OFFICE OF MANAGEMENT AND BUDGET 

AGENCY: Office of Management and Budget 

Executive Office of the President 

ACTION: Issuance of Transmittal Memorandum No. 24, amending OMB Circular No. A-76,

“Performance of Commercial Activities."

SUMMARY: This Transmittal Memorandum updates the annual federal pay raise assumptions

and inflation factors used for computing the government's in-house personnel and non-pay costs,

as generally provided in the President's Budget for Fiscal

Year 2003.

DATES: All changes in the Transmittal Memorandum are effective immediately and shall

apply to all cost comparisons in process where the government's in-house cost estimate has not

been publicly revealed before this date.

FOR FURTHER INFORMATION CONTACT: Mr. David C. Childs, Office of Federal

Procurement Policy, NEOB, Room 9013, Office of Management and Budget, 725 17th Street,

NW, Washington, DC 20503, Tel. No. (202) 395-6104.

AVAILABILITY: Copies of the OMB Circular A-76, its Revised Supplemental Handbook and

currently applicable Transmittal Memoranda changes may be obtained at the online OMB

Homepage address (URL): http:/www.whitehouse.gov/OMB/circulars.

Mitchell E. Daniels, Jr. 

Director 

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Circular No. A-76 (Revised) 

Transmittal Memorandum No. 24 

TO THE HEADS OF EXECUTIVE DEPARTMENTS AND AGENCIES 

SUBJECT: Performance of Commercial Activities 

This Transmittal Memorandum updates the annual federal pay raise assumptions and 

inflation factors used for computing the government's in-house personnel and non-pay costs, as 

generally provided in the President's Budget for Fiscal Year 2003. 

The non-pay inflation factors are for purposes of A-76 cost comparison determinations 

only. They reflect the generic non-pay inflation assumptions used to develop the fiscal year 2003 

budget baseline estimates required by law. The law requires that a specific inflation factor (GDP 

FY/FY chained price index) be used for this purpose. These inflation factors should not be 

viewed as estimates of expected inflation rates for major long-term procurement items or as an 

estimate of inflation for any particular agency’s non-pay purchases mix. 
Federal Pay Raise Assumptions 

Effective Date 

January 2001 

January 2002 

January 2003 

January 2004 

January 2005 

January 2006 

January 2007 

January 2008 

January 2009 

January 2010 

January 2011 

January 2012 

Civilian Military 

3.7% 3.7% 

4.6% 6.9%* 

2.6% 4.1% 

3.4% 3.4% 

3.4% 3.4% 

3.4% 3.4% 

3.4% 3.4% 

3.4% 3.4% 

3.4% 3.4% 

3.4% 3.4% 

3.4% 3.4% 

3.4% 3.4% 

* Average of various longevity-and rank-specific increases for January 2002. 

Non-Pay Categories (Supplies and Equipment, etc.) 

FY 2001 2.3% 

FY 2002 2.2% 

FY 2003 1.8% 

FY 2004 1.7% 

FY 2005 1.8% 

FY 2006 1.9% 

FY 2007 1.9% 

FY 2008 1.9% 

FY 2009 1.9% 

FY 2010 1.9% 

FY 2011 1.9% 

FY 2012 1.9% 

The pay rates (including geographic pay differentials) that are in effect for 2002 

shall be included for the development of in-house personnel costs. The pay raise factors 

provided for 2003 and beyond shall be applied to all employees, with no assumption 

being made as to how they will be distributed between possible locality and ECI-based 

increases. 

Agencies are reminded that OMB Circular No. A-76, Transmittal Memoranda 1 through 

Transmittal Memorandum 14 are canceled. Transmittal Memorandum No. 15 provides the 

Revised Supplemental Handbook, and is dated March 27, 1996 (Federal Register, April 1, 1996, 

pages 14338-14346). Transmittal Memoranda No. 16, 17, 18 and 19 (to the extent they provided 

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Circular A-76 federal pay raise and inflation factors) are canceled. Transmittal Memorandum 

No. 20 provided changes to the Revised Supplemental Handbook to implement the Federal 

Activities Inventory Reform Act of 1998 (P.L. 105.270). Transmittal Memorandum No.21 

provided A-76 federal pay raise and inflation factor assumptions and is canceled. Transmittal 

Memorandum No. 22 made technical changes to the Revised Supplemental Handbook regarding 

the implementation of the FAIR Act, A-76 administrative appeals, and the participation of 

directly affected employees on A-76 Source Selection Boards and their evaluation teams. 

Transmittal Memorandum No.23, which provided last year’s Circular A-76 federal pay raise and 

inflation factor assumptions, is hereby canceled. 

Mitchell E. Daniels, Jr. 

Director 

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