OMB Circular A-21 An Historical Perspective Part I – The First 20 Years 1940’s thru the 1960’s

The War Department “Blue Book” – 1947 Preceded by the “Green Book” – –War Department Technical Manual TM “Explanation of Principles for Determining Costs Under Government Contracts” – –Issued under the Navy Department, April 1942

The War Department “Blue Book” – 1947 Issued by the Office of Naval Research, Navy Department, August 1947 – –“Explanation of Principles for Determination of Costs Under Government Research & Development Contracts with Educational Institutions” (emphasis added) The Blue Book consisted of revisions to the Green Book A joint effort with the War Dept., ONR, and the Universities

The War Department “Blue Book” – 1947 Introduction Outline of the Items of Cost – –Direct Costs (14 paragraphs) – –Indirect Expenses (9 paragraphs) Entire document - 38 paragraphs – –(approx 13 pages)

The War Department “Blue Book” – 1947 Legendary Principles/Concepts Not intended to designate any particular system of accounting, provide rigid formula, or set procedures Acknowledged the cost accounting problems peculiar to educational institutions in performing R&D contracts

The War Department “Blue Book” – 1947 Legendary Principles/Concepts Admissible cost, Inadmissible cost, admissible cost limits (caps) Cost Sharing Faculty Effort Different Types of Rates (e.g. predetermined)

Bureau of the Budget – 1950s 1958 Bureau of the Budget (BOB) issues Budget Circular A-21 –Replaces ONR’s “Blue Book” to establish government wide cost principles –Applicable to R&D grants, contracts, other funding agreements between the federal govt. and educational institutions. –Established Simplified method for institutions receiving <$250,000 in awards

Bureau of the Budget – 1950s 1958 Bureau of the Budget (BOB) issues Budget Circular A-21 –More definition of direct and indirect costs –Set standards for accountability, documentation, and consistency

Bureau of the Budget – 1960s 1961 & 1962 Revisions –Focused on classifying costs and distributing indirect costs 1967 & 1968 Revisions –Changes to Effort Reporting 1969 Revision –Increased Simplified Method threshold to $1M –Established cost principles for training and educational service agreements

General Services Agency – 1970s Administration of A-21 transferred to the General Services Agency (GSA) –A-21 renamed Federal Management Circular (FMC) Revision –Focused on allowable cost standards 1979 – OMB takes FMC 73-8 back and renames it Circular A-21

Circular A-21 Now for the rest of the story Part II