FAR Updates References to OMB Circulars

Back in December 2013, the OMB (Office of Management and Budget) published new guidance a 2 CFR Part 200 entitled Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (OMB Uniform Guidance). The new guidance is often referred to as the "Super-Circular" even though technically, its not a circular. Its now part of the Code of Federal Regulations.

The new guidance became effective a year later, December 2014. The new OMB Uniform Guidance supersedes and streamlines requirements from OMB Circulars A-21 (Cost Principles for Educational Institutions), A-87 (Cost Principles for State, Local and Indian Tribal Governments), A-89 (Catalog of Federal Domestic Assistance), A-102 (Grants and Cooperative Agreements with State and Local Governments), A-122 (Cost Principles for Non-Profit Organizations), and A-133 (Audits of States, Local Governments and Non-Profit Organizations). Cost principles under OMB's Uniform Guidance apply to contracts with non-profits, educational institutions, state and local governments, and Indian tribal governments.

Now that OMB has consolidated and re-titled its administrative requirements, cost principles and audit requirements, the FAR (Federal Acquisition Regulations) require updating to replace obsolete references. The FAR Councils did that earlier this month. The first thing they set about doing was to find a shorter title than the official 2 CFR Part 200 title; Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. They did this by adding a new definition under FAR 2.101. It is now simply referred to as "OMB Uniform Guidance".

In addition to the new definition, the final rule makes about twenty additional changes, removing specific references to OMB circulars and replacing them with the term "OMB Uniform Guidance". A goodly number of these changes impacted the cost principles found at FAR Part 31.

You can read the full text of the changes here.

Feeling the Pinch Yet?

The Office of Federal Procurement Policy (OFPP), part of the Office of Management and Budget (OMB) announced yesterday that contract spending in fiscal year 2012 fell by $20 billion compared to fiscal year 2011.

According to OFPP, seven of the $20 billion came from reductions in management support services such as information technology systems, development, program management and engineering. Savings were also achieved by agencies pooling their purchases to get the same goods and services at lower prices.

The administration is proud of its accomplishments and last Wednesday, announced a new series of initiatives to continue the trend. The focus of the new initiatives is to drive even better coordination of contracting to achieve more savings in buying computers, IT software, janitorial and sanitation supplies, office furniture, building maintenance and operations services, and other professional technical services.

As almost an afterthought, the new initiatives add "To the maximum extent practicable, all strategic sourcing opportunities shall seek to increase participation by small businesses".

Acquisition and Contracting Improvement Plans and Pilots

On Monday, OMB released a report that identified more than $19 billion in contracting savings that Federal agencies expect to achieve in fiscal year 2010. This is nearly half of the Administration's $40 billion two-year goal. Of course, none of these savings have materialized yet, they're are simply projections. In reality, costs are going to increase, not decrease, as most agencies will see a five percent increase in their acquisition workforce this year, more than offsetting any saving to be achieved by these programs.

According to the OMB report, key acquisition reform actions include

• Agencies will cut contracting costs by 3.5 percent.
• Agencies are taking aggressive steps to improve accountability and management oversight
• Agencies are working to reduce their reliance on high-risk contracting by 10 percent
• Agencies are piloting new tools to determine the best mix of skills and workforce size for their organizations.

To achieve contract savings, one Agency standardized information technology. Another auctioned off some contracts and a third used in-house experts to improve a product.

To cut back on high-risk contracts, one Agency broke up a large cost-type contract into smaller competitive awards. Another converted a cost-type to a fixed price and a third initiated a peer review process that improved efficiency.

It is hard for us to get excited about these claims. Every administration want to reduce procurement cost. They initiate studies and pilot projects, claim victory, and go home. Yet when all is said and done, cost just keep rising. Does anyone really believe this stuff? What is most amazing to us is that when OMB briefed this report to reporters, some actually showed up. To view the entire OMB report, go here.