Enclosure (2) to COMDTINST 5224.3
It is important to ensure that public-public and public-private competitions are conducted on a
fair and level playing ground. The guiding principle for determining when the government
engages in commercial activities and when it considers competition is to ensure that we get
the best deal possible for the American taxpayer. In accordance with Part I, Chapter 2,
paragraph B.3, Circular No. A-76 Revised Supplemental Handbook, proposals to obtain new
or expanded products or services from another government agency or private sector offeror,
including ISSA proposals, will be published in the Commerce Business Daily.
The October 1, 1997 grandfather clause, included in the March 1996 Revised
Supplemental Handbook (Updated June 1999), Part I, Chapter 2, paragraph 5 has
expired. Beginning on October 1, 1997 and unless specifically exempted from this
requirement (see Enclosure 1, paragraph B.1.(b)), the Revised Supplement requires A-
76 cost comparisons for all new and expanded ISSAs, where such cost comparisons
were not conducted or required in the past. Agencies are now required to invite the
private sector to participate in cost comparisons before a decision to transfer work
between agencies is made under the Economy Act. These cost comparisons will be
based upon the cost to the taxpayer -- not simply the budgetary cost to the agency.
Effective 1 October 1997 and unless otherwise exempt from the cost comparison
requirements of the Revised Circular, new or expanded interservice support agreements
must be justified by a cost comparison. Interservice support providers that have
themselves, however, conducted a cost comparison with the private sector, may at the
customer agency's discretion, accept new or expanded work. No further cost
comparison on the customer or provider agency's part is necessary until the provider
agency's workload increases by 30 percent or 65 FTE, at which time another provider
cost comparison is required.
The revised Supplemental Handbook to OMB Circular A-76 did not retroactively apply this
new and more formal cost comparison requirement to agencies that are currently obtaining a
commercial support service from another Department or Agency, in accordance with the
Economy Act, the Federal Property and Administrative Services Act, or the Government
Management Reform Act. As we seek lower costs and best value support service offerors, we
must test and improve our in-house, contract and ISSA support mix. In effect, the Circular
does not need to require cost comparisons for existing ISSA workloads. The forces of the
market and budget constraints will require that these cost comparisons be conducted.
Agency heads may continue to consolidate support services into new, intra-service (internal to
Department of Transportation) revolving or franchise funds without cost comparison
assuming that such consolidation does not involve the conversion of work to or from in-house
or contract performance.
Use of other government agency contracts.
The decision by the Coast Guard to place a reimbursable support agreement under the
Economy Act with an agency outside DOT, instead of contracting directly with a private
source, shall be documented in Determinations and Findings. An authorized Contracting
Officer must sign the Determinations and Findings. In addition to the determinations in B.
above, FAR 17.503 requires that the Determinations and Findings must document the