Circular A-76 Supplement: Appendix 2

This document describes the process that agencies used to develop their commercial activities inventories, as required by the FAIR Act

Commercial Activities Inventory

A. Annual Inventory Submission

In accordance with the FAIR Act, Circular A-76 and this Handbook, each agency must submit to OMB, by June 30 of each year, a detailed Commercial Activities Inventory of all commercial activities performed by in-house employees, including, at a minimum, the following:

a. Organization unit.

b. State(s).

c. Location(s).

d. FTE.

e. Activity function code.

f. Reason code.

g. Year the activity first appeared on FAIR Act Commercial Activities Inventory (initial value will be 1999).

h. Name of a Federal employee responsible for the activity or contact person from whom additional information about the activity may be obtained.

i. Year of cost comparison or conversion (if applicable).

j. CIV/FTE savings (if applicable).

k. Estimated annualized Cost Comparison dollar savings (if applicable).

l. Date of completed Post-MEO Performance Review (if applicable).

Agencies have the discretion to automate and to structure the initial submission of the detailed inventory as they believe most appropriate, so long as the inventory includes each of these data elements. Agencies must transmit an electronic version of the inventory to OMB as well as two paper copies. The electronic version should be in a commonly used software format (commercial off-the-shelf spreadsheet, database or word processing format). OMB anticipates issuing additional guidance on the structure and format of future inventory submissions, based on the experience gained from the first annual review and consultation process.

B. Reporting

The above is public information. The data may be summarized into reports for the Congress, the General Accounting Office (GAO), agency officials, OMB or the public.


Enter the number of authorized full-time employees or FTE (as applicable) in the commercial activity function or functions as of the date of the inventory. Employees performing inherently Governmental activities are not reported in the Commercial Activities Inventory.

D. A-76 Commercial activity functional codes

The Department of Defense has developed a comprehensive list of function codes for use in their A-76 inventory system. In applying these function codes Government-wide, the codes standardize the functional descriptions of activities and facilitate the aggregation of activities Government-wide and by agency.

E. Reason codes

The following reason codes will be used in the Commercial Activities Inventory. Agencies may add additional sub-groupings (A1, A2 for example) within any reason code, as deemed necessary.


Code                         Explanation


A    Indicates that the function is performed by Federal employees and
is specifically exempt by the agency from the cost comparison
requirements of the Circular and this Supplement.
B Indicates that the activity is performed by Federal employees and
is subject to the cost comparison or direct conversion
requirements of the Circular and this Supplement. C Indicates that the activity is performed by Federal employees,
but is has been specifically made exempt from the provisions of
the Circular and this Supplement by Congress, Executive Order or
OMB. D Indicates that the function is currently performed by in-house
Federal employees and is in the process of being cost compared
or converted directly to contract or interservice support
agreement performance. E Indicates that the function is retained in-house as a result of
a cost comparison. F Indicates the function is currently being performed by Federal
employees, but a review is pending force restructuring decisions
(i.e., base closure, realignment, consolidation, etc.). G Indicates that the function is prohibited from conversion to
contract because of legislation. H Waiver issued. I Indicates the function is being performed in-house as a result
of a cost comparison resulting from a decision to convert from
contract to in-house performance. --------------------------------------------------------------------

F. Maintenance of aggregate data

Agencies should maintain aggregate program implementation data by fiscal year, to include: total number of studies, FTE and dollar savings by conversion to contract, conversion to in-house or otherwise retained in-house. Agencies should also track total FTE studied and MEO savings generated.

G. Inventory Review and Publication; Challenges and Appeals

1. Review and Publication: In accordance with Section 2 of the FAIR Act, OMB will review the agency's Commercial Activities Inventory and consult with the agency regarding its content. After this review is completed, OMB will publish a notice in the Federal Register stating that the inventory is are available to the public. Once the notice is published, the agency will transmit a copy of the detailed Commercial Activities Inventory to Congress and make the materials available to the public through its Washington, D.C. or headquarters offices.

2. Challenges and Appeals: Under Section 3 of the FAIR Act, an agency's decision to include or exclude a particular activity from the Commercial Activities Inventory is subject to administrative challenge and, then, possible appeal by an "interested party." Section 3(b) of the FAIR Act defines "interested party" as:

a. A private sector source that (A) is an actual or prospective offeror for any contract or other form of agreement to perform the activity; and (B) has a direct economic interest in performing the activity that would be adversely affected by a determination not to procure the performance of the activity from a private sector source.

b. A representative of any business or professional association that includes within its membership private sector sources referred to in a. above.

c. An officer or employee of an organization within an executive agency that is an actual or prospective offeror to perform the activity.

d. The head of any labor organization referred to in section 7103(a) (4) of title 5, United States Code that includes within its membership officers or employees of an organization referred to in c. above.

3. An interested party may submit to an executive agency an initial challenge to the inclusion or exclusion of an activity within 30 calendar days after publication of OMB's Federal Register notice stating that the inventory is available. The challenge must set forth the activity being challenged with as much specificity as possible, and the reasons for the interested party's belief that the particular activity should be reclassified as inherently Governmental (and therefore be deleted from the inventory) or as commercial (and therefore be added to the inventory) in accordance with OFPP Policy Letter 92-1 on inherently Governmental functions (see Appendix 5) or as established by precedent (such as when other agencies have contracted for the activity or undergone competitions for this or similar activities).

4. The agency head may delegate the responsibility to designate the appropriate official(s) to receive and decide the initial challenges. As mandated by the FAIR Act, the deciding official must decide the initial challenge and transmit to the interested party a written notification of the decision within 28 calendar days of receiving the challenge. The notification must include a discussion of the rationale for the decision and, if the decision is adverse, an explanation of the party's right to file an appeal.

5. An interested party may appeal an adverse decision to an initial challenge within 10 working days after receiving the written notification of the decision. The agency head may delegate the responsibility to receive and decide appeals to the official identified in paragraph 9.a of the Circular (or an equivalent senior policy official), without further delegation. Within 10 working days of receipt of the appeal, the official must decide the appeal and transmit to the interested party a written notification of the decision together with a discussion of the rationale for the decision. The agency must also transmit to OMB and the Congress a copy of any changes to the inventory that result from this process, make the changes available to the public and publish a notice of public availability in the Federal Register.

H. Agency Review and Use of Inventory

Section 2(d) of the FAIR Act requires that each agency, within a reasonable time after the publication of the notice that its inventories are publicly available, review the activities on the detailed commercial activities inventory. Agencies will report to OMB on this process as part of the Report on Agency Management of Commercial Activities required under Paragraph I, below. In addition, Section 2(d)-(e) of the FAIR Act provides that, each time the head of the executive agency considers contracting with a private-sector source for the performance of an activity included on the inventory, the agency must use a competitive process to select the source and must ensure that, when a cost comparison is used or otherwise required for the comparison of costs, all costs are considered and the costs considered are realistic and fair. In carrying out these requirements, agencies must rely on the guidance contained in Circular A-76 and this Supplemental Handbook to determine if cost comparisons are required and what competitive method is appropriate. All competitive costs of in-house and contract performance are included in the cost comparison, when such comparison is required, including the costs of quality assurance, technical monitoring, liability insurance, retirement benefits, disability benefits and overhead that may be allocated to the function under study or may otherwise be expected to change as a result of changing the method of performance.

I. Annual Report on Agency Management of Commercial Activities

As part of ongoing agency responsibility to manage their performance of commercial activities and ongoing OMB oversight, OMB will require agencies to report annually on such management. The content of the reports is likely to vary depending upon the progress made by each agency in reviewing their inventory and on the experience OMB gains from the first round of inventory submissions, review, challenges and appeals mandated by the FAIR Act. OMB anticipates issuing subsequent guidance if it determines that supplemental reports or other information is needed for future inventory submissions to assure that agencies have correctly implemented all of the provisions of the FAIR Act and taken advantage of the management information inherent in the detailed Commercial Activities Inventory.

A-76 Commercial Activition Functional Codes


                               G--Social Services


G001      Care of Remains of Deceased Personnel & Funeral Services

G008      Commissary Store Operation

G009      Clothing Sales Store Operations

G010      Recreational Library Services

G011      Morale, Welfare, and Recreation Services

G012      Community Services

G900      Chaplain Activities and Support Services

G901      Housing Administrative Services

G904      Family Services

G999      Other Social Services


                               H--Health Services


H101      Hospital Care

H102      Surgical Care

H105      Nutritional Care

H106      Pathology Services

H107      Radiology Services

H108      Pharmacy Services

H109      Physical Therapy

H110      Materiel Services

H111      Orthopedic Services

H112      Ambulance Services

H113      Dental Care

H114      Dental Laboratories

H115      Clinics and Dispensaries

H116      Veterinary Services

H117      Medical Records

H118      Nursing Services

H119      Preventive Medicine

H120      Occupational Health

H121      Drug Rehabilitation

H999      Other Health Services


          J--Intermediate, Direct or General Repair and Maintenance
of Equipment ---------------------------------------------------------------------- J501 Aircraft Maintenance J502 Aircraft Engine Maintenance J503 Missiles J504 Vessels J505 Combat Vehicles J506 Noncombat Vehicles J507 Electronic and Communication Equipment Maintenance J510 Railway Equipment J511 Special Equipment J512 Armament J513 Dining Facility Equipment J514 Medical and Dental Equipment J515 Containers, Textile, Tents, and Tarpaulins J516 Metal Containers J517 Training Devices and Audiovisual Equipment J519 Industrial Plant Equipment J520 Test, Measurement and Diagnostic Equipment J521 Other Test, Measurement and Diagnostic Equipment J522 Aeronautical Support Equipment J999 Maintenance of Other Equipment ---------------------------------------------------------------------- K--Depot Repair, Maintenance, Modification,
Conversion or Overhaul of Equipment ---------------------------------------------------------------------- K531 Aircraft K532 Aircraft Engines K533 Missiles K534 Vessels K535 Combat Vehicles K536 Noncombat Vehicles K537 Electronic and Communication Equipment K538 Railway Equipment K539 Special Equipment K540 Armament K541 Industrial Plant Equipment K542 Dinning and Facility Equipment K543 Medical and Dental Equipment K544 Containers, Textile, Tents, and Tarpaulins K545 Metal Containers K546 Test, Measurement and Diagnostic Equipment K547 Other Test, Measurement and Diagnostic Equipment K548 Aeronautical Support Equipment K999 Other Depot Repair, Maintenance, Modification, Conversion or
Overhaul of Equipment ---------------------------------------------------------------------- P--Base Maintenance/Multifunction Contracts ---------------------------------------------------------------------- P100 Installation Operation Contracts (Multi-function) ---------------------------------------------------------------------- R--Research, Development, Test, and Evaluation (RDT&E)
Support ---------------------------------------------------------------------- R660 RDT&E Support ---------------------------------------------------------------------- S--Installation Services ---------------------------------------------------------------------- S700 Natural Resource Services S701 Advertising and Public Relations S702 Financial and Payroll Services S703 Debt Collection S706 Bus Services S708 Laundry and Dry Cleaning S709 Custodial Services S710 Pest Management S712 Refuse Collection and Disposal Services S713 Food Services S714 Furniture Repair S715 Office Equipment Maintenance and Repair S716 Motor Vehicle Operation S717 Motor Vehicle Maintenance S718 Fire Prevention and Protection S719 Military Clothing S724 Guard Service S725 Electrical Plants and Systems Operation and Maintenance S726 Heating Plants and Systems Operation and Maintenance S727 Water Plants and Systems Operation and Maintenance S728 Sewage and Waste Plants Operation and Maintenance S729 Air Conditioning and Refrigeration Plants S730 Other Utilities Operation and Maintenance S731 Supply Operations S732 Warehousing and Distribution of Publications S740 Transportation Management Services S750 Museum Operations S760 Contractor-Operated Parts Stores & Civil Engineering Supply
Stores S999 Other Installation Services ---------------------------------------------------------------------- T--Other NonManufacturing Operations ---------------------------------------------------------------------- T800 Ocean Terminal Operations T801 Storage and Warehousing T802 Cataloging T803 Acceptance Testing T804 Architect-Engineering T805 Operation of Bulk Liquid Storage T806 Printing and Reproduction T807 Visual Information T808 Mapping and Charting T809 Administrative Telephone Services T810 Air Transportation Services T811 Water Transportation Services T812 Rail Transportation Services T813 Engineering and Technical Services T814 Aircraft Fueling Services T815 Scrap Metal Operation T816 Telecommunication Centers T817 Other Communications and Electronics Systems T818 Systems Engineering and Installation of Communications
Systems T819 Preparation and Disposal of Excess and Surplus Property T820 Administrative Support Services T821 Special Studies and Analysis T900 Training Aids, Devices, and Simulator Support T999 Other NonManufacturing Operations ---------------------------------------------------------------------- U--Education and Training ---------------------------------------------------------------------- U100 Recruit Training U200 Officer Acquisition Training U300 Specialized Skill Training U400 Flight Training U500 Professional Development Training U510 Professional Military Education U520 Graduate Education, Fully Funded, Full-time U530 Other Full-time Education Programs U540 Off-Duty (Voluntary) and On-Duty Education Programs U600 Civilian Education and Training U700 Dependent Education U800 Training Development and Support U999 Other Training Functions ---------------------------------------------------------------------- W--Automatic Data Processing ---------------------------------------------------------------------- W824 Data Processing Services W825 Maintenance of ADP Equipment W826 Systems Design, Development and Programming Services W827 Software Services W999 Other ADP Functions ---------------------------------------------------------------------- X--Products Manufactured and Fabricated In-House ---------------------------------------------------------------------- X931 Ordnance Equipment X932 Products Made From Fabric or Similar Materials X933 Container Products and Related Items X934 Preparation of Food and Bakery Products X935 Liquid, Gaseous and Chemical Products X936 Rope, Cordage, and Twine Products; Chains and Metal Cable
Products X937 Logging and Lumber Products X938 Communications and Electronic Products X939 Construction Products X940 Rubber and Plastic Products X941 Optical and Related Products X942 Sheet Metal Products X943 Foundry Products X944 Machined Parts X999 Other Products Manufactured and Fabricated In-House ---------------------------------------------------------------------- Z--Maintenance, Repair, Alteration,
and Minor Construction of Real Property ---------------------------------------------------------------------- Z991 Maintenance and Repair of Family Housing Buildings and
Structures Z992 Maintenance and Repair of Buildings and Structures Other
Than Family Housing Z993 Maintenance and Repair of Grounds and Surfaced Areas Z997 Maintenance and Repair of Railroad Facilities Z998 Maintenance and Repair of Waterways Z999 Other Maintenance, Repair, Alteration, and Minor
Construction of Real Property ----------------------------------------------------------------------
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