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X.X  OFFICEOFMANAGEMENTANDBUDGET    ?+ ` hp x (#X?0 `  Subject :0` ` (#` (#ImplementationoftheFederalActivitiesInventoryReformActof1998(Public  Law105270)( FAIRAct) ` (#` (# E.` hp x (#` XE?+ ` hp x (#X?0 `  Agency : ` OfficeofManagementandBudgetP ` (#` (# E.` hp x (#` XE0  0` (#(#ExecutiveOfficeofthePresident ` (#` (# ?+ ` hp x (#X?0 `  Action : ` OMBissuesfinalguidanceontheImplementationoftheFAIRAct. p ` (#` (# E.` hp x (#` XE0  0` (#(#   Summary : ` TheOfficeofManagementandBudget(OMB)herebyissuesguidanceto P  implementthe FederalActivitiesInventoryReformActof1998". ` (#` (# Tofacilitateandensureagencyimplementationofthe FederalActivitiesInventoryReformActof1998(PublicLaw105270)( FAIRAct),OMBisrevisingitsexistingguidanceonthemanagementofcommercialactivitiesthroughrevisionstoOMBCircularA76, PerformanceofCommercialActivities,andtoitsSupplementalHandbook.TheserevisionsinformagenciesoftheFAIRAct'srequirements;implementthestatutoryrequirementsoftheFAIRAct;avoidduplicationandconfusionbyconformingguidancetotheFAIRAct,andplacetheFAIRActsrequirementsinthecontextoftheFederalGovernmentslarger_reinvention_,competitionandprivatizationefforts.0   Dates :  ThisguidanceiseffectiveuponpublicationintheFederalRegister.@(#(#  ForFurtherInformationContact :Mr.David_Childs_,OfficeofManagementandBudget,  p _NEOB_ԀRoom6002,72517thStreet,_N.W._,Washington,D.C.20503,telephone:(202)3956104,FAX:(202)3957230 Availability : ` CopiesoftheupdatedversionsofOMBCircularA76,itsRevisedSupplemental 0 HandbookandthisTransmittalMemorandum20areavailablefromOMBontheInternetat:4    5  http://www.whitehouse.gov/OMB/circulars/index-procure.html6     7  Ԁ ! Ѐ SupplementaryInformation : #!  I.TheFederalActivitiesInventoryReformAct.  % # Ѐ  p&!$   OnOctober12,1998,PresidentClintonsignedintolawthe FederalActivitiesInventory `'"% ReformActof1998( FAIRActor Act).TheFAIRActdirectsFederalagenciestosubmiteachyearaninventoryofalltheiractivitiesthatareperformedbyFederalemployeesbutarenotinherentlyGovernmental(i.e.,arecommercial).OMBistorevieweachagencysCommercialActivitiesInventoryandconsultwiththeagencyregardingitscontent.Uponthecompletionofthisreviewandconsultation,theagencymusttransmitacopyoftheinventorytoCongressandmakeitavailabletothepublic.TheFAIRActestablishesanadministrativeappealsprocessunderwhichaninterestedpartymaychallengetheomissionortheinclusionofaparticularactivityontheinventory.Finally,theFAIRActrequiresagenciestoreviewtheactivitiesonthe .0*- inventory.Eachtimethattheheadofanexecutiveagencyconsiderscontractingwithaprivatesectorsourcefortheperformanceofsuchanactivity,theheadoftheexecutiveagencyshalluseacompetitiveprocess.Whenconductingcostcomparisons,agenciesmustensurethatallcostsareconsidered.  InenactingtheFAIRAct,CongressdidnotdisplacelongstandingExecutiveBranchpolicyregardingtheperformanceofcommercialactivities.TheFederalGovernmentseekstoachieveeconomyandenhanceproductivityandqualitythroughcompetitiontoobtainthebestserviceatleastcosttotheAmericantaxpayer.ThisFederalpolicyregardingtheperformanceofcommercialactivitieshasbeenprovidedbyOMBCircularA76, PerformanceofCommercialActivities.SpecificguidanceregardingtheimplementationofthispolicyisprovidedbytheMarch1996RevisedSupplementalHandbooktoOMBCircularA76andbyagencyconsultationwithOMB.  TheActcodifiedsomeofthisguidanceinlaw.Inparticular,theFAIRActcodifiedthepreexistingrequirementforagenciestoinventorytheircommercialactivities,aswellasthepreexistingdefinitionof inherentlygovernmentalfunction.  EachtimeanagencyconsiderschangingfromGovernmentemployeeperformanceofacommercialactivityontheinventory,theFAIRActrequiresthatacompetitiveprocessbeusedandthatcostcomparisons shallensurethatallcosts...areconsideredandthatthecostsconsideredarerealisticandfair.Here,too,theActcodifiesordeferstopreexistingExecutiveBranchpolicy.& 0 II.ImplementationoftheFAIRAct . 0   OMBCircularsareawellestablishedvehiclefordirectingagenciesonthemanagementoftheiractivities.Together,CircularA76anditsSupplementalHandbookhaveestablishedthebroadprinciples,individualdefinitionsandspecificdirectivesonthemanagementofcommercialactivities,includingtheinventoryandotheritemscodifiedbytheFAIRAct.OMBwantedtoprovidetheagencieswithpromptandclearguidanceonhowtoimplementtheActwithintheshorttimeframeavailable.OMBconcludedthatthebestwaytoprovideagencieswithclearandpromptguidanceonhowtoimplementtheFAIRActwastorevisethecurrentcircularandhandbooksothattheyconformtotheFAIRAct.OMBsgoalindraftingtheserevisionswastoensurethattheagenciesfullyimplementtheFAIRActsrequirements,andthattheagenciesdosowithoutconfusion,wastedeffortordelayscausedbyuncertaintyabouttheapplicabilityofcurrentguidance.'0 0q  Accordingly,onMarch1,1999,OMBrequestedagencyandpubliccommentsonproposedrevisionstotheHandbooktoimplementtheFAIRAct(64FR10031).TheproposedrevisionswouldinformagenciesoftheFAIRActrequirementsand,toavoidconfusion,conformtheHandbooksprovisionssothattheycrossreferenceandparallelrelevantFAIRActprovisions.  ToimplementtheFAIRActsinventoryrequirement,OMBproposedtomakeconformingchangestotheHandbookspreexistinginventoryrequirement.Thechanges .0*- incorporatedthestatutoryduedateofJune30thforagencysubmissionstoOMBandadded,tothe  inventorysdescriptionofeachactivity,twonewdataelementsrequiredbytheFAIRAct.  Inaddition,OMBproposedprovisionstotheHandbooktoaddresstheFAIRActsotherrequirements.Theseprovisions:  (1)reiteratedtherequirementsforOMBtoreviewthecommercialactivityinventoriesandtoconsultwiththeagenciesregardingthem;fortheagencies,afterOMBsreviewandconsultationiscompleted,tosendtheinventoriestoCongressandtomakethemavailabletothepublic;andfortheagenciestohearanddecideadministrative challengesinwhichinterestedpartieschallengeanagencysdecisiontoincludeanactivityin(orexcludeanactivityfrom)theinventory;and  (2)incorporatedtheFAIRActsrequirementthatagencies reviewtheactivitiesontheinventory;thatanagency,eachtimeitconsiderscontractingwithaprivatesectorsourcefortheperformanceofanactivitylistedontheinventory,useacompetitiveprocesstoselectthesource(unlessotherwiseprovided inalawotherthanthisAct,anExecutiveorder,regulations,oranyExecutiveBranchcircular);andthat,whencomparingcosts, allcosts...areconsideredand...arerealisticandfair.  OMBproposedthatagenciesrelyonandimplementtheexistingguidancewithrespecttothecostcomparisoncompetitionrequirementsoftheFAIRAct.Theseproceduresarewellestablishedanddirectagenciestocreateacompetitiveprocessthatcomparescostscompletely,accurately,andfairly.  OMBreceived82responsestoitsrequestforcomments:10Federalagencies,61industryortradegroups,and8employeeorganizationsresponded,inadditionto4lettersfrommembersofCongress.Adiscussionofthesignificantcomments,andOMBsresponsestothosecomments,isprovidedintheAppendixtothisnotice.  Afterconsideringallcommentsreceivedontheproposedguidance,OMBisissuingfinalguidancetotheagenciesforimplementingtheFAIRAct.TheguidanceconsistsofchangestotheA76Circular,itself,aswellasitsSupplementalHandbook.  InordertoimplementtheFAIRAct,OMBismakingseveralchangestotheguidanceasproposedonMarch1:C  $3CH4r` hp x (#XH0   OMBhasrevisedCircularA76,itself,inadditiontotheSupplementalHandbook,toconformtotherequirementsoftheFAIRAct; u (#(# 0   0(#(#  ToensurethatagenciescomplywiththeFAIRActsrequirementforreviewonaninventorywithinareasonabletime,OMBwillnowrequireannualreportsthatwill,amongotherthings,discusstheimplementation,status,andresultsoftheFAIRActprocess; (#(# 0   OMBhasclarified thatagenciesshould,asappropriate,permitemployeeinvolvementinthe ,J(, developmentoftheinventory;-:)-(#(# 0   OMBisrevisingagencyreportingrequirementssothatreportingiscleareronactivitiesthathavebeenconvertedfromcontractperformancetoinhouseperformanceorretainedinhouseasaresultofacostcomparison. u (#(# C  $$CK.` hp x (#` XK0  0` (#(#    ` (#` (#   Withtheissuanceoftheserevisions,agencieshavebeenprovidedguidanceforimplementingtheFAIRAct.OMBwillcontinue,asithasinthepast,toconsultwithindividualagenciesandprovideinformalguidanceasnecessary. III.ExecutiveBranchManagementofCommercialActivitiesGenerally  0    ImplementingtheFAIRActisonlyapartoftheGovernments_reinvention_Ԁandmanagementresponsibilities.Improvingthequality,andreducingthecost,ofcommercialactivitiesisanintegralpartofmanagingtheNationsresources.TheagenciesandOMBhaveanongoingresponsibilitytoensurethattheseactivitiesareperformedinamannerthatiscosteffectiveandinthebestinterestofthetaxpayer.Developinganinventoryofeachagencyscommercialactivitiesisanecessaryfirststepinpursuingthisobjective,onethathasnowbeencodifiedbytheFAIRAct.Oncetheseinventoriesaredeveloped,theywillthenbereviewed,bytheagenciesandOMB,toidentifywaystoimprovetheperformanceoftheFederalGovernmentscommercialactivities.  Equallyimportant,however,ishowtheagenciesmanagetheseactivitiesaftertheyare p identified.Inorderbettertomanagecommercialactivities,OMBrevisedtheSupplementalHandbookin1996.TheRevisedSupplementalHandbookseeksthemostcost-effectivemeansofobtainingcommercialsupportservicesandprovidednewadministrativeflexibilityintheGovernment's makeorbuydecisionprocess.Therevisionmodifiedand,insomecases,eliminatedcostcomparisonrequirementsforrecurringcommercialactivitiesandtheestablishmentofneworexpanded_interservice_Ԁsupportagreements;reducedreportingandotheradministrativeburdens;providedforenhancedemployeeparticipation;easedtransitionrequirementstofacilitateemployeeplacement;maintainedalevelplayingfieldforcostcomparisonsbetweenFederal,_interservice_Ԁsupportagreementandprivatesectoroffers,andimprovedaccountabilityandoversighttoensurethatthemostcosteffectivedecisionisimplemented.  Aspartofthisguidance,OMBisnowtakingtheadditionalstepofrequiringagenciestosubmitannualreportsthatwilldiscusstheimplementation,status,andresultsoftheFAIRActprocess.AswedevelopexperiencewiththeFAIRActandtheseprocedures,wewillconsiderwhetheradditionalguidanceisneeded,eitherforimplementationoftheFAIRActinparticularoronmanagementofcommercialactivitiesingeneral.0  0` (#(#0 ` (#` (#0 (# (#0h(#(#0h(#h(# h  `      `     h   ___________________________ (#(# 0  0` (#(#0 ` (#` (#0 (# (#0h(#(#0h(#h(# h  `      `     h   JacobJ.Lew (#(# 0  0` (#(#0 ` (#` (#0 (# (#0h(#(#0h(#h(# h  `      `     h   Director -P(+(#(#    `     h      p CircularNo.A76(Revised)   `     h      p TransmittalMemorandumNo.20   `     h      p June14,1999TOTHEHEADSOFEXECUTIVEDEPARTMENTSANDAGENCIES0  0` (#(#   SUBJECT: ` ImplementingtheFederalActivitiesInventoryReformActThroughConforming P  ChangestoOMBCircularNo.A76anditsMarch1996RevisedSupplementalHandbook ` (#` (#   ThisTransmittalMemorandumimplementsthestatutoryrequirementsoftheFederalActivitiesInventoryReformAct( TheFAIRAct),PublicLaw105270.Aspartofitslongstandingroleinthereviewandoversightofagencymanagementandtheallocationofresources,OMBhasestablishedpoliciesregardingtheperformanceofcommercialactivitiesbyFederalagencies.ThesepoliciesareoutlinedinOMBCircularNo.A76anditsRevisedSupplementalHandbook.TheFAIRActreinforcedthesepoliciesandprocedures;codifiedcertainrequirementswithrespecttothedevelopmentbyagenciesofanannualcommercialactivitiesinventory,andaddedanopportunityforinterestedpartiestochallengethecontentsoftheannualinventory.  ThechangestotheCircularsRevisedSupplementalHandbook(Attachment1)informagenciesoftheFAIRAct'srequirements;implementthestatutoryrequirementsoftheFAIRAct;avoidduplicationandconfusionbyconformingtheSupplementalHandbooktotheprovisionsoftheFAIRAct;andplacetheFAIRActsrequirementsinthecontextoftheFederalGovernmentslarger_reinvention_,competitionandprivatizationefforts.Asaresultofthesechanges,theCircularisalsobeingupdatedwithconformingchangesnecessarytoreflecttherequirementsoftheFAIRAct(Attachment2).ThepreviousOMBCircularA76waspublishedintheAugust16,1983,FederalRegisteratpages3711037116.TheMarch1996Revised P SupplementalHandbookwasissuedthroughTransmittalMemorandum15,publishedintheApril1,1996,FederalRegisteratpages1433814346. 0   UndertheFAIRAct,agenciesarerequiredtosubmittheircommercialactivityinventoriestoOMBbyJune30thofeachyear,startingthisyear. THEFIRSTFAIRACT "  INVENTORIESARE,THEREFORE,DUEINTWOWEEKS. OMBlooksforwardto #! workingwiththeagenciesduringourreviewoftheseinventories,andstandsreadytoassisttheagenciesastheExecutiveBranchmovesforwardinitsimplementationoftheFAIRAct.  QuestionsregardingtheFAIRActorthisguidancemaybeaddressedtoMr.David_Childs_Ԁ(phone:(202)3956104,Fax:(202)3957230).0  0` (#(#0 ` (#` (#0 (# (#0h(#(#0h(#h(# h  `      `     h   ___________________________ (#(# 0  0` (#(#0 ` (#` (#0 (# (#0h(#(#0h(#h(# h  `      `     h   JacobJ.Lew (#(# 0  0` (#(#0 ` (#` (#0 (# (#0h(#(#0h(#h(# h  `      `     h   Director (#(# Attachments  .0*-    Attachment1     &    RevisionstotheOMBCircularA76March1996RevisedSupplementalHandbook 'K    1.   TheIntroductiontotheSupplementalHandbook(p.iii)isrevisedtoreflectthefactthat   challengestotheactivitieslistedintheCommercialActivitiesInventoryarepermittedundertheFAIRAct,byaddingtotheendofthelastsentenceonpageiiithefollowing:  ...andassetforthinAppendix2,ParagraphG,consistentwithSection3oftheFederalActivitiesInventoryReformActof1998(FAIRAct,_P.L._Ԁ105270). 2.   PartI,Chapter1,paragraphsA,B.1andF,oftheSupplementalHandbook(pp.3,5)are `  revisedtoreflecttherequirementsoftheFAIRAct.Asrevised,paragraphsA,B.1andFreadasfollows:  A.0  General  (#(#   ThisPartsetsforththeprinciplesandproceduresformanagingtheGovernment'sacquisitionofrecurringcommercialsupportactivities,implementingthe FederalActivitiesInventoryReformActof1998( TheFAIRAct),_P.L._Ԁ105270,andCircularA76.Exhibit1summarizestheconditionsthatpermitconversiontoorfrominhouse,contractorInterServiceSupportAgreement(ISSA)performance.TherequirementsoftheFAIRActapplytothefollowingexecutiveagencies:(1)anexecutivedepartmentnamedin5_USC_Ԁ101,(2)amilitarydepartmentnamedin5_USC_Ԁ102,and(3)anindependentestablishmentasdefinedin5_USC_Ԁ104.TherequirementsoftheFAIRActdonotapplyto:(1)theGeneralAccountingOffice,(2)aGovernmentcorporationoraGovernmentcontrolledcorporationasdefinedin5_USC_Ԁ103,(3)anonappropriatedfundsinstrumentalityifallofitsemployeesarereferredtoin5_USC_Ԁ2105(