3. Refer to the proper page and line of the agency's inventory report previously submitted.

4. This should be the number of similar installations. Exclude those reported elsewhere as a part of another major activity.

5. If there are relatively few such installations, give their location. If there is a larger number of such installations, use some descriptive term, such as "at all dam construction sites" or "one in each seaboard State."

6. Show as subordinate activities the types listed in the Standard Industrial Classification Manual which form a part of the major activity listed in No. 1. 7. This should be an estimate of the total expenditures attributable to the activity for the fiscal year 1954.

8. This should be an estimate of the total expenditures attributable to the activity for the fiscal year 1955.

9. Show the number of employees assigned to the activity who were included on the standard form 113 report to the Civil Service Commisson and the number of military personnel assigned to the activity.

10. If the number of employees shown in No. 9 is not representative of the normal or seasonal size of the operation, explain the seasonal character and give figures which reflect the maximum employment during the peak season. 11. On a percentage basis, account for the disposition made during fiscal year 1954 of the products manufactured.

12. The value of land and buildings should be the same (initial cost) as reported to the General Services Administration in connection with its survey of real property holdings. For those assets disposed of before or acquired after December 31, 1953, which are not included in the GSA survey, use the same concept of initial cost, or the best estimate thereof, in setting the asset figure. This concept should also govern the value placed on equipment which was not covered by the GSA survey.

13. Check the block which indicates the authority and circumstances under which the activity is conducted. If it is required by law check "Required." If it is specifically authorized but not required by law, check "Specifically authorized." If it is not specifically authorized or requird but has been the subject of specific congressional approval in appropriation acts or some other legislation, check "Congressional approval" and explain the circumstances. If there is no specific approval, but the agency considers that its basic legislation authorizes the activity, check "General authorization." Use the "Other" block only if none of the previously mentioned categories is applicable, and explain the circumstances. Wherever there is legislation under which the activity is authorized, give the United States Code citation.

14. Indicate by a check what the agency head determines is to be done about the continuation of the activity. Check the block "Eliminate" if the Government operation is to be closed and the facilities disposed of. Check "Curtail" if the volume of activity is being reduced but the activity will continue as a Government operation. "Continue" will be used to denote the decision that it is in the public interest for the activity to be conducted as a Government operation. Check "Other" if the activity is being converted to a contractor-operator basis or some combination of ways of procuring the product. If the "Other" block is checked, give a brief explanation of what is to be done.

Section B. This section should be completed for all activities on which No. 14 is not checked "Continue."

15. State exactly what is to be done.

16. Show the date on which the activity has been or will be eliminated, curtailed, or otherwise modified.

17. If the agency head's detremination is not yet in effect, indicate the extent to which negotiations or other actions have progressed on the date of the report. 18. If the agency head's detremination cannot be carried out because of existing law, summarize any legislative proposals being submitted to the Bureau of the Budget.

19. If the assets which were used in the conduct of the activity are to be sold or otherwise disposed of, so indicate. If they are not to be disposed of, give

reasons.

20. If any of the assets have been disposed of, show the amount recovered from their sale. If they have not been but will be later, indicate an estimated amount to be recovered, adding "estimate."

21. Use the same basis for determining the value of the assets being retained as was used in estimating the value of the capital assets in No. 12.

22. There will normally be an entry on line 2 and, in addition, there may be one on lines 1 or 3, depending on the action being taken. The first line should show savings. The second should show amounts formerly spent for Government operations which hereafter will be spent for procurement of the product by direct purchase or contractual arrangements. The third line should show any increase in out-of-pocket costs of procuring the product, whether or not additional appropriations will be requested. The last line will be used for any other circumstances which will prevail. These need not be exact figures developed by a cost study but may be estimated amounts.

23. The changes in the numbers of persons engaged in the activity will be related to the answer on No. 9. The number eliminated does not necessarily mean that employment of the particular individuals will be terminated but it does mean that the personnel requirements of the agency will be reduced to that extent so far as the activity is concerned.

Section C. This section is to be completed whenever the agency head decides that the activity is to be continued as a direct Government operation.

24. This justification must be complete, showing the reasons why the agency head has decided that there is a clear demonstration that it is not in the public interest to procure such product from private enterprise.

25. If unavailability of the product commercially is a reason given in No. 24. this item will be used to indicate the circumstances under which the product is provided by private enterprise under normal business conditions. It should also indicate whether the geographical location of the activity is such that private enterprise is not in a position to fill the agency's needs. This should be answered only after specific analysis of the problem and must include a description of the steps which the agency has taken to be sure that private industry either can or cannot furnish the agency's needs.

26. If cost is a reason given in No. 24, this item will be used to indicate the comparative costs. Since cost should not usually be the deciding factor in determining whether to continue the operation as a direct Government operation. this statement should show both the results of the comparative cost analysis and the elements which have been used in determining the Government cost, both as a direct operation and if the product is secured from private industry.

SECTION 8 (TO BE COMPLETED ON ALL ACTIVITIES ON WHICH NO. 14 IS NOT CHECKED "CONTINUE")

SECTION C (TO BE COMPLETED FOR ALL ACTIVITIES ON WHICH NO. 14 IS CHECKED "CONTINUE")

24. REASON FOR DECISION TO CONTINUE AS GOVERNMENT OPERATION (IF MORE SPACE IS NEEDED ATTACH A SEPARATE SHEET).

25.

IF UNAVAILABILITY OF PRODUCT OR SERVICE COMMERCIALLY IS REASON GIVEN IN NO. 24, EXPLAIN

26. IF COST IS REASON GIVEN IN NO. 24, IDENTIFY ITEMS CONSIDERED IN COST COMPUTATIONS AND SOURCE OF COMMERCIAL COSTS USED IN COMPARISONS.

Bulletin No. 57-7.

EXECUTIVE OFFICE OF THE PRESIDENT,
BUREAU OF THE BUDGET,
Washington, D.C., February 5, 1957.

To: The Heads of executive departments and establishments. Subject: Commercial-industrial activities of the Government providing products or services for governmental use.

1. Purpose.-Bureau of the Budget Bulletin No. 55-4 of January 15, 1955, established policy and initiated a review of commercial-industrial-type activities conducted by the Government that provide services or products for its own use which can be procured from private enterprise through ordinary business channels (referred to as "commercial activities"). This bulletin gives further instructions with respect to (a) the evaluation of commercial activities classified as services, (b) the termination of commercial activities, and (c) the starting of new commercial activities.

GENERAL POLICY AND ITS INTERPRETATION

2. Policy. It is the general policy of the administration that the Federal Government will not start or carry on any commercial activity to provide a service or product for its own use if such product or service can be procured from private enterprise through ordinary business channels. Exceptions to this policy shall be made by the head of an agency only where it is clearly demonstrated in each case that it is not in the public interest to procure such product or service from private enterprise.

3. Meaning of certain terms.-The following interpretations apply to the preceding paragraph:

(a) In determining whether an activity is "commercial" in nature and "can be procured *** through ordinary business channels," reference may be made to the "Standard Industrial Classification Manual," to the availability of the service or product on a competitive basis, and to ordinary business practice with respect to procurement thereof. The inclusion of an activity in the manual will be generally considered indicative that it may be procured through ordinary business channels. There will be excluded as noncommercial, however, those functions which are a part of the normal management responsibilities of a Government agency or a private business of comparable size (such as accounting, personnel work, and the like). Information as to both source and ability of private enterprise to provide a product or service may be secured from the Business and Defense Services Administration of the Department of Commerce.

(b) "Activities *** for its own use" includes the activities of producing a service or product primarily for the use of the Government (whether the same agency or other agencies), even though some portion of the product or service is sold or given to the public. It includes activities which are to provide a service or product for the use of a Government agency in its official duties, even though the agency is engaged in carrying out a service to the public (e.g., the manufacture of mailbags or the generation of power at a Government institution). However, it excludes the activities of producing a service or product primarily to be sold or given to the public (e.g., the generation of power for sale to the public) and those primarily for the employees (e.g., the provision of quarters for rent to employees at remote locations).

The fact that this bulletin does not deal with products or services provided directly to the public in no way relieves the agencies of keeping such activities under constant review and reevaluation as to the need for the Government to carry on such activities.

(c) "Start" means to begin any activity of a commercial nature in a location where it was not previously carried on by an agency within the preceding 12 months.

4. Costs and prices.-The relative costs of Government operation compared to purchase from private sources will be a factor in determining whether to start or carry on a commercial activity in those cases where the agency head concludes that the product or service cannot be purchased on a competitive basis and cannot be obtained at reasonable prices from private industry.

55226-60-pt. 3-5