[Federal Register Volume 70, Number 146 (Monday, August 1, 2005)]
[Notices]
[Pages 44130-44131]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-15155]


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OFFICE OF MANAGEMENT AND BUDGET


Executive Office of the President; Performance of Commercial 
Activities

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

ACTION: Update to Federal Pay Raise Assumptions, Inflation Factors, and 
Costing Software Used in OMB Circular No. A-76, ``Performance of 
Commercial Activities.''

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SUMMARY: OMB is updating the annual federal pay raise assumptions and 
inflation cost factors used for computing the government's personnel 
and non-pay costs in public-private competitions conducted pursuant to 
Office of Management and Budget (OMB) Circular A-76. These annual pay 
raise assumptions and inflation factors are based on the President's 
Budget for Fiscal Year 2006. OMB is also providing notice of an update 
to ``COMPARE,'' the costing software agencies use when conducting 
public-private competitions.

DATES: Effective date: These changes are effective immediately and 
shall apply to all public-private competitions performed in accordance 
with OMB Circular A-76, as revised in May 2003, where the performance 
decision has not been certified by the government before this date.

FOR FURTHER INFORMATION CONTACT: Mathew Blum, Office of Federal 
Procurement Policy (OFPP), NEOB, Room 9013, Office of Management and 
Budget, 725 17th Street, NW., Washington, DC 20503, Tel. No. 202-395-
4953.
    Availability: Copies of OMB Circular A-76 may be obtained on the 
Internet at the OMB home page at www.whitehouse.gov/omb/circulars/index.html#numerical. Paper copies of the Circular may be obtained by 
calling OFPP (tel: (202) 395-7579). The COMPARE software may be 
accessed at http://www.compareA76.com.

Joshua B. Bolten,
Director.

Memorandum for the Heads of Executive Departments and Agencies

    From: Joshua B. Bolten, Director.
    Subject: Update of Annual Federal Pay Raise Assumptions, Certain 
Inflation Factors, and Costing Software Used in OMB Circular A-76, 
Performance of Commercial Activities.
    This memorandum updates the annual federal pay raise assumptions 
and inflation cost factors used for computing the government's 
personnel and non-pay costs in public-private competitions conducted 
pursuant to Office of Management and Budget (OMB) Circular A-76. These 
annual pay raise assumptions and inflation factors are based on the 
President's Budget for Fiscal Year 2006. The memorandum also provides 
notice of an update to ``COMPARE.'' COMPARE is the software agencies 
use to calculate costs and document performance decisions in public-
private competitions.
    1. Federal pay raise assumptions. The following Federal pay raise 
assumptions (including geographic pay differentials) that are in effect 
for 2005 shall be used for the development of government personnel 
costs. The pay raise factors provided for 2006 and beyond shall be 
applied to all government personnel with no assumption being made as to 
how they will be distributed between possible locality and base pay 
increases.

                     Federal Pay Raise Assumptions*
------------------------------------------------------------------------
                                                   Civilian    Military
                 Effective date                    (percent)   (percent)
------------------------------------------------------------------------
January 2005....................................         3.5         3.5
January 2006....................................         2.3        3.1
------------------------------------------------------------------------
* Federal pay raise assumptions have not been established for pay raises
  subsequent to January 2006. For January 2007 and beyond, the projected
  percentage change in the Employment Cost Index (ECI), 4.2 percent
  should be used to estimate government personnel costs for public-
  private competitions. In future updates to cost factors in the
  Circular, as pay policy for years subsequent to 2006 is established,
  these pay raise assumptions will be revised.

    2. Inflation factors. The following non-pay inflation cost factors 
are provided for purposes of public-private competitions conducted 
pursuant to Circular A-76 only. They reflect the generic non-pay 
inflation assumptions used to develop the fiscal year 2006 budget 
baseline estimates required by law. The law requires that a specific 
inflation factor (GDP FY/FY chained price index) be used for this 
purpose. These inflation factors should not be viewed as estimates of 
expected inflation rates for major long-term procurement items or as an 
estimate of inflation for any particular agency's non-pay purchases 
mix.

                           Non-Pay Categories
                       [Supplies, equipment, etc.]
------------------------------------------------------------------------
                                                               (percent)
------------------------------------------------------------------------
FY 2005.....................................................         2.0
FY 2006.....................................................         2.0
FY 2007.....................................................         2.1
FY 2008.....................................................         2.1
FY 2008.....................................................         2.1
FY 2010.....................................................       *2.1
------------------------------------------------------------------------
* Any subsequent years included in the period of performance shall
  continue to use the 2.1% figure, until otherwise revised by OMB.

    3. COMPARE Update. Revisions to Circular A-76, issued by OMB in May 
2003, require agencies to use ``COMPARE'' when calculating costs in 
public-private competitions. This software incorporates the costing 
procedures of the revised Circular to ensure all agencies calculate and 
document the costs of public and private sector performance in a 
standardized manner when conducting public-private competitions under 
the Circular. The Department of Defense (DOD) maintains COMPARE on 
OMB's behalf.
    DOD has completed a version update to COMPARE. COMPARE Version 2.1: 
(1) Improves the functionality of the software, (2) applies updated tax 
rate information (i.e., from the updated tax

[[Page 44131]]

rate table) to establish the adjusted cost of private sector 
performance, (3) fully automates the calculation of contract 
administration costs to ensure consistent agency application of this 
factor in competitions, and (4) updates terminology to reflect changes 
made when the Circular was revised in May 2003. The software also 
provides an optional baseline costing capability that may be used at an 
agency's discretion or as otherwise prescribed in agency guidance 
(e.g., for determining preliminary planning baseline costs and 
evaluating savings from completed competitions).
    COMPARE Version 2.1 replaces Version 2.0 and interim instructions 
issued when OMB revised the Circular. Agencies shall use COMPARE 
Version 2.1 to calculate costs for all public-private competitions 
performed pursuant to the revised Circular A-76 where a performance 
decision has not been certified by the government by the effective date 
identified in the Federal Register notice accompanying the publication 
of this memorandum. As explained above, however, the baseline costing 
feature is currently optional and may be used at the agency's 
discretion or as otherwise prescribed in agency guidance.
    COMPARE Version 2.1. and updated tables are located at http://www.compareA76.com.

[FR Doc. 05-15155 Filed 7-29-05; 8:45 am]
BILLING CODE 3110-01-P