US Internal Revenue Service: irs a76 primer

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Office of Competitive Sourcing

IRS A-76 Primer

February 2005


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Table of Content

Introduction....................................................................................................................................................... 1Purpose......................................................................................................................................................... 5Old vs. New Circular A-76....................................................................................................................... 5

The FAIR Act Inventory Process..................................................................................................................... 6Commercial activities may be subject to a competition ...................................................................... 7Inherently Governmental Activities are not subject to competition ................................................... 7

Public Private Competition............................................................................................................................ 8Preliminary Planning.................................................................................................................................. 8Make Public Announcement ....................................................................................................................10

Standard Competition Procedure..............................................................................................................11Preliminary Planning................................................................................................................................11Make Public Announcement ....................................................................................................................11Develop and Issue Solicitation ...............................................................................................................12Develop Offers and Tenders .................................................................................................................13Receive Offers and Tenders ..................................................................................................................13Perform Source Selection........................................................................................................................14Make Performance Decision...................................................................................................................14Make Public Announcement ....................................................................................................................15Award Contract or Issue Agreement ....................................................................................................15Perform Post Competition Accountability.............................................................................................15

Streamlined Competition Procedure .........................................................................................................17Preliminary Planning................................................................................................................................17Make Public Announcement ....................................................................................................................17Develop Cost Estimate.............................................................................................................................18Make Performance Decision...................................................................................................................18Award Contract or Issue Agreement ....................................................................................................18Perform Post Competition Accountability.............................................................................................19Calculating Competition Cost.................................................................................................................20

Acronyms and Glossary...............................................................................................................................21Acronyms....................................................................................................................................................21Glossary.....................................................................................................................................................22

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1

INTRODUCTION The August 1983 Office of Management and Budget (OMB) Circular No. A-76,"Performance of Commercial Activities," established Federal policy for theperformance of recurring commercial activities (CA). On May 29, 2003, OMB issueda revised circular a major step and one of the pillars to fulfill the Bush

Administrations promise of better management in Government.

The Government has long relied on the private sector to provide needed commercialservices. The concept of CA dates back to 1955 when the Bureau of the Budgetannounced a national policy to rely on the private sector for goods and serviceswhenever proper and economical to do so. The program has changed and grownthroughout the years and emphasis has fluctuated with various administrations, but the

basic policy of relying on commercial sources for products and services has notchanged.

According to the President Management Agenda, increased competition consistentlygenerates significant savings and noticeable performance improvements. Forexample:

Recent competitions under OMB Circular A76 have resulted in savings of morethan 20 percent for work that stays in-house and more than 30 percent forwork outsourced to the private sector.

From 1995 through 2000, the Department of Defense (DoD) completed over550 A-76 initiatives, which resulted in an average 34 percent reduction in cost.

DoD expects to achieve $11.7 billion in savings as a result of A-76 competitionbetween 1997 and 2005.

Numerous studies conducted by the General Accounting Office (GAO,) theCenter for Naval Analyses, and others confirm the magnitude of these savings.

Competition promotes innovation, efficiency, and greater effectiveness. Formany activities, citizens do not care whether the private or public sectorprovides the service or administers the program. The process of competitionprovides an imperative for the public sector to focus on continuous improvementand removing roadblocks to greater efficiency.

By focusing on desired results and outcomes, the objective becomes identifying themost efficient means to accomplish the task.

With few exceptions, activities that provide products and services can be classifiedinto one of two categories: commercial or governmental in nature. CAs are functionsthat provide products or services available from private sources. Governmentalfunctions are those, which are not suitable for performance by private sources due tolaw or exercise of governmental discretion.

The CA program emphasizes competition of CAs with the private sector to determinethe most efficient and cost-effective means of providing required services.

Government should be market-basedwe should not be afraidof competition, innovation, and choice. I will open government tothe discipline of competition.

George W. Bush

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The CA program is used as a tool for managers to make their organizations moreefficient and to make better use of dwindling resources. In addition to theencouragement of competition, a fundamental requirement of the CA program is thatan activity may not be converted from in-house to contract performance or from

contract to in-house performance without conducting a cost competition (unless itqualifies for one of many the many exceptions listed in the circular.

The circular also establishes a policy that governs the competitive force of thesecommercial activities and requires agencies to:

Identify commercial and inherently governmental activities

Perform governmental activities with federal personnel

Use private-public competition to determine if government personnel shouldperform a commercial activity

Apply Federal Acquisition Regulation (FAR) to appropriate competitions and

comply with procurement conduct rules

Designate an agency official responsible for implementing the circular and holdthem accountable

Centralize oversight responsibility of competitions

Develop government cost estimates for competitions using standard costingsoftware

Track the execution of competitions

Assist adversely affected federal employees

Now, youre probably thinking, why is this happening to me? It is important to

remember that this has been occurring, in some shape or form, since 1955. TheDepartment of Defense (DoD) has been following the circular for quite some time,and, as shown in the examples below, many civilian agencies are currently alsoengaged in the competitive sourcing process:

Graphics activities, human resources, and payment processing at theDepartment of Energy

Archaeological services (in the southeastern United States) at the Department ofthe Interior

Office automation support for the Department of Commerce

Library services and graphics arts at the Department of Health and Human

Services

Order fulfillment, inventory management, logistics and warehousing for IRSpublications at the Department of the Treasury

Immigration information services, marine navigational aides, and public worksat the Department of Homeland Security

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Nationwide test administration at the Office of Personnel Management

Automotive maintenance and repair activities at the Department of Justice

Maintenance and light construction activities at the Department of Agriculture

Information technology, vessel maintenance, and the Federal AviationAdministration's automated flight service stations at the Department ofTransportation.

The final decisions for many of these have yet to be determined; however, the result,i.e., whether to perform the work in-house or by contract, will be a more efficient andcost effective operation for the taxpayer. This isnt to say that youre not currentlydoing a good job, its just that by going through Most Efficient Organization (MEO)development surfaces efficiencies that are often overlooked.

The table below depicts the number of full time equivalents (FTE) performing

commercial activities that were reported to OMB, by agency, in FY 2002.

Figure 1 FTEs Performing Commercial Activities (FY 2002)

Agency* Total Workforce

Total # of FTEsPerformingCommercial

Activities

Total # of FTEsPerformingCommercial

Activities Availablefor Competition

% OfWorkforce

Available forCompetition

USDA 98,500 46,500 35,600 36DOC 26,500 8,400 4,800 18DOD 596,600 410,700 270,600 45ED 4,700 3,100 2,900 62DOE 15,100 7,800 4,700 31

EPA 17,400 600 400 2HHS 64,900 31,400 11,200 17HUD 9,200 8,000 3,600 39DOI 70,200 33,900 23,000 33DOJ 132,100 10,600 3,400 3DOL 16,400 6,200 2,600 16State 10,400 2,300 1,000 10DOT 64,600 38,400 11,900 18Treasury 118,100 27,100 18,400 12VA 221,500 190,500 7,600 3

AID 2,000 600 300 15Army Corps(Civil)

27,900 23,300 16,500 59

GSA 14,100 6,300 5,200 37NASA 19,000 7,400 3,400 18NSF 1,200 500 200 17OPM 3,000 1,700 600 20SBA 4,200 3,000 2,900 69Smithsonian 4,500 1,300 0 0SSA 63,900 11,100 4,000 6Note: The figures in this table represent a rough OMB estimate based on initial 2002 inventory submissions to OMB. These figures

do not reflect workforce restructuring associated with the creation of DHS. DHS represents approximately 135,200 positions.

*Agency figures may not reflect the inspectors general inventory, which may be reported separately form the rest of the agency.

This is the case, for example, with USDA, DOD, EPA, HUD, DOI, DOT and SBA.

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Figure 2 below further summarizes each agencys competitive sourcing plans. As youcan see by the examples of commercial activities included in the Competition Plan,you and the IRS are not alone.

Figure 2 Summary of Agency Competitive Sourcing Plans

Agency # OfPositions inCompletion

Plan

Examples Activities included inCompetition Plan

Examples of Commercial ActivitiesEXCLUDED from Competition Plan

USDA 5,822 Data center activities Loan operations

Administrative support

Equipment operations

Road maintenance

Maintenance, repair &minor construction of realproperty

Fleet management

services & motor vehiclemaintenance

Data collection & analysis forregulatory and program management

Program planning & support forregulatory and program management

Systems design, support & computerprogramming services

Compliance operations for regulatoryand program management

Insurance analysis for regulatory and

program management Food and drug testing and inspection

services

DOC 1,203 Administrative support Security

Publications

Graphics

Information technologyservices

Systems design, development &programming services

Data processing services

Data center operations

DOD 67,800 Administrative support Aircraft maintenance

Audiovisual

Facility operations &maintenance

Information technology

Logistics

Supply & transportation Storage, warehousing &

distribution

Vehicle operations &maintenance

Inspector general audit operations

Ordnance activities

Basic training & training of militarydoctrine or tactics

Selected research & developmentactivities

Selected activities that provide combat

support & combat service support

ED 220 Human resources services Payment processing

Management evaluations/audits forinvestigations

Performance audits for investigations

Public affairs/relations

DOE 1,180 Information technologyservices

Logistics

Financial management

Graphics

Human resources/training

Headquarters civil rights

review

Power marketing administrations

EPA 215 Human resources services Payment processing

Risk analysis

Computing services & databasemanagement

Administrative support

Special studies & analysis

Program monitoring & evaluation

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Purpose This primer introduces key concepts and provides a general overview of the A-76processes for Internal Revenue Service (IRS) employees and how these might affect you.These processes include the following:

Inventory Process Public-Private Competition Process (Streamlined and Standard)

Cost Estimation Process.

We encouraged you to review the complete A-76 Circular, available from the Officeof Management and Budget (OMB) website (www.omb.gov) for more detail. A-76activities of the Internal Revenue Service (IRS), along with information helpful to IRSemployees affected by A-76 activities, are also available on the IRS Office ofCompetitive Sourcing (OCS) website on the IRS Intranet and Internet.

Old vs. New

Circular A-76

As noted, OMB issued a revised Circular A-76 in May 2003. Your next question mightbe, What is the difference between the old and the new circular? The table belowprovides you with a summary of what has changed.

Figure 3 Comparison of Old and New Circular A-76Issue Old A-76 New A-76

Focus ofpolicy

Competition cited asunderlying element ofpolicy, but preference forprivate sector performance

Emphasis on best results for the citizen throughtransparent & fair competition processes (i.e., notoutsourcing). Continued recognition of important roleplayed by private sector

Use of directconversion &streamlineprocedures

Direct conversion of workto private sector permitted,primarily for activitiesinvolving less than 10 FTE.Streamlined public-privatecompetition allowed

Direct conversions eliminated and replaced by versatilestreamlined competition process requiringconsideration of both in-house and private sectorproviders. Agency must document actions on standardform & certify decision is cost-effective.

Basis forselectingProviders

Decisions generally madebased on low cost.

Creation of tradeoff source selection process to allowtradeoff between cost & quality in IT procurement &,with agency approval, other services.

Considerationof deficientoffers

Guaranteed considerationof in-house offer. NOguaranteed considerationof private sector offer withdeficiencies.

Express right to exclude either in-house or privatesector offer if materially deficient, but agency mustensure in-house offer gets full opportunity to beconsidered & devote additional resources if this willenable submission of a more competitive offer.

Timeframesforconductingcompetitions

No mandatory timeframesfor conductingcompetitions/

12-month timeframe for standard competitions with 6-month extension for complex competitions.Timeframes do not apply to preliminary planning, whichis emphasized by Circular to ensure effective &considered application of competition.

Accountability Private sector sources heldaccountable, but onlylimited post-competition

accountability for in-houseproviders.

Centralized oversight to promote sound & accountabledecision making & post-competition accountability rulesfor both sectors (e.g., performance standards and

quality assurance surveillance plans required for public& private providers).

Reportingrequirements

Some reporting. Expanded reporting to measure results (e.g., estimated& actual cost of performance must be tracked).

Developmentof workforceinventories

No requirement to justifyclassification of activitiesas inherently governmentalor as commercial but notsuitable for competition.

Increased visibility into government management.Requirement to identify inherently governmentalactivities & justify determination. Reason codes(rationale) for govt. performance of commercialactivities, or decision to make activity available forcompetition, may be challenged.

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THE FAIR ACTINVENTORYPROCESS

The Federal Activities Inventory Reform (FAIR) Act of 1998 (Public Law 105-270)requires most agencies, including IRS, to prepare a FAIR Act inventory. A FAIR Actinventory is a list of government personnel, by location, function (section), and position,who perform commercial activities. The Office of Management and Budget (OMB),

through Circular A-76, also requires agencies to provide an inventory of inherentlygovernmental activities performed by federal employees. OMB also providesinformation on how to prepare and submit the inventory through its annual inventoryguidance.

The Fair Act and OMB Circular A-76 stipulate that once a year agencies prepare andsubmit to OMB the following inventory information:

Agency inventory of commercial activities performed by government personnel

Agency inventory of inherently governmental activities performed bygovernment personnel

Inventory summary report.

As you can see in Figure 4, the process of creating, reviewing and publishing anagency inventory follows a very strict process.

An agency must submit its inventories and the summary report to OMB via e-mail byJune 30. Upon receipt, OMB reviews both agency inventories and consults with theagency regarding their contents. Following this review, OMB publishes a notice ofavailability in the Federal Register, and the agency makes the inventory and the

summary available to thepublic and Congress. Thespecific data formats thatmust be used for the annualinventories, along with the

type of data to provide areposted on the OMB website(http://www.omb.gov/).

Circular A-76 prescribes theformat of the InventorySummary Report. Asdiscussed, activitiesperformed by you or othergovernment personnel canbe grouped into two

categoriesinherentlygovernmental activities andcommercial activities. Thedesignation of governmentpersonnel performing

inherently governmental activities must be justified and must be based on the set ofcriteria presented in the circular.

Figure 4 A-76 Inventory Process Overview

Agency

Prepare Inventories

Summary Report

OMB

Review Inventory

Consult with Agency

Agency

Avail Inventory to

Congress and Public/

OMB

Place Notice in Federal

Register

A-76

Inventory Process

Agency

Prepare Inventories

Summary Report

Agency

Prepare Inventories

Summary Report

OMB

Review Inventory

Consult with Agency

OMB

Review Inventory

Consult with Agency

Agency

Avail Inventory to


Agency

Avail Inventory to


OMB


Register

OMB


Register

A-76

Inventory Process

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An agency must also explain why its commercial activities should be performed byfederal employees. It does so by using six reason codes for commercial activities.These are shown in Figure 5 below.

Figure Figure 5 Reason CodesCode Definition

A The commercial activity, or function, is not appropriate for private sectorperformance pursuant to a written determination by the CSO.

B The commercial activity is suitable for a streamlined or standard competition.

C The commercial activity is the subject of an in-progress streamlined orstandard competition.

D Government personnel perform the commercial activity as the result of astandard or streamlined competition (or a cost comparison, streamlined costcomparison, or direct conversion) within the past five years.

E The commercial activity is pending an agency approved restructuringdecision (e.g., closure, realignment).

F Government personnel due to a statutory prohibition against private sector

performance perform the commercial activity.

Commercialactivities may besubject to acompetition

Commercial activities are products or services that can be obtained from a commercialsource for example, activities that are listed in the yellow pages. Commercialactivities fall into two categories:

Functions performed in-house by Federal personnel, or

Contracted activities provided by contractor personnel.

OMB defines commercial activities as anything that can be, could be, or should becontracted. Federal Acquisition Regulations (FAR) 2.101 contains further informationregarding the definition of commercial activity. For additional information about theFAR, visit the Department of States Acquisition web site at www.statebuy.gov for linksto the FAR.)

InherentlyGovernmentalActivities are notsubject tocompetition

Only public employees can perform inherently Governmental activities and tasks,which usually involve significant discretion (subjective judgments) that

Bind the government to a particular course of action

Involve the control or disbursements of property or funds.

Evidence of inherently governmental activities usually involve signature authority interms of approving of funds, policies, or government authorities such as appointingforeign service officers.

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Figure 6 Overview of Competition Process

Preliminary Pla

Public Announc

nning

ement

StreamlinedCompetition

StandardCo

Publ

mpetition

ic-Private Competition Processes

Preliminary Planning

Public Announcement

StreamlinedCompetition

Standardmpetition

ic-Private Competition Processes

Co

Publ

PUBLIC PRIVATECOMPETITION

Competing for commercial activities involves a formalevaluation of sources that could provide a commercialactivity. The process entails pre-established rules presented

in the Federal Acquisition Regulation (FAR) and Circular A-76.

Competition, as defined in Circular A-76, can be accomplished using either thestreamlined or the standardcompetitive process. Either

type requires preliminaryplanning and anannouncement to the public(see Figure 6. In general,the decision to use astandard or streamlinedcompetitive process

depends on the scope andspecific attributes of thestudy, including the numberof personnel, Full TimeEquivalents (FTE),performing the commercialactivity.

PreliminaryPlanning

Before an A-76 study or competition officially begins, the IRS takes several stepsto plan for the study. These steps are shown in Figure 7 and include:

Decide which activities and how many workers to study. This is called thescope of the study.

Group the functionsunder study into

business units.

Examine workloaddata and perform-ance standards toensure that the datais available, valid,and quantifiable. Ifthe data is notavailable, then a

collection systemmust be established.

Determine thecurrent cost of theactivity. This iscalled establishingthe baseline.

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Figure 7 Preliminary Planning

DetermineScope

Preliminary

PlanningInform

Incumbent

Group

ActivitiesAssess

Workload Dataand Systems

Determine

Baseline Cost

Determine Type

of C ompetition

DevelopScheduleDetermine

Roles/Responsibilities

AppointCompetition

Officials

Preliminary Planning Activities

DetermineScope

Preliminary

PlanningInform

Incumbent

Group

ActivitiesAssess

Workload Dataand Systems

Determine

Baseline Cost

Determine Type

of Competition

DevelopScheduleDetermine

Roles/Responsibilities

AppointCompetition

Officials

Preliminary Planning Activities


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Select the type of A-76 study to use. The types of studies are:

- Standard Study for functions with more than 65 employees

- Streamlined Study for functions with 65 or fewer employees.

Develop a schedule for the study that accomplishes the following:

- Establish planned and actual completion dates

- Define the roles and responsibilities for members of the study team.

So far weve identified the function, determined the scope and type of study, andestablished a schedule. Now we determine who participates in the study.

Competition officials are named by the Competitive Sourcing Officer (CSO). TheCSO may also appoint competition officials forstreamlined studies. The most important duty of thecompetition official is to keep the study on schedule andmake sure that the A-76 rules are followed. Their role isessentially the same as an umpire in a baseball game.

So, the next question is who are the officials? They include, but arent limited tothe following:

The Agency Tender Official(ATO). This person is a government official whohas the power to make decisions and is independent of the study team andother competition officials. The ATO also certifies the Most EfficientOrganization (MEO), which is the governments bid, or tender, for thecompetition. By certification, we mean that this person insure that the MEO iscapable of meeting the requirements of the PWS.

The Contracting Officer (CO.) This person is responsible for the contractualaspects of the competition process, e.g., issuing the solicitations and awardingcontracts. As with any official, the CO must follow the rules of A-76 andfederal contracting. Federal contracting rules are known as the FAR, orFederal Acquisition Regulation.

ThePerformance Work Statement (PWS)Team Leader. This person selected thePWS team members who are responsible for developing the PWS. The PWSis a document that describes the work to be done, the equipment andfacilities provided, the performance standards, transition timeline, and therequirements of the quality control and transitions plans. The PWS TeamLeader also helps the CO with the contract, or solicitation, and the finaldecision.

TheHuman Resource Advisor(HRA). This individualis on the MEO Team andis independent of the CO and PWS Teams. The HRA helps workers, who areunder study, by explaining their rights. Some of these rights are placement,reemployment, and right of first refusal. The right of first refusal is used if acontractor wins the study. The right of first refusal means that if the contactorwins, they must offer the current government workforce positions before they

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hire someone off of the street. The HRA also helps the MEO Team write andclassify new position descriptions and develop a transition plan. Thetransition plan describes how the government will transition into the neworganization, which will be either the MEO or contractor.

The Source Selection Authority (SSA). The SSA is responsible for decisionsduring the source selection. The SSA follows the FAR rules and determinesthe winner of the competition.

Make PublicAnnouncement

So far, we have notified OMB of the inventory (functions that are commercial innature), determined the study method, performed our preliminary planning, and

selected the competition official.Now its time to announce the study.

So, when does the study start? AnyA-76 study officially starts when theagency makes a publicannouncement. This is done at thelocal and national levels andsignifies the start date of thecompetition. Generally, the heagency places a notice of the studyon the Federal BusinessOpportunities (FedBizOpps)website (FedBizOpps.gov). Theformal public announcementspecifies which activities and how

many workers are under study. It also supplies other important information aboutthe CO, ATO, locations, and the End Date for the study; however, this isnt the only

announcement. If it is canceled after the initial public announcement of the study,the CO posts a cancellation notice, with the reason, on the FedBizOpps website.The HRA notifies directly affected employees of the cancellation.

Another public announcement is posted locally and on the FedBizOpps websiteonce the competition is completed and a performance decision has been made.Certifying the appropriate competition forms signifies that a performancedecision has been made and that the competition has ended.

A n n o u n ce m e n t Co m p o n e n t s

- Agency

- Agency Com ponen t

- Locat ion

- T ype o f Comp e t i t i on

- Ac t i v i t y be i ng comp l e ted

- I ncumb en t serv i ce p rov i des

- N u m b e r o f g o v e r n m e n t

pe rsonne l pe r fo rm i ng the

ac t i v i t y

- Nam e of t he CSO, CO and

ATO

- Pro j ec ted End Da te o f t he

Compe t i t i on

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STANDARDCOMPETITION

PROCEDURE

The public announcement has been made and it is timeto start the formal study. As we mentioned above,there are two competitive procedures: the StandardCompetitive procedure, and the Streamlined procedure.

First, you need a little more detail on the StandardCompetitive Procedure, as depicted in Figure 7.Remember this procedure must be used by an agency

when, on the start date of the competition, more than 65 worker, or Full TimeEmployees(FTE), are performing the commercial activity. Its important to note thatthe time limit for a standard competition is 12 months from date of the publicannouncement. If the agency feels that the competition will be complex, it may askfor an additional six months, or 18 months total. However, this request must be madebefore the public announcement. Because of this very short duration, everyone mustwork as a team.

PreliminaryPlanning

Remember, during the planning step that occurs before any A-76study or competition begins, the agency has already evaluatedthe scope of the study, established the cost in the form of abaseline, and determined that a standard study is necessary,based on the number of FTEs performing the commercialactivity. It also has developed a schedule for the study andhas assembled a study team. (See page 8 for more details

on preliminary planning.)


An announcement at the local or national level, i.e., on the FedBizOpps website ismade to inform the public the agency intent to perform an A-76 study. This publicannouncement provides basic information about the study and explains whichactivities and how many workers are under study. (See page 10 for more details onpublic announcements.)

Figure 8 Overview of Standard Competition Process


IssueSolicitation


Perform PostCompetition

Accountability

MakePerformanceDecision

AwardContract/IssueAgreement


PerformSource

Selection

Develop Offersand Tenders

Receive Offersand Tenders

Standard Competition Process


IssueSolicitation

Preliminary PlanningPreliminary Planning

Perform PostCompetition

Accountability


AwardContract/IssueAgreement


PerformSource

Selection

Develop Offersand Tenders

Receive Offersand Tenders

Standard Competition Process


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Develop andIssueSolicitation

The announcement that was made provides very little detail for the current workforce(MEO team) and the contractor to develop their proposals. All of this informationcomes from a document know as a solicitation. Its the CO responsibility to issue asolicitation that promotes fair competition and follows the FAR rules. As soon as thePWS is complete, it is posted for the MEO Team and private contractors. In addition

to the PWS, The solicitation also lists the closing date for bids, the evaluation process,and how the service provider is chosen. Sometimes, a draft is posted first to invitepublic review and comments.

The solicitation defines the Period of Performance(POP). I know what youre thinking,another acronym. The POP is the length of time that the contract covers. For astandard competition, the POP must be at least three years.

The solicitation also can address specific information about government property,common costs (Common costs are also called wash costs and are the same no matterwho is selected as the new service provider), and incentive and award fees (Incentiveand award fees are ways the service provider may be rewarded with additional

money). The agency must decide if it will allow the new serviceprovider to

usegovernment property.

As you can see in the table to theleft, the solicitation consists of severalparts. One very important part ofthe solicitation is the Phase-in Plan.The agency, e.g., IRS, requires theservice provider (MEO or contractor)to outline how they will take over thework in the PWS with a minimum ofdisruption. The phase-in plan alsodescribes how the service provider

(MEO or contractor) will hire andtrain workers and handle the securityneeds of the agency. It is importantthat the service provider offerssmooth phase-in that does not causethe IRS to suffer a loss of service.

The solicitation also includes a requirement for a service provider (MEO or contractor)to develop, and submit, a Quality Control Plan. This plan serves as a self-inspectionplan and describes the internal staffing and the procedures that will be used to meetthe service delivery requirements (performance standards) in the PWS (e.g., quality,quantity, and timeliness)

Finally, the PWS Team writes a Quality Assurance Surveillance Planthat describes how the agency will monitor the service providerand specifies methods for measuring the providers performance.This is necessary to ensure the work is carried out correctly andaccording to the requirements presented in the solicitation.

Sol i c i ta t ion Cont en t

- Acqu is i t i on Process and Source

Selec t ion Prov is ion s

- Sol i c i ta t ion Prov is ions

- Eva lua t ion Facto r s

- Clos ing Date

- Compl iance Matr i x

- Per fo rm ance Per i od

- Gove rnm en t Fu rn i shed

P rope r t y

- Com m on Cos ts

- Per fo rm ance Bond

- I ncen t i ve Fee

- Aw ard F ee

- Phase in Plan

- Qual i ty Cont ro l P lan

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DevelopOffers andTenders

So far a lot of work has been accomplished; however, there is much more to do.Once a solicitation is issued, any service provider (MEO or contractor) interested inperforming the work develops a response to the solicitation. There are three types ofresponses:

Agency tender

Private sector offer

Public reimbursable tender.

The agency tender is the governments offer to accomplish the work. This would beconsidered the MEOs bid. It includes the details of the MEO, a cost estimate, aPhase-in-Plan (sometimes referred to as a Transition Plan), and a Quality ControlPlan. The MEO describes how it will staff the new organization, its new and betterways to do the work in the PWS, and position descriptions for the MEOworkers. Thecost estimate, developed using the COMPARE costing software, tells the CO how muchit will cost the government if the MEO won the competition. The Quality Control Plandescribes how the MEO will ensure the work is done correctly. It is very important forthe MEO Team to keep the agency tender (their bid) secret so that other interestedbidders (contractors) do not learn its details. The MEO must follow the rules of thesolicitation to make a bid.

Private sector offers are made by the private sector that includes contractors or othercompanies that want to perform the work. These offerors must follow the rules of thesolicitation to make a bid.

A public reimbursable tender may be made by another government agency interestedin the work. This type of tender requires a cost estimate, phase-in plan (sometimesreferred to as a Transition Plan), and quality control plan and must also follow therules of the solicitation.

Offers and tenders are submitted to the CO in sealed packages bythe solicitation closing date. Great, youve delivered the MEOoffer; now its time to wait, however, dont think that things arenthappening in the meantime. Remember, the study isnt over, and itstay on schedule. Lets see what happens next.

ReceiveOffers andTenders

Once the offers and tenders are received, the contracting officials must examine themto make sure they meet the agencys needs. If they do not, or if no satisfactoryprivate sector offers or public reimbursable tenders are received, the agency mustdecide whether the solicitation needs to be changed and reissued, or if the MEOs bidshould be accepted. A public announcement describes the reasons the MEOs bidwasaccepted if no other reasonable offers or tenders (bids) are received. If this is thecase, congratulations, youve won the competition! If all of the bids are acceptable,we move on to the next step, performing source selection.

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PerformSourceSelection

When making the decision on the new service provider, the agency adheres to verystrict rules. The IRS must use one of the following two procedures to conduct thestandard competition:

Sealed Bid Acquisition

Negotiated Acquisition.

In the sealed bid procedure, the CO opens all bids (offers and tenders) and selects theone with the lowest price. This one is entered into the Standard Comparison Form(SCF). The standard cost comparison form is the form that is generated fromCOMPARE, once all of the MEOs costing information is entered. The offers andtenders are examined to make sure they are acceptable. The CO then makes thedecision by certifying the SCF.

The negotiated acquisition is more complicated. The CO may make a decision basedon the technically acceptable, lowest price bid, on a phased approach, or based ontradeoff. Lets look at each one individually:

In the Lowest Price Technically Acceptable Source Selection, the CO evaluates allbids (offers and tenders) for technical acceptability. A decision is then basedon the lowest cost of all offers and tenders that are deemed technicallyacceptable.

In the Phased Evaluation Source Selection Process, the CO first decides whichoffers are acceptable (Phase 1), and then evaluates cost during Phase 2through price analysis. The decision is based on the lowest cost of alltechnically acceptable bids (offers and tenders). Responses to solicitationsutilizing a phased evaluation procedure are submitted in two separate parts the technical proposal and the cost proposal.

In the Tradeoff Source Selection, the IRS may also pick an offer based onweights assigned to evaluation factors and sub-factors, including cost. In thisprocedure, the agency must follow the FAR rules and choose an offer that iswithin its budget.

For all types of contract the IRS must ensure that in evaluating responses, conductingexchanges, and handling perceived material deficiencies, FAR rules are beingfollowed. It must also decide if the price of the offer or tender is reasonable. This iscalled cost realism. After completing and certifying the SCF, the agency makes itsfinal decision.

MakePerformance

Decision

Now its time to decide on the outcome. The CO must follow the selection process andFAR rules when deciding the winner of the competition. This is done after the Source

Selection Authority (SSA) and CO certify the completed SCF. Signing the SCFcertification signifies a performance decision and is considered the end date of thestandard competition. Remember, the SSA is a competition official with decision-making authority who is responsible for source selection as required by the FAR andOMB Circular A-76. The SSA and CO may be the same individual.

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Now that the winner has been identified, IRS formally announces the study decision tothe public at a local level and on the FedBizOpps website. The CO also offers theopportunity for a debriefing to all respondents (bidders) and the directly affectedgovernment personnel. There is no release of secret, or proprietary, information fromthe bidders to the public. This means that all of the MEOs good ideas stay with theagency.

AwardContract orIssueAgreement

So far the CO has made the decision, made the public announcement, and now itstime to award the contract or issue agreement. The CO implements the performancedecision by making the award or issuing an agreement in one of three ways:

1. If a private contractor has won the competition, the CO awards a contract thatfollows FAR rules. The contract includes the right-of-first refusal, a FAR clausethat protects the rights of the current workers.

2. If another government agency, or public reimbursable source, has won, the COissues a fee-for-service agreement. This means that one agency performs the work

and another agency pays the fee.

3. If a decision was made in favor of the MEO, the CO establishes a MEO Letter ofObligation that assigns responsibility of MEO performance to an agency official.All of your hard work has paid off, and it is time to time to implement the MEO.

Perform PostCompetitionAccountability

A lot has been accomplished over the past year; however, there are still a few thingsleft to do. After the competition ends, the IRS disseminates and tracks certain

information about the competitionand monitors its implementation.First, the IRS shares the lessonslearned and its best practices fromthe study with the rest of thegovernment by posting them onSHARE A-76!, the Department ofDefenses A-76 knowledge website.This allows other agencies to

improve their studies.

The IRS must also track the execution of all its streamlined and standard competitionsin a database. OMB provides guidance on the type and format of data agenciesmust track for each competition. The agency tracks information for each uniquecompetition in real time from announcement to the end of the performance periodand maintains relevant historical records.

Every quarter, the IRS must issue a report on its A-76 studies to OMB. ThisCompetitive Sourcing Quarterly Report is posted on the OMB website and providesinformation about the status and decisions of ongoing and completed competitions.

After the decision, the IRS must also monitor the performance of the privatecontractor, the public reimbursable agency, or the MEO. The IRS must ensure that thequality of work meets the agencys requirements and performance standards. Inaddition, costs are tracked on the SLCF or SCF. Through monitoring, the IRS candetermine if it is satisfied with the new service provider and is saving money.

Pos t Com pe t i t i on Ac t i v i t i e s

- Post Best Prac t i ces and Lessons

Learned

- T rack Execu t i on o f Compe t i t i on

- Subm i t Sou rc i ng Q uar te r l y

Repor t

- Mon i to r Pe r fo rmance

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At the end of the contract or agreement period, the IRS may choose to start a newcompetition or extend the contract. The IRS may also terminate the contract oragreement at any time if the new service provider is failing to perform satisfactorily.

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STREAMLINEDCOMPETITION

PROCEDURE

We have discussed the standard competition above. We will now look at how to doa Streamlined Competition. Streamlined Competitive Procedures, as depicted in Figure8, can be used by an agency when, on the start date, the commercial activity(function)of the agency is performed by no more than 65 FTEs. This procedure can also be

used if the function is performed by either a private sector or public reimbursablesource, and the agency cost estimate or agency tender will include a total of 65 FTEsor fewer.


DevelopCost Estimate


Perform Post

CompetitionAccountability

AwardContract/Issue

Agreement

MakePerformance

Decision

Streamlined Competition Process






Preliminary PlanningPreliminary Planning

Perform Post


Perform Post


AwardContract/Issue

Agreement

AwardContract/Issue

Agreement

MakePerformance

Decision

MakePerformance

Decision

Streamlined Competition Process



PreliminaryPlanning

As with the standard competition, the streamline competition starts with PreliminaryPlanning. During the preliminary planning step that occurs before any A-76 study orcompetition begins, the agency has evaluated the scope of the study, established the

cost in the form of a baseline, and determined that a streamlined study isappropriate, based on the number of FTEs performing the commercial activity(function). It also has developed a schedule for the study and has assembled a studyteam. (See page 8 for more details on preliminary planning.)


Again, as with the standard competition, prior to commencing any A-76 study, theagencys CO makes a public announcementat the local or national level, i.e., on theFedBizOpps website. This public announcement explains which activities and howmany workers are under study and provides basic information about the study. Justlike in the standard competition, a study can also be cancelled by posting acancellation notice, with the reason, on the FedBizOpps website. (See page 10 formore details on public announcements.)

The time limit for a streamlined competition is 90 calendar daysfrom the public announcement to the performance decision. Youllnotice that this is significantly less than the 12 months for thestandard competition. The CSO may grant a time limit waiver forno more than 45 days, for a maximum of 135 calendar days, ifthe agency will create a Most Efficient Organization (MEO) orissue a solicitation for private sector offers. If the agency feels

that the competition will require even more time to complete, it can either convert the

Fi ure 8 Overview of Streamlined Com etition

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streamlined competition to a standard competition or request a waiver.

Develop CostEstimate

Youve done your preliminary planning and made you public announcement, now itstime to develop you cost estimate. Following the public announcement, the agencymust decide who can accomplish the work at a lower cost: the government (currentworkforce) or a private company. The IRS must prepare a cost estimate for each one.This is you do it:

First, the agency calculates how much it will cost if the government continues todo the work for a minimum of 3 performance periods. The agency mayestimate the cost by looking at data from the current organization or it maydevelop a MEO.

Next, the agency calculates how much it would cost a private company toperform the work. They may also determine the same for another government

agency, or public reimbursable source. The IRS can do this by looking fordocumented market research or asking companies to bid or propose their price.

Finally, the agency uses its estimates to complete the Streamlined Cost ComparisonForm(SLCF). The estimates on the SLCF are adjusted and certified. This form is usedto make the final decision for the study.


Its time to decide on the outcome of the study, but before reaching a decision, the IRShas three different people certify the SLCF. Once this certification is complete, thecurrent service provider, or function, is also allowed to review the form. This review isrequired for ethical reasons and to ensure procurement integrity and adherence tofederal standards of conduct rules. As with the standard competition, the IRSannounces the study decision to the public at a local level and on the FedBizOppswebsite (http://www.fedbizopps.gov). The public may also request to review theSLCF, but no proprietary information contained in any support contracts is released.

Award Contractor IssueAgreement

Now that the decision has been made, the CO is responsible for making the award orissuing an agreement. If a private contractor has won, the CO makes a contractaward. This contract will also include the right-of-first refusal, a FAR clause thatprotects the rights of the current workers.

If another government agency, or public reimbursable source, has won, the CO issuesa fee-for-service agreement. This means that the one agency will do the work and theother agency will pay the fee.

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Perform PostCompetitionAccountability

Following the award, the IRS takes several steps in ensuring accountability of allcompetition:

First, the IRS must share the lessons learnedand its best practices from the studywith the rest of the government by posting it on the SHARE A-76! website(http://emissary.acq.osd.mil/inst/share.nsf), the Department of Defenses A-76knowledgewebsite.

The IRS must track the execution of all its streamlined (and standard)competitions in a database.

The IRS must enter information for each unique competition from announcementuntil the end of the performance period.

It must maintain historical recordsrelating to each competition.

Every quarter, the IRS must issue areport on its A-76 studies to OMB.This Competitive Sourcing QuarterlyReport is posted on the OMBwebsite and provides informationabout the status and decisions ofongoing and completedcompetitions.

In addition to ensuring the accountability of all competitions, the IRS must monitor theperformance of the private contractor, the public reimbursable agency, or the MEO.The agency assures quality to ensure that the work is being performed according tothe performance standards. In addition, costs are tracked on the SLCF or SCF. Bydoing this, the IRS determines if it is satisfied with the new service provider and is

saving money.

At the end of the contract or agreement period, the IRS may choose to start a newcompetition or extend the current contract or agreement. The agency may alsoterminate the contract or agreement at any time if the new service provider, MEO,public reimbursable source or contractor, is failing to perform satisfactorily.

Pos t Com pe t i t i on Ac t i v i t i e s

- Post Best Prac t i ces and

Lessons Learned- Track Execu t ion o f

Compe t i t i on

- Subm i t Sou rc i ng Qua r te r l y

Repor t

- Mon i to r Pe r fo rm ance

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CalculatingCompetitionCost

Circular A-76 provides very specific guidance for public-privatecompetitions, including procedures for agencies to estimate thefull cost of performance. It explains what cost information to use

in completing the Standard Competition Form (SCF) orStreamlined Competition Form (SLCF). For example, the circulardefines the type of costs that can and cannot be included in thecost estimate and how to account for inflation. Agencies mustadhere to these guidelines. The following are highlights of theinstructions provided in the Circular to estimate cost:

Agencies must use COMPARE, the costing software to develop cost estimatesand generate the Standard Competition Form (SCF) or the StreamlinedCompetition Form (SLCF). This software is maintained by the Department ofDefense and incorporates the appropriate costing procedures from the circular.The system performs the necessary calculations based on general data, such asinflation cost factors, tax rates, and wage rates, but the agency must determine

and manually enter agency-specific cost data. COMPARE can be used forboth standard and streamlined competitions and is available through theSHARE A-76! website.

Cost estimates for public reimbursable tender is calculated following the rulesof the public-private competition, but the Contracting Officer (CO) determinesthe cost adjustments that need to be made.

Some costs must be excluded from the cost estimates. These include the costsfor conducting the competition, the retained rate of basic pay for civilianemployees, and certain agency separation incentive pays.

For standard competitions, an agency must determine a conversion differentialthat is added to a non-incumbents cost of performance.

The performance periods used by public reimbursable sources must be identicalto the performance periods specified in the solicitation and reflected on theSCF.

All line entries on the SCF and SLCF must be rounded to the nearest dollar.

Cost estimates for other Federal agencies must include a phase-in cost.

Annual pay raise assumptions and inflation factors must be based on OMBstransmittal memorandum published in the Federal Register.

Agencies must use standard A-76 costing factors presented in the A-76 Circularto calculate cost estimates. These factors fall into two categories, pay and non-

pay, and come from different sources, including OMB Transmittal Memoranda,OMB Circular A-76, the Social Security Administration, and Internal RevenueService.

Standard Competitions require the completion of SCF; StreamlinedCompetitions require completion of SLCF. Certification and completionrequirements vary between the two forms.

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ACRONYMSANDGLOSSARY

This section provides acronyms and definitions of terms that are commonly used whendiscussing A-76 activities. The definitions in the glossary are those presented by OMBin Circular A-76.

Acronyms

ATO Agency Tender Official

CA Commercial Activities

CO Contracting Officer

CSO Competitive Sourcing Official

FAIR Federal Activities Inventory Reform

FAR Federal Acquisition Regulation

FedBizOpps Federal Business Opportunities

FTE Full Time Equivalent

GAO General Accounting Office

GFP Government Furnished Equipment

HRA Human Resource Advisor

IRS Internal Revenue Service

MEO Most Efficient Organization

OCSOffice of Competitive Sourcing

OMB Office Of Management and Budget

POP Period of Performance

PWS Performance Work Statement

SCF Standard Competition Form

SLCF Streamlined Competition Form

SSA Source Selection Authority

SSEB Source Selection Evaluation Board

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GlossaryActivity A specific task or grouping of tasks that provides a

specialized capability, service or product based on arecurring government requirement. Depending on thegrouping of tasks, an activity may be an entire function ormay be a part of a function. An activity may be inherentlygovernmental or commercial in nature.

Adversely AffectedEmployees

Federal civilian employees serving competitive or exceptedservice appointments in Tenure Groups I, II, or III, who areidentified for release from their competitive level by anagency, in accordance with 5 C.F.R. Part 351 and 5 U.S.C.Chapter 35, as a direct result of a performance decisionresulting from a streamlined or standard competition

Agency CostEstimate

The part of the agency tender in a standard competition thatincludes the agencys cost proposal and represents the fullcost of agency performance of the commercial activity,based on the requirements in the solicitation and the costingpolicy in Attachment C [of Circular A-76]. The agency costestimate for a streamlined competition is developed inaccordance with Attachments B and C of Circular A-76].

AgencyPerformance

Performance of a commercial or inherently governmentalactivity with government personnel. Often referred to as in-house performance.

Agency Tender The agency management plan submitted in response to asolicitation for a standard competition. The agency tenderincludes an MEO, agency cost estimate, MEO quality controlplan, MEO phase-in plan, and copies of any MEOsubcontracts (with the private sector providers proprietaryinformation redacted). The agency tender is prepared inaccordance with Attachment B [of Circular A-76] and thesolicitation requirements.

Agency TenderOfficial (ATO)

An inherently governmental agency official with decision-making authority who is responsible for the agency tenderand represents the agency tender during source selection.

Annualize The calculation method to convert a cost to an annual basis.The calculation converts a cost for a performance period thatis less than one full year into an annual cost to correctlyreflect the cost in a government cost estimate.

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Basic Pay Basic pay for GS employees is a positions annual salary

plus any other applicable civilian employee payentitlements. Basic pay for FWS employees is a positionsannual wages including shift differential pay andenvironmental pay, plus any other applicable civilian

employee pay entitlements. Examples of other civilianemployee pay entitlements include, but are not limited to,night differential pay for FWS employees, environmentaldifferential pay, and premium pay (for civilian employeefire fighters and law enforcement officers).

CapitalImprovement

An expenditure for a physical improvement to an existingcapital asset such as additions and major alterations that areintended to improve performance or increase useful life.

Civilian Employee An individual who works for a federal agency, in this casethe IRS, on an appointment without time limitation who is

paid from appropriated funds, which includes workingcapital funds. A foreign national employee, temporaryemployee, term employee, non-appropriated fundemployee, or uniformed personnel is not included in thisdefinition.

Commercial Activity A recurring service that could be performed by the privatesector. Commercial activities may be found within, orthroughout, organizations that perform inherentlygovernmental activities or classified work.

Common Costs Specific costs identified in the solicitation that will be incurredby the government regardless of the provider (private

sector, public reimbursable, or agency). Common costs aresometimes referred to as wash costs. Examples of commoncosts include government-furnished property, securityclearances, and joint inventories.

COMPARE The windows-based A-76 costing software that incorporatesthe costing procedures of this circular. Agencies must useCOMPARE to calculate and document the costs on the SLCFfor a streamlined competition or the SCF for a standardcompetition. The software is available through the SHARE A-76! website at http://emissary.acq.osd.mil/inst/share.nsf.

COMPARE Version

Control Log

The document that describes each of the changes made in a

particular version of the COMPARE software. This documentincludes a brief description of the change, the area of thesoftware program affected by the change, and the impactthe change has on the SCF/SLCF and/or documentation.

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COMPARE User'sGuide

A detailed guidebook for actual users of COMPARE thatincludes an in-depth explanation of the use and features ofthe COMPARE software program.

COMPARE Tables A specific set of master tables incorporated into theCOMPARE costing software that includes all of the approvedstandard cost factors and rates used to calculate theSCF/SLCF costs.

Competition A formal evaluation of sources to provide a commercialactivity that uses pre-established rules (e.g., the FAR, thiscircular). Competitions between private sector sources areperformed in accordance with the FAR. Competitionsbetween agency, private sector, and public reimbursablesources are performed in accordance with the FAR and thiscircular. The term competition, as used in this circularincludes streamlined and standard competitions performed in

accordance with this circular, and FAR-based competitionsfor agency-performed activities, contracted services, newrequirements, expansions of existing work, and activitiesperformed under fee-for-service agreement. The term alsoincludes cost comparisons, streamlined cost comparisons, anddirect conversions performed under previous versions ofOMB Circular A-76.

Competition File The documents used in a standard competition in addition tothe government contract files required by FAR Subpart 4.8.Agencies maintain this file regardless of the source selectedto perform the activity.

CompetitionOfficials These are agency officials appointed before a standardcompetition is announced. These individuals perform keyroles and have essential responsibilities for the successfulcompletion of the standard competition. Competition officialsare the agency tender official, contracting officer, sourceselection authority, human resource advisor, and PWS teamleader.

CompetitiveSourcing Official(CSO)

An inherently governmental agency official responsible forthe implementation of this circular within the agency.

Component An organizational grouping within an agency, such as a

bureau, center, military service, or field activity.

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Contracting Officer(CO)

An inherently governmental agency official who participateson the PWS team, and is responsible for the issuance of thesolicitation and the source selection evaluation methodology.The CO awards the contract and issues the MEO letter ofobligation or fee-for-service agreement resulting from astreamlined or standard competition. The CO and the SSAmay be the same individual.

Conversion FromContract

A change in the performance of a commercial activity from aprivate sector provider to agency performance.

Conversion ToContract

A change in the performance of a commercial activity fromagency performance to a private sector provider.

Depreciation The decline in the value of a capital asset. Depreciation

represents a cost of ownership and the consumption of anassets useful life.

Direct Labor Manpower resources dedicated to performing therequirements of the solicitation and labor for supervision andmanagement related support to the tender (e.g., MEO) suchas labor for quality control.

Directly AffectedEmployees

Civilian employees whose work is being competed in astreamlined or standard competition.

Directly AffectedGovernment

Personnel

Government personnel whose work is being competed in astreamlined or standard competition.

Directly InterestedParty

The agency tender official who submitted the agency tender;a single individual appointed by a majority of directlyaffected employees as their agent; a private sector offeror;or the official who certifies the public reimbursable tender.

Divestiture An agencys decision to eliminate a government requirementfor a commercial activity. No service contract or fee-for-service agreement exists between the agency and theprivate sector after a divestiture. By divesting of acommercial activity, an agency elects not to control theactivity and cedes ownership and control of the activitys

associated assets (e.g., equipment, facilities, property) andresources (agency manpower and budgeting for theactivity). The agency has no role in the financial support,management, regulation, or oversight of a divested activity.Moving, transferring, or converting a commercial activityfrom government performance to private sector or publicreimbursable performance is not a divestiture.

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EmployeeTransition Plan

A written plan developed by the HRA for the potentialtransition of the agencys civilian employees to an MEO, orto private sector or public reimbursable performance. Thisplan is developed early in the streamlined or standardcompetition process, based on the incumbent governmentorganization, to identify projected employee impacts andthe time needed to accommodate such impacts, dependingon the potential outcomes of the competition. The employeetransition plan differs from a phase-in plan, which isdeveloped by prospective providers responding to asolicitation.

End Date The end date for a streamlined or standard competition isthe date that all SCF certifications are completed, signifyingan agencys performance decision.

Expansion An increase in the operating cost of an existing commercialactivity based on modernization, replacement, upgrade, orincreased workload. An expansion of an existing commercialactivity is an increase of 30 percent or more in the activitysoperating costs (including the cost of FTEs) or total capitalinvestment.

FedBizOpps.gov The website where the government electronically advertisessolicitations or requirements.

Fee-for-ServiceAgreement

A formal agreement between agencies, in which one agencyprovides a service (a commercial activity) for a fee paid by

another agency. The agency providing the service isreferred to in this circular as a public reimbursable source.

First Period of FullPerformance

The performance period following the phase-in period whenthe service provider becomes fully responsible forperforming the activity. The first performance period is usedto implement the new service providers phase-in plan;therefore, full performance of the service provider does notoccur until the second performance period, which may bereferred to as the base period, full performance, or the firstperiod of full performance. This first period of fullperformance may be less than or more than 12 months. Thefirst period of full performance is the second performanceperiod (the performance period immediately followingphase-in period) regardless of the second performanceperiods length.

Foreign NationalEmployee

An employee that is not a United States citizen who isemployed by the United States Government and worksoutside the United States, its territories or possessions, undera system in which an Executive Agency is the official

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employer of the foreign national employee and assumesresponsibility for all administration and managementfunctions associated with the employees employment.

Full-Time

Equivalent (FTE)The staffing of Federal civilian employee positions,expressed in terms of annual productive work hours (1,776)rather than annual available hours that includes non-productive hours (2,080 hours). FTEs may reflect civilianpositions that are not necessarily staffed at the time of publicannouncement and staffing of FTE positions may fluctuateduring a streamlined or standard competition. The staffingand threshold FTE requirements stated in this circular reflectthe workload performed by these FTE positions, not theworkload performed by actual government personnel. FTEsdo not include military personnel, uniformed services, orcontract support.

Function CodeThe numerical code used to categorize an agencyscommercial and inherently governmental activities forinventory reporting purposes.

GovernmentFurnished Property(GFP)

Facilities, equipment, material, supplies, or other servicesprovided by the government for use by all prospectiveproviders in the solicitation. Costs for GFP included in asolicitation are considered common costs. Replacement costs,insurance, maintenance and repair costs for GFP may or maynot be government-furnished, depending on the provisions inthe solicitation.

Government

Personnel

Civilian employees, foreign national employees, temporary

employees, term employees, non-appropriated fundemployees, and uniformed services personnel employed byan agency to perform activities.

Human ResourceAdvisor (HRA)

An inherently governmental agency official who is a humanresource expert and is responsible for performing humanresource-related actions to assist the ATO in developing theagency tender.

Incumbent ServiceProvider

The source (i.e., agency, private sector, or publicreimbursable source) providing the service when a publicannouncement is made of the streamlined or standardcompetition.

InformationTechnology

Any equipment or interconnected system(s) or subsystem(s) ofequipment used in the automatic acquisition, storage,manipulation, management, movement, control, display,switching, interchange, transmission, or reception of data orinformation by the agency. For purposes of this definition,equipment is used by an agency if the equipment is useddirectly by the agency, or is used by a contractor under acontract with the agency that requires (1) its use or (2) to a

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significant extent, its use in the performance of a service orthe furnishing of a product. The term "informationtechnology" includes computers, ancillary equipment,software, firmware and similar procedures, services(including support services), and related resources, and does

not include any equipment that is acquired by a contractorincidental to a contract; or contains imbedded informationtechnology that is used as an integral part of the product,but the principal function of which is not the acquisition,storage, manipulation, management, movement, control,display, switching, interchange, transmission, or reception ofdata or information. For example, heating, ventilation, andair conditioning equipment, such as thermostats ortemperature control devices, and medical equipment whereinformation technology is integral to its operation, are notinformation technology.

InherentlyGovernmentalActivities

An activity that is so intimately related to the public interestas to mandate performance by government personnel asprovided by Attachment A [of Circular A-76].

Interested Parties For purposes of challenging the contents of an agencyscommercial activities inventory pursuant to the FederalActivities Inventory Reform Act, an interested party is (1) aprivate sector source that is an actual or prospective offerorfor a contract or other form of agreement to perform theactivity and has a direct economic interest in performing theactivity that would be adversely affected by adetermination not to procure the performance of the activityfrom a private sector source; (2) a representative of any

business or professional association that includes within itsmembership private sector sources referred to in (1) above;(3) an officer or employee of an organization within anexecutive agency that is an actual or prospective offeror toperform the activity; (4) the head of any labor organizationreferred to in section 7103(a)(4) of title 5, United StatesCode, that includes within its membership officers oremployees of an organization referred to in paragraph (3).

Inventory A list of government personnel, by location, function, andposition, performing either commercial activities or inherentlygovernmental activities.

MEO Letter ofObligation

A formal agreement that an agency implements when astandard or streamlined competition results in agencyperformance (e.g., MEO).

MEO Subcontracts Contracts between an agency and the private sector thatare included in the agency tender or fee-for serviceagreements with a public reimbursable source that areincluded in the agency tender. In addition to the cost of MEO

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subcontracts, agency or public reimbursable cost estimatesmust include support costs associated with MEO subcontractssuch as government-furnished property, and contractadministration, inspection, and surveillance.

MEO Team A group of individuals, comprised of technical and functionalexperts, formed to assist the ATO in developing the agencytender.

Military Personnel Officers [as defined in 10 U.S.C. 101(b)(1)] and enlistedmembers [as defined in 10 U.S.C. 101(b)(6)] of the militaryservices (defined as the Army, Navy, Air Force, and MarineCorps).

Most EfficientOrganization (MEO)

The staffing plan of the agency tender, developed to

represent the agencys most efficient and cost-effectiveorganization. An MEO is required for a standard competitionand may include a mix of government personnel and MEOsubcontracts.

New Requirement An agencys newly established need for a commercialproduct or service that is not performed by (1) the agencywith government personnel; (2) a fee-for-service agreementwith a public reimbursable source; or (3) a contract with theprivate sector. An activity that is performed by the agencyand is reengineered, reorganized, modernized, upgraded,expanded, or changed to become more efficient, but stillessentially provides the same service, is not considered a

new requirement. New ways of performing existing work arenot new requirements.

Non-Pay Categoriesof Costs

Costs in a cost estimate that are not related to pay. Non-paycategories of costs include, but are not limited to, materials,supplies, equipment, facilities, capital assets, and minor itemsand the inflation for these costs.

Offer A private sector sources formal response to a request forproposals or invitation for bid. The term offeror refers tothe specific source rather than the response.

Overhead Overhead includes two major categories of cost, operations

overhead and general and administrative overhead.Operations overhead includes costs that are not 100 percentattributable to the activity being competed but aregenerally associated with the recurring management orsupport of the activity. General and administrative overheadincludes salaries, equipment, space, and other tasks relatedto headquarters management, accounting, personnel, legalsupport, data processing management, and similar commonservices performed external to the activity, but in support of

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the activity being competed. A standard twelve percentoverhead factor is an estimated federal agency overheadfactor that is calculated in agency and public reimbursablecost estimates for streamlined and standard competitions

Past Performance An indicator that may be used in the source selection processto evaluate a prospective providers previous performanceon work comparable to that being competed, for thepurpose of predicting the quality of future performancerelative to other offers or public reimbursable tenders. FAR42.1501 describes the information used to evaluate pastperformance, and FAR 15.305(a)(2) provides guidance forthe consideration of past performance in the source selectionprocess.

Pay Categories ofCost

Costs in a cost estimate associated with the payroll forgovernment personnel, including inflation.

PerformanceDecision

The outcome of a streamlined or standard competition,based on SLCF or SCF certifications.

PerformanceStandards

Verifiable, measurable levels of service in terms of quantity,quality, timeliness, location, and work units. Performancestandards are used in a performance-based PWS to (1)assess (i.e., inspect and accept) the work during a period ofperformance; (2) provide a common output-related basis forpreparing private sector offers and public tenders; and (3)compare the offers and tenders to the PWS. The requiringactivitys acceptable levels of service are normally stated inthe PWS. The solicitation includes performance standards.

Performance WorkStatement (PWS).

A statement in the solicitation that identifies the technical,functional, and performance characteristics of the agencysrequirements. The PWS is performance-based and describesthe agencys needs (the what), not specific methods formeeting those needs (the how). The PWS identifiesessential outcomes to be achieved, specifies the agencysrequired performance standards, and specifies the location,units, quality and timeliness of the work.

Phase-in Plan A prospective providers plan to replace the incumbentprovider(s) that is submitted in response to the solicitation.The phase-in plan is implemented in the first performance

period and includes details on minimizing disruption, adversepersonnel impacts, and start-up requirements. The phase-inplan is different from the employee transition plandeveloped by the HRA.

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Privatization A federal agency decision to change a government-owned

and government-operated commercial activity or enterpriseto private sector control and ownership. When privatizing,the agency eliminates associated assets and resources(manpower for and funding of the requirement). Since there

is no government ownership and control, no service contractor fee-for-service agreement exists between the agency andthe private sector after an agency privatizes a commercialactivity or enterprise. Moving work from agencyperformance with government personnel to private sectorperformance where the agency still funds the activity is notprivatization.

ProspectiveProviders

Private sector, public reimbursable, and agency sources thatmay submit responses (offers or tenders) in response to anagencys solicitation.

ProviderAn agency, private sector, or public reimbursable source thatis performing, or will perform, a commercial activity;sometimes referred to as a service provider.

PublicAnnouncement

An agencys formal declaration that the agency has made a(1) decision to perform a streamlined or standardcompetition, or (2) performance decision in a streamlined orstandard competition. The CO makes these announcementsvia FedBizOpps.gov.

PublicReimbursableSource

A service provider from a federal agency that couldperform a commercial activity for another federal agency ona fee-for-service or reimbursable basis by using either

civilian employees or federal contracts with the privatesector.

PublicReimbursableTender

A federal agencys formal response to another federalagencys solicitation for offers or tenders. The publicreimbursable tender is developed in accordance with thiscircular and includes a cost estimate, prepared inaccordance with Attachment C [of Circular A-76].

PWS Team A group of individuals, comprised of technical and functionalexperts, formed to develop the PWS and quality assurancesurveillance plan, and to assist the CO in developing thesolicitation.

Quality AssuranceSurveillance

The governments monitoring of a service providersperformance in accordance with the quality assurancesurveillance plan and the performance requirementsidentified in the solicitation.

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Quality AssuranceSurveillance Plan

The governments inspection plan. The quality assurancesurveillance plan documents methods used to measureperformance of the service provider against therequirements in the PWS. The agency relies on the serviceprovider to monitor daily performance using their ownquality control plan, but retains the right to inspect allservices. When the agency makes a performance decision,the agency re-evaluates and modifies the existing qualityassurance surveillance plan, based upon the selectedprovider and the selected providers accepted qualitycontrol plan.

Quality ControlPlan

A self-inspection plan that is included in all offers andtenders. The quality control plan describes the internalstaffing and procedures that the prospective provider will

use to meet the quality, quantity, timeliness, responsiveness,customer satisfaction, and other service deliveryrequirements in the PWS.

Representatives ofDirectly AffectedEmployees

In the case of directly affected employees represented by alabor organization accorded exclusive recognition under 5U.S.C. 7111, a representative is an individual designatedby that labor organization to represent its interests. In thecase of directly affected employees not represented by alabor organization under 5 U.S.C. 7111, a representativeis an individual appointed by directly affected employeesas their representative.

Residual Value The estimated value of a capital asset at the end of its usefullife as determined by application of the Useful Life andDisposal Value Cost Factor.

Resources Funding allocated for contracts, manpower, facilities,material, or equipment to perform agency requirements.

SegregableExpansion

An increase to an existing commercial activity that can beseparately competed.

SHARE A-76! The Department of Defense A-76 knowledge managementsystem used to share knowledge, information, andexperience about public-private competitions. This public site

contains A-76-related guidance, sample documents, bestpractices, tools, and links to other A-76 websites and sourcesfor A-76-related information. Users may post best practicesused in public-private competitions, research A-76 throughthe use of search engines, and submit internet links to add tothe available links in SHARE A-76! The website address ishttp://emissary.acq.osd.mil/inst/share.nsf/.

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Solicitation ClosingDate

The due date for delivery of private sector offers, publicreimbursable tenders, and the agency tender, as stated inthe solicitation.

Source One of three specific categories of service providers (i.e.,agency, private sector, or public reimbursable) that canperform a commercial activity for an agency.

Source SelectionAuthority (SSA)

A competition official with decision-making authority who isresponsible for source selection as required by the FAR andthis circular. The SSA and CO may be the same individual.

Source SelectionEvaluation Board(SSEB)

The team or board appointed by the SSA to assist in anegotiated acquisition.

StandardCompetition Form(SCF)

The agency form that documents and certifies all costscalculated in the standard competition.

Start Date The start date for a streamlined or standard competition isthe date that the agency makes a formal publicannouncement of the agencys decision to perform astreamlined or standard competition.

StreamlinedCompetition Form(SLCF)

The agency form that documents and certifies all costscalculated in the streamlined competition, in accordance withAttachment C [of Circular A-76].

Uniformed Services Members of the armed forces (i.e., Army, Navy, Air Force,Marine Corps, and Coast Guard) and other uniformedservices (e.g., National Oceanic and AtmosphericAdministration, Public Health Service).

Useful Life The estimated period of economic usefulness of a capitalasset.

Documents

US Internal Revenue Service: irs a76 primer