Capital Programming Guide V3.0†
The Guide's Purpose†
The Capital Programming Guide was originally released in 1997 and this release, Version 3.0, is part of a continuing effort to more routinely update the Guide to remain consistent with new requirements and leading practices. This version reflects developments in capital planning since the publication of the original guide and provides updated base practices and lessons learned regarding more efficient project and acquisition management of capital assets. This guide does not establish new or alter existing policies articulated elsewhere (e.g. in OMB Circular A–11, Preparation, Submission and Execution of the Budget, or other OMB circulars). It does, however, expand the explanation of the concepts in the original guide that were not fully developed. An inter-agency Capital Programming Guide Working Group, consisting of various agency representatives, was convened to author updates and identify examples for the revision. Their invaluable additions, editing, and hard work are commended.
Agencies must have a disciplined capital programming process that addresses project prioritization between new assets and maintenance of existing assets, risk management and cost estimating to improve the accuracy of cost, schedule and performance provided to management, and the other difficult challenges proposed by asset management and acquisition. The purpose of the Capital Programming Guide, herein referred to as the Guide, is to provide professionals in the Federal Government guidance for a disciplined capital programming process, as well as techniques for planning and budgeting, acquisition, and management and disposition of capital assets. At the same time, agencies are provided flexibility in how they implement the key principles and concepts discussed. We expect the Guide to be revised as agencies continue to gain experience and develop improved best practices.
The Guide is intended to assist Federal Departments, Agencies and Administrations (herein collectively referred to as agencies) effectively plan, procure and use these assets to achieve the maximum return on investment. The guidance integrates the various Administration and statutory asset management initiatives (including the Government Performance and Results Act (GPRA) Modernization Act (Pub. L. No. 111-352), Divisions D and E of Pub. L. No. 104–106 (the Federal Acquisition Reform Act and the Information Technology Management Reform Act of 1996, as amended, popularly known as the Clinger-Cohen Act), the Federal Acquisition Streamlining Act of 1994 (Pub. L. No. 103–355), and others) into a single, integrated capital programming process to ensure that capital assets successfully contribute to the achievement of agency strategic goals and objectives.
Agencies should use this Guide to help establish a capital programming process within each component and across the organization. Effective capital programming uses long range planning and a disciplined, integrated budget process as the basis for managing a portfolio of capital assets to achieve performance goals with the lowest life-cycle costs and least risk. This process should provide agency management with accurate information on acquisition and life-cycle costs, schedules, and performance of current and proposed capital assets. The Federal Acquisition Streamlining Act of 1994 (Pub. L. No. 103–355) (FASA) requires that agency heads manage the agency portfolio of major acquisitions within 90 percent of the individual investment's cost, schedule and performance goals. Project managers when developing the cost, schedule, and performance goals on developmental projects with significant risk must, therefore, provide the agency Executive Review Committee (ERC) with risk-adjusted and most likely cost, schedule, and performance goals. Without the knowledge of the risks involved managers at all levels—agency, Office of Management and Budget (OMB) and the Congress—cannot make the best decisions for the allocation of resources among the competing investments.
Managing the stock of Federal capital assets and planning, budgeting, and acquiring assets is hard work, but it takes time and adequately trained personnel to do it successfully. Large sums of taxpayer funds are involved and the performance of the assets determines, to a large extent, how well the agencies are able to achieve their missions and provide service to the public.
Agencies have flexibility in how they implement the key principles and concepts of the Guide. They are expected to comply with existing statutes and guidance (cited in the text where appropriate) for planning and funding new assets; achieving cost, schedule, and performance goals; and managing the operation of assets to achieve the asset's performance and life-cycle cost goals. However, the key principles and importance of thorough planning, risk management, full funding, portfolio analysis, performance-based acquisition management, accountability for achieving the established goals, and cost-effective lifecycle management will not change. In general, OMB will only consider recommending for funding in the President's Budget priority capital asset investments that comply with good capital programming principles. This Guide does not discuss the entire strategic planning process, only that portion that pertains to the contribution of capital assets.
At each stage in the preparation of the Agency Capital Plan, the agency is encouraged to work with OMB's Resource Management Offices (RMOs). Early inclusion of RMO staff with the Integrated Project Teams, to be discussed further in section I.2.1, will facilitate a continuing review and dialogue regarding the agency's plan in order to avoid unexpected events. This is key in integrating the Planning and Budgeting Phases. The process of submission should be consistent with the annual guidance contained in the OMB Circular A–11, as well as with other current OMB guidance.