the FAIR Act, (c) an 

inventory of inherently governmental activities performed by civilian and military personnel, and (d) an 

Inventory Summary Report. When any inventory contains classified or national security data, agencies 

shall consult with OMB to determine the impact of releasing such information to the general public. 

2. Inventory Format and Data Elements. For annual inventories, the OMB web site 

(www.OMB.gov) shall provide format and data requirements. Function code definitions, located on the 

OMB web site, may be tailored to reflect agency-specific definitions. 

C. TYPES OF INVENTORIES. 

1. FAIR Act Commercial Activities Inventory.

a. Requirements. In accordance with the FAIR Act and OMB requirements, agencies shall 

submit an inventory of the commercial work performed by agency Full Time Equivalents 

(FTE). After OMB review, consultation, and publication of an inventory availability notice in 

the Federal Register, the agency shall: (1) make the inventory available to Congress and the 

public, and (2) conduct the required challenge and appeal process (see paragraph F). 
b. Applicability. The FAIR Act does not apply to: (1) the General Accounting Office (GAO), 

(2) a government corporation or a government controlled corporation as defined in 5 U.S.C. § 

103, (3) a non-appropriated funds instrumentality if all employees meet the definition at 5 

U.S.C. § 2105(c), or (4) depot-level maintenance and repair activities (defined at 10 U.S.C. § 

2460) performed by the military services of the Department of Defense (DoD), (4) military 

personnel, and (5) foreign nationals. 

2. Non-FAIR Act Commercial Activities Inventory. For all commercial activities that are 

performed by agency personnel, but are not otherwise listed on the FAIR Act inventory, agencies 

shall submit a separate inventory. 

3. Inherently Governmental Activities Inventory. Agencies shall submit a separate inventory of 

all inherently governmental activities performed by agency personnel. Agencies shall justify these 

inherently governmental activities in accordance with paragraph E. 

4. Inventory Summary Report. Agencies shall submit an Annual Inventory Summary using the 

following format to identify aggregate data. The total of the three agency inventories (FAIR Act, 

Non-FAIR Act, and Inherently Governmental) shall reasonably equate to an agency’s authorized 

personnel requirements. 

ANNUAL INVENTORY SUMMARY 

FISCAL YEAR: ______ 

AGENCY: COMMERCIAL ACTIVITIES

__________ FAIR Act Non-FAIR Act 

INHERENTLY GOVERNMENTAL 

ACTIVITIES 

Agency 

Component A 

Agency 

Component B 

Agency 

Component C 

Agency Total 

D. COMMERCIAL ACTIVITIES. 

1. Agencies shall presume all activities are commercial in nature unless justified as inherently 

governmental in accordance with paragraph E. 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 a contract, Commercial Inter-Service Support Agreement (ISSA), or agency 

employee performance. A commercial activity is not so intimately related to the public interest as 

to mandate performance by government personnel. 

2. Agencies shall use the following reason codes to indicate the rationale for agency performance of 

a commercial activity (both FAIR Act and Non-FAIR Act Inventories). The 4.e. official may 

exempt, in writing with sufficient justification, agency performed commercial activities from 

private sector performance using Reason Code A. A more complete definition of annual 

requirements regarding the use of these reason codes may be found at the OMB website. 

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3. Agencies shall make the written justifications for designating activities inherently government 

available to OMB and the public upon request. Agencies shall also make the written 

justifications for agency performance of commercial activities, using Reason Code A available to 

OMB and the public upon request 

REASON CODES FOR AGENCY PERFORMANCE 

COMMERCIAL ACTIVITIES INVENTORY 

REASON 

CODE DEFINITION 

A Agency performance is not appropriate for outsourcing pursuant to a written determination of the 4.e. 

official. 

B Agency performance will be subject to a Standard Competition or Direct Conversion within specified 

time frame. 

C Agency performance is the subject of an in-progress Standard Competition or Direct Conversion. 

D Agency performance is a Most Efficient Organization (MEO) as a result of Standard Competition. 

E Agency performance is pending an agency approved restructuring, i.e., closure, realignment, decision 

within a specified time frame. 

F Agency performance is required due to a legislative prohibition against private sector performance. 

E. INHERENTLY GOVERNMENTAL ACTIVITIES. Agency personnel designated as performing 

inherently governmental activities shall be justified, in writing by the 4.e. official, on the basis of the 

following. 

1. An inherently governmental activity is an activity that is so intimately related to the public 

interest as to mandate performance by government personnel. These activities require the 

exercise of substantial official discretion in the application of government authority and/or in 

making decisions for the government. Inherently governmental activities normally fall into two 

categories: the exercise of sovereign government authority or the establishment of procedures and 

processes related to the oversight of monetary transactions or entitlements. An inherently 

governmental activity involves: 

a. Binding the United States to take or not to take some action by contract, policy, regulation, 

authorization, order, or otherwise; 

b. Determining, protecting, and advancing economic, political, territorial, property, or other 

interests by military or diplomatic action, civil or criminal judicial proceedings, contract 

management, or otherwise; 

c. Significantly affecting the life, liberty, or property of private persons; or 

d. Exerting ultimate control over the acquisition, use, or disposition of property, real or personal, 

tangible or intangible, of the United States, including the establishment of policies or 

procedures for the collection, control, or disbursement of appropriated and other federal funds. 

2. While inherently governmental activities require the exercise of substantial agency discretion, not 

every exercise of discretion is evidence that an inherently governmental activity is involved. 

Rather, the use of discretion shall have the effect of committing the government to a 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 or other guidance that: (a) 

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identify specified ranges of acceptable decisions or conduct; and (b) subject the discretionary 

authority to final approval or regular oversight by agency officials. 

3. An activity may be provided by contract support (i.e., a private sector source or a public 

reimbursable source using contract support) where the contractor does not have the authority to 

decide on the course of action, but is tasked to develop options or implement a course of action, 

with agency oversight. Agencies shall consider the following to avoid the effect of transferring 

inherently governmental authority to a contractor: 

a. Congressional legislative restrictions that define an activity as inherently governmental; 

b. The degree to which official discretion is or would be limited, i.e., whether involvement of 

the private sector or public reimbursable provider is or would be so extensive that the ability 

of senior agency management to develop and consider options is inappropriately restricted; 

c. In claims or entitlement adjudication and related services: (1) the finality of any action 

affecting individual claimants or applicants, and whether or not review of the provider’s 

action is de novo on appeal of the decision to an agency official; (2) the degree to which a 

provider may be involved in wide-ranging interpretations of complex, ambiguous case law 

and other legal authorities, as opposed to being circumscribed by detailed laws, regulations, 

and procedures; (3) the degree to which matters for decisions may involve recurring fact 

patterns or unique fact patterns; and (4) the discretion to determine an appropriate award or 

penalty; 

d. The provider’s authority to take action that will significantly and directly affect the life, 

liberty, or property of individual members of the public, including the likelihood of this 

provider’s need to resort to force in support of a police or judicial activity; whether force, 

especially deadly force, is more likely to be initiated by this provider or by some other 

person; and the degree to which force may have to be exercised in public or relatively 

uncontrolled areas. Contracting for guard, convoy security, pass and identification, and plant 

protection services, armed or unarmed, is not proscribed by these policies; 

e. The availability of special agency authorities and the appropriateness of their application to 

the situation at hand, such as the power to deputize private persons; or 

f. Whether the activity in question is already being performed by the private sector for the 

agency. 

F. FAIR ACT CHALLENGE AND APPEAL PROCESS. Agencies shall implement the following 

process to comply with Section 3 of the FAIR Act. 

1. Appointment of FAIR Act Challenge and Appeal Authorities. The 4.e. official shall 

designate an Inventory Challenge Review Authority and an Inventory Challenge Appeal 

Authority as follows. 

a. Inventory Challenge Review Authority shall (1) be an agency official at the same or higher 

level in the agency than the individual who prepared the inventory and (2) review and respond 

to challenges to agency inventory decisions in writing. 

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b. Inventory Challenge Appeal Authority shall (1) be an agency official that is independent and 

at a higher level in the agency than the Inventory Challenge Review Authority and (2) review 

and respond to appeals of decisions made by the FAIR Act Challenge Review Authority in 

writing. 

2. The FAIR Act Inventory Challenge and Appeal Process. 

a. Challenges. 

1. Submissions. After publication of OMB’s Federal Register notice stating that an agency’s 

FAIR Act Commercial Activities Inventory is available, an interested party shall have 30 

working days to challenge, in writing, the inclusion or exclusion of a commercial activity. 

The written challenge shall be submitted to the agency’s Inventory Challenge Review 

Authority and shall specify the agency, component, organization, function(s) and 

location(s) for the activities being challenged. The challenge shall be limited to identifying 

reasons a specific activity should be reclassified as (a) an inherently governmental activity 

based upon the application of paragraph E above or (b) a commercial activity based upon 

the application of paragraph D above. The application of Function and Reason Codes and 

their definitions shall not be subject to this Challenge and Appeal Process. 

2. Decisions. Within 28 working days of receiving the challenge, the Inventory Challenge 

Review Authority shall (a) validate the commercial or inherently governmental 

classification of the activity based upon the application of paragraph D or E, above, in a 

written Challenge Decision and (b) transmit the Challenge Decision with rationale to the 

interested party and, if adverse, include an explanation of the interested party’s right to file 

an appeal. 

b. Appeals of Challenge Decisions. 

1. Submissions. Upon receipt of an adverse Challenge Decision, an interested party shall 

have 10 working days to submit an appeal of the decision to the Inventory Challenge 

Appeal Authority. 

2. Decisions. Within 10 working days of receipt of the appeal, the Inventory Challenge 

Appeal Authority shall issue and transmit a written Inventory Appeal Decision to the 

interested party. This Inventory Appeal Decision shall include rationale for the decision. 

c. Inventory Changes. When the FAIR Act Challenge and Appeal Process results in a change 

to an agency inventory, the agency shall (1) transmit a copy of the change to OMB and the 

Congress, (2) make such changes available to the public, and (3) publish a notice of public 

availability in the Federal Register. 

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Attachment B

OMB Circular No. A-76 

PUBLIC-PRIVATE COMPETITION

3⁄4 Agencies shall use Competition to determine the providers of commercial activities and 

shall compete these activities on a recurring basis. 

3⁄4 Public-private Competition is implemented through the Standard Competition process. 

3⁄4 The five steps of the Standard Competition process are outlined in the flow chart below. 

THE STANDARD COMPETITION PROCESS

8 months 4 months

S S S S S

Preliminary Solicitation Agency, Source Post 

Planning Developed Private 

Sector, 

Selection Competition 

and and Process 

Accountabili

ty 

Public Issued 

Announcem

ent 

and and 

Public Performanc

R e ¬

R

eimbursab

le ¬

esponses

and ¬ ¬R

Negotiated

Developed 

and

Decision ecompetiti

end 2

date

start 

date 

Sealed Bid

Type of Acquisition

Lowest Priced 

Technically Acceptable

Type of Source Selection Cost Technical Tradeoff

Type of A-76 Evaluation Process

Integr

t d

Phase

d
A. LIMITATIONS AND CRITERIA. 

1. Limitations When Performing a Standard Competition. 

a. Deviations. Agencies shall not deviate from the Standard Competition procedures or 

timeframes required. At competition announcement (start date), the 4.e. official (without 

delegation) may waive the timeframes required to complete a competition, if the competition 

is particularly complex, and issue a revised completion date, with notification to the Deputy 

Director for Management, OMB. The 4.e. official (without delegation) shall receive prior 

written OMB approval to use an alternative Competition process or make a specific 

procedural deviation from this Circular. 

b. Reorganization. Agencies shall not reorganize or restructure a commercial activity to 

circumvent the competition requirements of this Circular. 

c. Government Performance of Private Sector Work. Agencies shall not perform work as a 

contractor or subcontractor to the private sector or a public reimbursable source unless 

specific statutory authority exists or prior written OMB approval is obtained. 

2. Criteria To Perform a Standard Competition. 

a. To Change a Source. Agencies shall use a Standard Competition to change the source of a 

commercial activity as follows: 

(1) Agency Source. From agency performance to either a (a) private sector source or (b) 

public reimbursable source that will use either contract support or government personnel 

to perform the activity. 

(2) Private Sector Source. From private sector performance to either (a) an agency source 

or (b) a public reimbursable source. 

(3) Public Reimbursable Source. From public reimbursable performance to either (a) an 

agency source or (b) a private sector source. 

b. To Justify a Source. Agencies shall use Standard Competitions to justify the following: 

(1) Commercial Inter-Service Support Agreement (ISSA). A Commercial ISSA 

performed by a public reimbursable source. 

(2) Most Efficient Organization (MEO). Continued agency performance after completion 

of an MEO’s performance period in a previous Competition. 

(3) New Requirement. Agency or public reimbursable performance of a new requirement. 

A Standard Competition is not required for private sector performance of a new 

requirement competed in accordance with the Federal Acquisition Regulation (FAR). 

(4) Expansion. Agency or public reimbursable performance of an expansion of existing 

commercial activities. An expansion is the modernization, replacement, upgrade, or 

increased workload of an existing agency performed commercial activity that increases 

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operating cost of the activity by 30 percent or more. To justify performance by an 

agency or public reimbursable source, a Standard Competition shall be performed on 

either (a) the entire activity including the expansion or (b) the expansion, if segregable. 

A Standard Competition is not required for private sector performance of a segregable 

expansion competed in accordance with the FAR. 

(5) State or Local Government Agreements. Agency agreements with a state or local 

government to provide or receive commercial activities (see Attachment D). 

B. DESIGNATIONS AND RESPONSIBILITIES. 

1. Agency Tender Official (ATO). The ATO shall be an inherently governmental agency official 

with decision making authority and shall be independent of the CO, SSA, and AAA. The ATO 

shall comply with this Circular, shall develop and certify the Agency Tender, and shall represent 

the agency’s Tender during source selection, and in any Appeals. When Standard Competitions 

are announced, the ATO shall designate the MEO Team. The ATO shall be considered a directly 

interested party. 

2. Contracting Officer. The CO shall be an inherently governmental agency official, shall comply 

with both the FAR and this Circular, and shall be independent of (1) the activity being competed 

and (2) the ATO and AAA. The CO shall designate and assist the PWS Team. 

3. Human Resource Advisor (HRA). The HRA shall be an inherently governmental agency 

official; shall be an HR expert; shall be independent of the CO, SSA, and AAA; may participate 

on the MEO Team; shall comply with this Circular; and shall be responsible for the following. 

a. Employee and Labor-relations Requirements. HRAs shall, at a minimum, perform the 

following employee relations assistance actions; (a) interface with affected civilian 

employees and their representatives from public announcement until full implementation of 

the decision; (b) identify civilian employees who will be adversely affected; (c) inform the 

incumbent service providers of the competition; (d) make public announcements at the local 

level and in FedBizOpps and include in these announcements the agency, location, resources 

being competed and agency officials responsible for its completion; (e) accomplish 

employee placement entitlements in accordance with 5 USC Part 351(Reduction-in-Force 

procedures); (f) provide post-employment restrictions to employees; (g) consult with the 

Office of Personnel Management (OPM) to determine agency priority considerations for 

vacant positions and establish a reemployment priority list; and (h) for conversions to private 

sector or public reimbursable performance, provide the CO with a list of adversely affected 

civilian employees to implement the Right-of-First-Refusal (see paragraph D.2. below). The 

HRA, working in conjunction with the CO shall determine compliance with the Right-ofFirst-Refusal. 

b. MEO Team Requirement: The HRA shall assist the ATO and MEO Team with human 

resource related requirements during development of the Agency Tender including, but not 

limited to: (a) the Competition milestones to accomplish human resource actions for 

employee placement entitlements in accordance with 5 USC Part 351; (b) assist the MEO 

Team by advising on and classifying position descriptions; (c) performing labor market 

analysis to validate feasibility of MEO staffing; (d) assist in developing the agency cost 

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estimate by providing annual salaries, wages, night differential, premium pay, etc.; (e) assist 

in the development of the timing for the Phase-In Plan based on HR requirements; and (f) 

develop an Employee Transition Plan for the current organization early in the Competition 

process to identify projected employee impacts and the time to accommodate such impacts 

based on the potential outcomes of the Competition. 

4. Source Selection Authority (SSA). The SSA shall be an inherently governmental official 

appointed consistent with FAR Part 15.303, and shall be independent of (1) the activity being 

competed and (2) the ATO and AAA. The SSA shall comply with both the FAR and this 

Circular . 

5. Administrative Appeal Authority (AAA). The AAA shall be an inherently governmental 

agency official who is independent of the activity being competed, the ATO, CO, SSA, and HRA. 

The AAA may be assigned as the agency’s AAA for all Standard Competitions or for each 

Standard Competition. The AAA shall comply with this Circular for conducting the 

Administrative Appeal Process. 

C. STANDARD COMPETITION PROCEDURES. 

1. Preliminary Planning For Public Announcement. 

a. Preliminary Planning. Prior to public announcement (start date) of a Standard Competition, 

agencies shall: (1) determine the activities and positions to be competed, (2) conduct 

preliminary research to determine the appropriate grouping of activities as business units 

consistent with market and industry structures, (3) assess the availability of workload data, 

work units, quantifiable outputs of activities or processes, agency or industry performance 

standards, and other similar data, (4) establish data collection systems as necessary, (5) 

designate Competition Officials, (6) determine roles and responsibilities of participants in the 

process and their availability for the duration of the process, and (7) develop a preliminary 

completion schedule. (See paragraph D. for Special Considerations.) 

b. Competition Preparation Considerations. 

(1) Designation and Responsibilities of Competition Officials. Before public 

announcement, the 4.e. official shall appoint, in writing, the following Competition 

Officials: ATO, CO, HRA, SSA, and AAA. These officials shall be appointed in 

accordance with paragraph D and may be appointed for each or all Standard 

Competitions. The 4.e. official shall hold these Competition Officials accountable for the 

timely and proper conduct of Standard Competitions through the use of annual 

performance evaluations, 

(2) Cancellation of a Standard Competition. An agency is permitted to cancel a Standard 

Competition after the start date only if the commercial activity being competed will (a) be 

consolidated with an in-progress Standard Competition or a Standard Competition that 

will be announced within one year of the cancellation date; (b) be broken out into one or 

more Standard Competitions or Direct Conversions that will be announced within one 

year of the cancellation date; or (c) not be competed pursuant to a decision by the 4.e. 

official, without delegation, before a Performance Decision. Agencies shall publish a 

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notice in FedBizOpps of any cancellation of a Standard Competition and provide a 

similar notice to directly affected employees and their representatives. 

(3) Timeframes. A Standard Competition shall not exceed 12 months from public 

announcement (start date) to Performance Decision (end date), unless a deviation is 

granted. The 4.e. official may grant a one-time six-month extension if approved by the 

Deputy Director of Management of OMB. 

(4) Conflict of Interest. When conducting a Standard Competition, Competition Officials 

and individuals participating in any aspect of the process shall comply with procurement 

integrity, ethics and standards of conduct rules. 

(5) Centralized Oversight. Agencies shall centralize oversight responsibility in one or more 

offices to facilitate fairness in competitions and promote trust in the process. Agencies 

shall allocate resources to effectively apply a clear, transparent, and consistent 

competition process based on lessons learned and best practices. 

(6) Relationship to the Budget. In accordance with OMB Circular Number A-11, 

Preparation and Submission of Budget Estimate, the 4.e. official shall identify savings 

resulting from completing Standard Competitions. 

(7) Cost Estimates. An agency or public reimbursable source shall comply with Attachment 

E to develop cost estimates used in Standard Competitions. Agency budgetary costs shall 

not be used in cost estimates unless prior OMB written approval is received indicating 

these costs reflect the full cost of government performance to the taxpayer. 

(8) Personnel Considerations. Agencies shall provide assistance to adversely affected 

Federal civilian employees in accordance with 5 CFR Part 351. 

2. The Solicitation and Quality Assurance Surveillance Plan (QASP). 

a. Solicitation. In addition to FAR requirements, the CO shall consider the following when 

developing and issuing a solicitation. 

(1) General. The solicitation defines the activity, the performance standards and 

performance periods required. Development and issuance of the solicitation requires 

determining an agency’s requirements, gathering workload data for the PWS, and 

includes releasing the QASP. A PWS that is developed in a Standard Competition shall 

be performance based with measurable performance thresholds and may encourage 

innovation. Agencies shall not issue a solicitation that increases, or places additional risk 

on one offeror over another; violates industry service or service grouping norms; or omits 

statutory obligations or necessary regulatory requirements. 

(2) Delayed Issuance. Agencies shall issue a solicitation within eight months of the start 

date. If an agency is unable to issue a solicitation within this timeframe, the 4.e. official 

shall notify the Deputy Director for Management, OMB, in writing, no later than seven 

months after the start date and identify corrective actions that have been taken or are 

planned. 

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(3) FAR Provisions. The agency shall determine, in accordance with FAR Part 7, whether a 

Sealed Bid or Negotiated Acquisition will be used for the Standard Competition process. 

For sealed bid procurements, the CO shall issue an Invitation for Bid (IFB) and the CO 

shall insert the provision at FAR 52.207-1 in the solicitation. For negotiated 

procurements, the CO shall issue a Request for Proposals (RFP) and insert the provision 

at FAR 52.207-2. Whenever a Direct Conversion or Standard Competition is performed 

and the agency is the incumbent service provider, the CO shall include in solicitations the 

Right-of-First-Refusal provision at FAR 52.207-3. 

(4) Source Selection Provisions. When a Standard Competition is performed, the CO shall 

state that the agency is performing a Standard Competition in accordance with this 

Circular and shall identify one of the following procedures will be used to select the 

source: (a) Sealed Bid in paragraph B.4.a.(2)of this Attachment; (b) Negotiated 

Procurement using Low Priced Technically Acceptable Source Selection Procedures in 

paragraph B.4.b.(a) of this Attachment (c) Negotiated Procurement using 

Cost/Technical Tradeoff Source Selection Procedures with an Integrated Evaluation 

Process in paragraph B.4.b.(b)1. of this Attachment; or (d) Negotiated Procurement 

using Cost/Technical Tradeoff Source Selection Procedures with a Phased Evaluation 

Process in paragraph B.4.b.(b)2. of this Attachment. 

(5) Performance Periods. Agencies shall apply the performance periods stated in the 

solicitation to the Agency Tender, prospective private sector offers, and public 

reimbursable tenders, consistent with FAR 17.204. An agency shall not use performance 

periods for the Agency Tender that differ from private sector offers and public 

reimbursable tenders. 

(6) Phase-in and Phase-out Plans. For a Standard Competition, the CO shall include in the 

solicitation a requirement for private sector offers, public reimbursable tenders and the 

agency tender to propose a phase-in plan to replace the existing incumbent service 

provider. Phase-in plans shall include details to minimize disruption, adverse personnel 

impacts, and startup requirements. The length and requirements of the phase-in must 

consider hiring, training, recruiting, security limitations, and any other special 

considerations to reflect a realistic phase-in plan. The costs associated with phase-out 

plans shall not be required by the solicitation or calculated on the Standard Competition 

Form (SCF). 

(7) Government Furnished Property. The PWS Team shall determine if government 

property is to be provided. The determination to provide government furnished property 

shall be justified, in writing, and approved by the 4.e. official. Consistent with FAR 

45.102 and FAR Subpart 45.3, solicitations may offer the use of existing government 

facilities and equipment, and may make such use mandatory if the CO obtains prior 

approval from the 4.e. official. The determination to provide government property shall 

not be used to influence a specific outcome. 

(8) Maximum Incentive Fee. If a solicitation may result in a contract with an incentive fee, 

the CO shall state in the solicitation the maximum incentive fee. 

(9) Innovation. When performing Cost/Technical Trade-off (C TTO) source selections in 

negotiated acquisitions, the solicitation shall allow prospective offers and tenders, 

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including the Agency Tender, to propose innovative approaches and different 

performance standards than the requirements of solicitation. 

(10) Performance Bond. If a solicitation requires a private sector source to provide a 

performance bond, the CO shall exclude the costs associated with the performance bond 

from the contract price before it is entered on Line 7 of the SCF. 

(11) Compliance Matrix. To decrease the complexity of performing source selections in 

Standard Competitions, the CO may include a cross-reference compliance matrix in 

Section L of the solicitation. An example is provided below. A matrix shall clearly 

identify proposal reference information as it relates to the PWS, contract line items 

(CLIN), Sections L and M, Proposal Volume and Section, and Contract Data 

Requirements List (CDRL) references. This matrix should be modified to account for 

proposed performance standards that differ from the requirements in a solicitation when 

CTTO source selections are used (see paragraph C.4.a.(3)(b) below): 

CROSS-REFERENCE COMPLIANCE MATRIX (EXAMPLE) 

DESCRIPTION PROPOSAL VOLUME 

& PARAGRAPH # CLINs CDRLs PWS SECTION L SECTION M 

Administrative Support 1.1 4.3 F1, 1.5.1 

Records Management 1.1.1 4.3.1 F1, SF1 

Forms and Publications Note: 1.1.2 4.3.2 F1, 1.5.1.2 

Operations & Maintenance This section is to 1.2 4.4 F2 1.5.2 

Equipment Records be completed 1.2.1.1 4.4.2 F2, SF2, 

Maintenance Analysis by tenders and offers 1.2.2 4.4.3 SF3 1.5.2.3 

Data Base Management 1.2.2.1 4.4.4 SF4, 1.5.2.4 

Price 5.0 1.5.3 

Performance Risk Assessment 7.0 1.5.4 

(12) Security Clearances. A solicitation shall state when security clearances are necessary 

to have access to classified information to perform the activity (e.g., workload, specific 

position designations, level of security clearance). The costs associated with security 

clearance requirements shall not be included on the SCF for an agency tender, private 

sector offer, or public reimbursable tender. 

(13) Solicitation Exceptions for the Agency Tender. A solicitation shall explicitly state 

which requirements will not be applied to the Agency Tender. Solicitation requirements 

for the following shall not apply to an Agency Tender: (1) labor strike plan, (2) small 

business strategy, (3) subcontracting plan goal, (4) participation of small disadvantaged 

businesses, (5) licensing or other certifications and (6) past performance criteria. For 

Agency Tenders where a government MEO has been implemented in accordance with 

paragraph C.6.b. (2) or a previous competition, the CO shall include Agency Tender past 

performance criteria in the solicitation and evaluation requirement, (except as provided 

in paragraphs C.6.b. (2) and C.6.d. (2) below). 

(14) Cancellation of a Solicitation After Performance Decision. When the Performance 

Decision results in the issuance of an ISSA to a Public Reimbursable Tender or a letter 

of obligation to an Agency Tender, the CO shall cancel the solicitation in accordance 

with FAR Subpart 15.206. When a Performance Decision results in the selection of a 

private sector source but an agency cancels the solicitation and does not award the 

contract, the 4.e. official (without delegation) shall sign and forward to the Deputy 

B-7 

DRAFT OF NOVEMBER 14, 2002 
Director for Management, OMB, a written report that (1) states that the CO cancelled 

the solicitation in accordance with FAR Subpart 15.206, (2) justifies that cancellation of 

the solicitation was clearly in the public interest, (3) provides the agency’s rationale for 

canceling the solicitation, and (4) states an approximate date for reissuance of the 

solicitation unless the justification for cancellation is that the agency no longer has a 

requirement for the service. 

(15) Quality Assurance Surveillance Plan (QASP). The QASP identifies methods used to 

measure performance of the service provider against the requirements in the PWS. A 

quality control program (QCP) is also included in prospective offers and tenders to 

guarantee satisfactory performance. The agency may rely on the service provider to 

monitor daily performance. The agency retains the right to inspect all services. The 4.e. 

official shall assign individuals responsible for the QASP that are external to the 

selected service provider (i.e., agency, private sector or public reimbursable source) to 

perform quality assurance. 

3. The Agency Tender, Private Sector Offers, and Public Reimbursable Tenders. 

a. Agency Tender. The Agency Tender is the agency response to the solicitation. 

(1) Procurement Sensitivity. The Agency Tender shall be considered a procurement 

sensitive document, until a Performance Decision is reached. After a Performance 

Decision, an agency shall not consider any part of the Agency Tender to be procurement 

sensitive and shall release the Agency Tender to interested parties in the Administrative 

Appeal Process. 

(2) Developing the Agency Tender. The ATO shall develop an Agency Tender that 

responds to the requirements and bid structure stated in the solicitation. The ATO shall 

prepare the Agency Tender in accordance with the requirements of Section L 

(Instructions, Conditions, and Notices to Offerors or Respondents) and Section M 

(Evaluation Factors for Award). The Agency Tender shall also include the following: 

(1) an MEO, (2) Agency Cost Estimate developed in accordance with Attachment E, (3) 

the MEO’s Quality Control Plan (QCP), and (4) the MEO’s Phase-in Plan. The Agency 

Tender shall exclude the exceptions noted in paragraph C.2.a.(13). The ATO shall 

provide the certified Agency Tender in a sealed package to the CO by the due date stated 

in the solicitation. Failure to submit the Agency tender on or before the due date 

established in the solicitation may result in the Agency tender not being considered. 

(3) Changes to the Agency Tender. Prior to submitting the Agency Tender to the CO, 

changes are at the discretion of the ATO. After the due date stated in the solicitation, the 

ATO shall make changes to the Agency Tender only resulting from the following: (a) 

negotiations with the SSA, (b) official OMB, Office of Personnel Management (OPM), 

or Agency cost rate/factor updates approved by the 4.e. Office, (c) costing software 

version updates, or (d) as required through the Administrative Appeal Process. The CO 

and ATO shall retain auditable documentation for any changes to the original submitted 

Agency Tender after the due date stated in the solicitation. The Agency Tender may be 

revised if no private sector offers or public reimbursable tenders have been opened and if 

the CO extends the submission date to all offers and tenders. Other changes to the 

Agency Tender shall not be permitted. 

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DRAFT OF NOVEMBER 14, 2002 
(4) Most Efficient Organization (MEO). The MEO is an agency’s staffing plan as 

identified in the Agency Tender. The MEO is not represented by the current organization 

but is the product of management analyses that include, but are not limited to, activity 

based costing, business case analysis, consolidation, functionality assessment, industrial 

engineering, market research, productivity assessment, reengineering, reinvention, 

utilization studies, and value engineering. New position descriptions are developed and 

classified based on the MEO, but employees are not hired to staff these positions unless 

the Agency Tender is the selected provider. An MEO may be comprised of either (1) 

Federal employees or (2) a mix of Federal employees and existing contracts (referred to 

as MEO subcontracts in this Circular). New contracts shall not be created as part of 

MEO development. Other elements of the MEO include an MEO organization chart, 

MEO position descriptions, QCP organization, specific details for MEO subcontracts, 

and material, equipment and facilities. Once announced, the Agency Tender shall not 

include a new agency contract or ISSA that results from in the conversion of agency 

performed work as a part of the MEO or Agency Tender. 

(5) Agency Cost Estimate. The ATO shall develop and certify the Agency Cost Estimate 

(which represents the agency’s cost proposal) in accordance with Attachment E. The 

ATO may make changes to the Agency Cost Estimate in accordance with paragraph 

C3.a.(3). 

(6) Quality Control Plan (QCP). The ATO shall include a QCP in the Agency Tender 

outlining an MEO self-inspection plan that complies with the solicitation. The QCP shall 

describe the (a) internal staffing (which shall be included in the Agency Cost Estimate for 

personnel costs on Line 1 of the SCF) and (b) procedures that the MEO will perform to 

meet the quality, quantity, timeliness, responsiveness, customer satisfaction, and other 

aspects of service delivery as required by the solicitation. 

(7) Phase-in Plan. The ATO shall include a Phase-in Plan in the Agency Tender to replace 

the existing service provider with the MEO (this requirement applies even if the agency is 

the existing service provider). A Phase-in Plan shall include details to minimize 

disruption, adverse personnel impacts, and startup requirements. Phase-in costs for the 

Agency Tender shall be included on Line 3 of the SCF. 

(8) Submission of the Agency Tender. The ATO shall deliver the Agency Tender to the 

CO in a sealed package by the due date stated in the solicitation. The period available to 

deliver proposals shall be the same for all offers and tenders. 

(9) Delayed Delivery. If the ATO does not submit the Agency Tender to the CO on or 

before the due date stated in the solicitation, the CO shall not open any received offers or 

tenders and shall notify the ATO, and 4.e. official that the Agency Tender was not 

submitted. The ATO shall provide the 4.e. official with a written rationale for not 

submitting the Agency Tender and the 4.e. official may: (1) instruct the CO to return 

received offers and tenders and amend the solicitation allowing additional time for 

resubmission of all offers and tenders, or (2) instruct the CO to proceed with source 

selection without the Agency Tender. 

B-9 

DRAFT OF NOVEMBER 14, 2002 
b. Private Sector Offers. Private sector offers respond to the solicitation in accordance with 

the FAR. 

c. Public Reimbursable Tenders. Public reimbursable tenders respond to the solicitation in 

accordance with Attachment C and prepare tenders in accordance with paragraph C.3.a. 

d. No Responses to Solicitation. When a Standard Competition is attempted but private sector 

offers or public reimbursable tenders are either not received, or those received are found to be 

non-responsive or not responsible, the agency shall take the following actions: 

(1) Determine Reasons. Through discussions with private sector or public reimbursable 

sources, the CO shall document, in writing, the following: (1) restrictive, vague, 

confusing, or misleading portions of the solicitation; (b) possible revisions to the 

solicitation to encourage participation; (2) the reasons provided by sources for not 

submitting responses; and (3) the reasons offers or tenders were either not responsive or 

not responsible. The CO and SSA shall evaluate the results of these discussions and 

propose a course of action in a written document to the 4.e. official. The CO shall 

provide a copy of this written document to the PWS Team, ATO, and to the public, upon 

request. 

(2) Required Action. The 4.e. official shall evaluate the CO’s written documentation and 

make a written determination to either (a) revise solicitation or (2) implement the Agency 

Tender. 

(a) Revise Solicitation. Before revising or reissuing the solicitation, the CO shall the 

return the sealed Agency Tender to the ATO. The CO shall then revise and reissue 

the solicitation. 

(b) Implement Agency Tender. The SSA shall proceed with evaluating the Agency 

Tender as required by the solicitation and the applicable source selection 

requirements in paragraph C.4.a.(1). The SCF is completed by leaving Line 7 blank, 

without calculating the costs on Lines 8-12, and by annotating “agency” on Line 18. 

The SSA shall document the reasons for not entering a price on Line 7 and attach the 

SCF the documentation required by paragraphs C.5.b. (1) (a) and (b). The ATO, 

SSA, and CO shall sign the SCF to certify the Performance Decision. The SSA shall 

provide the ATO, and directly affected agency civilian employees (and their 

representatives) a debriefing in accordance with FAR 15.503. The agency shall 

announce the Performance Decision and state that it is not subject to Administrative 

Appeal Process. The CO shall provide the SCF and the Agency Tender to the ATO, 

directly affected agency civilian employees (and their representatives), and, upon 

request, to the public. The ATO shall retain the SCF and the Agency Tender 

documentation with the Standard Competition documentation. 

4. The Source Selection Process and Performance Decision. 

a. The Source Selection Process. 

(1) Special Requirements. The SSA and CO shall comply with the following requirements 

for all Standard Competitions. 

B-10 

DRAFT OF NOVEMBER 14, 2002 
(a) Evaluation of Agency and Public Reimbursable Tenders. The SSA shall evaluate 

all offers concurrently. Neither the SSA nor the CO shall: (1) direct or request 

adjustments to the Agency Tender that would identify a private sector or public 

reimbursable offeror’s proprietary methodology; or (2) require, direct or make 

specific changes to the Agency Tender including the approach used by the agency 

and agency staffing requirements (e.g., adding a specific number of employee 

positions). The SSA or CO may question whether sufficient resources have been 

included in the MEO. 

(b) Cost/Price Realism. 

1. Agency and Public Reimbursable Tender. The SSA shall subject Agency 

Tenders and Public Reimbursable Tenders to a Cost Realism analysis to 

determine if the cost estimate reflects the requirements of the solicitation. The 

SSA shall validate the Agency Cost Estimates and Public Reimbursable Cost 

Estimates to determine if the estimates have been calculated in accordance with 

Attachment E and the solicitation. The SSA shall not assess monetary values for 

non-quantifiable elements of an Agency Tender or Public Reimbursable Tender. 

The SSA shall be responsible for the accuracy of cost data on Lines 7-18 of the 

SCF (see Attachment E) during source selection. The ATO shall respond to SSA 

requests for adjustments to the Agency Cost Estimate and make changes in 

accordance with paragraph C.3.a.(3). 

2. Private Sector Bids and Cost Proposals. The SSA shall conduct price or cost 

realism on private sector offers during source selection as provided by the FAR. 

The SSA shall not assess monetary values for non-quantifiable elements of the 

private sector offers. 

(2) Sealed Bid Acquisition. On the due date for receipt of offers and tenders stated in the 

solicitation, the CO shall open the Agency Tender, private sector bids, and public 

reimbursable tenders. The CO shall enter the price of the apparent lowest priced private 

sector bid or public reimbursable tender on Line 7 of the SCF that is submitted in the 

Agency Tender. The CO shall enter the lowest contract price or public reimbursable cost 

on Line 7 of the SCF, and validate that the cost adjustments to Lines 8-18 are made in 

accordance with Attachment E. The CO shall evaluate private sector bids for 

responsiveness and responsibility in accordance with the FAR. The CO shall evaluate the 

Agency Tender for responsiveness and cost realism in accordance with paragraph 

C.4.a.(1). The Performance Decision is made when the SCF is certified in accordance 

with paragraph C.4.b. The SCF is the decision document. 

(3) Negotiated Acquisition. 

(a) Exchanges with Offerors or Tenders During Negotiated Acquisitions. On the 

due date for receipt of offers and tenders stated in the solicitation, the CO shall open 

the Agency Tender, private sector bids, and public reimbursable tenders. Exchanges 

between the SSA and the ATO, officials responsible for public reimbursable tenders 

or other offerors after receipt of proposals may include: (1) clarifications, where 

offerors clarify certain aspects of proposals or resolve minor or clerical errors where 

B-11 

DRAFT OF NOVEMBER 14, 2002 
the CO intends to make award without discussion, (2) communications to address 

issues that must be explored to determine whether a proposal should be placed in the 

competitive range, and (3) discussions, which are undertaken after establishment of 

the competitive range with the intent of allowing the offeror to revise its proposal and 

are intended to maximize the government's ability to obtain the greatest overall 

benefit based on the requirement and the evaluation factors set forth in the 

solicitation. Exchanges that occur during a Standard Competition shall be governed 

by the procedures set forth in FAR 15.306, except that the following special 

procedures shall also apply with respect to exchanges involving the ATO. 

1. Exchanges between the SSA and the ATO. The SSA shall correspond with the 

ATO, in writing, through the CO. Although the ATO certifies that the Agency 

Tender is technically acceptable prior to submitting the tender to the CO, the 

ATO shall be responsive to SSA questions about the Agency Tender including 

technical acceptability. 

2. Ambiguities. If the SSA identifies any ambiguities in the Agency Tender, the 

ATO shall be given an opportunity to correct these ambiguities either through 

clarifications (see FAR 15.306(a) or communications, negotiations and 

discussions (see FAR 15.306(a) and depending on whether the CO contemplates 

making the award without discussions. 

3. Deficiencies. If the Agency Tender is materially deficient upon the SSA’s initial 

review and prior to the determination of the competitive range, the SSA shall 

afford the ATO an opportunity to correct material deficiencies by responding to 

deficiency notices issued by the SSA and revising the Agency Tender. If the 

ATO responses to deficiency notices are satisfactory, the Agency Tender shall be 

included in the competitive range and Cost or Price Realism is performed on all 

offers and tenders (see paragraph C.4.a.(1)(b) above), the SCF is completed, and 

the SSA certifies the SCF and documents the Performance Decision as part of the 

source selection documentation. However, if the SSA and ATO cannot reach 

agreement on a specific issue related to the Agency Tender within a reasonable 

timeframe, the 4.e official shall appoint an individual (who has not been involved 

in the source selection process) to resolve the disagreement 

(b) Lowest Priced Technically Acceptable (LPTA) Source Selection. During the 

source selection process, the SSA shall simultaneously evaluate private sector offers, 

public reimbursable tenders, and the Agency Tender to determine technical 

acceptability. The Performance Decision shall be based on the lowest cost of all 

offers and tenders determined to be technically acceptable. For LPTA source 

selection, if the SSA conducts discussions with any private sector offeror, public 

reimbursable tender or agency tender, the SSA shall allow all tenders and offers 

determined to be technically acceptable to submit their final proposal revisions 

(including public reimbursable and agency tenders). The SSA conducts discussions 

and cost or price realism in accordance with paragraph C.4.a.(1). When final 

proposal revisions are received, the CO shall enter the lowest contract price or public 

reimbursable cost on Line 7 of the SCF, and validate that the cost adjustments to 

Lines 8-18 are in accordance with Attachment E. The Performance Decision is made 

B-12 

DRAFT OF NOVEMBER 14, 2002 
when the SCF is certified in accordance with paragraph C.4.b. The SCF is the 

decision document. 

(c) Cost/Technical Tradeoff (CTTO) Source Selection. The CTTO processes under 

FAR Subpart 15.101-1 may be used to evaluate private sector offers, public 

reimbursable tenders, and the Agency Tender. As provided at FAR 15.101-1, a 

Standard Competition using a CTTO source selection may be appropriate when the 

agency wishes to consider award to other than the lowest priced offeror or other than 

the highest technically rated offeror. When agencies use the CTTO source selection 

process in a Standard Competition, agencies shall comply with FAR Part 15 unless 

otherwise noted in this Circular. Under the CTTO source selection process, an 

agency may accept an offer or agency tender that is not the lowest priced proposal if 

that offer is within the agency’s current budgetary limitations. Agencies shall not use 

a CTTO source selection to justify increases in an agency’s budgetary authorization 

and may include a not-to-exceed cost in the solicitation. Private sector offers, public 

reimbursable tenders and the Agency Tender may submit higher performance 

standards than the PWS. For purposes of the Standard Competition process, the 

SSA’s rationale for tradeoffs required by FAR 15.406 shall be included in the 

decision documentation. 

1. Integrated Evaluation Process. Agencies may use the Integrated Evaluation 

Process in a Standard Competition of: (1) information technology activities (as 

defined in Attachment F) performed by the agency personnel, (2) contracted 

commercial activities, new requirements, or segregable expansions where an 

Agency Tender will be submitted, or (3) any other commercial activities where 

the 4.e. official receives written approval from OMB prior to issuance of the 

solicitation. When using the Integrated Evaluation Process, the Agency Tender 

may be eliminated from the competitive range and the Performance Decision 

may be based on factors other than lowest cost. The SSA shall conduct 

negotiations and cost or price realism as required in paragraph C.4.a.(1). When 

using the Integrated Evaluation Process, if agreement cannot be reached between 

the ATO and SSA regarding any aspect of the Agency Tender, the individual 

appointed to resolve the disagreement between the SSA and ATO (see paragraph 

C.4.a.(1)(c) above) shall either (1) resolve the disagreement regarding the 

Agency Tender or (2) authorize exclusion of the Agency Tender from the 

competitive range. For all private sector offers and public reimbursable tenders 

determined to be in the competitive range, the CO shall enter on Line 8 of the 

SCF each contract price and public reimbursable cost for comparison of costs 

against the Agency Cost Estimate. The SSA may determine a Performance 

Decision on either low cost or other than low cost. 

a. Low Cost Decision. If the decision is based on low cost, the SSA shall 

certify this decision by signing the SCF. The Performance Decision is made 

when the SCF is certified in accordance with paragraph C.4.b. 

b. Other Than Low Cost Decision. If the Performance Decision is based on 

other than low cost, the SSA shall certify this decision by signing and 

documenting on Line 19 of the SCF the following: (1) a summary of the 

Source Selection Decision Document and (2) a narrative explanation of the 

B-13 

DRAFT OF NOVEMBER 14, 2002 
tradeoffs and a quantifiable rationale for a Performance Decision based on 

other than lowest cost. The SCF, combined with the Source Selection 

Decision Document, is the Performance Decision document. The 

Performance Decision is made when the SCF is certified in accordance with 

paragraph C.4.a. (3) 

2. Phased Evaluation Process. Agencies may use the following Phased 

Evaluation Process for any Standard Competition. In the Phased Evaluation 

Process, an agency shall determine technical capability in Phase One and 

evaluate cost in Phase Two. The Performance Decision shall be based on lowest 

cost of all technically acceptable offers and tenders, and the decision document is 

the SCF. The SSA shall not end Phase One and commence Phase Two until the 

SSA agrees that the Agency Tender is technically acceptable. The Agency 

Tender shall be among the group of private sector offers and public reimbursable 

tenders considered in Phase Two. 

a. Phase One. In Phase One, the SSA shall simultaneously evaluate the 

technical proposals from all offerors (private sector offerors, public 

reimbursable tenders, and the Agency Tender) for technical merit. The 

solicitation shall not require, and the SSA shall not evaluate the Agency Cost 

Estimate, public reimbursable cost estimates, or private sector price 

proposals during Phase One. The SSA may consider only the discrete cost or 

price differential associated with any performance standard proposed that 

differs from the requirements of the solicitation. The Agency Tender, private 

sector offers, and public reimbursable tenders shall clearly identify each 

proposed performance standard that differs from the requirements stated in 

the solicitation. For each proposed performance standard that differs from 

the requirements in the solicitation, the offers and tenders shall include the 

following in the compliance matrix (see paragraph C.2.a.(11) above): (1) 

clear identification of the proposed performance standard and an explanation 

of how it differs from the required performance standard, (2) the discrete cost 

or price difference between the solicitation and the proposed performance 

standard and (3) a cost-benefit analysis explaining the rationale for each 

performance standard that differs from the solicitation. In consultation with 

the requiring organization, the SSA shall determine whether any of the 

proposed performance standards are necessary and within the agency’s 

current budget limitations. If none of the proposed performance standards 

are accepted, the SSA shall afford all offerors and tenders that proposed these 

performance standards an opportunity to resubmit a tender or offer based on 

the solicitation requirements. If any of the proposed performance standards 

are accepted, the CO shall issue a formal amendment to the solicitation that 

states the specific changes to the performance standard(s) in the PWS 

(without conveying proprietary information about technical approaches or 

solutions for meeting the new performance standard). Upon receiving 

proposal revisions and revised tenders, the SSA shall conduct negotiations in 

accordance with FAR Subpart 15.306 and paragraph C.4.a.(1) to determine 

technical acceptability of each offer or tender. When the SSA and the ATO 

determine that the Agency Tender meets the revised performance standards 

of the amended solicitation, the SSA shall proceed to Phase Two. 

B-14 

DRAFT OF NOVEMBER 14, 2002 
b. Phase Two. In Phase Two, the SSA formally requests cost proposals from 

all offerors and tenders that were determined to be technically acceptable at 

the conclusion of Phase One. The SSA shall notify private sector offers or 

public reimbursable tenders that were removed from the competitive range in 

Phase One (see FAR 15.307). If the solicitation is amended as a result of 

Phase One, the SSA shall request the ATO who bid the requirements of the 

solicitation to submit an update to the Agency Tender to meet the revised 

solicitation (see paragraph C.3.a.(3) above). When all cost proposals and 

cost estimates have been received, the SSA shall perform price/cost realism 

in accordance with paragraph C.4.a. (1) above, then enter lowest contract 

price or public reimbursable cost on Line 8 of the SCF. The Performance 

Decision is made when the SCF is certified in accordance with paragraph 

C.4.b. The SCF is the decision document. 

c. The Performance Decision. To certify the Performance Decision, the ATO, 

SSA, and CO shall sign the SCF. The SSA shall provide all private sector 

offerors, public reimbursable tenders, the ATO, and directly affected agency 

civilian employees (and their representatives) a debriefing in accordance with 

FAR 15.503. The agency shall announce the Performance Decision. The 

CO shall provide the SCF and the Agency Tender to interested parties to 

commence the Administrative Appeal Process. 

5. Post Competition Accountability. 

a. Implementing the Performance Decision. The head of the requiring organization shall: (1) 

implement the Performance Decision and QASP; (2) maintain the currency of the PWS; (3) 

monitor actual cost of performance; and (4) retain the Standard Competition documentation. 

To maintain currency to the PWS, an agency shall (1) retain the original PWS and (2) update 

a revised PWS no later than the end of each performance period to reflect requirements and 

scope changes made during that performance period. To monitor actual cost of performance 

for each performance period, the agency shall adjust actual costs as necessary to compare to 

estimated costs submitted in the Agency Tender, allowing for scope, inflation, and wage rate 

adjustments made during that performance period. 

(1) Private Sector Source. For a private sector source decision, the CO shall award a 

contract in accordance with the FAR. 

(2) Public Reimbursable Source. For a public reimbursable source decision, the head of 

the requiring organization shall issue an ISSA, with a copy to the 4.a. official. 

(3) Agency Source. For an agency source decision, the 4.e. official shall issue a Letter of 

Obligation to the ATO and the head of the requiring organization. 

(4) Requirements for the Letter of Obligation and ISSA. Agencies shall include the 

following in a Letter of Obligation or an ISSA: (a) the Performance Decision Date; (b) 

the expected date for full performance based upon the Phase-in Plan; (c) the option years 

and end date for performance based upon the performance periods specified in the 

solicitation; (d) the terms of the solicitation and tender (similar to FAR requirements for a 

B-15 

DRAFT OF NOVEMBER 14, 2002 
contract decision); (e) performance records based upon performance tracking required by 

the QCP and performance monitoring required by the QASP; (f) a requirement (in 

accordance with paragraph C.7.(a) above) to document changes to the PWS and MEO, 

and to track actual costs; (g) a requirement to retain the Standard Competition 

Documentation until the activity is recompeted; and (h) the recompetition date (see 

paragraph C.7.b.(2) below). 

b. Years of Performance and Follow-on Competition. 

(1) Private Sector Source Decision. The CO shall exercise option years for contract 

decisions in accordance with FAR 17.207. By the end of the last year of performance 

used in the Competition, a recompetition shall be performed in accordance with the FAR 

and this Circular. 

(2) Agency or Public Reimbursable Source Decision. For an agency or public 

reimbursable decision, the head of the requiring organization shall exercise option years 

by approving another year of performance. The head of the requiring activity shall 

include the following statements in a written recommendation to approve another year of 

Agency or ISSA performance: (a) the activity continues to be an existing government 

requirement, (b) the PWS reflects the activity’s current requirements at a cost that is 

affordable, (c) the Agency or ISSA meets the requirements of this PWS as demonstrated 

by the QCP and QASP, and (d) continued MEO or ISSA performance continues to be an 

advantageous to the agency. The head of the requiring organization shall not approve 

performance that exceeds the total number of years specified in the solicitation used in 

the Standard Competition By the end of the last performance period stated on the SCF, 

another public-private Competition or Direct Conversion shall be completed in 

accordance with this Circular. For future Standard Competitions, the CO shall include 

agency past performance criteria in the solicitation requirement. 

c. Failure to Perform 

(1) Notification. Agencies shall, as with any acquisition, notify a service provider of poor 

performance through deficiency notices, cure notices, and show cause notices. As part of 

administering post Competition requirements, the CO shall notify a private sector 

provider and the head of the requiring activity shall notify the Agency or public 

reimbursable provider. 

(2) Termination. If an agency, private sector or public reimbursable provider fails to 

perform to the extent that a termination for default is justified, agencies shall comply with 

the following: (a) for a private sector provider, the CO complies with FAR Part 49; (b) 

for an agency or public reimbursable provider, the head of the requiring organization 

shall issue a notice to terminate and shall recommend, in writing, that the 4.e. official 

approve either (1) a Direct Conversion based upon a Standard Competition Waiver or (2) 

a Standard Competition. 

(3) Temporary Remedies. If a service provider is terminated, agencies shall use interim 

contract or public reimbursable sources on an emergency basis, not to exceed one year. . 

Agencies shall not use agency personnel as a temporary remedy, unless approved by the 

4.e. official. 

B-16 

DRAFT OF NOVEMBER 14, 2002 
6. The Administrative Appeal Process. 

a. The Administrative Appeal Process. 

(1) General. The Administrative Appeal Process provides directly interested parties an 

opportunity to have an independent agency official review the Performance Decision. 

Following a Performance Decision, agencies shall allow directly interested parties to 

review the decision documentation (completed SCF and Agency or Public Reimbursable 

Tenders) to determine whether to submit an appeal. While private sector proposals shall 

not be subject to appeal, questions regarding a private a sector offeror’s compliance with 

the scope and technical performance requirements of the solicitation may be appealed. 

(2) Appeal Submission Period. An appeal shall only be submitted during the Appeal 

Submission Period. The Appeal Submission Period shall (1) begin on the date the 

decision documentation is provided or made available to all directly interested parties, 

and (2) last for 10 working days (which may be extended by the AAA to a maximum of 

15 working days if the Standard Competition is particularly complex). Where private 

sector proprietary information is involved a redacted copy of the appeal and decision 

documentation will be made available. 

(3) Eligibility of Appeals. An appeal shall only be eligible for consideration if the appeal: 

(1) is submitted in writing by an directly interested party; and (2) is received by the CO 

during the Review Period. Each appeal may address only the following issues: 

(a) Compliance. Factual questions regarding an agency's compliance with this Circular. 

(b) Costs. Factual questions regarding compliance with this Circular in the calculation 

of costs on the SCF including a rationale for questioning the costs. 

(c) Source Selection. Specific questions regarding how the SSA conducted the source 

selection process and determined that the level of performance meets the 

requirements of the solicitation or was based upon a CTTO. 

(4) Administrative Appeal Authority Determination. 

(a) Appeal Eligibility. At the end of the Appeal Submission Period, the CO shall 

provide all appeals received to the AAA and the AAA shall evaluate all appeals for 

eligibility. The CO shall return all ineligible appeals to directly interested parties 

with an ineligibility rationale. 

(b) Optional Comment Period. The AAA may permit a comment period to allow 

directly interested parties to react to all eligible appeals. The CO shall provide 

directly interested parties who submitted eligible appeals with a copy of all eligible 

appeals (redacted for private sector proprietary information, as appropriate). The 

AAA shall not (1) allow the optional comment period to exceed ten working days, (2) 

review comments submitted that do not relate to an eligible appeal, (3) permit new or 

expanded appeals to be submitted, or (4) wait for the comment period to end before 

beginning to evaluate eligible appeals. 

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DRAFT OF NOVEMBER 14, 2002 
(c) Limitations. The AAA shall not (1) make changes to the solicitation, or (2) review 

any issue not specifically addressed in an appeal including corrections to 

documentation (e.g., correcting mathematical errors) that may be raised outside the 

Administrative Appeal Process. 

(d) Single Administrative Appeal Process Decision Document. The AAA shall 

simultaneously evaluate all eligible appeals (and comments if submitted in an 

optional comment period) and issue a single Administrative Appeal Process Decision 

Document within 30 working days (or 45 working days based on the complexity of 

the Standard Competition or submitted appeals). During this evaluation, the AAA 

shall adjudicate appeals that raise questions of compliance, costs and source selection 

(see paragraph C.4.a.(1) above). The Administrative Appeal Decision Document 

shall be signed by the AAA and shall provide the rationale for each eligible appeal 

decision. The AAA shall provide the Administrative Appeal Process Decision 

Document to the CO who, in turn, shall provide copies to directly interested parties 

that submitted eligible appeals, the ATO and SSA. To complete the Administrative 

Appeal Process, the ATO and SSA shall comply with the AAA’s Administrative 

Appeal Process Decision Document. 

(e) Suspension of the Performance Decision. If a valid administrative appeal is filed, 

the AAA may suspend implementation of the Performance Decision for 30 days or 

less. 

(5) SCF Changes. After the Performance Decision, agencies shall not make changes to the 

SCF unless identified in the Administrative Appeal Process Document. When SCF 

changes are identified in the Administrative Appeal Process Decision Document: (1) the 

ATO shall recompute the SCF and document the changes made to the Performance 

Decision SCF, (2) the ATO, CO, SSA, and AAA shall certify the revised SCF; and (3) 

ATO shall retain the revised SCF and Administrative Appeal Process Decision Document 

with the Standard Competition documentation. 

(6) Sequential Reviews or Appeal Processes. Agencies shall not conduct or permit any 

sequential appeal process, review an Administrative Appeal Decision document, or 

reverse an AAA’s decision. Agencies shall implement the results of the AAA’s 

Administrative Appeal Decision document unless an exception is requested by the 

agency 4.e official (without delegation) and approved by the Deputy Director for 

Management, OMB. 

D. SPECIAL CONSIDERATIONS. 

1. Right-of-First-Refusal. Agencies shall afford adversely affected Federal civilian employees with 

the Right-of-First-Refusal by including FAR 52.203 in the solicitation for all Standard 

Competitions and Direct Conversions. Adversely affected Federal civilian employees are 

afforded the Right-of-First-Refusal to non-management job vacancies created by a conversion of 

agency performed work to contract or public reimbursable performance as a result of either a 

Standard Competition or Direct Conversion. The Right-of-First-Refusal does not apply to: (1) 

conversions from public reimbursable sources to agency performance, (2) conversions from 

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DRAFT OF NOVEMBER 14, 2002 
contract performance to agency or ISSA performance, or (3) to temporary employees, 

nonappropriated fund civilian employees, foreign nationals, military personnel, or civilian 

employees who voluntarily separate or take early retirement. The HRA shall provide the CO with 

a list of adversely affected Federal civilian employees when the Performance Decision is made. 

The CO shall provide this list to the selected contractor or public reimbursable and determine the 

compliance with the Right-of-First-Refusal. When job openings are created by a conversion to 

contract or public reimbursable performance and the employees on this list are deemed qualified 

by the HRA for these job openings, the selected source contractor or public reimbursable shall be 

required to offer employment to these employees before hiring new or transferring existing 

employees to fill these job openings. The clause at FAR 52.207-3, Right-of-First-Refusal, may 

be used to affect this requirement in the solicitation: 

2. Team Designations, Responsibilities, and Restrictions. 

a. PWS Team. The PWS Team shall be comprised of technical and functional experts and 

shall be responsible for (1) developing the PWS, QASP, supporting workload data, and any 

information relating to the activity being competed; (2) determining government furnished 

property, equipment and facilities; (3) assisting the CO in developing the solicitation; and (4) 

compliance with this Circular. 

(1) Conflict of Interest and Standards of Conduct. To avoid any appearance of a conflict 

of interest, members of the PWS Team shall not be members of the MEO Team. 

Members of the MEO Team shall not be members of the SSEB 

(2) Right of First Refusal. Agency personnel who are personally and substantially 

participating in developing the solicitation shall not be afforded the Right-of-FirstRefusal (see paragraph D.1. above) (see FAR 3.104 and 41 U.S.C. 253). Agency 

employees are not personally and substantially participating in the development of the 

solicitation when they provide only the following: workload data, management 

information, costing data, organizational structure, efficiency improvements, or other 

technical support recommendations to be used by the CO and others in making the final 

determinations to be included in the solicitation. 

b. MEO Team. The MEO Team shall (1) be comprised of technical and functional experts, (2) 

assist the ATO in developing the Agency Tender, and (3) comply with this Circular. The 

ATO shall make all final management decisions regarding the Agency Tender. Other 

individuals with expertise in management analysis, position classification, work 

measurement, value engineering (see OMB Circular A-131), industrial engineering, cost 

analysis, procurement, and the technical aspects of the activity may also assist this team. 

(1) Conflict of Interest and Standards of Conduct. To avoid any appearance of a conflict 

of interest, members of the MEO team shall not be members of the PWS Team. 

(2) Right of First Refusal. Agency civilian employees who are personally and substantially 

participating in developing the Agency Tender (see FAR 3.104 and 41 U.S.C. 253) shall 

not be afforded the Right-of-First-Refusal. Agency civilian employees are not personally 

and substantially participating in the development of the Agency Tender when they 

provide the following: workload data, management studies, costing data, organizational 

structure, efficiency improvements, or other technical support recommendations to be 

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DRAFT OF NOVEMBER 14, 2002 
used by the ATO and others in making the final determinations to be included in the 

Agency Tender. 

c. Source Selection Evaluation Board (SSEB). The SSA appoints an SSEB in accordance 

FAR Subpart 15.303 when a negotiated procurement is used in a Standard Competition. The 

SSEB shall comply with the source selection requirements in paragraph C.3.a. 

(1) Conflict of Interest and Standards of Conduct. PWS Team members that are not 

directly affected personnel may participate on the SSEB. MEO Team members, directly 

affected personnel (and their representatives), and any individual with detailed 

knowledge of the MEO or Agency Cost Estimate in the Agency Tender submitted to the 

CO shall not be members of the SSEB. 

(2) Right of First Refusal. Agency employees on the SSEB shall not be afforded the Rightof-First-Refusal. 

3. Participation of Directly Affected Employees and Representatives of Employees. Directly 

affected employees and their representatives may participate in the Standard Competition process 

in accordance with paragraph D.3. above. 

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DRAFT OF NOVEMBER 14, 2002 
 

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DRAFT OF NOVEMBER 14, 2002 

Attachment C

OMB Circular No. A-76 

DIRECT CONVERSION PROCESS

3⁄4 If certain criteria are met, commercial activities may be 

converted to or from agency, private sector, or public 

reimbursable performance without a Standard Competition. 

3⁄4 Direct conversions may result in a Contract, Inter-Service 

Support Agreement (ISSA) or Letter of Obligation. 

Apply Direct Conversion Criteria

Certification by 4.e. Official Authorizing the Direct Conversion 

Public Announcement of Direct Conversion Decision 

Perform the Action Necessary for the Direct Conversion

A. CRITERIA. A Direct Conversion is permitted when changing to or from an agency, private sector, 

or public reimbursable source if a commercial activity meets any one of the following criteria. 

1. Small Activity. An activity is or will be performed by an aggregate of 10 or fewer civilian 

employees. 

2. No Employee Impact. An activity is performed by civilian employees and: (a) all directly

affected Federal civilian employees within the agency are on permanent appointments and are 

reassigned to comparable Federal positions or voluntarily retire; or (b) agency Federal civilian 

employees are on time limited appointments. 
3. R&D. An activity provides direct research and development (R&D) (see Attachment F). 

Commercial activities providing R&D support shall be subject to the Competition requirements 

of this Circular. 

4. Direct Patient Care. An activity provides direct patient care at Government-owned hospitals 

(see Attachment F). Other commercial activities performed at Government-owned hospitals shall 

be subject to the requirements of this Circular. 

5. Military. An activity is performed by military personnel. 

6. National Defense and Security. An activity is necessary for National Defense or Intelligence 

Security. The Secretary of the agency (or the 4.e. official without delegation), with the prior 

written concurrence of the Deputy Director for Management, OMB, shall authorize this type of 

direct conversion. 

7. Javits-Wagner-O’Day. An activity may be converted to a source administered pursuant to 

Section 2 of the Javits-Wagner-O’Day Act (41 U.S.C. 44, 46-48). 

8. Competition Waiver. An activity for which a Competition Waiver has been approved in 

accordance with paragraph C. 

9. Business Case Analysis. An activity for which a Business Case Analysis has been performed in 

accordance with paragraph D. 

10. Law. An activity where direct conversion is permitted by law. 

B. DIRECT CONVERSION CERTIFICATION. The 4.e. official shall make a written certification 

of the following to authorize a Direct Conversion: (1) the activity meets one or more of the criteria in 

paragraph A, above, to permit a Direct Conversion, (2) the cost of obtaining the activity from another 

source is expected to be fair and reasonable in accordance with this Circular, OMB Circular A-25, 

when appropriate, and the FAR, and (3) the activity has not been reorganized or restructured for the 

sole purpose performing a Direct Conversion to avoid the Competition requirements of this Circular. 

C. COMPETITION WAIVER. A Competition Waiver may be approved to permit a Direct 

Conversion to or from performance by an agency, private sector or public reimbursable source for 

any commercial activity. 

1. Approval Requirements. Competition Waivers shall be approved, in writing, by the 4.e. official, 

without delegation. 

2. Competition Waiver Documentation. Competition Waivers shall include: (a) the commercial 

activity; (b) the scope and performance requirements of the work being converted; (c) location; 

(d) incumbent service provider; (e) a waiver certification statement; and (f) an explanation of how 

the direct conversion results in either (1) a significant financial improvement based on full costs 

calculated in accordance with this Circular or (2) a significant service quality improvement that 

cannot be achieved by the current service provider. Competition Waivers for conversion to a 

private sector or public reimbursable source shall also include (a) an explanation that the 

conversion will not result in limiting future sources or competitions and (b) a statement that 

agency assistance will be provided to adversely affected civilian employees in accordance with 5 

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DRAFT OF NOVEMBER 14, 2002 
CFR Part 351 and that these employees will be provided the Right of First Refusal as required by 

FAR Part 52.207-3. 

D. BUSINESS CASE ANALYSIS. If the requirements in paragraphs. D.1 and D.2., below, are met, a 

Direct Conversion to or from performance by an agency, private sector or public reimbursable source 

based on a Business Case Analysis is permitted. 

1. Approval Requirements. The 4.e. official shall make a written certification that the activity 

being analyzed meets all of the the following: 

a. The activity is or will be performed in aggregate by 50 or fewer agency civilians; 

b. The activity is commonly provided by the private sector to the Federal government by 

contracts of comparable, size, workload and scope; 

c. The activity has no more than $5,000 in asset purchase requirements and will be predominately 

Government furnished/contractor operated; 

d. The business case can be made on a limited analysis of labor cost, material cost, and level of 

performance; 

e. The time-frame from the certification to conduct a Business Case Analysis by the 4.e. Official 

to completion of the business case analysis does not exceed fifteen working days; 

f. The cost of converting the activity to another source is fair and reasonable; 

g. The activity has not been reorganized or restructured for the sole purpose performing a Direct 

Conversion to avoid the Standard Competition requirements of this Circular; 

h. An MEO was not created for consideration in a Business Case Analysis for conversion from 

agency performance to private sector or public reimbursable performance; and 

i. Market surveys were not used in lieu of actual contracts. 

2. Business Case Analysis Documentation. 

a. To perform a Direct Conversion based on a business case analysis, the ATO shall (1) provide 

the CO a description of the workload and (2) develop an Agency Tender in accordance with 

Attachment B. The ATO shall not develop an MEO when considering conversion from 

agency performance to a private sector source or public reimbursable source (the business 

case analysis shall be based upon agency’s current organization, costs, performance and 

structure). The ATO shall calculate the Agency Cost Estimate by (1) completing Standard 

Competition Form (SCF) Lines 1, 2, 3, 4, 6, 7, 8, 12, 13, 14, 15, 16, 17, and 18 in accordance 

with Attachment E; (2) including contract support costs to the Agency Tender on SCF Line 3, 

and (3) not calculating any other costs. The ATO shall sign and submit the Agency Tender to 

the CO in a sealed package. 

b. The CO shall not (1) begin establishing comparable contract or ISSA costs until the ATO 

submits the Agency Tender and (2) have knowledge of the Agency Cost Estimate while 

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DRAFT OF NOVEMBER 14, 2002 
establishing comparable contract or ISSA costs. Upon submission of the sealed Agency 

Tender, the CO shall: (1) identify four comparable, existing, fixed price, Federal contracts of 

similar size, workload and scope but shall not issue a solicitation at this point in the process. 

Existing public reimbursable agreements may be used but all costs shall be adjusted to reflect 

the total cost to the taxpayer in accordance with the costing requirements of this Circular); (2) 

determine that selected contracts are reasonably grouped; (3) select the low contract price; 

and (4) open the agency tender, complete, and sign the SCF. If the CO determines that the 

selected contracts (or ISSAs) cannot not be reasonably grouped or if four comparable 

contracts (or ISSAs) are not available to perform a Direct Conversion, the agency shall 

perform a Standard Competition in accordance with this Circular. 

E. DIRECT CONVERSION PROCESS. At a minimum, Agencies shall perform the following 

phases. 

1. Start-Up Phase. Prior to public announcement of a Direct Conversion, agencies shall: (a) apply 

the Direct Conversion Criteria in paragraph A, (b) authorize the Direct Conversion with a written 

certification by the 4.e. official, (c) identify, in accordance with Attachment B, the Agency 

Tender Official (ATO), Contracting Officer (CO) and Human Resource Advisor (HRA); (d) 

inform the incumbent service providers of the Direct Conversion; and (e) make public 

announcements at the local level and in FedBizOpps and include in these announcements the 

agency, location, resources being converted, designation of the responsible agency officials, and 

the criteria upon which a Direct Conversion is based. 

2. Conversion Phase. 

a. For conversions from agency performance to a public reimbursable or a private sector source, 

the CO shall (1) determine the acquisition strategy which may include using competitive or 

noncompetitive procedures as justified by FAR Part 6 to select the private sector source or 

may include converting agency performance to an existing contract; (2) prepare or modify a 

PWS; (3) issue a solicitation, if required by the acquisition strategy; and (4) determine fair 

and reasonable prices. When the CO determines a private sector or ISSA source is 

appropriate, the agency shall make an announcement of the selection at the local level and 

shall inform incumbent service providers of the start date. Agencies shall not develop an 

Agency Tender, including an MEO, when a direct conversion is performed to convert from 

agency performance to a private sector source. 

b. For conversions from private sector or ISSA performance to an agency source, the 4.e. 

official shall determine that the cost of converting the activity is fair and reasonable. 

Agencies shall develop an Agency Tender, including an MEO, when a direct conversion is 

performed to convert from (1) private sector performance to agency performance, or (2) 

public reimbursable performance to agency performance. For conversions to agency or 

public reimbursable source, the agency shall (1) develop a PWS (2) issue a Letter of 

Obligation in accordance with paragraph C.6 of Attachment B, (3) notify the incumbent 

contractor in accordance with the FAR, and (4) make an announcement of the decision at the 

local level and in FedBizOpps. 

c. Post Conversion and Recompetition Phase. Agencies shall implement the decision, 

administer performance, and recompete the activity in accordance with paragraph C.6. in 

Attachment B. 

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DRAFT OF NOVEMBER 14, 2002 
F. Personnel Considerations. Agencies shall provide assistance to adversely affected Federal civilian 

employees in accordance with 5 CFR Part 351. When solicitations are issued in Direct Conversions 

from agency to private sector or ISSA performance, the solicitation shall state that as required by 

FAR Part 52.207-3, adversely affected Federal civilian employees are afforded the Right of First 

Refusal. (see paragraph D.2. in Attachment B). 

G. Conflict of Interest. When conducting a Direct Conversion (including development of a 

Competition Waiver and Business Case Analysis), agency officials shall comply with procurement 

integrity, ethics and standards of conduct rules. 

H. Relationship to OMB Circular No. A-11 "Preparation and Submission of Budget Estimates." 

The 4.e. official shall identify savings achieved as a result of Direct Conversions in accordance with 

the instructions of OMB Circular No. A-11. 

C-5 

DRAFT OF NOVEMBER 14, 2002 
Attachment D

OMB Circular No. A-76 

COMMERCIAL INTERSERVICE SUPPORT AGREEMENTS (ISSA)

3⁄4 Commercial activities may be performed by agency, private sector, or public reimbursable 

sources. 

3⁄4 If a commercial activity is performed by a public reimbursable source on a fee for service 

basis, an Inter-Service Support Agreement (ISSA) exists between the requiring agency

(customer) and the providing agency (fee for service).

3⁄4 The providing agency may use either their agency personnel or an agency contract to 

provide the service. 

3⁄4 These Commercial ISSAs are subject to Competition requirements of this Circular. 

A. APPLICABILITY. Customer agencies shall compete all Commercial ISSAs exceeding $1 million 

annually. ISSAs are not subject to Competition if: (1) the revenue generated by the reimbursable rate 

does not exceed $1 million annually, (2) the ISSA provides inherently governmental activities, (3) the 

ISSA is statutorily mandated, (4) the ISSA is designed to facilitate the use of a Federal multiple award 

schedule contracts (MASs) , government-wide acquisition contracts (GWACs), or multi-agency contracts 

where the customer (service requiring agency) is directly responsible for contract performance and all 

contract payments, or (5) the ISSA facilitates lease or grant agreements. 

B. COMPETITION REQUIREMENTS. 

1. Timeframe. Customer agencies shall compete all applicable existing Commercial ISSAs within five 

years of the effective date of this Circular. To meet this Competition requirement, customer agencies 

shall: (a) issue a solicitation to perform a Standard Competition (see Attachment B) or (b) perform a 

Direct Conversion from public reimbursable performance to agency or private sector performance 

(see Attachment C). 

2. Recompetition. Customer agencies shall compete all Commercial ISSAs on a recurring basis 

consistent with Post Competition requirements of Attachment B. 

3. Commercial ISSA Renewal Constraint. Customer agencies shall not renew or issue new 

Commercial ISSAs prior to compliance with this Competition requirement. All ISSAs not competed 

or directly converted within the 5-year timeframe shall be terminated, unless specific written approval 

is granted by the Deputy Director for Management, OMB, based upon a report submitted by the head 

of the customer agency showing why competition is not feasible. 

4. Commercial ISSA Competition Plan. Customer agencies with Commercial ISSAs shall submit to 

OMB an Annual Agency ISSA Competition Plan that (a) lists all existing Commercial ISSAs by 

customer agency (and component), function code, provider agency, the number of estimated provider 

agency FTE involved, the annual cost of the Commercial ISSA, and (b) provides a Competition 

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DRAFT OF NOVEMBER 13, 2002 
schedule for the listed commercial ISSAs. Agencies shall submit an Annual Agency ISSA 

Competition Plan no later than June 30 of each year. 

C. COMMERCIAL ISSA COMPETITION PROCESS. 

1. Customer agencies shall permit public reimbursable sources (agency venders) to participate and 

provide Tenders for: 

a. Standard Competitions of agency or private sector performed commercial activities as provided 

by Attachment B. 

b. Direct Conversions of agency or private sector performed commercial activities as provided by 

Attachment C. 

c. Resolicitations of commercial activities performed by the private sector and listed in 

FedBizOpps. 

d. Re-Competitions of existing Commercial ISSAs. 

e. Competitions for new requirements or expansions commercial activities. Agencies shall publish 

notices to renew or obtain new or expanded Commercial ISSAs in the FedBizOpps. 

2. When competing against agency, private sector, or other public reimbursable sources, a public 

reimbursable source: 

a. May respond, as a prime service provider, to a notice or solicitation advertised by a customer 

agency in FedBizOpps. 

b. Shall be represented by a Public Reimbursable Tender Official who certifies and submits a 

Public Reimbursable Tender developed in accordance with Attachment B. 

c. Shall calculate the cost estimate in the public Reimbursable Tender in accordance with 

Attachment E. When agencies determine the public reimbursable source through Standard 

Competitions or Direct Conversions performed in accordance with this Circular, the 

reimbursable rate charged to a customer agency shall rely on budget based reimbursable rates, 

prepared under current law and policy. 

D. AGENCY SOLICITATIONS. When a customer agency issues a solicitation for private sector 

responses and a provider agency responds, the CO shall amend the solicitation stating that the Public 

Reimbursable Source is required to submit a tender in accordance with this Circular. 

E. PERSONNEL CONSIDERATIONS. A customer agency shall provide assistance to the customer 

agency’s affected Federal civilian employees in accordance with 5 C.F.R. Part 330. When a Standard 

Competition or Direct Conversion results in a private sector or public reimbursable decision, the 

customer agency’s adversely affected Federal civilian employees shall be afforded the Right-of-FirstRefusal for all federal and contract jobs vacancies created by a decision to either award a contract or 

issue an ISSA. When a customer agency converts from a public reimbursable provider to performance 

by either the customer agency or private sector, the vendor agency federal civilian employees shall not 

be afforded the Right-of-First-Refusal. 

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DRAFT OF NOVEMBER 14, 2002 
F. CONFLICT OF INTEREST. When conducting Competitions with public reimbursable sources, 

customer and vendor agency officials shall comply with procurement integrity, ethics and standards of 

conduct rules. 

G. RELATIONSHIP TO THE BUDGET. In accordance with OMB Circular No. A-11, Preparation and 

Submission of Budget Estimate, the 4.e. official of the customer agency shall identify savings achieved 

from competing Commercial ISSAs. 

H. REIMBURSABLE AGREEMENTS WITH STATE AND LOCAL GOVERNMENTS. 

1. Specialized and Technical Services. 

a. In accordance with Section 302 of the Intergovernmental Cooperation Act of 1968 (31 U.S.C. § 

6505), Executive Order 11541, Presidential Memorandum, November 8, 1968 (33 F.R. 16487), 

or other applicable law, specialized and technical commercial services may only be provided to 

State and local governments, as follows: upon the receipt of a State or local government’s 

written request, Federal agencies may provide only specialized or technical commercial services 

to a State or local government if: 

(1) the written request demonstrates that the State or local government has sought but has been 

unable to identify a satisfactory private sector source; 

(2) the provision of such specialized and technical services shall not require additional agency 

resources, beyond that necessary to meet Federal requirements; 

(3) the commercial service is currently provided by the agency for its own use and, if 

commercial in nature, it has been competed in accordance with this Circular; 

(4) the reimbursable rates or fees for the provision of the service are established in accordance 

with OMB Circular No. A-25, User Charges, to reflect fully allocated costs; and 

(5) the written request and all supporting documentation shall be made available to the OMB and 

the public upon request. 

b. It is hereby determined that Federal agencies have the special competence to provide, and may 

provide, the following specialized or technical services and facilities related thereto, pursuant to 

Title III of the Intergovernmental Cooperation Act of 1968: 

(1) Any existing statistical or other studies and compilations, where the data gathering is 

conducted as a joint effort to meet the ongoing requirements of both a Federal and a State or 

local government requirement. This authority shall not extend to State or local data requests 

to conduct Federal surveys or other compilations in advance of Federal schedules for 

collecting the same data or compilations, unless specifically approved, in writing, by OMB. 

(2) Preparation of unique statistical and other studies and compilations, tests and evaluations, 

surveys, reports, and documents, and assistance in the conduct of such activities and in the 

preparation of such materials, provided they are of a type that the Federal agency is 

authorized by law to conduct or prepare for itself. 

(3) Highly specialized training of the type that the Federal agency is authorized by law to 

conduct for Federal personnel involved in inherently governmental activities or which is 

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DRAFT OF NOVEMBER 13, 2002 
similar to such training. Specialized or technical services do not include common 

administrative support services, facilities (base operating support or public work) operations 

and maintenance activities or other functions commonly performed by or for the private 

sector. 

(4) Technical aid in the preparation of proposals for development and other projects for which 

the Federal agency provides grants-in-aid or other assistance, provided such aid primarily 

strengthens the ability of the recipient in developing its own capacity to prepare proposals. 

c. Any of the above specialized or technical services provided to the States and their political 

subdivisions by existing statutory authorities may also be provided under Title III of the Act and 

the terms of this Circular. 

d. If a Federal agency receives a request for specialized or technical services that are not covered 

above, and the agency believes the service is consistent with the Act and the agency has a special 

competence to provide, the agency should forward the request to OMB for approval. Similarly, 

if there is doubt as to whether the service requested is covered by this Circular, the agency shall 

forward a written request to the Deputy Director for Management, OMB, for consideration. 

e. Federal agencies may receive specialized or technical services from a State or local government, 

on a reimbursable basis. If the activity is commercial in nature, (1) the agency shall compete the 

activity in accordance with this Circular and (2) the reimbursable rates or fees to be paid by the 

Federal agency for the provision of the activity shall be fair and reasonable and reflect the 

provisions of OMB Circular No. A-25, “User Charges.” The solicitation, and all supporting 

documentation, including the source selection technical evaluation documentation, shall be made 

available to the OMB and the public upon request. 

f. An agreement for specialized or technical services between an agency and State and local 

government shall not continue beyond five years without written recertification that there is no 

satisfactory private sector or public reimbursable source. The recertification, with all supporting 

documentation, shall be made available to the OMB and the public upon request. 

2. Prohibition. A Federal agency shall not perform a commercial activity for a private sector source 

providing a commercial activity to a state or local government. 

3. Payment. Payments or reimbursements to Federal agencies for activities provided to State and local 

governments shall be deposited or credited to the principal appropriation, franchise, working capital 

fund or other account for that activity. 

D-4 

DRAFT OF NOVEMBER 14, 2002 
Attachment E 

OMB Circular No. A-76 

CALCULATING PUBLIC-PRIVATE COMPETITION COSTS 

3⁄4 To reflect the full cost of agency, private sector, and public reimbursable performance 

to the taxpayer, the following costing policy is required for public-private competitions. 

A. SPECIAL PROVISIONS 

1. Proration of Performance Periods. Agencies shall conduct Standard Competitions using not less 

than three years of proposal/cost data, excluding a phase-in period. Standard Competitions in excess 

of five years are permitted only when approved, in writing, by the 4.e. official prior to issuance of 

the solicitation. The SCF shall reflect the same number of performance periods as the solicitation. 

The recompetition requirements of this Circular shall also be determined by the number of years 

included in the SCF. 

2. Standard Cost Factors. Agencies shall use the standard cost factors stated in this Attachment. 

OMB shall approve all deviations from the standard cost factors prior to agency use. 

3. Common Costs. Costs that are the same for agency, private sector or public reimbursable sources 

are not calculated in the Standard Competition. Common costs (wash costs) shall be identified in the 

solicitation and Agency Tender. Examples include government furnished property and joint 

inventories. 

4. Minimum Conversion Differential. The minimum conversion differential is the lesser of 10 

percent of agency personnel-related costs (Line 1 of the SCF) or $10 million over all the 

performance periods in the solicitation. The minimum conversion differential precludes conversions 

based on marginal estimated savings and captures non-quantifiable costs related to a conversion such 

as disruption and decreased productivity. Agencies shall apply the minimum conversion differential 

to the non-incumbent sources when a Standard Competitions is performed. Agencies shall not 

include the minimum conversion differential for Standard Competitions conducted between private 

sector and public reimbursable sources] 

5. Inflation. Agencies shall apply the annual inflation rates developed for the President's Budget and 

issued by OMB on the OMB web-site for Standard Competitions. Agencies may use agency unique 

inflation factors (e.g., military inflation) with prior written OMB approval. In preparing agency cost 

estimates, agencies shall include all known or anticipated increases incurred before the end of the 

first performance period for each cost element, prorated as appropriate. For subsequent 

performance periods, the cost of anticipated changes in the scope of work, as described in the 

Solicitation, is calculated. Agencies shall then apply the inflation factors for pay and non-pay 

categories through the end of the first performance period. 

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DRAFT OF NOVEMBER 13, 2002 
6. Phase-in and Phase-out Costs. If the solicitation includes a separate contract line (CLIN) item for a 

phase-in period, the first performance period of the Standard Competition is the phase-in period and 

shall be calculated accordingly. Phase-in costs shall be limited to costs associated only with phase-in 

actions. Phase-out costs shall not be included in Standard Competitions. The private sector or 

public reimbursable price shall exclude any required phase-out costs from in the Line 7 of the SCF. 

7. Rounding Rule. Round all line entries on the SCF to the nearest dollar. 

8. Retained Pay. Retained pay shall not be calculated in a Standard Competition. An MEO reflects a 

new agency organization based on vacant positions. 

9. Cost of Competition. The cost of conducting a Standard Competition shall not be calculated. 

10. Standard Cost Comparison Form (SCF) Calculations and Certifications. In accordance with 

this Attachment: the ATO shall calculate the Agency Cost Estimate, sign the SCF and certify that 

the Agency Tender is calculated and otherwise reflects the requirements of this Circular. The SSA 

shall perform Cost Realism of the Agency Cost Estimate to validate compliance with this Circular 

and shall then also sign the SCF. Public reimbursable tenders shall prepare their cost estimate in 

accordance with Circular and sign the SCF certifying that the Public Reimbursable Tender has been 

calculated in accordance with this Circular. The SSA shall perform Cost Realism of the Public 

Reimbursable Tender to validate compliance with this Circular and shall then also sign the SCF. 

The following SCF format shall be used for Standard Competitions. 

E-2 

DRAFT OF NOVEMBER 14, 2002 
STANDARD COMPETITION FORM 

Date of Submission to Contracting Officer: Solicitation Number: 

Competition Title: Location: 

Line 

# LINE TITLE 

First 

Performance 

Period 

Second 

Performance 

Period 

Third 

Performance 

Period 

Fourth 

Performance 

Period 

Total 

COST OF AGENCY PERFORMANCE 

1. Personnel Costs $000 $000 $000 $000 $000 

2. Material and Supply Costs $000 $000 $000 $000 $000 

3. Other Specifically Attributable Costs $000 $000 $000 $000 $000 

4. Overhead Costs $000 $000 $000 $000 $000 

5. Additional Costs $000 $000 $000 $000 $000 

6. Total Cost of Agency Performance $000 $000 $000 $000 $000 

ADJUSTED COST OF PRIVATE SECTOR OR PUBLIC REIMBURSABLE PERFORMANCE 

7. Private Sector Price or Public Reimbursable Cost Estimate $000 $000 $000 $000 $000 

8. Contract Administration Costs $000 $000 $000 $000 $000 

9. Additional Costs $000 $000 $000 $000 $000 

10 One-time Conversion Costs $000 $000 $000 $000 $000 

11. Gain From Disposal or Transfer of Assets ($000) ($000) ($000) ($000) ($000) 

12. Federal Income Tax Adjustment ($000) ($000) ($000) ($000) ($000) 

13. Total Adjusted Cost of Private Sector or 

Public Reimbursable Performance $000 $000 $000 $000 $000 

DECISION CALCULATIONS 

14. Minimum Conversion Differential (Enter: Line 1 Total x .10) $000 

15. Adjusted Total Cost of Agency Performance (Enter: Line 6 Total) $000 

16. Adjusted Total Cost of Private Sector or Public Reimbursable Performance (Enter: Line 13 + Line 14) $000 

17. Cost Difference (Enter: Line 16 – Line 15) $000 

18. PERFORMANCE 

DECISION _____Agency Source _____Private Sector Source _____Public Sector Reimbursable Source 

CERTIFICATIONS AND SIGNATURES 

19. AGENCY TENDER CERTIFICATION 

I certify that : (1) this Agency Tender is responsive to the solicitation, (2) the Agency Tender reflects the agency’s most efficient organization (MEO), (3) 

the costs reflected in the agency cost estimate are accurate and calculated in accordance with OMB Circular A-76, and, (4) to the best of my 

knowledge, the MEO is fully capable of performing the requirements of the solicitation. I also certify that competent agency authorities have approved 

the following in order to implement the Agency Tender: (1) the organizational structure, (2) the personnel requirements, and (3) capital and budgetary 

requirements. If selected, the Agency Tender shall be implemented in accordance with the Transition Plan and the agency has scheduled compliance 

with the re-competition requirements of OMB Circular A-76. 

Agency Tender Official Signature Date Signed: 

Agency Tender Official Printed Full Name, Title, Agency/Office Symbol, Phone Number 

20. SOURCE SELECTION AUTHORITY CERTIFICATION 

I certify that: (1) that the costs reflected in this Agency Tender have been calculated in accordance with OMB Circular A-76, and (2) this Agency Tender 

reflects the requirements of the solicitation. My source selection decision has been based on evaluating all offers and the costs included on this 

Standard Competition Form. The Performance Decision is either (___) based on Line 17 of the Standard Competition Form or (___) based on the 

Source Selection Document, which is summarized as follows: 

Source Selection Authority Signature: Date Signed: 

Source Selection Authority Printed Full Name, Title, Agency/Office Symbol, Phone Number 

21. Contracting Officer’s Signature Date Signed: 

Printed Full Name, Title, Agency/Office Symbol, Phone Number 

20. Administrative Appeal Authority Signature (if applicable) Date Signed: 

Printed Full Name, Title, Agency/Office Symbol, Phone Number) 

E-3 

DRAFT OF NOVEMBER 13, 2002 
B. THE COST OF AGENCY PERFORMANCE (LINES 1-6 OF THE SCF) 

1. Personnel Costs (Line 1 of the SCF). 

a. General. This Line includes the cost of all direct agency labor, supervision, and management and 

related support necessary to accomplish the requirements specified in the solicitation, including 

quality control. Indirect labor support to the MEO shall also be included on Line 1. 

b. Direct, Indirect and Prorated Labor. 

(1) Direct Labor. Personnel costs for labor that is dedicated to the MEO are considered “direct 

labor.” To determine SCF Line 1 Personnel costs, identify the agency staffing estimate and 

proper wage/grade classifications as described in the Agency Tender. Also included are 

salaries, wages, fringe benefits, and other entitlements, such as uniform allowances and ertime 

and other local personnel costs expended to perform the MEO. 

(2) Indirect Labor. Personnel costs for labor that is not dedicated to the MEO but clearly have 

responsibilities to the MEO are considered “indirect labor.” Indirect labor includes, but is not 

limited to, personnel costs for MEO management and oversight activities, such as managers 

and supervisors above the first line of MEO supervision who are essential to the performance 

of the MEO. Indirect labor also includes the labor of individuals who are responsible for 

oversight and compliance actions implicitly required by the MEO in order to comply with the 

solicitation (e.g., supervision, human resources, comptroller, general counsel, environmental, 

Occupational Safety and Health Administration (OSHA) Act compliance management). While 

these individuals do not work in the MEO, they have responsibilities to the MEO that permit 

its operation. The cost of performing these responsibilities to the MEO are captured as an 

MEO cost that is reflected as an indirect labor cost in the agency cost estimate. The agency 

shall include in the Agency Cost Estimate, the cost of indirect labor to reflect personnel who 

are responsible to manage, control, regulate, preside over, oversee, or supervise MEO related 

activities but are not dedicated to the MEO as a direct labor cost. 

(3) Prorated Labor. When a position or job function is not 100% dedicated to the MEO, its cost 

shall be prorated to Line 1 of the SCF according to the amount of dedicated time to the MEO. 

For example, a GS-13 position spends 20% of its time performing management oversight of an 

activity being competed; the prorated cost of this position would be entered on Line 1 as .20 

FTEs in the grade of GS-13, step 5. 

c. Full-Time Equivalents. Generally, agency staffing requirements are expressed in terms of 

productive work hours. With the establishment of the number of productive work hours required, 

a conversion to the number of FTEs is needed. For full-time and part-time positions, estimate the 

total hours required by skill and divide by 1,776 annual available hours to determine the number of 

FTE positions required. For intermittent positions to be expressed in FTE, estimate total hours 

required by skill and divide by 2,007 annual available hours to determine the number of FTE 

positions required. The military agency comptroller shall establish comparable productive hours 

for military personnel included in an MEO as a military position. The productive hours exclude 

annual leave, sick leave, administrative leave, training and other nonproductive hours. Identify the 

temporary and intermittent employee work years. 

d. Pay and Wages. Use local pay salaries and wages based on the Government-wide representative 

rate of step 5 for GS and step 4 for FWS positions. Express civil service grade and step for pay 

E-4 

DRAFT OF NOVEMBER 14, 2002 
banded or demonstration project employees at the mid-grade or mid-band and mid-step level. 

Locality pay for each site for multiple site Competitions is also included. For personnel 

developmental position(s), the HRA shall determine the length of time for each grade in a 

developmental series. 

e. Fringe Benefits and FICA. Multiply the following Government wide standard factors by the 

appropriate basic pay. 

(1) Full- or Part-time Permanent Federal Civilian Employees. 

(a) Standard Retirement Cost Factor. The standard retirement cost factor represents the 

Federal Government's complete share of the weighted CSRS/FERS retirement cost to the 

Government, based upon the full dynamic normal cost of the retirement systems; the 

normal cost of accruing retiree health benefits based on average participation rates; Social 

Security, and Thrift Savings Plan (TSP) contributions. The current rate is 24.0 percent of 

base payroll for all agencies (18.9 percent pension plus 5.1 percent for retiree health). The 

revised retirement cost factors for special class employees are 33.0 percent for air traffic 

controllers (27.9 percent pension plus 5.1 percent for retiree health) and 38.2 percent for 

law enforcement and fire protection employees (33.1 percent pension plus 5.1 percent for 

retiree health). 

(b) Insurance and Health Benefit Cost Factor. The cost factor for Federal employee 

insurance and health benefits, based on actual cost, is 5.7 percent, plus an additional 1.45 

percent for Medicare. 

(c) Miscellaneous Fringe Benefit Cost Factor. The cost factor to be used for Federal 

employee miscellaneous fringe benefits (workmen's compensation, bonuses and awards, 

and unemployment programs) is 1.7 percent. Based on the OPM civilian award policy, 

there are two general categories for civilian employee awards. Category one is for special 

acts (e.g., cash awards, bonuses) that are over and above a civilian employee’s expected 

annual performance and category two is for awards that are based on a civilian employee’s 

annual performance rating (e.g., cash awards, bonuses, Quality Step Increases). Category 

two civilian employee awards (that are based on civilian employee annual performance 

ratings) are included in the 1.7% miscellaneous fringe benefit factor. Category one 

civilian employee awards (that are considered special acts awards) are not included in the 

1.7% miscellaneous fringe benefit factor and shall be included in Other Pay. 

(2) Temporary or Intermittent Federal Civilian Employees. The FICA employer cost factor of 

7.65 (or the current rate established by law) shall be applied to civilian positions not covered 

by either of the two civilian civil service retirement systems (normally intermittent and 

temporary employees). Apply the FICA rate to wages and salaries subject to the tax. There is 

an annual salary limitation for FICA tax. 

(3) Seasonal Federal Civilian Employees. Seasonal employees work on an annually recurring 

basis for less than 12 months (1,776 hours) each year. Agencies shall calculate the cost of 

seasonal employee positions as a full-time or part-time position on the basis of the number of 

annual hours the employee will be scheduled to work. Seasonal positions designated as fulltime receive benefits while temporary positions do not receive benefits. The agency shall 

calculate the cost of a seasonal position based on 1,776 annual productive hours. 

E-5 

DRAFT OF NOVEMBER 13, 2002 
f. Other Pay. Other Pay includes premium pay that is subject to FICA taxes. Some examples are 

night differential pay for GS employees, overtime, holiday, awards, bonuses, special acts awards 

and uniform allowances. 

g. Other Entitlements. Work closely with the HRA to include all entitlements and obtain current 

factors. Examples include: night differential pay for FWS employees, environmental differential 

pay and premium pay for Federal civilian fire fighters and law enforcement officers. 

h. Non-foreign Area Cost-Of-Living Allowance. The Government pays cost-of-living allowances 

(COLA) to Federal white-collar employees in Alaska, Hawaii, Guam and the Commonwealth of 

the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands. Therefore, these costs 

shall be included for MEO positions that will be performing the work at these locations. 

i. Administration and Inspection for MEO Subcontracts. A Tender (MEO) that assumes a mix of 

agency labor and existing private sector or public reimbursable support shall include the cost of 

labor for the agency’s administration and inspection of these support contracts or ISSAs on SCF 

Line 1. The actual cost of the MEO contract/ISSA support, including the cost of related agency 

furnished equipment and facilities, shall be entered on Line 3, Other Specifically Attributable 

Costs. 

j. Labor Escalation. Labor escalation reflects the inflation for wages and salaries of Federal or 

private sector service positions. It is included in private sector cost proposals and Agency Cost 

Estimates based upon whether an Economic Price Adjustment (EPA) for labor is or is not included 

in a solicitation. An EPA for services and construction labor is mandated by the Service Contract 

Act (SCA) and the Davis-Bacon Act (DBA) which is prescribed by FAR Part 22. The CO shall 

certify that positions are DBA. To calculate inflation for service employee positions on SCF Line 

1 in the Agency Cost Estimate, the agency shall comply with the following (which is consistent 

with the FAR Part 22 requirement for submission of private sector offers): 

(1) When a solicitation includes either FAR clause 52.222-43 or FAR 52.222-44, inflation 

for labor costs as follows: (1) for employee positions that are subject to an EPA, 

inflation is applied only through the end of the first performance period stated in the 

solicitation and (2) for employee positions that are not subject to an EPA, inflation is 

applied through the end of all performance periods stated in the solicitation. 

(2) When a solicitation does not include either of these FAR clauses (i.e., 52.222-43, 

52.222-44), inflation is applied to all employee positions through the end of the last 

performance period stated in the solicitation. 

(3) While the SCA and DBA do not apply to Federal positions, the SCA and Fair Labor 

Standards Act (FLSA) have the same definition for services employees. On the basis of 

this common definition and that the private sector uses the SCA and DBA (FAR Part 22) 

to determine which private sector positions are subject to an EPA, the ATO shall 

determine which MEO positions are subject to an EPA based upon FLSA. One of the 

OPM requirements when officially classifying a Federal position description is for the 

HRA to determine if the position is either exempt or nonexempt under FLSA. When the 

official position description is classified as exempt under FLSA, the MEO position is not 

subject to an EPA and the agency shall apply inflation for labor costs through the end of 

the last performance period. If the official position description is classified as 

nonexempt under FLSA, the MEO position is subject to an EPA only if the solicitation 

E-6 

DRAFT OF NOVEMBER 14, 2002 
includes either of the aforementioned FAR clauses (i.e., FAR 52.222-43 or FAR 52.222-

44) and the ATO shall only apply inflation for these MEO positions through the end of 

the first performance period stated in the solicitation. 

k. Military Labor. An Agency Tender may include existing military labor in the MEO, under the 

following conditions: (a) MEO military positions shall not exceed the number of pre-Competition 

military positions performing the activity, and (b) military positions cannot be converted to 

civilian positions. No civilian positions shall be converted to military positions. The cost of these 

positions shall be included in Line 1 based on the standard military composite rate published by 

the DOD or other applicable Comptroller. This standard military composite rate includes 

productive hours which excludes annual leave, sick leave, administrative leave, training and other 

nonproductive hours. 

l. Volunteers, Inmate Labor, and Borrowed Military Manpower. Agencies shall only include 

these labor sources in an Agency Tender if a solicitation states the labor is available to all 

prospective offerors and tenders as a “common cost” labor source and that their use is not 

required. Since these labor sources are a “common cost”, the ATO shall not include this labor as 

a competitive cost in the Agency Cost Estimate. 

2. Material and Supply Costs (Line 2 of the SCF) 

a. General. Material and supply costs are incurred in each performance period for goods such as 

raw materials, parts, subassemblies, components and office supplies. The MEO Team shall adjust 

historical or engineering estimates of material and supply use and cost data to reflect the 

solicitation requirements. Material and supply costs are calculated and included in the Agency 

tender only if the materials and supplies are required by the Agency Tender but will not be 

provided to the contractor or public reimbursable source by the Government. The CO includes 

instructions for material and supply costs in the solicitation (FAR 51.101). An Agency Cost 

Estimate shall comply with this guidance. 

b. Ceiling Cost. If the solicitation includes a material and supply cost ceiling, the agency cost 

estimate shall reflect this ceiling on Line 2. If a solicitation does not include a material and 

supply cost ceiling, all offers and tenders are required to include the full material and supply 

costs. 

c. Material Related Costs. Material cost includes material, transport, handling, availability/delay 

costs, established allowances for normal scrap, spoilage, overruns and defective work. List 

required material by quantity needed, unit price, escalation for out-years and total cost. A single 

entry may be made for miscellaneous items such as office supplies. 

d. Inflation. Material and supply costs are projected for all performance periods, including 

adjustments for inflation consistent with the economic assumptions contained in the President's 

most recent Budget. Calculate unit prices to the end of the first performance period. Inflate and/or 

prorate the cost of materials and supplies in the cost estimate in accordance with instructions in the 

solicitation. Review Section B (Bid Schedule) and any special clauses in Section H of the 

solicitation to determine if an EPA provision applies to materials and supplies. If materials and 

supplies (that are not subject to an EPA) are listed in Section B of the solicitation, inflate costs by 

applying the applicable factors (if any) from the first performance period to the first and 

subsequent performance periods. 

E-7 

DRAFT OF NOVEMBER 13, 2002 
3. Other Specifically Attributable Costs (Line 3 of the SCF) 

a. Depreciation. 

(1) General. Agencies shall use The Useful Life and Disposal Value Table (located on the OMB 

website) for calculating residual value and The Federal Accounting Standards for Property, 

Plant and Equipment to establish depreciation schedules, rates of depreciation and other related 

guidance. If an asset is (a) fully depreciated, (b) is to be used as a apart of the Agency Tender, 

and (c) is not to be provided by the government to the private sector or public reimbursable 

source, extend the life of the asset through the end of the performance period or until 

replacement. Depreciation is then calculated using the extended life and original acquisition 

cost. If a capital asset involves a capital improvement, the ATO shall include the cost of the 

capital improvement as a separate asset on SCF Line 3 in the Agency Cost Estimate because 

the capital improvement costs are depreciated from the date of the capital improvement and 

not from the original acquisition date. 

(2) Minor Items. Individual assets costing less than $5,000 are considered minor items and are 

not depreciated, but are added to other costs. If the MEO will share the use of a minor asset 

with another Federal activity that is not the subject of the Standard Competition and the minor 

asset is not provided by the Government in the solicitation for use by private sector and public 

reimbursable sources, the agency shall prorate the cost of this “joint” usage of a minor asset in 

the Agency Cost Estimate based upon the purchase price 

(3) Major Items. Assets costing more than $5,000 are major items for depreciation. If the MEO 

will share these assets with another activity that is not the subject of the Competition (but the 

asset is not provided to other offerors), this “joint” use of the assets shall be prorated in the 

agency cost estimate. 

(4) Calculation Method. Calculate depreciation, using straight line accounting methods and 

include the results as annual depreciation for each performance period. If the asset was 

acquired through transfer, seizure or forfeiture, an industry specific standard or engineering 

appraisal may be used to establish the market or "acquisition" value of the asset. 

(5) Facilities. The useful life expectancies listed below shall be used by type of facility. If useful 

life has been exceeded, an engineering projection of anticipated remaining useful life is 

required. These costs shall be prorated to the MEO by a unit of measure that varies directly 

with consumption (e.g., floor space, type of facility, number of telephones). Estimates of 

expenses to be incurred for the first year of performance shall be based on recent experience, 

appropriately adjusted for anticipated requirements. Engineering estimates shall be used when 

historical data are not available. All estimates shall be appropriately documented with 

supporting detail. If an asset (such as a facility) has a capital improvement (such as a 

renovation), the capital improvement (renovation costs) shall be reflected as separate asset in 

the agency cost estimate because the capital improvement costs (renovation costs) are 

depreciated from the date of the capital improvement (renovation) not the original acquisition 

or construction date. 

Facility Category Useful Life 

Permanent 75 years 

Semi-Permanent 50 years 

Temporary 25 years 

E-8 

DRAFT OF NOVEMBER 14, 2002 
b. Cost of Capital. The annual cost of capital shall be added to the depreciation cost of any asset costing 

more than $5,000, if the asset is: (1) not provided for private sector or public reimbursable source’s use, or 

(2) scheduled for purchase within the performance period. To estimate the annual cost of capital, 

agencies shall identify the total depreciable acquisition cost of new assets or, if acquired by transfer, 

forfeiture or seizure, the market value of the assets. The total cost results from the value of the asset, 

transportation costs (if not already included in the purchase price) and any installation costs to place the 

asset in operation. The cost of capital shall be computed by applying the nominal rate provided by OMB 

Circular A-94 to the determined total cost of the asset. 

c. Rent. Rent is incurred for the use, operation and maintenance of land, building space, plant and 

machinery, etc., by the agency activity being compared but not furnished to private sector or Public 

reimbursable sources. Agencies shall calculate costs that are associated with the MEO on an allocated 

basis. 

d. Utilities. Utility costs include charges for fuel, electricity, telephone, water and sewage services, etc., that 

will not be furnished to private sector or public reimbursable sources but are needed for the MEO. The 

amount of these costs shall be determined on an allocated basis. 

e. Insurance. Operation of an agency activity involves risks and potential costs from property losses (e.g., 

fire, flood, accident) and liability claims that are covered by insurance in private sector offers. These 

costs are self-indemnified in the Government. 

(1) Casualty Insurance. If the solicitation does not provide all assets to all offerors, or if property 

losses may be assessed, agencies shall calculate casualty premiums for the MEO by multiplying .005 

times the net book value of the MEO’s equipment and/or facilities as of the beginning of the 

performance period, plus a one-month average value of material and supplies. 

(2) Government Furnished Property (GFP) Casualty Insurance. The FAR contains several GFP 

clauses that may be included in a solicitation depending on conditions of the acquisition. Table 2-2 

provides an extract of these FAR GFP clauses that could appear in solicitations when Competitions 

are performed. To determine whether casualty insurance costs for GFP are included in the agency 

cost estimate, determine which GFP clause is included in the solicitation. 

GFP CLAUSES AND CASUALTY INSURANCE REQUIREMENTS 

Is GFP Casualty Insurance Required in the Agency Cost Estimate? FAR Reference Liability Assigned to Private Sector or 

Public Reimbursable Offer Materials Capital Assets Minor Items 

52.245-2 Yes Yes Yes 

52.245-2 Alt I No No No No 

52.245-4 Yes Yes Yes 

52.245-5 No No No 

Yes 

Yes 

No 

For solicitations that include both firm fixed price and cost reimbursement contract lines items in section B, 

the solicitation will state which GFP clause applies to which contract lines item. For example, the 

solicitation may apply FAR 52.245-5 to the material ceiling cost, which means that insurance is not required 

on the material dollars. The same solicitation may designate FAR 52.245-2 to GFP vehicles, which means 

that the vehicles require casualty insurance cost. When GSA leased vehicles are not provided as GFP but 

used by the MEO the agency estimate includes the cost of casualty insurance if the GSA lease terms make 

the lessee liable for vehicle damage. 

(3) Liability Insurance. Personnel liability losses shall be computed by multiplying .007 times the total 

personnel-related costs on Line 1. Additional liabilities (not associated with personnel liability) 

E-9 

DRAFT OF NOVEMBER 13, 2002 
assigned to the private sector or public reimbursable source in the solicitation shall be computed by 

applying the standard .007 factor to the estimated liability ceiling identified in the solicitation and 

included in the agency cost estimate. If the solicitation requires additional insurance to cover certain 

high-risk activities (e.g., environmental, air traffic control, child care, ammunition handling, air 

cargo, nuclear fuel handling), the MEO shall include the cost of this additional insurance 

f. Travel. The agency shall include the projected cost of travel the MEO is expected to be expended unless 

the solicitation includes a ceiling cost for travel reimbursement or states that travel is government 

furnished. If the solicitation includes a ceiling cost for travel, the Agency shall enter this amount on SCF 

Line 3. Historic costs should be readily available from budgeted amounts of per diem and transportation 

cost for the activity that is the subject of the Standard Competition . The Agency shall inflate travel costs 

through the end of the last performance period or as stated in the solicitation in the EPA clause. 

g. MEO Subcontracts. Solicitations that include work currently performed by private sector or public 

reimbursable sources, should include the MEO cost of labor for the Government's administration and 

inspection of the continued support contracts on Line 1. When including an existing MEO subcontract in 

an Agency Tender, the agency shall calculate the following to account for the cost of the contract to be 

entered o SCF Line 3: (1) the actual cost of the contract or ISSA, (2) the cost of related Government 

furnished materials, equipment and facilities not provided to private sector or public reimbursable sources, 

(3) inflation for the performance periods stated in the solicitation, as appropriate, and (4) the offset for 

Federal income tax revenue to the Government (a downward adjustment using the appropriate tax rate on 

the OMB website). 

(1) Nonrecurring Workload. Surge workload, overtime and other types of nonrecurring 

workload may be included as an MEO subcontract cost, if it is purchased using either a 

Government purchase card [e.g., International Merchant Purchase Authorization Card 

(IMPAC)] or a task order contract or other appropriate contract type. The cost of services 

purchased using a Government purchase card shall be recorded as a subcontract on Line 3 to 

account for the Federal income tax. Escalate costs for each performance period, as 

appropriate. Task order contract costs shall also be adjusted (downward) to offset for potential 

Federal income tax revenue to the Government. 

(2) New MEO Subcontracts. MEO subcontracts shall only be permitted if the workload is 

performed under an existing contract. New or projected new contracts to support the MEO 

shall not be created nor shall agencies assume the Direct Conversion of work from Federal 

employees to MEO subcontract or public reimbursable performance as part of the MEO. The 

Competition (and solicitation) can be modified to exclude this work in order to perform a 

Direct Conversion (as a separate competitive sourcing initiative) if authorized as a Direct 

Conversion in this Circular. 

h. Other Costs. 

(1) Other Costs is a general category for specifically attributable costs. The Agency Tender shall: 

(a) include the cost of minor items that are not immediately consumed by the MEO and not 

provided to all offerors, and (b) estimate the cost of minor items for each performance period. 

Some examples are purchased services packaging and crating (if not already a part of material 

and supplies); transportation costs; and royalties, overhead projectors, office equipment, tools, 

chairs, desks, cabinets, etc. 

E-10 

DRAFT OF NOVEMBER 14, 2002 
(2) When an award fee is established in the solicitation as a potential reward for performance to 

the selected provider resulting from competition including the Agency Tender, the MEO has 

the potential to earn the award fee stated in the solicitation. Agencies shall state the maximum 

award fee in the solicitation and the Agency Cost Estimate shall include 65% of the total 

award fee amount on Line 3, Other Specifically Attributable Cost, Other Costs. 

4. Overhead Costs (Line 4 of the SCF) 

a. The Agency Tender shall include the overhead costs on Line 4 of the SCF. For each performance 

period, Line 4 is calculated by multiplying Line 1, including the fringe benefit cost factor, by 12 

percent (.12) and entering the total on Line 4. 

b. The 12 percent overhead factor is a rate established by OMB to represent an overhead cost factor 

for all Federal agencies when performing Standard Competitions. Any deviation form the use of 

this standard cost factor shall be approved, in advance, by the Deputy Director for Management, 

OMB. This overhead factor represents costs that are not visible, allocable, or quantifiable to the 

agency, activity or MEO. Use of the rate accounts for all management and support costs internal 

and external to the agency not required on Line 1. 

5. Additional Costs (Line 5 of the SCF) 

a. General. This SCF Line includes costs not otherwise represented or accounted for on Lines SCF 1 

through 4. This cost category shall reflect additional costs resulting from unusual or special 

circumstances. Amounts entered on Line 5 should be supported by a definition of the type of cost 

reported, a justification for its inclusion in the Competition, an explanation of the underlying 

assumptions, and methods of computation. 

b. Phase-in Costs. The solicitation designates a phase-in period which shall be reflected as the first 

performance period and costs associated with converting from the agency’s current organization to 

the MEO shall be included on Line 5. If the solicitation designates the first performance period as 

a phase-in period, these costs may be entered on Lines 1 through 5 may be used to document these 

costs. 

c. Expansions, New Requirements, or Conversions From Contract To Agency Performance. 

The one-time additional costs of an expansion, new requirement or conversion from a private 

sector or public reimbursable source to agency performance, which are added to the agency costs, 

shall be made on Line 5. New investment by an agency in facilities and equipment shall not be 

included as one-time costs. The costs incurred in acquiring facilities or equipment and installing 

the equipment shall be included in the capitalized cost of the MEO on Line 3. Government 

facilities and equipment will not normally be expanded to accommodate new or expanded agency 

requirement if cost-effective private sector or public reimbursable facilities and equipment are 

available. Likewise, agency ownership shall not preclude a private sector or public reimbursable 

source from competing for the new or expanded agency requirement. If the MEO is dependent 

upon the agency’s purchase or construction of new facilities or other major capital asset purchases, 

the Competition and conversion to agency performance shall be delayed until the approval to 

purchase or construct such items is obtained, subject to the Competition. 

6. Total Cost of Performance: Agency Source (Line 6 of the SCF). Line 6 is the sum of Lines 1-5. 

E-11 

DRAFT OF NOVEMBER 13, 2002 
C. THE ADJUSTED COST OF PRIVATE SECTOR OR PUBLIC REIMBURSABLE 

PERFORMANCE (LINES 7-13 OF THE SCF) 

1. Contract Price or Public Reimbursable Cost Estimate (Line 7 of the SCF). A private sector 

offeror’s price or public reimbursable offeror’s cost estimate (prepared in compliance with this 

Circular) is entered on Line 7 after the SSA performs Cost Realism on all offers and tenders. For a 

public reimbursable offeror, enter the cost from Line 6 of the public offeror’s SCF. For private 

sector offerors, the price to be entered on Line 7 based on the contract type as follows: 

a. Sealed Bid, Firm Fixed Price. Enter the price of the low responsible, responsive offeror. 

b. Negotiated Acquisitions. Enter the contract prices as follows based on the type of contract 

stated in the solicitation. 

(1) Firm Fixed Price Contract. Enter the negotiated price. 

(2) Cost-Reimbursement Contract. Enter the negotiated estimate. 

(3) Cost-Sharing Contract. Enter the negotiated estimate. 

(4) Contract with Award Fee. Enter 65 percent of the award fee plus the estimated contract 

price or cost. 

(5) Contract with Incentive Fee. Enter 65 percent of the potential maximum incentive fee plus 

the estimated contract price. 

(6) Time and Materials or Labor-Hour Contract. Enter the estimated total cost of contract 

performance. For these types of acquisitions, comparable rates shall be developed for the 

agency cost estimate. 

c. Tax Exempt Organizations. For a tax-exempt organization, the tax-exempt's contract price is 

adjusted by an amount equal to the estimated Federal income taxes that the lowest non taxexempt offeror would pay. This adjustment is necessary to determine which offeror has the 

lowest overall cost to the Government. Calculate the Federal tax adjustment. Add the Federal 

taxes calculated to the tax-exempt's offer for Competition with other non tax-exempt offerors. 

Compare the tax-exempt's adjusted offer to the low non tax-exempt offer and any public 

reimbursable tenders. If the tax-exempt's adjusted offer is lower than the low non tax-exempt 

offer, the unadjusted tax-exempt's offer shall be entered on Line 7 and the Competition with the 

agency cost estimate is performed. 

d. Performance Bonds. When a solicitation requires the private sector offer to provide a 

performance bond, the cost of the performance bond is excluded from the private sector offer 

when entered on Line 7. The solicitation bid structure should facilitate the elimination of this 

cost. 

3. Contract Administration Costs (Line 8 of the SCF) 

Agencies shall calculate contract administration costs to be entered on Line 8, in accordance with the 

following table based on the MEO staffing in Line 1. This Line reflects a full range on contractual 

E-12 

DRAFT OF NOVEMBER 14, 2002 
administration requirements, excluding inspections related to the QASP, which are common costs to 

all offerors. 

CONTRACT ADMINISTRATION FACTORS AND GRADES 

GRADES MEO STAFFING* CONTRACT ADMINISTRATION 

FTE GS-12 GS-11 GS-9 GS-6 

10 or less .5 0 0 0 

11 – 20 1 1 0 0 0 

21 – 50 2 1 1 0 0 

51 – 75 3 1 1 1 0 

76 – 100 4 1 1 1 1 

101 – 120 5 1 1 2 1 

121 – 150 6 1 2 2 1 

151 – 200 7 1 2 2 2 

201 – 250 8 2 2 2 2 

251 – 300 9 2 2 3 2 

301 – 350 10 2 3 3 2 

351 – 450 11 2 3 4 2 

451 and above 2.5% of agency MEO staffing Distribution automatically calculated by win.COMPARE2 

1 

4. Additional Costs (Line 9 of the SCF) 

a. ATO Requirement. This cost element includes any additional costs to the Government such as 

transportation or purchased services resulting from unusual or special circumstances. The ATO 

shall document additional costs to describe the nature of the cost item, and indicate the reason 

the additional cost will not be incurred if the activity is performed with the agency's agency 

resources in the Agency Tender. When an agency activity is terminated in favor of contract or 

public reimbursable performance and the agency elects to hold MEO equipment and facilities on 

standby, solely to maintain performance capability, the standby costs are not to be charged to the 

cost of the contract. The SSA shall evaluate the costs provided by the ATO in the Agency 

Tender and enter the approved additional costs on Line 9. 

b. Nonprofit Agency Fees. When a Javits-Wagner-O'Day participating nonprofit agency (as 

defined by FAR Part 8 such as the National Institute for the Blind or NISH, participates in a 

Competition, the SCF shall include the 4% fee paid to the Committee for Purchase from People 

Who Are Blind or NISH. This is required to determine the total cost of contract performance to 

the Government for Competition purposes with the agency cost estimate. The SSA shall 

determine if the 4% is included in the contract price, and if so, this contract price is entered on 

Line 7 of the SCF. If the 4% is excluded from the contract price, then the fee shall be entered 

separately on Line 9 of the SCF. 

c. Incentive Fees. When an Indian Tribe competes against the Agency Tender or is a 

subcontractor to the competing private sector offer and the Indian Incentive Program described 

E-13 

DRAFT OF NOVEMBER 13, 2002 
in FAR Part 26 is authorized, the SSA shall include the 5% incentive fee allowed by the program 

on Line 9 of the SCF. 

5. One-time Conversion Costs (Line 10 of the SCF) 

a. ATO Requirement. When the Government converts from agency performance to a private 

sector or public reimbursable source, one-time costs may be incurred as a result of this 

conversion. The ATO shall include these costs in the Agency Tender, with supporting 

documentation to justify the type and calculation of the one-time conversion costs. The SSA 

evaluates these costs during Cost Realism, approves them, and enters them on Line 10 of the SCF. 

b. Severance Costs. The SSA shall calculate one-time severance pay at four percent of Line 1 

(without fringe benefits) for the first performance period, or for second performance period, if a 

solicitation provides a phase-in period of less than one full year. If the second performance 

period is also less than a full year, the agency shall annualize the basic pay (i.e., salary plus other 

entitlements) only for the purposes of determining a full year of costs for severance pay. The 

SSA shall evaluate severance costs on SCF Line 10 to determine if they are calculated in 

compliance with this Circular. 

c. Relocation, Retraining, and Other Costs. The SSA shall calculate all remaining one-time 

conversion costs as one percent of Line 1 (without fringe benefits) for the first performance 

period, or for second performance period, if a solicitation requires a phase in period. Agencies 

shall not include separate one-time conversion costs for items such as Separation Incentive Pay 

(e.g., VERA, VSIP), security clearances, the cost of performing an Environmental Baseline 

Survey to the estimated cost of contract performance, etc. 

6. Gain on Assets (Line 11 of the SCF). 

a. ATO Requirement. The ATO shall include these estimated costs in the Agency Tender, with 

supporting documentation and to justify the type and calculation of asset disposal or transfer. The 

SSA evaluates these proposed costs during Cost Realism, approves them, and enters them on Line 

11. 

b. Gain on Assets. This entry represents the gain from the sale or transfer of government assets at 

the net book value of the asset as of the start date of the first performance period. These gains 

(revenue) are calculated to account for Government material or equipment included in the Agency 

Tender that are not provided to other offerors and will not be needed by the agency if the 

Competition favors private sector or public reimbursable performance. This revenue reduces the 

cost of private sector or public reimbursable performance and shall only be entered on the SCF as 

a negative number or zero. 

Gain on Assets 

(Sample Calculation) 

(A) 

Capital Asset 

(B) 

Original Acquisition 

Cost 

(C) 

Accumulated 

Depreciation 

(D) 

Net Book Value 

(B minus C) 

Capital Equipment= Bus $30,000 $24,900 $5,100 

Capital Facility= Cafeteria $625,000 $502,000 $123,000 

E-14 

DRAFT OF NOVEMBER 14, 2002 
Column Instructions 

A. Capital Asset Identify the name of the each specific capital asset 

B. Original Acquisition Cost 

Enter the original acquisition cost of the asset, plus transportation and 

installation costs if not included in the purchase price, plus any capital 

improvement costs made to that asset 

C. Accumulated Depreciation Enter the accumulated depreciation for the asset 

D. Net Book Value 

Enter the net book value at the date of the first performance period 

This is the “gain on asset” cost entered on the SCF 

(The cost of disposal or transfer shall not be included in the net book value) 

7. Federal Income Tax Adjustment (Line 12 of the SCF). This revenue reduces the cost of private 

sector or public reimbursable performance and may only be entered on the SCF as a negative 

number, unless the prospective private sector offeror is a tax-exempt organization. To calculate this 

line for each performance period, the SSA shall use the Tax Rate Table on the OMB website and 

enter on Line 12 the net increase of Federal income tax that may result from a conversion to a private 

sector. This table is provide by the Internal Revenue Service, by types of industry and appropriate 

tax rates in relation to business receipts and the industry groupings conform to the North American 

Industry Classification System (NAICS) issued by the Department of Commerce. 

8. Total Adjusted Cost of Private Sector or Public Reimbursable Performance (Line 13 of SCF). 

Enter the sum of Lines 7, 8, 9, 10, 11, and 12 on Line 13 of the SCF. 

D. MINIMUM CONVERSION DIFFERENTIAL (LINE 14 OF THE SCF) 

1. Calculation.. The SSA shall enter on Line 14 the minimum conversion differential based on the 

lesser of: (1) 10 percent of personnel costs (Line 1) or (2) $10 million over all performance periods. 

2. Expansions, New Requirements, or Conversions From Contract To Agency Performance. 

a. The agency shall add and the SSA shall validate the appropriate conversion differential to SCF 

Line 6 of the Agency Cost Estimate when an agency is performing a Standard Competition to 

justify agency performance of a: (a) potential conversion from a private sector source (contract 

performance) to agency performance, (b) potential for agency performance of a new 

requirement, or (3) potential for agency performance of an expansion of requirements for an 

existing commercial activity. The conversion differential represents the minimum level of 

savings that must exist in order to warrant a conversion. It is calculated as an advantage 

provided to the incumbent source (i.e., agency, private sector or public reimbursable). Since 

agency performance of new requirements and expansions of existing commercial activities are 

justified based upon Standard Competitions agencies shall consider private sector sources as the 

incumbent method of performance for any new requirements and expansions of existing 

commercial activities. 

b. If agency performance of expanded workload (e.g., 30% increase) is preferred and there is 

reason to believe that contract service quality or prices may be unreasonable, then a Standard 

Competition of either (1) the 30% expanded workload if the work is severable or (2) the entire 

workload including the 30% increase shall be performed. The conversion differential is 

allocated between agency and contract/ISSA costs based on the percentage of Line 1 attributed 

to the expansion workload, as follows: 

E-15 

DRAFT OF NOVEMBER 13, 2002 
(1) If a Standard Competition is performed only on the severable 30+% of the expanded work 

(i.e., new workload), all of Line 14 (minimum conversion differential) is added to Line 6 

(total agency cost) to generate Line 15 (adjusted total cost of agency performance). 

(2) If a Standard Competition is performed on the entire commercial activity currently 

performed by the agency plus the 30+% expanded work, a percentage of agency personnel 

costs on Line 1 that re present the expanded work is multiplied by Line 14 (minimum 

conversion differential) and the result is added to Line 6 (total agency cost) to generate Line 

15 (adjusted total cost of agency performance). The percentage of Line 1 (personnel) that 

represents the work currently performed by the agency is multiplied by Line 14 (minimum 

conversion differential), and the result is added to Line 13 (total contract/ISSA cost) to 

generate Line 16 (adjusted cost of contract/ISSA performance). 

3. Partial Conversion From Contract to Agency Performance. When an agency performs a Standard 

Competition of a commercial activity that is performed by a mix of private sector, public 

reimbursable, and agency sources and the Agency Tender includes a partial conversion of work from 

private sector performance to agency performance using federal employees, the minimum 

conversion differential is apportioned to each source based upon the percentage of work performed 

by each incumbent source at the time of public announcement. Therefore, the agency shall calculate 

the minimum conversion differential as follows: (1) calculate the MEO minimum conversion 

differential, (2) calculate the value of the minimum conversion differential for the contracted work 

projected to be converted to agency performance using federal employees, and (3) enter the delta on 

SCF Line 14. If the Agency Tender includes an MEO subcontract, the ATO shall not calculate any 

minimum no conversion differential for the MEO subcontract in the Agency Cost Estimate. 

E. ADJUSTED TOTAL COST OF AGENCY PERFORMANCE (LINE 15 OF THE SCF) 

If the Competition is being conducted to determine if an activity should be converted from private sector 

or public reimbursable performance to agency performance, the conversion differential from Line 14 is 

added to Line 6 and the sum is entered on Line 15. The total amount for all performance periods on Line 

13 is then replicated on Line 16. 

F. ADJUSTED TOTAL COST OF PRIVATE SECTOR OR PUBLIC REIMBURSABLE 

PERFORMANCE (LINE 16 OF THE SCF) 

If the Competition is being conducted to determine if an activity should be converted from agency 

performance to a private sector or public reimbursable source, the conversion differential from Line 14 is 

added to Line 13 and the sum is entered on Line 16. The total amount for all performance periods on 

Line 6 is then replicated on Line 15. 

G. THE COMPETITION DECISION (LINES 17 AND 18 OF THE SCF) 

The Competition decision is computed by subtracting Line 15 from Line 16 and entering the sum on 

Line 17. A positive number on Line 17 of the SCF determines an agency decision, and a negative 

number on Line 17 of the SCF determines a decision favoring a private sector or public reimbursable 

source, which is indicated by an “x” on Line 18 next to the appropriate source. 

E-16 

DRAFT OF NOVEMBER 14, 2002 
Attachment F 

OMB Circular No. A-76 

GLOSSARY OF ACRONYMS 

AND

DEFINITION OF TERMS

The acronyms and terms used in this Circular are unique to the inventory, public-private 

competition, and direct conversion processes. Agencies shall apply definitions as prescribed 

in this attachment. 

A. GLOSSARY OF ACCRONYNMS 

AAA – Administrative Appeal Authority

ATO – Agency Tender Official 

CDRL – Contract Data Requirements List 

CFR – Code of Federal Regulations 

CLIN – Contract Line Item

COLA – Cost of Living Allowance 

CSRS – Civil Service Retirement System

CTTO – Cost Technical Tradeoff 

CO – Contracting Officer 

DoD – Department of Defense 

EPA – Economic Price Adjustment

FAIR – Federal Activities Inventory Reform Act 

FAR – Federal Acquisition Regulation 

FERS – Federal Employee Retirement System

FICA – Federal Insurance Contribution Act 

FLSA – Fair Labor Standards Act 

FTE – Full-time Equivalent 

FWS – Federal Wage Schedule 

GAO – General Accounting Office 

GFP – Government Furnished Property

GS – General Schedule 

GSA – General Services Administration 

HRA – Human Resource Advisor 

IFB – Invitation for Bid 

IMPAC – International Merchant Purchase Authorization Card 

ISSA – Inter-Service Support Agreement 

LPTA – Low Priced Technically Acceptable 

F-1 

DRAFT OF NOVEMBER 13, 2002 
MEO – Most Efficient Organization 

NAICS - North American Industry Classification System

OMB – Office of Management and Budget 

OPM – Office of Personnel Management 

PWS – Performance Work Statement 

QASP – Quality Assurance Surveillance Plan 

QCP – Quality Control Plan 

R&D – Research and Development 

RFP – Request for Proposals 

SCA – Service Contract Act 

SCF – Standard Competition Form

SSA – Source Selection Authority 

SSEB – Source Selection Evaluation Board 

TSP – Thrift Savings Program

VERA – Voluntary Early Retirement Authority

VSIP – Voluntary Separation Incentive Pay

USC – United States Code 

B. DEFINITION OF TERMS 

4.e. Official. The inherently governmental agency official designated by an agency head, in accordance 

with paragraph 4.e., of the Circular, to be responsible for the implementation of this Circular in the 

agency. 

Activity. A specific task or grouping of tasks that provides a specialized capability, service or product 

based on a recurring government requirement. Depending on the grouping of tasks, an activity may be an 

entire function or may be a part of a function. An activity may be inherently governmental or commercial 

in nature. 

Administrative Appeal Authority (AAA). The AAA is an inherently governmental agency official who 

is independent of the activity being competed, the ATO, CO, SSA, and HRA. An individual may be 

assigned as the agency’s AAA for all Standard Competitions or Direct Conversions or for an individual 

competition. 

Administrative Appeal Decision Document. The written decision of the Administrative Appeal 

Authority that adjudicated appeals received as a result of a Performance Decision in a Standard 

Competition Decision or a Direct Conversion certification. 

Adversely Affected Civilian Employee. Federal civilian employees serving on competitive or excepted 

service appointments in Tenure Groups I, II, or III that are identified for release from their competitive 

level by an agency, in accordance with 5 CFR Part 351 and Chapter 35 of Title 5, United States Code, as 

a direct result of a Standard or Direct Conversion competition decision. 

Agency Cost Estimate. The part of the Agency Tender in a Standard Competition that includes the 

agency’s cost proposal and represents the full cost of agency performance of the commercial activity 

based on the requirements in the solicitation and the costing policy at Attachment E. 

F-2 

DRAFT OF NOVEMBER 14, 2002 
Agency Federal Civilian Employees. Personnel employed by an agency serving on appointments 

without time limitation and paid from either (1) appropriated funds or (2) working capital funds. 

Agency Performance. Performance of a commercial or inherently governmental activity with agency 

personnel. Often referred to as “in-house performance.” 

Agency Personnel. Civilian personnel employed by an agency serving on appointments without time 

limitation and paid from either appropriated funds or working capital funds; nonappropriated fund 

employees; foreign national employees; temporary employees; term employees; and military personnel 

employed by an agency to perform activities. 

Agency Tender. The Agency management plan submitted to respond to the requirements and bid 

structure of a solicitation for a Standard Competition or when converting from a private sector or public 

reimbursable source to agency performance for a Direct Conversion. The Agency Tender includes a most 

efficient organization (MEO), agency cost estimate, quality control plan for the MEO, and phase-in plan. 

The Agency Tender is prepared in accordance with this Circular and the solicitation requirements of 

Section L (Instructions, Conditions, and Notices to Offerors or Respondents) and Section M (Evaluation 

Factors for Award). 

Agency Tender Official (ATO). An inherently governmental agency official with decision making 

authority, independent of the CO, SSA, and AAA. The ATO develops and certifies the Agency Tender, 

and represents the agency during source selection, and the Administrative Appeal Process. When 

Standard Competitions are announced, the ATO designates the MEO Team. 

Agency Source. A service provider resourced with agency personnel. 

Borrowed Military Manpower. Military manpower used to perform workload other than in their 

assigned work centers, including non-military essential activities, and often in other than their primary 

occupational specialties. 

Cancellation. The termination of a Standard Competition or Direct Conversion. The cancellation of a 

solicitation is a FAR requirement and does not result in the termination of a Standard Competition or 

Direct Conversion. 

Commercial Activity. A recurring service that could be performed by the private sector and is resourced 

and controlled by the agency through a contract, ISSA, or agency employee performance. A commercial 

activity is not an activity that is so intimately related to the public interest as to mandate performance by 

government personnel. Commercial activities may be found within larger organizations that perform 

inherently governmental or classified work. 

Commercial Inter-Service Support Agreement (Commercial ISSA). A reimbursable fee-for-service 

agreement between an agency (or agency component) and a public reimbursable source to provide a 

commercial activity. An agency that buys a service from another agency is a customer agency. An 

agency that sells a service to another agency on a reimbursable basis is the vendor agency and is referred 

to as a “public reimbursable source” in this Circular. 

Competition. A formal evaluation of sources to provide a commercial activity using prearranged rules 

(e.g., FAR, this Circular). Competitions between private sector sources are performed in accordance with 

the FAR. Competitions between agency, private sector and public reimbursable sources are performed 

F-3 

DRAFT OF NOVEMBER 13, 2002 
only in accordance with the FAR and this Circular. The term “competition,” as used in this Circular, 

includes FAR based competitions for contracted, new and expanded work, activities performed by 

Commercial ISSAs, and the Standard Competition Process. 

Competition Officials. The agency official appointed before a Standard Competition or Direct 

Conversion is announced. These individuals perform key roles and have essential responsibilities for the 

successful completion of the Standard Competition or Direct Conversion. These include the Agency 

Tender Official, Contracting Officer, Source Selection Authority, Human Resource Advisor and 

Administrative Appeal Authority. 

Competition Waiver. A document that permits a Direct Conversion of a commercial activity that would 

otherwise be subject to the Standard Competition requirements of this Circular. A Competition Waiver is 

approved by the 4.e. official to permit a Direct Conversion to or from private sector, public reimbursable, 

or agency performance and is prepared in accordance with Attachment D. 

Component. An agency’s subordinate organizational grouping such as a bureau, center, military service, 

field activity. 

Contracting Officer. An inherently governmental agency official that designates and assists the PWS 

Team, is responsible for the issuance of the solicitation, the selection of the Source Selection Board and 

the source selection evaluation methodology. If a decision is reached to award a contract, the 

Contracting Officer shall award the contract. If a decision is reached to retain a function or convert to 

agency or public reimbursable performance, the contracting Officer shall announce the decision, and 

advise the 4.e. official 

Conversion From Contract. A conversion from contract occurs when an agency changes the source of a 

commercial activity from a private sector provider to agency performance. 

Conversion To Contract. A conversion to contract occurs when an agency changes the source of a 

commercial activity from agency performance to a private sector provider. 

Cost/Technical Tradeoff (CTTO). An evaluation process under FAR Subpart 15.101-1 that trades cost 

or price against factors governing technical performance or quality. CTTO does not include tradeoff 

processes where the technical factor is graded on a Pass/Fail, Go/No-Go or similar rating system where 

all offers and tenders meet the same level of performance and where cost or price is then traded off only 

against non-technical factors (e.g., past performance, management capability, risk). 

Customer Agency. A federal agency that monetarily reimburses another federal agency for a provided 

service. 

Direct Conversion Process. A conversion process permitted by this Circular to change performance to 

or from an agency, private sector, or public reimbursable provider without conducting a Standard 

Competition. (Attachment C) 

Direct Patient Care. Provision of highly specialized expertise and technical capability in critical areas 

that involve the authority to determine therapies and treatment for patients in government-owned or 

military hospitals. 

F-4 

DRAFT OF NOVEMBER 14, 2002 
Directly Affected Civilian Employees or Military Personnel. Federal civilian employees, or military 

personnel whose job or work is included in a competition. 

Expansion. An expansion is the modernization, replacement, upgrade, or increased workload of an 

existing agency performed commercial activity that increases the activity’s operating cost by 30%. 

Before the expansion is performed by an agency or public reimbursable source, a Standard Competition is 

performed on either (a) the entire activity including the 30% expansion or (b) the 30% expansion, if 

segregable. The 30% expansion, if segregable, may be performed by a private sector source if competed 

in accordance with the FAR. 

FedBizOpps. The website, where the government electronically advertises solicitations or requirements. 

Full-Time Equivalent (FTE). Staffing of Federal civilian employee positions, expressed in terms of 

annual productive work hours (1,776) rather than annual available hours (2,080 hours). 

Function Code. The numerical code used to categorize an agency’s commercial and inherently 

governmental activities for inventory reporting purposes. 

Human Resource Advisor (HRA). The HRA shall be an inherently governmental agency official; shall 

be an HR expert; shall be independent of the CO, SSA, and AAA; and may participate on the MEO Team. 

Incumbent Provider. The current source (i.e., agency, private sector, or public reimbursable source) 

providing the service when competition begins. 

Information Technology. A commercial activity that provides any equipment or interconnected 

system(s) or subsystem(s) of equipment used in the automatic acquisition, storage, manipulation, 

management, movement, control, display, switching, interchange, transmission, or reception of data or 

information by the agency. For purposes of this definition, equipment is used by an agency if the 

equipment is used by the agency directly or is used by a contractor under a contract with the agency that 

requires (1) its use or (2) to a significant extent, its use in the performance of a service or the furnishing of 

a product. The term "information technology" includes computers, ancillary equipment, software, 

firmware and similar procedures, services (including support services), and related resources and it does 

not include any equipment that (1) is acquired by a contractor incidental to a contract; or (2) contains 

imbedded information technology that is used as an integral part of the product, but the principal function 

of which is not the acquisition, storage, manipulation, management, movement, control, display, 

switching, interchange, transmission, or reception of data or information. For example, heating, 

ventilation, and air conditioning (HVAC) equipment, such as thermostats or temperature control devices, 

and medical equipment where information technology is integral to its operation, are not information 

technology. 

Inherently Governmental Activities. As provided by Attachment A, an inherently governmental 

activity is an activity that is so intimately related to the public interest as to mandate performance by 

Government personnel. 

Interested Parties. A directly interested party or other interested party. 

• Directly Interested Party. The Agency Tender Official that submitted the Agency Tender, a 

private sector offeror, or the official that certifies the public reimbursable tender. 

• Other Interested Parties For purposes of (1) challenging the contents of an agency’s 

F-5 

DRAFT OF NOVEMBER 13, 2002 
Commercial Activities Inventory under the Federal Activities Inventory Reform Act, an 

interested party is: 

a. A private sector source that: (1) is an actual or prospective offeror for a contract or other 

form of agreement to perform the activity; and (2) has a direct economic interest in 

performing the activity that would be adversely affected by a determination not to procure the 

performance of the activity from a private sector source; 

b. A representative of any business or professional association that includes within its 

membership private sector sources referred to in (1) above; 

c. The head of any labor organization referred to in section 7103(a) (4) of Title 5, United States 

Code that includes within its membership officers or employees of the federal organization 

referred to above; 

d. Federal employees performing the commercial activity included in the competition or their 

appointed representative when they are not officially represented by a formal labor 

organization. 

Inventory: A by-location, by-function code, by-position list of agency personnel performing either 

commercial activities or inherently governmental activities at the end of a given fiscal year that is 

provided to OMB annually. 

Lowest Price Technically Acceptable (LPTA): A negotiated acquisition source selection process that is 

appropriate when best value is expected to result from selection of the technically acceptable offer with 

the lowest evaluated price. (Note: a contract awarded using other than sealed bidding procedures is a 

negotiated contract.) The evaluation factors and significant subfactors that establish the requirements of 

acceptability shall be delineated in the solicitation, which shall specify that award will be made on the 

basis of the lowest evaluated price of offers and tenders meeting or exceeding the acceptability standards 

for non-cost factors. Tradeoffs are not permitted when using a LPTA source selection, and offers and 

tenders are evaluated for acceptability but not ranked using the non-cost/price factors. 

MEO Team. A group of individuals, comprised of technical and functional experts, formed to assist the 

Agency Tender Official to develop the Agency Tender. 

Most Efficient Organization (MEO). The staffing plan of the Agency Tender developed to represent 

the most efficient government organization. An MEO is required for a Standard Competition or when the 

Direct Conversion process converts an activity performed by a private sector or public reimbursable 

source to agency performance. An MEO may include a mix of Federal employees and existing private 

sector support (referred to as MEO subcontracts). 

Negotiated Acquisition. A type of procurement process permitted under the FAR where offerors and 

tenders are submitted in response to a Request for Proposal and the SSA performs negotiations during the 

source selection process. 

New Requirement. A new requirement is a newly established need for a commercial product or service 

that is not performed by the agency with agency personnel, via a Commercial ISSA with a public 

reimbursable source, or contract with the private sector. An activity that is performed by the agency and 

is reengineered, reorganized, modernized, upgraded, expanded, or changed to become more efficient but 

still essentially provides the same service is not considered a new requirement—new ways of performing 

existing work are not new requirements 

F-6 

DRAFT OF NOVEMBER 14, 2002 
Offer. In response to a Request for Proposals or Invitation for Bid, an offer is a private sector company’s 

formal response to a solicitation. The term “offeror” refers to the specific company rather than the 

response. 

Overhead. Overhead is a cost that is included in all cost proposals. The overhead used in cost estimates 

submitted by agency or public reimbursable sources is the OMB required standard cost factor identified in 

Attachment E. This standardized cost factor accounts for indirect costs that are comparable to those 

included in private sector offers, represent costs to the taxpayer that are not necessarily visible at the 

installation, headquarters level or Department level, but are provided by the Government's budget at an 

expense to the taxpayer. Indirect cost means any cost not directly identified with a single final cost 

objective, but identified with two or more final cost objectives or with at least one intermediate cost 

objective. 48 C.F.R. 9904.402-30 (a)(5). 

Past Performance. An indicator that may be used in the source selection process to evaluate an offeror's 

previous performance on work comparable to that being competed for the purpose of predicting the 

quality of future performance relative to other offers or public reimbursable tenders (See FAR 42.1501 

for a description of the information used to evaluate past performance and FAR 15.305(a)(2) regarding 

the consideration of past performance in the source selection process. 

Performance Standards. Verifiable, measurable levels of service in terms of quantity, quality, 

timeliness, location, and work units. Performance standards are used in a performance based PWS to: (1) 

assess (i.e., inspect and accept) the work during a period of performance, and (2) provide a common 

output-related basis for preparing private sector offers and public tenders and for comparing the offers 

and tenders to the PWS. The requiring activity’s acceptable levels of service are normally stated in the 

PWS. 

Performance Work Statement (PWS). A statement in the solicitation that identifies the technical, 

functional and performance characteristics of the government’s requirements. The PWS is performancebased (not requirements driven), identifies essential functions to be performed, determines performance 

factors, and, specifies the location, units, quality and timeliness of the work. 

Phase-in Plan. A specific requirement in the solicitation that requires all offerors (agency, private sector 

and public reimbursable sources) to propose a phase-in approach to replace the existing service provider. 

The Phase-in Plan includes details on minimizing disruption, adverse personnel impacts, and startup 

requirements. 

Provider. An agency, private sector or public reimbursable source that is performing or will perform a 

commercial activity. 

Public Announcement. Formal notification to the incumbent providers (i.e., directly affected employees 

and their representatives, public reimbursable sources, or private sector providers), state and local 

government officials, or congressional members, to formally announce the (1) start of a Standard 

Competition, (2) Performance Decision, (3) Direct Conversion, and (4) Administrative Appeal Process 

decision. 

Public Reimbursable Official. An inherently governmental official with decision-making authority who 

is responsible for and certifies the public reimbursable tender. 

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Public Reimbursable Source. A service provider from a federal agency (vendor agency) that could 

perform a commercial activity for another federal agency (or customer agency) on a reimbursable basis 

(fee for service) via a commercial ISSA. The public reimbursable source performs the service with either 

(1) vendor agency federal civilian employees or (2) vendor agency federal contracts with the private 

sector. Public reimbursable sources include franchise funds, revolving funds and working capital funds 

authorized by the Clinger/Cohen Act, the Federal Property and Administrative Services Act of 1949, the 

Economy Act of 1932 (31 U.S.C. 1535), the Government Management Reform Act of 1994 (103 U.S.C. 

356), and other statutes authorizing agencies to acquire or perform commercial activities on a 

reimbursable basis. 

Public Reimbursable Tender. The vendor agency’s formal response to a customer agency’s solicitation. 

The Public Reimbursable Tender (1) is developed in accordance with Attachment B; (2) is structured to 

meet the solicitation requirements of Section L (Instructions, Conditions, and Notices to Offerors or 

Respondents) and Section M (Evaluation Factors for Award); (3) includes cost estimates prepared in 

accordance with Attachment E; and (4) responds to the requirements and bid structure of a solicitation for 

either a Standard Competition or a competition soliciting only private sector offers. 

PWS Team. A group of individuals comprised of technical and functional experts, formed to develop the 

PWS, QASP, and assist the CO in developing the solicitation. 

Quality Assurance Surveillance. The method by which Federal agency personnel monitor agency, 

private sector or public reimbursable performance to determine if the performance output requirements of 

the solicitation are met by the service provider within the costs submitted to the Government. 

Quality Control Plan (QCP). A self-inspection plan. All offerors and tenders are required to submit a 

QCP when responding to a solicitation. The QCP outlines a self-inspection plan that complies with the 

PWS and describes the internal staffing and procedures that will be used by the prospective offeror to 

meet the quality, quantity, timeliness, responsiveness, customer satisfaction, and other aspects of service 

delivery as required by the PWS. A QCP is included in all prospective private sector offers and public 

tenders to guarantee satisfactory performance. 

Quality Assurance Surveillance Plan (QASP). The government’s inspection plan. The QASP 

documents methods used to measure performance of the service provider against the requirements in the 

PWS. The agency relies the service provider to monitor daily performance via the Quality Control Plan. 

The agency retains the right to inspect all services. The ATO assigns individuals responsible for the 

QASP that are external to the selected service provider (i.e., agency, private sector or public reimbursable 

source) to perform quality assurance. When a Performance Decision is rendered, the agency is required 

to re-evaluate and modify the QASP based upon the selected provider. 

Representatives of Directly Affected Employees. In the case of directly affected employees represented 

by a labor organization accorded exclusive recognition under 5 U.S.C § 7111, a representative is a 

member of that labor organization. In the case of directly affected employees not represented by a labor 

organization under 5 U.S.C. § 7111, a representative is an individual appointed by directly affected 

employees as their representative. 

Direct Research and Development. Activities that have direction, control and conduct of science and 

technology programs. R&D does not include program management of systems acquisition or other 

administrative, facilities or equipment support. R&D includes conducting mid- and long-range planning, 

programming, and budgeting; developing and issuing policies; providing policy guidance; reviewing, 

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analyzing, and evaluating program performance; and allocating and distributing resources for science and 

technology. Basic Research for Pure R&D includes scientific study and experimentation directed toward 

increasing knowledge and understanding in those fields of the physical, engineering, environmental, and 

life sciences related to long-term national security needs. 

Resources. Funding allocated for contracts, manpower, facilities or equipment, to perform agency 

requirements. 

Sealed Bid Acquisition. A type of procurement where sources submit bids in response to an invitation 

for bids. 

Source. One of three specific categories of service providers (i.e., agency, private sector, or public 

reimbursable) that can perform a commercial activity for an agency. 

Source Selection Evaluation Board (SSEB). The team that assists the SSA when a negotiated 

acquisition is used in a Standard Competition. 

Specialized or Technical Services means statistical and other studies and compilations, development 

projects, technical tests and evaluations, technical information, highly specialized training activities, 

surveys, reports, documents, and or any other similar service functions that a Federal agency is especially 

equipped and authorized by law to perform for itself., services which may be required to meet the needs 

of the Federal Government or to carry out the normal program responsibilities of the Federal agencies 

involved, technical aid or instruction in the preparation of proposals and applications for development 

and other projects for which the Federal agency provides grants or other assistance, provided such aid 

primarily strengthens the ability of the State or local government recipient in developing its own capacity 

to prepare proposals; and services that a Federal agency receives a request for and that it believes is 

consistent with the Act and that it has a special competence to provide, that are approved by the Deputy 

Director for Management, OMB, to provide. If there is doubt as to whether the service requested is 

covered by this definition, the request should be forwarded to the Deputy Director for Management, OMB 

for consideration. Specialized or technical services do not include common administrative support 

services or extend to State or local data requests to conduct Federal surveys or other compilations in 

advance of Federal schedules for collecting the same data or providing the same or similar services, 

unless specifically approved by the Deputy Director for Management, OMB. 

Standard Competition Documentation. The Agency Tender at the time the Performance Decision is 

made. Supporting documentation includes information, data, worksheets, files, and records supporting 

the data included on the SCF. 

Standard Competition End Date. The date that a Performance Decision is made. 

Standard Competition Form (SCF). The certified agency form that documents all costs calculated in 

the Standard Competition in accordance with Attachment E. Lines 1-6 of the SCF represent the total cost 

of agency performance and Lines 7-13 represent the total cost of contract or public reimbursable provider 

performance. The Standard Competition Form is the decision document in all Standard Competitions. 

Standard Competition Process. A public-private competition process that is required by this Circular 

for competition between (1) private sector, public reimbursable, and agency sources or (2) private sector 

and public reimbursable sources. A Standard Competition is a formal competitive process to be used in 

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conjunction with the FAR when an agency selects a provider based upon formal offers or tenders 

submitted in response to an agency solicitation. 

Standard Competition Start Date. The day the agency makes a public announcement of a Standard 

Competition to the directly affected employees and their representatives, incumbent contractors or public 

reimbursable sources, and other interested individuals. 

State or local Government. The term "State" is defined as any of the official states of the United States, 

the District of Columbia, the Commonwealth of Puerto Rico, any territory or possession of the United 

States, or any agency or instrumentality of a State, but does not include the governments of the political 

subdivisions of a State. The term "political subdivision" or "local government" is defined as any local 

unit of government, including specifically a county, municipality, city, town, township, or a school or 

other special district created by or pursuant to State law, or combinations thereof. 

Transition Plan. A written plan for the transition of employees from the current organizational structure 

to the prospective service provider. 

Vendor Agency. A federal agency that provides a service to another federal agency that pays for the 

service. 

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