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OMB+Circular+A-94+excerpts - Circular No A-94...

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Circular No. A-94 Revised (Transmittal Memo No. 64) October 29, 1992 MEMORANDUM FOR HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS SUBJECT: Guidelines and Discount Rates for Benefit-Cost Analysis of Federal Programs Table of Contents 1. Purpose 2. Rescission 3. Authority 4. Scope 5. General Principles a. Net Present Value and Related Outcome Measures b. Cost-Effectiveness Analysis c. Elements of Benefit-Cost or Cost-Effectiveness Analysis 6. Identifying and Measuring Benefits and Costs a. Identifying Benefits and Costs b. Measuring Benefits and Costs 7. Treatment of Inflation a. Real or Nominal Values b. Recommended Inflation Assumption 8. Discount Rate Policy a. Real versus Nominal Discount Rates b. Public Investment and Regulatory Analyses c. Cost-Effectiveness, Lease-Purchase,Internal Government Investment, and Asset Sale Analyses 9. Treatment of Uncertainty a. Characterizing Uncertainty b. Expected Values c. Sensitivity Analysis d. Other Adjustments for Uncertainty 10. Incidence and Distributional Effects a. Alternative Classifications b. Economic Incidence 11. Special Guidance for Public Investment Analysis a. Analysis of Excess Burdens b. Exceptions 12. Special Guidance for Regulatory Impact Analysis 13. Special Guidance for Lease-Purchase Analysis a. Coverage
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b. Required Justification for Leases c. Analytical Requirements and Definitions 14. Related Guidance 15. Implementation 16. Effective Date 17. Interpretation Appendix A: Definitions of Terms Appendix B: Additional Guidance for Discounting Appendix C: Discount Rates for Cost-Effectiveness, Lease-Purchase, and Related Analyses Other Documents 1. Purpose . The goal of this Circular is to promote efficient resource allocation through well- informed decision-making by the Federal Government. It provides general guidance for conducting benefit-cost and cost-effectiveness analyses. It also provides specific guidance on the discount rates to be used in evaluating Federal programs whose benefits and costs are distributed over time. The general guidance will serve as a checklist of whether an agency has considered and properly dealt with all the elements for sound benefit-cost and cost-effectiveness analyses. 2. Rescission . This Circular replaces and rescinds ………. . 3. Authority . This Circular is issued under the authority of 31 U.S.C. Section 1111 and the Budget and Accounting Act of 1921, as amended. 4. Scope . This Circular does not supersede agency practices which are prescribed by or pursuant to law, Executive Order, or other relevant circulars. The Circular's guidelines are suggested for use in the internal planning of Executive Branch agencies. The guidelines must be followed in all analyses submitted to OMB in support of legislative and budget-programs ………… a. Aside from the exceptions listed below, the guidelines in this Circular apply to any analysis used to support Government decisions to initiate, renew, or expand programs or projects which would result in a series of measurable benefits or costs extending for three or more years into the
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