ECONOMIC
IMPACT
ANALYSIS
FOR
THE
COMPREHENSIVE
PROCUREMENT
GUIDELINE
V
July
2003
­
2­
Contents
I.
Requirements
Under
Executive
Order
12866
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II.
Unfunded
Mandates
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III.
Background
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IV.
General
Provisions
of
CPG
V
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V.
Summary
of
Benefits
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VI.
Summary
of
Costs
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VII.
Affected
Universe
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VIII.
Cost
Analysis
Methodology
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IX.
Product
Cost
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X.
Regulatory
Flexibility
Analysis
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XI.
Limitations
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19
Appendix
1­­
Summary
of
Costs
to
Federal
Agencies
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A­
1
Appendix
2­­
Summary
of
Costs
to
State
Governments
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A­
2
Appendix
3­­
Summary
of
Costs
to
Local
Governments
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A­
3
Appendix
4­­
Summary
of
Costs
to
Contractors
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4
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3­
This
document
presents
the
Economic
Impact
Analysis
(
EIA)
associated
with
the
proposed
Comprehensive
Guideline
for
Procurement
of
Products
Containing
Recovered
Materials
V,
henceforth,
the
Comprehensive
Procurement
Guideline
V
or
CPG
V.
The
document
presents
the
following
information:
1)
Environmental
Protection
Agency
(
EPA)
analytical
requirements
under
Executive
Order
12866,
2)
EPA
requirements
under
the
Unfunded
Mandates
Reform
Act
of
1995,
3)
background
information
on
the
regulations
governing
the
CPG,
CPG
II,
CPG
III,
CPG
IV,
and
CPG
V,
4)
general
provisions
of
CPG,
CPG
II,
CPG
III,
CPG
IV,
and
CPG
V,
5)
summary
of
benefits
for
CPG
V,
6)
summary
of
costs
for
CPG
V,
7)
universe
of
entities
affected
by
the
rule,
8)
discussion
of
cost
analysis
methodology,
9)
discussion
of
price
differentials
between
recycled
and
virgin
products,
10)
regulatory
flexibility
analysis,
and
11)
limitations
of
the
analysis.

I.
REQUIREMENTS
UNDER
EXECUTIVE
ORDER
12866
Executive
Order
12866
(
54
FR
51735,
October
4,
1993)
requires
federal
agencies
to
determine
whether
a
regulatory
action
is
"
significant."
The
Order
defines
a
"
significant"
regulatory
action
as
one
that
is
likely
to
result
in
a
rule
that
may:
(
1)
have
an
annual
effect
on
the
economy
of
$
100
million
or
more
or
adversely
affect,
in
a
material
way,
the
economy,
a
sector
of
the
economy,
productivity,
competition,
jobs,
the
environment,
public
health
or
safety,
or
state,
local,
or
tribal
governments
or
communities;
(
2)
create
serious
inconsistency
or
otherwise
interfere
with
an
action
taken
or
planned
by
another
agency;
(
3)
materially
alter
the
budgetary
impact
of
entitlements,
grants,
user
fees,
or
loan
programs
or
the
rights
and
obligations
of
recipients;
or
(
4)
raise
novel
legal
or
policy
issues
arising
out
of
legal
mandates,
the
President'
s
priorities,
or
the
principles
set
forth
in
the
Executive
Order.

EPA
estimates
that
the
costs
associated
with
the
CPG
V
are
below
the
$
100
million
threshold.
However,
to
enable
the
Agency
to
evaluate
the
potential
impact
of
the
CPG
V,
EPA
conducted
the
Economic
Impact
Analysis
(
EIA),
discussed
below.

II.
UNFUNDED
MANDATES
Under
Section
202
of
the
Unfunded
Mandates
Reform
Act
of
1995,
signed
into
law
on
March
22,
1995,
EPA
must
prepare
a
statement
to
accompany
any
rule
where
the
estimated
costs
to
state,
local,
or
tribal
governments
in
the
aggregate,
or
to
the
private
sector,
will
be
$
100
million
or
more
in
any
one
year.
Under
Section
205,
EPA
must
select
the
most
cost­
effective
and
least
burdensome
alternative
that
achieves
the
objective
of
the
rule
and
is
consistent
with
statutory
requirements.
Section
203
requires
EPA
to
establish
a
plan
for
informing
and
advising
any
small
governments
that
may
be
significantly
impacted
by
the
rule.

EPA
has
determined
that
the
CPG
V
does
not
include
a
federal
mandate
that
may
result
in
estimated
annualized
costs
of
$
100
million
or
more
to
either
state,
local,
or
tribal
governments
in
the
aggregate,
or
to
the
private
sector.
­
4­
III.
BACKGROUND
On
April
20,
1994,
EPA
proposed
the
first
Comprehensive
Procurement
Guideline
(
59
FR
18852).
In
the
initial
CPG,
EPA
proposed
to
designate
21
items
made
with
recovered
materials
for
government
procurement
and
to
consolidate
5
earlier
guidelines
in
one
document.
Concurrently,
EPA
also
published
a
draft
Recovered
Materials
Advisory
Notice
(
RMAN)
which
recommended
recovered
materials
content
ranges
within
which
the
designated
items
are
available.
The
CPG
and
RMAN
implemented
Section
6002(
e)
of
the
Resource
Conservation
and
Recovery
Act
(
RCRA)
and
the
requirements
of
Section
502
of
Executive
Order
13101.
EPA
promulgated
the
final
CPG
on
May
1,
1995
and
designated
the
original
5
plus
an
additional
19
items
that
are
or
can
be
made
with
recycled
materials
(
60
FR
21370,
codified
at
40
CFR
Part
247).

RCRA
Section
6002(
e)
requires
EPA
to
designate
items
that
are
or
can
be
made
with
recovered
materials
and
to
recommend
practices
for
the
procurement
of
designated
items
by
procuring
agencies.
Once
EPA
designates
an
item,
Section
6002
requires
any
procuring
agency
that
purchases
$
10,000
or
more
of
that
item
with
appropriated
federal
funds
to
develop
an
affirmative
procurement
program
to
assure
that
the
designated
item
is
purchased
with
the
highest
percentage
of
recovered
materials
practicable.
RCRA
1004(
17)
defines
a
procuring
agency
as
"
any
federal
agency,
or
any
state
agency
or
agency
of
a
political
subdivision
of
a
state
which
is
using
appropriated
federal
funds
for
such
procurement,
or
any
person
contracting
with
any
such
agency
with
respect
to
work
performed
under
such
contract."

Executive
Order
13101
sets
forth
procedures
for
EPA
to
follow
in
implementing
Section
6002(
e)
of
RCRA.
The
Executive
Order
requires
EPA
to
designate
items
in
a
Comprehensive
Procurement
Guideline
and
to
recommend
procurement
practices
in
a
related
Recovered
Materials
Advisory
Notice.
The
Executive
Order
also
requires
EPA
to
designate
additional
items
annually.
Accordingly,
EPA
proposed
CPG
II
on
November
17,
1996
(
61
FR
57748).
EPA
proposed
to
designate
13
items:
shower
and
restroom
dividers,
latex
paint,
parking
stops,
channelizers,
delineators,
flexible
delineators,
snow
fencing,
hose(
garden
and
soaker),
lawn
and
garden
edging,
ink
jet
cartridges,
printer
ribbons,
plastic
envelopes,
and
pallets.
In
the
final
CPG
II,
EPA
designated
all
of
these
items
except
ink
jet
cartridges.
In
CPG
III
(
65
FR
3070,
January
19,
2000),
EPA
designated
all
18
items
originally
proposed,
including:
carpet
cushion,
flowable
fill,
railroad
grade
crossing
surfaces,
park
benches
and
picnic
tables,
playground
equipment,
plastic
lumber
landscaping
timbers
and
posts,
food
waste
compost,
solid
plastic
binders,
plastic
clipboards,
plastic
file
folders,
plastic
clip
portfolios,
plastic
presentation
folders,
sorbents,
industrial
drums,
awards
and
plaques,
mats,
signage,
and
strapping.
On
August
28,
2001,
EPA
proposed
to
designate
11
items
in
CPG
IV
(
66
FR
45256),
including:
bike
racks,
blasting
grit,
cement
and
concrete
containing
cenospheres,
cement
and
concrete
containing
silica
fume,
modular
threshold
ramps,
nonpressure
pipe,
nylon
carpet
and
nylon
carpet
backing,
office
furniture,
rebuilt
vehicular
parts,
roofing
materials,
and
tires.
CPG
IV
is
due
to
be
finalized
in
the
near
future.

This
Technical
Background
Document
provides
estimated
economic
impacts
upon
federal,
state,
and
local
governments,
as
well
as
private
contractors,
for
the
two
items
proposed
for
designation
in
CPG
V,
including:
a
revised
designation
for
compost
that
would
include
compost
made
from
manure
or
biosolids,
and
a
new
designation
for
fertilizers
made
from
recovered
organic
materials.
EPA
is
also
proposing
to
consolidate
all
compost
designations
(
i.
e.,
for
composts
made
from
yard
waste,
food
waste,
manure,
or
biosolids)
under
one
item
called
"
compost
made
from
recovered
organic
materials."
Although
revising
an
item
designation
would
most
likely
result
in
less
economic
impacts
than
designating
a
new
item,
for
the
purposes
of
this
EIA
EPA
is
conservatively
assuming
that
the
impacts
are
the
same.
­
5­
IV.
GENERAL
PROVISIONS
OF
CPG
V
CPG
V
proposes
the
designation
of
two
items
that
are
or
can
be
made
with
recovered
materials.
It
would
revise
the
current
compost
designation
to
include
compost
made
from
manure
or
biosolids
and
designate
fertilizers
made
from
recovered
organic
materials.
Both
of
these
items
fall
under
the
Landscaping
Products
category.

If
EPA
promulgates
the
proposed
CPG
V
designations,
procuring
agencies
would
be
required
to
perform
several
activities.
For
purposes
of
this
analysis,
EPA
is
dividing
these
activities
as
follows:
rule
review
and
implementation;
estimation,
certification,
and
verification;
and,
for
federal
agencies,
recordkeeping
and
reporting.
The
rule
review
and
implementation
subsection
is
further
subdivided
into
three
subgroup
activities,
including
Initial
review;
Policy
development,
distribution,
and
implementation;
and
Specification
revision.
These
requirements
are
discussed
in
further
detail
in
Section
VIII.

V.
SUMMARY
OF
BENEFITS
EPA
anticipates
that
CPG
V
will
result
in
increased
opportunities
for
recycling
and
waste
prevention.
Waste
prevention
can
reduce
the
nation's
reliance
on
natural
resources
by
reducing
the
amount
of
materials
used
in
making
products.
This
may
result
in
a
commensurate
reduction
in
energy
use,
as
well
as
reductions
in
the
generation
and
release
of
air
and
water
pollutants
associated
with
manufacturing.
Additionally,
waste
prevention
leads
to
a
reduction
in
the
environmental
impacts
of
mining,
harvesting,
and
other
extraction
processes.

Recycling
can
effect
the
more
efficient
use
of
natural
resources.
For
many
products,
the
use
of
recovered
materials
in
manufacturing
may
result
in
lower
energy
and
material
input
costs
than
when
virgin
raw
materials
are
used.
Aluminum
recycling,
for
instance,
can
save
up
to
97
percent
of
the
energy
requirements
for
making
new
aluminum,
as
compared
to
the
use
of
bauxite.
Use
of
recovered
materials
can
also
reduce
the
generation
and
release
of
air
and
water
pollutants
often
associated
with
manufacturing
(
including
air
emissions
that
contribute
to
ozone
depletion
and
the
generation
of
"
greenhouse
gases").
Air
pollutant
reductions
of
nearly
25
percent
have
been
associated
with
the
manufacture
of
glass
from
recovered
materials.
When
recovered
materials
are
used
instead
of
raw
materials,
reductions
from
the
manufacture
of
steel
and
aluminum
can
be
as
high
as
85
percent
and
95
percent,
respectively.
Additionally,
when
recovered
materials
are
used,
water
pollutant
reductions
in
the
manufacture
of
steel
and
aluminum
can
be
as
high
as
75
percent
and
95
percent,
respectively.
Using
recovered
materials
also
reduces
the
environmental
impacts
of
mining,
harvesting,
and
other
extraction
of
natural
resources,
while
conserving
non­
renewable
resources
for
future
use.
Recycling
can
also
divert
large
amounts
of
materials
from
landfills,
conserving
increasingly
valuable
space
for
the
management
of
materials
that
truly
require
disposal.
This
reduces
the
need
to
expand
existing
or
site
new
disposal
facilities,
allowing
local
government
officials
to
devote
more
attention
to
health,
education,
and
safety
issues.

By
purchasing
products
made
with
recovered
materials,
government
agencies
will
increase
opportunities
for
realizing
these
benefits.
On
a
national
and
regional
level,
CPG
V,
if
promulgated,
will
result
in
expanding
and
strengthening
markets
for
additional
materials
diverted
or
recovered
through
public
and
private
collection
programs.
Also,
since
many
state
and
local
governments,
as
well
as
private
­
6­
enterprises,
reference
EPA
guidelines
when
purchasing
designated
items,
CPG
V
will
result
in
further
increased
purchasing
of
recycled
products
locally,
regionally,
and
nationally.

Finally,
purchase
and
use
of
recycled
products
by
government
agencies
will
also
spur
private
sector
development
of
new
technologies,
creating
business
and
employment
opportunities
that
enhance
local,
regional,
and
national
economies.
Technological
innovation
associated
with
the
use
of
recovered
materials
translates
into
economic
growth
which
makes
American
industry
more
competitive
in
the
global
economy.
EPA
has
not
monetized
any
of
the
benefits
mentioned
above
for
this
CPG
V
Economic
Impact
Analysis.

VI.
SUMMARY
OF
COSTS
As
shown
in
Table
1
below,
EPA
estimates
that
the
annualized
costs
of
CPG
V
range
from
$
1.15
to
$
2.31
million,
with
costs
being
spread
across
all
procuring
agencies
(
i.
e.,
federal,
state,
and
local
agencies
that
use
appropriated
federal
funds
to
procure
designated
items)
and
their
contractors
(
i.
e.,
federal,
state
and
local
government
contractors
involved
with
the
procurement
of
designated
items).
These
costs
are
annualized
over
a
10­
year
period
at
a
three
percent
discount
rate.
CPG
V
covers
two
related
items.
EPA
therefore
considered
it
likely
that
if
an
Agency
used
one
item
(
e.
g.,
compost),
it
would
also
use
the
second
item
(
e.
g.,
fertilizers).
A
sensitivity
analysis
examined
the
effects
of
all
Agencies
using
only
one
CPG
V
item.
The
costs
are
half
of
the
best
estimated
costs
and
are
the
lower
range
cited
in
the
middle
column
of
Table
1.

Table
1.
­­
Summary
of
Annualized
Costs
of
CPG
V
to
All
Procuring
Agencies
Procuring
Agency
Total
Annualized
Costs
($
1000)
BEST
ESTIMATE
Total
Annualized
Costs
($
1000)

Federal
Agencies
$
577
­
$
1,153
$
1,153
States
$
207
­
$
413
$
413
Local
Governments
$
361
­
$
722
$
722
Contractors
$
10
­
$
20
$
20
Total
$
1,154
­
$
2,308
$
2,308
RCRA
Section
6002(
g)
requires
the
Office
of
Federal
Procurement
Policy
(
OFPP)
to
report
to
Congress
every
two
years
on
the
actions
taken
by
federal
agencies
to
comply
with
RCRA
Section
6002.
In
developing
this
report,
OFPP
requests
information
and
data
from
federal
agencies
regarding
their
affirmative
procurement
programs
and
related
activities.
Table
2
below
presents
the
estimated
annualized
costs
to
federal
agencies,
including
(
1)
specification
revision
and
affirmative
procurement
program
modification/
implementation
costs,
and
(
2)
record­
keeping
and
reporting
costs.
The
record­
keeping
and
­
7­
reporting
costs
presented
below
are
the
costs
likely
to
be
incurred
by
federal
agencies
to
maintain
and
compile
information
and
complete
the
annual
OFPP
information
request
using
the
existing
OFPP
reporting
format
(
i.
e.,
the
format
used
to
collect
information
for
fiscal
years
1993
and
1994).

Table
2.
­­
Summary
of
Best
Estimate
Annualized
Costs
of
CPG
V
to
Federal
Agencies
Federal
Agency
Specification
Revision
and
APP
Costs
($
1000)
Record­
keeping
and
Reporting
Costs
($
1000)
Total
Annualized
Costs
($
1000)

Defense
Agencies
$
493
$
182
$
675
Civilian
Agencies
$
235
$
244
$
479
Total
$
728
$
426
$
1,154
Note:
Numbers
do
not
sum
due
to
rounding.

Many
federal
agencies
have
stated
that
the
current
OFPP
format
is
too
burdensome
and
costly
to
complete.
To
address
these
concerns,
the
Office
of
the
Federal
Environmental
Executive
has
formed
a
workgroup
which
includes
representatives
from
OFPP
and
several
federal
agencies
to
examine
methods
of
streamlining
the
current
reporting
format.
Based
on
information
and
data
submitted
by
two
federal
agencies,
EPA
estimates
that
if
OFPP
revised
the
current
format
to
request
data
on
purchases
made
at
and
above
the
small
purchase
threshold
and
only
anecdotal
information
on
small
purchases
and
bank­
card
acquisitions,
federal
record­
keeping
and
reporting
costs
could
be
reduced
by
75
percent.

VII.
AFFECTED
UNIVERSE
RCRA
Section
6002
applies
to
procuring
agencies
that
use
at
least
a
portion
of
federal
funds
to
procure
over
$
10,000
worth
of
a
designated
product
in
a
given
year.
Based
on
these
criteria,
EPA
estimates
that
CPG
V
would
apply
to
35
federal
agencies,
all
56
states
and
territories
and
1,900
local
governments.
EPA'
s
assumptions
on
the
number
of
local
entities
that
would
be
affected
were
based
on
information
regarding
the
amount
of
federal
funds
that
are
dispersed
to
specific
local
governments.
In
addition,
EPA
assumed
that
as
many
as
1,000
contractors
may
be
affected.

A.
Federal
Agencies
RCRA
Section
6002
provides
that
federal
agencies
that
procure
at
least
$
10,000
annually
of
a
designated
item
in
a
given
year
are
subject
to
the
CPG,
CPG
II,
CPG
III,
CPG
IV,
and
CPG
V.
For
purposes
of
this
analysis,
EPA
assumed
that
35
agencies
would
be
affected.
EPA
based
this
assumption
on
the
amount
of
contract
money
spent
per
annum
by
each
Executive
agency,
as
reported
in
the
Federal
Procurement
Data
System
(
FPDS).
The
FPDS
tracks
federal
contract
actions
and
dollars
by
department
and
agency.
The
initial
report
that
EPA
used
in
the
first
CPG
was
the
Federal
Procurement
Report
for
Fiscal
Year
92,
which
listed
62
agencies
in
the
Executive
branch.
Of
these
agencies,
35
spent
more
than
$
10
million
on
contracts
in
1992.
Of
the
remaining
agencies,
26
spent
less
than
$
2
million.
­
8­
In
developing
its
assumption
for
the
number
for
federal
agencies
involved
in
specification­
writing,
EPA
assumed
that
5
of
the
35
agencies
would
actually
write
specifications
for
one
or
more
of
the
designated
items.
These
5
agencies
are
the
Department
of
Defense
(
DoD),
Government
Services
Administration
(
GSA),
Department
of
the
Interior
(
DOI),
Department
of
Transportation
(
DOT),
and
Housing
and
Urban
Development
(
HUD).
A
list
of
the
number
of
federal
"
specification­
writing"
agencies
potentially
affected
by
the
landscaping
product
category
included
in
CPG
V
is
presented
in
Table
3
below.

Table
3.
­­
Number
of
Federal
Specification­
Writing
Agencies
Potentially
Affected
by
CPG
V
Product
Category
Agencies
Potentially
Affected
Total
Number
of
Agencies
Potentially
Affected
Landscaping
GSA,
DOD,
DOT,
DOI,
HUD
5
B.
State
Governments
RCRA
Section
6002
provides
that
state
agencies
that
receive
appropriated
federal
funds
and
that
use
these
funds
to
procure
designated
items
in
quantities
of
$
10,000
or
more
in
a
given
year
are
subject
to
the
CPG,
CPG
II,
CPG
III,
CPG
IV,
and
CPG
V.
RCRA
Section
1004(
31)
defines
a
"
state"
to
include
all
50
states,
the
District
of
Columbia,
the
Commonwealth
of
Puerto
Rico,
Guam,
American
Samoa,
the
Commonwealth
of
the
Northern
Mariana
Islands,
and
the
Virgin
Islands.

For
purposes
of
this
analysis,
EPA
assumed
that
56
state
and
territorial
governments
would
be
affected,
the
full
universe
of
state
and
territorial
governments.
EPA
does
not
have
information
as
to
whether
all
of
these
states
use
appropriated
federal
funds
to
purchase
more
than
$
10,000
of
one
or
more
items
proposed
for
designation
in
CPG
V.
However,
for
purposes
of
this
analysis,
EPA
assumed
that
all
56
state
and
territorial
governments
would
procure
some
of
both
designated
items
in
quantities
costing
at
least
$
10,000
per
year.

C.
Local
Governments
RCRA
Section
6002
provides
that
local
agencies
that
receive
federal
funds
and
that
use
these
funds
to
procure
designated
items
in
quantities
of
$
10,000
or
more
annually
are
subject
to
CPG
V.
For
purposes
of
this
analysis,
EPA
assumed
that
1,900
local
governments
would
be
affected.
Because
EPA
does
not
have
direct
information
to
indicate
the
number
of
local
governments
that
currently
would
fit
this
criteria,
the
Agency
based
its
assumption
on
the
amount
of
federal
funds
dispersed
to
local
governments,
as
reported
in
the
Consolidated
Federal
Funds
Report
for
Fiscal
Year
1992.

The
Consolidated
Federal
Funds
Report
provides
information
on
the
distribution
of
federal
funds.
The
initial
report
that
EPA
used
in
the
first
CPG
listed
that
1,900
local
governments
received
over
$
10
million
in
federal
assistance
funding
in
fiscal
year
1992.
Of
the
remaining
local
governments,
3,125
received
$
1
million
or
less
in
federal
funds.
For
purposes
of
this
analysis,
EPA
assumed
that
the
1,900
local
governments
receiving
over
$
10
million
would
procure
some
of
both
items
proposed
for
designation
in
­
9­
CPG
V
in
quantities
of
more
than
$
10,000
annually.
EPA
recognizes
that
this
estimate
may
over
estimate
the
number
of
governments
actually
affected
or
the
level
to
which
they
are
affected.
1
EPA
estimated
the
labor
rate
using
a
2003
Washington,
DC,
locality
pay
area,
step
1,
GS­
12
($
57,421)
salary
(
see
<
www.
opm.
gov>),
and
a
government
overhead
factor
of
1.6.

­
10­
D.
Contractors
As
part
of
fulfilling
their
contractual
requirements,
RCRA
Section
6002
provides
that
contractors
to
federal,
state
or
local
agencies
that
use
appropriated
federal
funds
to
procure
a
designated
item,
purchase
such
items
with
recovered
materials
content
when
purchasing
$
10,000
or
more
of
that
item
in
a
given
year.
EPA
believes
that
there
will
be
a
minor
cost
to
these
contractors
as
a
result
of
CPG
V.
However,
EPA
believes
it
is
appropriate
to
allocate
some
contractor
costs.
Therefore,
EPA
assumed
that
1,000
contractors
would
be
affected.
Since
the
number
of
designated
items
a
contractor
would
purchase
in
any
given
year
is
also
uncertain,
EPA
assumed
two
items
being
used
as
the
best,
most
conservative
estimate.

VIII.
COST
ANALYSIS
METHODOLOGY
This
section
discusses
EPA'
s
methodology
for
developing
its
cost
estimates
for
CPG
V.
In
estimating
costs,
EPA
assumed
an
average
loaded
cost
of
$
44.00
per
labor
hour,
which
represents
a
midlevel
specialist,
at
a
GS­
12
grade
level
for
the
federal
government.
1
EPA
derived
this
estimate
based
on
standard
labor
rates
cited
in
past
EPA
Information
Collection
Requests
(
ICR).
Subsection
A
discusses
the
general
methodology
for
estimating
costs.
Subsection
B
discusses
categories
of
costs,
in
general,
that
are
expected
to
be
incurred
by
procuring
agencies.
Appendices
1,
2,
3,
and
4
provide
summaries
of
estimated
costs
to
federal
agencies,
states,
local
governments,
and
contractors,
respectively.

A.
General
Methodology
Once
EPA
designates
an
item,
each
procuring
agency
is
required
to
establish
an
affirmative
procurement
program
within
one
year
of
the
item
designation.
RCRA
Section
6002(
i)
requires
that
an
affirmative
procurement
program
contain
the
following
four
elements:
a
recovered
materials
preference
program;
a
promotion
program;
a
program
for
requiring
vendors
to
estimate,
certify,
and,
where
appropriate,
reasonably
verify
the
recovered
materials
contained
in
their
product;
and
a
program
to
monitor
and
annually
review
the
effectiveness
of
the
affirmative
procurement
program.
In
addition,
RCRA
Section
6002(
d)(
2)
requires
federal
agencies
responsible
for
drafting
or
reviewing
specifications
to
revise
their
specifications
to
require
the
use
of
recovered
materials
to
the
maximum
extent
practicable.
These
revisions
must
be
completed
within
one
year
of
the
final
designation
of
an
item.

In
the
CPG,
EPA
recommended
that
each
procuring
agency
establish
one
overall
affirmative
procurement
program
that
allows
for
the
integration
of
new
items
as
they
are
designated.
According
to
the
information
provided
in
the
FY
93
affirmative
procurement
program
status
reports
submitted
to
the
Office
of
Management
and
Budget'
s
Office
of
Federal
Procurement
Policy,
federal
agencies
are
already
following
this
approach
for
the
previously­
designated
items.
For
the
items
proposed
for
designation
in
CPG
V,
EPA
anticipates
that
federal
and
other
procuring
agencies
will
continue
this
practice
and
simply
incorporate
the
items
into
their
existing
affirmative
procurement
programs.
Since
most
procuring
agencies
already
have
established
affirmative
procurement
programs,
EPA
is
not
attributing
the
full
costs
associated
with
­
11­
establishing
these
programs
to
CPG
V.
Rather,
EPA
believes
that
procuring
agencies
will
revise
certain
elements
of
their
affirmative
procurement
programs,
which
may
cause
them
to
incur
additional
costs.

When
EPA
initially
developed
its
cost
estimate
for
CPG
I
in
1995,
EPA
assumed
that
35
federal
agencies,
all
56
states
and
territories,
1,900
local
governments,
and
1,000
contractors
would
be
affected
by
CPG.
At
the
time,
EPA
received
detailed
cost
estimates
from
six
federal
agencies
who
commented
on
the
proposed
cost
estimates
for
the
CPG
program.
These
estimates
included
the
likely
costs
of
amending
these
agencies'
existing
affirmative
procurement
programs
to
include
the
items
proposed
for
designation
in
CPG
V.

In
developing
its
estimates
for
the
potential
impact
of
CPG
V
on
federal
agencies,
EPA
again
relied
on
the
information
initially
submitted
by
these
six
agencies.
EPA
then
used
this
information
in
estimating
costs
to
the
remaining
29
federal
agencies.
EPA's
methodology
for
developing
these
estimates
is
presented
in
the
individual
cost
category
discussions
below.
For
some
cost
categories,
EPA
based
its
estimates
for
the
remaining
29
federal
agencies
on
population
data.
In
doing
so,
EPA
determined
that
the
average
number
of
employees
in
each
of
the
29
remaining
agencies
is
about
42,800
employees.

In
CPG
I,
when
EPA
initially
developed
its
proposed
estimates
of
the
costs
of
implementing
the
"
buy
recycled"
requirements
of
the
CPG,
a
few
states
commented
that
the
estimates
were
understated.
However,
none
of
these
state
agencies
provided
information
on
their
likely
costs
or
information
that
would
enable
EPA
to
assess
the
reasonableness
of
the
estimates
made
at
the
time
of
proposal.
EPA
became
convinced
in
its
discussions
with
federal
agencies
that
states
would
indeed
incur
higher
costs
than
EPA's
initial
proposed
estimates.
Therefore,
EPA
relied
on
the
information
submitted
by
the
federal
agencies
to
estimate
costs
likely
to
be
incurred
by
state
and
local
governments.
In
developing
its
estimates
for
state
governments,
EPA
assumed
that,
for
most
cost
categories,
each
state
would
incur
costs
similar
to
each
federal
agency
because
each
state
would
have
to
conduct
activities
similar
to
those
required
of
federal
agencies.
The
exceptions
are
recordkeeping
and
reporting
and
specification
revision.
There
is
no
statutory
requirement
for
states
to
report
their
purchases
of
designated
items
or
to
revise
their
specifications
to
include
recovered
materials
content
requirements.
However,
EPA
believes
that,
for
some
items,
state
governments
will
need
to
revise
their
specifications
in
order
to
comply
with
the
CPG
V
requirements
and
has
allocated
costs
to
state
governments
for
this
activity.

When
EPA
initially
developed
its
proposed
estimates
of
local
government
costs
for
implementing
CPG
I,
it
did
not
receive
comments.
However,
EPA
believed
it
was
appropriate
to
revise
its
cost
estimates
for
local
governments
based
on
information
received
from
and
discussions
with
federal
agencies.
For
this
reason,
EPA
redefined
its
methodology
for
estimating
costs
to
local
governments.
EPA
again
uses
this
redefined
methodology
for
local
governments,
as
discussed
below,
for
CPG
V.

When
EPA
initially
developed
its
proposed
estimates
of
contractor
costs
in
CPG
I,
it
did
not
receive
comments
regarding
its
estimates
presented
in
the
technical
background
document
for
the
proposed
CPG
I.
EPA
reviewed
the
methodology
it
used
to
develop
cost
estimates
for
contractors
presented
in
the
technical
background
document
for
the
proposed
CPG
I
and
concluded
that
the
affirmative
procurement
program
modification
and
verification
activities
were
appropriately
identified.
For
this
reason,
EPA'
s
methodology
for
estimating
contractor
costs
remained
generally
unchanged
from
its
initial
estimates.
EPA
again
uses
this
methodology
for
estimating
contractor
costs
for
CPG
V.
­
12­
B.
Cost
Components
EPA
is
dividing
costs
to
procuring
agencies
into
three
major
subsections.
These
subsections
relate
to
the
affirmative
procurement
program
requirements
of
RCRA
Section
6002(
i).
They
are
1)
rule
review
and
implementation,
2)
estimation,
certification,
and
verification,
and
3)
recordkeeping
and
reporting.
A
summary
of
each
requirement
is
presented
below.

Some
cost
components
(
e.
g.,
initial
review)
are
incurred
in
the
first
year
only,
while
others
(
e.
g.,
verification
and
recordkeeping
and
reporting)
are
incurred
on
an
annual
basis.
In
presenting
the
total
cost
estimates
for
CPG
V,
all
costs
have
been
annualized
over
a
10­
year
period
at
a
three
percent
discount
rate.
Formulas
presented
below
demonstrate
EPA'
s
methodology
for
developing
best
estimates
for
each
procuring
agency.
Details
on
the
sensitivity
analyses
conducted
are
in
Subsection
4
below.

Cost
estimates
to
procuring
agencies
are
presented
in
the
following
appendices
to
this
document:
federal
agencies
­
Appendix
1;
state
governments
­
Appendix
2;
local
governments
­
Appendix
3;
and
contractors
­
Appendix
4.

1.
Rule
Review
and
Implementation
Rule
review
and
implementation
activities
include
reading
and
assessing
CPG
V;
modifying
an
agency'
s
affirmative
procurement
program;
incorporating
new
requirements
into
existing
agency
policy
documents;
and
executing
these
new
policies.
In
presenting
costs
related
to
these
activities,
EPA
further
divided
the
rule
review
and
implementation
subsection
into
four
areas:
a)
initial
review;
b)
policy
development,
distribution,
and
implementation;
c)
training;
and
d)
specification
revision.

a.
Initial
Review.

Initial
review
activities
include
reading
CPG
V
and
developing
a
strategy
for
implementing
its
requirements.
EPA
estimates
that
total
costs
to
procuring
agencies
to
complete
their
initial
review
would
be
$
1.10
million.
These
costs
are
one­
time
costs
and
would
be
incurred
in
the
first
year
only.
Costs
presented
are
the
incremental
costs
of
developing
an
implementation
strategy
for
only
the
items
proposed
for
designation
in
CPG
V.
Costs
to
develop
an
overall
procurement
guideline
implementation
strategy
for
all
guideline
items,
including
previously­
designated
items,
are
not
allocated
to
CPG
V.
EPA's
estimates
for
procuring
agencies
to
complete
initial
review
activities
are
as
follows:
federal
agencies
­
$
354,100
and
state
governments
­
$
665,300.
Costs
to
local
governments
for
initial
review
are
included
in
the
costs
for
policy
development,
distribution,
and
implementation
presented
in
Subsection
1.
b
below.

i)
Federal
Agency
Costs
EPA
assumed
that
all
35
federal
agencies
would
incur
costs
for
initial
review.
For
the
six
agencies
that
provided
data,
EPA
estimates
that
total
initial
review
costs
would
be
$
90,600.
For
the
remaining
29
agencies,
EPA
estimates
$
344,500
in
total
initial
review
costs.
To
estimate
costs
for
the
remaining
29
federal
agencies,
EPA
developed
the
following
formula:

270
hours
per
agency
x
29
agencies
x
labor
rate
$
44
per
hour
=
$
344,500.
­
13­
The
number
of
hours
per
agency
was
developed
by
averaging
the
hourly
estimates
submitted
by
the
federal
agencies
that
provided
data.

ii)
State
Government
Costs
EPA
assumed
that
all
56
state
governments
would
incur
costs
for
initial
review.
EPA
used
the
following
formula
in
developing
initial
review
costs
to
state
governments:

(
Total
costs
of
$
344,500
for
non­
reporting
federal
agencies
/
29
non­
reporting
federal
agencies)
x
56
state
governments
=
$
665,300.

iii)
Local
Government
Costs
Costs
to
local
governments
for
initial
review
are
included
in
the
costs
for
policy
development,
distribution,
and
implementation
presented
in
Subsection
1.
b
below.

iv)
Contractor
Costs
For
contractors
and
vendors,
EPA
anticipates
that
the
initial
review
costs
are
negligible
since
affected
government
agencies
would
include
requirements
in
their
solicitations
and
contract
documents
for
procurement
of
newly­
designated
items.
Contractors
would
review
those
requirements
while
reviewing
all
other
solicitation
requirements.

b.
Policy
Development,
Distribution,
and
Implementation.

Policy
development,
distribution,
and
implementation
activities
include
1)
modifying
an
agency's
affirmative
procurement
program;
2)
developing
and
distributing
policies
implementing
CPG
V
to
affected
activities;
and
3)
incorporating
requirements
to
purchase
designated
items
into
existing
agency
documents.

EPA
estimates
that
total
costs
to
procuring
agencies
for
policy
development,
distribution,
and
implementation
in
the
first
year
would
be
$
4.79
million.
These
costs
are
one­
time
costs
and
would
be
incurred
in
the
first
year
only.
These
costs
are
the
incremental
costs
of
modifying
the
agency'
s
affirmative
procurement
program
and
developing
and
incorporating
requirements
and
procedures
for
purchasing
only
the
items
proposed
for
designation
in
CPG
V.
Costs
to
develop
an
agency's
overall
affirmative
procurement
program
and
general
procurement
guideline
implementing
policies
are
not
allocated
to
CPG
V.
EPA'
s
estimates
for
procuring
agencies
to
complete
policy
development,
distribution,
and
implementation
activities
are
as
follows:
federal
agencies
$
496,900;
state
governments
­
$
738,800;
local
governments
­
$
3.38
million;
and
contractors
­
$
176,000.

i)
Federal
Agency
Costs
EPA
assumed
that
all
35
federal
agencies
would
incur
costs
for
policy
development,
distribution,
and
implementation.
For
the
six
agencies
that
provided
data,
EPA
estimates
that
the
total
costs
for
policy
development,
distribution,
and
implementation
activities
would
be
$
114,300.
For
the
remaining
29
agencies,
EPA
estimates
$
382,600
in
total
policy
development,
distribution,
and
implementation
costs.
Information
provided
by
federal
agencies
indicated
that
the
estimated
costs
of
this
activity
tended
to
­
14­
increase
with
the
size
and
the
number
of
field
components
characteristic
of
the
agency.
To
estimate
costs
for
the
remaining
29
federal
agencies,
EPA
developed
the
following
formula:

0.007
hours
per
employee
x
29
agencies
x
Average
of
42,836
employees
per
agency
x
labor
rate
of
$
44
per
hour
=
$
382,600.

This
component
uses
agency
population
as
a
surrogate
for
size
and
complexity
of
federal
agencies.
The
number
of
hours
per
employee
was
developed
by
adding
the
hourly
estimates
submitted
by
the
six
federal
agencies
that
provided
EPA
with
detailed
cost
estimates.
This
total
was
then
divided
by
the
total
number
of
employees
from
those
agencies.

ii)
State
Government
Costs
EPA
assumed
that
all
56
state
governments
would
incur
costs
for
policy
development,
distribution,
and
implementation.
EPA
used
the
following
formula
in
developing
policy
development,
distribution,
and
implementation
costs
to
state
governments:

(
Total
costs
of
$
382,600
for
non­
reporting
federal
agencies
/
29
non­
reporting
federal
agencies)
x
56
state
governments
=
$
738,800.

iii)
Local
Government
Costs
EPA
assumed
that
all
1,900
local
governments
would
incur
costs
for
initial
review,
policy
development,
distribution,
and
implementation,
and
specification
review.
In
calculating
these
costs
for
local
governments,
EPA
assumed
that
a
national
organization
representing
local
governments
would
prepare
a
CPG
V
implementation
package
for
use
by
local
government
officials
in
implementing
the
CPG
V
requirements.
This
CPG
V
implementation
package
would
contain
a
synopsis
of
the
requirements
of
the
CPG
V,
sample
policies
and
affirmative
procurement
programs,
and
references
to
national
and
other
specifications
that
would
facilitate
the
implementation
of
the
CPG
V
requirements
by
local
governments.
EPA
estimated
costs
for
preparing
this
package
using
the
following
formula:

[
270
hours
for
initial
review
x
labor
rate
of
$
44
per
hour]
+
[
283
hours
for
specification
revisions
x
2
CPG
items
x
labor
rate
of
$
44
per
hour]
=
$
36,800.

Currently,
under
a
grant
from
EPA,
the
U.
S.
Conference
of
Mayors
provides
information
to
assist
local
government
officials
in
purchasing
the
previously­
designated
items.
In
the
short­
term,
EPA
will
provide
the
U.
S.
Conference
of
Mayors
with
the
necessary
materials
to
enable
it
to
provide
its
constituents
with
information
on
the
items
proposed
for
designation
in
CPG
V.
EPA
will
also
work
with
other
national
organizations
representing
local
officials
in
preparing
information
packages
for
their
members.
EPA
also
may
work
through
a
grantee
to
develop
such
a
package
and
make
it
available
to
local
officials
through
its
RCRA
Hotline.
Should
EPA
provide
the
funding
for
developing
this
information
package,
EPA
estimates
that
the
costs
presented
in
this
section
could
be
reduced.

In
addition
to
the
above
costs,
EPA
estimates
an
additional
40
hours
per
local
government
will
be
required
to
tailor
this
package
to
meet
the
needs
of
their
local
agencies.
In
estimating
these
costs,
EPA
used
the
following
formula:
­
15­
40
hours
per
local
government
x
1,900
local
governments
x
labor
rate
of
$
44
per
hour
=
$
3.34
million.

iv)
Contractor
Costs
EPA
assumed
that
all
1,000
contractors
would
incur
costs
for
policy
development,
distribution,
and
implementation.
EPA
estimates
that
each
contractor
would
require
two
hours
per
item
for
this
task.
EPA
used
the
following
formula
in
calculating
policy
development,
distribution,
and
implementation
costs
to
contractors:

2
hours
per
contractor
x
1,000
contractors
x
2
items
x
labor
rate
of
$
44
per
hour
=
$
176,000.

c.
Training
Training
activities
include
training
affected
personnel
on
new
policies
and
procedures
developed
to
implement
the
CPG
V.
EPA
estimates
that
total
costs
to
procuring
agencies
to
conduct
training
would
be
approximately
$
17.9
million.
These
costs
are
one­
time
costs.
Based
on
discussions
with
federal
agencies,
it
is
EPA's
view
that
training
would
likely
be
conducted
over
a
period
of
five
years.
These
costs
are
the
incremental
costs
of
training
appropriate
personnel
on
only
the
items
proposed
for
designation
in
CPG
V.
Costs
to
train
personnel
on
overall
affirmative
procurement
policies
and
procedures
or
pollution
prevention
programs
are
not
allocated
to
the
CPG
V.
EPA'
s
estimates
for
procuring
agencies
to
complete
training
activities
are
as
follows:
federal
agencies
­
$
15.26
million;
state
governments
­
$
971,000;
and
local
governments
­
$
1,672,000.

i)
Federal
Agency
Costs
EPA
assumed
that
all
35
agencies
would
incur
costs
for
training.
Using
the
detailed
cost
estimates
of
the
six
agencies
that
provided
data
for
the
original
CPG,
EPA
estimated
that
the
total
costs
for
training
activities
under
CPG
V
to
be
$
2.06
million.
For
the
six
agencies
that
provided
data,
EPA
estimates
that
the
total
costs
for
training
would
be
$
1.55
million.
For
the
remaining
29
agencies,
EPA
estimates
$
502,900
in
total
training
costs.
Information
provided
by
federal
agencies
indicated
that
the
estimated
costs
of
this
activity
tended
to
increase
with
the
size
of
the
agency.
To
estimate
costs
for
the
remaining
29
federal
agencies,
EPA
developed
the
following
formula:

0.0046
hours
per
employee
per
item
x
29
agencies
x
42,836
(
for
average
number
of
employees
per
agency)
x
2
items
x
labor
rate
of
$
44
=
$
502,900.

This
component
used
agency
population
as
a
surrogate
for
size
and
complexity
of
federal
agencies.
The
number
of
hours
per
employee
per
item
was
developed
by
adding
the
hourly
estimates
submitted
by
the
six
federal
agencies
who
originally
provided
EPA
with
detailed
cost
estimates.
This
total
was
then
divided
by
the
total
number
of
employees
from
those
agencies,
and
again
divided
by
21
(
i.
e.;
the
number
of
items
initially
proposed
for
designation
in
the
first
CPG
and
upon
which
these
six
agencies
based
their
estimates).

ii)
State
Government
Costs
EPA
assumed
that
all
56
state
governments
would
incur
costs
for
training.
EPA
used
the
following
formula
in
developing
training
costs
to
state
governments:
­
16­
(
Total
costs
of
$
502,900
for
non­
reporting
federal
agencies
/
29
non­
reporting
federal
agencies)
x
56
state
governments
=
$
971,000.

iii)
Local
Government
Costs
EPA
assumed
that
local
governments
would
incur
costs
for
training.
In
calculating
these
costs
for
local
governments,
EPA
assumed
that
one
official
in
each
of
five
departments
within
each
local
government
would
require
training.
EPA
estimated
that
each
official
would
require
approximately
two
hours
of
training
per
designated
item.
Therefore,
EPA
used
the
following
formula
in
calculating
training
costs
for
local
governments:

10
hours
per
item
(
i.
e.,
2
hours
per
item
x
5
departments)
x
1,900
local
governments
x
1
local
official
per
department
x
2
items
x
labor
rate
of
$
44
per
hour
=
$
1,672,000.

iv)
Contractor
Costs
For
contractors
and
vendors,
EPA
anticipates
that
the
training
costs
are
negligible
since
affected
government
agencies
would
include
requirements
in
their
solicitations
and
contract
documents
for
procurement
of
designated
items.
Contractors
would
review
those
requirements
while
reviewing
all
other
solicitation
requirements.

d.
Specification
revision
(
including
testing
and
evaluation)

Specification
revision
activities
include
reviewing
and
revising
agency
specifications
to
incorporate
recovered
materials
content
requirements.
This
includes
1)
identifying
and
locating
affected
specifications
for
items
designated
in
CPG
V;
2)
conducting
performance
reviews,
in
advance
of
an
actual
procurement,
to
determine
if
products
containing
recovered
materials
meet
existing
performance
requirements
(
i.
e.,
any
costs
incurred
to
compare
recycled
product
performance
to
current
performance
requirements
(
specifications),
including
any
necessary
testing
and
evaluation);
3)
revising
specification
provisions,
as
appropriate;
and
4)
completing
the
revision
process.

EPA
estimates
that
total
costs
to
procuring
agencies
to
review
their
specifications
and
incorporate
the
requirements
of
CPG
V
would
be
$
4.76
million.
These
costs
are
one­
time
costs
only.
Based
on
discussions
with
federal
agencies,
EPA
believes
that
specification
revision
would
be
conducted
over
a
period
of
five
years.
These
costs
are
the
incremental
costs
of
reviewing
and
revising
specifications
for
only
the
items
proposed
designation
in
CPG
V.
Costs
to
review
and
revise
specifications
to
remove
requirements
specifying
virgin
materials
only
or
excluding
the
use
of
recovered
materials
are
not
allocated
to
CPG
V.
Pursuant
to
RCRA
Section
6002(
d)(
1),
these
revisions
were
to
have
been
completed
prior
to
issuance
of
the
CPG
(
and,
of
course,
CPG
II,
CPG
III,
CPG
IV,
and
CPG
V).
As
recommended
by
commenting
federal
agencies,
costs
to
qualify
vendors
were
not
allocated
to
the
CPG,
CPG
II,
CPG
III,
CPG
IV,
or
CPG
V.
EPA's
estimates
for
procuring
agencies
to
complete
specification
revision
activities
are
as
follows:
federal
agencies
$
1,000,670
and
state
governments
­
$
1,394,600.

i)
Federal
Agency
Costs
For
six
of
the
35
federal
agencies
that
could
be
significantly
affected
by
the
CPG
V
(
i.
e.,
the
six
agencies
that
provided
data),
EPA
estimates
that
five
will
revise
their
specifications
to
incorporate
­
17­
recovered
materials
content
requirements.
For
these
six
agencies,
EPA
estimates
that
total
specification
revision
costs
would
be
$
278,500.
For
the
remaining
29
agencies,
EPA
estimates
approximately
$
722,200
in
total
specification
revision
costs,
based
on
the
following
assumptions.
For
most
product
categories,
EPA
estimates
the
potential
time
for
a
federal
specification­
writing
agency
to
review
and
revise
its
product
specifications
would
average
283
hours
per
product
based
on
actual
specification
revision
activities
performed
by
one
of
the
agencies
that
commented
on
the
initial
cost
estimate
for
the
CPG.
Table
4
below
presents
a
breakdown
of
potential
costs
associated
with
the
non­
reporting
federal
agencies
for
reviewing
and
revising
specifications.

Table
4.
­­
Potential
Specification
Revisions
for
Non­
Reporting
Federal
Agencies
Product
Category
Number
of
Items
Total
Number
of
Agencies
Potentially
Affected
Specification
Review
and
Revision
Time
per
Item
(
In
Hours)
Total
Category
Costs
Landscaping
Products
2
29
283
$
722,216
Note:
The
calculations
would
include
an
estimated
2,003
hours
per
product
for
review
and
revise
product
specifications
if
CPG
V
included
road­
related
construction
products,
see
footnote
2.

ii)
State
Government
Costs
Although
the
statute
does
not
require
state
governments
to
review
and
revise
their
specifications
for
designated
items,
EPA
believes
that
for
some
items,
state
governments
will
need
to
revise
their
specifications
in
order
to
comply
with
CPG
V
requirements.
EPA
anticipates
that
these
costs
would
be
the
incremental
cost
of
incorporating
these
additional
requirements
into
existing
documents
where
procurement
of
designated
items
is
a
concern.

EPA
assumed
that
all
56
state
governments
would
incur
costs
for
specification
revision.
EPA
used
the
following
formula
in
developing
specification
revision
costs
to
state
governments:

(
Total
costs
of
$
722,216
for
non­
reporting
federal
agencies
/
29
non­
reporting
federal
agencies)
x
56
state
governments
=
$
1,394,600.
­
18­
iii)
Local
Government
Costs
As
with
state
governments,
the
statute
does
not
require
local
governments
to
review
and
revise
specifications
for
designated
items.
However,
EPA
believes
that
local
governments
may
need
to
revise
some
specifications
in
order
to
meet
CPG
V
requirements,
and,
as
explained
previously,
include
these
costs
in
the
cost
estimates
for
policy
development,
distribution,
and
implementation
presented
in
Subsection
1.
b
above.

iv)
Contractor
Costs
The
statute
does
not
require
contractors
to
review
and
revise
specifications.
EPA
did
not
estimate
costs
to
perform
these
activities.
For
contractors
and
vendors,
EPA
anticipates
that
the
specification
revision
costs
are
negligible
because
affected
government
agencies
would
include
requirements
in
their
solicitations
and
contract
documents
for
procurement
of
items
proposed
for
designation
in
CPG
V.
Contractors
would
review
those
requirements
while
reviewing
all
other
solicitation
requirements.

2.
Estimation,
Certification,
and
Verification
RCRA
Section
6002(
i)(
C)(
2)
requires
procuring
agencies
to
establish
procedures
for
estimating,
certifying,
and,
where
appropriate,
verifying
the
amount
of
recovered
materials
utilized
in
the
performance
of
a
contract.
RCRA
Section
6002(
c)(
3)
further
provides
"
the
contracting
officer
shall
require
that
vendors
(
A)
certify
that
the
percentage
of
recovered
materials
to
be
used
in
the
performance
of
the
contract
will
be
at
least
the
amount
required
by
applicable
specifications
or
other
contractual
requirements
and
(
B)
estimate
the
percentage
of
the
total
materials
utilized
for
the
performance
of
the
contract
which
is
recovered
materials."
In
addition,
Section
903
of
Executive
Order
13101
requires
the
elements
of
an
affirmative
procurement
program
to
be
included
into
the
Federal
Acquisition
Regulation,
including
guidance
on
agency
programs
for
estimation
and
certification.

Since
the
items
proposed
for
designation
in
CPG
V
in
essence
are
made
from
100
percent
recovered
materials,
procuring
agencies
would
not
need
to
obtain
estimates,
certifications,
or
verifications
of
the
recovered
materials
content
in
the
items.
Therefore,
EPA
does
not
anticipate
that
there
would
be
a
cost
to
procuring
agencies
for
establishing
procedures
for
estimating,
certifying,
and
verifying
the
amount
of
recovered
materials
utilized
in
the
performance
of
a
contract.

3.
Recordkeeping
and
Reporting
Recordkeeping
and
reporting
requirements
apply
to
federal
agencies
only.
Activities
include
obtaining
or
maintaining
data
on
agency
purchases
of
the
items
proposed
for
designation
in
CPG
V
and
annually
reporting
such
data
to
the
Office
of
Federal
Procurement
Policy
and
the
Federal
Environmental
Executive.
RCRA
Section
6002(
g)
requires
the
Office
of
Federal
Procurement
Policy
to
report
to
Congress
every
two
years
on
the
actions
taken
be
federal
agencies
to
comply
with
RCRA
Section
6002.
In
developing
this
report,
OFPP
requests
information
and
data
from
federal
agencies
regarding
their
affirmative
procurement
programs
and
related
activities.
The
recordkeeping
and
reporting
costs
presented
below
are
the
likely
costs
that
would
be
incurred
by
federal
agencies
to
maintain
and
compile
information
for
and
complete
the
annual
OFPP
information
request
using
the
existing
OFPP
reporting
format
(
i.
e.,
the
format
used
to
collect
information
for
fiscal
years
1993
and
1994).
­
19­
EPA
estimates
that
annual
costs
to
federal
agencies
to
perform
recordkeeping
and
reporting
activities
would
be
$
728,100.
These
costs
are
annual
costs
and
would
be
incurred
starting
in
Year
2.
These
costs
are
the
incremental
costs
of
maintaining
records
and
reporting
on
the
items
designated
in
CPG
V
only.
Total
costs
to
report
on
an
agency'
s
compliance
with
Executive
Order
13101
or
general
requirements
of
RCRA
Section
6002
or
total
costs
to
report
on
an
agency's
overall
affirmative
procurement
activities
are
not
allocated
to
CPG
V.

a.
Federal
Agency
Costs
EPA
assumed
that
all
35
agencies
would
incur
recordkeeping
and
reporting
costs.
Using
the
detailed
cost
estimates
of
the
six
agencies
that
provided
data
for
the
original
CPG,
EPA
estimated
that
the
total
costs
for
the
recordkeeping
and
reporting
activities
under
CPG
V
to
be
$
553,200.
For
the
remaining
29
agencies,
EPA
estimates
$
174,900
in
annual
recordkeeping
and
reporting
costs.
Information
provided
by
federal
agencies
indicated
that
the
estimated
costs
of
this
activity
tended
to
increase
with
the
size
of
the
agency.
To
estimate
recordkeeping
and
reporting
costs
for
the
remaining
29
federal
agencies,
EPA
used
the
following
formula:

0.0016
hours
per
employee
per
item
x
29
agencies
x
Average
of
42,836
employees
per
agency
x
2
items
x
labor
rate
of
$
44
per
hour
=
$
174,900.

This
component
uses
agency
population
as
a
surrogate
for
size
and
complexity
of
federal
agencies.
The
number
of
hours
per
employee
per
item
was
developed
by
adding
the
hourly
estimates
submitted
by
the
six
federal
agencies
that
provided
EPA
with
detailed
cost
estimates.
This
total
was
then
divided
by
the
total
number
of
employees
from
those
agencies,
and
again
divided
by
21
(
i.
e.;
the
number
of
items
initially
proposed
for
designation
in
the
first
CPG
and
upon
which
these
six
agencies
based
their
estimates).

Based
on
information
and
data
submitted
by
two
federal
agencies,
EPA
estimates
that
if
OFPP
revised
the
current
format
to
request
data
on
purchases
made
at
and
above
the
small
purchase
threshold
and
request
only
anecdotal
information
on
small
purchases
and
bankcard
acquisitions,
federal
recordkeeping
and
reporting
costs
could
be
reduced
by
75
percent.

b.
State
and
Local
Government
and
Contractor
Costs
The
statute
does
not
require
state
and
local
governments
or
contractors
to
file
reports
on
their
purchases
of
products
containing
recovered
materials.
These
entities,
however,
may
be
required
to
report
on
their
compliance
with
all
of
the
requirements
of
individual
contracts
and
assistance
agreements,
perhaps
including
requirements
to
purchase
designated
items.
Relative
to
the
overall
burden
to
report
on
compliance
with
all
aspects
of
the
contracts
and
assistance
agreements,
EPA
anticipates
that
the
incremental
effort
to
report
on
compliance
with
the
requirements
to
buy
designated
items
would
be
negligible.

IX.
PRODUCT
COST
Another
potential
cost
of
CPG
V
is
the
possible
price
differential
between
an
item
made
with
recovered
materials
and
an
equivalent
item
manufactured
using
virgin
materials.
As
discussed
in
the
proposed
CPG
(
59
FR
18859),
relative
prices
of
recycled
products
compared
to
prices
of
comparable
virgin
products
vary.
In
many
cases,
recycled
products
may
be
less
expensive
than
their
virgin
­
20­
counterparts.
In
other
cases,
virgin
products
may
have
lower
prices
than
recycled
products.
However,
other
factors
can
also
affect
the
price
of
virgin
products.
For
example,
temporary
fluctuations
in
the
overall
economy
can
create
oversupplies
of
virgin
products,
leading
to
a
decrease
in
prices
for
these
items.
Under
RCRA
Section
6002(
c),
procuring
agencies
are
not
required
to
purchase
a
product
containing
recovered
materials
if
it
is
only
available
at
an
unreasonable
price.
However,
the
decision
to
pay
more
or
less
for
such
a
product
is
left
to
the
procuring
agency.

X.
REGULATORY
FLEXIBILITY
ANALYSIS
The
primary
purpose
of
the
Regulatory
Flexibility
Analysis
is
to
identify
if
there
is
an
adverse
impact
to
small
businesses
that
are
directly
regulated
by
CPG
V
and
to
examine
regulatory
alternatives
that
fall
within
the
scope
of
the
statutory
requirements
that
would
reduce
impacts
to
small
businesses,
small
organizations,
or
small
governmental
jurisdictions
subject
to
the
regulation.
The
RCRA
procurement
requirements
apply
to
procuring
agencies
that
procure
more
than
$
10,000
of
a
designated
item.
No
exemption
is
included
in
the
statute
for
small
businesses.
Therefore,
EPA
has
decided
that
alternative
regulatory
approaches
for
small
businesses
are
not
appropriate
for
CPG
V.

With
regard
to
possible
impacts
to
small
businesses,
there
may
be
both
positive
and
negative
impacts
to
individual
businesses.
EPA
anticipates
that
CPG
V
will
provide
additional
opportunities
for
small
recycling
businesses
to
begin
supplying
recovered
materials
to
manufacturers
and
products
made
from
recovered
materials
to
procuring
agencies.
In
addition,
other
small
businesses
that
do
not
directly
contract
with
procuring
agencies
may
be
affected
positively
by
the
increased
demand
for
recovered
materials.
These
include
small
businesses
involved
in
materials
recovery
programs
and
materials
recycling.
Municipalities
that
run
recycling
programs
are
also
expected
to
benefit
from
the
increased
demand
for
certain
recovered
materials.

EPA
is
unable
to
determine
the
number
of
small
businesses
that
may
be
adversely
affected
by
CPG
V.
It
is
possible
that
if
a
small
business
that
currently
supplies
products
to
a
procuring
agency
uses
virgin
materials
only,
CPG
V
may
reduce
its
ability
to
compete
for
future
contracts.
However,
CPG
V
will
not
affect
existing
purchase
orders,
nor
will
it
preclude
businesses
from
adapting
their
product
lines
to
meet
new
specification
or
solicitation
requirements
for
products
containing
recovered
materials.
Thus,
many
small
businesses
that
market
to
procuring
agencies
have
the
option
to
adapt
their
product
lines
to
meet
specifications.

XI.
LIMITATIONS
As
stated
above,
EPA
did
not
have
specific
data
from
which
to
develop
its
cost
estimates
for
state
and
local
governments
and
contractors.
Although
several
states
initially
commented
on
the
proposed
CPG
I
and
said
that
EPA's
proposed
estimates
of
the
costs
of
implementing
the
CPG
were
understated,
none
of
these
commenters
provided
data
supporting
their
comments.
In
addition,
no
comments
were
submitted
by
potentially­
affected
local
governments
or
contractors.
Furthermore,
EPA
to
date
has
not
received
cost
data
during
the
comment
period
of
any
subsequent
CPG
proposal.

Based
on
its
discussions
with
federal
agencies,
EPA
determined
that
state
and
local
governments
would
most
likely
incur
higher
costs
than
EPA'
s
proposed
estimates.
Therefore,
EPA
relied
on
the
­
21­
information
submitted
by
the
federal
agencies,
Census
data,
and,
in
some
instances,
EPA's
own
judgement,
in
adjusting
its
estimating
factors
in
order
to
determine
the
potential
costs
of
CPG
V
on
state
and
local
governments
and
contractors.
2
Since
the
items
proposed
for
designation
in
CPG
V
in
essence
are
made
from
100
percent
recovered
materials,
procuring
agencies
would
not
need
to
obtain
estimates,

certifications,
or
verifications
of
the
recovered
materials
content
in
the
items.
Therefore,
EPA
does
not
anticipate
that
there
would
be
a
cost
to
procuring
agencies
for
establishing
procedures
for
estimating,
certifying,
and
verifying
the
amount
of
recovered
materials
utilized
in
the
performance
of
a
contract.

A­
1
APPENDIX
1.
­­
SUMMARY
OF
COSTS
TO
FEDERAL
AGENCIES
Costs
to
Federal
Agencies
(
2
Products)

Requirement
Reporting
Defense
Agencies
Reporting
Civilian
Agencies
Remaining
Agencies
Reporting
Agencies
Civilian
Agencies
Initial
Review
(
First
Year
Only)
$
4,488
$
5,126
$
344,520
$
9,614
$
349,646
Policy
Development,
Distribution,
and
Implementation
(
First
Year
Only)
$
88,242
$
26,070
$
382,611
$
114,312
$
408,681
Training
(
Total
Over
First
5
Years
Only)
$
1,521,124
$
32,758
$
502,860
$
1,553,882
$
535,618
Specification
Revision
(
Total
Over
First
5
Years
Only)
$
70,884
$
207,570
$
722,216
$
278,454
$
929,786
Verification
(
Total
Every
3
Years
Beginning
in
Year
2)
2
$
0
$
0
$
0
$
0
$
0
Recordkeeping
and
Reporting
(
Annual
Beginning
in
Year
2)
$
493,284
$
59,950
$
174,908
$
553,234
$
234,858
Total
Annualized
Costs
(
2
Products)

With
Recordkeeping
and
Reporting
Without
Recordkeeping
and
Reporting
Defense
Agencies
$
493,284
$
181,498
Civilian
Agencies
$
234,858
$
243,659
A­
2
3
Since
the
items
proposed
for
designation
in
CPG
V
in
essence
are
made
from
100
percent
recovered
materials,
procuring
agencies
would
not
need
to
obtain
estimates,
certifications,
or
verifications
of
the
recovered
materials
content
in
the
items.
Therefore,
EPA
does
not
anticipate
that
there
would
be
a
cost
to
procuring
agencies
for
establishing
procedures
for
estimating,
certifying,
and
verifying
the
amount
of
recovered
materials
utilized
in
the
performance
of
a
contract.

A­
3
APPENDIX
2.
­­
SUMMARY
OF
COSTS
TO
STATE
GOVERNMENTS
Costs
to
State
Governments
(
2
Products)

Requirement
Costs
Initial
Review
(
First
Year
Only)
$
665,300
Policy
Development,
Distribution,
and
Implementation
(
First
Year
Only)
$
738,800
Training
(
Total
Over
First
5
Years
Only)
$
971,000
Specification
Revision
(
Total
Over
First
5
Years
Only)
$
1,394,600
Verification
(
Total
Every
3
Years
Beginning
in
Year
2)
3
$
0
TOTAL
ANNUALIZED
COSTS
­
$
413,800
4
Since
the
items
proposed
for
designation
in
CPG
V
in
essence
are
made
from
100
percent
recovered
materials,
procuring
agencies
would
not
need
to
obtain
estimates,
certifications,
or
verifications
of
the
recovered
materials
content
in
the
items.
Therefore,
EPA
does
not
anticipate
that
there
would
be
a
cost
to
procuring
agencies
for
establishing
procedures
for
estimating,
certifying,
and
verifying
the
amount
of
recovered
materials
utilized
in
the
performance
of
a
contract.

A­
4
APPENDIX
3.
­­
SUMMARY
OF
COSTS
TO
LOCAL
GOVERNMENTS
Costs
to
Local
Governments
(
2
Products)

Requirement
Costs
Initial
Review,
Policy
Development,
Distribution,
and
Implementation,
and
Specification
Revision
(
First
Year
Only)
$
3,381,000
Training
(
Total
Over
First
5
Years
Only)
$
1,672,000
Verification
(
Total
Every
Three
Years
Beginning
in
Year
2)
4
$
0
TOTAL
ANNUALIZED
COSTS
­
$
721,500
5
Since
the
items
proposed
for
designation
in
CPG
V
in
essence
are
made
from
100
percent
recovered
materials,
procuring
agencies
would
not
need
to
obtain
estimates,
certifications,
or
verifications
of
the
recovered
materials
content
in
the
items.
Therefore,
EPA
does
not
anticipate
that
there
would
be
a
cost
to
procuring
agencies
for
establishing
procedures
for
estimating,
certifying,
and
verifying
the
amount
of
recovered
materials
utilized
in
the
performance
of
a
contract.

A­
5
APPENDIX
4.
­­
SUMMARY
OF
COSTS
TO
CONTRACTORS
Costs
to
Contractors
Requirement
Costs
Policy
Development,
Distribution,
and
Implementation
(
First
Year
Only)
$
176,000
Verification
(
Total
Every
Three
Years
Beginning
in
Year
2)
5
$
0
TOTAL
ANNUALIZED
COSTS
­
$
20,000
