OMB Holds Steady on LCCA

On Sept. 20, 2012, the White House Office of Management and Budget (OMB) issued its final report on the issue of discount rates and life-cycle cost analysis (LCCA). The memorandum states: "Regardless of any assumptions about relative prices and costs, all alternatives being compared should be discounted with the same discount rate following the guidelines in Section 9 of Circular A-94." In other words, OMB does not recommend overturning standard economic procedures in favor of a material-specific discount rate as previously proposed by the cement industry.

One of the cement industry’s top legislative priorities in 2012 was to increase market share by changing how the discount rate in LCCA is computed. They based their efforts on a model developed by the Concrete Sustainability Hub at MIT, and paid for by the cement and ready-mix concrete industry. As a result of an aggressive lobbying campaign by NAPA, these efforts were thwarted. Instead of a mandated change to how discount rates are computed, OMB was directed to study the issue. NAPA met with OMB officials as part of this review.

With its Sept. 20 memo, OMB ensures that Congress will not become the engineering arm of the federal government. Click here for a copy of the OMB memo.