Applicability of Office of Management and Budget Circular A-76 to the Onsite Production of Liquid Nitrogen at an Oak Ridge Plant

GAO was asked whether Office of Management and Budget (OMB) Circular A-76 or other regulatory policy applies to the way the Department of Energy obtains liquid nitrogen at a gaseous diffusion plant.

The plant, which is a Government-owned, contractor-operated uranium enrichment complex has been producing nitrogen onsite since 1959. In 1975, the nitrogen facility was deemed inadequate and, after studies of alternative methods of generating nitrogen, it was concluded that upgrading the facility would cost about 30 percent less over a 20-year period than any of the other alternatives. While the facility was being upgraded, nitrogen was bought under a small business set-aside; when the upgrading was completed, onsite nitrogen generation resumed which eliminated the need to buy nitrogen. OMB Circular A-76 prescribes criteria for determining whether a product or a service should be provided in-house by the Government or procured from a contractor. When the decision to produce the nitrogen onsite was made, the facility's activities were not subject to the circular. Therefore, the original decision did not violate the regulation. The circular, as revised, would have no applicability to a decision by the contractor to produce nitrogen onsite at the facility.