[Federal Register: November 1, 2006 (Volume 71, Number 211)]
[Notices]
[Page 64320-64322]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01no06-126]
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OFFICE OF MANAGEMENT AND BUDGET
Performance of Commercial Activities
AGENCY: Office of Management and Budget (OMB), Executive Office of the
President.
ACTION: Update to civilian position full fringe benefit cost factor,
Federal pay raise assumptions, inflation factors, and tax rates used in
OMB Circular No. A-76, ``Performance of Commercial Activities.''
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SUMMARY: OMB is updating the civilian position full fringe benefit cost
factor used to compute the estimated cost of government performance in
public-private competitions conducted pursuant to Office of Management
and Budget (OMB) Circular A-76. The civilian position full fringe
benefit cost factor is comprised of four separate elements: (1)
Insurance and health benefits, (2) standard civilian retirement
benefits, (3) Medicare benefits, and (4) miscellaneous fringe benefits.
OMB is updating the insurance and health benefits and standard civilian
retirement benefits cost elements based on actuarial analyses provided
by the Office of Personnel Management.
OMB is also updating the annual Federal pay raise assumptions and
inflation cost factors used for computing the government's personnel
and non-pay costs in Circular A-76 public-private competitions. These
annual pay raise assumptions and inflation factors are based on the
President's Budget for Fiscal Year 2007. The tax rate tables used in
connection with Circular A-76 competitions have also been revised. 2
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, as revised by this
notice, may be obtained at http://www.whitehouse.gov/omb/circulars/index.html#numerical.
Paper copies of the Circular may be obtained by
calling OFPP (tel: (202) 395-7579).
Rob Portman,
Director.
Attachment
Memorandum for the Heads of Executive Departments and Agencies
FROM: Rob Portman, Director
SUBJECT: Update to Civilian Position Full Fringe Benefit Cost
Factor, Federal Pay Raise Assumptions, Inflation Factors, and Tax
Rates used in OMB Circular No. A-76, ``Performance of Commercial
Activities.''
Office of Management and Budget (OMB) Circular A-76 requires
agencies to use standard cost factors to estimate certain costs of
government performance. These cost factors ensure that specific
government costs are calculated in a standard and consistent manner
to reasonably reflect the cost of performing commercial activities
with government personnel. This memorandum updates the civilian
position full fringe benefit cost factor, the annual Federal pay
raise assumptions, inflation cost factors, and tax rate information.
The update to the civilian position full fringe benefit cost factor
is based on actuarial analyses provided by the Office of Personnel
Management (OPM). The revised pay raise assumptions and inflation
cost factors are based on the President's Budget for Fiscal Year
2007. The tax rates are based on information provided by the
Internal Revenue Service.
Civilian Position Full Fringe Benefit Cost Factor
The Circular requires agencies to add the civilian position full
fringe benefit cost factor to the basic pay for each full-time and
part-time permanent civilian position in the agency cost estimate.
This factor is comprised of four separate elements: (1) Insurance
and health benefits, (2) standard civilian retirement benefits, (3)
Medicare benefits, and (4) miscellaneous fringe benefits. OMB has
determined, based on information provided by OPM, that the civilian
position full fringe benefit cost factor needs to be adjusted
upward, from 32.85 percent to 36.45 percent. This adjustment is
necessary to account for increases in insurance and health benefits
and civilian retirement benefits. The Medicare benefits and
miscellaneous fringe benefits elements remain unchanged at this
time. The revised cost elements of the civilian position full fringe
benefit cost factor are summarized in the table below.
[[Page 64321]]
Table.--Elements of the Civilian Position Full Fringe Benefit Cost
Factor
------------------------------------------------------------------------
Updated cost
Element Previous cost factor
factor (percent)
------------------------------------------------------------------------
Insurance and Health Benefit \a\........ 5.7 6.7
Standard Civilian Retirement Benefit \b\ 24.0 26.6
Medicare Benefit........................ 1.45 1.45
Miscellaneous Fringe Benefit............ 1.7 1.7
-------------------------------
Total Civilian Position Full Fringe 32.85 36.45
Benefits...........................
------------------------------------------------------------------------
\a\ This factor is based on actuarial estimates for the costs of the
government paid portion of health insurance under the Federal
Employees Health Benefits (FEHB) Program and the Federal Employees
Government Life Insurance (FEGLI) Program. This figure is multiplied
by the average participation rates in these programs and divided by
the average civilian employee's salary (as identified in the
President's Budget) to derive a factor as a percentage of basic pay.
This factor is based only on costs borne by the government (not
enrollee premiums) and only on behalf of active Federal employees (not
retirees). Increases in government costs for retirees are reflected in
the standard civilian retirement benefit cost factor.
\b\ The standard civilian retirement benefit cost factor includes the
government's accruing cost for pension benefits (Social Security,
Thrift Savings Plan, Federal Employees or Civil Service Retirement
Systems) and the accruing cost for post-retirement health benefits.
The master tables for COMPARE (the costing software that
incorporates the costing procedures of the circular) have been
updated to reflect these changes. The updates are available at
http://www.compareA76.com. Agencies shall use the updated COMPARE
master tables to calculate and document public and private sector
costs in competitions 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.
OMB intends to conduct periodic reviews of the civilian position
full fringe benefit cost factor. OMB is exploring options with OPM
for updating this factor on a more regularized schedule.
Accordingly, the following changes are made to OMB Circular A-
76.
1. Subparagraphs B.2.f.(1)(a) and (b) of Attachment C are
revised to read as follows:
(1) Full-time and Part-time Permanent Civilian Positions. Full-
time and part-time permanent civilian positions receive the civilian
position full fringe benefit cost factor of 36.45 percent of the
position's basic pay. The 36.45 percent civilian position full
fringe benefit cost factor is the sum of the standard civilian
position retirement benefit cost factor (26.6 percent), insurance
and health benefit cost factor (6.7 percent), Medicare benefit cost
factor (1.45 percent), and miscellaneous fringe benefit cost factor
(1.7 percent).
(a) Retirement Benefit Cost Factors. The standard civilian
retirement benefit cost factor represents the cost of the weighted
Civil Service Retirement System/Federal Employees Retirement System
to the government, based upon the full dynamic normal cost of the
retirement systems, the normal cost of accruing retiree health
benefits based on average participation rates, social security, and
Thrift Savings Plan contributions. The standard civilian retirement
benefit cost factor for civilian positions is 26.6 percent of the
position's basic pay (20.4 percent retirement pension plus 6.2
percent for retiree health). The retirement cost factors for special
class civilian positions are: 37.6 percent of basic pay for air
traffic controllers (31.4 percent retirement pension plus 6.2
percent for retiree health) and 39.8 percent of basic pay for law
enforcement and fire protection (33.6 percent retirement pension
plus 6.2 percent for retiree health).
(b) Insurance and Health Benefit Cost Factor. The insurance and
health benefit cost factor for civilian positions, based on actual
cost, is 6.7 percent of the position's basic pay (0.2 percent for
life insurance benefits and 6.5 percent for health benefits). The
following standard cost factors and footnote no. 1 in Figure C.1 of
Attachment C, ``Table of Standard A-76 Costing Factors,'' are
revised as set forth below:
Table of Standard A-76 Costing Factors
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Factor \1\
Title Originating source Category of cost (percent)
----------------------------------------------------------------------------------------------------------------
Civilian Position Full Fringe Benefit OMB Transmittal Memoranda... Pay........................ 36.45
Cost Factor.
Insurance and Health Benefit Cost Factor. OMB Transmittal Memoranda... Pay........................ 6.7
Special Class Retirement Cost Factor (Law OMB Transmittal Memoranda... Pay........................ 39.8
Enforcement & Fire Protection).
Special Class Retirement Cost Factor (Air OMB Transmittal Memoranda... Pay........................ 37.6
Traffic Control).
Standard Civilian Retirement Benefit Cost OMB Transmittal Memoranda... Pay........................ 26.6
Factor.
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\1\ The factors listed in this column are factors in effect on December 2005. Agencies should refer to the
COMPARE Web site at http://www.compareA76.com. for the updated COMPARE master tables and other updated
information.
[[Page 64322]]
Federal Pay Raise Assumptions
The following Federal pay raise assumptions (including
geographic pay differentials) that are in effect for 2006 shall be
used for the development of government personnel costs.
The pay raise factors provided for 2007 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
Efective date (percent) (percent)
------------------------------------------------------------------------
January 2006.................................. 3.1 3.1
January 2007.................................. 2.2 2.7
------------------------------------------------------------------------
* Federal pay raise assumptions have not been established for pay raises
subsequent to January 2007. For January 2008 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 2007 is established,
these pay raise assumptions will be revised.
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 2007 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 2007.................................................... 2.2
FY 2008.................................................... 2.2
FY 2009.................................................... 2.1
FY 2010.................................................... 2.1
FY 2011.................................................... * 2.1
------------------------------------------------------------------------
* Any subsequent years included in the period of performance shall use a
2.2% figure, until otherwise revised by OMB.
Tax Rate Tables
The Circular requires that agencies subtract the Federal income
tax generated for the government from the total cost of private
sector performance. The tax rate tables used in connection with
public-private competitions have been revised. COMPARE will apply
the updated tax rate information to establish the adjusted cost of
private sector performance.
[FR Doc. E6-18415 Filed 10-31-06; 8:45 am]
BILLING CODE 6325-39-P