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Synopsis of the Capital Programming Guide

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Staff Paper Prepared for the President's Commission to Study Capital Budgeting

June 19, 1998
The Capital Programming Guide is to provide professionals in the Federal Government a basic reference on principles and techniques for planning, budgeting, procurement, and management of capital assets.

The Guide was developed by a group of more than 80 staff representing 14 agencies, plus contributions by the General Accounting Office. The Guide was published in July 1997 as a Supplement to OMB Circular A-11: Part 3. This Circular provides agencies with guidance on the kinds of information to be included in their budget submissions. OMB intends to update the Guide from time to time based on experience with its use and further development of the principles and techniques.

The Guide is organized to reflect the four phases of the capital programming process: planning, budgeting, procurement, and management-in-use. Each phase overlaps the others and is composed of a number of steps.

Planning. The planning phase is the "core" of the capital programming process. Its products are applied throughout the remaining phases, and information from the other phases flows into the planning phase. The six steps in the planning phase are: 1) strategic and program performance linkage; 2) baseline assessment and identifying the performance gap; 3) functional requirements; 4) alternatives to capital assets; 5) choosing the best capital asset, which focuses on benefit/cost and risk analysis; and 6) the agency capital plan, which is to include an inventory of existing capital assets.

Budgeting. The budgeting phase begins when the agency submits its proposal to the Office of Management and Budget for the coming fiscal year. This phase could also be called the justification or approval phase. The agency justifies its proposal to OMB and, if approved, the agency and the Administration justify the proposal to Congress. It emphasizes the importance of full upfront funding for capital acquisitions. This phase ends when the Congress appropriates funds for the acquisition and the funds are apportioned to the agency.

Procurement. In this phase the agency first validates the decisions in the planning phase as adjusted by the budget phase. It emphasizes three key principles for managing risk: avoiding or limiting development work and using off-the-shelf acquisitions wherever possible; making effective use of competition; and establishing a performance-based acquisition system. Other steps emphasize aspects of contract selection, evaluation, award, and management.

Management-in-use. This phase begins once the acquisition is accepted and put in use. This phase emphasizes comparing planned and actual performance of the acquisition, evaluation of the process that developed the plan for the asset, and ensuring adequate maintenance and proper disposal of the asset.

President's Commission to Study Capital Budgeting

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