The Office of Management and Budget's (OMB) Circular A-76 and its supplemental handbook provide policy guidance and implementation procedures for government agencies to use in deciding whether to contract out for commercial goods, services, and activities. As you requested, we examined three provisions associated with a March 1996 revision to the k76 supplemental handbook. Specifically, this report addresses (1) what is the basis for OMB's new requirement that a standardized 12-percent overhead rate be applied to in-house cost estimates, regardless of the type of commercial activity or where in the country the activity is to be performed; (2) whether the Department of Defense (DoD) has developed a separate overhead rate for military personnel and, if so, the basis for that rate; and (3) how "best value" criteria are expected to be used in A-76 competitions. Because your interest focused on A-76 competitions within DOD, we focused our attention there, while gathering some data from other agencies.

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NSIAD-98-62 Defense Outsourcing: Better Data Is Needed to Support Overhead Rates for A-76 Studies