[Federal Register Volume 78, Number 32 (Friday, February 15, 2013)]
[Notices]
[Pages 11232-11234]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-03581]
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OFFICE OF MANAGEMENT AND BUDGET
Notification of a Public Meeting on the Use of Cost Comparisons
in Federal Procurement
AGENCY: Office of Management and Budget, Executive Office of the
President.
ACTION: Notice of a public meeting and request for comments.
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SUMMARY: The Office of Federal Procurement Policy (OFPP) in the Office
of Management and Budget (OMB) seeks input from the public on the
practice of comparing the relative cost of performance by Federal
employees versus contract performance in order to identify the most
cost-effective source. OFPP intends to consider feedback received in
response to this notice as it evaluates existing policies addressing
cost comparisons and considers new ones to help agencies save money and
drive better results. Feedback will also be considered in connection
with the development of guidance required by section 1655 of the
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2013,
Public Law 112-239. Section 1655 requires OMB to publish guidance
addressing the conversion of a function being performed by a small
business concern to performance by a Federal employee.
Interested parties may offer oral and/or written comments at a
public meeting to be held on March 5, 2013. Parties are also encouraged
to provide all written comments directly to www.regulations.gov.
DATES: A public meeting will be conducted on Tuesday March 5, 2013 at 2
p.m. eastern time and is expected to conclude not later than 5 p.m.
eastern time.
Procedures for the public meeting:
The public is asked to pre-register by Friday March 1, 2013, due to
security limitations. To pre-register, please send an email to Ms.
Aisha Hasan of OFPP at ahasan@omb.eop.gov. Registration check-in will
begin at 1 p.m. eastern time and the meeting will start at 2 p.m.
eastern time.
Oral Public Comments: Parties wishing to make formal oral
presentations at the public meeting must contact Ms. Aisha Hasan by
electronic mail at ahasan@omb.eop.gov no later than Friday March 1,
2013, to be placed on the public speaker list. Time allocations for
oral presentations will be limited to five minutes. All formal oral
public comments should also be followed-up in writing and submitted to
www.regulations.gov. When submitting your comments, reference ``Public
Comments on the Use of Cost Comparisons.'' Note: Requests made after
the deadline for formal oral presentations will be permitted as time
permits and assigned based on the order the requests are received.
Written Comments/Statements: In lieu of, or in addition to,
participating in the public meeting, interested parties may
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submit written comments to www.regulations.gov by April 15, 2013. When
submitting your comments, reference ``Public Comments on the Use of
Cost Comparisons.'' Parties wishing to share written statements at the
public meeting must submit such statements to Ms. Hasan at
ahasan@omb.eop.gov by March 1, 2013.
ADDRESSES: The public meeting will be held at the General Services
Administration Auditorium located at 1800 F Street NW., Washington, DC,
20405.
Meeting Accommodations: The public meeting is physically accessible
to people with disabilities. Request for sign language interpretation
or other auxiliary aids should be directed to Ms. Lague at
deborah.lague@gsa.gov or 202-694-8149 by February 25, 2013.
The TTY number for further information is: 1-800-877-8339. When the
operator answers the call, let them know the agency is the General
Services Administration; the point-of-contact is Deborah Lague at 202-
694-8149.
FOR FURTHER INFORMATION CONTACT: For clarification of the subject
matter related to the memorandum: Mr. Mathew Blum, OFPP, (202) 395-4953
or mblum@omb.eop.gov or Mr. Jim Wade, OFPP, (202) 395-2181 or
jwade@omb.eop.gov.
For public meeting information and submission of comment: Ms. Aisha
Hasan, OFPP, (202) 395-6811 or ahasan@omb.eop.gov.
SUPPLEMENTARY INFORMATION: From the start of the Administration, it has
been a priority to make sure agencies apply fiscally responsible
acquisition practices that cut contracting costs and better protect
taxpayers from cost overruns and poor performance. In response,
agencies have been taking steps to buy less and buy smarter. These
steps include cutting unnecessary contract spending and launching new
efforts to pool the government's buying power. These efforts are paying
off. FY 2012's total spending on contracts was $35 billion less than
the amount spent in FY 2009, marking the largest three-year decline in
Federal contract spending on record. (For additional information on the
Federal government-wide contracting achievements, go to http://www.whitehouse.gov/blog/2012/12/06/historic-savings-contracting-and-plans-more.)
To build on these efforts, OFPP has kicked off an initiative to
consider how agencies may achieve further savings and drive even better
results through the use of cost comparisons in appropriate
circumstances. Cost comparison is the term used to describe the
practice of comparing the cost of a private sector contractor
performing a defined task, or set of tasks, to the cost of having
Federal employees perform the same task(s) where the work is suitable
for performance by either sector. This tool offers a number of
benefits. A cost comparison can help the agency validate whether the
current sector performing the work is the more cost-effective source.
Where this is not the case, the cost comparison may be used to
encourage the sector currently performing the work to adopt more
efficient practices. Where the difference in cost between the public
and private sectors for performance of the same task is significant,
the comparison may support conversion of work from one sector to the
other, in accordance with law, including any limitations imposed
thereon.
OFPP seeks public comment on how agencies can best incorporate cost
comparisons into their management practices and especially welcomes
public comment on the following
three issues: (1) When cost comparisons are likely to be
beneficial, (2) what principles should guide the conduct of a cost
comparison, and (3) what special considerations should be involved when
work is currently being performed by a small business contractor.
Additional explanation and discussion questions are set forth below.
A. Suitability
Like most management practices, cost comparisons are not a ``one-
size-fits-all'' tool. A number of factors need to be considered to
identify when a cost comparison may be appropriate and, when
appropriate, where the agency is likely to derive benefit from using a
cost comparison. For example, a cost comparison would not be
appropriate if an agency decides that a particular requirement is no
longer needed, or no longer affordable, no matter who performs the
work. A cost comparison would also not be appropriate if only one
sector is suitable for performing a given requirement. For example,
performance of work by the private sector would not be suitable if the
work to be performed involves (i) an inherently governmental function,
(ii) a critical function to the extent that human capital and/or risk
analysis shows that there is not a sufficient number of Federal
employees performing, or managing, the function so that the agency can
maintain control of its mission and operations, or (iii) an
unauthorized personal service. These limitations are explained in OFPP
Policy Letter 11-1, Performance of Inherently Governmental and Critical
Functions, available at http://www.whitehouse.gov/omb/procurement_index_work_performance/, and OMB Memorandum M-09-26, Managing the
Multi-Sector Workforce, available at http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_fy2009/m-09-26.pdf.
At the same time, as explained in Policy Letter 11-01 and
Memorandum M-09-26, there are many requirements that may be suitable
for performance by either the public or private sector, such as
positions within critical functions where the agency has determined it
has the internal capacity to maintain control over its operations and
work that is not inherently governmental, closely associated to an
inherently governmental function, or critical.
1. In situations where either sector may be suitable to perform the
work, what factors should an agency take into account to determine if a
cost comparison is likely to be beneficial?
2. What considerations would be helpful in prioritizing which
functions are studied first?
B. Procedures
When an agency determines that a cost comparison may be beneficial,
it must have principles and procedures to support the conduct of a cost
comparison.
Guiding principles. OMB Memorandum M-09-26 provides two overarching
principles for a cost analysis, namely, it must (a) provide ``like
comparisons'' of costs that are of a sufficient magnitude to influence
the final decision on the most cost effective source of support for the
organization and (b) address the full costs of government and private
sector performance.
1. What additional guiding principles and/or clarification of the
above principles would be helpful?
2. What guidance might be provided regarding tracking of results to
ensure expected benefits identified in the cost comparison have been
realized?
Cost principles. For many years, costing principles to facilitate
the comparison of costs between the public and private sectors have
been provided in Appendix C of OMB Circular A-76, available at http://www.whitehouse.gov/sites/default/files/omb/assets/omb/circulars/a076/a76_incl_tech_correction.pdf. These factors were developed to
support the use of public-private competition but also can be used to
compare the relative cost of each sector's performance without
conducting a competition.
3. What changes and/or clarifications might be considered to
improve the
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effectiveness of these principles in the conduct of a cost comparison?
4. In 2010, the Department of Defense established business rules
for use in estimating and comparing the full costs of military and
civilian manpower and contract support. See Directive-Type Memorandum
(DTM) 09-007, ``Estimating and Comparing the Full Costs of Civilian and
Military Manpower and Contract Support,'' available at http://www.dtic.mil/whs/directives/corres/pdf/DTM-09-007.pdf. What, if any,
principles might be considered for adoption government-wide?
C. Small Business Considerations
Section 1655 of the NDAA for FY 2013 requires OMB to publish
procedures and methodologies to be used by Federal agencies with
respect to decisions to convert a function being performed by a small
business concern to performance by a Federal employee, including
procedures and methodologies for determining which contracts will be
studied for potential conversion.
Section 5-3 of Policy Letter 11-01 includes management guidance in
connection with small business contracting. Specifically, section 5-3:
Instructs agencies to place a lower priority on reviewing
work performed by small businesses where the work is not inherently
governmental and where continued contractor performance does not put
the agency at risk of losing control of its mission or operations,
especially if the agency has not recently met, or currently is having
difficulty meeting, its small business goals;
encourages agencies to involve their small business
advocates if considering the insourcing of work currently being
performed by small businesses; and
instructs agencies that make a management decision to
insource work that is currently being performed by both small and large
businesses, to apply the ``rule of two'' to the work that will continue
to be performed by contractors (the rule of two calls for a contract to
be set aside for small businesses when at least two small businesses
can do the work for a fair market price).
1. What additional factors might be considered, if any, in addition
to those identified in Policy Letter 11-01, to determine where it may
be appropriate to insource work that is otherwise suitable for
performance by a small business contractor?
2. Section 1655 also requires OMB's guidance to address procedures
and methodologies for estimating and comparing costs. If a situation
arises where it is appropriate to consider a cost-based insourcing of
work currently being performed by a small business, to what extent, if
any, should costing procedures and methodologies differ from those used
to evaluate the cost effectiveness of other than small businesses?
Joseph G. Jordan,
Administrator for Federal Procurement Policy.
[FR Doc. 2013-03581 Filed 2-14-13; 8:45 am]
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