[Federal Register Volume 63, Number 9 (Wednesday, January 14, 1998)]
[Notices]
[Pages 2288-2290]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-818]


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OFFICE OF MANAGEMENT AND BUDGET


Proposed Revision of OMB Circular A-97

AGENCY: Office of Management and Budget, Executive Office of the 
President.

ACTION: Proposed revision of OMB Circular A-97.

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SUMMARY: The Office of Management and Budget requests agency and public 
comments on a proposed revision of OMB Circular No. A-97, ``Rules and 
Regulations Permitting Federal Agencies to Provide Specialized or 
Technical Services to State and Local Units of Government, Under Title 
III of the Intergovernmental Cooperation Act of 1968.'' The proposed 
revision establishes and updates Circular A-97 requirements with regard 
to the provision or receipt of commercial support services to or from 
Federal agencies and State and local governments. Circular A-97 was 
issued on April 29, 1969, and was last revised on March 27, 1981.

DATES: Agency and public comments are due to the Office of Management 
and Budget (OMB) not later than March 16, 1998.

ADDRESSES: Written comments should be sent to the Budget Analysis and 
Systems Division, NEOB Room 6002, Office of Management and Budget, 725 
17th Street, N.W., Washington, D.C. 20503. FAX terminal comments may be 
sent to (202) 395-7230.

AVAILABILITY: Copies of Circular A-97 may be obtained by contacting The 
Executive Office of the President, Office of Administration, 
Publications Office, Washington, D.C. 20503, at (202) 395-7332.

FOR FURTHER INFORMATION CONTACT: The Budget Analysis and Systems 
Division, NEOB Room 6002, Office of Management and Budget, 725 17th 
Street, N.W., Washington, D.C. 20503, Telephone Number: (202) 395-6104, 
FAX Number (202) 395-7230.

Background: Circular A-97 has become an integral part of the Federal 
privatization and outsourcing discussion. Federal support to meet State 
and local workload requirements has been suggested for a wide range of 
commercial services, including payroll services, background 
investigations services, leasing management, fleet management, geodetic 
and mapping services, prison requirements and health care services. 
Economies of scale, similarities of purpose and approach, and the 
possibility of a partnership to meet common data requirements suggest 
there may be opportunities for Federal or State and local taxpayer 
savings. On the other hand, special care must be taken to ensure that 
the Federal Government does not, unnecessarily, become a reimbursable 
competitor with or otherwise displace private sector, State or local 
employees. To address these concerns, OMB has prepared a revised and 
updated Circular A-97. OMB requests comments on this revision.
Franklin D. Raines,
Director.

To the Heads of Executive Departments and Establishments

Subject: Rules and regulations permitting Federal agencies to provide 
specialized or technical services to State and local units of 
government under Title III of the Intergovernmental Cooperation Act of 
1968

1. Purpose

    This Circular promulgates the rules and regulations that the 
Director of the Office of Management and Budget (OMB) is authorized to 
issue pursuant to Section 302 of the Intergovernmental Cooperation Act 
of 1968 (Pub. L. 90-577; 82 Stat. 1102). It also provides for the 
coordination of the action of Federal departments and agencies 
(hereinafter referred to as ``Federal agencies'') in exercising the 
authority contained in Title III of said Act as directed by the 
President's Memorandum of November 8, 1968 (33 FR 16487).

2. Background

    a. Title III of the Intergovernmental Cooperation Act of 1968 is 
intended to:
    1. Encourage intergovernmental cooperation in the conduct of 
specialized or technical services and provision of facilities essential 
to the administration of State or local governmental activities.
    2. Enable State and local governments to avoid unnecessary 
duplication of special service functions.
    3. Authorize Federal agencies that do not have such authority to 
provide reimbursable specialized and technical services to State and 
local governments.
    b. Title III of the Act authorizes the head of any Federal agency, 
upon a written request from a State or political subdivision thereof, 
to provide specialized or technical services, upon payment to the 
Federal agency by the unit of government making the request, of 
salaries and all other identifiable direct and indirect costs of 
performing such services. These costs shall be established in 
accordance with all applicable statements of Federal financial 
accounting standards.
    c. Title III of the Act requires that:
    1. Any services provided pursuant to Title III shall include only 
those that the Director of the Office of Management and Budget through 
rules and regulations determines Federal agencies have special or 
unique competence to provide.
    2. The Director's rules and regulations shall be consistent with, 
and in furtherance of, the Government's policy of relying on the 
private enterprise system to provide those services that are reasonably 
and expeditiously available through ordinary business channels.
    3. All moneys received by any Federal agency in payment of 
furnishing specialized and technical services under

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Title III of the Act shall be deposited to the credit of the principal 
appropriation, franchise or working capital fund from which the cost of 
providing such services has been paid or is to be charged.
    4. The head of any Federal agency shall furnish annually to the 
Director a summary report on the scope of the services provided under 
Title III.

3. Reservation of Existing Authority

    The authority contained in Title III of the Act and this Circular 
is in addition to, and does not supersede, any existing and specific 
authority now possessed by any Federal agency with respect to 
furnishing services, whether on a reimbursable or non-reimbursable 
basis, to State and local units of government. The requirements and 
conditions contained in this Circular shall not apply to services 
specifically provided in accordance with existing statutory 
authorities.

4. Definitions

    For purposes of this Circular: a. The term State means any of the 
several States of the United States, the District of Columbia, the 
Commonwealth of Puerto Rico, any territory or possession of the United 
States, or any agency or instrumentality of a State, but does not 
include the governments of the political subdivisions of a State.
    b. The terms political subdivision or local government mean a local 
unit of government, including specifically a county, municipality, 
city, town, township, or a school or other special district created by 
or pursuant to State law, or combinations thereof.
    c. Specialized or technical services means statistical and other 
studies and compilations, development projects, technical tests and 
evaluations, surveys, reports, documents, or any other similar service 
functions that a Federal agency is uniquely equipped and authorized by 
law to perform. Specialized or technical services do not include common 
administrative support services.

5. Policy

    Federal agencies will cooperate to the maximum extent possible with 
State and local units of government to provide the specialized or 
technical services as may be authorized. Such services shall generally 
supplement, not supplant existing services, and Federal agencies should 
not provide services with full reimbursement under this Circular that 
have heretofore been furnished for less than full reimbursement under 
other authorities, unless specifically requested to do so by the 
Director of OMB.

6. Types of Services That May Be Provided

    a. It is hereby determined that Federal agencies have the special 
competence to provide, and may provide, the following specialized or 
technical services and facilities related thereto, pursuant to Title 
III of the Intergovernmental Cooperation Act of 1968:
    1. Any existing statistical or other studies and compilations, 
where the data gathering is conducted as a joint effort to meet the 
ongoing requirements of both a Federal and a State or local government 
requirement. This authority shall not extend to State or local data 
requests to conduct Federal surveys or other compilations in advance of 
Federal schedules for collecting the same data or compilations, unless 
specifically approved by OMB.
    2. Preparation of unique statistical and other studies and 
compilations, tests and evaluations, surveys, reports, and documents, 
and assistance in the conduct of such activities and in the preparation 
of such materials, provided they are of a type that the Federal agency 
is authorized by law to conduct or prepare for itself.
    3. Highly specialized training of the type that the Federal agency 
is authorized by law to conduct for Federal personnel involved in 
inherently governmental activities or which is similar to such 
training.
    4. Technical aid in the preparation of proposals for development 
and other projects for which the Federal agency provides grants-in-aid 
or other assistance, provided such aid primarily strengthens the 
ability of the recipient in developing its own capacity to prepare 
proposals.
    b. Any of the above specialized or technical services provided to 
the States and their political subdivisions by existing statutory 
authorities may also be provided under Title III of the Act and the 
terms of this Circular.
    c. If a Federal agency receives a request for specialized or 
technical services that are not covered in subparagraph ``a.'' above, 
and that it believes is consistent with the Act and that it has a 
special competence to provide, it should forward the request to the 
Director for approval. Similarly, if there is doubt as to whether the 
service requested is covered by subparagraph ``a.,'' the request should 
be forwarded to the Director for consideration.

7. Conditions Under Which Services May Be Provided

    The specialized or technical services provided under Title III of 
the Act and this Circular may be provided, only under the following 
conditions:
    a. Such services will be provided only to the States, political 
subdivisions thereof, and combinations or associations of such 
governments or their agencies and instrumentalities.
    b. Such services will be provided only upon the written request of 
a State or a political subdivision thereof. Requests will normally be 
made by the chief executives of such entities and will be addressed to 
the head of the agency involved.
    c. Such services will not be provided unless the agency providing 
the services is providing similar services for its own use and, if 
commercial in nature, are being provided in accordance with a cost 
comparison conducted under the policies set forth in the Office of 
Management and Budget's Circular No. A-76, ``Performance of Commercial 
Activities,'' (Revised August 3, 1983) and its March 1996 Revised 
Supplemental Handbook. In addition, in accordance with the policies set 
forth in Circular No. A-76, the requesting entity must certify that 
such services cannot be procured reasonably and expeditiously by it 
through ordinary business channels.
    d. Such services will not be provided if they require any additions 
of staff or if they involve outlays for additional equipment or other 
facilities solely for the purpose of providing such services.
    e. Such services will be provided only upon payment or provision 
for reimbursement to the Federal agency involved, by the unit of 
government making the request, of salaries and all other identifiable 
direct and indirect costs of performing such services to the Federal 
taxpayer. For cost determination purposes, Federal agencies will be 
guided by the policies set forth in the Statement of Federal Financial 
Accounting Standards No. 4, ``Managerial Cost Accounting Concepts and 
Standards,'' Circular A-76, as revised, and Circular No. A-25, ``User 
Charges'' (July 8, 1993), or subsequent guidance.
    f. Any payments or reimbursements received by Federal agencies for 
the costs of such services will be deposited to the credit of the 
principal appropriation, franchise, working capital or other account 
from which the costs of providing the services have been paid or are to 
be charged.
    g. In the event a request for a service is denied, the Federal 
agency shall furnish the entity making the request with a statement 
indicating the reasons for the denial.
    8. Effective date. This revised Circular is effective immediately.
    9. Inquiries. Inquiries regarding this Circular may be addressed to 
the Budget

[[Page 2290]]

Analysis Branch, Budget Analysis and Systems Division, Office of 
Management and Budget, 725 17th Street, N.W., Washington, DC 20503; 
telephone: (202) 395-6104 or FAX (202) 395-7230.
Franklin D. Raines,
Director.
[FR Doc. 98-818 Filed 1-13-98; 8:45 am]
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