Circular No. A-76 -- Revised
Definition of Terms
receipt of an appeal, the official designated in paragraph 9.a. of the
Circular A-76, or designee, assigns an official(s) to serve on an A-76
Administrative Appeal Authority for that appeal. The individual(s) selected
must be: (a) independent of the activity under review or, (b) at least
two organizational levels above the official who certified the Government's
Management Plan and MEO. The Appeal Authority reviews appeals to ensure
that all costs are properly accounted for in accordance with the principles
and procedures of this Supplemental Handbook. The Authority shall also
ensure that all participants have full and equal access to the decision
employees and existing Federal contractors that will or could be impacted
by a decision to waive a cost comparison or have submitted bids to convert
to or from in-house, contract or ISSA performance, as a result of a cost
comparison, and their representatives are affected parties. Agencies or
parts of agencies that have submitted formal bids or offers, in order
to compete for the right to provide services through ISSAs, are also considered
commercial activity is the process resulting in a product or service that
is or could be obtained from a private sector source. Agency missions
may be accomplished through commercial facilities and resources, Government
facilities and resources or mixes thereof, depending upon the product,
service, type of mission and the equipment required.
commercial source is any business or other concern that is eligible for
contract award in accordance with Federal Acquisition Regulations.
administration includes those inherently governmental activities performed
by warranted contracting officers (CO), the contracting officer's technical
representatives (COTR), and related payment evaluation staff. Contract
administration is not to be confused with contract quality control, performance
evaluation or inspection, which are defined as commercial activities by
this Supplement and OFPP Policy Letter 92-1.
contract.--A conversion to contract is the change of performance of
a commercial activity from in-house performance by Federal employees to
performance by a commercial source.
contract.--Conversion from contract to in-house performance means
the change of a commercial activity from performance by contract with
a commercial source to performance by Federal employees with Government
resources. It also includes the conversion of expansions and/or new requirements
(work) from contract performance to in-house performance.
core capability is a commercial activity operated by a cadre of highly
skilled employees, in a specialized technical or scientific development
area, to ensure that a minimum capability is maintained. The core capability
does not include the skills, functions or FTE that may be retained in-house
for reasons of National Defense, including military mobilization, security
or rotational necessity, or to the patient care or research and development
activities, as provided in Part I, Chapter 1 of this Supplement.
cost comparison is the process whereby the estimated cost of Government
performance of a commercial activity is formally compared, in accordance
with the principles and procedures of this Circular and Supplement, to
the cost of performance by commercial or ISSA sources.
expansion is the modernization, replacement, upgrading or the enlargement
of an in-house commercial activity or capability. If the expansion involves
a 30-percent increase in the operating cost of the activity, a 30-percent
increase in the total capital investment to perform the activity or an
increase of 65 FTE or more, a cost comparison is required prior to authorizing
in-house performance. A consolidation of two or more existing commercial
activities is not an expansion, unless the total operating cost is 30
percent greater than the total of the individual components or it requires
an increase of 65 FTE or more.
The above definition
notwithstanding, pursuant to OMB Circular A-126 all aircraft purchase
decisions should be justified through formal cost comparison, as provided
by this Supplement.
exemption is a determination, made in accordance with Circular A-76 and
this Supplement, that a commercial activity may be converted to or from
in-house, contract or ISSA performance, without cost comparison and may
be justified by reasons other than cost.
activity.--An inherently governmental activity is one that is so intimately
related to the public interest as to mandate performance by Federal employees.
Activities that meet these criteria are not in competition with commercial
sources, are not generally available from commercial sources and are,
therefore, not subject to Circular A-76 or this Supplement. Guidance to
avoid an unacceptable transfer of official responsibility to contract
performance may be found in the Office of Federal Procurement Policy (OFPP)
Policy Letter 92-1. See Appendix 5.
Officer (IRO).--The agency official who certifies--prior to bid opening--that
the Government's performance and cost comparison estimates have been prepared
in accordance with Circular A-76 and this Supplement.
provision of a commercial activity, in accordance with an interservice
support agreement, on a reimbursable basis. This includes franchise funds,
revolving funds and working capital funds.
Management Plan is the document that outlines the changes that will result
in the Government's Most Efficient Organization (MEO) to perform a commercial
activity in-house. It provides the staffing patterns and operating procedures
that serve as a baseline for in-house cost estimates.
Organization (MEO).--The MEO refers to the Government's in-house organization
to perform a commercial activity. It may include a mix of Federal employees
and contract support. It is the basis for all Government costs entered
on the Cost Comparison Form. The Most Efficient Organization (MEO) is
the product of the Management Plan and is based upon the Performance Work
activity.--A national defense activity is a commercial activity that
is approved by the Secretary of Defense, or designee, as being subject
to deployment in a direct military combat support role.
national security activity is a commercial activity that is approved by
the Director of Central Intelligence, or designee, as being necessary
to meet the national security.
new requirement is a newly established need for a commercial product or
is included in the in-house estimate and is defined as those costs that
are not directly attributable to the activity under study.
measures provide a series of indicators, expressed in qualitative, quantitative
or other tangible terms, that indicate whether current performance is
reasonable and cost effective. Performance measures can include workload
and output-to-cost ratios, transaction ratios, error rates, consumption
rates, inventory fill rates, timeliness measures, completion and back
order rates, etc. Quality service measures may include responsiveness
rates, user satisfaction rates, etc.
performance standard reflects the minimum, sector-specific, Federal requirement
for the performance of a commercial activity. It incorporates both quality
measures and cost measures. Cost measures reflect the cost comparability
procedures of Part II of this Supplement to assure equity in the comparison
of performance standards with private industry standards.
Statement (PWS).--A Performance Work Statement is a statement of the
technical, functional and performance characteristics of the work to be
performed, identifies essential functions to be performed, determines
performance factors, including the location of the work, the units of
work, the quantity of work units, and the quality and timeliness of the
work units. It serves as the scope of work and is the basis for all costs
entered on the Cost Comparison Form.
review.--When services are performed in-house, as a result of a cost
comparison, including those involving an interservice support agreement,
a formal review and inspection of the Most Efficient Organization (MEO)
should be conducted. Typically, this review should be conducted following
the end of the first full year of performance. Post-MEO Performance Reviews
confirm that the MEO has been implemented in accordance with the Transition
Plan, establish the MEO's ability to perform the services of the PWS and
confirm that actual costs are within the estimates contained in the in-house
cost estimate. Adjustments may be made for formal mission or scope of
procurement programs.--These are special "commercial" source programs,
such as Federal Prison Industries and the workshops administered by the
Committee for the Purchase from the Blind and Other Severely Handicapped
under the Javits-Wagner-O'Day Act.
summary (PRS).--A PRS is a synopsis of the scope of work and output
performance measurements that may be used in conjunction with aviation
cost comparisons that rely on the GSA FAMIS data system for identifying
is the process of changing a public entity or enterprise to private control
and ownership. It does not include determinations as to whether a support
service should be obtained through public or private resources, when the
Government retains full responsibility and control over the delivery of
surveillance.--Quality Assurance Surveillance is the method by which
Federal employees will supervise in-house or contract performance to ensure
that the standards of the PWS are met within the costs bid.
competitive prices.--The expected range of prices resulting from experience
obtained through the competitive free enterprise system for like or similar
activities. Determinations are to be made by the contracting officer.
activity.--A recurring commercial activity is one that is required
by the Government on a consistent and long term basis. This definition
does not imply an hourly, daily, monthly or annual requirement, but must,
in a general sense, be repetitive in nature, wherein the expected workload
can be reasonably estimated.
commercial activities are common to more than one agency. Many of these
commercial activities can be aggregated. For example, an agency may inventory
transportation acquisition, operations, maintenance and disposal as independent
severable expansion is an expansion of currently contracted, in-house
or interservice support agreement provided work that could be provided
using the current approach or could, without severe additional administrative
burden, be provided by another competitive offeror. Economies of scale
are not justification for dismissing new or expanded work as severable,
these economies will be tested through competitive offer.
term is used in two ways. First, it is the date when a cost comparison
begins, generally defined as the date that a local Study Team is formed
and actual work on the Performance Work Statement, Management Plan and
in-house cost estimate begins. Second, it may refer to the actual date
work is scheduled to begin under a contract, as provided in the solicitation.