OFFICE OF MANAGEMENT AND BUDGET
Subject: Implementation of the Federal
Activities Inventory Reform Act of 1998 (Public Law 105-270) ("FAIR Act")
Agency: Office of Management and Budget,
Executive Office of the President
Action: OMB issues final guidance on the Implementation of the FAIR Act.
Summary: The Office of Management and Budget (OMB) hereby
issues guidance to implement the "Federal Activities Inventory Reform Act of 1998".
To facilitate and ensure agency implementation of the "Federal Activities
Inventory Reform Act of 1998" (Public Law 105-270) ("FAIR Act"), OMB is
revising its existing guidance on the management of commercial activities through
revisions to OMB Circular A-76, "Performance of Commercial Activities," and to
its Supplemental Handbook. These revisions inform agencies of the FAIR Act's requirements;
implement the statutory requirements of the FAIR Act; avoid duplication and confusion by
conforming guidance to the FAIR Act, and place the FAIR Act's requirements in the context
of the Federal Government's larger reinvention, competition and privatization efforts.
Dates: This guidance is effective upon publication in the Federal
For Further Information Contact: Mr. David Childs, Office of
Management and Budget, NEOB Room 6002, 725 17th Street, N.W., Washington, D.C. 20503,
telephone: (202) 395-6104, FAX: (202) 395-7230
Availability: Copies of the updated versions of OMB Circular A-76, its
Revised Supplemental Handbook and this Transmittal Memorandum 20 are available from OMB on
the Internet at:
I. The Federal Activities Inventory Reform Act.
On October 12, 1998, President Clinton signed into law the "Federal Activities
Inventory Reform Act of 1998" ("FAIR Act" or "Act"). The FAIR Act
directs Federal agencies to submit each year an inventory of all their activities that are
performed by Federal employees but are not inherently Governmental (i.e., are commercial).
OMB is to review each agency's Commercial Activities Inventory and consult with the agency
regarding its content. Upon the completion of this review and consultation, the agency
must transmit a copy of the inventory to Congress and make it available to the public. The
FAIR Act establishes an administrative appeals process under which an interested party may
challenge the omission or the inclusion of a particular activity on the inventory.
Finally, the FAIR Act requires agencies to review the activities on the inventory. Each
time that the head of an executive agency considers contracting with a private sector
source for the performance of such an activity, the head of the executive agency shall use
a competitive process. When conducting cost comparisons, agencies must ensure that all
costs are considered.
In enacting the FAIR Act, Congress did not displace longstanding Executive Branch
policy regarding the performance of commercial activities. The Federal Government seeks to
achieve economy and enhance productivity and quality through competition to obtain the
best service at least cost to the American taxpayer. This Federal policy regarding the
performance of commercial activities has been provided by OMB Circular A-76,
"Performance of Commercial Activities." Specific guidance regarding the
implementation of this policy is provided by the March 1996 Revised Supplemental Handbook
to OMB Circular A-76 and by agency consultation with OMB.
The Act codified some of this guidance in law. In particular, the FAIR Act codified the
pre-existing requirement for agencies to inventory their commercial activities, as well as
the pre-existing definition of "inherently governmental function."
Each time an agency considers changing from Government employee performance of a
commercial activity on the inventory, the FAIR Act requires that a competitive process be
used and that cost comparisons "shall ensure that all costs ... are considered and
that the costs considered are realistic and fair". Here, too, the Act codifies or
defers to pre-existing Executive Branch policy.
II. Implementation of the FAIR Act.
OMB Circulars are a well-established vehicle for directing agencies on the management
of their activities. Together, Circular A-76 and its Supplemental Handbook have
established the broad principles, individual definitions and specific directives on the
management of commercial activities, including the inventory and other items codified by
the FAIR Act. OMB wanted to provide the agencies with prompt and clear guidance on how to
implement the Act within the short time-frame available. OMB concluded that the best way
to provide agencies with clear and prompt guidance on how to implement the FAIR Act was to
revise the current circular and handbook so that they conform to the FAIR Act. OMB's goal
in drafting these revisions was to ensure that the agencies fully implement the FAIR Act's
requirements, and that the agencies do so without confusion, wasted effort or delays
caused by uncertainty about the applicability of current guidance.
Accordingly, on March 1, 1999, OMB requested agency and public comments on proposed
revisions to the Handbook to implement the FAIR Act (64 FR 10031). The proposed revisions
would inform agencies of the FAIR Act requirements and, to avoid confusion, conform the
Handbook's provisions so that they cross-reference and parallel relevant FAIR Act
To implement the FAIR Act's inventory requirement, OMB proposed to make conforming
changes to the Handbook's pre-existing inventory requirement. The changes incorporated the
statutory due date of June 30th for agency submissions to OMB and added, to the
inventory's description of each activity, two new data elements required by the FAIR Act.
In addition, OMB proposed provisions to the Handbook to address the FAIR Act's other
requirements. These provisions:
(1) reiterated the requirements for OMB to review the commercial activity inventories
and to consult with the agencies regarding them; for the agencies, after OMB's
review-and-consultation is completed, to send the inventories to Congress and to make them
available to the public; and for the agencies to hear and decide administrative
"challenges" in which interested parties challenge an agency's decision to
include an activity in (or exclude an activity from) the inventory; and
(2) incorporated the FAIR Act's requirement that agencies "review" the
activities on the inventory; that an agency, each time it considers contracting with a
private sector source for the performance of an activity listed on the inventory, use a
competitive process to select the source (unless otherwise provided "in a law other
than this Act, an Executive order, regulations, or any Executive Branch circular");
and that, when comparing costs, "all costs...are considered and...are realistic and
OMB proposed that agencies rely on and implement the existing guidance with respect to
the cost-comparison competition requirements of the FAIR Act. These procedures are
well-established and direct agencies to create a competitive process that compares costs
completely, accurately, and fairly.
OMB received 82 responses to its request for comments: 10 Federal agencies, 61 industry
or trade groups, and 8 employee organizations responded, in addition to 4 letters from
members of Congress. A discussion of the significant comments, and OMB's responses to
those comments, is provided in the Appendix to this notice.
After considering all comments received on the proposed guidance, OMB is issuing final
guidance to the agencies for implementing the FAIR Act. The guidance consists of changes
to the A-76 Circular, itself, as well as its Supplemental Handbook.
In order to implement the FAIR Act, OMB is making several changes to the guidance as
proposed on March 1:
OMB has revised Circular A-76, itself, in addition to the Supplemental Handbook, to
conform to the requirements of the FAIR Act;
To ensure that agencies comply with the FAIR Act's requirement for review on an
inventory within a reasonable time, OMB will now require annual reports that will, among
other things, discuss the implementation, status, and results of the FAIR Act process;
OMB has clarified that agencies should, as appropriate, permit employee involvement in
the development of the inventory;
OMB is revising agency reporting requirements so that reporting is clearer on
activities that have been converted from contract performance to in-house performance or
retained in-house as a result of a cost-comparison.
With the issuance of these revisions, agencies have been provided guidance for
implementing the FAIR Act. OMB will continue, as it has in the past, to consult with
individual agencies and provide informal guidance as necessary.
III. Executive Branch Management of Commercial Activities Generally
Implementing the FAIR Act is only a part of the Government's reinvention and management
responsibilities. Improving the quality, and reducing the cost, of commercial activities
is an integral part of managing the Nation's resources. The agencies and OMB have an
ongoing responsibility to ensure that these activities are performed in a manner that is
cost-effective and in the best interest of the taxpayer. Developing an inventory of each
agency's commercial activities is a necessary first step in pursuing this objective, one
that has now been codified by the FAIR Act. Once these inventories are developed, they
will then be reviewed, by the agencies and OMB, to identify ways to improve the
performance of the Federal Government's commercial activities.
Equally important, however, is how the agencies manage these activities after
they are identified. In order better to manage commercial activities, OMB revised the
Supplemental Handbook in 1996. The Revised Supplemental Handbook seeks the most
cost-effective means of obtaining commercial support services and provided new
administrative flexibility in the Government's "make or buy" decision process.
The revision modified and, in some cases, eliminated cost comparison requirements for
recurring commercial activities and the establishment of new or expanded interservice
support agreements; reduced reporting and other administrative burdens; provided for
enhanced employee participation; eased transition requirements to facilitate employee
placement; maintained a level playing field for cost comparisons between Federal,
interservice support agreement and private sector offers, and improved accountability and
oversight to ensure that the most cost effective decision is implemented.
As part of this guidance, OMB is now taking the additional step of requiring agencies
to submit annual reports that will discuss the implementation, status, and results of the
FAIR Act process. As we develop experience with the FAIR Act and these procedures, we will
consider whether additional guidance is needed, either for implementation of the FAIR Act
in particular or on management of commercial activities in general.
Jacob J. Lew
Circular No. A-76 (Revised)
Transmittal Memorandum No. 20
June 14, 1999
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND AGENCIES
SUBJECT: Implementing the Federal Activities Inventory Reform Act Through Conforming
Changes to OMB Circular No. A-76 and its March 1996 Revised Supplemental Handbook
This Transmittal Memorandum implements the statutory requirements of the Federal
Activities Inventory Reform Act ("The FAIR Act"), Public Law 105-270. As part of
its longstanding role in the review and oversight of agency management and the allocation
of resources, OMB has established policies regarding the performance of commercial
activities by Federal agencies. These policies are outlined in OMB Circular No. A-76 and
its Revised Supplemental Handbook. The FAIR Act reinforced these policies and procedures;
codified certain requirements with respect to the development by agencies of an annual
commercial activities inventory, and added an opportunity for interested parties to
challenge the contents of the annual inventory.
The changes to the Circular's Revised Supplemental Handbook (Attachment 1) inform
agencies of the FAIR Act's requirements; implement the statutory requirements of the FAIR
Act; avoid duplication and confusion by conforming the Supplemental Handbook to the
provisions of the FAIR Act; and place the FAIR Act's requirements in the context of the
Federal Government's larger reinvention, competition and privatization efforts. As a
result of these changes, the Circular is also being updated with conforming changes
necessary to reflect the requirements of the FAIR Act (Attachment 2). The previous OMB
Circular A-76 was published in the August 16, 1983, Federal Register at pages
37110-37116. The March 1996 Revised Supplemental Handbook was issued through Transmittal
Memorandum 15, published in the April 1, 1996, Federal Register at pages
Under the FAIR Act, agencies are required to submit their commercial activity
inventories to OMB by June 30th of each year, starting this year. THE FIRST
FAIR ACT INVENTORIES ARE, THEREFORE, DUE IN TWO WEEKS. OMB looks forward to
working with the agencies during our review of these inventories, and stands ready to
assist the agencies as the Executive Branch moves forward in its implementation of the
Questions regarding the FAIR Act or this guidance may be addressed to Mr. David Childs
(phone: (202) 395-6104, Fax: (202) 395-7230).
Jacob J. Lew
Revisions to the OMB Circular A-76 March 1996 Revised
1. The Introduction to the Supplemental Handbook (p. iii) is revised
to reflect the fact that challenges to the activities listed in the Commercial Activities
Inventory are permitted under the FAIR Act, by adding to the end of the last sentence on
page iii the following:
"...and as set forth in Appendix 2, Paragraph G, consistent with Section 3 of the
Federal Activities Inventory Reform Act of 1998 (FAIR Act, P.L. 105-270)."
2. Part I, Chapter 1, paragraphs A, B.1 and F, of the Supplemental
Handbook (pp. 3,5) are revised to reflect the requirements of the FAIR Act. As revised,
paragraphs A, B.1 and F read as follows:
This Part sets forth the principles and procedures for managing the Government's
acquisition of recurring commercial support activities, implementing the "Federal
Activities Inventory Reform Act of 1998" ("The FAIR Act"), P.L. 105-270,
and Circular A-76. Exhibit 1 summarizes the conditions that permit conversion to or from
in-house, contract or Inter-Service Support Agreement (ISSA) performance. The requirements
of the FAIR Act apply to the following executive agencies: (1) an executive department
named in 5 USC 101, (2) a military department named in 5 USC 102, and (3) an independent
establishment as defined in 5 USC 104. The requirements of the FAIR Act do not apply to:
(1) the General Accounting Office, (2) a Government corporation or a Government controlled
corporation as defined in 5 USC 103, (3) a non-appropriated funds instrumentality if all
of its employees are referred to in 5 USC 2105(c), or (4) Depot-level maintenance and
repair of the Department of Defense as defined in 10 USC 2460."
"B. Inherently Governmental Activities
1. Inherently Governmental activities are not subject to the FAIR Act, Circular A-76 or
this Supplemental Handbook. As a matter of policy, an inherently Governmental activity is
one that is so intimately related to the exercise of the public interest as to mandate
performance by Federal employees. The Office of Federal Procurement Policy (OFPP) Policy
Letter 92-1, dated September 23, 1992 (Federal Register, September 30, 1992, page
45096), provides guidance on the identification of inherently Governmental activities (see
Appendix 5). This guidance conforms to the definition provided at Section 5, paragraph 2,
of the FAIR Act."
"F. Commercial Activities Inventory
As required by the FAIR Act, Circular A-76 and this Supplemental Handbook, each agency
will maintain a detailed inventory of all in-house commercial activities performed by its
Government employees. This inventory, as described at Appendix 2 of this Supplement, and
any supplemental information requested by OMB, will be submitted not later than June 30 of
each year. Agencies should, as appropriate, permit employee involvement in the development
of this Commercial Activities Inventory."
3. Part II, Chapter 1, Paragraph A.1 of the
Supplemental Handbook (p. 17) is revised by adding a reference to the FAIR Act. As revised,
Paragraph A.1 reads as follows:
1. Part II provides generic and streamlined cost comparison
guidance to comply with the provisions of the FAIR Act and Circular A-76. This includes guidance
for developing in-house costs based upon the Government's Most Efficient Organization (MEO)
and other adjustments to the contract and inter-service support agreement (ISSA) price. It
also sets out the principles for development of cost-based performance standards or other
measures that are comparable to those used by commercial sources. Appendices 6 and 7
provide sector-specific cost comparison guidance."
4. The title of Appendix 2 of the Supplemental
Handbook (p. 38) and the corresponding entry in the Table of Contents are revised from
"OMB Circular No. A-76 Inventory" to "Commercial Activities Inventory."
Portions of this inventory are now required by the FAIR Act, as a matter or law.
5. Paragraph A of Appendix 2 of the Supplemental
Handbook (p. 38) is revised in several ways. The introductory sentences now refer to the
FAIR Act's requirements for a Commercial Activities Inventory and incorporate its due date
(June 30th) for submission to OMB of each agency's inventory. Two data elements are added to
the inventory's description of an activity. These additional data elements (g and h, below)
correspond to the new data elements required under Section 2(a)(1) and (3) of the FAIR
Act. In addition, the existing data element for "Location / organization unit"
is being separated into two elements ("Location" and "Organization
Unit"). Finally, a concluding sentence is added to clarify that agencies have the
flexibility to automate and structure the inventory so long as all the listed data
elements are included. As revised, Paragraph A reads as follows:
"A. Annual Inventory Submission
In accordance with the FAIR Act, Circular A-76 and this Handbook, each agency must
submit to OMB, by June 30 of each year, a detailed Commercial Activities Inventory of all
commercial activities performed by in-house employees, including, at a minimum, the
Agencies have the discretion to automate and to structure the initial submission of the
detailed inventory as they believe most appropriate, so long as the inventory includes
each of these data elements. Agencies must transmit an electronic version of the inventory
to OMB as well as two paper copies. The electronic version should be in a commonly used
software format (commercial off-the-shelf spreadsheet, database or word processing
format). OMB anticipates issuing additional guidance on the structure and format of future
inventory submissions, based on the experience gained from the first annual review and
- Organization unit.
- Activity function code.
- Reason code.
- Year the activity first appeared on FAIR Act Commercial Activities Inventory
(initial value will be 1999).
- Name of a Federal employee responsible for the activity or contact person from whom
additional information about the activity may be obtained.
- Year of cost comparison or conversion (if applicable).
- CIV/FTE savings (if applicable).
- Estimated annualized Cost Comparison dollar savings (if applicable).
- Date of completed Post-MEO Performance Review (if applicable).
6. To reflect the FAIR Act's requirement that
information on full time employees (or its equivalent) be included, paragraph C of Appendix 2
of the Supplemental Handbook (p. 38) has been revised as follows:
Enter the number of authorized full-time employees or FTE (as applicable) in the
commercial activity function or functions as of the date of the inventory. Employees
performing inherently Governmental activities are not reported in the Commercial
7. Paragraph E "A-76 Reason Codes" of
Appendix 2 of the Supplemental Handbook (p. 38) is retitled "Reason Codes."
The phrase "agency A-76 inventories" is changed to "Commercial Activities
Inventory" and "Reason code E" is revised and a new reason code
"I" is added as follows:
- Indicates that the function is retained in-house as a result of a cost
- Indicates the function is being performed in-house as a result of a cost
comparison resulting from a decision to convert from contract to in-house
8. Appendix 2 of the Supplemental Handbook (p. 38)
is further revised by adding three new paragraphs. New paragraph "G" describes the
review and publication of the detailed agency Commercial Activities Inventory and the
challenge-and-appeals process pertaining to its content, as required by the FAIR Act. The
new paragraph "H" includes the FAIR Act's requirements that agencies review the
commercial activities in their inventories and use a competitive process or established
cost comparison procedures each time an agency considers contracting with a private-sector
source for the performance of an activity on the inventory. New paragraph "I"
alerts agencies to the requirement for an annual Report on Agency Management of Commercial
Activities. The new paragraphs read as follows:
"G. & Inventory Review and Publication; Challenges and Appeals.
1. Review and Publication: In accordance with Section 2 of the FAIR Act, OMB will
review the agency's Commercial Activities Inventory and consult with the agency regarding
its content. After this review is completed, OMB will publish a notice in the Federal
Register stating that the inventory is are available to the public. Once the notice
is published, the agency will transmit a copy of the detailed Commercial Activities
Inventory to Congress and make the materials available to the public through its
Washington, D.C. or headquarters offices.
2. Challenges and Appeals: Under Section 3 of the FAIR Act, an agency's decision to
include or exclude a particular activity from the Commercial Activities Inventory is
subject to administrative challenge and, then, possible appeal by an "interested
party." Section 3(b) of the FAIR Act defines "interested party" as:
a. A private sector source that (A) is an actual or prospective offeror for any
contract or other form of agreement to perform the activity; and (B) 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 a. above.
c. An officer or employee of an organization within an executive agency that is an
actual or prospective offeror to perform the activity.
d. 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 an
organization referred to in c. above.
3. An interested party may submit to an executive agency an initial challenge to the
inclusion or exclusion of an activity within 30 calendar days after publication of OMB's Federal
Register notice stating that the inventory is available. The challenge must set forth
the activity being challenged with as much specificity as possible, and the reasons for
the interested party's belief that the particular activity should be reclassified as
inherently Governmental (and therefore be deleted from the inventory) or as commercial
(and therefore be added to the inventory) in accordance with OFPP Policy Letter 92-1 on
inherently Governmental functions (see Appendix 5) or as established by precedent (such as
when other agencies have contracted for the activity or undergone competitions for this or
4. The agency head may delegate the responsibility to
designate the appropriate official(s) to receive and decide the initial challenges.
As mandated by the FAIR Act, the deciding official must decide the initial challenge and
transmit to the interested party a written notification of the decision within 28 calendar
days of receiving the challenge. The notification must include a discussion of the
rationale for the decision and, if the decision is adverse, an explanation of the party's
right to file an appeal.
5. An interested party may appeal an adverse decision to an initial
challenge within 10 working days after receiving the written notification of the decision.
The agency head may delegate the responsibility to receive and
decide appeals to the official identified in paragraph 9.a of the Circular (or an
equivalent senior policy official), without further delegation. Within 10 working
days of receipt of the appeal, the official must decide the appeal and transmit to the
interested party a written notification of the decision together with a discussion of the
rationale for the decision. The agency must also transmit to OMB and the Congress a copy
of any changes to the inventory that result from this process, make the changes available
to the public and publish a notice of public availability in the Federal Register."
"H. Agency Review and Use of Inventory.
Section 2(d) of the FAIR Act requires that each agency, within a reasonable time after
the publication of the notice that its inventories are publicly available, review the
activities on the detailed commercial activities inventory. Agencies will report to OMB on
this process as part of the Report on Agency Management of Commercial Activities required
under Paragraph I, below. In addition, Section 2(d)-(e) of the FAIR Act provides that,
each time the head of the executive agency considers contracting with a private-sector
source for the performance of an activity included on the inventory, the agency must use a
competitive process to select the source and must ensure that, when a cost comparison is
used or otherwise required for the comparison of costs, all costs are considered and the
costs considered are realistic and fair. In carrying out these requirements, agencies must
rely on the guidance contained in Circular A-76 and this Supplemental Handbook to
determine if cost comparisons are required and what competitive method is appropriate. All
competitive costs of in-house and contract performance are included in the cost
comparison, when such comparison is required, including the costs of quality assurance,
technical monitoring, liability insurance, retirement benefits, disability benefits and
overhead that may be allocated to the function under study or may otherwise be expected to
change as a result of changing the method of performance."
"I. Annual Report on Agency Management of Commercial Activities.
As part of ongoing agency responsibility to manage their performance of commercial
activities and ongoing OMB oversight, OMB will require agencies to report annually on such
management. The content of the reports is likely to vary depending upon the progress made
by each agency in reviewing their inventory and on the experience OMB gains from the first
round of inventory submissions, review, challenges and appeals mandated by the FAIR Act.
OMB anticipates issuing subsequent guidance if it determines that supplemental reports or
other information is needed for future inventory submissions to assure that agencies have
correctly implemented all of the provisions of the FAIR Act and taken advantage of the
management information inherent in the detailed Commercial Activities Inventory."
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON. D.C. 20503
CIRCULAR NO. A-76 (REVISED 1999)
August 4, 1983
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Performance of Commercial Activities
- Purpose. This Circular establishes Federal
policy regarding the performance of commercial activities and implements the statutory
requirements of the Federal Activities Inventory Reform Act of 1998, Public Law 105-270.
The Supplement to this Circular sets forth the procedures for determining whether
commercial activities should be performed under contract with commercial sources or
in-house using Government facilities and personnel.
- Rescission. OMB Circular No. A-76 (Revised),
dated March 29, 1979; and Transmittal Memoranda 1 through 14 and 16 through 18.
- Authority. The Budget and Accounting Act of 1921
(31 U.S.C. 1 et seq.), The Office of Federal Procurement Policy Act Amendments of
1979. (41 U.S.C. 401 et seq.), and The Federal Activities Inventory Reform Act of
1998. (P. L. 105-270).
- In the process of governing, the Government should not
compete with its citizens. The competitive enterprise system, characterized by
individual freedom and initiative, is the primary source of national economic strength. In
recognition of this principle, it has been and continues to be the general policy of the
Government to rely on commercial sources to supply the products and services the
- This national policy was promulgated through Bureau of
the Budget Bulletins issued in 1955, 1957 and 1960. OMB Circular No. A-76 was
issued in 1966. The Circular was previously revised in 1967, 1979, and 1983. The
Supplement (Revised Supplemental Handbook) was previously revised in March 1996
(Transmittal Memorandum 15).
- Policy. It is the policy of the United States
- Achieve Economy and Enhance Productivity.
Competition enhances quality, economy, and productivity. Whenever commercial sector
performance of a Government operated commercial activity is permissible, in accordance
with this Circular and its Supplement, comparison of the cost of
contracting and the cost of in-house performance shall be performed to determine who will
do the work. When conducting cost comparisons, agencies must ensure that all costs are
considered and that these costs are realistic and fair.
- Retain Governmental Functions In-House. Certain
functions are inherently Governmental in nature, being so intimately related to the
public interest as to mandate performance only by Federal employees. These functions are
not in competition with the commercial sector. Therefore, these functions shall be
performed by Government employees.
- Rely on the Commercial Sector. The Federal
Government shall rely on commercially available sources to provide commercial products and
services. In accordance with the provisions of this Circular and its Supplement, the
Government shall not start or carry on any activity to provide a commercial product or
service if the product or service can be procured more economically from a commercial
- Definitions. For purposes of this Circular:
- A commercial activity is one which is operated
by a Federal executive agency and which provides a product or service that could be obtained
from a commercial source. Activities that meet the definition of an inherently
Governmental function provided below are not commercial activities. A representative list
of commercial activities is provided in Attachment A. A commercial activity also may be
part of an organization or a type of work that is separable from other functions or
activities and is suitable for performance by contract.
- A conversion to contract is the changeover of an
activity from Government performance to performance under contract by a commercial
- A conversion to in-house is the changeover of an
activity from performance under contract to Government performance.
- A commercial source is a business or other
non-Federal activity located in the United States, its territories and possessions, the
District of Columbia or the Commonwealth of Puerto Rico, which provides a commercial
product or service.
- An inherently Governmental function is a
function which is so intimately related to the public interest as to mandate performance by
Government employees. Consistent with the definitions provided in the Federal Activities
Inventory Reform Act of 1998 and OFPP Policy Letter 92-1, these functions include those
activities which require either the exercise of discretion in applying Government
authority or the use of value judgment in making decisions for the Government. Services or
products in support of inherently Governmental functions, such as those listed in
Attachment A, are commercial activities and are normally subject to this Circular.
Inherently Governmental functions normally fall into two categories:
- (1) The act of governing; i.e., the discretionary
exercise of Government authority. Examples include criminal investigations, prosecutions
and other judicial functions; management of Government programs requiring value judgments,
as in direction of the national defense; management and direction of the Armed Services;
activities performed exclusively by military personnel who are subject to deployment in a
combat, combat support or combat service support role; conduct of foreign relations;
selection of program priorities; direction of Federal employees; regulation of the use of
space, oceans, navigable rivers and other natural resources; direction of intelligence and
counter-intelligence operations; and regulation of industry and commerce, including food
- (2) Monetary transactions and entitlements, such as
tax collection and revenue disbursements; control of the Treasury accounts and money
supply; and the administration of public trusts.
- A cost comparison is the process of developing
an estimate of the cost of Government performance of a commercial activity and
comparing it, in accordance with the requirements of the Supplement, to the cost to the
Government for contract performance of the activity.
- Directly affected parties are Federal employees
and their representative organizations and bidders or offerors on the instant
- Interested parties for purposes of challenging
the contents of an agency's Commercial Activities Inventory under the Federal Activities
Inventory Reform Act of 1998 are:
- (1) A private sector source that (A) is an actual or
prospective offeror for any contract or other form of agreement to perform the activity;
and (B) 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
- (2) A representative of any business or professional
association that includes within its membership private sector sources referred to in (1)
- (3) An officer or employee of an organization within an
executive agency that is an actual or prospective offeror to perform the activity.
- (4) 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 an organization referred to in (3) above.
- Unless otherwise provided by law, this Circular and its
Supplement shall apply to all executive agencies and shall provide administrative
direction to heads of agencies.
- This Circular and its Supplement apply to printing and
binding only in those agencies or departments which are exempted by law from the
provisions of Title 44 of the U.S. Code.
- This Circular and its Supplement shall not:
- (1) Be applicable when contrary to law, Executive Orders,
or any treaty or international agreement;
- (2) Apply to inherently Governmental functions as defined
in paragraph 6.e.;
- (3) Apply to the Department of Defense in times of a
declared war or military mobilization;
- (4) Provide authority to enter into contracts;
- (5) Authorize contracts which establish an
employer-employee relationship between the Government and contractor employees. An
employer-employee relationship involves close, continual supervision of individual
contractor employees by Government employees, as distinguished from general oversight of
contractor operations. However, limited and necessary interaction between Government
employees and contractor employees, particularly during the transition period of
conversion to contract, does not establish an employer-employee relationship.
- (6) Be used to justify conversion to contract solely to avoid personnel ceilings or
- (7) Apply to the conduct of research and development. However, severable in-house
commercial activities in support of research and development, such as those listed in
Attachment A, are normally subject to this Circular and its Supplement; or
- (8) Establish and shall not be construed to create any substantive or procedural basis
for anyone to challenge any agency action or inaction on the basis that such action or
inaction was not in accordance with this Circular, except as specifically set forth in
Part 1, Chapter 3, paragraph K of the Supplement, "Appeals of Cost Comparison
Decisions" and as set forth in Appendix 2, Paragraph G, consistent with Section 3 of
the Federal Activities Inventory Reform Act of 1998.
- The requirements of the Federal Activities Inventory
Reform Act of 1998 apply to the following executive agencies:
- (1) an executive department named in 5 USC 101,
- (2) a military department named in 5 USC 102, and
- (3) an independent establishment as defined in 5 USC 104.
- The requirements of the Federal Activities Inventory
Reform Act of 1998 do not apply to the following entities or activities:
- (1) the General Accounting Office,
- (2) a Government corporation or a Government controlled corporation as defined in 5 USC
- (3) a non-appropriated funds instrumentality if all of its employees are referred to in
5 USC 2105(c), or
- (4) Depot-level maintenance and repair of the Department of Defense as defined in 10
- Government Performance of a Commercial Activity.
Government performance ofa commercial activity is authorized under any of the
- No Satisfactory Commercial Source Available.
Either no commercial source is capable of providing the needed product or service, or use
of such a source would cause unacceptable delay or disruption of an essential program.
Findings shall be supported as follows:
- (1) If the finding is that no commercial source is capable
of providing the needed product or service, the efforts made to find commercial sources
must be documented and made available to the public upon request. These efforts shall
include, in addition to consideration of preferential procurement programs (see Part I,
Chapter 1, paragraph C of the Supplement) at least three notices describing the
requirement in the Commerce Business Daily over a 90-day period or, in cases of bona
fide urgency, two notices over a 30-day period. Specifications and requirements in
the solicitation shall not be unduly restrictive and shall not exceed those required of
in-house Government personnel or operations.
- (2) If the finding is that a commercial source would cause
unacceptable delay or disruption of an agency program, a written explanation, approved by
the assistant secretary or designee in paragraph 9.a. of the Circular, must show the
specific impact on an agency mission in terms of cost and performance. Urgency alone is
not adequate reason to continue in-house operation of a commercial activity. Temporary
disruption resulting from conversion to contract is not sufficient support for such a
finding, nor is the possibility of a strike by contract employees. If the commercial
activity has ever been performed by contract, an explanation of how the instant
circumstances differ must be documented. These decisions must be made available to the
public upon request.
- (3) Activities may not be justified for in-house
performance solely on the basis that the activity involves or supports a classified
program or the activity is required to perform an agency's basic mission.
- National Defense.
- (1) The Secretary of Defense shall establish criteria for
determining when Government performance of a commercial activity is required for national
defense reasons. Such criteria shall be furnished to OMB, upon request.
- (2) Only the Secretary of Defense or his designee has the
authority to exempt commercial activities for national defense reasons.
- Patient Care. Commercial activities performed at
hospitals operated by the Government shall be retained in-house if the agency head,
in consultation with the agency's chief medical director, determines that in-house
performance would be in the best interests of direct patient care.
- Lower cost. Government performance of a
commercial activity is authorized if a cost comparison prepared in accordance with the Supplement
demonstrates that the Government is operating or can operate the activity on an ongoing
basis at an estimated lower cost than a qualified commercial source.
- Action Requirements. To ensure that the
provisions of this Circular and its Supplement are followed, each agency head shall:
- Designate an official at the assistant secretary or
equivalent level and officials at a comparable level in major component organizations to have
responsibility for implementation of this Circular and its Supplement within the agency.
- Establish one or more offices as central points of
contact to carry out implementation. These offices shall have access to all
documents and data pertinent to actions taken under the Circular and its Supplement and
will respond in a timely manner to all requests concerning inventories, schedules,
reviews, results of cost comparisons and cost comparison data.
- Be guided by Federal Acquisition Regulation (FAR)
Subpart 24.2 (Freedom of Information Act) in considering requests for information.
- Implement this Circular and its Supplement with
a minimum of internal instructions. Cost comparisons shall not be delayed pending issuance
of such instructions.
- Ensure the reviews of all existing in-house commercial
activities are completed within a reasonable time in accordance with the
Federal Activities Inventory Reform Act of 1998 and the Supplement.
- Annual Reporting Requirement. As required by
the Federal Activities Inventory Reform Act of 1998 and Appendix 2 of the Supplement, no later
than June 30 of each year, agencies shall submit to OMB a Commercial Activities Inventory
and any supplemental information requested by OMB. After review and consultation by OMB,
agencies will transmit a copy of the Commercial Activities Inventory to Congress and make
the contents of the Inventory available to the public. Agencies will follow the process
provided in the Supplement for interested parties to challenge (and appeal) the contents
of the inventory.
- OMB Responsibility and Contact Point. All
questions or inquiries should be submitted to the Office of Management and Budget, Room 6002 NEOB,
Washington, DC 20503. Telephone number (202) 395-6104, FAX (202) 395-7230.
- Effective Date. This Circular and the changes
to its Supplement are effective immediately.
OMB Circular No. A-76
EXAMPLES OF COMMERCIAL ACTIVITIES
- Audiovisual Products and Services
- Photography (still, movie, aerial, etc.)
Photographic processing (developing, printing, enlarging, etc.)
Film and videotape production (script writing, direction, animation,
editing, acting, etc.)
Microfilming and other microforms
Art and graphics services
Distribution of audiovisual materials
Reproduction and duplication of audiovisual products
Audiovisual facility management and operation
Maintenance of audiovisual equipment
- Automatic Data Processing
- ADP services - batch processing, time-sharing, facility management, etc.
Programming and systems analysis, design, development, and simulation
Key punching, data entry, transmission, and teleprocessing services
Systems engineering and installation
Equipment installation, operation, and maintenance
- Food Services
- Operation of cafeterias, mess halls, kitchens, bakeries, dairies, and commissaries
Ice and water
- Health Services
- Surgical, medical, dental, and psychiatric care
Hospitalization, outpatient, and nursing care
Eye and hearing examinations and manufacturing and fitting glasses and hearing aids
Medical and dental laboratories
- Industrial Shops and Services
- Machine, carpentry, electrical, plumbing, painting, and other shops
Industrial gas production and recharging
Equipment and instrument fabrication, repair and calibration
Plumbing, heating, electrical, and air conditioning services, including repair
Fire protection and prevention services
Custodial and janitorial services
Refuse collection and processing
- Maintenance, Overhaul, Repair, and Testing
- Aircraft and aircraft components
Ships, boats, and components
Electronic equipment and systems
Weapons and weapon systems
Medical and dental equipment
Office furniture and equipment
Industrial plant equipment
- Management Support Services
- Advertising and public relations services
Financial and payroll services
- Manufacturing, Fabrication, Processing, Testing, and Packaging
- Ordnance equipment
Clothing and fabric products
Liquid, gaseous, and chemical products
Communications and electronics equipment
Rubber and plastic products
Optical and related products
Sheet metal and foundry products
Test and instrumentation equipment
- Office and Administrative Services
- Library operations
Stenographic recording and transcribing
Word processing/data entry/typing services
Management information systems, products and distribution
Financial auditing and services
- Other Services
- Laundry and dry cleaning
Mapping and charting
Architect and engineer services
Training -- academic, technical, vocational, and specialized Operation of utility
systems (power, gas, water steam, and sewage)
Laboratory testing services
- Printing and Reproduction
- Facility management and operation
Printing and binding -- where the agency or department is exempted from the provisions
of Title 44 of the U.S. Code
Reproduction, copying, and duplication
- Real Property
- Design, engineering, construction, modification, repair, and maintenance
of buildings and structures; building mechanical and electrical equipment and
systems; elevators; escalators; moving walks
Construction, alteration, repair, and maintenance of roads and other surfaced areas
Landscaping, drainage, mowing and care of grounds
Dredging of waterways
- Guard and protective services
Systems engineering, installation, and maintenance of security systems and
individual privacy systems
- Special Studies and Analyses
- Cost benefit analyses
Scientific data studies
Defense, education, energy studies
- Systems Engineering, Installation, Operation, Maintenance, and Testing
- Communications systems - voice, message, data, radio, wire, microwave, and
Satellite tracking and data acquisition
Radar detection and tracking
Television systems - studio and transmission equipment, distribution systems,
receivers, antennas, etc.
Bulk storage facilities
- Operation of motor pools
Vehicle operation and maintenance
Air, water, and land transportation of people and things
Trucking and hauling
Summary of Comments Received
- OMB received 82 responses to its March 1, 1999, Federal
Register request for comments: 10 Federal agencies; 61 industry or trade groups, and
8 employee organizations responded, in addition to 4 letters from members of Congress. A
discussion of the significant comments, and OMB's responses (including resulting changes
that have been made to Circular A-76 and its Supplemental Handbook), is provided below.
1. The Development and Submission of the
Commercial Activities Inventory
- OMB received a number of comments regarding the proposed
revisions to Appendix 2 of the Supplemental Handbook that address the requirement in
Section 2(a) of the FAIR Act that agencies develop and submit to OMB, by June 30th
of each year, "a list of activities performed by Federal Government sources for the
executive agency that, in the judgment of the head of the executive agency, are not
inherently Governmental functions."
- Comment: One agency commenter stated that it
would be burdensome for the agency to include in the agency's inventory the name of a
Federal employee with respect to each listed commercial activity.
Response: This data element is specifically
required by Section 2(a)(3) of the FAIR Act itself.
- Comment: Several commenters asked for changes to
the data elements to prevent any implication that agency savings could only be achieved by
"outsourcing" (converting work from in-house to contract performance) but not by
"insourcing" (converting work from contract to in-house performance).
Specifically, the commenters asked that OMB delete the commercial activity data element
for "CIV/FTE Savings" (item g, of the Supplemental Handbook's Appendix 2). The
commenters also asked for savings information to be collected when a conversion is from
contract to in-house performance. Finally, the commenters asked that agencies provide, as
part of the data that is collected pursuant to paragraph "F" in Appendix 2 of
the Handbook, aggregate data on the numbers of contractor employees performing work for
Response: The cost-comparison process under
Circular A-76 provides a level playing field for agencies to determine whether savings
would result from a conversion of work, whether that conversion is from in-house to
contract performance or from contract to in-house performance. Moreover, the
cost-comparison process can result in savings even if no conversion occurs. The commercial
activity data element for "CIV/FTE Savings" reflects the number of civilian FTE
saved as a result of conducting a cost comparison, whether the function is retained
in-house or converted to contract. This data element, therefore, is not meant to suggest
that savings can only occur through outsourcing.
With respect to the request for additional information on
savings that result from conversions from contract to in-house performance, the
inventories will include an additional data element (a "reason code") to
identify those commercial activities that are "being performed in-house as a result
of a cost comparison resulting in a decision to convert from contract to in-house
performance" (new reason code "I"). A corresponding change has been made to
limit reason code "E" to functions retained in-house as a result of a cost
comparison. The request for information on the aggregate number of agency contractor
employees is beyond the scope of the FAIR Act, which is limited to performance of
commercial activities by Federal employees.
- Comment: Several commenters suggested that
additional "reason codes" be included that would identify commercial functions
that, in the agency's view, should not be subject to conversion to contract because of its
need for a cadre of highly skilled employees, in a specialized technical or scientific
development area, to ensure that a minimum in-house capability ("core
capability") in the area is maintained.
Response: The inclusion of a function on the
agency's inventory of commercial activities does not mean that the agency is required to
compete the function for outsourcing. Rather, the FAIR Act in Section 2(d) requires each
agency to review its inventory of commercial activities. Presumably, this review would
include consideration of outsourcing, consolidation, privatization, other reinvention
alternatives or maintaining the status quo. Not all commercial activities
performed by Federal employees should be performed by the private sector, though all such
activities should be inventoried under the provisions of the FAIR Act and Circular A-76.
The decision as to which commercial functions represent "core capabilities," and
thus should be retained in-house, remains with the agency head. Accordingly, a specific
reason code for "core capability" was not added to the inventory.
- Comment: A number of commenters requested that
the inventory be expanded to include inherently Governmental positions, along the lines of
the information requested of the agencies on May 12, 1998 (Memorandum M-98-10,
"Inventory of Commercial Activities").
Response: The FAIR Act requires agencies to develop
an inventory of the agency activities that "are not inherently Governmental
functions." The FAIR Act does not request any information on inherently Governmental
activities; its focus is limited to commercial activities.
As part of its pre-FAIR Act oversight function to evaluate
how agencies determine what functions performed by Federal employees are classified as
commercial, OMB requested summary information from agencies that also included functions
they classified as not commercial (i.e., inherently Governmental functions). When OMB
conducts its FAIR Act review and consultation on the Commercial Activities Inventory
submissions, it will do so in light of the information gained from its review of the
agencies' responses to OMB's Memorandum M-98-10.
- Comment: Several commenters expressed their
views as to which positions in the Department of Defense should be designated as
inherently Governmental and, therefore, excluded from the Commercial Activities Inventory.
Response: Under the FAIR Act, the agency head makes
the determination of which activities are to be excluded from the Commercial Activities
Inventory because they are "inherently Governmental", as defined by the Act and
existing guidance. Part of OMB's review of the agencies' submissions will be to review
these judgments, and to consult with the agencies on them.
- Comment: One commenter interpreted the Act's use
of the term "full-time employees (or its equivalent)" to mean that the Act
applied only to civilian employees and, thus, to exclude military positions from the Act's
Commercial Activities Inventory requirement.
Response: All activities of the Federal Government
that "are not inherently Governmental" are to be inventoried under the FAIR Act.
This requirement is not limited to civilian employees. Accordingly, military personnel
performing commercial activities are subject to the FAIR Act and must be inventoried. For
clarity, the data element FTE described in Appendix 2, paragraph "C" has been
clarified to include "authorized full-time employees or FTE (as applicable)."
- Comment: Several commenters stated that agencies
should, in accordance with the principles of Executive Order 12871 ("Labor-Management
Partnerships"), permit employee involvement in the development of the agencies'
inventories of commercial activities.
Response: Executive Order 12871 does apply.
Agencies should seek employee input in the development of the Commercial Activities
Inventory, as appropriate, and the guidance has been revised to say so. It remains up to
the agency head to make the determination whether a function is commercial or inherently
Governmental in nature. The FAIR Act also provides that Federal employees and their
representatives are "interested parties" who may challenge the contents of the
2. OMB's Review of the Commercial Activities
Inventory and the Availability of the Inventories to the Public
- Comment: Under Section 2(b) of the FAIR Act, OMB
"shall review the executive agency's list for a fiscal year and consult with the head
of the executive agency regarding the contents of the final list for that fiscal
year." When that review and consultation is completed, the inventory is then made
available to the public under Section 2(c), with a notice of availability published by OMB
in the Federal Register. Several commenters expressed concern that the FAIR Act
did not establish a timetable for OMB's review of agency inventories or their availability
for public review.
Response: OMB intends to complete its review and
consultation in a timely manner. Since this is a new process, OMB cannot set a firm
timetable at this time. However, it is anticipated that the review and consultation should
take about 60 days after OMB receives the agency inventory and any requested supplemental
information. The notice of the inventory's public availability would be published within a
few days thereafter.
- Comment: Several commenters stated that, if an
employee's activities are considered commercial and are therefore included on the agency's
list, the Handbook should require timely notification to those employees.
Response: In accordance with Section 2(c) of the
FAIR Act, OMB will publish a notice in the Federal Register when the inventories
are available to the public (after the completion of OMB's review-and-consultation). The
FAIR Act and the revised Handbook require each agency to make its inventory available to
the public, which, of course, includes its employees and their representatives.
3. "Competition" and "Cost
- Comment: Section 2(d) of the FAIR Act provides
that, "[w]ithin a reasonable time after" an agency's inventory has been made
available to the public, the head of the agency "shall review the activities on the
list." Several commenters recommended that OMB define what constitutes a
"reasonable time" for the agency to review its inventory of commercial
activities. One commenter suggested a time frame of 1 to 2 years, depending on the number
of commercial activities on an agency's inventory. One commenter also suggested that
agencies should be required to publish for public comment their timetable for reviewing
Response: The FAIR Act does not provide a
definition of the phrase "reasonable time." OMB believes that agencies should
conduct such review in conjunction with their larger ongoing review of all functions for
possible re-engineering, privatization, consolidation or other reinvention under the NPR
and the Government Performance and Results Act. As part of its ongoing oversight of agency
management of commercial activities performance, OMB will now require agencies to provide
annual reports to OMB on the FAIR Act process, including their review and use of the
Commercial Activities Inventory.
- Comment: Several commenters took issue with the
statement in the preamble to the proposal that "the FAIR Act requires agencies . . .
to review the activities on the list for possible performance by the private sector."
(64 FR 10031) They pointed out that Section 2(d) of the FAIR Act does not specify a
particular purpose for the review.
Response: The FAIR Act inventory provides
information that can assist the agency in considering a wide variety of options for how to
satisfy its commercial activity needs that are performed by Federal employees. These
options include both the possibility of the private sector fulfilling the need (through
such actions as direct conversion, competition, and privatization), as well as continued
agency reliance on Federal employees (with, perhaps, improvements that can flow from
process changes suggested in the competition).
- Comment: Several commenters interpreted Section
2(d) of the FAIR Act as permitting the direct conversion, without a cost comparison,
of any commercial activity on the list (of any size or type) to performance by
the private sector. In their view, FAIR does not preclude an agency from utilizing any of
the processes allowed by law, including private-private competition as prescribed in FAR
Part 8, 15 and 36. Other commenters expressed concern that the proposed revisions to the
Supplemental Handbook required public-private cost comparisons in situations where such
cost comparisons are not presently required.
Response: The FAIR Act envisions the use of
competition to select a source when an agency considers contracting with a private sector
source for performance of an activity on the list, but the law did not modify existing
policies regarding the conduct of competitions. Existing guidance provides guidelines for
determining when cost comparisons are required and, if required, how they are conducted.
- Comment: Several commenters viewed the FAIR Act
as prohibiting an agency from converting commercial work from contract to in-house
performance under any condition.
Response: The FAIR Act addresses only inventories
of commercial activities that are performed by Federal employees. It does not address
commercial activities that are performed through contract and, therefore, does not address
the conversion of contract work to in-house performance.
- Comment: Several commenters stated their view
that the FAIR Act requires substantial changes to the Circular A-76 costing rules so that
they incorporate "all costs," and in particular the costs listed in the
parenthetical in Section 2(e) (i.e., the costs of quality assurance, technical monitoring
of the performance of such function, liability insurance, employee retirement and
disability benefits, and all other overhead costs).
Response: Existing guidance already requires
agencies, in conducting cost comparisons, to consider all the fair and reasonable costs
addressed in Section 2(e) of the FAIR Act. (See 64 FR 10032). The Supplemental Handbook
requires consideration of all costs to the taxpayer that could be expected to change as a
result of a conversion to or from performance by in-house or contract employees.
- Comment: Several commenters suggested that
public-private competitions must be based on "best-value" principles. They were
concerned that OMB's proposed guidance relies on "cost-only competitions," thus
ignoring the potential use of the best-value approach in the cost comparison process.
Response: Existing guidance is not limited to
"cost-only competitions." It also allows for best value tradeoffs between cost
and other factors. The competitive-source selection process outlined at Part 1, Chapter 3,
paragraph H of the Supplemental Handbook permits use of the best value source selection
approach in the context of public-private competition.
4. The FAIR Act "Challenge" Process
- Comment: Section 3 of the FAIR Act provides for
an administrative "challenge" process under which "interested parties"
may challenge the agency's omission, or inclusion, of an activity on its FAIR Act
inventory. Under this process, an "initial decision" is rendered by an agency
official designated by the agency head. The interested party may then file an appeal of an
adverse decision to the agency head. Several commenters suggested that, in the case of an
appeal, the agency should publish its initial decision and the appeal in the Federal
Register and request comments of other interested parties so that they may be
considered by the agency head. It was further suggested that the final appeal should be
reviewed by OMB, the Small Business Administration, the General Accounting Office, and
relevant congressional appropriations and authorization committee staff.
Response: The requested procedures would go far
beyond the FAIR Act. In addition, since Section 3 provides the agency head with 10 days to
decide an appeal, there is not sufficient time for the agency to solicit, receive, and
consider public comments.
5. Implementing the FAIR Act Via Revisions to A-76
& the Supplemental Handbook
Comment: A number of commenters suggested that OMB
use an alternative vehicle to implement the FAIR Act guidance, such as issuing regulations
or a separate circular, rather than making changes to the existing guidance on the
performance of commercial activities contained in OMB Circular A-76 and its Supplemental
Response: Circulars are a well-established vehicle
for directing agencies on management of their activities. Circular A-76 already
establishes the broad principles and the Revised Supplemental Handbook provides the
specific definitions and direction on management of commercial activities, including the
inventory and other activities that are codified by the FAIR Act. For this reason, it
makes much more sense to revise the existing guidance than to develop a new circular. More
importantly, however, OMB wanted to provide the agencies with prompt and clear guidance on
how to implement the Act within the short time frame available and without confusion or
wasted effort on the part of the agencies. Without revising the Handbook to conform to the
FAIR Act, repetitive and competing guidance would exist in a number of areas. For example,
the Handbook already requires agencies to develop an annual inventory of their commercial
activities and specifies what information (data elements) is to be included. It also
contains guidance for when and how agencies are to conduct cost comparisons and what costs
should be included. These are all specific areas addressed by the FAIR Act. Ironically,
the confusion that could result from issuing a new circular might slow agencies down
rather than speeding them up.
Revising the Circular and Supplemental Handbook so that
they conform to the FAIR Act is the best way to provide agencies with clear and prompt
guidance on how to implement the Act.
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