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   2XXX2XXXX2X  _    "XX "ԀfQrfCIRCULARNO.A76    3 p x (#X3Q*  6 p x (#X6 Q RevisedSupplementalHandbook x   4    E.` hp x (# XE  PERFORMANCEOFCOMMERCIALACTIVITIES [KGx| c p @ZKKKKdElc  !R 2  Qr  "$_OKx| o8 p/.v@JKKKKdEo8 =$ 2 A% A Qr !!(#(# (#(#!!Ҟ Qr     EXECUTIVEOFFICEOFTHEPRESIDENTV݌ 'C# ЌQr Ҟ    ȕ !Qr Ҟ  ! ȕOFFICEOFMANAGEMENTANDBUDGET  )$ 4 Ҟ MARCH1996(RevisedthroughTransmittalMemorandum20,June1999)Ҟ 4w Ҟ  ,j' &* 1-(  &* &' *&+ *    33 !w !!      TableofContents}݌ ) Ќ  33w! ww   ww   &%w&%%&        (#XINTRODUCTION""F(#.h h 1   ݌  7 Ќw%&ww   XXwXXXX &%XX&%%&    E   PARTIPOLICYIMPLEMENTATIONB"B"G(#.bb'5 E ݌ B  ЌXX%&XXXX    &%XX&%%&       PARTIIPREPARINGTHECOSTCOMPARISONESTIMATES""F(#.nn:3  9 ݌    ЌXX%&XXXX    &%XX&%%&    E  H4X` hp x (#(#HAPPENDICES: E݌ H  ЌXX%&XXXX     ,..rXX4P <XD`Lh!(#XXr&%XX&%%&     i (#X4P <XD`Lh!hi1.DEFINITIONOFTERMS(#(#K(#.||# ݌ S  Ќ ,$XX(#$XX%&XXXX..    ,..rXX4P <XD`Lh!(#XXr&%XX&%%&   t  i (#X4P <XD`Lh!hi2. COMMERCIALACTIVITIESINVENTORY (#(#K(#.FF0 t݌   Ќ ,$XX(#$XX%&XXXX..    ,..rXX4P <XD`Lh!(#XXr&%XX&%%&   (  i (#X4P <XD`Lh!hi3.USEFULLIFEANDDISPOSALTABLES(#(#K(#.^^/ (3݌  Y Ќ ,$XX(#$XX%&XXXX..    ,..rXX4P <XD`Lh!(#XXr&%XX&%%&     i (#X4P <XD`Lh!hi4.TAXTABLES(#(#K(#.   ݌ d Ќ ,$XX(#$XX%&XXXX..    ,..rXX4P <XD`Lh!(#XXr&%XX&%%&   m  i (#X4P <XD`Lh!hi5._OFPP_ԀPOLICYLETTER92.&-%%&!&%%.&-1,/&J%%&_A&%%/&JINHERENTLY_ԀGOVERNMENTALFUNCTIONS/&J%%&@&%%/&J(#(#K(#.M mx݌  Ќ ,$XX(#$XX%&XXXX..    ,..rXX4P <XD`Lh!(#XXr&%XX&%%&   2  i (#X4P <XD`Lh!hi6.AVIATIONCOMPETITIONS(#(#K(#.% 2=݌ )y Ќ ,$XX(#$XX%&XXXX..    ,..rXX4P <XD`Lh!(#XXr&%XX&%%&      i (#X4P <XD`Lh!hi7.MOTORVEHICLECOMPETITIONS(#(#K(#.*  !݌  Ќ ,$XX(#$XX%&XXXX..  rXX4P <XD`Lh!(#XXrwXX____  _  X _  X 057' 9+   99w    ,%  XX4P <XD`Lh!(#X4P <XD`Lh!hIntroduction ,%%݌ R Ќ  w99   (,(#(#(;?CF  ,0&%wTheAugust1983OfficeofManagementandBudget(OMB)CircularNo.A76,"PerformanceofCommercialActivities,"establishesFederalpolicyfortheperformanceofrecurringcommercialactivities.ThisSupplementreplacestheHandbookissuedwiththe1983Circularandprovidesupdatedguidanceandproceduresfordeterminingwhetherrecurringcommercialactivitiesshouldbeoperatedundercontractwithcommercialsources,inhouseusingGovernmentfacilitiesandpersonnel,orthrough_interservice_Ԁsupportagreements(_ISSAs_).TheRevisedSupplementalHandbookisanintegralpartofthe1983Circular. 0AsnotedintheVicePresident/&J%%&=&%%/&JsThirdReportof * theNationalPerformanceReview,/&J%%&_A&%%/&JCommon_ԀSense  Government:WorksBetterandCostsLess,/&J%%&@&%%/&JԀ(Sep p tember1995),Americanswantto/&J%%&_A&%%/&Jget_Ԁtheirmoney/&J%%&=&%%/&Js _ worth/&J%%&@&%%/&JԀandwantaGovernmentthatismorebusi N nesslikeandbettermanaged.The_reinvention_ԀofGovernmentbeginsbyfocusingoncoremissioncompetenciesandservicerequirements.Thus,the_reinvention_Ԁprocessmustconsiderawiderangeofoptions,including:theconsolidation,restructuringorreengineeringofactivities,privatizationoptions,makeorbuydecisions,theadoptionofbetterbusinessmanagementpractices,thedevelopmentofjointventureswiththeprivatesector,assetsales,thepossibledevolutionofactivitiestoStateandlocalgovernmentsandtheterminationofobsoleteservicesorprograms.Inthecontextofthislarger_reinvention_Ԁeffort,thescopeofthisSupplemental q( "" Handbookislimitedtotheconversionofrecurringcommercialactivitiestoorfrominhouse,contractorISSA.CircularA76isnotdesignedtosimplycontractout.Rather,itisdesignedto:(1)balancetheinterestsofthepartiestoamakeorbuycostcomparison,(2)providealevelplayingfieldbetweenpublicandprivate_offerors_Ԁtoacompetition,and(3)encouragecompetitionandchoiceinthemanagementandperformanceofcommercialactivities.ItisdesignedtoempowerFederalmanagerstomakesoundandjustifiablebusinessdecisions.ReliablecostandperformanceinformationiscrucialtotheeffectivemanagementofGovernmentoperationsandtotheconductofcompetitionsbetweenpublicorprivatesector_offerors_.Unfortunately,thisinformationhasnotbeengenerallyavailableandhasoftenbeenfoundtobeunreliable.TheChiefFinancialOfficersActof1990(CFOAct)includesamongthefunctionsofchieffinancialofficers"thedevelopmentandreportingofcostinformation"and"thesystematicmeasurementofperformance."Thisincludesperformancebyinhouse,contractorISSAresources.InJuly1993,CongresspassedtheGovernmentPerformanceandResultsAct(_GPRA_),whichmandatesperformancemeasurementbyFederalagencies.The"StatementofFederalFinancialAccountingConceptsNo.1,"ObjectivesofFederalFinancialReporting(1993)," u% > statedthatoneoftheobjectivesofFederalfinancialreportingistoprovideusefulinformationtoassistinassessingthebudgetintegrity,operating_perfor_ԃ B(!A #;?CF# ;<0 ?;@5 C?D7  FCG9b F  _mance_,stewardship,andcontroloftheFederalGovernment.In1995,theFederalAccountingStandardsAdvisoryBoard(_FASAB_)recommendedstandardsformanagerialcostaccounting,whichwereapprovedbytheDirectorofOMB,theSecretaryoftheTreasuryandtheComptrollerGeneral.Thesestandardswereissuedasthe"StatementofFederalAccountingStandardsNo.4,"Managerial   CostAccountingStandardsfortheFederalGovernment."ThisSupplementreliesonthemanagerial g  costaccountingandperformancestandardsestablishedinsupportoftheCFOAct,_GPRA_,andtheFederalAccountingStandards,astheyaredevelopedandimplemented.CostandperformanceinformationdevelopedforcostcomparisonsrequiredbytheCircularandthisSupplementshouldbedrawnfromthedatabaseestablishedbythesestandardsandadjustedasappropriate.TheCircularandthisSupplementarenotintendedandshouldnotbeconstruedtocreateanyrightorbenefit,substantiveorprocedural,enforceableatlawbyapartyagainsttheUnitedStates,itsagencies,itsofficersoranyperson.Itshouldnotbeconstruedtocreateanysubstantiveorproceduralbasisonwhichtochallengeanyagencyactionorinaction,exceptassetforthinPartI,Chapter3,ParagraphK,ofthisSupplement andassetforthin W Appendix2,ParagraphG,consistentwithSection3oftheFederalActivitiesInventoryReformActof1998(FAIRAct,_P.L._Ԁ105270) . x!$  , x#$  T (,**(IP %& x$$   e%   IP IJ< PIQ@ P  ,&% ThisSupplementisdividedintotwoparts(withatableofcontentsatthebeginningofeachPart)as T follows: , HXX4P <XD`Lh!(#X4P <XD`Lh!h PartI   4 PolicyImplementation C   <ӀSetsforththeprinciplesandproceduresforimplementingOMBCircularA76. < HXX4P <XD`Lh!(#X4P <XD`Lh!h HXX4P <XD`Lh!(#X4P <XD`Lh!h PartII  PreparingtheCostComparisonEstimates C  Ѐ    ProvidesinstructionsforcalculatingthefinancialadvantagetotheGovernmentofacquiringa C  productorservicethroughinhouse,contractor_interservice_Ԁsupportagreementresources.  HXX4P <XD`Lh!(#X4P <XD`Lh!h   Appendices  2   P XX4P <XD`Lh!(#X4P <XD`Lh!h DefinitionofTerms P   0   DefinestermswithinthecontextofOMBCircularA76.2  (# (#   P XX4P <XD`Lh!(#X4P <XD`Lh!h P XX4P <XD`Lh!(#X4P <XD`Lh!h  CommercialActivities Inventory  Providesinformationandreportingguidance. 2    P XX4P <XD`Lh!(#X4P <XD`Lh!hUsefulLifeandDisposalValues  Providesusefulexpectedlifeanddisposalvaluesforequipment. 2  P XX4P <XD`Lh!(#X4P <XD`Lh!h TaxTables   P      ProvidesFederaltaxratetablesforuseinA76costcomparisonsby 2 industrytype.  P XX4P <XD`Lh!(#X4P <XD`Lh!h P XX4P <XD`Lh!(#X4P <XD`Lh!h _OFPP_ԀPolicyLetter921    Providesguidanceandcriteriafordeterminingwhetheractivitiesmay ! beconsideredinherentlygovernmentalandnotsubjecttotherequirementsoftheCircularorthisSupplement.Aviation/MotorVehicle    Providessectorspecificalternativestothecostcomparisonmethodolo  giesinPartII.  P XX4P <XD`Lh!(#X4P <XD`Lh!hw%&+ D`Lh!(#X4P <XD`Lh!hQ*wԈXX4P <XD`Lh!(# D`Lh!h   TJ UQ   p  VT WU XDbZGb   PARTI  J POLICYIMPLEMENTATION  x   \Db^Gb   $0 `T aU    33  !w !!    PT  XX4P <XD`Lh!(#X4P <XD`Lh!hTableofContentsPTT݌  Ќ   33w! ww   (,(#(#(be  :X4 <DpLh!(#X4P <XD`Lh!h&%wPage  Y   Chapter1GeneralProvisions:   Y T" VDLh!(# XXpLh!hT A.GeneralVV)V. Y B.InherentlyGovernmentalActivitiesVV)V.1 Y   E"r rVDLh!(#VXh!hE C.GovernmentPerformanceofCommercialπActivities(((V.  H   `=XrS <IDLh!(#rrVXh!h` 1.NationalDefenseorIntelligenceW" VDLh!(# X XIXh!hW ӀSecurity%V.   H   2.PatientCareVV)V.  H  3.CoreCapabilityVV)V.  H 4.ResearchandDevelopmentVV)V.>>) H 5.NoSatisfactoryCommercialSourceVV)V.2 H  T1rXrrVDLh!(#VXh!hT >Ӏ   r 6.Functionswith10orFewer_FTE_VV)V./ H  Q" VDLh!(#r XrVXh!hQ >7.MeetPerformanceStandard&V.+ H 8.LowerCost%V.  H  `=SXrSS <IDLh!(#VXh!h` 9.TemporaryAuthorizationforInHouse  W" VDLh!(#S XS XIXh!hWӀPerformanceVV)V.> > % H  `=rXrrS <IDLh!(#VXh!h` D.ContractPerformanceofCommercial  Z" VDLh!(#rXrS XIXh!hZӀActivitiesVV)V.( ( # H  1.ContractedActivitiesVV)V.r r & H 2.NewRequirementsVV)V. !  H 3.SeverableExpansionsVV)V. % !H `=XrS <IDLh!(#VXh!h`4._Interservice_ԀSupportAgreements(ISSA).π   r W" VDLh!(# X XIXh!hW5.ActivitiesWith10orFewer_FTE_VV)V.0 #7 6.Activitieswith11orMore_FTE_VV)V.pp/ $7 7.ActivitiesPerformedbytheMilitaryVV)V.5 %7 8.PreferentialProcurementProgramsVV)V.||2 &7  9.LowerCostVV)V.  '7!     `=XrS <IDLh!(#VXh!h` (7"! Page  Y!    W" VDLh!(# X XIXh!hW E.AgencyCostComparisonWaivers(#(#K(#.[ [ O  Y#  Q.XVDLh!(#VXh!hQӀ c F. CommercialActivities Inventory(#(#K(#.P Y$ Q" VDLh!(# XVXh!hQ G.ReviewofDocuments(#(#K(#.D Y %  X1.AccesstoSupportingDocuments(#(#K(#.V!V!R Y & 2.AppealsofAgencyDecisions(#(#K(#.N N O Y '  XH.PersonnelConsiderations(#(#K(#.I Y ( I.RelationshiptotheBudget(#(#K(#.K Y )  `=X <DLh!(#VXh!h` Chapter2_Interservice_ԀSupportAgreements Y+  (ISSA):  Y, T" VDLh!(# X Xh!hTA.General(#(#K(#.8 Y- B.Specific(#(#K(#.9 Y.  `=X <DLh!(#VXh!h` Chapter3CostComparisons:  Y0 T" VDLh!(# X Xh!hT ,A.General(#(#K(#.9 Y1 B.CostComparisonStudyTeam(#(#K(#.\\L Y2 C.PerformanceWorkStatements(#(#K(#.M Y3 D.QualityAssuranceSurveillancePlans(#(#K(#.!!V Y4 E.ManagementPlans(#(#K(#.RRC Y5 F.Safeguardingthe_MEO_(#(#K(#.vvG  Y6 G.Solicitations(#(#K(#.NN? !Y7 H.MethodsofProcurement(#(#K(#.H "Y8 I.TheIndependentReview(#(#K(#.I #Y9 ]:X <DLh!(#VXh!h]J.EvaluationofBidsandTentativeN" VDLh!(# X Xh!hN ,Decisions(#(#K(#.DD; %Y;  E" VDLh!(#VXh!hE >K.AppealsofTentativeWaiverandCostComparisonDecisions(#(#K(#.F 'H!=  E" VDLh!(#VXh!hE ,>L.Post_MEO_ԀPerformanceReview""J(#.Mw%&  (H">   h  h (,VV(]:X <DLh!(#VXh!h] B  ,  h  h  h  h    (H"> h`iaj\bl^ h  B B DLh!(#VXh!hB @  !w Chapter1General  Provisions  J  ]:X <DLh!(#DXh!h]w!   Q (,(#(#(nri=X <DLh!(# X Xh!hi&%w A.  Generalw%&     o=Xr <DLh!(# X Xh!ho ,&%w ThisPartsetsforththeprinciplesandprocedures   formanagingtheGovernment'sacquisitionofrecurringcommercialsupportactivities,implementingthe/&J%%&_A&%%/&JFederal_ԀActivitiesInventoryReformActof `  1998/&J%%&@&%%/&JԀ(/&J%%&_A&%%/&JThe_ԀFAIRAct/&J%%&@&%%/&J),_P.L._Ԁ105270,andCircular O  A76.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(c),or(4)DepotlevelmaintenanceandrepairoftheDepartmentofDefenseasdefinedin10_USC_Ԁ2460. ff   |  o=Xr <DLh!(# Xr Xh!hocff B.   InherentlyGovernmentalActivities |}݌ !? Ќ c   1. r InherentlyGovernmentalactivitiesarenot " subjecttotheFAIRAct,CircularA76orthisSupplementalHandbook.Asamatterofpolicy,aninherentlyGovernmentalactivityisonethatissointimatelyrelatedtotheexerciseofthepublicinterestastomandateperformancebyFederalemployees.TheOfficeofFederalProcurement ("" Policy(_OFPP_)PolicyLetter921,datedSeptember23,1992(FederalRegister,September30,1992, W# page45096),providesguidanceontheidentificationofinherentlyGovernmentalactivities(seeAppendix5).ThisguidanceconformstothedefinitionprovidedatSection5,paragraph2,oftheFAIRAct.   '   2. D Thedecisionthataparticularfunctionis  ) inherentlygovernmentalorcommercialrestsonanumberoffactors,including:thelevelofFederalcontrolrequired,theministerialnatureofthefunction,certainstatutoryprovisions,anddistinguishingbetweenrecurringoperationsandoversight.Statutoryauthoritytoperformafunctionisnot,itself,sufficienttowarrantcontinuedinhouseperformanceasaninherentlygovernmentalfunction.Thefullrangeofissuesaddressedbythe_OFPP_ԀPolicyLetter921mustbeconsidered.AsprovidedbythePolicyLetter,OMBremainsavailabletoresolveagencyconcernsinthisdetermination.ff   :  o=Xr <DLh!(# Xr Xh!ho ff C.  c GovernmentPerformanceofCommercial G6 Activities :g݌ #7 Ќ   o=Xr <DLh!(# Xr Xh!ho 0 Consistentwithparagraph8.oftheCircular,costcomparisonsarenotrequiredtoconvertthefollowingactivitiestoorfrominhouse,contractorISSA.Theapplicationoftheseconditionsshouldbereviewedbytheofficialinparagraph9.a.oftheCircular,ordesignee,asapartoftheannualinventoryofcommercialactivities: 01. D NationalDefenseorIntelligenceSecurity. D"? Commercialactivitiesmaybeperformedbyinhouse,contractorISSA,withoutcostcomparison,whenrequiredtoassurethenationaldefenseornationalintelligencesecurity.TheSecretaryofDefense,ordesignee,approvesrequestsforconver sionsonthebasisofthenationaldefense.The 'v!E  n r  noh rnsi r  DirectorofCentralIntelligence,ordesignee,approvesconversionsonthebasisofnationalsecurity. 2. r PatientCare.Asprovidedbyparagraph8._c._ C oftheCircular,commercialactivitiesatGovernmentownedhospitalsorotherhealthfacilitiesmaybeperformedbyinhouse,contractorISSA,withoutcostcomparison,whenneededtomaintainthequalityofdirectpatientcare.v0 3. r CoreCapability.Aminimumcorecapability   ofspecialized,scientificortechnicalinhouseorcontractemployeesandrelatedcommercialworkload,maybemaintained,withoutcostcomparison,toensurethattheGovernmenthasthenecessarycapabilitiestofulfillitsmissionresponsibilitiesormeetemergencyrequirements.4. r ResearchandDevelopment.Asprovidedby " paragraph7.c.(7)oftheCircular,researchanddevelopmentactivitiesmaybeperformedbyinhouse,contractorISSAwithoutcostcomparison.RecurringandseverableactivitiesthatareperformedinsupportofdirectresearchanddevelopmentaresubjecttothecostcomparisonrequirementsofthisSupplement. Ӏ  5. r NoSatisfactoryCommercialSource [ Available. `   a. r Ifacommercialactivitycouldbecontracted, v" butthereisnocommercialsource,theactivityistobeoperatedusingtheGovernment'sMostEfficientOrganization(_MEO_).b. r Effortstosolicitcommercialinterestaretobe #G documented,toinclude:(1)considerationofpreferentialandnonpreferentialprocurementand(2)adeterminationthatthesolicitationdidnotlimit commercialparticipation. '[!! 6. D FunctionsWith10orFewer_FTE_.Activities T!  involving10orfewer_FTE_ԀmaybeconvertedfromcontracttoinhouseorISSA,withoutcostcomparison,ifthecontractingofficerdeterminesthatperformanceisunsatisfactoryorthatfairandreasonablepricescannotbeotherwiseobtained. Ӏ c 7. D MeetPerformanceStandard.  /'  a. D Performancebyinhouse,contractorISSA  E( maybeauthorizedifanagencydemonstratesthatperformancemeetsorexceedsgenerallyrecognizedindustryperformanceandcoststandards.b. D Competitionsbaseduponoutputandcost j , performancemeasuresmustreflecttheagency'sfullyallocatedcostsofperformanceandmustbecertifiedasbeinginfullcompliancewiththeStatementofFederalAccountingStandardsNo.4, ~0 "ManagerialCostAccountingStandardsfortheFederalGovernment."Thecostcomparability 2 proceduresdescribedinthisSupplement,suchasthoserelatedtofringebenefitfactors,mustalsobeconsideredinassessingthecomparabilityofGovernmentandprivatesectorperformancemeasuresandcosts.AdjustmentstoGovernmentandprivatesectorperformancemeasuresandcostsmayberequired.PerformancestandardsshouldbemonitoredinconjunctionwiththeChiefFinancialOfficersAct(CFOAct)andtheGovernmentPerformanceResultsActof1993(GPA).c. D Afulldescriptionofthestandards,perfor $#= mancemeasures,costsandadjustmentsmadewillbedevelopedbytheagencyandmadeavailabletothepublicuponrequest.Theuseofselectedstandards,performancemeasuresandadjustmentsare subjecttotheadministrativeappealprocedures =(!B v  ve v  providedatPartI,Chapter3,paragraphK,ofthisSupplement. Ӏ  8. r LowerCost.Inhouse,contractorISSA  performanceofacommercialactivitymaybewarrantedbytheresultsofacostcomparisonconductedinaccordancewiththeproceduresdescribedinthisSupplement.w      o=Xr <DLh!(# Xr Xh!hoӀ  9. r TemporaryAuthorizationsforInHouse I @ Performance.Ifacontractordefaultsorisother N E wiseterminated,agenciesshouldseekinterimcontractsupport.Ifinterimcontractperformanceisnotfeasible,inhouseorISSAperformanceofa"contracted"activitymaybeauthorized,onatemporaryandemergencybasis.Assoonaspossible,butnotlaterthanattheendofthenextcontractoptionperiod,areplacementcontractshouldbeawardedoranewrequirementscostcomparisoncompletedtojustifypermanentconversiontoinhouseperformance.݌̌   D.   ContractPerformanceofCommercialActivi  ties    Asamatterofpolicy,theGovernmentshallacquirenonrecurringcommercialactivitiesthroughcontractswiththeprivatesector.Theacquisitionofarecurringcommercialactivitybycontractmaybewarrantedunderthefollowingconditions(Theapplicationoftheseconditionsshouldbereviewedbytheofficialinparagraph9.a.oftheCircular,ordesignee.): 01. r ContractedActivities.Anactivityobtained " throughacompetitivelyawardedcontractwillcontinuetobeobtainedbycontractaslongasthequalityofserviceisacceptableandcompetitivepricesarefairandreasonable.IftheGovernmentbelievesthatqualityisunacceptableorpricesappearunreasonable,acostcomparisonisconductedto ({"" justifyconversiontoinhouseorISSAperformance. c 2. D NewRequirements.Anewrequirementwill # beobtainedbyacompetitivelyawardedcontract.Ifthereisreasontobelievethatcontractservicequalityorpricesmaybeunreasonable,acostcomparisonisconductedtojustifyconversiontoinhouseorISSAperformance.0 3. D SeverableExpansions.Severableexpansions  ) ofexistinginhouse,contractedorISSAperformedactivitiesareobtainedbyacompetitivelyawardedcontract.Iftheexpansionisnotseverable,areviewoftheentireactivity,includingtheproposedexpansion,isconductedforpotentialcontractperformance.Ifthereisreasontobelievethatcontractservicequalityorpricesmaybeunreasonable,acostcomparisonisconductedtojustifyconversiontoinhouseorISSAperformance.4. D _Interservice_ԀSupportAgreements(ISSA). 3 a. D Commercialactivitiesmaybeperformedby 4 inhouseorcontractresourcesorthrough_ISSAs_ԀasprovidedbylawandPartI,Chapter2ofthisSupplement.o=Xr <DLh!(# Xr Xh!hob.Inrespondingto_interservice_Ԁsupportrequests,potentialagencyserviceproviderswillcertifythattheirreimbursablecostestimatesreflectthefullcompetitivecoststotheGovernmentasdefinedinthisSupplement.5. D ActivitiesWith10orFewer_FTE_.Commer K!B= cialactivitiesinvolving10orfewer_FTE_ԀmaybeconvertedtocontractorISSAperformance,withoutcostcomparison,ifthecontractingofficerdeterminesthat_offerors_Ԁwillproviderequiredlevelsofservicequalityatfairandreasonableprices. Ӏ c 6. D Activitiesof11orMore_FTE_.Commercial z'q!C activitiesmaybeperformedbyinhouseorcontract, (v"D w  wee w  withoutcostcomparison,iffairandreasonablepricescanbeobtainedthroughcompetitiveawardandalldirectlyaffectedFederalemployeesserving   onpermanentappointmentsarereassignedtoothercomparableFederalpositionsforwhichtheyarequalified.Innocase,shallanycommercialactivitybemodified,reorganized,dividedorinanywaychangedforthepurposeofcircumventingtherequirementsofthisparagraphorthisSupplement. 7. r ActivitiesPerformedbytheMilitary. G>  a. r Theofficialinparagraph9.a.oftheCircular, ]T  ordesignee,mayauthorizethedirectconversionofactivitiesperformedbyuniformedmilitaryservicepersonneltocontractperformance,withoutcostcomparison,ifthecontractingofficerdeterminesthatfairandreasonablepricescanbeobtainedfromqualifiedcommercialsources.xb. r Ifacostcomparisonisconductedorotherwise  requiredtoconverttoISSAperformance,theuniformedmilitarypositionsincludedintheGovernment'sinhousecostestimatearecostatthestandardcompositerateforuniformedpersonnelpublishedbytheDODorotherapplicableagencyComptroller.TheComptrollerwillalsoestablishthenumberofproductivehoursforuniformedpersonnel(seePartII,Chapter2,paragraphB,"Personnel").c. r Civilianpersonnelwillbecostasprovidedby   thisSupplement.Whiletheuniformedpositionsmayormaynotbeconvertedtocivilianpositionsasapartofthisprocess,theconversionofinhousecivilianpositionstouniformedpositionsisnotauthorized.8. r PreferentialProcurementPrograms.A &  commercialactivityofanysizethatisperformedbyFederalemployeesmaybeconvertedtocontract )"" performance,withoutcostcomparisonevenifitresultsinadverseemployeeactions,ifthecontractisawardedtoapreferentialprocurementsourceatafairmarketprice.Attheagency'sdiscretion,acostcomparisonmaybeconducted.9. D LowerCost.ContractorISSAperformance 3 *' ofarecurringcommercialactivitymaybeauthorizedbytheresultsofacostcomparison,conductedinaccordancewiththeproceduresdescribedinthisSupplement. ff0    r=Xr <DLh!(# Xr Xh!hrcff E.  c AgencyCostComparisonWaivers ݌ ]T , Ќ0c  1. D Theofficialinparagraph9.a.oftheCircular  - mayauthorizecostcomparisonwaiversanddirectconversionstoorfrominhouse,contractorISSA Ӏperformance.ISSAcostcomparisonwaiversmaybegrantedbytherequestingagencyonly. 2. D WithintheDepartmentofDefense,theauthor 2 itytoissuegeneralcostcomparisonwaiversmaybedelegatedtotheServiceAssistantSecretaryorDepartmentalAgencyHead,withoutfurtherdelegation.ISSAcostcomparisonwaiversmaybedelegatedtotheheadoftherequestingServiceSystemCommand,withoutfurtherdelegation.3. D Waiversshallbegrantedonlyasfollows: 9 a. D Awrittencostcomparisonwaiverwillbe $: preparedandsignedbytheauthorizedwaiverofficial.Thewaiverwillbeaccompaniedbyadetaileddeterminationthattheconversionmeetsthefollowingrequirements: ,(1) p Theconversionwillresultinasignificant N$E? financialorservicequalityimprovementandafindingthattheconversionwillnotservetoreducesignificantlythelevelorqualityofcompetitioninthefutureawardorperformanceofwork;or b(Y"C x  xee x  (2)  Thewaiverwillestablishwhyinhouseor   contractoffershavenoreasonableexpectationofwinningacompetitionconductedunderthecostcomparisonproceduresofthisSupplement. ,4. r ThesegeneralfunctionA76costcomparison . % waiversaresubjecttotheadministrativeappealproceduresprovidedatPartI,Chapter3,paragraphK,ofthisSupplement.Whilethejustificationforawaiverissubjecttoappeal,adecisionnottoissueawaiverisnotsubjecttoappeal.5. r Federalemployeesadverselyaffectedbya ]T  decisiontowaiveacostcomparisonshallbeaffordedthesamepersonnelconsiderationsprovidedatParagraphHofthisChapter.6. r Costcomparisonwaiversaregrantedto y DepartmentofDefenseandotherFederalinstallationsscheduledforclosureorincaseswherefunctionsaredesignatedforterminationonspecifieddates.  F.   CommercialActivitiesInventory   y  AsrequiredbytheFAIRAct,CircularA76and  thisSupplementalHandbook,eachagencywillmaintainadetailedinventoryofallinhousecommercialactivitiesperformedbyitsGovernmentemployees.Thisinventory,asdescribedatAppendix2ofthisSupplement,andanysupplementalinformationrequestedbyOMB,willbesubmittednotlaterthanJune30ofeachyear.Agenciesshould,asappropriate,permitemployeeinvolvementinthedevelopmentofthisCommercialActivitiesInventory.  G.  ReviewofDocuments  &    1. r AccesstoSupportingDocumentation.  '!  a. r Attheearliestpossiblestagesofdevelop 6(-"! ment,consistentwithprocurementandconflictof ;)2#" interestrequirements,affectedpartieswillhavetheopportunitytofullyparticipateinthedevelopmentofsupportingdocumentsandproposals,includingthedevelopmentofperformancestandards,performanceworkstatements,managementplans,andthedevelopmentofinhouseandcontractcostestimates.b. D Uponissuance,asolicitationusedinthe 8 /( conductofacostcomparisonwillbemadeavailabletodirectlyaffectedFederalemployeesortheirrepresentativesforcomment.Theemployeesortheirrepresentativeswillbegivensufficienttimetoreviewthedocumentandsubmitcommentsbeforefinalreceiptofoffersfromtheprivatesector.Privatesector_offerors_ԀshallcommentasprovidedbytheFederalAcquisitionRegulations(FAR). 02. D AppealsofAgencyDecisions.Asprovidedby vm1 theCircularandthisSupplementatPartI,Chapter3,paragraphK,agenciesshallmakeallrelevantdocumentsavailableforreviewasapartoftheadministrativeappealprocess.Thedetaileddocumentationshallinclude,ataminimum,theinhousecostestimate,withdetailedsupportingdata,thecompletedcostcomparisonformitself,andthemanagementplan.  H.  c PersonnelConsiderations  :  1. D AdverselyaffectedFederalemployeesare ; employeesidentifiedforreleasefromtheircompetitivelevelbyanagency,inaccordancewith5_CFR_Part351andChapter35ofTitle5,UnitedStatesCode,asadirectresultofadecisiontoconverttocontract,ISSAperformanceortheagency'sMostEfficientOrganization(_MEO_).2. D FederalemployeesandexistingFederal %B supportcontractemployeesadverselyaffectedbyadecisiontoconverttocontractorISSAperformance havetheRightofFirstRefusalforjobsfor_which U(L"E y  yee y  theyarequalifiedthatarecreatedbytheawardoftheconversion. a. r Astandardclauseisincludedindirectconver  sionandA76costcomparisonsolicitationsnotifyingpotentialcontractorsofthisrequirement(seeFAR52.2073).TheRightofFirstRefusalisaffordedtoallFederalemployeesadverselyaffectedbythedecisiontoconverttocontractperformance.b.ExecutiveOrder12933,"NonDisplacementofQualifiedWorkersUnderCertainContracts,"datedOctober20,1994,alsoprovidestheRightofFirstRefusaltocontractemployees(seeFAR7.305(c)).Asamatterofpolicy,theRightofFirstRefusalofferedatFAR52.2073issuperior.c. r Personnelofficersshouldworkwiththe NE  contractingofficerandemployeestoimplementtheseprovisions.3. r Agenciesshouldexertmaximumeffortsto ,# findavailablepositionsforFederalemployeesadverselyaffectedbyconversiondecisions,including:0 a. r givingpriorityconsiderationforavailable  positionswithintheagency;b. r establishinga_reemployment_Ԁprioritylistand   aneffectiveplacementprogram;c. r payingreasonablecostsfortrainingand /& relocationthatcontributedirectlytoplacement,andd. r coordinatingwiththeOfficeofPersonnel J A Management(_OPM_)toensureemployeeshaveaccesstoplacementprograms,includingthe_OPM_ԄoperatedDisplacedEmployeeProgram(_DEP_)andtheInteragencyPlacementAssistanceProgram(_IPAP_).4.Agenciesshouldnotifyemployeesaffectedas soonaspossibleofanimpendingcostcomparison ~'u!" andkeeptheminformedofitsprogressateverymajormilestoneoftheprocess. z I.  D RelationshiptotheBudget  $$ 1. D Workloadandresultingcostestimateswillbe : 1% consistentwiththePresident'sBudgetcoveringtheperformanceperiod.Neworexpandedworkrequirements,or_ISSAs_Ԁandconversionsofexistingworktoorfrominhouseorcontractperformanceshouldbeidentified.2. D Agenciesshouldincludeineachannual i` + budgetsubmissionthesavingsfromchangesinthemethodofobtainingcommercialactivities.ThesesavingswillbesubmittedinaccordancewiththeinstructionsofOMBCircularNo.A11,"Prepara }t / tionandSubmissionofBudgetEstimates."Changes y0 inthemethodofperformanceshouldbetimedtoconformwiththebudgetprocess.3. D AgenciesmayrequestOMBapprovaltoretain 3 orredistributebudgetsavingstoothercriticalmissions. { 7 (,VV(|~  T DLh!(# Xr Xh!hT!  ("7 #z{|~# zee {zee |{}o ~|s ~  !Q& EXHIBIT1  `=Xr <DLh!(#DXh!h`""* ddd Xdd Xdd X(#(#,x+  5" 3 45  c.` hp x (# Xr Xh!hc0K  A      Q=Xr <DLh!(#XQK0 %&&A\݌̌  &#A\݌̌    H  #r=Xr <DLh!(# Xr Xh!hrCONDITIONSPERMITTINGGOVERNMENTPERFORMANCEOFCOMMERCIALACTIVITIES   n  {XK N;#  4   -4N {XK  c.` hp x (# Xr Xh!hc0 x  K7(X(( <DLh!(#XK 01. NationalDefenseorIntelligenceSecurity. TheSecretaryofDefense,ordesignee,approvesnationaldefense   ԍ !  ԍ!"  ԍ  ԍ"#  ԍ#&  ԍ&_  ԍ V 9 justifications.TheDirectorofCentralIntelligence,ordesignee,approvesnationalsecurityjustifications.&&##""!!  ____________________________________________________________________________________________________________________    __!  !__"  "__"  "__#  #__&  &_  _ O<$V 9 4 -  ?4O  x  ].` hp x (#( X(( Xh!h]0 x  K7(X(( <DLh!(#XK 02. PatientCare. CommercialactivitiesatGovernmentownedhospitalsorotherhealthfacilitiesmaybeperformedbyin_  &  &#  #"    "!  !    __  !!""##&&house,ISSAorcontractemployeeswhenneededtomaintainthequalityofdirectpatientcare.&&##""!!  ____________________________________________________________________________________________________________________    __!  !__"  "__"  "__#  #__&  &_  _ O<$ f  4 ?  4O  x  ].` hp x (#( X(( Xh!h]0  K7X( <DLh!(#XK03. CoreCapability. Acorecapabilityofinhouseandcontractresourcesmaybewarrantedforcertainfunctionalareas. N;#  4   4N  ].` hp x (# X( Xh!h]0 x  K7(X(( <DLh!(#XK 04. ResearchandDevelopment. Researchanddevelopmentactivitiesmaybeconvertedtoorfrominhouse,ISSAor fI  contractwithoutcostcomparison.SeverablesupportactivitiesaresubjecttothecostcomparisonprovisionsofthisSupplement. N;#  4   y4N  x  ].` hp x (#( X(( Xh!h]0 x  K7(X(( <DLh!(#XK 05. NoSatisfactoryCommercialSourceAvailable. Agencieswillsolicitprivatesectorinterestandcertifythatthe  solicitationdidnotrestrictorotherwiselimitcompetition. N;#y\ 4 y  X4N  x  ].` hp x (#( X(( Xh!h]0 x  K7(X(( <DLh!(#XK 06 .FunctionsWith10orFewer_FTE_. Maybeconvertedtoorfrominhouse,contractorISSA,withoutacost   ԍ   comparison,ifthecontractingofficerdeterminesthatreasonablepricescannototherwisebe  obtained.     N;# 4 X  4N  x  ].` hp x (#( X(( Xh!h]0 x  K7(X(( <DLh!(#XK 07. MeetPerformanceStandard. Agenciesmaydemonstratethattheactivitymeetsorexceedsgenerallyrecognized tW industrycostandperformancestandards,afteralladjustmentsrequiredbythisSupplement. N;#J- 4   4N  x  ].` hp x (#( X(( Xh!h]0  K7X( <DLh!(#XK08. LowerCost. Resultsofacostcomparisondemonstratethatinhouseperformanceislesscostly.   N;# 4   4 N  aX` hp x (# X( Xh!h0   Q7sXss <DLh!(#XXQ =09. TemporaryAuthorization. Temporaryemergencyperformancemaybewarrantednottoexceedthenextfullcontract S6 optionyear. =  80f7Xs <DLh!(#s Xss Xh!hf3)'  4   3 80     *_ d dxx(#(#_,x+  5" !  4 5  ].` hp x (# Xs Xh!h]0K  J    6" XDLh!(#X6K0 Q*Je݌̌    !     Z7Xs <DLh!(#XXh!hZCONDITIONSPERMITTINGCONTRACTPERFORMANCEOFCOMMERCIALACTIVITIES ! < ݌ ?#"# Ќ    @   {XKf7Xs <DLh!(# Xs Xh!hf@ [ ݌ WD,&$ $  4   4 WЌ  {XK  ].` hp x (# Xs Xh!h]0   Q=sss# { +3; "(#XQ =01. ContractedActivities. Shouldbeobtainedbycontract,unlessacostcomparisondemonstratesthatinhouseorISSA %& performanceismorecosteffective. N;#&| ' 4   4 N =   T.` hp x (#sssX(#T0 x  K7(X(( <DLh!(#XK 02. NewRequirement. Shouldbeobtainedbycontract,unlesscontractqualityorpriceappearunreasonable.Acost 6(") comparisonisperformedtoconverttheactivitytoinhouseorISSA_performance.+) E2# )"* 4   f4 E)+)  ) N;# )"* 4   f4 N  x  ].` hp x (#( X(( Xh!h]0#  ԍ#&  ԍ&)  ԍ  ԍ)+  ԍ+ Q4 ++))&&## x  K7(X(( <DLh!(#XK 0##&&))++3.++))&&## ##&&))++++))&&####&&))++Severable++))&&##&&))++++))&&##&&))++Expansions++))&&####&&))++.++))&&## ##&&))++Sameas++))&&##&&))++above.++))&&#  #&  &)    )+  + N;# 4 f  4 N  x  ].` hp x (#( X(( Xh!h]0 x  K7(X(( <DLh!(#XK 04. _ISSAs_. Commercialactivitiesshouldnotbeperformedthroughneworexpanded_ISSAs_,exceptasprovidedbylawor)  ԍ) O2 thisSupplement.)  ) N;#%  4   4 N  x  ].` hp x (#( X(( Xh!h]0K  <    6" XDLh!(#X6K0 Q*$݌̌  ݌  ݌  $%݌$$%$$%  %<W݌%%%%    Z7X( <DLh!(#XXh!hZ {XKCONDITIONSPERMITTINGCONTRACTPERFORMANCEOFCOMMERCIALACTIVITIES Continued<20 c  4    < {XK  ].` hp x (# X( Xh!h]0B  ԍ̎*_ ddxx(#(#_,x+  9( Q 4 ( d9C    K7X( <DLh!(#XK0 TA)   (  d 4 T  ].` hp x (# X( Xh!h]0  K7X( <DLh!(#XK05. ActivitiesWith10orFewerFTE. Maybeconvertedtoorfrominhouse,contractorISSA,withoutacostcomparison. N;#  4   4 N  ].` hp x (# X( Xh!h]0 x  K7(X(( <DLh!(#XK 06. Activitieswith11orMoreFTE. Maybeconvertedtocontract,withoutcostcomparison,iffairandreasonablecontract T7  pricescanbeobtainedandalldirectlyaffectedFederalemployeesonpermanentappointmentscanbereassignedto *  othercomparableFederalpositions. N;#  4   4 N  x  ].` hp x (#( X(( Xh!h]0 x  K7(X(( <DLh!(#XK 07. ActivitiesPerformedbytheMilitary. Activitiesperformedbymilitary(uniformed)personnelmaybeconvertedto   contractwithoutcostcomparison.MilitarypositionsincludedincostcomparisonsarecostatthecompositeratesprovidedbytheDODorotherappropriateagencyComptroller. N;#I, 4   4 N  x  ].` hp x (#( X(( Xh!h]0 x  K7(X(( <DLh!(#XK 08. PreferentialProcurementPrograms. Contractperformancemaybegranted,withoutcostcomparison,ifthecontractis  awardedtoapreferentialprocurementprogram. N;# 4   4 N  x  xIX` hp x (#( X(( Xh!hx0 x  Q7(X(( <DLh!(#XXQ 0 809. LowerCost. Conversiontocontractisrequiredifacostcomparisonindicatesthatcontractperformanceisthelowercost Y< alternative.3)'/ 4    3 80  xN DLh!(#( X(( Xh!hN"nQ* 00330&%"  D XX%&   0  ee   }Z7X( <DLh!(#DXh!hZwXX   !w  s,  f7X( <DLh!(# X( Xh!hfChapter2_Interservice_ԀSupportAgreements(ISSA)s,,݌  Ќ  w!   (,(#(#( x  i:(X((S <DLh!(# X( Xh!hi  33&%w A.  ( General     xl:X(S <DLh!(#( X((S Xh!hl x0 1. S Inaccordancewiththeprovisionsofthe   FederalPropertyandAdministrativeServicesActof1949,theEconomyActof1932(31_USC_Ԁ1535),andtheGovernmentManagementReformActof1994(103_USC_Ԁ356),excesspropertyandcommonadministrativeservicesavailablefromotherFederaldepartmentsoragenciesmaybeused,unlessthe   neededproductorservicecanbeobtainedmoreeconomicallythroughagencyorprivatesectorresources.ThecostprinciplesandcompetitionproceduresestablishedbythisSupplementaretobeusedtodeterminewhenservicesshouldbeperformedbyinhouse,contractor_interservice_Ԁsupportagreement(ISSA)resources.2. S Federalagenciesshallnotprovidecom '  mercialactivitiestotheprivatesector.OMBapprovalorspecificstatutoryauthorityisrequiredtodeviatefromthispolicy.3. S InaccordancewithOMBCircularA97, L/ "RulesandRegulationsPermittingFederalAgencies Q 4 toProvideSpecializedorTechnicalServicestoStateandLocalUnitsofGovernment,"Federalagencies ["> mustconductcostcomparisonspriortoofferingtoprovideorreceivecommercialservicestoorfromStateorlocalgovernmentagencies.Thisrequirementdoesnot,however,applytoexceptionalemergencycircumstancessuchasdisasterreliefrequirements. y(\"  4. % InaccordancewithOMBCircularA126,    "ImprovingtheManagementandUseofGovern  ! mentAircraft,"datedMay22,1992,agencieswill  " conductapprovedcostcomparisonsbeforeretaining,purchasingorotherwiseproviding,directlyorthrough_ISSAs_,Federalaircraftoraviationservices(seeAppendix6).5. % InrecognitionofGovernmentwidedown  ' sizingand_reinvention_Ԁefforts,thecostcomparisonrequirementsofthisSupplementalHandbookshallnotapplytoanyISSAconsolidations,wherethetransferofworkisaccomplishedpriortoOctober1,1997,unlessthatconsolidationincludestheconversionofworktoorfromcontractperformanceandsuchconversionisnototherwiseauthorizedbythisSupplementalHandbook.a. % EffectiveOctober1,1997,thecostcom B%0 parisonrequirementsofthisSupplementalHandbookwillnotapplytoexistingorrenewed_ISSAs_ԀortotheconsolidationofcommercialorotherserviceswithinaDepartmentoragency,unlessthatconsolidationincludestheconversionofworktoorfrominhouseorcontractperformance.New,expandedortransferredworkrequirementswillbeauthorizedforperformancebyanISSAonlyasprovidedbythecostcomparisonorotherprovisionsofthisSupplementalHandbook.6. % Thecostcomparisonprovisionsofthis 'm!; Chapterdonotapplytotheperformanceof_inher_ԃ (r"<  ee   _ently_Ԁgovernmentalfunctions,suchasreimbursableprocurementorcontractadministrationservices. i7rXrr<Lh!(# X(S Xh!hi >x B.  r Specific  8  o7Xr<Lh!(#rXrr<XXh!ho >1.  Theprospectiveprovidingagencywill N 1 furnishtherequestingagencyafirmpriceorreimbursableratefortherequestedneworexpandedproductorservice.TheprospectiveproviderwillalsoissueacertificationthatitspriceorreimbursablerateiscalculatedinaccordancewithPartIIofthisSupplement.Thiscostestimatewillthenbecomparedbytherequestingagencytoaninhouseand/oracommercialoffer,alsocalculatedoradjustedinaccordancewiththisSupplement.Acontractshallbeawardedbytherequestingagency,ifthecommercialofferismoreeconomical. 0a.  Iftheprospectiveproviderisrespondingto ~ aformalsolicitationissuedbytherequestingagency,theprospectiveprovidershallsubmittotherequestingagencyasynopsis,managementplanandGovernmentcostestimatedevelopedinaccordancewiththisSupplement.Acompleteresponse,asrequiredbytheFederalAcquisitionRegulations(FAR),isnotrequired. X(1)Undernocondition,shalltherequestingagencycancelorotherwisedelaybidopeningorcontractawardinordertopermitanagencytosubmitanISSApriceorreimbursablerate.(2)Therequestingagencymayacceptorrejecttheprospectiveprovider'sofferastechnicallyqualifiedorunqualifiedasitdeemsappropriateandwithoutappeal.Prospectiveproviderswhosubmitatechnicallyacceptableoffershallcompetewithprivatesectorandotherinhouseoffers. X0 b.  Agenciesthatwishtoprovideacommercial & ! activitytoanotherDepartmentoragencymaypetitiontheagencytoconductacostcomparison. ("# c.  Atthesolediscretionoftherequesting # agency,theprospectiveprovidermaysubmitperformancestandarddata,asprovidedbyChapter1,paragraphC.7.ofthisPart.Theprospectiveprovidershallcertifythatallnecessaryadjustmentstoitsperformancemeasuresandcoststandardshavebeenmade.Therequestingagencyshallreviewthedocumentationfortheseadjustmentsandmakesimilaradjustmentstotheprivateandotherinhouseoffersbaseduponthesubmissionofperformancemeasures.2.  Competitionsbetweenarequestingagency, eH . privatesector_offeror_ԀandapotentialISSAprovidermayrequirespecialperformanceandpriceadjustmentstoensurethatallcompetitorsaretreatedequitably.Theseperformanceandpriceadjustments,include:̄  ContractPrice w4 Є  ContractAdministrationCosts 5 Є  AdditionalCosts 6 Є  OnetimeConversionCosts 7 Є  Gain/LossonDisposal/TransferofAssets 8 Є  FederalIncomeTaxes 9 Є  OtherAdjustmentCosts : Є  MinimumDifferentialCosts .; 3.  Proposalstoobtainneworexpanded D '< productsorservicesfromanotherGovernmentagencyorprivatesector_offeror_,includingISSAproposals,willbepublishedintheCommerce S#6? BusinessDaily. X$;@ 4.  Anagencythatiscurrentlyobtaininga n%QA commercialsupportservicefromanotherDepartmentoragencymay,withpropernotification,terminatethatrelationshipandconvertdirectlyto }(`"D  ee   contractperformancewithoutcostcomparison.If,however,theagencywishestoperformthatworkdirectlywithinhouseresources,itwillneedtojustifythatdecisionthroughacostcomparisonfora"newrequirement."Again,thisprovisiondoesnotapplytotheperformanceofinherentlygovernmentalactivities.5.  Agencieswillnotretain,createorexpand Q 4 capacityforthepurposeofprovidingneworexpandedlevelsof_interservice_Ԁsupportservices,unlessjustifiedbythecostcomparisonrequirementsofthisSupplement.a.  Oncean_interservice_Ԁsupportproviderhas {^  competeditsentire_interservice_Ԁsupportworkloadwiththeprivatesector,thatprovidermayprovideneworexpanded_interservice_Ԁsupportworkofthesametypetootheragencies,withoutfurtherrevieworcostcomparisononitsortherequestingagency'spart.Thisabilitytoofferservices,withoutcostcomparison,willcontinueuntiltheprovidingagencyhasincreaseditscapabilityandtotalworkloadbythelesserof(1)theexpansionrequirementsofthisSupplementor(2)morethan65_FTE_Ԁareaddedtotheinhousecapability,atwhichtimeanotherfullrevieworindividualcostcomparisonsarerequired.b.Paragraph5.a.notwithstanding,ifaneworexpandedISSAresultsinageneralconversionofworktoorfrominhouseorcontractperformanceandacostcomparisonhasnotpreviouslyjustifiedtheprovider'smethodofperformance,acostcomparisonisrequired.6.  Costcomparisonsconductedtojustify % _ISSAs_Ԁaresubjecttoindependentreviewandappeal.Priortobidopening,therequestingagency'sIndependentReviewOfficershallreviewallGovernment  )"" bidsforcompliancewiththerequirementsofthisSupplement.AppealsshallbeconductedinaccordancewithChapter3,paragraphK,ofthisPart.  X ;' ## ee   ee   (,VV(1    1{&"%%&P {#"%{&   /wXXTX#{W/+vwXXTXw+q32S$vw2w$2S   2 !2w2 !!2 330  q3W  Chapter3CostComparisonsq3WX݌  Ќv !!2 v !!v    vw!v vwvw033  #v&%vwEW#vw%v& (,(#(#(5p 5#v&%vwY#A.  r General     r 1.  ExceptasprovidedinChapter1ofthisPart,   agencieswillconductcostcomparisonswhenactivitiesdonotmeetestablishedperformancestandards,whenagenciesbelievefairandreasonablepricescannotbeobtainedfromqualifiedcommercialsources,orasotherwiseprovidedtopermittheconversionofworktoorfrominhouse,contractor_interservice_Ԁsupportagreement(ISSA)performance.DetailedguidanceontheconductofcostcomparisonsiscontainedinPartIIofthisSupplement. r 2.  Inconsolidatingactivitiesforcost 5, comparison,agenciesshouldtakeexistingindustrystructures,contractadministrationandothermanagementconsiderationsintoaccount. r 3.  Ingeneral,thecostcomparisonprocess ZQ consistsofsixmajorcomponents.Theyare:(1)thedevelopmentofaPerformanceWorkStatement(_PWS_)andQualityAssuranceSurveillancePlan(_QASP_);(2)theperformanceofamanagementstudytodeterminetheGovernment'sMostEfficientOrganization(_MEO_);(3)thedevelopmentofaninhouseGovernmentcostestimate;(4)issuanceoftheRequestforProposal(_RFP_)orInvitationforBid(_IFB_);(5)thecomparisonoftheinhousebidagainstaproposedcontractorISSAprice,and(6)theAdministrativeAppealProcess,whichisdesignedtoassurethatallcostsenteredontheCostComparison ("  Form(CCF)arefair,accurateandcalculatedinaccordancewithPartIIofthisSupplement. D 4.Costcomparisonsshouldbecompletedwithineighteenmonthsforasingleactivity(orthirtysixmonthsformultipleactivities)fromthecostcomparisonstartdate,i.e.,publicorunionnotificationanddesignationofthestudyteam.AgenciesaretoprovideanannualreporttoOMBonallcostcomparisonsthatexceedthesetimeframes,includingadescriptionoftheproblemsencountered,remedialactions,statusandexpectedcompletiondate. B.  D TheCostComparisonStudyTeam  5,,  D 1.  Generally,acentralorfieldagencystudy KB- teamshouldbeformed.Overtime,theteammayincludeindividualswithexpertiseinmanagementanalysis,positionclassification,workmeasurement,valueengineering(seeOMBCircularA131),industrialengineering,costanalysis,procurementandthetechnicalaspectsoftheactivityunderstudy.Theteamshoulddocumentmissionrequirementsandseeknewandinnovativewaystoprovidetherequiredproductsorservices. D 2.  Agenciesareencouragedtoseektrainingon #7 thepoliciesandproceduresofCircularA76andthisSupplement,andtoensurethattheskillsnecessarytopreparethePerformanceWorkStatement,inhousemanagementplanandcostestimateareavailable.Jointtrainingforemployees ("<  ee   andtheirrepresentativesisencouraged.0 r 3.  ProcurementrestrictionsprohibitFederal @7 procurementofficialsfromacceptinganofferoffutureemploymentfromanycontractorcompetingforaprocurementinwhichtheprocurementofficialisinvolved."Procurementofficial"inthissenseincludespersonnelinthecommercialactivitywhoaredirectlyandsubstantiallyinvolvedinpreparingorapprovingthe_PWS_,managementplan,theinhousecostestimate,orsupportingthesourceselectionevaluationprocess.(SeeFAR3.1044(h)(3)and41_USC_Ԁ423.)33 r a.  Employeeswhoparticipateorprovidedata   tosupportthedevelopmentofthevariousstudyelements,butdonotreview,approveorhavedirectknowledgeofthefinalperformanceworkstatement,performancestandards,_MEO_,inhouseorcontractcostestimatesarenotconsidered"procurementofficials"andarenotaffectedbythisrestriction. r b.  Theparticipationoffunctionalexpertsis  essentialtotheQրqualityofthecostcomparison.However,whenparticipationonthestudyteamcouldadverselyaffecttheirrightsundertheRightofFirstRefusalortheopportunityforfutureemploymentwiththecontractor,employeesshouldbegiventheoptiontodeclineparticipation. r c.  Ataminimum,certifyingofficialsforthe 0 ' _PWS_ԀandManagementPlan,theIndependentReviewOfficer(s),thosewhosignthecostcomparisonformandtheAdministrativeAppealAuthorityareconsideredprocurementofficials. C.  r PerformanceWorkStatements  d%[  r 1.  PerformanceWorkStatements(_PWS_) |&s  shouldbedevelopedforallactivitiesbeing_resolicited_Ԁforcontractorscheduledfordirect ("" conversiontoorfrominhouse,contractorISSAperformance. D 2.  The_PWS_Ԁdefineswhatisbeingrequested, I@$ theperformancestandardsandmeasures,andϐ_timeframes_Ԁrequired.ItprovidesthetechnicalperformancesectionsoftheRequestforProposals(_RFP_)orInvitationforBid(_IFB_)issuedbythecontractingofficer.33 D 3.  Inthedevelopmentofthe_PWS_,agencies {* shouldrefertotheOfficeofFederalProcurementPolicy's(_OFPP_)PolicyLetter912,"Service f] , Contracting,"datedApril9,1991;_OFPP_ԀPolicy WN - Letter921,"InherentlyGovernmentalFunctions," H? . datedSeptember23,1992(seeAppendix5);and_OFPP_ԀPolicyLetter931,"ManagementOversight *!0 ofServiceContracting,"datedMay18,1994. 1 33 D 4.  Specialcareshouldbetakenwhen 2 developingthe_PWS_Ԁtoensurethatitdoesnotlimitserviceoptions,arbitrarilyincreaserisk,reducecompetition,unnecessarilyviolateindustryserviceorservicegroupingnormsoromitstatutoryorregulatoryrequirementswithoutfulljustification.The_PWS_Ԁshouldbeperformanceoriented,specifyingwhatoutputsormeasuresaredesiredandlimitingdirectionsastohowtheresultsareachieved.Agenciesshouldnotconsidera_PWS_Ԁthatlimitstheoptionsavailableforprovidingtherequiredproductorservice,orotherwiseunnecessarilyrestrictsprivatesectorparticipation,asbeingincompliancewithCircularA76orthisSupplement. D. D QualityAssuranceSurveillancePlans %A   D 1.  TheQualityAssuranceSurveillancePlan & B (_QASP_)describesthemethodsofinspectiontobeused,thereportsrequiredandtheresourcestobe ("D employedwithestimatedworkhours.Althoughthe_QASP_Ԁaccompaniesthe_PWS_ԀtotheIndependentReviewOfficer(IRO)foracostcomparison,itneednotbeincludedasapartofthesolicitationorprovidedtoprivatesector_offerors_.Inhouse,contractandISSA_offerors_Ԁshoulddeveloptheiroffersbasedupontherequirementsofthe_PWS_alone.The_QASP_ԀprocessissupplementedwithperiodicPost_MEO_ԀPerformanceReviews. E.  r ManagementPlans  zq  33 r 1.  TheManagementPlandescribesthe   Government'sMostEfficientOrganization(_MEO_)andisthebasisoftheGovernment'sinhousecostestimates.TheManagementPlan,whichmustreflectthescopeofthePerformanceWorkStatement,shouldidentifytheorganizationalstructures,staffingandoperatingprocedures,equipment,transitionandinspectionplansnecessarytoensurethattheinhouseactivityisperformedinanefficientandcosteffectivemanner.33 r 2.  Agenciesmayconsiderexisting   management_reinvention_,consolidation,reengineering,personnelclassification,marketandotheranalysesintheidentificationanddevelopmentofthe_MEO_. r 3.  TheManagementPlaniscertifiedas A8 reflectingtheGovernmentsMostEfficientOrganization(_MEO_).Thecertifyingofficialmaybeanytechnicallycompetentindividual:(a)organizationallyindependentofthefunctionunderstudyor(b)atleasttwolevelsabovethemostseniorofficialincludedintheinhousecostestimate.Thecertifyingofficialmustalsobeabletocommittotheprovisionofnecessaryresourcestoperformtheactivity.Suchcertificationismadebeforethe (w"" reviewofbidsorproposals. D 4.  TheManagementPlanwilldocumentthe B9# assumptionsusedinthedevelopmentofthe_MEO_andinhousecostestimate,including: D a.  Summary. Anoverallcomparisonofthe h _& currentorganizationwiththe_MEO_Ԁandareviewofanyspecialinitiativesorassumptions,includingequipmentorproductivitychanges. D b.  TheQualityAssuranceSurveillancePlan * А(_QASP_).AdescriptionoftheGovernment'sin  + houseQualityAssuranceSurveillancePlanandhowitwilldiffer,includingresources,ifservicesareprovidedbyISSAorcontract,andwhy. D c.  Assets.Whenexistingassetsusedbythe  / Government's_MEO_ԀarenotprovidedtotheISSAorcontractorforuse,ananalysisofthebenefitstotheGovernmentmaybewarranted. D d.  TransitionPlan.Aplanforthetransitionto 3 orfromcurrentorganizationalstructureto_MEO_,contractor_interservice_Ԁsupportagreementperformancedesignedtominimizedisruption,adverseimpacts,capitalizationandstartuprequirements. D e.  InhouseCostEstimate. Adescriptionof 1(9 allcostsassociatedwiththeperformanceofthe_MEO_,calculatedinaccordancewithPartIIofthisSupplement. F.  D Safeguardingthe_MEO_ ^"U=   D 1.  TheManagementPlanandthe_MEO_Ԁare v#m> consideredprocurementsensitivedocumentsuntilatentativedecisionisreached,e.g.,atbidopeningandcompletionofthecostcomparisonform.S D 2.  TheManagementPlan,_MEO_Ԁandinhouse '!B costestimatearedeliveredassealeddocumentsto ("C thecontractingofficerpriortotheduedateforthereceiptofbidsortechnicalproposals.Theperiodavailabletodelivercontractofferswillbeextendeduntilthe_MEO_Ԁandtheinhousecostestimatesaresealed.NoprivatesectorofferisopenedorotherwisereviewedpriortothesealingoftheGovernment'sinhousecostestimate. G.  r Solicitations  l c 33 r 1.  Thecontractingofficerreviewsthe_PWS_Ԁto { ensurethatitisadequateandappropriatetoserveasabasisforaward.Thecontractingofficeissuesasolicitationbasedonthe_PWS_. r 2.  Thecontractingofficer,whencontractingby YP  sealedbid,insertsincostcomparisonsolicitationstheprovisionatFAR52.2071,NoticeofCostComparison(SealedBid). r 3.  Thecontractingofficer,whencontractingby .% competitivenegotiationorsourceselection,insertsincostcomparisonsolicitationstheprovisionatFAR52.2072,NoticeofCostComparison(Negotiated). r 4.  Thecontractingofficerinsertstheclausesat  FAR52.2073and7.305,theRightofFirstRefusalofEmployment,inalldirectconversionandcostcomparisonsolicitations. H.  r MethodsofProcurement   33 r 1.  AllcompetitivemethodsofFederal  procurementprovidedbytheFARareappropriateforcostcomparisonundertheCircularandthisSupplement.Thisincludes:sealedbid,twostep,sourceselectionandothercompetitivequalificationsbasedornegotiatedprocurementtechniques. r 2.  Inselectingthemethodofprocurementand  '!! contracttype,thecontractingofficeranalyzesthe_PWS_Ԁandappliestheguidancecontainedin_OFPP_ )## PolicyLetter912andFARPart16. D 3.  SourceSelectionornegotiatedprocurement B9$ techniquesmaybeusedforsomeA76CostComparisons.Toensureequityinthecostcomparisonprocess,thefollowingguidelinesareprovided: D a.  Inadditiontothe_PWS_,ManagementPlan v m) andinhousecostestimate,theGovernment,liketheprivatesector_offerors_,shallsubmittheTechnicalPerformancePlanrequiredbythesolicitation,totheA76IndependentReviewOfficer(IRO).TheTechnicalPerformancePlanreflectsthe_MEO_Ԁandissealedpriortotheconsiderationofanypartofanycontractoffer. D b.  AsrequiredbytheFAR,theGovernment 1 shouldestablishaSourceSelectionAuthority,includingassurancesthattherearenopotentialconflictsofinterestinthemembershipoftheAuthority. D c.  TheAuthorityreviewscontractandISSA 6 offersandidentifiesthatofferwhichrepresentsthe"bestoverallvaluetotheGovernment."ThiscontractoffercompeteswiththeGovernment'sinhousecostestimate. D d.  Withtheselectionofthecompetitiveoffer, '; thecontractingofficersubmitstotheAuthoritytheGovernment'sinhouseTechnicalPerformancePlan.TheAuthorityevaluatestheinhouseofferandassesseswhetherornotthesamelevelofperformanceandperformancequalitywillbeachieved.TheAuthorityshouldnotrevieworhaveaccesstotheinhousecostestimate. D e.  TheGovernmentmakesallchanges p'g!C necessarytomeettheperformancestandards w(n"D acceptedbytheAuthority.RevisedcostestimatesareresubmittedtotheIROforacceptance.ThiswillassurethattheGovernment'sinhousecostestimateisbaseduponthesamescopeofworkandperformancelevelsasthebestvaluecontractoffer. I. r TheIndependentReview e \   r 1.  TheGovernment'scostestimatesare } t certifiedinwritingbytheagency'sA76IndependentReviewOfficer(IRO),ordesignee,asbeinginfullcompliancewiththeproceduresandrequirementsdescribedinthisSupplement.TheIROshouldbeaqualifiedpersonfromanimpartialactivitythatisorganizationallyindependentofthecommercialactivitybeingstudiedandtheactivitypreparingthecostcomparison. r 2.  The_PWS_,ManagementPlan,_QASP_Ԁandall  Governmentdevelopedcostestimates,withsupportingdocumentation,areforwardedtotheagencyIRO,ordesignee,forreview.ThisisdonepriortosubmissionoftheCostComparisonForm(CCF)andsupportingdatatothecontractingofficer. r 3.  TheIROactsasanindependentauthorityto:   r a.  ensurethatthedatacontainedinthe  ManagementPlanreasonablyestablishtheGovernment'sabilitytoperformthe_PWS_Ԁwithintheresourcesprovidedbythe_MEO_,and33 r b.  ensurethatallcostsenteredontheCCFare <"3 fullyjustifiedandcalculatedinaccordancewiththeproceduresdescribedinPartIIofthisSupplement. J.  r EvaluationofBidsandTentativeDecisions   %  r 1.  Forsealedbid_procurements_,thecontracting "&  officeropensthebids,includingtheGovernment'sinhousecostestimate,andentersthepriceoftheapparentlow_offeror_ԀontheCostComparisonForm ("" (CCF).AfterallnecessaryadjustmentsaremadeandtheCCFiscompleted,thecontractingofficerannouncesthetentativedecision,subjecttoevaluationofbidsforresponsiveness,responsibilityandresolutionofpossibleadministrativeappeals.TheappealperiodbeginswhenaccesstothecompletedCCF,andallsupportingdocumentation,isprovidedtoaffectedpartiesforreview,usuallythedayofbidopening. D 2.  If,asaresultofanappealorotherproblem, + theselectedcompetitive_offeror_Ԁisotherthanthepreviouslyannouncedapparentlowbidder,theCCFisrevised.Allaffectedpartiesshouldbenotifiedofanysuchrevision. D 3.  Foranegotiatedorbestvalueprocurement, zq 0 afterselectionoftheprivatesector'smostadvantageousproposal,andallnecessaryadjustmentshavebeenmadetoensurethattheGovernment'sinhousecostestimateandtheotheroffersarebaseduponthesamescopeofworkandperformancestandards,thecontractingofficeropenstheGovernment'sinhousecostestimate,andcompletestheCCF.33 D 4.  If,aftercontractstart,thecostcomparison 9 "winner"isfoundtobeunresponsiveorotherwiseunabletoperform,theGovernmentshouldseekareaffirmationofbidsreceivedfromtheinhouse,privatesectorandISSA,asappropriate,tothecostcomparisonsolicitation.Adjustments,limitedtotimedelaysorinflation,shouldbeaccommodatedforall_offerors_.TheCCFisthenrecalculatedandawardmadetothenextlowestbidder. K.AppealsofTentativeWaiverandCost T%KB ComparisonDecisions  [&R C  D 1.  FollowingatentativewaiverorA76cost s'j!D comparisondecision,theA76Administrative z(q"E Appealsprocessisinvoked.TobeeligibleforreviewundertheA76AdministrativeAppealsprocess,appealsmust: r a.  Besubmittedbyaneligibleappellant. P G  r b.  Inthecaseofawaiver,bereceivedbythe h _ officialinparagraph9.a.oftheCircular,orϐdesignee.Inthecaseofatentativecostcomparisondecision,bereceivedbythecontractingofficer.Ineithercase,theappealmustbereceivedinwritingandwithin20calendardaysafterthedatethatallsupportingdocumentationismadepubliclyavailable.Theagencymayextendtheappealperiodtoamaximumof30daysifthecostcomparisonisparticularlycomplex. r c.  Addressspecificquestionsregardingan  agency'scompliancewiththerequirementsandproceduresofthisCircular,factualquestionsregardingagencyjustificationstowaiveacostcomparison,oraddressspecificquestionsregardingthecostsenteredbytheGovernmentontheapplicableCostComparisonFormandsetforththerationaleforquestioningthoseitems. r d.  Identifyspecificinstancesofagencydenials  ofinformationnototherwiseprotectedbylaworregulation.33 r e.  Demonstratethattheitemsappealed, . % individuallyorinaggregate,wouldreversethetentativedecision. r 2.  Aneligibleappellantisdefinedas; #  33 r a.  Federalemployees(ortheirrepresentatives) $  andexistingFederalcontractorsaffectedbyatentativedecisiontowaiveacostcomparison; r b.  Federalemployees(ortheirrepresentatives) :'1!  andcontractorsthathavesubmittedformalbidsor A(8"! offerswhowouldbeaffectedbyatentativedecisiontoconverttoorfrominhouse,contractperformanceorISSAasaresultofacostcomparison;or D c.  agenciesthathavesubmittedformaloffers P G$ tocompetefortherighttoprovideservicesthrough_ISSAs_. D 3.  Withreceiptofaneligibleappeal,the v m' officialdesignatedinparagraph9.a.oftheCircular,ordesignee,assignsanofficial(s)toserveastheA76AdministrativeAppealAuthorityforthatappeal.Theindividual(s)selectedmustbe:(a)twolevelsabovetheofficialwhosignedthewaiver,inthecaseofacostcomparisonwaiverauthorizedunderChapter1,paragraphE,ofthisPart;or(b)independentoftheactivityunderrevieworatleasttwoorganizationallevelsabovetheofficialwhocertifiedtheGovernmentsManagementPlanand_MEO_,inthecaseofatentativecostcomparisonappeal. D 4.  TheAppealAuthorityensuresthatthecost 4 itemschallengedintheappealareproperlyaccountedforinaccordancewiththeproceduresofPartIIofthisSupplement.TheAuthorityalsoensuresthatallparticipantstothecostcomparisonprocesshaveappropriateaccesstothedecisionprocess. D 5.  Ifsignificantproblemswiththewaiver $!; justificationorcostcomparisonestimatesarefound,suchthatthetentativedecisionmaybeunsupportedorisinerror,theAppealAuthoritycorrectstheerrorandcostcomparison,ifapplicable,andtheagencyproceedsaccordingtotheamendeddecision.TheAuthoritywillnotreviewanyitemnotformallychallengedbyaneligibleappellant. U(L"B Ѐ r 6.  AgencyA76AdministrativeAppeal *! proceduresdonotapplytoquestionsconcerning: r a.  theselectionofonecontract_offeror_Ԁor I@ anotherforcompetitionwiththeinhousecostestimate; r b.  awardtoonecontractorinpreferenceto o f another; r c.  Governmentmanagementdecisions   involvingtheGovernment'scertifiedinhouse_MEO_,and r d.  thepoliciesorprocedurescontainedinthe   CircularandthisSupplement. r 7.  Theproceduredoesnotauthorizeanappeal   outsidetheagencyorjudicialreview,nordoesitauthorizesequentialappeals.TheappealprocessprovidesreasonableassurancesthatdecisionstowaivethecostcomparisonrequirementsofthisSupplementareproperlyreviewedandthatthecostcomparisonrequirementsofthisSupplementareproperlyadheredto,whenapplicable.Therefore,alldirectlyaffectedpartiesareexpectedtosubmittheirappealswithintheinitialappealperiod. r 8.  Theappealsprocedureshouldprovidefora *! finaldecisionwithin30daysofreceiptoftheappealbytheAppealAuthority. L.  r Post_MEO_ԀPerformanceReview P G   r 1.  Whenservicesareperformedinhouseasa h!_ resultofacostcomparison,includingthoseinvolvinganISSA,aformalreviewandinspectionoftheMostEfficientOrganization(_MEO_)shouldbeconducted.Typically,thisreviewshouldbeconductedfollowingtheendofthefirstfullyearofperformance.33 r 2.  ThePost_MEO_ԀPerformanceReview ("! confirmsthatthe_MEO_ԀhasbeenimplementedinaccordancewiththeTransitionPlan,establishesthe_MEO_'sabilitytoperformtheservicesofthe_PWS_andconfirmsthatactualcostsarewithintheestimatescontainedintheinhouseestimate.Adjustmentsmaybemadeforformalmissionorscopeofworkchanges.33 D 3.  Post_MEO_ԀReviewswillbeconductedat  ( thedirectionoftheofficialinparagraph9.a.oftheCircular,ordesignee,butmustbeindependentofthemostseniorofficialincludedintheGovernmentsinhouseorISSAcostestimate.Post_MEO_ԀPerformanceReviewswillbeconductedonnotlessthan20percentofthefunctionsretainedperformedbytheGovernmentasaresultofacostcomparison.  4. f! _MEO_  0 implementationmaybemeasuredintermsofthe_FTE_,gradestructureandthecontractsupportincludedintheTransitionandManagementPlan. D 5.  _MEO_Ԁperformancemaybemeasuredin 7.4 termsofworkload,responsivenessandqualityofwork.Specialinspectionsandareviewoftheactivity'simplementationoftheQualityAssuranceSurveillancePlanmaybenecessary. D 6.  Costconformancemaybedeterminedbyan kb9 analysisofactuallaborandmaterialcostsagainstthePersonnel,Material,andOtherSpecificallyAttributablecostsonthefinalCCF.Careshouldbetakentoassurethatadjustmentsaremadeforretainedorsavedpayandforfringebenefitfactorswhenusingactualcostrecords.   $? 7. D Minorcostorperformancedeficienciesmay %@ becorrectedtomaintaintheintegrityofthecostcomparisonprocess.Aperiodoftimeconsistentwiththatgiventoacontractormaybegiventothe ("C inhouseorISSAactivitytocorrectanydeficienciesfound.Failuretocorrectdeficienciesthatwouldindividuallyorinaggregateinvalidatetheoriginalcostcomparison,oranyfindingofasignificantdeviationfromtherequirementsofthe_PWS_,shallresultinthefollowing: r Aswithacontractdefault,ifaninhouseorISSAfailuretoperformisidentified,includingfailuretoimplementthe_MEO_ԀasprovidedbytheTransitionPlan,thecontractingofficerwillawardtheworktonextlowest_offeror_Ԁwhoparticipatedinthecostcomparison,iffeasible.Ifawardtothenext   lowest_offeror_Ԁisnotfeasiblethecontractingofficerwillimmediately_resolicit_Ԁtoconductarevisedandupdatedcostcomparison. D 8.  AnannuallistofPost_MEO_ԀPerformance P G Reviewcertificationswillbemadeavailabletothepublicuponrequest.ThislistwillidentifythetotalnumberofcostcomparisonscompletedsincetheissuanceofthisRevisedSupplementalHandbookandthenumberofPost_MEO_ԀPerformanceReviewscompleted._2   2_    5(#(#,0VZ5Ҁ  @ 0!! :Z@#&%%v&W#v&%%&e  e  r     @{{' v%v&PARTII  @  3 r 0  0(#(#0<(#(#0<(#<(#0(#(#0(#(#0(#(#0(#(#0L(#(#0hL(#L(#0!h(#h(#3@ #v&%v7#v%v&PREPARINGTHECOSTCOMPARISON  Z    ESTIMATES  H   2(#  Ї77665577447  T 7<  v #v&%v#vXX%v&x@yS  #v&%XvX#vw%v&TableofContents  ` #wvw#9+{#XXXw+9#&%wL#XX%&44(,(#(#(5p 5  #&%XX#0 r 0rVrV0VV0<VV0<V<V %&Page#&% $# VV Chapter1ImplementationInstructionsc+ X' <Xh!(#XXr<XXh!hc ' A.GeneralVV)V.{ {   D  ' B.OrganizationVV)V.   \  Chapter2DevelopingtheCostofGovernment ' Performance]+ ,,r X< !X X' <Xh!(#X]  A.GeneralVV)V.0 0  T      1.OverviewVV)V.  l      2.StandardCostFactorsVV)V.FF(       3.CommonCostsVV)V.^ ^       4.RetainedandSavePayVV)V.(      5.CostofConductingaCostComparisonVV)V.::7      6.ProrationofPerformancePeriodsVV)V.3 4     7.InHouseCostsVV)V.b b ! L     8.MinimumCostDifferentialsVV)V.- d     9.RoundingRuleVV)V.J J  ,|     10.InflationVV)V.  D 0  B.PersonnelCosts(Line1)#VV)V.(VV# \   C.MaterialandSupplyCosts(Line2)VV)V.2 t   D.OtherSpecificallyAttributableCosts    (Line3)VV)V.        1.OverviewVV)V.  !      2.DepreciationVV)V.  "$     3.CostofCapitalVV)V.D D " #<     4.RentVV)V.H H  %T  Ѐ    5.MaintenanceandRepairVV)V.) &l!     6.UtilitiesVV)V.8 8  4'"     7.InsuranceVV)V.  L(#      8.Travel(#(#K(#.:        9._MEO_ԀSubcontractCosts(#(#K(#.I  )!     10.OtherCosts(#(#K(#.VV?  A"     11.OtherISSAAdjustments(#(#K(#.J  Y#      p  }      f!  %&Page#&% # 9 %   E.OverheadCosts(Line4)(#(#K(#.I T '   F.AdditionalCosts(Line5)(#(#K(#.K l (   G.TotalCostInHousePerformance    (Line6)(#(#K(#.008 * Chapter3DevelopingtheCostofContractPerformance  A.General(#(#K(#.9 #-   B.ContractPrice(Line7)(#(#K(#.VVI ;.     1.Overview(#(#K(#.< S/ 0  0(#(#2.ContractTypes#(#(#K(#.((B(#(## k0     3.TaxExemptOrganizations(#(#K(#.zzL 31   0  4.ProcurementPreferenceEligibleOrganizations#""J(#.=(#(## R3 Ѐ  C.ContractAdministration(Line8)(#(#K(#.0 0 R j4   D.AdditionalCosts(Line9)(#(#K(#.K  5 Ѐ  E.OneTimeConversionCosts(Line10) !6     1.Overview(#(#K(#.< "7     2.MaterialRelatedCosts(#(#K(#.RRJ # 8     3.LaborRelatedCosts(#(#K(#.G $! 9     4.OtherCosts(#(#K(#.((? %9!:     5.OneTimeCostComputation(#(#K(#.  M 'Q"; 0  0(#(#  F.GainfromtheDisposal/TransferofAssets(Line11)#(#(#K(#.9(#(## )p$= V x@ x1< x    G.FederalIncomeTax(Line12)VV)V., ! Ѐ  H.TotalCostContractPerformance 9     (Line13)VV)V.   Q Chapter4CalculatingtheCostComparisonDecision  A.ConversionDifferential(Line14)VV)V.1 5    B.AdjustedTotalInhouseCost(Line15)  C.AdjustedTotalContractCost(Line16)         <      %&Page#&% <#     D.TheCostComparisonDecision(Lines    17/18)%V.  .   Ї     p  }      f!  %&Page#&% # .  Chapter5StreamlinedCostComparisonsforActivitiesInvolving65_FTE_ԀorLess  A.General(#(#K(#.9 h Ѐ  B.Procedure(#(#K(#.;      @ 0k!! d@5(#(#,V<5_8  8__8  8__8  8__8 8__8 8__8 < 8__8  8__8  8__8 D 8__8  8__88_  J   w%&@  #&%w# !%&Chapter1ImplementationInstructions #&%! 3#Ԉ p |y!w%&;(,(#(#(;5pc 5 c1,eFrX< !X ,,r X< !Xc#&%w#A .   General    Q    1. r 9#&%"%{&ѷ#9:}&%%&:PartIIprovidesgenericandstreamlinedcost   comparisonguidancetocomplywiththeprovisionsoftheFAIRActandCircularA76.ThisincludesguidancefordevelopinginhousecostsbasedupontheGovernment'sMostEfficientOrganization(_MEO_)andotheradjustmentstothecontractandinterservicesupportagreement(ISSA)price.Italsosetsouttheprinciplesfordevelopmentofcostbasedperformancestandardsorothermeasuresthatarecomparabletothoseusedbycommercialϐsources.Appendices6and7providesectorspecificcostcomparisonguidance.:#&%%}&#:{&"%%& 9    2. r TheguidanceprovidedbythisPartrelieson Q themanagerialcostaccountingandperformancestandardsestablishedinsupportoftheCFOAct,_GPRA_ԀandFederalAccountingStandards.CostandperformanceinformationdevelopedforcompetitionssubjecttotheCircularandthisSupplementshouldbedrawnfromthedatabaseestablishedbythesestandardsandadjustedasappropriate.ThisguidanceistobeusedbyFederalagenciestoensurethatcostcomparisonsarefairandreasonable.  3. r Acostcomparisonbetweeninhouse,contract _# orISSAperformanceseemsstraightforward,but,infact,iscomplicatedbytheverydifferentwaysGovernmentagenciesandcommercialsourcesaccountforcost.Forexample,theGovernmentbuyscapitalequipmentandmayrecognizetheentire (#! expensewhenpaymentismade.Thecommercialsectormayborrowfundsandrecognizetheexpenseofcapitalequipmentasitisused.Allcostsincurredbycommercialsourcesareultimatelychargedtoa"customer,"whereasagencycostsmaybemetbyseveraldifferentappropriationsaccounts,revolvingfundsormixesthereof.Insuranceisarealcostofdoingbusinessinthecommercialsector,whiletheFederalGovernmentisa"selfinsuredentity."Taxesarepaidbymostcommercialsourcesandreceivedandusedbythepublicsector.Assetsarepurchasedfromownersequityinthecommercialsector,yettheyarepurchasedbythetaxpayerinthepublicsector.TheGovernmentmayincuremployeeretainedpayorsavepayasawayofmitigatingtheadverseimpactsofamanagementdecision,withoutassessingthesecoststotheactivity.Thecommercialsectorpassesthesetypesofcostsontothecustomer.TheseandotherdifferencesnecessitatecostcomparisonrequirementsthatequalizethesystemstoreflectthetotalalternativecoststotheGovernmentandthetaxpayer.Suchcostsmayormaynotbefullyreflectedbyagencyaccounts. c 4. D TheproceduressetforthinthisPartrecognize =#9 theabsenceofauniformaccountingsystemthroughouttheFederalGovernmentandareintendedtoestablishapracticallevelofconsistencytoassurethatallsubstantivefactorsareconsidered. B. c Organization q(#> P P   P    1. r PartIIisdividedintofivechapters. ! 33  2. r Chapter2providesthegenericprinciplesand 9 proceduresfordevelopingthecostofinhouseperformancetotheGovernment.TheprinciplesandproceduresofChapter2representacompetitivecostcomparison.  3. r Chapter3providesthegenericprinciplesand   proceduresfordevelopingthecostofcontractorISSAperformancetotheGovernment.TheprinciplesandproceduresofChapter3representacompetitivecostcomparison.~#33  4. r Chapter4providesproceduresforcomputing   theminimumconversiondifferential,calculatingthefinancialadvantagestotheGovernmentassociated   withGovernmentorcontractperformanceandthecostcomparisondecision. c 5. D Chapter5providesanalternativecost @ comparisonmethodologyforactivitiesinvolving65inhouse_FTE_Ԁorlessatthetimeofstudyannouncement.WhiletheprinciplesandproceduresofChapter5representacompetitivecostcomparison,thisnonmandatoryalternativeapproachisprovidedtominimizetheadministrativecostsassociatedwithcostcomparisons,ensuretimelycompletionandpreservetheequityandcostcomparabilityrequirementsofthisSupplement.; T  5(#(#,0V5;   @ܲ-ݲ- !! @ D {#"%{&:TRX3' Letter3'3' Letter3'T:|"~$#{&"%#{#{X/X"%{& @ #{&"%/X{Xߙ#{ R5!"%{&Chapter2DevelopingtheCostofGovernmentPerformance #{&"%5!{ R#Ԉ p {#"%{&f.X <Xh!(#X,eFrX< !Xf (,(#(#(5pc 533#{&"%#{#A.  General      1. r Overview. <    33    a. r ThisChapterprovidesthepoliciesand   proceduresthatwillbeusedwhentheGovernmentdeterminesthatacostcomparisonbetweeninhouse(agency),contractor_interservice_Ԁsupportagreement(ISSA)performanceiswarranted.    b. r TheproceduresofPartIofthisSupplement   regardingcostcomparisonwaivers,thecertificationoftheGovernment's_MEO_,reviewbyanIndependentReviewOfficerandtheAdministrativeAppealsprocessapply.CostcomparisonswillbebaseduponthesamescopeofworkandperformancerequirementscontainedinthePerformanceWorkStatement(_PWS_).̀    c. r Costcomparisonsareconductedin U accordancewiththisguidance,modifiedtotheextentapplicablebyChapters5or6ofthisPart.TheproceduresdifferfortheconversionofworkfromcontractorISSAtoinhouseperformance,however,infourbasicareas:(1)theidentificationof (x neworincreasedinhousecosts,(2)onetime /  conversioncostsand(3)thecalculationoftheminimumcostdifferential,and(4)certainotheradjustmentsthatmaybenecessaryifanISSAisbeingconsidered.  2. r StandardCostFactors.Standardcostfactors c%  aretobeusedasprescribedinthisPart.Agenciesareencouragedtocollectagencyorsectorspecificdatatoupdateandimproveuponthestandardcost x(#! factorsprovidedherein.Theofficialinparagraph9.a.oftheCircular,ordesignee,maydevelopalternativeagencywideorsectorspecificstandardcostfactors,includingoverhead,forapprovalbyOMB.c.X4<Xh!(#X X <Xh!(#Xc c 3. D CommonCosts.Coststhatwouldbethesame  ' foreitherinhouse,contractorISSAperformance,withoutorganizational,workload,orresponsibilitychangesneednotbecomputedorenteredintothecostcomparison.Commoncostsor"wash"itemswillbeidentifiedintheManagementPlanforreview. c 4. D RetainedandSavePay.Retainedandsave b. payarenotincludedintheinhousecostestimates.AgenciesareencouragedtoseektheirMostEfficientOrganization(_MEO_),withoutpenaltyofhistoricalinefficiencies.Agenciescostonlythe"positions"inthe_MEO_. 53  c 5. D CostofConductingaCostComparison.The M4 costofconductingacostcomparisonisnotaddedtotheinhousecostestimateorcontractprice.Thisisanadministrativeexpenseassociatedwithgoodmanagementpracticesandisirrelevanttothecostofperformance. c 6. D ProrationofPerformancePeriods.Cost $: comparisonsareconductedusingnotlessthanthreeyearsofproposal/costdata,submittedbytheGovernmentandcommercialsources.Inhousecostestimatesandcontractpriceswillreflectthesame(#> multiyearbasis.IfpermittedbystatuteandtheFederalAcquisitionRegulations(FAR),performanceperiodsforcostcomparisonsinexcessoffiveyearsmaybeapprovedbytheofficialinparagraph9.a.oftheCircular,ordesignee.Multiyearprocurementorprepricedrenewaloptionsprovideadvantagessuchascontinuityofoperations,thepossibilityoflowerprices,andreducedturbulenceanddisruption.However,inextendingtheperformanceperiod,theofficialinparagraph9.a.oftheCircular,ordesignee,mustcertifythatnoknowncostcomparisonadvantagewillbeconveyedtotheinhouse,contractorISSAbidbythe &extension.  7. r InHouseCosts. Q   a. r Thecompetitivecostofinhouseperformance i includesallsignificantperformancecostsassociatedwiththeactivitythatarenotcommontotheinhouse,contractorISSAoptions.Theinhousecostestimateisbaseduponthefollowing:     r 0  PersonnelCostsVV      r 0  MaterialsandSupplyCostsVV      r 0  OtherSpecificallyAttributableCostsVV      r 0  Depreciation(VV      r 0  CostofCapital@VV      r   Rent !X      r   MaintenanceandRepair -"p      r   Utilities E#      r   Insurance ]$      r   Travel u%      r   _MEO_ԀSubcontracts &      r   OtherCosts '       r 0  OverheadCosts(" VV  c    D 0  AdditionalCosts! (#(#  c b. D Inadditiontocostsgenerallyassociatedwith 9! theinhouseperformanceofanactivity,includingpersonnel,materialandoverheadcosts,aconversionfromcontractorISSAperformancetoinhouseperformancemayrequireincreasedcostsforfacilitiesandequipment.ThecostofallcapitalassetsnotcurrentlyprovidedtothecontractorwillbecomputedusingthedepreciationandcostofcapitalmethodsprovidedinthisChapter.Increasesfortherent,maintenanceandrepair,utilities,travelandtheirassociatedoverheadisalsocalculated.Governmentcoststhatwouldbethesameforinhouse,contractorISSAoperation,shouldbeidentified,butneednotbecomputed. Q.  c 8. D MinimumCostDifferentials. i/  c   a. D ThisSupplementestablishesaminimumthres 0 holdofundefinedcoststhatmustbeexceededpriortoaconversiontoorfrominhouse,contractorISSAperformance.TheminimumdifferentialisalsoestablishedtoensurethattheGovernmentwillnotundertakeaconversionformarginalestimatedsavings.̀ c   b. D Anactivitywillnotbeconvertedtoorfrom 7 inhouse,contractorISSAperformance,onthebasisofacostcomparison,unlesstheminimumcostdifferentialismet.Theminimumcostdifferentialisthelesserof10percentofinhousepersonnelrelatedcosts(Line1)or,$10millionovertheperformanceperiod.Factorssuchasdecreasedproductivity,andothercostsofdisruptionthatcannotbeeasilyquantifiedatthetimeofthecostcomparisonareincludedinthisdifferential. c   c. D Wheneveracostcomparisoninvolvesamix )]"A ofexistinginhouse,contract,neworexpandedrequirements,orassumesfullorpartialconversionstoinhouseperformance,eachportionisaddressedindividuallyandthetotalminimumdifferentialiscalculatedaccordingly.̀  9. r RoundingRule.Roundalllineentriesonthe  U CostComparisonForm(CCF)tothenearestdollar.  10.  Inflation.  c     a. r Agencieswillusetheannualinflation 8{ guidancedevelopedannuallyforthePresident'sBudgetandprovidedbyOMBforuseincostcomparisonsconductedinaccordancewiththisSupplement.    b. r Inpreparingcostestimates,allknownor l  anticipatedincreasesincurredbeforetheendofthefirstperformanceperiod;e.g.,salaryincreasesforGovernmentemployees,areincludedineachcostelementproratedasappropriate.Forsubsequentperiods,thecostofanticipatedchangesinthescopeofwork,asdescribedinthe_PWS_,isdetermined.Inflationfactorsforpayandnonpaycategorieswillthenbeappliedtotheestimatedyearendcostsforthefirstyearofperformance.Therearesomeexceptionstotheinflationadjustmentsasdiscussedlater,suchaspersonnelcostssubjecttoeconomicpriceadjustmentclausesoftheServiceContractAct,DavisBaconAct,depreciationcostsforfacilitiesandequipment,andthecostofminoritems.    c. r Tocalculateoutyearcosts:(1)determinethe $0 costelementsaffectedbyinflationduringeachperformanceperiod.Foreachperiod,ensurethatthenumberofmonthsintheperiodandthechangesinthe_PWS_Ԁforeachperiodhavebeenconsidered;  )L"! (2)multiplyeachcostelementforeachperformanceperiodbytherespectivesalary/wageormaterialcostinflationfactorstotheapplicableperformanceperiod,and(3)onceadjustedforinflation,calculatethetotalcostofthatCCFLineitem. c 11.OtherISSAAdjustments.  U&  c   a. D ItisnottheintentofthisSupplementto * m' requireanISSA_offeror_Ԁtosignificantlyalteritsmethodsofoperationtoprovideuniqueorsitespecificservices.Whilesuchservicesmaymeetagencymissionsandmaylegitimatelybeincludedinthesolicitation,additionaladjustmentstotheISSAcostestimatemaybenecessarytoreflectdifferencesin_in_Ԅhouseandcontractorbids. c   b.Agenciesshouldidentifytheminordifferencesbetweentherequirementsofthesolicitation(contractorbid)andtheISSAcostestimates.Theagencydeterminesifanyitemorcombinationofitemswillimpacttheagency'sabilitytoperform.Iftheagency'sabilitytoperformwouldbeadverselyimpacted,theISSAcostestimatesmayberejectedasnonresponsive.Ifthedifferenceswillhaveminimalagencyperformanceimplications,and/orcancontinuetobeperformedbyagencypersonnel,theISSAcostestimateswillbeadjustedforpurposesofcomparisonwiththecontractorand_MEO_Ԁoffers,baseduponthecomparablecostscontainedintheagency's_MEO_. c   c.AcompleterecordofalladjustmentstothecontractorandISSAcostestimatesshouldbemaintainedandmadeavailabletothepublicuponrequest. B.  c Personnel 󄄀Line1 (V!A  c 1. D ThisLineincludesthecostofalldirectin +)n"B houselaborandsupervisionnecessarytoaccomplishtherequirementsspecifiedinthe_PWS_.Includedaresalaries,wages,fringebenefits,andotherentitlements,suchasuniformallowancesandovertime.TodetermineLine1Personnelcosts,identifytheinhousestaffingestimateandproperwage/gradeclassificationsasdescribedintheManagementPlan.  2. r Inhousecostestimatesthatassumeamixof 'j inhouselaborandexistingcontractsupportshouldincludethecostoflaborfortheGovernment'sadministrationandinhouseinspectionofthosesupportcontractsonLine1.Table31,ofthisPart,maybeusedtoestimatecontractadministrationcosts,basedupontheestimatednumberofcontractemployeesinvolved.Thecostofthesupportcontractsthemselves,includingthecostofrelatedGovernmentfurnishedequipmentandfacilitiesnotprovidedtothecontractorunderthiscostcomparison,shouldbeenteredonLine3OtherSpecificallyAttributablecosts.  3. r Line1includesallcompetitivecoststhat  couldchangeifperformanceisconvertedtoorfrominhouse,contractorISSA.Thus,Line1mayalsoincludecertainmanagementandoversightactivities,suchaspersonnelsupport,environmentalorOSHAcompliancemanagement,legalorotherdirectadministrativesupportcosts.  4. r Theconclusionthatanactivitymaybeper # formedbycontractorISSAalsoreflectsadecisionthattheworkneednotbeaccomplishedbymilitaryorotheruniformedGovernmentpersonnel.Thecostofmilitarylaborinacostcomparison,eveniftheworkwillremainmilitaryifretainedinhouse,will (;"! bedeterminedbythecompositerateforuniformedpersonnelestablishedbytheDODorotherapplicableComptroller. c 5. D Generally,inhousestaffingshouldbe  G$ expressedintermsofproductiveworkhours.Withtheestablishmentofthenumberofproductiveworkhoursrequired,aconversiontothenumberoffulltimeequivalents(_FTE_)isneeded.Forfulltimeandparttimepositions,estimatethetotalhoursrequiredbyskillanddivideby1,776annualavailablehourstodeterminethenumberof_FTE_Ԁpositionsrequired.Forintermittentpositionstobeexpressedin_FTE_,estimatetotalhoursrequiredbyskillanddivideby2,007annualavailablehourstodeterminethenumberof_FTE_Ԁpositionsrequired.Themilitaryagencycomptrollerwillestablishcomparableproductivehoursformilitarypersonnelincludedinan_MEO_Ԁasmilitarypositions.Theproductivehoursexcludeannualleave,sickleave,administrativeleave,trainingandothernonproductivehours.Thefactorsresultfromdifferencesinnonproductivetimebetweentypesofpositions.̀ c 6. D Thefollowingconsiderationsareusedto 7 computepersonnelcosts: c a. D PositionTitleorSkill󀄀Identifythejob. 9 Example:carpenter,driver,janitor,supervisor,foreman,administrativeclerkordepartmenthead. c b. D GradeIdentifytheappropriateGS/_FWS_ #:= gradeforeachpositiontitleorskill. c c.0 D Numberof_FTE_ԀRequired󀄀Identifythe&Y?D(#D(# _FTE_Ԁrequiredforeachgrade.Identifythetemporaryandintermittentemployeeworkyears.Thisis 5(x!A importantforlaterfringebenefitcalculations,sinceintermittentandtemporaryemployeesgetfewerbenefitsthanfulltimeorparttimeemployees.  d. r AnnualSalary/Wages󀄀Payinformationcan  G beobtainedfromthepersonnelorfinanceoffice.UsecurrentpayratesbasedontheGovernmentwiderepresentativerateofstep5forGSandstep4for_FWS_Ԁemployees.Multiplythatpayratebythenumberof_FTE_,exceptforintermittentpositionswhereactualhoursareused.Asarule,GSsalaryisexpressedasanannualrateofpayandthe_FWS_salaryisexpressedasanhourlyrate.Forpositionstobeusedonaprearrangedregularlyscheduledtourofduty,thishourlyrateismultipliedby2,087(thenumberofhoursemployeesarepaidannually).  e. r OtherEntitlements󀄀Includeentitlementsthat i willalsoearnfringebenefits.Workcloselywiththepersonnelofficetomakesureallentitlementsareconsideredandtoobtaincurrentfactors.Examplesinclude:nightdifferentialpayfor_FWS_Ԁemployees,environmentaldifferentialpayandpremiumpayforFederalcivilianfirefightersandlawenforcementofficers.  f. r FringeBenefitsorFICA󀄀Thefollowing  fringebenefitfactorsareestimatedaccordingtotheFederalaccountingstandardsforLiabilitiesExposure.Multiplythefollowing_Governmentwide_standardfactorsbytheappropriatebasicpay.    (1)FullorparttimepermanentFederalcivilianemployees:     r (a) 4 Thestandardretirementcostfactor &H representstheFederalGovernment'scompleteshareoftheweighted_CSRS_/_FERS_ԀretirementcosttotheGovernment,baseduponthefulldynamicnormal )]"! costoftheretirementsystems;thenormalcostofaccruingretireehealthbenefitsbasedonaverageparticipationrates;SocialSecurity,andThriftSavingsPlan(_TSP_)contributions.Thecurrent(1996)rateis23.7percentofbasepayrollforallagencies.Therevisedretirementcostfactorsforspecialclassemployeesare32.3percentforairtrafficcontrollersand37.7percentforlawenforcementandfireprotectionemployees. c    D (b)  ThecostfactortobeusedforFederal .q * employeeinsuranceandhealthbenefits,basedonactualcost,is5.6percent,plusanadditional1.45percentforMedicare. c    D (c)  ThecostfactortobeusedforFederal [ . employeemiscellaneousfringebenefits(workmen'scompensation,bonusesandawards,andunemploymentprograms)is1.7percent. c   (2)TemporaryorintermittentFederalcivilianemployees.TheFederalInsuranceContributionAct(FICA)employercostfactorof7.65(orthecurrentrateestablishedbylaw)willbeappliedtocivilianemployeesnotcoveredbyeitherofthetwociviliancivilserviceretirementsystems(normallyintermittentandtemporaryemployees).ApplytheFICArateonlytowagesandsalariessubjecttothetax;thereisanannualsalarylimitationforFICAtax.33 c g. D OtherPay󀄀Includeentitlementsthatdonot !; earnfringebenefits.SomeexamplesarenightdifferentialpayforGSemployees,overtime,holiday,awards,bonuses,anduniformallowances. c h. D PersonnelCost󀄀AddBasicPay,Fringe %? BenefitsorFICAandotherpayforallpositionsandtotalforbothFederalWageSystem(_FWS_)andGeneralSchedule(GS)categories.Thisfigurecan (!B nowbeusedasabasistocomputetheannualpersonnelcostsforeachperformanceperiod.  7. r Adjustmentstoannualpersonnelcostsfor  eachperformanceperiodaremadetoreflectanticipatedpayincreases.  8. r Allinhousewages,salariesandothercosts   areadjustedforinflationconsistentwiththeeconomicassumptionsusedinthePresident'smostrecentBudget,throughtheendofthefirstyearofperformance.FederalwagesandsalariesforcontractsthatcontainaneconomicadjustmentclauseoraresubjecttotheServiceContractAct(_SCA_)(41_USC_Ԁ351357)ortheDavisBaconAct(_DBA_)(40_USC_Ԁ276a276a7)areinflatedtotheendofthefirstperformanceperiod.However,whenusingtheDepartmentofLaborcriteria,certainpotentialcontractpositionsmaynotbecoveredunderthe_SCA_/_DBA_Ԁprovisions;accordingly,theinhouserelatedcostsforsuchpositionsareescalatedthroughtheendofthecostcomparisonperiod.  & C.   MaterialandSupply 󄄀Line2 (   1. r Materialandsupplycostsareincurredineach * performanceperiodforgoodssuchasrawmaterials,parts,subassemblies,componentsandofficesupplies.Materialcostsarecalculatedonlyifthematerialsareusedbytheactivityandwillnotbe  providedtothecontractororISSAproviderbytheGovernment.33  2. r Reviewthe_PWS_Ԁtodeterminethematerials ! requiredforinhouseperformancethatwillnotbefurnishedtothecontractororISSAprovider.Normally,thecontractororISSAproviderwillbeexpectedtoprovidethesuppliesandmaterialsnecessarytoperformtheworkdescribedinthe_PWS_.ThepolicyregardingcontractororISSAuseofGovernmentprovidedsuppliesandmaterialsis ("# setforthinFAR51.101.Adjusthistoricalmaterialuseandcostdatatoreflecttherequirementsofthe_PWS_. c 3. D Determineifmaterialscanbeobtainedonthe  G& openmarketatlesscostthanfromotherGovernmentagencies.Materialcostincludesmaterial,transport,handlingandavailability/delaycosts.Ifso,obtainanynecessarywaiversfromtheotherGovernmentagency(s)topurchasematerialsontheopenmarket.Includeestablishedallowancesfornormalscrap,spoilage,overrunsanddefectivework.Listrequiredmaterialbyquantityneeded,unitprice,escalationforoutyearsandtotalcost.Asingleentrymaybemadeformiscellaneousitemssuchasofficesupplies.̀ c 4. D Ifthefurnishingagencyestablishesand i2 certifiesthatallcostsofacquiring,managing,storingandtransportingitsmaterialareincludedinitspricingstructure,includingoverhead,nomaterialmarkupisrequired.Ifnot,escalationfactorsbasedupontheprinciplesandproceduresofthisSupplementshouldbedeveloped. c 5. D Materialandsupplycostsareprojectedforall 9 performanceperiods,includingadjustmentsforinflationconsistentwiththeeconomicassumptionscontainedinthePresident'smostrecentBudgetandtherateoftransitiontothecontractororISSAprovider,asprovidedinthe_PWS_.Ensurethatunitpricesarecalculatedtotheendofthefirstperformanceperiod.Futureperformanceperiodmaterialcostsmaynotbeinflated,ifthe_PWS_includesanescalationoreconomicadjustmentclause.SuchaclauseenablesacontractororISSAprovidertobereimbursedforfuturepriceincreases. (;"D TheManagementPlanshowsthecomputationsusedtoderivetheentriesforallperformanceperiods. D.   OtherSpecificallyAttributable 󄄀Line3 @   1. r Overview.Personnelandmaterialcostsare  X normallytheprimarysourcesofGovernmentcosts.Theremainingelementsofcompetitivecostarealsoattributabletotheactivity.Whenrequirementsdifferbyperiodduetochangesinthe_PWS_ԀortheTransitionPlan,additionaladjustmentswillbenecessary.Ensurethatsuchadjustmentsaremadebeforeapplyinginflationfactors,ifappropriate.Coststhatwouldbethesameregardlessoftheeventualdecision,shouldbeidentifiedforeachcostelement.i4Xr Xh!(#X X4<Xh!(#Xi     r   ElementsofCost 󀀀Paragraph s o4*cDp}f!X:/12XXr Xh!(#Xo    Depreciation  Para2D2      CostofCapital  Para2D3      Rent   Para2D4      MaintenanceandRepair0  Para2D5VV     Utilities   Para2D6 .     Insurance   Para2D7 F     Travel   Para2D8 ^     _MEO_ԀSubcontracts  Para2D9 3v     OtherCosts Para2D10 K 0   VV   2. r Depreciation. {!     a. r Depreciationrepresentsthecostofownership " andtheconsumptionofanasset'susefullife.    b. r Unlessanassetisfullydepreciated,the $ FederalAccountingStandardsforProperty,PlantandEquipmentwillbeused.Ifanapplicableassetisfullydepreciated,istobeusedbythe_MEO_Ԁduringtheperformanceperiodandisnottobeprovidedto ("  thecontractororISSAprovider,extendthelifeoftheassetthroughtheendoftheperformanceperiod.Thecostofdepreciationisthenrecalculatedusingtheextendedlifeandoriginalacquisitioncost. c c. D Individualassetscostinglessthan$5,000are  N$ consideredminoritemsandwillnotbedepreciated,butwillbeaddedtoothercosts(seeparagraph  \& D.10).Thejointuseofminoritemsneednotbeproratedtothefunctionunderstudy.Assetscostingmorethan$5,000aremajoritemsfordepreciation. c d. D Ifaninhouseactivitysharesanassetwith F * anotheractivitynotunderrevieworcostcomparisonandthatassetwillnotbeprovidedforusebythecontractororISSA,allocatedepreciationtotheinhouseestimateonthebasisofuseorotherappropriatemethodology.IftheactivityisconvertedtocontractorISSAperformance,theasset'slifeandutilizationratemaychange. c e. D Tofindthecostofdepreciationaddedtoeach 2 optionyear,subtracttheresidualvaluefromthetotaloftheacquisitioncostplusanycapitalimprovementsand,then,dividebytheestimatedusefullifeoftheasset.Includetheresultantannualdepreciationforeachyearofthecostcomparison.Iftheassetwasacquiredthroughtransfer,seizureorforfeiture,anindustryspecificstandardorengineeringappraisalmaybeusedtoestablishthemarketor"acquisition"valueoftheassetattransfer. c f. D Facilitiesaregenerallycategorizedas #)< permanent,semipermanentortemporaryandtheusefullifewillbestandardizedfortheentiregrouping.Theusefullifeexpectancieslistedbelowmaybeusedbytypeoffacility.Ifusefullifehasbeenexceeded,obtainanengineeringprojectionof  )L"A anticipatedremainingusefullife.Thesecostswillbeproratedtotheactivityunderstudybyaunitofmeasurethatvariesdirectlywithconsumption(e.g.,floorspace,typeoffacility,numberoftelephones).Estimatesofexpensestobeincurredforthefirstyearofperformanceshouldbebasedoncurrentexperience,appropriatelyadjustedforanticipatedrequirements.Engineeringestimatesshouldbeusedwhenhistoricaldataarenotavailable.Allestimatesshouldbeappropriatelydocumentedwithsupportingdetail.o4Xr Xh!(#X*cDp}f!X:/12Xo  FacilityCategory  UsefulLife <    Permanent(P)  75years T    SemiPermanent(S)  50years l    Temporary(T)  25years    3. r CostofCapital.    a. r Theannualcostofcapitalisaddedtothe  depreciationcostofanyassetcostingmorethan$5,000acquiredbytheGovernmentif:(1)notprovidedforthecontractorsorISSAprovider'suse,(2)ispurchasedlessthantwoyearspriortothecostcomparisondateor(3)isscheduledforpurchasewithintheperformanceperiod.  9    b. r Thecostofcapitalisdefinedasanimputed  Q chargeontheGovernment'sinvestmentincapitalassetsnecessaryfortheactivitytoprovidetheproductorservice.̀  c. r Toestimatetheannualcostofcapital,itis ;$~ necessarytoidentifythetotaldepreciableacquisitioncostofnewassetsor,ifacquiredbytransfer,forfeitureorseizure,themarketvalueoftheassets.Thetotalcostresultsfromthevalueof W(!  theasset,transportationcosts(ifnotalreadyincludedinthepurchaseprice)andanyinstallationcoststoplacetheassetinoperation.ThecostofcapitalwillbecomputedbyapplyingthenominalrateprovidedbyOMBCircularA94tothedeterminedtotalcostoftheasset. c 4. D Rent.󀄄Rentisincurredfortheuse,operation  \& andmaintenanceofland,buildingspace,plantandmachinery,etc.,bytheactivityunderstudy.Computeonlythosecoststhatareassociatedwiththe_MEO_,onanallocatedbasis,notprovidedtothecontractororISSAprovider.33 c 5. D MaintenanceandRepair.Thiscostis T , incurredtokeepbuildingsandequipmentinnormaloperatingcondition.Itdoesnotincludecapitalimprovementsthataddvaluetoanassetandareaccountedforunderdepreciation.AllocatemaintenanceandrepaircostsforthoseassetsthatwillnotbefurnishedtothecontractororISSAproviderbutare:(1)neededfor_MEO_Ԁperformanceand(2)arenotcoveredbyrentalfees.33 c 6. D Utilities.Thiscategoryincludeschargesfor !5 fuel,electricity,telephone,waterandsewageservices,etc.,thatwillnotbefurnishedtothecontractororISSAproviderbytheGovernmentbutareneededforinhouseperformanceoftheactivity.Theamountofthesecostsapplicabletotheactivityunderstudywillbedeterminedeitheronameteredorallocatedbasisofconsumption.33Ӏ c 7. D Insurance. '$j=  c a. D OperationofanyGovernmentactivity %W> involvesrisksandpotentialcostsfrompropertylosses(fire,flood,accident,etc.)andliabilityclaims.Theserisksarenormallycoveredbyinsuranceincludedinanycommercialcostestimate. ("B 33  b. r Totheextentassetsarenotprovidedtothe ! contractorortotheextentthatpropertylossesmaybeassessedagainstacontractorwhousesGovernmentspace,facilitiesorequipment,inhousecasualtypremiumsmustbecomputed.Generally,theGovernment'scasualtypremiumequivalentcostwillbecomputedbymultiplying.005timesthenetbookvalueofGovernment'sequipmentand/orfacilities,plustheaveragevalueofmaterialandsupplies.  < `  <  c. r Insurancetobecomputedonassetswill 5x  dependontherequirementsofthePerformanceWorkStatement(_PWS_).IfthecontractororISSAprovidesspecialcasualtyinsuranceonallGovernmentfurnishedassets,computeinsuranceforallassetsusedbytheactivityunderstudy.Ifthe X contractdoesnotrequirethecontractortofurnishspecialcasualtyinsurance,e.g.,theGovernmentwillselfindemnify,computecasualtyinsuranceononly m thoseassetstobeusedbytheactivityunderstudythatwouldnotbeprovidedtothecontractororISSAprovider,asappropriate.  d. r Personnelliabilitylosseswillbecomputedby  multiplying.007timestheGovernment'stotalpersonnelrelatedcostsonLine1.AdditionalliabilitiesassignedtothecontractororISSAproviderbythe_PWS_Ԁthatarenotassociatedwithpersonnelwillalsobecomputedbyapplyingthestandard.007factortotheestimatedliabilityceilingidentifiedinthe_PWS_Ԁandincludedintheinhousecostestimate.  8. r Travel.Thiscategorycoverstheexpected &-  costofinhousetravelthatwouldnotcontinueinthe '4!  eventofcontractorISSAperformance.Thesecosts (;"! shouldbereadilyavailablefrombudgetedamountsofperdiemandtransportationcostfortheactivityunderstudy. c 9. D _MEO_ԀSubcontractCosts.Solicitationsthat  G$ includeworkcurrentlyperformedbycontractandbyFederalemployees,shouldincludethe_MEO_ԀcostoflaborfortheGovernment'sadministrationandinspectionofthecontinuedsupportcontractsonLine1.Thecostofthesupportcontractitself,includingthecostofrelatedGovernmentfurnishedequipmentandfacilitiesnotprovidedtothecontractororISSA,shouldbeenteredonLine3.Escalatetoeachperformanceperiodasappropriate.Supportcontractcostsshouldalsobeadjusted(downward)tooffsetforpotentialFederalincometaxrevenuetotheGovernment.ThisisdonebyapplyingtheappropriatetaxratesinAppendix4ofthissupplement. c 10. p OtherCosts. ~3  c a. D OtherCostsisageneralcategoryfor 4 specificallyattributablecoststhatdonotproperlyfitintooneoftheothercostelements,butwouldchangeintheeventofcontractorISSAperformance.Someexamplesarepurchasedservicespackagingandcrating(ifnotalreadyapartofmaterialandsupplies);transportationcosts;androyalties.EnsurethesecostsarenotalsocoveredinLine4overheadcosts.33 c b. D Includethecostofminoritemsthatarenot #)= immediatelyconsumedbytheactivityandnotprovidedtothecontractororISSAprovider.Thisincludesitemssuchasoverheadprojectors,officeequipment,tools,chairs,desks,cabinets,etc.Estimatethecostofminoritemsforeach (!B performanceperiodbyallocating10percentofthetotalestimatedreplacementcostofallsuchitems.ϐShouldthesupplysourcemarkupincreasetheitem'scosttomorethan$5,000,itwillstillbeconsideredaminoritem. E.  Overhead 󀄄Line4     1. r Whiledirectlabor,supervisionandmaterial   costsareprorated,asappropriate,toLines1and2,overheadexpenses,whichincludegeneralmanagementandadministrativeexpenses,areenteredonLine4.33  2. r Line4includestwomajorcategoriesofcost. l  Thefirstisoperationsoverheadandisdefinedas s  thosecoststhatarenot100percentattributabletotheactivityunderstudy,butaregenerallyassociatedwiththerecurringmanagementorsupportoftheactivity.Thesecondisgeneralandadministrative  overheadandincludessalaries,equipment,space  andotheractivitiesrelatedtoheadquartersmanagement,accounting,personnel,legalsupport,dataprocessingmanagementandsimilarcommonservicesperformedoutsidetheactivity,butinsupportoftheactivity.Thesecostsareaffectedbytheconversionofworktoorfrominhouse,contractorISSA.  3. r Foreachyearofthecostcomparison,Line4 " iscalculatedbymultiplyingLine1,includingfringe,by12percent(.12)andenteringthetotalonLine4.IfmilitarypersonnelareincludedinLine1,applythe12percentfactortocivilian_MEO_ԀLine1costsonly.Thecompositemilitaryrateshouldincludeallmilitaryrelatedoverhead. F.   Additional Line5 !'d    1. r Thiscostelementincludescostsnototherwise 9(|!! properlyclassifiedonLines1through4.Thiscostcategoryshouldreflectthoseadditionalcostsresultingfromunusualorspecialcircumstancesthatmaybeencounteredinparticularcomparisons.Examplesincludeofficeandplantrearrangements,transport,employeerecruitment,training,relocation,andotherexpenses. c 2. D AmountsenteredonLine5shouldbe  c( supportedbyadefinitionofthetypeofcostreported,ajustificationforitsinclusioninthecostcomparison,anexplanationoftheunderlyingassumptions,andmethodsofcomputation. c 3. D Theonetimeadditionalcostsofanexpansion, T - newrequirementorconversionfromcontractorISSAtoinhouseperformance,whichareaddedtotheinhousecosts,shouldbemadeonLine5inconsultationwithengineering,production,managementandcontractingpersonnel. c a. D NewinvestmentbytheGovernmentin 3 facilitiesandequipmentshouldnotbeincludedasonetimecosts.Thecostsincurredinacquiringfacilitiesorequipmentandinstallingtheequipmentshouldbeincludedinthecapitalizedcostofinhouseperformance. c b. D Governmentfacilitiesandequipmentwillnot  9 normallybeexpandedtoaccommodateneworexpandedworkifcosteffectivecontractorISSAfacilitiesandequipmentareavailable.Likewise,agencyownershipshallnotprecludeacontractororanISSAproviderfromcompetingfortheservice.IfinhouseoperationisdependentupontheGovernment'spurchaseorconstructionofnewfacilitiesorothermajorcapitalassetpurchases,thecostcomparisonandconversiontoin_Ԅhouse  )L"B Аperformancewillbedelayeduntiltheapprovaltopurchaseorconstructsuchitemsisobtained,subjecttothecostcomparison. G  G.  c TotalCostInhousePerformance 󀄄Line6 !  c EnterthesumofLines1through5onLine6. 9 5(#(#,0V 5'%@-- 7 !! 7 @)  {#"%{&@?=  7  =?==>  0  0  0  0  0  0  0  0  0  0  0  0  0  >@#{&"%#{ե# { R5!"%{&Chapter3DevelopingtheCostofContractPerformance#{&"%5!{ R(#{X/X"%{&Ԉ   #{&"%/X{Xߣ#{#"%{&#{&"%#{#(,(#(#(5p 5A.  General    *  ThisChapterprovidesguidanceforthedeterminationofthecosttotheGovernmentofobtainingacommercialproductorservicebycontractor_interservice_Ԁsupportagreement(ISSA).Itincludesadeterminationofnotonlytheamounttobepaidtothecontractor/provider(price)butalsoadeterminationoftheadditionalcoststothetaxpayerthatwouldbeincurredintheeventofaconversion. ff33B.  ContractPrice 󀄄Line7  \ 33ff  1. r Overview.ThecontractorISSApricereflects P thecosttoperformtherequirementsofthe_PWS_Ԁaspresentedbythe_offeror_Ԁselectedtocompetewiththeinhouseworkforce.Thesolicitationforbidsorproposalswillnotifythe_offerors_Ԁthatacomparisonwillbemadebetweenthecostofcontracting,thecostoftheinhouseperformanceand,ifappropriate,thecostofperformancethroughanISSA.Acontractmayormaynotbeawardedasaresult.L33  2. r ContractTypes. " LӀ  a. r Indeterminingtheamounttoberecordedas # thecontractprice,considerthecontracttype.Thefollowingguidanceisprovidedinthisregard.  b. r Inthecaseofasealedbid,firmfixedprice &" contract,thepriceofthelowresponsible,responsive_offeror_Ԁwillbeentered.Ifafirmfixedpricecontract (#  istobenegotiated,thenegotiatedpricewillbeentered. c c. D Ifacostreimbursementorcostsharingtype  " contractisproposed,enterthelownegotiatedestimate. c d. D Ifacontractwithanincentiveorawardfeeis % proposed,enter65percentofthepotentialmaximumincentiveorawardfeeplusthecontractcostsofthemostadvantageousoffertotheGovernment.33 c e. D Ifatimeandmaterialorlaborhourcontractis H* proposed,entertheestimatedtotalcostofperformance.Alternatively,comparableratescanbedevelopedfortheGovernmentcostestimate,developedinaccordancewiththisSupplement,andthecomparisoncanbemadeonthebasisofrates,ratherthancosts. c 3. D TaxExemptOrganizations. 1  c a. D Iftheapparentlowcontract_offeror_Ԁisatax  2 exemptorganization,thetaxexempt'scontractpriceisadjustedbyanamountequaltotheestimatedFederalincometaxesthatthelowestnontaxexempt_offeror_Ԁwouldpay.Thisadjustmentisnecessarytodeterminewhich_offeror_ԀhasthelowestoverallcosttotheGovernment. c b. D CalculatetheFederaltaxadjustmentbyusing '4#9 theproceduresinparagraphGofthisChapter.Add(;$: @+ 11   theFederaltaxescalculatedtothetaxexempt'sofferforcomparisonwithothernontaxexempt_offerors_.  c. r Comparethetaxexempt'sadjustedoffertothe / lownontaxexemptoffer.Thelowestcost_offeror_,afterthiscomparison,willthencompeteagainsttheGovernment'sinhousecostestimateandanyISSAproposals.Ifthetaxexempt'sadjustedofferislowerthanthelownontaxexemptoffer,entertheunadjustedtaxexempt'sofferonLine7.  Y   4. r ProcurementPreferenceEligible !q  Organizations.  a. r Ifapreferenceeligiblecontractormeetsthe @  requirementsofanunrestrictedsolicitation,andisanotherwisefullyresponsive_offeror_,thepreferenceeligiblemaycompetewithnon.(քpreferenceeligible_offerors_.Thisisaccomplishedbyadding10percentofeachnonpreferenceeligible'soffertotheirofferforinitialcomparisonpurposesonly.Thelowestoffer,afteradjustment,willbechosentocompetewiththeGovernment'sinhousecostestimateandISSAoffers.  b. r Ifthepreferenceeligible'sofferislowerthan  allothercommercialsourcesafteradjustmentsenterthepreferenceeligible'spriceonLine7.Ifthenonpreferenceeligible'sadjustedpriceislower,entertheunadjustednonpreferenceeligible'sprice  onLine7. C.  ContractAdministration 󀀄Line8  "   1. r Contractadministrationcostsareincurredin !: administeringacontractorISSA.Itincludesthecostofreviewingcompliancewiththetermsofthecontract,processingpayments,negotiatingchangeorders,andmonitoringthecloseoutofcontractoperations.ItdoesnotincludeinspectionandotheradministrativerequirementsthatwouldbecommontocontractandGovernmentperformancetoassure )k$# acceptableperformance.̀ c 2. D Thecontractadministrationcostsenteredon 9$ Line8arelimitedtothepersonnelshownatTable31. c 3. D Table31representstheestimatedadditional  _' costtoadministeracontractorISSAoverandabovethecosttoadministerthesameworkperformedbyinhouseemployees.  $ t*   c 4. D Contractadministrationorganizationand < + gradestructureshouldbecertifiedasbeingincompliancewithallapplicablepersonnelregulations.{-=9"%{&  c #{&"%9{-=#Table31.ContractAdministrationFactors  A 0 {-=9"%{&#{&"%9{-=G#_MEO_ԀStaffing󀀀ContractAdministration_FTE_ 2 10orless..............................0 x 0.53x(#x(# 1120.............................#&%"%{&;#{&"%%&. x 1 4 2150..............................#&%"%{&#{&"%%& x 2#&%"%{&R#{&"%%&@ )5 @  c Table31.ContractAdministrationFactors   Y7 _MEO_ԀStaffing󀀀ContractAdministration_FTE_#&%"%{&ѡ#{&"%%&Ԁ#&%"%{&#{&"%%& 99 5175..............................#&%"%{&&#{&"%%& x 3 Q: 76100..............................#&%"%{&ѧ#{&"%%& x 4 i; 101120..............................#&%"%{&4#{&"%%& x 5 < 121150...............................#&%"%{&#{&"%%& x 6 = 151200..............................#&%"%{&M#{&"%%&0 x 7 >x(#x(# 201250..............................#&%"%{&#{&"%%&0 x 8!?x(#x(# 251300..............................#&%"%{&o#{&"%%& x 9 "1@ 301350..............................#&%"%{&#{&"%%& x 10 #IA 351450..............................#&%"%{&ё#{&"%%& x 11 %a B 451andabove......#&%"%{&#{&"%%&...0 x 2.5Percentof)&y!Cx(#x(#  c    D  p  }  x inhouse_MEO_ c    D  p  }  x Staffing Y(#E Ѐ D.  Additional 󄄀Line9 !   1. r Thiscostelementincludesanyadditional 9 coststotheGovernmentsuchastransportationorpurchasedservicesresultingfromunusualorspecialcircumstancesthatmaybeencounteredinparticularcostcomparisons.  2. r Thesupportingdocumentationforadditional * m costsshoulddescribethenatureofthecostitemandindicatethereasontheadditionalcostwillnotbeincurrediftheactivityisperformedwiththeϐagency'sinhouseresources.  3. r ThecostsenteredonLine9shouldbe ^  supportedbyadefinitionofthetypeofcostreported,justificationforinclusion,methodsofcomputation,and,ifapplicable,adetailedlistingofthecostcomponents.  4. r Whenaninhouseactivityisterminatedin  favorofcontractorISSAperformanceandtheagencyelectstohold_MEO_Ԁequipmentandfacilitiesonstandby,solelytomaintainperformancecapability,thestandbycostsarenottobecharged,tothecostofthecontract. E.   OnetimeConversion 󄄀Line10    1. r Overview.WhentheGovernmentconvertsto ( orfrominhouse,contractor_interservice_Ԁsupportagreementperformance,thereareusuallyonetimecostsincurredasaresultoftheconversion.ff33  2. r MaterialRelatedCost. #U 33ff  a. r Aconversionmayresultincertainitemsof V$ Governmentmaterialorequipment,thatwouldotherwisehavebeenusedbytheinhouse_MEO_,becomingexcessandavailablefortransfertoanotherinhouseactivityortothecontractor. r(!   c b. D Itshouldbepossibletotransferthematerialto !  thecontractorISSA_offeror_.Inthiscase,itmaybeappropriatetoconductaspecialjointphysicalinventoryandincludetheGovernment'scostofconductingthejointinventory(costsmaybesharedwiththewinningbidder)onLine10.33 c c. D Ifthetransferofexistingmaterialstothe  \& contractorISSA_offeror_Ԁisfeasible,andtheagencyelectsnottoprovidethematerial,nochargeforconductingtheinventoryispermitted.ff c 3. D LaborRelatedCosts. 1 * 33ff c a. D Aconversionwillalsonormallyresultin 2u + certainonetimelaborrelatedexpenses.Thesemayincludehealthbenefitcosts,severancepay,homeownerassistance,relocationandretrainingexpensesandinitialcontractorsecurityclearancerequirements. c b. D Estimatedseverancepayiscalculatedatfour m1 percentoftheannualbasicpay(performanceperiod1only)enteredonLine1,withoutfringebenefits.π+ c c. D Ifthereisarequirementforthecommercial 4 sourcetohaveaccesstoclassifiedinformationorothersecurityclearancesunderexistingagencydirectives,onlythosecoststhatwouldbenecessitatedbytheconversionmaybecalculated.RecurringrequirementsnecessitatedbyinhouseattritionorbyemployeesthatmaybehiredundertheRightofFirstRefusalwillnotbeincluded. c 4. D OtherCosts.Aconversiontocontractor #< ISSAperformancemayrequireanagencytotakecertainactionsthatwouldnotbenecessaryiftheactivitywerecontinuedinhouse.Agencieshaveanobligationtomitigatethesecostsandjustifywhysuchcostsarenecessary.Forexample,itmaynot (1"A bepossibletoterminatearentorleaseagreementwithoutapenaltyfee,oritmaybenecessarytomovematerialsthatarenotassociatedwiththeactivityunderstudytoanotherlocationinordertofacilitateconversionorthecontractor'sorISSA'suseofafacility.Suchtermination,penaltyorfacilitationcostsarealsocostscausedbytheconversion.  5. r OneTimeCostComputation.Supporting 'j documentationshouldclearlystatethetypeofcostanticipated,justificationforinclusionorexclusionandmethodsofcomputation. F.   GainfromDisposal/transferofAssets 󀄄Line T  11  1. r AstheGovernmentdevelopsits_MEO_,certain s assetsmaybefoundtobenolongerneeded.Theseassetsmaybedisposedofortransferredwithoutconsiderationinacostcomparison.ThecostcomparisonisconcernedwithcomparingtheGovernment's_MEO_ԀwiththatofthebestcommercialorISSAprovider.Therefore,onlythoseassetsthataretobeusedbytheGovernment's_MEO_ԀandnotmadeavailabletothecontractororISSAareconsideredonLine11.  2. r TheGovernmentshouldnotdisposeofor   transfer_MEO_ԀassetsunlessthereisaneconomicadvantagetotheGovernmenttodoso.Ifthecostoftransferexceedsthenetbookvalueoftheasset,suchthatthereisanetloss,nosuchlossesareassessedagainstthecontractororISSA.Managementhasmadeadecisionnottomakesuchassetsavailabletothecontractor/providerirrespectiveoftheeconomiccostsrelatedtosuchadecision.  3. r ThenetgaingeneratedtotheGovernmentas )]"! aresultofaconversiontoacontractorISSAandadecisionnottoprovidecertain_MEO_Ԁassetstothecontractor/providershouldequatetothenetbookvalueoftheassetlessanycostsincurredtoremovetheasset. G. FederalIncomeTax 󀄄Line12  U&  c 1. D WhendevelopingtheGovernment'scostof * m' contractperformance,thepotentialFederalincometaxrevenueshouldbeconsidered.Sincecontractperformancewouldprovidethecontractorwithincomesubjecttotax,anestimatedamountofsuchtaxesisanappropriatedeductionfromthenetcosttotheGovernment,unlesstheprospectivecontractorisataxexemptorganization. c 2. D Tosimplifythetaxcomputation,Appendix4, s/ preparedbytheInternalRevenueService,provides,bytypesofindustry,appropriatetaxratesinrelationtobusinessreceipts.TheindustrygroupingsconformtotheEnterpriseStandardIndustrialClassificationissuedbytheDepartmentofCommerce.TodeterminetheamountofestimatedFederalincometax,thecontractprice(Line7ofthe_GCCF_)foreachperformanceperiodwillbemultipliedbytheapplicabletaxrate.TheestimatedϐamountofFederalincometaxwillbeenteredonLine12asadeduction,i.e.negative,reducingthecostofcontracting. H . TotalCostContractorISSAPerformance 󀄄 ""< Line13 c AddLines7,8,9and10.Ifthereisanumberinparenthesis,i.e.,adeduction,inLine11,addtoLine12andsubtractthistotalfromthetotalofLines7through10andenterthedifferenceonLine13. (V!A 5(#(#,0V>5    .- a {X/X"{&#{&"%/{Xߋ#{X/X"{& @ #{&"%/X{X#{ R5!"%{&Chapter4CalculatingtheCostComparisonDecision #{&"%5!{ R,#Ԉ  {#"%{&@ w !! f@ (,(#(#(5pw 5#{&"%#{#A.   ConversionDifferential 󄄀Line14     1. r Aminimumcostdifferentialofthelesserof;   (1)10percentofpersonnelcosts(line1)or(2)$10millionovertheperformanceperiod,hasbeenestablishedthatmustbemetbeforeconvertingtoorfrominhouse,contractor_interservice_Ԁsupportagreement(ISSA)performance.TheminimumdifferentialisestablishedtoensurethattheGovernmentwillnotconvertformarginalestimatedsavings.̀  2. r Wheneveracostcomparisoninvolvesamix P ofexistinginhouse,contract,neworexpandedrequirements,orassumesfullorpartialconversionstoinhouseperformance,eachportionisaddressedindividuallyandthetotalminimumdifferentialiscalculatedaccordingly. B.   AdjustedTotalInhouseCost 󄄀Line15 ; ЀIfthecostcomparisonisbeingconductedtodetermineifanactivityshouldbeconvertedfromcontractorISSAperformancetoinhouseoperation,theconversiondifferentialascalculatedabove(Line14)isaddedtotheInhouseperformancecostestimate(Line6,TotalColumnonly)andthesumisenteredunderAdjustedTotalCostofInHouse }" Performance(Line15).TheamountintheTotalColumnforLine13isreplicatedonLine16. C.  c AdjustedTotalContractorISSACost 󄄀Line   16̀IfthecostcomparisonisbeingconductedtodetermineifanactivityshouldbeconvertedfrominhouseoperationtocontractorISSAperformance,theconversiondifferentialascalculatedabove(Line14)isaddedtotheContractperformancecostestimate(Line13,TotalColumnonly)andthesumisenteredunderAdjustedTotalCostofContractorISSAPerformance(Line16).TheamountintheTotalColumnforLine6isreplicatedonLine15. D.  c TheCostComparisonDecision 󀄄Lines17and &v( 18̀SubtractLine15fromLine16andentertheresultonLine17.ApositiveamountonLine17supportsadecisiontoperformtheactivitywithinhouseresources.AnegativeamountonLine17supportsadecisiontoaccomplishtheworkwithcontractresources.IndicateintheappropriateblockonLine h/ 18thedecisionsupportedbyLine17. ! 1 @ 0$. !! G@5(#(#,V5  $ 1 .01@22"{X/X"%{& ILLUSTRATIONII1    @ THEA76GENERICCOSTCOMPARISONFORM(_GCCF_)  x /@*@" " INHOUSEVS.CONTRACTORISSAPERFORMANCE Q   @* 󀀀     r           D Performance _  ЀInHousePerformance#XX/{Xߗ#{X/XX      1st󀀀2nd󀀀3rd󀀀_Add'l_󀀀TOTAL h Reference#XX/{X;#{X/XX V   #XX/{X!#{X/XX1.Personnel2.Material&Supply3.OtherSpecificallỳAttributable4.Overhead5.Additional0  0(#(#0(#(#____________________(#(# 6.TotalInHouse ContractorISSAPerformance  l 7.ContractorISSAPrice8.ContractAdmin.9.Additionalx=Xr X^L!(#XXr Xh!(#Xx10.OnetimeConversion0  0(#(#0(#(#0D(#(#H D(#D(# 11.GainonAssets0  0(#(#0(#(#()0D(#(#()()()()?!D(#D(# 12.FederalIncomeTax0  0(#(#0(#(#()0D(#(#()()()()#XX/{X߁#{X/XX6"D(#D(# Ѐ0 0 (# (#0(#(#0(#(#____0D(#(#________0^D(#D(#________-#^(#^(# 13.TotalContractorISSA Decision  '   14.MinimumConversion#XX/{Xߐ#{X/XXԀDifferential       D   ____ (!! 15.AdjustedTotalCostofInHousePerformance    0 D 0D(#D(#____(~""(#(# 16.AdjustedTotalCostofContractorISSA  Performance 0  0(#(#0(#(#0D(#(#0D(#D(#____(#(# 17.DecisionLine16minusLine15       D 0  ____(#(#  18.CostComparisonDecision:AccomplishWork   Ѐ  InHouse(+)       D    ^ ____   Ѐ  ContractorISSA()       D   0 ^ 0L^(#^(#____ L(#L(# 21#{&"%/{X#{PC"{&/"XXXC {P/v" "  v ! v"     THEA76COSTCOMPARISONFORM(_GCCF_)Continued݌   Ќ  v"v    #" v"#+{PCXXX "+@* #{&"%C {P5#{X/X"{&19.InHouse_MEO_ԀCertifiedBy:0  0(#(#__________________________Date:_______, (#(# Ѐ     r        __________________________     r        OfficeandTitle0  0(#(#"Icertifythat,tothebestofmyknowledgeandbelief,theinhouseorganizationreflectedinthiscostcomparisonisthemostefficientandcosteffectiveorganizationthatisfullycapableofperformingthescopeofworkandtasksrequiredbythePerformanceWorkStatement.IfurthercertifythatIhaveobtainedfromtheappropriateauthorityconcurrencethattheorganizationalstructure,asproposed,canandwillbefully#{&"%/{Xl#{X/X"{&Ԁimplementedsubjecttothiscostcomparison,in e accordancewithallapplicableFederalregulations. (#(# 21.InHouseCostEstimatePreparedBy:0  _________________________Date:________#{&"%/{X #{PC"{&9|(#(# #{&"%C {PM #{X/X"{&22.IndependentReviewer:0  0(#(#_________________________Date:________D(#(# ̀     r   0 0 (# (#0(#(#_________________________)"l(#(# Ѐ0  0(#(#0(#(#OfficeandTitle#{&"%/{X߰ #{PC"{& #c(#(# #{&"%C {P #{X/X"{&0  0(#(#"IcertifythatIhavereviewedthePerformanceWorkStatement,ManagementPlan,Inhousecostestimatesandsupportingdocumentationavailablepriortobidopeningand,tothebestofmyknowledgeandabilityhavedeterminedthat:(1)theabilityoftheinhouse_MEO_ԀtoperformtheworkcontainedinthePerformanceWorkStatementatthe estimatedcostsincludedinthiscostcomparisonis,tothebestofmyknowledgeandability,reasonablyestablishedand, '!" (2)thatallcostsenteredonthecostcomparisonhavebeenpreparedinaccordancewiththeprinciplesandproceduresofCircularA76anditsSupplement.#{&"%/{X#{PC"{&(#(#  #{&"%C {P #{X/X"{&22.CostComparisonFormCompletedBy:0  _________________________Date:________ (#(# 23.ContractingOfficer:0  0(#(#_________________________Date:_______ (#(# 24.TentativeCostComparison  DecisionAnnouncedBy:0  0(#(#_________________________Date:_______#{&"%/{Xx#{PC"{&w(#(# #{&"%C {PN#25.AppealAuthority(ifapplicable):0  0(#(#_________________________Date:_______ L {PC"%{&  0!(#(#  !(#!(#  @  @13 /"XXXC{P/v""@@  v !v"     @:   5:݌̌  v"!v    #v&%v".#vw%v&BB  v !vw     Chapter5StreamlinedCostComparisonsforActivitiesWith65 C _FTE_ԀorLess.݌̌  vw!v    #wvw#+{#XXXw+6(,(#(#(5p 5 #{&"%#{{#A.   General   )   1. r Thischapterprovidesproceduresthatmaybe  A usedwhentheGovernmentdeterminesthatasimplifiedcostcomparisonwillservetheequityandfairnesspurposesofCircularA76forconversiontoorfrominhouse,contractorISSA.Themethodologyislimitedtoactivitiesthatmeetthefollowingcriteria:33  a. r Possibleconversiontoorfrominhouse, 3  contractorISSAperformanceinvolving65_FTE_Ԁorless;33  b. r Activitiesthatwillcompetelargelyonalabor g andmaterialcostbasissuchas,butnotlimitedto,custodial,grounds,guard,refuse,pestcontrol,warehousingandnonmechanicalmaintenanceservices.  c. r Activitiesforwhichsignificantcapitalasset K purchasesarenotrequiredorforwhichallequipmentrequirementswillbeGovernmentϐFurnished/ContractorOperated(_GOCO_).  d. r Activitiesthatarecommonlycontractedbythe x Governmentand/orprivatesector,e.g.,therearenotlessthanfourcomparableagencycontractsofthesamegeneraltypeandscopeandtherangeoftheexistingservicecontractcostsarereasonablyϐgrouped.33  2. r Innocase,shallanycommercialactivity %! involving66ormore_FTE_Ԁbemodified,reorganized,dividedorinanywaychangedforthepurposeofcircumventingtherequirementsofthissectionor (#! otherproceduresofthisSupplement. c 3. D AStreamlinedCostComparisonForm  +" А(_SCCF_)isprovidedatIllustrationII2. B. c Procedure   $   c 1. D ThestreamlinedA76costcomparison  % processassumesthattheactivitybeingconsideredisregularlyperformedbycontract.Thus,itassumesthatexistingfixedpricecontractscanbeused,withonlyminormodification,todefinethescopeofthecompetitionandtoavoidtheneedforthedevelopmentofanewororiginalPerformanceWorkStatement(_PWS_)oraformalsolicitation. c 2. D Theemployeeparticipationandnotification i- provisionsofPartIapply. c 3. D TheGovernmentwillbaseitsinhousecosts \/ onthecurrentorganization. c 4. D TheGovernment'sinhouseLaborand O1 Materialcosts(Lines1and2oftheGenericA76CostComparisonForm)willbecalculatedinaccordancewithChapter2ofthisPart.OverheadcostswillbecalculatedasprovidedbyChapter2ofthisPartforLine4.AnycontractsupportcostsnormallyincludedinLine5ofthe_GCCF_Ԁwillbecalculated.Nootherinhousecostswillbecalculated.TheprovisionsforanIndependentReviewapply.Uponacceptancebytheagency'sA76IRO,theinhousecostestimatewillbesealedandsubmittedtothecontractingoffice. c 5. D Uponreceiptoftheinhousecostestimate,the % = contractingofficewilldeveloparangeofcontractcostestimates,baseduponnotlessthanfourcomparableservicecontractsorISSAoffers.(#@ 4 /1   Adjustmentsfordifferencesinscopemaybenecessary.Thecontractingofficeisnotrequiredtoissueasolicitationforbidsfromtheprivatesector.If,however,thecontractingofficefindsthatfourcomparablecontractsorISSAoffersarenotavailable,thecontractingofficemayissueasolicitationforbidsandtheagencymayconductacostcomparisonasotherwiseprovidedbythisSupplement.  6. r Atcostcomparison,theinhousecostestimate f  willbecomparedwithISSAoffersandthe.4rangeofestimatedcontractcostsdevelopedbythecontractingoffice.Therangeofestimatedcontractcostswillthenbeadjustedforthecostofcontractadministration(limitedtoTable31)andFederaltaximpacts.IncalculatingtheAdjustedTotalCosts,theminimumconversiondifferentialshallbeaddedtothetotalcostofcontractorISSAperformanceifthecostcomparisonisbeingconductedtodetermineifanactivityshouldbeconvertedfrominhouseoperationtocontractorISSAperformance.IfthecomparisonisbeingconductedtodetermineifanactivityshouldbeconvertedfromcontractorISSAperformancetoinhouseoperation,thedifferentialisaddedtothetotalcostofinhouseperformance.π  7. r IftheGovernment'sAdjustedTotalInhouse v CostestimateisgreaterthantherangeofAdjustedTotalContractorISSACostestimates,thecontractingofficewillannounceatentativedecision I! tocontractorenterintoanISSA.UponnotificationofadverselyaffectedFederalemployeesandpublicationofthistentativedecisionintheCommerceBusinessDaily,theA76Administrative   AppealprocessoutlinedinthisSupplementwillbeinitiated.WiththeA76AdministrativeAppealAuthoritysconfirmationofallcostsenteredonthe_SCCF_ԀandcertificationofthereasonablenessofthecontractandISSApricingadjustmentsmadebythecontractingoffice,thecontractingofficewillsolicitforawardtocontractorISSAperformance.TheRightofFirstRefusalwillbeofferedtoemployeesadverselyaffectedbytheaward. c 8. D IftheGovernment'sAdjustedTotalInhouse *o ) CostestimateisbeloworwithintherangeofAdjustedTotalContractorISSACostestimates,thecontractingofficewillannounceatentativedecisionthattheactivitywillbeperformedinhouse.Again,uponnotificationofadverselyaffectedFederalemployeesandpublicationofthistentativedecisionintheCommerceBusinessDaily,theA76 0 AdministrativeAppealprocesswillbeinitiated. c 9. D Activitiestobeperformedorretainedin 2 houseasaresultofastreamlinedcostcomparisonϐshouldbesubmittedtoPost_MEO_ԀPerformanceReview,incompliancewiththisSupplement.Thisrecognizesthat,forretainedactivities,theexistingorganizationisassumedtobethe_MEO_Ԁandnomanagementplanisrequired. Z!8 @#{X/XX____y!^(#^(# 12.AdjustedTotalCostofContractorISSA  Performance 0  0(#(#0(#(#0D(#(#0D(#D(#0^(#(##XX/{X??#{X/XX____A#^(#^(# #XX/{Xq@#{X/XX13.CostComparison(Line12minusLine11)0     D   0^(#(##XX/{X@#{X/XX____%$h^(#^(# 14.CostComparisonDecision:0  0(#(#0(#(#0D(#(#0D(#D(# %L (#(#   PerformInHouse0  0(#(#0(#(#0D(#(#0D(#D(#0^(#(##XX/{XߐA#{X/XX____%0!^(#^(# ЀConverttoContractorISSA0  0(#(#0(#(#0D(#(#0D(#D(#0^(#(##XX/{X'C#{X/XX____& "^(#^(#   ' #  @*  THESTREAMLINEDA76COSTCOMPARISONFORM(_SCCF_)@@*   15.InHouseCostEstimatePreparedBy:0  _____________________0(#(#Date:________ \(#(# 16.IndependentReviewer:0  0(#(#_____________________0(#(#Date:________ (#(# ̀0  0(#(#____________________________________ (#(# Ѐ0  0(#(#0(#(#0D(#(#OfficeandTitleq D(#D(#   0  "IcertifythatIhavereviewedtheproposedcontract,inhouseandISSAcostestimatesandcontractpricesandfindthemtobereasonableandcalculatedinaccordancewiththeprinciplesandproceduresofCircularA76anditsSupplement. (#(# 17.CostComparisonCompletedBy:0  0(#(#_____________________0(#(#Date:________7z(#(# 18.ContractingOfficer:0  0(#(#_____________________0(#(#Date:________&(#(# 19.TentativeCostComparisoǹ0  DecisionAnnouncedBy:0(#(#0(#(#_____________________0(#(#Date:________s!(#(# 20.AppealAuthority(ifapplicable):0  0(#(#_____________________0(#(#Date:________$b (#(#   &^" #{&"%/X{Xp5#{#"%{&@&1/wXXX#{)D/vww    v !vw    e L  APPENDIX1LtL݌ 8 Ќ  vw!v    #wvwK#+{#XXXw+98/wXXX#{7M/vww DefinitionsofTerms   ? #wvwM#+{#XXXw+ #{&"%#{tK#(,(#(#(5pw 5  33AdministrativeAppealAuthority. Withreceiptof   anappeal,theofficialdesignatedinparagraph9.a.oftheCircularA76,ordesignee,assignsanofficial(s)toserveonanA76AdministrativeAppealAuthorityforthatappeal.Theindividual(s)selectedmustbe:(a)independentoftheactivityunderreviewor,(b)atleasttwoorganizationallevelsabovetheofficialwhocertifiedtheGovernment'sManagementPlanand_MEO_.TheAppealAuthorityreviewsappealstoensurethatallcostsareproperlyaccountedforinaccordancewiththeprinciplesandproceduresofthisSupplementalHandbook.TheAuthorityshallalsoensurethatallparticipantshavefullandequalaccesstothedecisionprocess. Affected Parties. Federalemployeesandexisting b Federalcontractorsthatwillorcouldbeimpactedbyadecisiontowaiveacostcomparisonorhavesubmittedbidstoconverttoorfrominhouse,contractorISSAperformance,asaresultofacostcomparison,andtheirrepresentativesareaffectedparties.Agenciesorpartsofagenciesthathavesubmittedformalbidsoroffers,inordertocompetefortherighttoprovideservicesthrough_ISSAs_,arealsoconsideredaffectedparties. CommercialActivity. Acommercialactivityisthe i&! processresultinginaproductorservicethatisorcouldbeobtainedfromaprivatesectorsource. w(#! Agencymissionsmaybeaccomplishedthroughcommercialfacilitiesandresources,Governmentfacilitiesandresourcesormixesthereof,dependingupontheproduct,service,typeofmissionandtheequipmentrequired. Commercial Source. Acommercialsourceisany  & businessorotherconcernthatiseligibleforcontractawardinaccordancewithFederalAcquisitionRegulations. ContractAdministration. Contractadministration I* includesthoseinherentlygovernmentalactivitiesperformedbywarrantedcontractingofficers(CO),thecontractingofficer'stechnicalrepresentatives(_COTR_),andrelatedpaymentevaluationstaff.Contractadministrationisnottobeconfusedwithcontractqualitycontrol,performanceevaluationorinspection,whicharedefinedascommercialactivitiesbythisSupplementand_OFPP_ԀPolicyLetter921. Conversion toContract. #&%"%{&-N#{&"%%&Aconversiontocontract P 4 isthechangeofperformanceofacommercialactivityfrominhouseperformancebyFederalemployeestoperformancebyacommercialsource. Conversionfrom Contract. Conversionfrom }$8 contracttoinhouseperformancemeansthechangeofacommercialactivityfromperformancebycontractwithacommercialsourcetoperformancebyFederalemployeeswithGovernmentresources.(#< @8 1&   Italsoincludestheconversionofexpansionsand/ornewrequirements(work)fromcontractperformancetoinhouseperformance. CoreCapability. #&%"%{&X#{&"%%&Acorecapabilityisa  G commercialactivityoperatedbyacadreofhighlyskilledemployees,inaspecializedtechnicalorscientificdevelopmentarea,toensurethataminimumcapabilityismaintained.Thecorecapabilitydoesnotincludetheskills,functionsor_FTE_ԀthatmayberetainedinhouseforreasonsofNationalDefense,includingmilitarymobilization,securityorrotationalnecessity,ortothepatientcareorresearchanddevelopmentactivities,asprovidedinPartI,Chapter1ofthisSupplement. CostComparison.#&%"%{&[#{&"%%& Acostcomparisonisthe b processwherebytheestimatedcostofGovernmentperformanceofacommercialactivityisformallycompared,inaccordancewiththeprinciplesandproceduresofthisCircularandSupplement,tothecostofperformancebycommercialorISSADCCDsourceEEs. Expansion.#&%"%{&~^#{&"%%& Anexpansionisthemodernization,  replacement,upgradingortheenlargementofaninhousecommercialactivityorcapability.Iftheexpansioninvolvesa30percentincreaseintheoperatingcostoftheactivity,a30percentincreaseinthetotalcapitalinvestmenttoperformtheactivityoranincreaseof65_FTE_Ԁormore,acostcomparisonisrequiredpriortoauthorizinginhouseperformance.Aconsolidationoftwoormoreexistingcommercialactivitiesisnotanexpansion,unlessthetotaloperatingcostis30percentgreaterthanthetotaloftheindividualcomponentsoritrequiresanincreaseof65_FTE_Ԁormore. (;"! Theabovedefinitionnotwithstanding,pursuanttoOMBCircularA126allaircraftpurchasedecisionsshouldbejustifiedthroughformalcostcomparison,asprovidedbythisSupplement. Exemption.#&%"%{&`#{&"%%& Anexemptionisadetermination,  N% madeinaccordancewithCircularA76andthisSupplement,thatacommercialactivitymaybeconvertedtoorfrominhouse,contractorISSAperformancewithoutcostcomparisonandmaybejustifiedbyreasonsotherthancost. ;InherentlyGovernmental Activity.#&%"%{&d#{&"%%& Aninherently F + governmentalactivityisonethatissointimatelyrelatedtothepublicinterestastomandateperformancebyFederalemployees.Activitiesthatmeetthesecriteriaarenotincompetitionwithcommercialsources,arenotgenerallyavailablefromcommercialsourcesandare,therefore,notsubjecttoCircularA76orthisSupplement.GuidancetoavoidanunacceptabletransferofofficialresponsibilitytocontractperformancemaybefoundintheOfficeofFederalProcurementPolicy(_OFPP_)PolicyLetter921.SeeAppendix5. IndependentReviewOfficer(IRO). #&%"%{&Ѣe#{&"%%&Theagency 7 officialwhocertifiespriortobidopeningthattheGovernment'sperformanceandcostcomparisonestimateshavebeenpreparedinaccordancewithCircularA76andthisSupplement. ISSA. Theprovisionofacommercialactivity,in ""< accordancewithan_interservice_Ԁsupportagreement,onareimbursablebasis.Thisincludesfranchisefunds,revolvingfundsandworkingcapitalfunds. #&%"%{&hh#{&"%%& %7?  ManagementPlan. #&%"%{&ыj#{&"%%&TheManagementPlanisthe  'O @ documentthatoutlinesthechangesthatwillresultintheGovernment'sMostEfficientOrganization )]"B (_MEO_)toperformacommercialactivityinhouse.Itprovidesthestaffingpatternsandoperatingproceduresthatserveasabaselineforinhousecostestimates. MostEfficient Organization(_MEO_). #&%"%{&j#{&"%%&The_MEO_  N referstotheGovernment'sinhouseorganizationtoperformacommercialactivity.ItmayincludeamixofFederalemployeesandcontractsupport.ItisthebasisforallGovernmentcostsenteredontheCostComparisonForm.TheMostEfficientOrganization(_MEO_)istheproductoftheManagementPlanandisbaseduponthePerformanceWorkStatement(_PWS_). NationalDefenseActivity. #&%"%{&l#{&"%%&ԀAnationaldefense [  activityisacommercialactivitythatisapprovedbytheSecretaryofDefense,ordesignee,asbeingsubjecttodeploymentinadirectmilitarycombatsupportrole. NationalSecurity. #&%"%{&Do#{&"%%&Anationalsecurityactivityisa  commercialactivitythatisapprovedbytheDirectorofCentralIntelligence,ordesignee,asbeingnecessarytomeetthenationalsecurity. NewRequirements. #&%"%{&np#{&"%%&Anewrequirementisanewly  establishedneedforacommercialproductorservice. Overhead. #&%"%{&ьq#{&"%%&Overheadisincludedintheinhouse  % estimateandisdefinedasthosecoststhatarenotdirectlyattributabletotheactivityunderstudy. PerformanceMeasures. #&%"%{&Hr#{&"%%&Performancemeasures $K provideaseriesofindicators,expressedinqualitative,quantitativeorothertangibleterms,thatindicatewhethercurrentperformanceisreasonableandcosteffective.Performancemeasurescan $(g!  includeworkloadandoutputtocostratios,transactionratios,errorrates,consumptionrates,inventoryfillrates,timelinessmeasures,completionandbackorderrates,etc.Qualityservicemeasuresmayincluderesponsivenessrates,usersatisfactionrates,etc. PerformanceStandard. #&%"%{&Gs#{&"%%&Aperformancestandard  \& reflectstheminimum,sectorspecific,Federalrequirementfortheperformanceofacommercialactivity.Itincorporatesbothqualitymeasuresandcostmeasures.CostmeasuresreflectthecostcomparabilityproceduresofPartIIofthisSupplementtoassureequityinthecomparisonofperformancestandardswithprivateindustrystandards. PerformanceWork Statement(_PWS_). #&%"%{&ѷu#{&"%%&A i/ PerformanceWorkStatementisastatementofthetechnical,functionalandperformancecharacteristicsoftheworktobeperformed,identifiesessentialfunctionstobeperformed,determinesperformancefactors,includingthelocationofthework,theunitsofwork,thequantityofworkunits,andthequalityandtimelinessoftheworkunits.ItservesasthescopeofworkandisthebasisforallcostsenteredontheCostComparisonForm. Post_MEO_ԀPerformanceReview. #&%"%{&w#{&"%%&Whenservices  9 areperformedinhouse,asaresultofacostcomparison,includingthoseinvolvingan_interservice_Ԁsupportagreement,aformalreviewandinspectionoftheMostEfficientOrganization(_MEO_)shouldbeconducted.Typically,thisreviewshouldbeconductedfollowingtheendofthefirstfullyearofperformance.Post_MEO_ԀPerformanceReviewsconfirmthatthe_MEO_Ԁhasbeen (;"A implementedinaccordancewiththeTransitionPlan,establishthe_MEO_'sabilitytoperformtheservicesofthe_PWS_Ԁandconfirmthatactualcostsarewithintheestimatescontainedintheinhousecostestimate.Adjustmentsmaybemadeforformalmissionorscopeofworkchanges. PreferentialProcurement Programs. #&%"%{&(z#{&"%%&Theseare  \ special"commercial"sourceprograms,suchasFederalPrisonIndustriesandtheworkshopsadministeredbytheCommitteeforthePurchasefromtheBlindandOtherSeverelyHandicappedunderthe_Javits_ԄWagner_O'Day_ԀAct. PerformanceRequirementsSummary(_PRS_). #&%"%{&"~#{&"%%&A T  _PRS_ԀisasynopsisofthescopeofworkandoutputperformancemeasurementsthatmaybeusedinconjunctionwithaviationcostcomparisonsthatrelyontheGSA_FAMIS_Ԁdatasystemforidentifyingcontractcosts. Privatization. #&%"%{&#{&"%%&Privatizationistheprocessof  changingapublicentityorenterprisetoprivatecontrolandownership.Itdoesnotincludedeterminationsastowhetherasupportserviceshouldbeobtainedthroughpublicorprivateresources,whentheGovernmentretainsfullresponsibilityandcontroloverthedeliveryofthoseservices. QualityAssurance Surveillance. #&%"%{&k#{&"%%&ԀQuality ! AssuranceSurveillanceisthemethodbywhichFederalemployeeswillsuperviseinhouseorcontractperformancetoensurethatthestandardsofthe_PWS_Ԁaremetwithinthecostsbid. ReasonableorCompetitivePrices. #&%"%{&5#{&"%%&Theexpected  'O  rangeofpricesresultingfromexperienceobtainedϐthroughthecompetitivefreeenterprisesystemfor )]"! likeorsimilaractivities.Determinationsaretobemadebythecontractingofficer. RecurringCommercialActivity. #&%"%{&ѓ#{&"%%&Arecurring @# commercialactivityisonethatisrequiredbytheGovernmentonaconsistentandlongtermbasis.Thisdefinitiondoesnotimplyanhourly,daily,monthlyorannualrequirement,butmust,inageneralsense,berepetitiveinnature,whereintheexpectedworkloadcanbereasonablyestimated. Sector. #&%"%{&#{&"%%&Certaincommercialactivitiesarecommon ? * tomorethanoneagency.Manyofthesecommercialactivitiescanbeaggregated.Forexample,anagencymayinventorytransportationacquisition,operations,maintenanceanddisposalasindependentcommercialactivities. SeverableExpansion. #&%"%{&х#{&"%%&Aseverableexpansionisan z0 expansionofcurrentlycontracted,inhouseor_interservice_Ԁsupportagreementprovidedworkthatcouldbeprovidedusingthecurrentapproachorcould,withoutsevereadditionaladministrativeburden,beprovidedbyanothercompetitive_offeror_.Economiesofscalearenotjustificationfordismissingneworexpandedworkasseverable,theseeconomieswillbetestedthroughcompetitiveoffer. StartDate. Thistermisusedintwoways.First,it  : isthedatewhenacostcomparisonbegins,generallydefinedasthedatethatalocalStudyTeamisformedandactualworkonthePerformanceWorkStatement,ManagementPlanandinhousecostestimatebegins.Second,itmayrefertotheactualdateworkisscheduledtobeginunderacontract,asprovidedinthesolicitation. )]"B @NTLOTL 0!!! N@5(#(#,VN5{#"%{&F  F  /wXXX#{/vww: / @% #v&%vwA#v !%v&APPENDIX2  ` # !!v Í#+{ R5!XXX! +@*#{&"%5{ R<#{#"{& /wXXX#{/vww  v !vw   򀀀}  @@^^CommercialActivitiesInventory}݌  S Ќ  vw!v    #wvw^#+{#XXXw+@*<= (,(#(#(5p F5#{&"%#{#A.0  AnnualInventorySubmission. gVV =XrS XL!(#XXr X^L!(#X  InaccordancewiththeFAIRAct,CircularA76 /  andthisHandbook,eachagencymustsubmittoOMB,byJune30ofeachyear,adetailedCommercialActivitiesInventoryofallcommercialactivitiesperformedbyinhouseemployees,including,ataminimum,thefollowing:0    a. r Organizationunit.j VV 0    b. r State(s). VV 0    c. r Location(s).VV 0    d. r _FTE_.VV 0    e. r Activityfunctioncode.VV 0    f. S Reasoncode. 2VV 0  0VV0rVV     g. r YeartheactivityfirstappearedonFAIRJrVrV      r  S ActCommercialActivitiesInventory     r  S (initialvaluewillbe1999).0  0VV0rVV  h. r NameofaFederalemployeeresponsibleBrVrV      r  S fortheactivityorcontactpersonfrom     r  S whomadditionalinformationaboutthe     r  S activitymaybeobtained.0  0VV0rVV  _i_. r 0SrVrVYearofcostcomparisonorconversion(if ! applicable). SVSV 0    j. r 0SVV_CIV_/_FTE_Ԁsavings(ifapplicable).#SVSV 0  0VV0rVV  k. r EstimatedannualizedCostComparison$) rVrV      r  S dollarsavings(ifapplicable).0  0VV0rVV  l. r 0SrVrVDateofcompletedPost_MEO_ԀPerformance  'Y" Review(ifapplicable).0SVSV(`#VV   Agencieshavethediscretiontoautomateandto ()x$  structuretheinitialsubmissionofthedetailedinventoryastheybelievemostappropriate,solongastheinventoryincludeseachofthesedataelements.AgenciesmusttransmitanelectronicversionoftheinventorytoOMBaswellastwopapercopies.Theelectronicversionshouldbeinacommonlyusedsoftwareformat(commercialofftheshelfspreadsheet,databaseorwordprocessingformat).OMBanticipatesissuingadditionalguidanceonthestructureandformatoffutureinventorysubmissions,basedontheexperiencegainedfromthefirstannualreviewandconsultationprocess.̀ B. c Reporting  -  c Theaboveispublicinformation.ThedatamaybesummarizedintoreportsfortheCongress,theGeneralAccountingOffice(GAO),agencyofficials,OMBorthepublic. C. c _FTE_.  2  c   Enterthenumberofauthorizedfulltime 03 employeesor_FTE_Ԁ(asapplicable)inthecommercialactivityfunctionorfunctionsasofthedateoftheinventory.EmployeesperforminginherentlyGovernmentalactivitiesarenotreportedintheCommercialActivitiesInventory.  %S 8 D. c A76CommercialActivityFunctionalCodes  &k!9 33 c TheDepartmentofDefensehasdevelopedacomprehensivelistoffunctioncodesforuseintheirA76inventorysystem.Inapplyingthese>function)e$<V codesGovernmentwide,thecodesstandardizethefunctionaldescriptionsofactivitiesandfacilitatetheaggregationofactivitiesGovernmentwideandbyagency.    E.  ReasonCodes      Thefollowingreasoncodeswillbeusedinthe CommercialActivitiesInventory .Agenciesmay   addadditionalsubgroupings(A1,A2forexample)withinanyreasoncode,asdeemednecessary.{-=9"%{&~:Xr,XL!(#XXrS XL!(#X~#{&"%9{-=#  Code0  0VVExplanationK VV {-=9"%{&#{&"%9{-=#  A0 r 0rVrVIndicatesthatthefunctionisperformed   byFederalemployeesandisspecifically y  exemptbytheagencyfromthecostcomparisonrequirementsoftheCircularandthisSupplement. VV   B0 r 0rVrVIndicatesthattheactivityisperformedby N Federalemployeesandissubjecttothe ? costcomparisonordirectconversionrequirementsoftheCircularandthisSupplement. VV   C0 r 0rVrVIndicatesthattheactivityisperformedby W Federalemployees,butishasbeenspecificallymadeexemptfromtheprovisionsoftheCircularandthisSupplementbyCongress,ExecutiveOrderorOMB. VV   D0 r 0rVrVIndicatesthatthefunctioniscurrently   performedbyinhouseFederalemployeesandisintheprocessofbeingcostcomparedorconverteddirectlytocontractor_interservice_Ԁsupportagreementperformance. VV ~=*cDpxf!X'*-.12XXr,XL!(#X~  E0 r 0rVrV Indicatesthatthefunctionisretainedin &" houseasaresultofacostcomparison. s' #VV 33  F0 r 0rVrV0VVIndicatesthefunctioniscurrentlybeingu(!$VV performedbyFederalemployees,butareviewispendingforcerestructuringdecisions(i.e.,baseclosure,realignment,consolidation,etc.). (#(#  c G0 D 0pD(#D(#0p(#p(#Indicatesthatthefunctionisprohibited  N( fromconversiontocontractbecauseoflegislation. (#(#  c H0 D 0pD(#D(#0p(#p(#Waiverissued.1t+(#(#  c I 0  0D(#(#0pD(#D(# Indicatesthefunctionisbeingperformed I, inhouseasaresultofacostcomparisonresultingfromadecisiontoconvertfromcontracttoinhouseperformance. ^ /p(#p(#  F. c MaintenanceofAggregateData v 0  c Agenciesshouldmaintainaggregateprogram  1 implementationdatabyfiscalyear,toinclude:totalnumberofstudies,_FTE_Ԁanddollarsavingsbyconversiontocontract,conversiontoinhouseorotherwiseretainedinhouse.Agenciesshouldalsotracktotal_FTE_Ԁstudiedand_MEO_Ԁsavingsgenerated. ?G. c InventoryReviewandPublication;Challenges  7 andAppeals  8  c 1.#&%"%{&Ӑ#}&%%&ReviewandPublication:Inaccordancewith +9 Section2oftheFAIRAct,OMBwillreviewtheϐagency'sCommercialActivitiesInventoryandconsultwiththeagencyregardingitscontent.Afterthisreviewiscompleted,OMBwillpublishanoticeintheFederalRegisterstatingthattheinventoryis  "N> areavailabletothepublic.Oncethenoticeispublished,theagencywilltransmitacopyofthedetailedCommercialActivitiesInventorytoCongressandmakethematerialsavailabletothepublicthroughitsWashington,D.C.orheadquartersoffices. 5(x!D 33  2.ChallengesandAppeals:UnderSection3oftheFAIRAct,anagency'sdecisiontoincludeorexcludeaparticularactivityfromtheCommercialActivitiesInventoryissubjecttoadministrativechallengeand,then,possibleappealbyan interestedparty.Section3(b)oftheFAIRActdefines interestedpartyas:0    a. r Aprivatesectorsourcethat(A)isanactualor   prospective_offeror_Ԁforanycontractorotherformofagreementtoperformtheactivity;and(B)hasadirecteconomicinterestinperformingtheactivitythatwouldbeadverselyaffectedbyadeterminationnottoprocuretheperformanceoftheactivityfromaprivatesectorsource. VV 0    b. r Arepresentativeofanybusinessor .q  professionalassociationthatincludeswithinitsmembershipprivatesectorsourcesreferredtoina.above. VV 0    c. r Anofficeroremployeeofanorganization F withinanexecutiveagencythatisanactualorprospective_offeror_Ԁtoperformtheactivity. VV 0    d. r Theheadofanylabororganizationreferredto * insection7103(a)(4)oftitle5,UnitedStatesCodethatincludeswithinitsmembershipofficersoremployeesofanorganizationreferredtoinc.above. VV   3.Aninterestedpartymaysubmittoanexecutiveagencyaninitialchallengetotheinclusionorexclusionofanactivitywithin30calendardaysafterpublicationofOMBsFederalRegisternotice " statingthattheinventoryisavailable.Thechallenge q# mustsetforththeactivitybeingchallengedwithasmuchspecificityaspossible,andthereasonsfortheinterestedparty'sbeliefthattheparticularactivityshouldbereclassifiedasinherentlyGovernmental(andthereforebedeletedfromtheinventory)orascommercial(andthereforebeaddedtothe )Z"$ inventory)inaccordancewith_OFPP_ԀPolicyLetter921oninherentlyGovernmentalfunctions(seeAppendix5)orasestablishedbyprecedent(suchaswhenotheragencieshavecontractedfortheactivityorundergonecompetitionsforthisorsimilaractivities). c 4.#&%%}&#{&"%%&Theagencyheadmaydelegatethe  * responsibilitytodesignatetheappropriateofficial(s)toreceiveanddecidetheinitialchallenges.#&%"%{&Ѫ#}&%%&ԀAs w, mandatedbytheFAIRAct,thedecidingofficialmustdecidetheinitialchallengeandtransmittotheinterestedpartyawrittennotificationofthedecisionwithin28calendardaysofreceivingthechallenge.Thenotificationmustincludeadiscussionoftherationaleforthedecisionand,ifthedecisionisadverse,anexplanationoftheparty'srighttofileanappeal. c 5.Aninterestedpartymayappealanadversedecisiontoaninitialchallengewithin10workingdaysafterreceivingthewrittennotificationofthedecision.#&%%}&#{&"%%&Theagencyheadmaydelegatethe 8 responsibilitytoreceiveanddecideappealstotheofficialidentifiedinparagraph9.aoftheCircular(oranequivalentseniorpolicyofficial),withoutfurtherdelegation.Within#&%"%{& #}&%%&Ԁ10workingdaysofreceiptof < theappeal,theofficialmustdecidetheappealandtransmittotheinterestedpartyawrittennotificationofthedecisiontogetherwithadiscussionoftherationaleforthedecision.TheagencymustalsotransmittoOMBandtheCongressacopyofanychangestotheinventorythatresultfromthisprocess,makethechangesavailabletothepublicandpublishanoticeofpublicavailabilityintheFederalRegister.#&%%}&7#{&"%%& x  &TE  H. c AgencyReviewandUseofInventory.  'V F  c #&%"%{&X#}&%%&Section2(d)oftheFAIRActrequiresthateach (X!G Аagency,withinareasonabletimeafterthe )I"H publicationofthenoticethatitsinventoriesarepubliclyavailable,reviewtheactivitiesonthedetailedcommercialactivitiesinventory.AgencieswillreporttoOMBonthisprocessaspartoftheReportonAgencyManagementofCommercialActivitiesrequiredunderParagraphI,below.Inaddition,Section2(d)(e)oftheFAIRActprovidesthat,eachtimetheheadoftheexecutiveagencyconsiderscontractingwithaprivatesectorsourcefortheperformanceofanactivityincludedontheinventory,theagencymustuseacompetitiveprocesstoselectthesourceandmustensurethat,whenacostcomparisonisusedorotherwiserequiredforthecomparisonofcosts,allcostsareconsideredandthecostsconsideredarerealisticandfair.Incarryingouttheserequirements,agenciesmustrelyontheguidancecontainedinCircularA76andthisSupplementalHandbooktodetermineifcostcomparisonsarerequiredandwhatcompetitivemethodisappropriate.Allcompetitivecostsofinhouseandcontractperformanceareincludedinthecostcomparison,whensuchcomparisonisrequired,includingthecostsofqualityassurance,technicalmonitoring,liabilityinsurance,retirementbenefits,  disabilitybenefitsandoverheadthatmaybeallocatedtothefunctionunderstudyormayotherwisebeexpectedtochangeasaresultofchangingthemethodofperformance.#&%%}&#{&"%%&    I. c AnnualReportonAgencyManagementof   CommercialActivities.    #&%"%{&U#}&%%& ,Aspartofongoingagencyresponsibilityto   managetheirperformanceofcommercialactivitiesandongoingOMBoversight,OMBwillrequireagenciestoreportannuallyonsuchmanagement.ThecontentofthereportsislikelytovarydependingupontheprogressmadebyeachagencyinreviewingtheirinventoryandontheexperienceOMBgainsfromthefirstroundofinventorysubmissions,review,challengesandappealsmandatedbytheFAIRAct.OMBanticipatesissuingsubsequentguidanceifitdeterminesthatsupplementalreportsorotherinformationisneededforfutureinventorysubmissionstoassurethatagencieshavecorrectlyimplementedalloftheprovisionsoftheFAIRActandtakenadvantageofthemanagementinformationinherentinthedetailedCommercialActivitiesInventory.#&%%}&%#{&"%%& - 5(#(#,0V?5  -  ,D@p F !! g@   {X/X"%{&GG @ A76CommercialActivityFunctionalCodes  y#{&"%/X{Xߚ#{X/X"%{&  #{&"%/X{XE# @ GSocialServices @   2 eu1XR Z bj #*cDpxf!X'*-.12Xu/&%XXX"%{&Ѣ/v&%%&0,X` XXX0ur&wL%%v&v&%L%&w3XX,X` X3  6,X` XXX6ur  G0010  CareofRemainsofDeceasedPersonnel&FuneralServicesur݌ 6(#(# Ќv&%%v&v&%%v&6,X` X,X` X6  #&%%v&#+{&"%XXX%&+G0080  CommissaryStoreOperation 8(#(# G009  ClothingSalesStoreOperations  : G0100  RecreationalLibraryServices<(#(# G0110  Morale,Welfare,andRecreationServices> (#(# G0120  CommunityServices@ (#(# G9000  ChaplainActivitiesandSupportServicesB (#(# G9010  HousingAdministrativeServicesD (#(# G9040  FamilyServicesF (#(# G9990  OtherSocialServicesH(#(#     @ HHealthServices   L   H1010  HospitalCare P(#(# H1020  SurgicalCareR(#(# H1050  NutritionalCareT(#(# H1060  PathologyServicesV(#(# H1070  RadiologyServicesX(#(# H1080  PharmacyServicesZ(#(# H1090  PhysicalTherapy\(#(# H1100  MaterielServices ^(#(# H1110  OrthopedicServices!`(#(# H1120  AmbulanceServices"b(#(# H1130  DentalCare   h      p !#d(#(# H1140  DentalLaboratories#$f(#(# H1150  ClinicsandDispensaries%%h(#(# H1160  VeterinaryServices'&j(#(# H1170  MedicalRecords)'l (#(# H1180  NursingServices+(n!!(#(# H1190  PreventiveMedicine-)p""(#(# H1200  OccupationalHealth h (#(# H1210  DrugRehabilitation(#(# H9990  OtherHealthServices(#(#       @ JIntermediate,DirectorGeneralRepairandMaintenanceofEquipment      J5010  AircraftMaintenance (#(# J5020  AircraftEngineMaintenance(#(# J5030  Missiles (#(# J5040  Vessels (#(# J5050  CombatVehicles (#(# J5060  _Noncombat_ԀVehicles (#(# J5070  ElectronicandCommunicationEquipmentMaintenance (#(#  J5100  RailwayEquipment(#(# J5110  SpecialEquipment(#(# J5120  Armament (#(# J5130  DiningFacilityEquipment"(#(# J5140  MedicalandDentalEquipment$(#(# J5150  Containers,Textile,Tents,andTarpaulins&(#(# J5160  MetalContainers((#(# J5170  TrainingDevicesandAudiovisualEquipment*(#(# J5190  IndustrialPlantEquipment,(#(# J5200  Test,MeasurementandDiagnosticEquipment.(#(# J5210  OtherTest,MeasurementandDiagnosticEquipment0(#(# J5220  AeronauticalSupportEquipment2(#(# J9990  MaintenanceofOtherEquipment 4(#(#     @ KDepotRepair,Maintenance,Modification,ConversionorOverhaulofEquipment  "8 K5310  Aircraft$<(#(# K5320  AircraftEngines%>(#(# K5330  Missiles&@ (#(# K5340  Vessels'B!!(#(# K5350  CombatVehicles)D""(#(# K5360  _Noncombat_ԀVehicles(#(# K5370  ElectronicandCommunicationEquipment(#(# K5380  RailwayEquipment(#(# K5390  SpecialEquipment (#(# K5400  Armament (#(# K5410  IndustrialPlantEquipment (#(# K5420  DinningandFacilityEquipment (#(# K5430  MedicalandDentalEquipment (#(# K5440  Containers,Textile,Tents,andTarpaulins(#(# K5450  MetalContainers (#(# K5460  Test,MeasurementandDiagnosticEquipment (#(# K5470  OtherTest,MeasurementandDiagnosticEquipment (#(# K5480  AeronauticalSupportEquipment (#(# K9990  OtherDepotRepair,Maintenance,Modification,ConversionorOverhaulofEquipment (#(#     @ PBaseMaintenance/MultifunctionContracts   P1000  InstallationOperationContracts(Multifunction)"(#(#     @ RResearch,Development,Test,andEvaluation(_RDT_&E)Support  & R6600  _RDT_&ESupport*(#(#     @ SInstallationServices  . {qW1"%{&#{&"%1{qW>#S7000  NaturalResourceServices(#(# S7010  AdvertisingandPublicRelations !(#(# S7020  FinancialandPayrollServices!#(#(# S7030  DebtCollection"%(#(# S7060  BusServices#'(#(# S7080  LaundryandDryCleaning$)(#(# S7090  CustodialServices%+(#(# S7100  PestManagement&- (#(# S7120  RefuseCollectionandDisposalServices'/!!(#(# S7130  FoodServices(1""(#(# S7140  FurnitureRepair(#(# S7150  OfficeEquipmentMaintenanceandRepair(#(# S7160  MotorVehicleOperation(#(# S7170  MotorVehicleMaintenance (#(# S7180  FirePreventionandProtection (#(# S7190  MilitaryClothing (#(# S7240  GuardService (#(# S7250  ElectricalPlantsandSystemsOperationandMaintenance (#(# S7260  HeatingPlantsandSystemsOperationandMaintenance(#(# S7270  WaterPlantsandSystemsOperationandMaintenance (#(# S7280  SewageandWastePlantsOperationandMaintenance (#(# S7290  AirConditioningandRefrigerationPlants (#(# S7300  OtherUtilitiesOperationandMaintenance (#(# S7310  SupplyOperations (#(# S7320  WarehousingandDistributionofPublications(#(# S7400  TransportationManagementServices(#(# S7500  MuseumOperations (#(# S7600  ContractorOperatedPartsStores&CivilEngineeringSupplyStores"(#(# S9990  OtherInstallationServices$(#(# {qW1"%{&    @ #{&"%1{qWC#TOther_NonManufacturing_ԀOperations   f{qW1"%{&#{&"%1{qW#T800 0  OceanTerminalOperations(#(# T8010  StorageandWarehousing(#(# T8020  Cataloging (#(# T8030  AcceptanceTesting (#(# T8040  ArchitectEngineering (#(# T8050  OperationofBulkLiquidStorage!(#(# T8060  PrintingandReproduction"(#(# T8070  VisualInformation#(#(# T8080  MappingandCharting$(#(# T8090  AdministrativeTelephoneServices%(#(# T8100  AirTransportationServices& (#(# T8110  WaterTransportationServices'!!(#(# T8120  RailTransportationServices(""(#(# T8130  EngineeringandTechnicalServices(#(# T8140  AircraftFuelingServices(#(# T8150  ScrapMetalOperation(#(# T8160  TelecommunicationCenters (#(# T8170  OtherCommunicationsandElectronicsSystems (#(# T8180  SystemsEngineeringandInstallationofCommunicationsSystems (#(# T8190  PreparationandDisposalofExcessandSurplusProperty (#(# T8200  AdministrativeSupportServices (#(# T8210  SpecialStudiesandAnalysis(#(# T9000  TrainingAids,Devices,andSimulatorSupport (#(# T9990  Other_NonManufacturing_ԀOperations (#(#    @ UEducationandTraining    U1000  RecruitTraining(#(# U2000  OfficerAcquisitionTraining(#(# U3000  SpecializedSkillTraining (#(# U4000  FlightTraining"(#(# U5000  ProfessionalDevelopmentTraining$(#(# U5100  ProfessionalMilitaryEducation&(#(# U5200  GraduateEducation,FullyFunded,Fulltime((#(# U5300  OtherFulltimeEducationPrograms*(#(# U5400  OffDuty(Voluntary)andOnDutyEducationPrograms,(#(# U6000  CivilianEducationandTraining.(#(# U7000  DependentEducation0(#(# U8000  TrainingDevelopmentandSupport2(#(# U9990  OtherTrainingFunctions 4(#(#     @ WAutomaticDataProcessing  "8 W8240  DataProcessingServices$<(#(# W8250  MaintenanceofADPEquipment%>(#(# W8260  SystemsDesign,DevelopmentandProgrammingServices&@ (#(# W8270  SoftwareServices'B!!(#(# W9990  OtherADPFunctions)D""(#(# D  =      @ XProductsManufacturedandFabricatedInHouse   X9310  OrdnanceEquipment(#(# X9320  ProductsMadeFromFabricorSimilarMaterials(#(# X9330  ContainerProductsandRelatedItems (#(# X9340  PreparationofFoodandBakeryProducts (#(# X9350  Liquid,GaseousandChemicalProducts (#(# X9360  Rope,Cordage,andTwineProducts;ChainsandMetalCableProducts (#(# X9370  LoggingandLumberProducts  (#(# X9380  CommunicationsandElectronicProducts (#(# X9390  ConstructionProducts (#(# X9400  RubberandPlasticProducts (#(# X9410  OpticalandRelatedProducts (#(# X9420  SheetMetalProducts(#(# X9430  FoundryProducts(#(# X9440  MachinedParts (#(# X9990  OtherProductsManufacturedandFabricatedInHouse"(#(# {qW1"%{&   #{&"%1{qW9 # @ ZMaintenance,Repair,Alteration,andMinorConstructionofRealProperty   \ {qW1"%{&#{&"%1{qW #Z9910  MaintenanceandRepairofFamilyHousingBuildingsandStructures(#(# Z9920  MaintenanceandRepairofBuildingsandStructuresOtherThanFamilyHousing(#(# Z9930  MaintenanceandRepairofGroundsandSurfacedAreas(#(# Z9970  MaintenanceandRepairofRailroadFacilities (#(# Z9980  MaintenanceandRepairofWaterways (#(# Z9990  OtherMaintenance,Repair,Alteration,andMinorConstructionofRealProperty(#(# G{#"%{&G@/&%XXX"%{&/G#&%#v&%%&G %&G#v  vv#G{qW1 #{&"%1{qW#{#"%{&@   =  @E@E 11 11   JJ/wXXX#{/+vwXXXw+A@   @%#v&%vw#v !%v& APPENDIX3 #v&%!v #vw%v&Ԉ D #v&%vw#vXX%v&  v !XvX   v  @@UsefulLifeandDisposalValuev݌  Ќ  vXX!v    #v&%XvXV#vw%v&5p6  5(,(#(#(  9,Xr` X,X` X9  #v&%vw##&%%v&#2&%%&Theattachedusefullifeanddisposalvaluesare W  estimatedbytheDefenseLogisticsAgency. J    Thedisposalvaluefactor,asapercentofacquisitioncost,isbasedupontherateofreturn.#&%%2&#v&%%&5 J   @Y 0 !! @5(#(#,V 5   #&%%v&#2&%%&UsefulLife*andDisposalValueTable#&%%2&#&*tN%%&  ^    Aoz)xdE xA6(P Hh,Xr` X6#&%N%&*tY#v&%%&v %v& (  P  H   #v&% vV#v %v&#  v7#v  ԀDisposalValue T  9rP <(P H9 r  P  <   ExpectedFactorasa r _FSC_ P 0 < 0<(#<(#UsefulLifePercentof2(#(#  r No. P  < Nomenclature  (Years)AcquisitionCost !q #v&% v#Aoz) xdE xA ` v %v&9(P HrP <9 (  P Guns,through30mm H   15PPB3.15#  v#FP  E  (  P # PFl#Guns,over30mmupto75mm  PPB1.18 4  (  P Guns,75mmthrough125mm H 250  0.63#s(#(#  (  P Guns,over125mmthrough200mm  PPB2.14 b  (  P Guns,over200mmthrough300mm  PPB2.61 Q 10400 P ChemicalWeaponsandEquipment  16@P (#P (#  (  P Launchers,RocketandPyrotechnic  15PPB2.00 / 1080 P CamouflageandDeceptionEquipment  10PPB1.75  1090 P AssembliesInterchangeablebetween    (  P WeaponsinTwoorMoreClasses  25PPB2.25  1095 P Misc.Weapons H   PPB1.06   Az) xdE! xA ! 1135 P FusingandFiringDevices "  (  P NuclearOrdnance H   16PPB0.08 #  1190 P SpecializedTestandHandling t$!  (  P Equipment,NuclearOrdnance H 880.60 c% " Az) xdEQ& xA R&!# 1220 P FireControlComputingSightsandDevices  8PPB0.29 ^'"% 1230 P FireControlSystem,Complete  11 M(#& 1240 P OpticalSightingandRangingEquipment  11PPB1.80 <)$'  1250 P FireControlStabilizingMechanisms  11PPB1.76  1260 P FireControlDesignatingand   (  P IndicatingEquipment H   12PPB0.58  1265 P FireControlTransmittingand   C (  P ReceivingEquipment,exceptAirborne  11PPB0.39 y  #&% #Gv&%%&G %&G#v  vv#Gv  9rP <(P H91270 r 0 P AircraftGunneryFireControlComponents  #  v%#v  0P (#P (##  vY&#v  0.22W (#(# B1285 r 0 P FireControlRadarEquipment,exceptAirborne  #  v&#v  0P (#P (##  v~'#v  1.19F (#(# E1290 r 0 P Misc.FireControlEquipment  190P (#P (#0.795x(#(# Az) xdE# xA $g  9rP <rP <913400 r  P Rockets,RocketAmmoandRocket0s r(#r(#  r  P Components <   18  3.62 b  1375 r 0 P DemolitionMaterialsQ P (#P (# 1377 r 0 P CartridgeandPropellantActivated@ P (#P (#  r  P DevicesandComponenent  0  1.28/ (#(# 1398 r 0 P SpecializedAmmoHandlingandServicingP (#P (#  r  P Equipment <   120  0.52 (#(# 9(P HrP <9Az) xdE xAN (  P   NL  LOO1410 P GuidedMissiles H   190  1.55(#(# 1420 P GuidedMissileComponents H   150  0.13(#(# 1430 P GuidedMissileRemoteControlSystems  190  0.45(#(# 1440 P Launchers,GuidedMissile H   170  0.66(#(# 1450 P GuidedMissileHandlingandServicing   (  P Equipment H   270  0.65p(#(# MMAz) xdE^ xA#  v'#v   _ PP1560 P AirframeStructuralComponents  200  2.48k(#(# QQAz) xdEY xA Z 1610 P AircraftPropellers H   100  4.58f (#(# 1615 P HelicopterRotorBlades,Drive U!   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(  P Equipment H 0  100Y(#(#2.20(!(Y(#Y(# 6640 P LaboratoryEquipmentandSupplies0  200Y(#(#2.12Y(#Y(# 6645 P TimeMeasuringInstruments0 H   250YH(#H(#5.54Y(#Y(# 6650 P OpticalInstruments H 0  80Y(#(#2.31Y(#Y(# 6655 P GeophysicalandAstronomicalInstruments0  250Y(#(#2.02 Y(#Y(# 6660 P MeteorologicalInstrumentsandApparatus0  200Y(#(#1.05 Y(#Y(# 6665 P HazardDetectingInstrumentsandApparatus0  160Y(#(#1.44u Y(#Y(# 6670 P ScalesandBalances H 0  180Y(#(#4.77d Y(#Y(# 6675 P Drafting,SurveyingandMappingInstruments0  190Y(#(#2.44S Y(#Y(# 66800 P LiquidandGasFlow,LiquidLevelandBxP (#P (#  (  P MechanicalMotionMeasuringInstruments0  100Y(#(#2.871g Y(#Y(# 6685 P Pressure,TemperatureandHumidityMeasuring  V   (  P andControllingInstruments H 0  100Y(#(#2.53E Y(#Y(# 6695 P CombinationandMisc.Instruments0  80Y(#(#2.064 Y(#Y(# Az) xdE xA #  6710 P Cameras,MotionPictures H 0  250Y(#(#5.29/ Y(#Y(# 6720 P Cameras,StillPicture H 0  240Y(#(#1.82Y(#Y(# 67300 P PhotographicProjectionEquipment0P (#P (#250Y(#(#3.52 Y(#Y(# 6740 P PhotographicDevelopingandFinishing   (  P Equipment H 0  240Y(#(#3.32Y(#Y(# 6750 P PhotographicSupplies H 0  250Y(#(#8.64Y(#Y(# 6760 P PhotographicEquipmentandAccessories0  240Y(#(#1.36Y(#Y(# 6780 P PhotographicSets,KitsandOutfits0  220Y(#(#3.24Y(#Y(# Az) xdEp xA q 6910 P TrainingAids H 0  200Y(#(#0.96}Y(#Y(# 6920 P ArmamentTrainingDevices0 H 0H(#H(#20 Y 3.22l(#(# 6930 P OperationTrainingDevices H   210 Y 0.62[Y(#Y(# #  vb##&% # %&v  6940 P CommunicationTrainingDevices0  210Y(#(#0.79JY(#Y(# #  v##&% # %&v  Az) xdE xA#  v#v  #v&% v#v %v&7010 P ADPEConfiguration H   80 Y #v&% v#v %v&#  vE#v  0.73(!^Y(#Y(# 7021 P ADPCentralProcessingUnit,Digital0  150Y(#(#0.73"MY(#Y(# 7022 P ADPCentralProcessingUnit,Hybrid0  15#< (#(# 7025 P ADPInput/OutputandStorageDevices0  13AY1.01#+!(#(# 7030 P ADPSoftware H 0  15AY0.97$"(#(# 7035 P ADPAccessorialEquipment H 0  13AY0.72% #(#(# 7040 P PunchedCardEquipment H 0  15AY0.87&$(#(# 7045 P ADPSuppliesandSupportEquipment0  11AY1.50' %(#(# 7050 P ADPComponents H 0  15AY0.95(!&(#(# Az) xdE xA  7105 P HouseholdFurniture H 0  10AY9.94 (#(# 7110 P OfficeFurniture H 0  10@Y16.20(#(# 7125 P Cabinets,Lockers,BinsandShelving0  20AY9.47 (#(# 7195 P Misc.FurnitureandFixturesHH'H0  #v&% v#v %v&10AY6.17 (#(# Az) xdE xA   7310 P FoodCooking,BakingandServing    (  P Equipment H 0  12AY5.40  (#(# 7320 P KitchenEquipmentandAppliances0  18AY5.60| (#(# Az) xdEj xA k  9(P H(P He9_񀀀 P  H _7420 P AccountingandCalculatingMachine  #v&% vG#v %v&12Electric/ w   (  P  H   15Manual0  1.46f (#(# 7439 P TypewritersandOfficeTypeComposing U   (  P Machines H   12Electric/   Dz   (  P  H   15Manual  6.10 "X  7450 P OfficeTypeSoundRecordingandReproducing G  (  P Machines H 0  120(#(#1.176(#(# 7460 P VisibleRecordEquipment H   0  2.26%(#(# 7490 P Misc.OfficeMachines H 0  120(#(#3.30(#(# Az) xdE xA  7710 P MusicalInstruments H 0  120(#(#14.67(#(# Az) xdE xA  7910 P FloorPolishersandVacuumCleaning    (  P Equipment H   0  5.72(#(# Az) xdE xA  8140 P AmmoandNuclearOrdnanceBoxes,Packages   (  P andSpecialContainers H 0  150(#(#12.33 (#(# #  vR##&% 8# %&v  8145 P SpecializedShippingandStorageContainers0  220(#(#6.55 !(#(# Az) xdE! xA !" 8340 P TentsandTarpaulins H 0  50(#(#4.86"$(#(# 8345 P FlagsandPennants H 0  50(#(#8.30#%(#(# 8415 P Clothing,SpecialPurpose H 85ff@10.81 u$& Az) xdEc% xA d%' 8820 P LiveAnimals,NotRaisedforFood83ff@55.05 p&) Az) xdE^' xA _' *  9320 P RubberFabricatedMaterials H 85ff@19.40 k(!, 9340 P GlassFabricatedMaterials H 85A4.14   9515 P ArmorPlate H LL710ff@19.00  9530 P MetalBar H LL710ff@47.51  9535 P MetalPlate H LL710ff@52.44   v&` hp x (#%'0*,.8135@8:<H?ACPFHKXMOR`TVYh[(P H#v&% v#v %v& 򀀀a񀀀a   y'H8@ HPX "%`'),h.03p57 :x<>(ACE0HJL8OQS@VXXӀ*Thereisnoexpectedusefullifeforthoseitemsleftblank.  u  #v&% vW#v %v&#  v#v  b   bG#v&% v#vw%v&>@  D .H#v&%vw#v !%v&APPENDIX4  8 J@% #v&%!v 4#v"%v&TaxTables   n 5p  5#v&%v"#(,(#(#(3H8rXH8X3 r TheestimatedFederalincometaxrates,   presentedforuseincomparisonsofcommercialandinhousecostestimates,arederivedfromtheDepartmentoftheTreasury'sInternalRevenueService1988CorporationSourceBookof e  StatisticsofIncome,Publication1053.    Theformulaforestimatingthetaxratesisbasedupontotalincomebeforecreditsdividedbythebusinessreceiptsforeachuniqueindustry.B" H8rXPXH8rXB  Thesetaxrateswillbeupdatedperiodically.v"%v&   @ 0 !! @5(#(#,Vo5      <% H8rXPX< @8  @ #v&%v"-#v"%v&TaxRateTable*  @  @  @H  @  @  @P #v&%v"r#v"%v&      #v&%v"#ԀTaxv"%v& M #v&%v"#CodeNo.0  Industry0(#(#Rate(%) @6"  @6" v"%v&O(#(#    #v&%v"]#ExtractiveIndustries  S -%-10010400  AgricultureProduction  0.8 W 10010600  AgriculturalServices  0.5  Y 20021010  MiningIronOres  3.8  [ 20021070  MiningCopper,Lead,Zinc,GoldandSilverOres  8.3  ] 20021098  MiningotherMetals  0.6 _ 20031150  CoalMining  1.1 a 20051430  Sand,Gravel,Dimension,CrushedandBrokenStone  2.2  c    @ Construction  "g 30061510  Generalbuilding(construction)  0.4 $k 30061531  Operativebuilders(construction)  0.8 %m  30071600  Heavyconstruction  0.8 &o!! 30081711  Plumbing,heating,airconditioning  0.4 !'q"" 30081731  Electricalwork  0.5 #(s## 30081798  Otherspecialtrades  0.5 %)u$$ @T 1      @ Manufacturing   40092010  Meatproducts  0.5   40092020  Dairyproducts  2.1   40092030  Preservedfruitsandvegetables  2.0    I40092040  Grainmillproducts  2.1   40092050  Bakeryproducts  1.1   40092060  Sugarandconfectioneryproducts  1.9  40092089  Bottledsoftdrinksandflavorings  2.1   40092096  Otherfoodandkindredproducts  0.9   40122315  Men'sandboy'sclothing  1.5   40122345  Women'sandchildren'sclothing  1.1   40122388  Otherapparelandaccessories  0.5   L40122390  Otherfabricatedtextileproducts  0.5  40132415  Logging,sawmillsandplaningmills  2.1  40132430  Millwork,plywood,relatedproducts  1.3   40132498  Otherwoodproducts  0.5 " 40142500  Furnitureandfixtures  1.1 $ 40152625  Pulp,paperandboardmills  2.8 & 40152699  Otherpaperproducts  2.4 ( 40162710  Newspapers(printingandpublishing)  3.7 * 40162720  Periodicals(printingandpublishing)  1.6 , 40162735  Books,greetingcardsandmiscellaneouspublishing  3.9 . 40162799  Commercialandotherprintingandprintingtradeservices  1.1 0 40172815  Industrialchemicals,plasticsmaterialsandsynthetics  3.3 2 40172830  Drugs  5.9  4 40172840  Soap,cleanersandtoiletgoods  2.1 !6 40172850  Paintsandalliedproducts  1.5 "8 40172898  Agriculturalandotherchemicalproducts  1.6 #: 40182998  Petroleumandcoalproducts,notelsewhereclassified  1.3 $< 40193050  Rubberproducts;plastics,footwear,hoseandbelting  1.6 %> 40193070  Miscellaneousplasticsproducts  1.0 &@  40203140  Leatherfootwear  1.3 'B!! 40203198  Leatherandleatherproductsnotelsewhereclassified  0.8 )D"" 40213225  Glassproducts  1.8  40213240  Cement,hydraulic  0.8  40213270  Concrete,gypsumandplasterproducts  1.4  40213298  Othernonmetallicmineralproducts  2.3   40223370  Ferrousmetalindustries;misc.primarymetalproducts  1.2   40223380  Nonferrousmetalindustries  1.1   40233410  Metalcansandshippingcontainers  1.9   40233428  Cutlery,handtoolsandhardware;screwmachine  2.2     products,boltsandsimilarproducts40233430  Plumbingandheating,exceptelectricandwarmair  2.0   40233440  Fabricatedstructuralmetalproducts  1.0   40233460  Metalforgingsandstamping  1.0   40233470  Casting,engravingandalliedservices  1.0   40233480  Ordnanceandaccessories,exceptvehiclesandguided  1.2     missiles    40233490  Miscellaneousfabricatedmetalproducts  1.0  40243520  Farmmachinery  1.2   40243530  Constructionandrelatedmachinery  1.6 " 40243540  Metalworkingmachinery  1.1 $ 40243550  Specialindustrymachinery  1.1 & 40243570  Officeandcomputingmachines  5.2 ( 40243598  Othermachinery,exceptelectrical  1.7 * 40253665  Radio,television,communicationequipmentv %v&Ԁ  1.3 , 40253670  Electroniccomponentsandaccessories  2.4 . 40253698  Otherelectricalequipment  2.2  40263710  Motorvehiclesandequipment  1.7   40273725  Aircraft,guidedmissilesandparts  3.0   40273730  Shipandboatbuildingandrepairing  0.8 ! 40273798  Othertransportationequipment,exceptmotorvehicles#v&% v#  1.3 " 40283815  Scientificinstrumentsandmeasuringdevices;watchesv %v&Ԁ#v&% vr#v %v&  4.0 #   andclocks#v&% v#   $ 40283845  Optical,medicalandophthalmicgoodsv %v&  2.9 % 40283860  Photographicequipmentandsupplies  2.5 &  40293998  Miscellaneousmanufacturingandmanufacturingnot#v&% v#  1.4 z' !   allocable |(!" Ї   @  @X  @  TransportationAndUtilities   50304000  Railroadtransportation  2.5  50304100  Localandinterurbanpassengertransit  0.4   50304200  Truckingandwarehousing  0.6   50304400  Watertransportation  1.2   50304500  Transportationbyair  2.0   50304600  Pipelines,exceptnaturalgas0  10.5 (#(# 50304700  Transportationservicesnotelsewhereclassifiedv %v&  0.4  50314825  Telephone,telegraphandothercommunicationservices#v&% v#  3.1   50314830  RadioandTelevisionbroadcasting  4.4   50324910  Electricservices  3.0   50324920  Gasproductionanddistribution  1.7    M50324930  Combinationutilityservices  3.0   50324990  Watersupplyandothersanitaryservicesv %v&  2.7  #v&% v/#   @  @X  @ WholesaleTrade    61335004  Groceriesandrelatedproducts  0.3  61345008  Machinery,equipmentandsupplies  0.6  61355010  Motorvehiclesandautomotiveequipment  0.6  61355030  Lumberandconstructionmaterials  0.3  61355050  Metalsandminerals,exceptpetroleumandscrap  0.7  61355060  Electricalgoods  0.5  61355070  Hardware,plumbingandheating  0.5  61355098  Otherdurablegoods  0.5  61355110  Paperandpaperproducts  0.4  ! 61355129  Drugs,chemicalsandalliedproducts  0.5 !# 61355130  Apparel,piecegoodsandnotions  0.6 "% 61355150  Farmproductrawmaterials  0.3 #' 61355170  Petroleumandpetroleumproducts  0.3 $) 61355180  Alcoholicbeverages  0.3 %+ 61355190  Miscellaneousnondurablegoods;wholesaletradenot  0.5 &-    allocable (1""    @ RetailTrade   m#62365220  Buildingmaterialsdealers  0.4  62365251  Hardwarestores  0.4   62365265  Gardensuppliesandmobilehomedealers  0.4   62375300  Generalmerchandisestores  1.1   62385400  Foodstores  0.3   62395541  Gasolineservicestations  0.2   62395598  Otherautomotivedealers  0.3  62405600  Apparelandaccessorystores  1.1   62415700  Furnitureandhomefurnishingsstores  0.8   62425800  Eatinganddrinkingplaces  0.6   62435912  Drugstoresandproprietarystores  0.6   62435921  Liquorstores  0.2   62435995  Otherretailstores  0.6  63445997  Wholesaleandretailtradenotallocable  0.3       @ Services  " a(80527000  Hotelsandotherlodgingplaces  1.0 & 80537200  Personalservices  0.8 ( 80547310  Advertisingservices  0.7 * 80547389  Businessservices,exceptadvertising  0.8 , 80557500  Autorepairandservices  0.7 . 80557600  Miscellaneousrepairservices  0.4 0 80567812  Motionpictureproduction,distributionandservices  1.8 2 80567830  Motionpicturetheaters  1.1  4 80567900  Amusementandrecreationservices,exceptmotion  1.4 !6   pictures80578015  Physicians'services  0.2 #: 80578021  Dentists'services  0.1 $< 80578050  Nursingandpersonalcarefacilities  0.2 %> 80578071  MedicalLaboratories  1.2 &@  80578099  Othermedicalservices  0.7 'B!! 80578111  Legalservices  0.2 )D"" 80578200  Educationalservices  0.5  80578980  Miscellaneousservices,notelsewhereclassifiedcv %v&c  0.5#  v"#v    ̀򀀀 J  *TaxRatesareinrelationtobusinessreceipts.**Doesnotreflectrevisionscontainedinthe1987StandardClassificationManual.  (k  NK = dd#v&% v^.#ee g@*gf  = f  :.P#&%%v&.#{&"%%&" = {#"%{&#{&"%#{B1#{ R5!"%{&APPENDIX5# !5!{ R1#v !!  8 #v&%!v 1#vw%v&#v&%vw*2#vXX%v&#XXXvX1#Xb7XXXOfficeofFederalProcurementPolicy(_OFPP_)PolicyLetter921,  ? "InherentlyGovernmentalFunctions"#XX7XXb2#vXXXX#v&%XvXm2#vw%v& #v&%vw3##&%%v&3#{&"%%&@@  !September23,1992 c     TOTHEHEADSOFEXECUTIVEDEPARTMENTSANDESTABLISHMENTS g  SUBJECT: InherentlyGovernmentalFunctions. i  0,X %0  335pm 5(,(#(#(1.  Purpose .Thispolicyletterestablishes   ExecutiveBranchpolicyrelatingtoservicecontractingandinherentlygovernmentalfunctions.ItspurposeistoassistExecutiveBranchofficersandemployeesinavoidinganunacceptabletransferofofficialresponsibilitytoGovernmentcontractors.2.0   Authority .Thispolicyletterisissuedpursuant  tosubsection6(a)oftheOfficeofFederalProcurementPolicy(OFPP)Act,asamended,codifiedat41U.S.C.405(a). VV 3.   Exclusions .Servicesobtainedbypersonnel F appointmentsandadvisorycommitteesarenotcoveredbythispolicyletter.3,X %,X 34.   Background .Contractors,whenproperlyused,  l provideawidevarietyofusefulservicesthatplayanimportantpartinhelpingagenciestoaccomplishtheirmissions.AgenciesuseservicecontractstoacquirespecialknowledgeandskillsnotavailableintheGovernment,obtaincosteffectiveservices,orobtaintemporaryorintermittentservices,amongotherreasons.̀Notallfunctionsmaybeperformedby e(#! contractors,however.Justasitisclearthatcertainfunctions,suchasthecommandofcombattroops,maynotbecontracted,itisalsoclearthatotherfunctions,suchasbuildingmaintenanceandfoodservices,maybecontracted.Thedifficultyisindeterminingwhichoftheseservicesthatfallbetweentheseextremesmaybeacquiredbycontract.AgencieshaveoccasionallyreliedoncontractorstoperformcertainfunctionsinsuchawayastoraisequestionsaboutwhetherGovernmentpolicyisbeingcreatedbyprivatepersons.Also,fromtimetotimequestionshavearisenregardingtheextenttowhichdefactocontrolovercontract 2- performancehasbeentransferredtocontractors.Thispolicyletterprovidesanillustrativelistoffunctions,thatare,asamatterofpolicy,inherentlygovernmental(seeAppendixA),andarticulatesthepracticalandpolicyconsiderationsthatunderliesuchdeterminations(seepara.7).̀Asstatedinparagraph9,however,thispolicyletterdoesnotpurporttospecifywhichfunctionsare,asalegalmatter,inherentlygovernmental,or_to2(#6 definethefactorsusedinmakingsuchlegaldetermination.Thus,thefactthatafunctionislistedinAppendixA,orafactorissetforthinparagraph7(b),doesnotnecessarilymeanthatthefunctionisinherentlygovernmentalasalegalmatterorthatthefactorwouldberelevantinmakingthelegaldetermination.9,X, %,X 9_O_5.   Definition .Asamatterofpolicy,an"inherently 8{ governmentalfunction"isafunctionthatissointimatelyrelatedtothepublicinterestastomandateperformancebyGovernmentemployees.ThesefunctionsincludethoseactivitiesthatrequireeithertheexerciseofdiscretioninapplyingGovernmentauthorityorthemakingofvaluejudgementsinmakingdecisionsfortheGovernment.Governmentalfunctionsnormallyfallintotwocategories:(1)theactofgoverning,i.e.,thediscretionaryexerciseofGovernmentauthority,and(2)monetarytransactionsandentitlement.̀Aninherentlygovernmentalfunctioninvolves,amongotherthings,theinterpretationandexecutionofthelawsoftheUnitedStatessoasto:  (a)bindtheUnitedStatestotakeornottotakesomeactionbycontract,policy,regulation,authorization,order,orotherwise;  #&%"%{&64#j{&"%%&j(b)determine,protect,andadvanceits !, economic,political,territorial,property,orotherinterestsbymilitaryordiplomaticaction,civilorcriminaljudicialproceedings,contractmanagement,orotherwise;  (c)significantlyaffectthelife,liberty,orpropertyofprivatepersons; $(g!    (d)commission,appoint,direct,orcontrolofficersoremployeesoftheUnitedStates;or  (e)exertultimatecontrolovertheacquisition,use,ordispositionoftheproperty,realorpersonal,tangibleorintangible,oftheUnitedStates,includingthecollection,control,ordisbursementofappropriatedandotherFederalfunds.̀Inherentlygovernmentalfunctionsdonotnormallyincludegatheringinformationfororprovidingadvice,opinions,recommendations,orideastoGovernmentofficials.Theyalsodonotincludefunctionsthatareprimarilyministerialandinternalinnature,suchasbuildingsecurity;mailoperations;operationofcafeterias;housekeeping;facilitiesoperationsandmaintenance,warehouseoperations,motorvehiclefleetmanagementandoperations,orotherroutineelectricalormechanicalservices.̀ThedetailedlistofexamplesofcommercialactivitiesfoundasanattachmenttoOfficeofManagementandBudget(OMB)Cir.No.A-76isanauthoritative,nonexclusivelistoffunctionsthatarenotinherentlygovernmentalfunctions.Thesefunctionsthereforemaybecontracted.6.   Policy .  8   (a)Accountability.Itisthepolicyofthe  %9 ExecutiveBranchtoensurethatGovernmentactionistakenasaresultofinformed,independentjudgmentsmadebyGovernmentofficialswhoareultimatelyaccountabletothePresident.WhentheGovernmentusesservicecontracts,suchinformed,independentjudgmentisensuredby:   D (1)prohibitingtheuseofservicecontractsfor $(g!@ "[ |1   theperformanceofinherentlygovernmentalfunctions(SeeAppendixA);    (2)providinggreaterscrutinyandanappropriateenhanceddegreeofmanagementoversight(seesubsection7(f))whencontractingforfunctionsthatarenotinherentlygovernmentalbutcloselysupporttheperformanceofinherentlygovernmentalfunctions(seeAppendixB);    (3)ensuring,inusingtheproductsofthosecontracts,thatanyfinalagencyactioncomplieswiththelawsandpoliciesoftheUnitedStatesandreflectstheindependentconclusionsofagencyofficialsandnotthoseofcontractorswhomayhaveintereststhatarenotinconcertwiththepublicinterest,andwhomaybebeyondthereachofmanagementcontrolsotherwiseapplicabletopublicemployees;and    (4)ensuringthatreasonableidentificationofcontractorsandcontractorworkproductsismadewheneverthereisariskthatthepublic,Congress,orotherpersonsoutsideoftheGovernmentmightconfusethemwithGovernmentofficialsorwithGovernmentworkproducts,respectively.  (b)OMBCircularNo.A-76.Thispolicyletter  doesnotpurporttosupersedeorotherwiseeffectanychangeinOMBCircularNo.A-76,PerformanceofCommercialActivities.  (c)DraftingofCongressionaltestimony, ;#3 responsestoCongressionalcorrespondence,andagencyresponsestoauditreportsfromanInspectorGeneral,theGeneralAccountingOffice,orotherFederalauditentity.Whiletheapprovalofa W'O  Governmentdocumentisaninherently ^(V!  governmentalfunction,itsdraftingisnotnecessarilysuchafunction.Accordingly,inmostsituationsthedraftingofadocument,orportionsthereof,maybecontracted,andtheagencyshouldreviewandrevisethedraftdocument,totheextentnecessary,toensurethatthefinaldocumentexpressestheagency'sviewsandadvancesthepublicinterest.However,eventhoughthedraftingfunctionisnotnecessarilyaninherentlygovernmentalfunction,itmaybeinappropriate,forvariousreasons,foraprivatepartytodraftadocumentinparticularcircumstances.BecauseoftheappearanceofprivateinfluencewithrespecttodocumentsthatarepreparedforCongressorforlawenforcementoroversightagenciesandthatmaybeparticularlysensitive,contractorsarenottobeusedforthedraftingofCongressionaltestimony;responsestoCongressionalcorrespondence;oragencyresponsestoauditreportsfromanInspectorGeneral,theGeneralAccountingOffice,orotherFederalauditentity.7.  Guidelines .Ifafunctionproposedforcontract 5 АperformanceisnotfoundinAppendixA,thefollowingguidelineswillassistagenciesinunderstandingtheapplicationofthispolicyletter,determiningwhetherthefunctionis,asamatterofpolicy,inherentlygovernmentalandforestallingpotentialproblems.  (a)Theexerciseofdiscretion.Whileinherently  $< governmentalfunctionsnecessarilyinvolvetheexerciseofsubstantialdiscretion,noteveryexerciseofdiscretionisevidencethatsuchafunctionisinvolved.Rather,theuseofdiscretionmusthave M(E!@ theeffectofcommittingtheFederalGovernmenttoacourseofactionwhentwoormorealternativecoursesofactionexist(e.g.,purchasingaminicomputerratherthanamainframecomputer,hiringastatisticianratherthananeconomist,supportingproposedlegislationratherthanopposingit,devotingmoreresourcestoprosecutingonetypeofcriminalcasethananother,awardingacontracttoonefirmratherthananother,adoptingonepolicyratherthananother,andsoforth).33ӀAcontractmaythusproperlybeawardedwherethecontractordoesnothavetheauthoritytodecideonthecourseofactiontobepursuedbutisrathertaskedtodevelopoptionstoinformanagencydecisionmaker,ortodeveloporexpanddecisionsalreadymadebyFederalofficials.Moreover,themerefactthatdecisionsaremadebythecontractorinperforminghisorherduties(e.g.,howtoallocatethecontractor'sownorsubcontractresources,whattechniquesandprocedurestoemploy,whetherandwhomtoconsult,whatresearchalternativestoexploregiventhescopeofthecontract,whatconclusionstoemphasize,howfrequentlytotest)isnotdeterminativeofwhetherheorsheisperforminganinherentlygovernmentalfunction.33  (b)Totalityofthecircumstances.Determining   whetherafunctionisaninherentlygovernmentalfunctionoftenisdifficultanddependsuponananalysisofthefactsofthecase.Suchanalysisinvolvesconsiderationofanumberoffactors,andthepresenceorabsenceofanyoneisnotinitselfdeterminativeoftheissue.Norwillthesameemphasisnecessarilybeplacedonanyonefactoratdifferenttimes,duetothechangingnatureofthe )!" Government'srequirements.̀Thefollowingfactorsshouldbeconsideredwhendecidingwhetherawardofacontractmighteffect,ortheperformanceofacontracthaseffected,atransferofofficialresponsibility:̀(1)Congressionallegislativerestrictionsorauthorizations.̀(2)Thedegreetowhichofficialdiscretionisorwouldbelimited,i.e.,whetherthecontractor'sinvolvementinagencyfunctionsisorwouldbesoextensiveorhisorherworkproductissofaradvancedtowardcompletionthattheagency'sabilitytodevelopandconsideroptionsotherthanthoseprovidedbythecontractorisrestricted.̀(3)Inclaimsadjudicationandrelatedservices,̀(_i_)thefinalityofanycontractor'sactionaffectingindividualclaimantsorapplicants,andwhetherornotreviewofthecontractor'sownisdenovo(i.e.,tobeeffectedwithouttheappellatebody'sbeingboundbypriorlegalrulingsorfactualdeterminations)onappealofhisorherdecisiontoanagencyofficial;̀(ii)thedegreetowhichcontractoractivitiesmayinvolvewide-ranginginterpretationsofcomplex,ambiguouscaselawandotherlegalauthorities,asopposedtobeingcircumscribedbydetailedlaws,regulations,andprocedures;̀(iii)thedegreetowhichmattersfordecisionbythecontractorinvolverecurringfactpatternsoruniquefactpatterns;and̀(iv)Thecontractor'sdiscretiontodetermineanappropriateawardorpenalty. (!B Ѐ(4)Thecontractor'sabilitytotakeactionthatwillsignificantlyanddirectlyaffectthelife,liberty,orpropertyofindividualmembersofthepublic,includingthelikelihoodofthecontractor'sneedtoresorttoforceinsupportofapoliceorjudicialfunction;whetherforce,especiallydeadlyforce,ismorelikelytobeinitiatedbythecontractororbysomeotherperson;andthedegreetowhichforcemayhavetobeexercisedinpublicorrelativelyuncontrolledareas.(Notethatcontractingforguard,convoysecurity,andplantprotectionservices,armedorunarmed,isnotproscribedbythesepolicies.)̀(5)Theavailabilityofspecialagencyauthoritiesandtheappropriatenessoftheirapplicationtothesituationathand,suchasthepowertodeputizeprivatepersons.̀(6)Whetherthefunctioninquestionisalreadybeingperformedbyprivatepersons,andthecircumstancesunderwhichitisbeingperformedbythem.̀(c)Finalityofagencydeterminations.Whether  ornotafunctionisaninherentlygovernmentalfunction,forpurposesofthispolicyletter,isamatterforagencydetermination.However,agencydecisionsthatafunctionisorisnotaninherentlygovernmentalfunctionmaybereviewed,and,ifnecessary,modifiedbyappropriateOMBofficials.̀(d)_Preaward_Ԁresponsibilities.Whethera B$: functionbeingconsideredforperformancebycontractisaninherentlygovernmentalfunctionisanissuetobeaddressedpriortoissuanceofthesolicitation. ^(V!  Ѐ(e)Post-awardresponsibilities.Afteraward, )!  evenwhenacontractdoesnotinvolveperformanceofaninherentlygovernmentalfunction,agenciesmusttakestepstoprotectthepublicinterestbyplayinganactive,informedroleincontractadministration.ThisensuresthatcontractorscomplywiththetermsofthecontractandthatGovernmentpolicies,ratherthanprivateones,areimplemented.Suchparticipationshouldbeappropriatetothenatureofthecontract,andshouldleavenodoubtthatthecontractisunderthecontrolofGovernmentofficials.Thisdoesnotrelievecontractorsoftheirperformanceresponsibilitiesunderthecontract.NordoesthisresponsibilitytoadministerthecontractrequireGovernmentofficialstoexercisesuchcontrolovercontractoractivitiesastoconvertthecontract,orportionthereof,toapersonalservicecontract.33ӀIndecidingwhetherGovernmentofficialshavelostormightlosecontroloftheadministrationofacontract,thefollowingarerelevantconsiderations:thedegreetowhichagencieshaveeffectivemanagementproceduresandpoliciesthatenablemeaningfuloversightofcontractorperformance,theresourcesavailableforsuchoversight,theactualpracticeoftheagencyregardingoversight,thedurationofthecontract,andthecomplexityofthetaskstobeperformed.̀(f)Managementcontrols.Whenfunctions 3#+< describedinAppendixBareinvolved,additionalmanagementattentiontothetermsofthecontractandthemannerofperformanceisnecessary.Howclosethescrutinyorhowextensiveorstringentthemanagementcontrolsneedtobeisforagenciestodetermine.Examplesofadditionalcontrolmeasures (!B _thatmightbeemployedare:33Ӏ(1)developingcarefullycraftedstatementsofworkandqualityassuranceplans,asdescribedinOFPPPolicyLetter91-2,ServiceContracting,thatfocusontheissueofGovernmentoversightandmeasurementofcontractorperformance;̀(2)establishingauditplansforperiodicreviewofcontractsbyGovernmentauditors;̀(3)conductingpreawardconflictofinterestreviewstoensurecontractperformanceinaccordancewithobjectivestandardsandcontractspecifications;̀(4)physicallyseparatingcontractorpersonnelfromGovernmentpersonnelattheworksite;and̀(5)requiringcontractorsto(a)submitreportsthatcontainrecommendationsandthatexplainandrankpolicyoractionalternatives,ifany,(b)describewhatprocedurestheyusedtoarriveattheirrecommendations,summarizethesubstanceoftheirdeliberations,(d)reportanydissentingviews,(e)listsourcesreliedupon,and/or(f)otherwisemakeclearthemethodsandconsiderationsuponwhichtheirrecommendationsarebased.33Ӏ(g)Identificationofcontractorpersonneland  acknowledgmentofcontractorparticipation.   Contractorpersonnelattendingmeetings,answeringGovernmenttelephones,andworkinginothersituationswheretheircontractorstatusisnotobvioustothirdpartiesmustberequiredtoidentifythemselvesassuchtoavoidcreatinganimpressioninthemindsofmembersofthepublicortheCongressthattheyareGovernmentofficials,unless,inthejudgmentoftheagency,noharmcancomefromfailingtoidentifythemselves.Alldocuments (!! orreportsproducedbycontractorsaretobesuitablymarkedascontractorproducts.33Ӏ(h)Degreeofreliance.Theextentofrelianceon  # servicecontractorsisnotbyitselfacauseforconcern.Agenciesmust,however,haveasufficientnumberoftrainedandexperiencedstafftomanageGovernmentprogramsproperly.Thegreaterthedegreeofrelianceoncontractorsthegreatertheneedforoversightbyagencies.WhatnumberofGovernmentofficialsisneededtooverseeaparticularcontractisamanagementdecisiontobemadeafteranalysisofanumberoffactors.Theseinclude,amongothers,thescopeoftheactivityinquestion;thetechnicalcomplexityoftheprojectoritscomponents;thetechnicalcapability,numbers,andworkloadsofFederaloversightofficials;theinspectiontechniquesavailable;andtheimportanceoftheactivity.Currentcontractadministrationresourcesshallnotbedeterminative.Themostefficientandcosteffectiveapproachshallbeutilized.̀(i)Exerciseofapprovingorsignatureauthority. 6 OfficialresponsibilitytoapprovetheworkofcontractorsisapowerreservedtoGovernmentofficials.Itshouldbeexercisedwithathoroughknowledgeandunderstandingofthecontentsofdocumentssubmittedbycontractorsandarecognitionoftheneedtoapplyindependentjudgmentintheuseoftheseworkproducts.8.   Responsibilities.  $> Ѐ(a)Headsofagencies.Headsofdepartmentsand & ? agenciesareresponsibleforimplementingthispolicyletter.Whilethesepoliciesmust_be !(!A :_ 1|   implementedintheFederalAcquisitionRegulation(FAR),itisexpectedthatagencieswilltakeallappropriateactionsintheinterimtodevelopimplementationstrategiesandinitiatestafftrainingtoensureeffectiveimplementationofthesepolicies.̀(b)FederalAcquisitionRegulatoryCouncil.  U Pursuanttosubsections6(a)and25(f)ofthe_OFPP_Act,asamended,41U.S.C.405(a)and421(f),theFederalAcquisitionRegulatoryCouncilshallensurethatthepoliciesestablishedhereinareincorporatedintheFARwithin210daysfromthedatethispolicyletterispublishedintheFederalRegister.Issuanceoffinalregulationswithinthis210-dayperiodshallbeconsideredissuance"inatimelymanner"asprescribedin41U.S.C.405(b).̀(c)Contractingofficers.Whenrequirementsare i developed,whensolicitationsaredrafted,andwhencontractsarebeingperformed,contractingofficersaretoensure:̀(1)thatfunctionstobecontractedarenotamongthoselistedinAppendixAofthisletteranddonotcloselyresembleanyfunctionslistedthere;̀(2)thatfunctionstobecontractedthatarenotlistedinAppendixA,andthatdonotcloselyresemblethem,arenotinherentlygovernmentalfunctionsaccordingtothetotalityofthecircumstancestestinsubsection7(b),above;̀(3)thatthetermsandthemannerofperformanceofanycontractinvolvingfunctionslistedinAppendixBofthisletteraresubjecttoadequatescrutinyandoversightinaccordancewithsubsection7(f),above;and̀(4)thatallothercontractiblefunctionsare $(g!  properlymanagedinaccordancewithsubsection7(e),above.̀(d)Allofficials.Whentheyareawarethat @" contractoradvice,opinions,recommendations,ideas,reports,analyses,andotherworkproductsaretobeconsideredinthecourseoftheirofficialduties,allFederalGovernmentofficialsaretoensurethat,theyexerciseindependentjudgmentandcriticallyexaminetheseproducts.9.   Judicialreview .Thispolicyletterisnotintended ? ) toprovideaconstitutionalorstatutoryinterpretationofanykindanditisnotintended,andshouldnotbeconstrued,tocreateanyrightorbenefit,substantiveorprocedural,enforceableatlawbyapartyagainsttheUnitedStates,itsagencies,itsofficers,oranyperson.ItisintendedonlytoprovidepolicyguidancetoagenciesintheexerciseoftheirdiscretionconcerningFederalcontracting.Thus,thispolicyletterisnotintended,andshouldnotbeconstrued,tocreateanysubstantiveorproceduralbasisonwhichtochallengeanyagencyactionorinactiononthegroundthatsuchactionorinactionwasnotinaccordancewiththispolicyletter.10. D  Informationcontact .Forinformation 7 regardingthispolicylettercontact RichardA._Ong_, 8 DeputyAssociateAdministrator,theOfficeofFederalProcurementPolicy,72517thStreet,_N.W._,Washington,DC20503.Telephone(202)395-7209 . "; (UPDATED8/1995contacttheBudgetAnalysis #< andSystemsDivision,OfficeofManagementandBudget,72517thStreet,_N.W._,Washington,DC20503.Telephone(202)395-6104. &- ? 11. Effectivedate. Thispolicyletteriseffective30 (E!@ daysafterthedateof_publication.  )L"A   Signedby 9 ЀALLANV._BURMAN_̀Administrator#&%"%{&D#lv&%%&lw%& 9 (,0VV(l  6 y '#wvwe#{#w#{&"%#{#{X/X"%{&  5 4!! 5(,(#(#(Qlk =e k  6 y l/wXXTX#{G/lvwwl  lq32S$vw2w$2S   2 !2w2 !!2 3333  l'lq3  l(,VV(lq3݌v !!2 v !!v    vw!v vwvw3333  #v&%vw#vw%v&q32S$vw2w$2S   2 !2w2 !!2 3333  q3  AppendixAto_OFPP_ԀPolicyLetter921q̖݌v !!2   p   vw!v 3333  q32S$vw2w$2S   2 !2w2 !!2 3333  q3ؗ  RQ  (,(#(#(Ҁ# !!2 #{ R5!! #{&"%5!{ R# Thefollowingisanillustrativelistoffunctions   consideredtobeinherentlygovernmentalfunctions:1 { R5!"{&qؗ݌v !5!{ R   ]   vw!v 3333  /wXXTXvwC/vww#v&%vw #1.Thedirectconductofcriminalinvestigations. %u  #&%%v&#+v&%XXTX%&+2.Thecontrolofprosecutionsandperformanceof =  adjudicatoryfunctions(otherthanthoserelatingtoarbitrationorothermethodsofalternativedisputeresolution).3.Thecommandofmilitaryforces,especiallytheleadershipofmilitarypersonnelwhoaremembersofthecombat,combatsupportorcombatservicesupportrole.4.Theconductofforeignrelationsandthedeterminationofforeignpolicy.5.Thedeterminationofagencypolicy,suchasdeterminingthecontentandapplicationofregulations,amongotherthings.6.ThedeterminationofFederalprogram_prioriies_orbudgetrequests.7.ThedirectionandcontrolofFederalemployees.8.Thedirectionandcontrolofintelligenceandcounter-intelligenceoperations.9.Theselectionor_nonselection_ԀofindividualsforFederalGovernmentemployment.10.TheapprovalofpositiondescriptionsandperformancestandardsforFederalemployees.vw%v& X%  #v&%vwş#3311.ThedeterminationofwhatGovernment p&! propertyistobedisposedofandonwhatterms(althoughanagencymaygivecontractorsauthority R(#  todisposeofpropertyatpriceswithinspecifiedrangesandsubjecttootherreasonableconditionsdeemedappropriatebytheagency).12.InFederalprocurementactivitieswithrespecttoprimecontracts,33  (a)determiningwhatsuppliesorservicesaretobeacquiredbytheGovernment(althoughanagencymaygivecontractorsauthoritytoacquiresuppliesatpriceswithinspecifiedrangesandsubjecttootherreasonableconditionsdeemedappropriatebytheagency);  (b)participatingasavotingmemberonanyϐsourceselectionboards;  (c)#&%%v&#{&"%%&Ԁapprovalofanycontractualdocuments,to - includedocumentsdefiningrequirements,incentiveplans,andevaluationcriteria;  (d)awardingcontracts;  (e)administeringcontracts(includingorderingϐchangesincontractperformanceorcontractquantities,takingactionbasedonevaluationsofcontractorperformance,andacceptingorrejectingcontractorproductsorservices);  (f)terminatingcontracts;and  (g)determiningwhethercontractcostsarereasonable,allocable,andallowable.13.TheapprovalofagencyresponsestoFreedomofInformationActrequests(otherthanroutineresponsesthat,becauseofstatute,regulation,oragencypolicy,donotrequiretheexerciseofjudgmentindeterminingwhetherdocumentsareto z(#= bereleasedorwithheld),andtheapprovalofagencyresponsestotheadministrativeappealsofdenialsofFreedomofInformationActrequests.14.Theconductofadministrativehearingstodeterminetheeligibilityofanypersonforasecurity  N clearance,orinvolvingactionsthataffectmattersofpersonalreputationoreligibilitytoparticipateinGovernmentprograms.  G 1,,0VV115.TheapprovalofFederallicensingactionsandinspections.16.Thedeterminationofbudgetpolicy,guidance,andstrategy..T17.Thecollection,control,anddisbursementoffees,royalties,duties,fines,taxesandotherpublicfunds,unlessauthorizedbystatute,suchastitle31_U.S.C_S.952(relatingtoprivatecollectioncontractors)andtitle31U.S.C.3718(relatingtoprivateattorneycollectionservices),butnotincluding:̀(a)collectionoffees,fines,penalties,costsorotherchargesfromvisitorstoorpatronsofmesshalls,postorbaseexchangeconcessions,nationalparks,andsimilarentitiesoractivities,orfromother D persons,wheretheamounttobecollectediseasilycalculatedorpredeterminedandthefundscollectedcanbeeasilycontrolledusingstandardcashmanagementtechniques,and̀(b)routinevoucherandinvoiceexamination.18.Thecontrolofthetreasuryaccounts.19.Theadministrationofpublictrusts.򀀀 $ 1{Z"%{&Withrespecttotheactualdraftingof < Congressionaltestimony,ofresponsestoCongressionalcorrespondence,andofagencyresponsestoauditreportsfromanInspectorGeneral,theGeneralAccountingOffice,orotherFederalauditentity,pleaseseespecialprovisionsinsubsection6.cofthetextofthepolicyletter,above.#{&"%Z{##&%"%{&b#v&%%& N" (,0VV(   L"   s v"%v& #"v"#{PC"  #{&"%C{P@#{ R5!"%{&AppendixBto_OFPP_ԀPolicyLetter921# !5!{ R#v !!   F   Ӏ#v&%!v #vw%v& ) 5p l !! 5#wvwm#{#w#{&"%#{װ#  (,(#(#(  Thefollowinglistisofservicesandactionsthatarenotconsideredtobeinherentlygovernmentalfunctions.However,theymayapproachbeinginthatcategorybecauseofthewayinwhichthecontractorperformsthecontractorthemannerinwhichtheGovernmentadministerscontractorperformance.Whencontractingforsuchservicesandactions,agenciesshouldbefullyawareofthetermsofthecontract,contractorperformance,andcontractadministrationtoensurethatappropriateagencycontrolispreserved.̀Thisisanillustrativelisting,andisnotintendedtopromoteordiscouragetheuseofthefollowingtypesofcontractorservices:331.Servicesthatinvolveorrelatetobudgetpreparation,includingworkloadmodeling,factfinding,efficiencystudies,andshould-costanalyses,etc.2.Servicesthatinvolveorrelatetoreorganizationandplanningactivities.3.Servicesthatinvolveorrelatetoanalyses,feasibilitystudies,andstrategyoptionstobeusedbyagencypersonnelindevelopingpolicy.4.Servicesthatinvolveorrelatetothedevelopmentofregulations.5.Servicesthatinvolveorrelatetotheevaluationofanothercontractor'sperformance.6.Servicesinsupportofacquisitionplanning.7.Contractors'providingassistanceincontractmanagement(suchaswherethecontractormightinfluenceofficialevaluationsofothercontractors). (#" 8.Contractors'providingtechnicalevaluationofcontractproposals.9.Contractors'providingassistanceinthedevelopmentofstatementsofwork.10.Contractors'providingsupportinpreparingresponsestoFreedomofInformationActrequests.11.Contractors'workinginanysituationthatpermitsormightpermitthemtogainaccesstoconfidentialbusinessinformationand/oranyothersensitiveinformation(otherthansituationscoveredbytheDefenseIndustrialSecurityProgramdescribedinFAR4.402(b)).12.Contractors'providinginformationregardingagencypoliciesorregulations,suchasattendingconferencesonbehalfofanagency,conductingcommunityrelationscampaigns,orconductingagencytrainingcourses.13.Contractors'participatinginanysituationwhereitmightbeassumedthattheyareagencyemployeesorrepresentatives.14.Contractors'participatingastechnicaladvisorstoasourceselectionboardorparticipatingasvotingornonvotingmembersofasourceevaluationboard.15.Contractors'servingasarbitratorsorprovidingalternativemethodsofdisputeresolution.16.Contractors'constructingbuildingsorstructuresintendedtobesecurefromelectroniceavesdroppingorotherpenetrationbyforeigngovernments.17.Contractors'providinginspectionservices.18.Contractors'providinglegaladviceandinterpretationsofregulationsandstatutestow(#A  d  =o   Governmentofficials.19.Contractors'providingspecialnon-lawenforcement,securityactivitiesthatdonotdirectlyinvolvecriminalinvestigations,suchasprisoner  detentionortransportandnon-militarynationalsecuritydetails.  @ 0 :!! @ #&%"%{&c#v&%%&vw%v&@        = (,VV(    #wvw#{#wVU#{&"%#{#{ R5!"%{&APPENDIX6 8 #{&"%5!{ RM#{#"%{&@ AviationCompetitions @*#w#{#vwwԀ 3   #v&%vw#  (,(#(#(5pw  5#&%%v&@#{&"%%&A.General    33  1.ThisAppendixprovidesguidanceforuseincostcomparisonsinvolvingtheprovisionofaircraftoraviationmanagementsupportservices.IthasbeenpreparedtoeasecompletionofcostcomparisonsconductedinaccordancewithOMBCircularA76andOMBCircularA126,"ImprovingtheManagementandUseofGovernmentAircraft,"datedMay22,1992.2.InaccordancewithOMBCircularA126,agenciesshouldconductapprovedcostcomparisonsbeforeretaining,purchasingorotherwiseprovidingFederalaircraftoraviationservicesnototherwiseexemptfromCircularA76(seePartI).Inreviewingaviationprograms,agenciesshouldconsiderthatalthoughanactivityormissionmaybeinherentlygovernmental,thetoolsneededtoperformtheactivityarenotnecessarilyinherentlygovernmental.Relatedaviationsupportservicesϐshouldbereviewed,inaccordancewiththisSupplement,forpossibleconversiontoorfrominhouse,contractor_interservice_Ԁsupportagreement(ISSA)performance.Leasesforaircraftof90daysormorearesubjecttotheseprinciplesandprocedures.3.Agenciesmayestimatelease,charter,orothercontractaviationsupportcoststhroughtheGeneralServicesAdministration's(GSA)FederalAviation r(#! ManagementInformationSystem(_FAMIS_)orotherpreapproveddatasources.ThisapproachavoidstheneedforformalsolicitationstoacquirecommercialbidsforcomparisonwithaninhouseGovernmentcostestimate.OtheraspectsoftheprocessdescribedinthisSupplementaremaintained.4.Whenanaviationcostcomparisonisconducted,theagencywillnotifyaffectedFederalemployeesandannouncethetentativecostcomparisondecisionintheCommerceBusinessDaily.The ?+ announcementwillinitiatetheA76AdministrativeAppealprocess.ThePerformanceRequirementsSummary,theManagementPlan,includingthecalculationofcommercialcosts,andtheaviationcostcomparisonformwillbemadeavailabletothepublicuponrequest.5.Appealsoftentativeaviationcostcomparisondecisionswillbedirectedtotheagency'sA76AdministrativeAppealAuthority,whowillconducttheappealasprovidedinPartIandPartIIofthisSupplement.6.TheseinstructionsincorporatethecostelementdefinitionsusedelsewhereinPartsIandIIofthisSupplement.Inaddition,thereareseveralcostdefinitionsthatpertaintoonlyaircraftandaviationservicesasprovidedbythisAppendix.7.Agencieswillprovidecopiesofeachaircraftor (#< aviationcostcomparisontotheGSAOfficeofAircraftManagementDivision,whencompleted,andtotheOfficeofManagementandBudget(OMB)uponrequestorasrequiredbyOMBCircularA11tojustifyaircraftpurchases. B.Policy   U 1.Agenciesshouldrelyoncommercialairlineorotheraviationservicestomeettheiraviationmissionandtransportationsupportneeds.2.Ingeneral,theoperationsofaircraftandaviationservicesarecommercialinnatureandarenotinherentlygovernmental.CertainGovernmentofficialsormissionsmayrequireenhancedlevelsofsecurity,bothonthegroundandintheair.Inmostcases,however,theaviation_indu_.X_stry_ԀcanaccommodatetheGovernment'sneedforservicesandforonboardsecuritydevices,specialflightprofiles,testingequipment,etc.3.Thenumberofaircraftownedorleasedbyanagencymaynotexceedthenumbernecessarytocarryoutdirectmissionrequirementsand,then,onlywherecommercialoperationsarenotascosteffectiveorarenotavailable,asdemonstratedbytheproceduresofthisSupplement.4.Thesizeandcapacityofagencyaircraftacquiredorleasedshouldnotexceedthatnecessarytocosteffectivelymeetmissionrequirements,includingthecrewandequipmentforthemissionflightprofiles. C.Theaviationmanagementplan  $K 1.TheManagementPlanforaircraftoraviationsupportservicesshouldconformtotheprinciplesandproceduresinPartIofthisSupplement.TheManagementPlanisstructuredtoidentifythelowest 5(x!  overallcosttothetaxpayerandtofullyconsiderGovernmentOwnedContractorOperated(_GOCO_)options.2.APerformanceWorkStatement(_PWS_)oraPerformanceRequirementsSummary(_PRS_)isapartoftheManagementPlan.Itshoulddefinethescopeofservices,workloaddataandperformancecriterianeededtomeetagencymissionrequirements.Itmaynotdescribeaspecifickindormakeormodelofaircraft.3.Agenciesshoulddetermineifequipmentand/orpersonnelcanbefittedtoacontractorcharter/rentalaircraftagreementthatresultsinalowertotalservicecosttotheGovernment.Equipmentrequirementsinclude,butarenotlimitedto,aircraft,ϐuniquenavigation,securecommunication,andflighttestdevices.4.GSA_FAMIS_Ԁdataassumethatthecontractorwillprovideallrelatedequipment,includingaircraft.Agenciesthatwishtousetheseaircraftcostcomparisonprocedures,undera_GOCO_arrangement,mayneedtosolicitadjustedrateschedulesfromavarietyofsources.Ifacceptableinformationsourcesarenotavailable,aformalcompetitionwithcommercialand/orISSAsourcesmaybenecessary.5.Ifthescopeofthecompetitionincludesnonaviationsupport(groundsupportactivities),thecostofsuchinhouse,contractorISSAsupportiscalculatedasprovidedinPartIIofthisSupplement. D.Thecostofgovernmentperformance  &H> ЀAlllabor,materialandfuelcostsareestimatedandescalatedasprovidedinPartIIofthis $(g!@ Supplement. E.Standardaviationoperationcostelements 9 variable  @ ЀThevariablecostsofoperatingaircraftarethosecoststhatvarydependingonhowmuchtheaircraftareused.Thespecificvariablecostelementsinclude:1. Fuelandotherfluids. Thesearethecostsof B aviationgasoline,jetfuel,andotherfluids,e.g.,engineoil,hydraulicfluids,andwatermethanol,consumedbyaircraft.Fuelcostsarethecostpergallontimesgallonsperhour.Engineoilandotherlubricantscanbeestimatedusingmanufacturers'estimatesoronthebasisofanhistoricpercentageofenginefuelcostperhour.2. Crew. Thecrewcoststhatvaryaccordingto  aircraftusageconsistoftravelexpenses,particularlyreimbursementofsubsistence,i.e.,perdiemandmiscellaneousexpenses,overtimecharges,andwagesplusbenefitsofcrewmembershiredonanhourlyorparttimebasis.3. AircraftLeaseorRental. Whenaircraftare   obtainedunderanopenendedarrangement,suchasanoncall(hourly/availabilityrate)basis,theassociatedleaseorrentalcostsareconsideredvariablecosts.4. Landingandtiedownfees(ifapplicable). !=  Landingandtiedownfeesthatarenotcommon #D costsandareassociatedwithaircraftusageareconsideredvariablecosts.TiedownfeesfYorstoringanaircraftatitsbaseofoperationsshouldbeconsideredafixedcost.Includethehistoricfeespaidorassessedperlanding,timeslandings,divided $(g!  byprojectedflighthours.̀5. Variablemaintenanceandspares. All 9! maintenanceactivitiesandpartscostsbasedonaircraftusearevariablecosts.Allnonscheduledmaintenanceandallnonscheduledmaintenanceinspectionsarealsovariablecosts.Maintenanceandinspectionactivitiesscheduledonacalendarintervalbasiswillbeconsideredfixed.Inadditiontothecostsofnormalmaintenanceactivities,variablemaintenancecostsincludeaircraftrefurbishment,suchaspaintingandinteriorrestoration,andcostsoforallowancesforperformingoverhaulsandmodificationsrequiredbyservicebulletinsandairworthinessdirectives. a. J - Maintenancelabor.󀀀Alllaborexpendedby Q. mechanics,exclusiveoftheoverhaulormajorrepairofcomponentsandengines.  b.Maintenanceparts.Thisincludesmaterialsand w1 partsconsumedinaircraftmaintenanceandinspections,exclusiveofmaterialsandpartsforengineoverhaul,aircraftrefurbishment,and/orrepairofmajorcomponents.Typicalitemsinthiscategoryaretires,instruments,avionics,generators,relays,pumps,brakes,filters,airframehardware,windows,interiors,paint,shafting,andbearingsnotinsidecomponentscoveredunderanoverhaul.  c.Maintenancecontracts.Thisincludesall ! : contractedcostsforunscheduledmaintenanceandformaintenancescheduledonaflyinghourbasisorbasedontheconditionofthepartorcomponent.  d.Engineoverhaul,aircraftrefurbishment,and %7> majorcomponentrepairs.Thesearethematerials &> ? andlaborcostsofoverhaulingengines,refurbishingaircraft,and/orrepairingmajoraircraftcomponents.  )L"A   e.Reserves.Thisisforoverhauling ! componentsofengines,andothermajorworkincludingpainting,refurbishmentoftheaircraftinterior,andexpensesnotrecognizedinothermaintenanceaccounts.  f.Addlines5athrough5eandenteronline5fforthetotalcostofdirectvariablemaintenanceandspares.̀6.Addlines1through4and5ftofindthetotaldirectoperationscostperflighthour.̀7.Entertheannualnumberofflighthoursfromthe_PWS_/_PRS_.̀8.Multiplythetotaldirectoperatingcostperflighthour(line6)bythenumberofflighthours(line7)tofindthetotaldirectoperatingcost. F.Standardaviationoperationcostelements  ЀFixed 󀀀Thefixedcostsofoperatingaircraftarethosethat  resultfromowningandsupportingtheaircraftanddonotvaryaccordingtoaircraftusage.̀9. Crew. Federalpilots/crewareoftenpaid 5 whetherornottheaircraftareflown.Thesefixedcrewcostsincludethesalaries,benefits,andtrainingcostsofcrewmemberswhoperformminimalaircraftmaintenanceorotheradministrativetasksthatcouldbeimpactedbyaconversiontocontractperformance.Alsoincludedinfixedcrewcostsarethecostsoftheircharts,personalprotectiveequipment,uniforms,andotherpersonalequipmentwhentheagencyisauthorizedtopurchasesuchitems.Nonaviationactivitiesperformedbypilots/crewthatwouldcontinueevenifoperationswereconvertedtocontractshouldnotbeincluded. F(!  10. Fixedmaintenance. Maintenanceand !  inspectionactivitiesarescheduledonacalendarintervalbasisandtakeplaceregardlessofwhetherorhowmuchtheaircraftareflown.Thesearefixedcosts,includinglaborandmaterial.  a.Maintenancelabor.Thisincludesallprojected  U% laborexpendedbymechanics,technicians,andinspectorsassociatedwithmaintenancescheduledonacalendarintervalbasis.Thiscategoryalsoincludescostsassociatedwithnonallocatedmaintenancelaborexpenses;i.e.,associatedsalaries,benefits,travel_expens_Wes,andtrainingcosts.Thesecostsshouldbeevenlyallocatedoverthenumberofaircraftinthefleet.  b.Maintenanceparts.Thisincludesallpartsand b. consumablesusedformaintenancescheduledonacalendarintervalbasis.  c.Maintenancecontracts.Thisincludesall 1 contractedcostsformaintenanceorinspectionsscheduledonacalendarintervalbasis.11. Aircraftlease. Whenaircraftareleasedfor90 4 daysormore,withaknownfee,utilizationrateorminimumreimbursementguarantee,theassociatedleasecostsareconsideredfixed.Includetheentireamountpaid.12. Depreciation. AsprovidedinPartIIofthis  %9 Supplement,aircraftandothermajorasset(hangar)depreciationcostsareaddedtoeachoptionyear.Aircrafthavefiniteeconomicorusefulservicelives.Depreciationisthemethodusedtospreadtheacquisitioncost,lessresidualvalue,overanasset'susefullife.Althoughthesecostsarenotdirectoutlaysasisthecasewithmostothercosts,itisimportanttorecognizethemforanalysis.Subtract )]"A _theresidual(notmarket)valuefromthetotaloftheacquisitioncostplusanycapitalimprovementsand,then,dividebytheremainingestimatedusefullifeoftheassetnotlessthanthecostcomparisonperiod.  a.  Theacquisitioncostisthevalueinitially  = recordedonagencyproperty/accountingrecordsatthetimeofacquisition.Iftheaircraftisacquiredthroughaninteragencytransfer,theacquisitioncostisthegreateroftheaircraftnetbookvalueplusthecostofreturningtheaircrafttoanairworthy,missionreadyconditionorthecommercialretailvalueofthataircraftinaveragecondition,asestablishedbytheAircraftBluebookPriceDigestorotherindustry 2u  standard.Ifitisamilitaryaircraftwithoutadirectcommercialequivalent,theacquisitioncostisequaltothemostcomparablecommercialequivalentplusthecostofreturningtheaircrafttoanairworthy,missionreadycondition.Thefollowingexplainstherelevantterms:̀b.Usefullife.󀀀Usefullifeistheestimated t periodduringwhichtheaircraftwillbeused.Ifanewaircrafthasanairframewithadesignlifeof10,000hoursandtheagencyexpectstoflytheaircraft500hoursperyear,theusefullifeistwentyyears.33Ӏc.Residualvalue.Residualvaluereflectsthe   historicallyexpectedconditionoftheassetattheendofitsusefullife.Itisthedollarvaluebelowwhichtheassetwillnotbedepreciated.Residualvalueisestablishedatthetimeofacquisition.Agencieswillselectthelessorofthefollowingmethodstocalculatetheresidualvalueofaircraft:̀(1)Assumea10percentresidualvalueforpurposesofcalculatingthedepreciablevalueofthe H(!! aircraftandannualdepreciationexpenses.33Ӏ(2)Selecttheaverageofthehistoricresaleπvalueofsimilaraircraftbyageandtype,asprovidedbyGSA.̀d.Reconstructions,conversions,  I% refurbishment,andcertificationofexmilitaryaircraft.󀀀Thesemaintenanceeffortsaddvalueor  W' prolongthelifeofaircraft.TheyarecapitalimprovementsthataddtotheNetBookValueoftheasset(acquisitioncostlessaccumulateddepreciation).Thisrevisedtotalvalueshouldthenbedepreciatedovertheremainingorextendedusefullifeoftheasset.̀e.Fullydepreciatedassets.Ifanassethas V . beenfullydepreciatedorhasexceededitsexpectedusefullife,recalculatethedepreciationschedulethroughtheendofthecostcomparisonperiod.13. Selfinsurancecosts. Aviationactivity 2 involvesrisks,potentialcasualtylossesandliabilityclaims.Theserisksarecoveredinthecommercialsectorbypurchasinginsurance,thecostsforwhicharecapturedwithintheGSAFAMISsystem.Actualorhistoricagencycostsarenotcomparablewiththecostsincludedinthecommercialbid(FAMIS)orrepresentativeoftheoverallcosttotheGovernmentasawhole.̀a.Agenciesshouldcalculateannualinhousehullaircraftcasualtyinsurancecostsbymultiplyingthe"BlueBook"ormarketvalueoftheaircraftbytheinsurancefactorsprovidedannuallybytheGeneralServicesAdministrationsAircraftManagementDivision.Enterthesecostestimatesonline13a.̀b.AgenciesshouldcalculateannualFederal )X"B aircraftliabilityinsurancecostsonthebasisofthenumberofaircraftseatstheagencyhasorwillinstall,includingpilots,overthecourseofthecostcomparisonperiod.EntertheaircraftliabilitycostdevelopedusingdataprovidedannuallybytheGeneralServicesAdministrationsAircraftManagementDivisiononline13b.̀c.AllotherinsurancecostsincurredintheperformanceoftheaviationserviceunderstudyarecalculatedinaccordancewithPartIIandenteredonLine13aor13b,asappropriate.̀d.Enterthetotalforallinsurance(sumoflines13athrough13c)onLine13d.14. Overhead. Thisincludesallcostsassociated l  withoperationalandadministrativeoverhead.AsdescribedinPartIIofthisSupplement,aviationmanagementoverheadcostsshallbecalculatedbyapplyingthestandardoverheadcostfactorof12percenttothetotaloflines2,5.a,9and10a.oftheAircraftandAviationCostcomparisonForm.EnterthetotalofthiscalculationonLine14.15. Costofcapitalorfinanceexpense.   Ѐa.ThecostofcapitalistheannualcosttotheGovernmentofacquiringthefundsnecessaryforcapitalinvestments.Thecostofcapitalisappliedtotheoutstandingbalanceoftheaircraftpurchasepriceforeachyearoftheperformanceperiod.̀b.TheannualcostofcapitalisincludedforanydepreciableassetacquiredlessthantwoyearspriortoorafterthecostcomparisonthatwillbeusedasapartoftheMEO.ThecostofcapitalisonlyapplicabletoassetsrequiredbytheMEOthatwillnotbeprovided(GOCO)tothecommercial $(g!  source.̀c.ThecostofcapitaliscalculatedbyapplyingOMBCircularA94"DiscountRatestobeUsedinEvaluatingDeferredCostsandBenefits,"plusanycapitalimprovements.̀d.Ifthepurchasepriceisunknown,asinthecaseofaforfeitedassetorinteragencytransfer,theacquisitioncostisthegreateroftheaircraftnetbookvalueplusthecostofreturningtheaircrafttoanairworthy,missionreadyconditionorthecommercialretailvalueofthataircraftinaveragecondition,asestablishedbytheAircraftBluebook M + PriceDigestorotherindustrystandard.Ifitisa T , militaryaircraftwithoutadirectcommercialequivalent,theacquisitioncostisequaltothemostcomparablecommercialequivalentplusthecostofreturningtheaircrafttoanairworthy,missionreadycondition.̀e.Aircraftacquiredthroughlease/purchasearrangementsarenotbeburdenedwiththecostofcapital.Thecostofcapitalisassumedtoexistinthelease/purchaseagreement.Atthetransferoftitle,depreciationexpenses,calculatedfromthethenexistentmarketpriceoftheaircraft,willbeincurred.16. TotalFixedOperatingCosts. Addlines9  8 through15andenteronline16.17. TotalInHouseMEOPerformanceCosts. !,:  Addlines8and16andenteronline17. "3;  G.Standardaviationoperationcostelements $K< ЀDevelopingthecostofcontractperformance. 18. Contractcost.  8&{> Ѐa.ThecomparablecostofcontractperformanceistobecalculatedontheAviation W(!@ CCF.̀b.Themostefficientcommercialcostofmeetingtheservicerequirementistobeenteredifasolicitationwasissuedrequestingformalbids.IfGSA/FAMISdataisbeingusedtoestimatecontractcosts,thisfigureisestablishedbyreviewingexistingcontractsandrental/charterflightrateinformationprovidedbyFAMISorfromotherGSAapprovedsources.̀c.Entertheestimatedtripcoststimesthenumberoftrips/missionsorthehourlyrateforthataircrafttimesthenumberofestimatedflighthoursfromthePWS/PRSonline19.IfFAMISdoesnotreflecttheaircraftservicesrequirements,andreasonablyaccuratecostscannotbeconstructedbyextrapolationfromtheFAMISdatabase,agenciesmayutilizeotherapproveddatasources.19. CostconstructiontomeetPWS/PRS. There  maybeotheradjustmentsnecessarytoestimatethecostofcontractperformanceusingGSA/FAMISdata.Thefollowingareothercoststhatmaybeconsideredandenteredtotheextentthattheyarenotcommoncostsorcostsincludedinthepublished/developedrates.Allsuchcostswillbefullyjustifiedandmadeavailableforpublicreview.#&%"%{&(#v&%%&Ԁa.DailyAvailability/Standby/GuaranteeHours.   #&%%v&#{&"%%&Ԁb.AdditionalPilotandCrewCharges. !, #&%"%{&U#{&"%%&Ԁc.AdditionalMaintenanceSupport. #D #&%"%{&#v&%%&Ԁd.AirframeAlteration/Equipment $\ Installation.#&%%v&Y#{&"%%&Ԁe.EquipmentNotProvidedbytheGovenment. I& Ѐf.AdditionalGroundServiceSupport.̀g.TravelandPerDiem. y(!  Ѐh.ServiceEquipmentMileage.̀i.AirportFees.̀j.Other.20. Contractadministration. Therewillbecosts & i# thattheagencyincursinadministeringthecontract.Thesecostsarerelevantonlyiftheydifferbetweeninhouseandcontractalternatives.AgenciesshouldrefertoPartII,Chapter3,Table31forguidance.21. Onetimeconversioncosts. SeePartII, Z( Chapter3ofthisSupplement.22. Gainfromdisposal/transferofassets. SeePart y * IIChapter3ofthisSupplement.23. Federalincometax. Multiplyline19as  , providedinAppendix5andenterasaϐsavings/revenuetotheGovernmentcausedbytheconversiontocontractperformance.24. Totalestimatedcostofcontractperformance. 0  Thiselementreflectsthetotaloflines18through24. 1  H.Aviationcostcomparisonofinhouseversus̀ContractororISSAperformance. 25. Inhouseperformancecosts. Dataistaken ,o5 fromLine17foreachyearofperformanceasestablishedinthePRS,butnotlessthanthreeyears.26. ContractororISSAperformance. Datais R 8 takenfromline24foreachyearofperformance.̀27. Conversiondifferential. AsprovidedinPart q": IIofthisSupplement,aconversiondifferentialequaltothelesserof;(1)10percentoftheinhousepersonnelrelatedcosts(totalofLines2,5.a,9and10.a.)or(2)$10millionovertheperformanceperiod,isaddedtothetotalcostofcurrentmethodofperformance.Entertheresultofthiscalculation (!@ onLine27.28. Adjustedtotalcostofinhouseperformance. 9  Ifthecostcomparisonisbeingconductedto @ determineifanaircraftoraviationserviceshouldbeconvertedfromcontractorISSAperformancetoinhouseoperation,theconversiondifferentialascalculatedabove(Line27)isaddedtotheInhouseperformancecostestimate(Line25,TotalColumnonly)andthesumisenteredunderAdjustedTotalCostofInHousePerformance(Line28).TheϐamountintheTotalColumnforLine26isreplicatedonLine29.29. Adjustedtotalcostofcontractperformance. If T  thecostcomparisonisbeingconductedtodetermineifanaircraftoraviationserviceshouldbeconvertedfrominhouseoperationtocontractorISSAperformance,theconversiondifferentialascalculatedabove(Line27)isaddedtotheContractperformancecostestimate(Line26,TotalColumnonly)andthesumisenteredunderAdjustedTotalCostofContractPerformance(Line29).TheϐamountintheTotalColumnforLine25isreplicatedonLine28.30. Decision. SubtractLine28fromLine29and  entertheresultonLine30.ApositiveamountonLine30supportsadecisiontoperformtheaircraftandaviationsupportactivitywithinhouse !  resources.AnegativeamountonLine30supportsadecisiontoaccomplishtheworkwithcontractresources.31. Costcomparisondecision. Indicateinthe  G appropriateblockonline31thedecisionsupportedbyline30.̀a.Iftheresultofthecomparisonisadecisiontoaccomplishtheworkwithcontractresourceandthatdecisionisaffirmedafteradjustmentsbythepublicreview,theagencywill:̀(1)ExpandthePerformanceRequirementsSummarydevelopedundertheaviationmethodologytomeettherequirementsofaPerformanceWorkStatement.̀(2)Issueaformalsolicitationforbidsfromthecommercialsectorandconverttocontract.̀b.Ifthedecisionoftheaviationcostcomparisonistoaccomplishtheworkwithinhouseresources,andthatdecisionisaffirmedafteradjustmentsbythepublicreview,theagencywillannouncethefinaldecisionintheCommerce . BusinessDaily.  /   TheresultswillberecordedintheOMBCircularA76trackingsystem.  (1 _  @2 @s t 0!!! @5(#(#,V5#&%"%{&#2&%%&@ THEA76AIRCRAFTANDAVIATIONCOSTCOMPARISONFORM  2n%2&DIRECTOPERATIONCOSTPERFLIGHTHOUR(_PFH_)#2&%2n+#  0 2n%2&1.Fueland_and_ԀOtherFluids0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#$____  (# (# 2.Crew(_PFH_)0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#_____  (# (# 3.AircraftLeaseorRental0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#_____  (# (# 4.LandingandTieDownFees(Ifapplicable)0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#_____  (# (# 5.VariableMaintenanceandSpares?,X, ,X, ?Ӏa.MaintenanceLabor@$___perhourmultipliedby___manhours_PFH_0 p _____]p(#p(# ?,X, ,X, ?Ӏb.MaintenanceParts0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#_____E  (# (# Ѐc.MaintenanceContracts0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#_____-p  (# (# Ѐd.Engineoverhaul,etc0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#_____X  (# (# Ѐe.Reserves0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#_____@  (# (# Ѐf.Totalvariablemaintenancecost0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#_____(  (# (# 6.TotalDirectOperatingCostPerFlightHour0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#_____  (# (# 7.FlightHoursfor_PWS_.0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#_____  (# (# 8.TOTALDIRECTOPERATINGCOST(line6xline7)0  0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#$____ (# (#  FIXEDOPERATINGANNUALCOST  m 9.Crew0  0X(#(#0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#_____U (# (# 10.FixedMaintenancèa.MaintenanceLabor0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#_____%h (# (# Ѐb.MaintenanceParts0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#_____ P (# (# Ѐc.MaintenanceContracts0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#_____8 (# (# 11.AircraftLease0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#_____  (# (# 12.Depreciation0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#_____ (# (# 13.SelfInsurancèa.Hull0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#_____ (# (# Ѐb.Liability0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#_____}  (# (# Ѐc.Other̀c1.Casualty0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#_____M" (# (# Ѐc2.PersonnelLiability0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#_____5#x (# (# Ѐd.TotalSelfInsurance0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#_____$`  (# (# 3314.Overhead0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#_____%H! (# (# 15.CostofCapitalorFinanceexpense0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#_____%" (# (# 16.TOTALFIXEDOPERATINGANNUALCOST(Lines9thru15)0 D 0pD(#D(#0p(#p(#0 (#(#0 (# (#$____' $ (# (# 17.TOTALINHOUSEPERFORMANCECOST(Lines8+16)0  0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#$____](!% (# (#  3)v"&  33CONTRACTAVIATIONOPERATIONSCOSTWORKSHEET   18.Contract(_PFH_Ԁtimesnumberofhours)0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#$____ (# (# 19.Costconstructiontomeet_PWS_̀a.Dailyavailability/guaranteehours0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#_____u  (# (# Ѐb.Additionalpilotandcrewcharges0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#_____]  (# (# Ѐc.Additionalmaintenancesupport0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#_____E  (# (# Ѐd.Airframealteration/equipmentinstallation0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#_____- p (# (# Ѐe.EquipmentnotprovidedbyGovernment0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#_____ X (# (# Ѐf.Additionalgroundservicesupport0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#_____ @ (# (# Ѐg.Travelandperdiem0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#_____(  (# (# Ѐh.Serviceequipmentmileage0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#_____  (# (# Ѐ_i_.Airportfees0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#_____  (# (# Ѐj.Other0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#0@ % %_____  (# (# 20.ContractAdministration0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#_____ @L"   (# (# 21.OnetimeConversion0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#_____m  (# (# 22.GainonDisposal/TransferofAssets(deduct)0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#(____)U  (# (# 23.Federalincometax(deduct)0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (#(____)= (# (# 24.TOTALCONTRACTPERFORMANCECOST 0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0 (#(#0 (# (# $____%h (# (# @Z Z  #2&%2n[,#2 %2&INHOUSEVERSUSCONTRACTPERFORMANCE   #2&% 2P#2n%2&     X   Performanceperiods    󀀀 X   1st2nd3rd_Add'l_ԀTOTAL  ?,X,-%,X, ?25.Inhouseperformance0 X 0X(#X(#$______$______$______$______$______h(#(# 26.Contractperformance0 X 0X(#X(#$______$______$______$______$______P(#(# 27.ConversionDifferential0 X 0X(#X(# D  p 0(#(#0-(#(#$_____8 {-(#-(# 28.AdjustedTotalCostofInHousePerformance0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(# - $______ !c(#(# 29.AdjustedTotalCostofContractPerformance0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0-(#(#$______"K-(#-(# 30.DecisionLine29minusLine28:0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0-(#(#$______"3-(#-(# 31.COSTCOMPARISONDECISION:AccomplishWork̀Inhouse(+)0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0-(#(#______$!-(#-(# ЀContract()0 X 0X(#X(#0D(#(#0pD(#D(#0p(#p(#0-(#(# ______ %"-(#-(# B ,z X, ,X,-SB 32.InHouse_MEO_ԀCertifiedBy:0 z 0Xz (#z (#__________________________Date:_______x' $X(#X(#      z  X __________________________ H)"&      z 0 X OfficeandTitleX(#X(# 0  0(#(#"Icertifythat,tothebestofmyknowledgeandbelief,theinhouseorganizationreflectedinthiscostcomparisonisthemostefficientandcosteffectiveorganizationthatisfullycapableofperformingthescopeofworkandtasksofthe_PWS_/_PRS_.IfurthercertifythatIhaveobtainedfromtheappropriateauthorityconcurrencethattheorganizationalstructure,asproposed,canandwillbefullyimplementedsubjecttothiscostcomparison,inaccordancewithallapplicableFederalregulations. (#(#   33.InHouseCostEstimatePreparedBy:0 X ___________________Date:________ X(#X(# 34.IndependentReviewer:0 z 0Xz (#z (#____________________Date:________ X(#X(# ̀0 z 0Xz (#z (#_________________________Y X(#X(#      z  X OfficeandTitle0  0(#(#"IcertifythatIhavereviewedthe_PWS_/_PRS_,ManagementPlan,Inhouseand_GDS_/_FAMIS_Ԁcostestimatesandsupportingdocumentationavailablepriortobidopeningandtothebestofmyknowledgeandabilityhavedeterminedthat:(1)theabilityoftheinhouse_MEO_Ԁtoperformtheworkcontainedinthe_PWS_/_PRS_Ԁattheestimatedcostsincludedinthiscostcomparisonisreasonablyestablished,(2)thattheselectionandinclusionofcontractperformancecostsarereasonableand,(3)thatallcostsenteredonthecostcomparisonhavebeenpreparedinaccordancewiththeprinciplesandproceduresofCircularA76anditsSupplement." (#(# 35.CostComparisonCompletedBy:________________Date:_______36.ContractingOfficer:________________Date:_______37.TentativeCostComparisoǹDecisionAnnouncedBy:________________Date:_______38.AppealAuthority(ifapplicable):________________Date:_______  T! [Z#2&%2nQ#2w%2& l  #2&%2w\c#2"%2&APPENDIX7 p  #2&%2"c# @@33MotorVehicleCompetitions  #  ^   A.  General  S      ThisAppendixprovidesjointguidancebyOMBandGSAforuseincostcomparisonsinvolvingthe  k provisionofmotorvehiclefleetmanagementservices.Itappliestoconversionstoorfrominhouse,contractor_interservice_Ԁsupportagreement(ISSA).Agenciesshouldconsiderthecosts,benefitsandfeasibilityofusingtheagency'sfleetmanagementsystem,theGSAInteragencyFleetManagementSystem(_IFMS_),otherISSAprovidersandqualifiedcommercialmanagementproviders. B.   Specific O     1.  MotorVehiclecostcomparisonswillcomplywithPartIandPartIIofthisSupplement,andas g  discussedinthisAppendix.  2.  CostcomparisonsshoulddistinguishbetweenthebenefitsofcentralizedGovernmentvehicle  acquisitionandthepotentialbenefitsoffleetacquisition,operation,maintenance,anddisposalmanagementsupportservices.Solicitationsshouldpermitormayrequire_offerors_Ԁtocompetevehicleassetcostsseparatelyfromfleetmanagementservices.m񀀀  m  3.  InaccordancewithPartI,Chapter2ofthisSupplement,allgovernment_offerors_Ԁparticipatingina  costcomparisonconductedundertheseprocedureswillcertifythattheirperformancecostestimatesorreimbursableratesarecalculatedinaccordancewiththisSupplement.  4.  Agenciesmayincludealloftheirfleetrequirements,includingthosecurrentlybeingmetbythe ) GSA/_IFMS_Ԁorprivatesector.VehiclescurrentlyprovidedbytheGSA/_IFMS_Ԁmaybeincludedintheagency'sinhousecostestimateas_IFMS_Ԁvehicles. C.  Developingtherequestingagency'sinhousemotorvehiclefleetmanagementcosts O    1.  Therequestingagency'sinhousecostsarecalculatedasprovidedinPartsIandIIofthisSupplement !g andenteredonLines1through6asappropriate.Careshouldbetakentoseparatevehicleassetcosts(costofvehicles)fromvehicleacquisitionandotheradministrativemanagementsupportcosts. D.   Developingcomparablemotorvehiclefleetcosts =$    1.  Competitionsbetweenarequestingagency,privatesector_offeror_,theGSA/_IFMS_ԀoranotherISSA U%  _offeror_Ԁmayrequirethattherequestingagencymakecertainadjustmentsinscopeandcosttoensurethatthecostcomparisonisequitable.Thesescopeandcostadjustments,asdiscussedbelow,include:    ContractPrice {(#!     ContractAdministrationCosts      AdditionalCosts      OnetimeConversionCosts 0     Gain/LossonDisposal/TransferofAssets H     FederalIncomeTaxes  `     OtherAdjustmentCosts ( x     MinimumDifferential @   ]  2.  Contractprice(Line9andLine16).Thecontractpriceisthepriceproposedbythelowestpriced, X  andfullyqualifiedcommercial_offeror_,other_IFMS_,orISSA_offeror_.Thiswillbeobtainedbyissuingasolicitationrequestingoffers.Theagencyshouldbecarefulthatthesolicitationaccuratelydescribesitsfleetmanagementneeds.  3.  Contractadministrationcosts(Line10andLine17).Includecosts,asappropriatefromPartIITable   31.  4.  Onetimeconversioncosts(Line11andLine18).       a.Onetimeconversioncostsmayresultwhenacontractor,_IFMS_ԀorISSA_offeror_Ԁtakesovertheoperationofthefleet.ThiscaninvolvethecostsofthetransferofGovernmentownedsuppliesortemporarylaborcostsincurredtofacilitatethetransitiontoanewfleetmanager.    b.Whenitemsofmaterialbecomeavailablefortransfertothecontractor,_IFMS_ԀorISSA,materialrelatedconversioncostsmayresult.Ifmaterialsconsumedasapartoftherequestingagency's_MEO_Ԁareclearlyidentifiedinthe_PWS_Ԁtobetransferredtothecontractor,_IFMS_ԀorISSA_offeror_,thevalueofthosematerialsandsuppliesarecommoncostsandnotconsideredapartofthecomparison.    c.If,however,thosesamematerialsarenottobeprovidedtothecontractor,_IFMS_ԀorISSA_offeror_,butareinsteadtobetransferredtoanotheragencylocationor_excessed_,thevalueofthatmaterialshouldbesubtractedfromthecontract,_IFMS_,orISSAoffersasanetsavingstotheGovernmentresultingfromtheconversion.  5.  Gainondisposalofassets(Line12andLine19). <     a.Ifanagencyrequiresthecontractor,_IFMS_ԀorISSAtoreplaceexistingGovernment(agency)ownedvehicles(assets)byaspecificdate,theprojectedfairmarketvalueofthoseexistingassets,asestablishedbygenerallyavailableindustryguides,aresubtractedfromthecontractor's,_IFMS_ԀorISSA'scostestimates.Thesevaluesrepresentanet"savings"causedbyconversion.    b.Agenciesmayprovidethatvehiclereplacementbythecontractor,_IFMS_ԀorISSA_offeror_ԀwillbeinaccordancewiththeGovernment'sexistingor_MEO_Ԁreplacementschedule.Inthiscase,allpartiestothecompetitionshouldassumereplacementatthesamerate.ValuesfromexistingfleettotheGovernmentapplytoallalternativesequally.    c.Agenciesmayalsocontinuetoprovidevehiclesforcontractor,_IFMS_ԀorISSAfleetmanagement.Noadjustmentsarenecessary.    d.Finally,agenciesmayrequirereplacementbythecontractor,_IFMS_ԀorISSAandmayallowtheagency,_IFMS_ԀorISSA_offeror_ԀtosimplyassumeownershipoftheexistingfleetasFederalagencies.Inthiscase,theagency,_IFMS_ԀorISSA_offeror_Ԁreceivesagainandaconsiderablecompetitiveadvantageoverthecontractbidestimatedatthefairmarketvalueoftheexistingfleet.Anamountequaltothefairmarket -2)' valueoftheexistingfleetisaddedtotheagency,_IFMS_ԀorISSAoffer`atLine19forcostcomparison  purposes.  6.  Federalincometax(Line13andLine20).  Ђ    a.AgenciesshouldrecognizethecurrentcontractsupportidentifiedinLine6,above.CalculatethetotalFederalIncomeTax,baseduponthecontractor'soffer(Line9)andAppendix5,TaxRateTable.Subtractfromthecontractor'sestimatedtaxliabilitytheFederaltaxespaidwithintheinhousecostestimate(estimatedfromtheappropriateshareofLine6andasdescribedintheManagementPlan)andentertheremainder.    b.Thesametreatmentmaybeaffordedtothe_IFMS_ԀISSAoffer,ifthe_IFMS_Ԁcertifiesthevalueofitscontractsupportcontainedwithinitsoverallcostestimate.Thisestimatemustbeavailabletotherequestingagency'sIndependentReviewOfficerforreviewandconcurrence.  7.  Conversiondifferential(Line7,Line14andLine21). p Thestandardminimumdifferential,as A  providedinPartIIofthisSupplement,shallbeappliedtothecontract,_IFMS_ԀandISSAoffers.Ifthecostcomparisonisbeingconductedtodetermineifmotorvehiclefleetmanagementservicesshouldbeconvertedfromcontract,_IFMS_ԀorISSAperformancetoinhouseagencyoperation,theconversiondifferentialisadded(onLine7)totheinhouseperformancecostestimate.Ifthecostcomparisonisbeingconductedtodetermineifmotorvehiclefleetmanagementservicesshouldbeconvertedfrominhouseoperationtocontract,_IFMS_ԀorISSAperformance,theconversiondifferentialisadded(onLine14andLine21)tothecontract,_IFMS_ԀorISSAperformancecostestimates.  8.Other_IFMS_/ISSAscopeadjustments(Line22).      a.ItisnottheintentofthisSupplementtorequirethe_IFMS_ԀorotherpotentialISSA_offerors_Ԁtoaltertheirmethodsofoperationtoprovideuniqueorsitespecificservices.Whilesuchservicesmaymeetagencymissionsandmaylegitimatelybeincludedinthesolicitation,additionaladjustmentstothe_IFMS_/ISSAcostestimatemaybenecessarytoreflectdifferencesinthebids.Examplesofsuchservicesinclude:dispatching,vehicletransition,maintenanceworkwarranties,certaindisposalservices/costs,accessoryinstallationsandremovals,tirereplacements,etc.    b.Agenciesshouldidentifythedifferencesbetweentherequirementsofthesolicitation(contractorbid)andthe_IFMS_/ISSAcostestimates.Theagencydeterminesifanyitemorcombinationofitemswillimpacttheagency'sabilitytoperform.Iftheagency'sabilitytoperformwouldbeadverselyimpacted,the_IFMS_/ISSAcostestimatesmayberejectedasnonresponsive.Ifthedifferenceswillhaveminimalagencyperformanceimplications,and/orcancontinuetobeperformedbyagencypersonnel,the_IFMS_/ISSAcostestimateswillbeadjustedforpurposesofcomparisonwiththecontractorand_MEO_Ԁoffers,baseduponthecomparablecostscontainedintheagency's_MEO_.    c.Acompleterecordofalladjustmentstothecontractor's,_IFMS_ԀandISSA'scostestimatesshould bemaintainedandmadeavailabletothepublicuponrequest. &(v#"  \E.   Motorvehiclecostcomparison     1.  AMotorVehicleCostComparisonForm(_MVCCF_)hasbeendeveloped.Useofthisformwillhelp  agenciesmovethroughthecostcomparisoninastructuredmanner.TheFormhasbeensetupwithfivesections.Eachsectionrelatestoadifferentsetofcostsortotheevaluationitself.Withineachsection,theappropriatecostelementshavebeenshown.  2.  Eachcostlistedisprojectedforallperiodsofthecostcomparison.Thefirstyearwillreflectcurrent  E estimatedcosts.Foreachofthefollowingyears,theinflationfactorsprovidedbythisSupplementshallbeusedforeachelementofcostthatisaffectedbyinflation.Aminimumofoneyearandthreeoptionyearswillbeusedforcomparativepurposes.  3.  Withthecompletionofthe_MVCCF_,theagencymayevaluatethealternatives.Inordertodothis, /r  thetotalLines(Lines8,15and23)shouldbeenteredonLines24,25and26,respectively.ThedecisionisbaseduponthelowestoverallcosttotheGovernmentovertheminimumfouryearcostcomparisonperiod.Enterthedecisionasappropriate.  \   /@MMTHEA76/MVCOSTCOMPARISONFORMFORMOTORVEHICLEFLEETS        z  X    D 2n%2&PerformancePeriods(FiscalYears)  H H" ,z X, ,%,z X, HӀ0 z 0Xz (#z (#0X(#X(#Base D Option  Option0 (#(#Option0x (# (#Option 0x(#x(#  A. ` DEVELOPMENTOFINHOUSECOSTS  X 0  Year p _Yr_Ԁ10(#(#_Yr_Ԁ20 (#(#_Yr_Ԁ30L (# (#_Yr_Ԁ40xL(#L(#Total  !  x(#x(#   1.  Personnel     2.  Material     3.  OtherDirect    4.  CostofCapital u    5.  Overhead ]    6.  Additional E    7.  ConversionDifferential -p       z  X     8.  TotalInhouse0 z 0Xz (#z (#  _____0pX(#X(#_____0p(#p(#_____0 (#(#_____0x (# (#_____0 x(#x(#_____#n2n2+#2nn@  (# (#  B. 0  DEVELOPMENTOFCONTRACTCOSTS (#(#   9.  ContractPrice    10.  ContractAdministration    11.  OnetimeConversion    12.  GainonDisposal m   13.  FederalIncomeTaxes0 z 0Xz (#z (#()0X(#X(#()0p(#(#()  ()0 p(#p(#()0x (# (#()Ux(#x(#   14.  ConversionDifferential =      z  X   #n2n1#2nn  15.  TotalAdjustedContractPrice0 X   _____0pX(#X(#_____0p(#p(#_____0 (#(#_____0x (# (#_____0 x(#x(#_____#n2n#2nn P (# (#  C.   DEVELOPMENTOF_IFMS_Ԁand/orISSACOSTS    D  p            16.  _IFMS_/ISSAcostestimate    17.  ContractAdministration     18.  OnetimeConversion !   19.  GainonDisposal }"   20.  FederalIncomeTaxes0 z 0Xz (#z (#()0X(#X(#()0p(#(#()  ()0 p(#p(#()0x (# (#()e#x(#x(# #n2n#2nn  21.  ConversionDifferential M$    22.  OtherScopeAdjustments 5%x!      z  X   #n2n#vnn  23.  TotalAdjusted_IFMS_ԀorISSAPrice0 X 0X(#X(#_____0p(#(#_____0p(#p(#_____0 (#(#_____0x (# (#_____0 x(#x(#_____ @L" 'H # (# (#  _nn ("% D.   COSTCOMPARISON   c  24.  InHouse z  X    D  p        L  x    _____    25.  Contract z  X    D  p        L  x   0 _____#nvn#2nn (# (#   26.  _IFMS_Ԁand/orISSA z  X    D  p        L  x r񀀀r0  0 (#(#_____#n2n{#2nnu  (# (#  qqooqppqE.   DECISION E     _____ z RetainInHouse - p   _____ z Contract  X   _____ z ConsolidatetoGSA/_IFMS_ԀorISSA  @   _____ z ConvertfromContractto:Inhouse,_IFMS_ԀorISSA  (   27.InHouse_MEO_ԀCertifiedBy:0 z __________________________Date:_______ z (#z (# ̀0 z __________________________ z (#z (#      z OfficeandTitle0  0(#(#"Icertifythat,tothebestofmyknowledgeandbelief,theinhouseorganizationreflectedinthiscostcomparisonisthemostefficientandcosteffectiveorganizationthatisfullycapableofperformingthescopeofworkandtasksrequiredbythePerformanceWorkStatement.IfurthercertifythatIhaveobtainedfromtheappropriateauthorityconcurrencethattheorganizationalstructure,asproposed,canandwillbefullyimplementedsubjecttothiscostcomparison,inaccordancewithallapplicableFederalregulations. (#(# 28.InHouseCostEstimatePreparedBy:0 X _________________________Date:________iX(#X(# 29.IndependentReviewer:0 z 0Xz (#z (#_________________________Date:________9|X(#X(# ̀0 z 0Xz (#z (#_________________________ LX(#X(#      z  X OfficeandTitle     z  X    D  p        L  x     ! 0  0(#(#"IcertifythatIhavereviewedthe_PWS_,ManagementPlan,Inhouse,GSA/_IFMS_ԀorISSAcostestimatesandsupportingdocumentationavailablepriortobidopeningand,tothebestofmyknowledgeandability,havedeterminedthat:(1)theabilityoftheinhouse_MEO_ԀtoperformtheworkcontainedinthePerformanceWorkStatementattheestimatedcostsincludedinthiscostcomparisonisreasonablyestablishedand,(2)thatallcostsenteredonthecostcomparisonhavebeenpreparedinaccordancewiththerequirementsofCircularA76anditsSupplement. (#(# 30.CostComparisonCompletedBy:0 X __________________________Date:________%0#X(#X(# 31.ContractingOfficer:0 z 0Xz (#z (#__________________________Date:________'!%X(#X(# 32.TentativeCostComparisoǹDecisionAnnouncedBy:s0 z s0Xz (#z (#__________________________Date:________u*#(X(#X(# 33.AppealAuthority(ifapplicable):#2&%2nT##&%%2&ӫ#v&%%&vn%v&0 X __________________________Date:________#nvn##&%n#