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February 07, 2018
Elaine Buckberg Co-Authors ABA White Paper on Proposed Alternatives to OMB Scoring

Brattle Principal Elaine Buckberg recently contributed to a white paper published by the American Bar Association’s (ABA) Privatization, Outsourcing, and Financing Transactions Committee, Public Contract Law Section, on challenges and proposed alternatives to Office of Management and Budget (OMB) scoring.

The paper, “The Crisis in the Federal Government’s Infrastructure: Additional Approaches to the Current Federal Budgetary Scoring Regime,” proposes two new scoring approaches to long-term capital and real property projects, including those undertaken through Public-Private Partnerships (P3s). These alternative scoring approaches are designed to provide a more accurate reflection of the government’s obligations. Neither proposed option requires the government to surrender the transparency benefits provided by the current rules. Both options could be undertaken through Executive action.

Under the first alternative approach, the Office of Management and Budget would adopt a modified version of the budget scoring rules currently used for federal credit programs under the Federal Credit Reform Act of 1990 (FCRA). Under this method, the OMB would score the net present value of project costs, adjusted for the amount of project risk taken by the government. For a project to move forward, an agency would require sufficient budgetary authority in the first year to obligate the risk-adjusted cost of the project. Such an approach could provide more opportunities for agencies to consider beneficial projects in which the majority of risk is carried by the private partner while allowing the government to track and account for the full cost of the project.

Under the second alternative approach, OMB would recognize new “safe harbors” which would allow certain projects to be scored on an annual basis, thereby avoiding upfront capital investment scores that might prevent agencies from moving forward with transactions. Similar to safe harbors currently in place for Energy Savings Performance Contracts (ESPCs) and Utility Energy Service Contracts (UESCs), the new safe harbors could be implemented to cover projects where the government’s contracting partner would carry most or substantially all of the project risk and cost savings would be achieved over time.