Definitions Of Inherently Governmental Function In Federal Procurement Law And Guidance

Functions that federal law and policy require to be performed by government personnel, not contractor employees, are known as "inherently governmental functions." Such functions have been a topic of interest in recent Congresses, in part, because of questions about sourcing policy (i.e., whether specific functions should be performed by government personnel or contractor employees). There have also been questions about the various definitions of inherently governmental function given in federal law and policy and, particularly, whether the existence of multiple definitions of this term may have resulted in contractor employees performing functions that should be performed by government personnel. Two primary definitions of inherently governmental function currently exist in federal law and policy. One is a statutory definition, enacted as part of the Federal Activities Inventory Reform (FAIR) Act of 1998. This definition states that an inherently governmental function is "a function so intimately related to the public interest as to require performance by Federal Government employees." The other is a policy-oriented definition contained in Office of Management and Budget (OMB) Circular A-76. This definition states that an inherently governmental activity is "an activity that is so intimately related to the public interest as to mandate performance by government personnel." These two definitions arguably do not differ significantly in and of themselves. However, both the FAIR Act and OMB Circular A-76 include further elaboration and expansion upon the meaning of inherently governmental function that differ in certain ways. Other statutes, regulations and guidance documents that define inherently governmental function do so either by reproducing the language of the FAIR Act or OMB Circular A-76, or by incorporating their definitions by reference. Most notably, the Federal Acquisition Regulation (FAR) incorporates by reference or otherwise adopts the definition of OMB Circular A-76, while Office of Federal Procurement Policy (OFPP) Policy Letter 11-01, discussed below, adopts the FAIR Act's definition. However, like the FAIR Act and OMB Circular A-76, both the FAR and Policy Letter 11-01 also include some unique elaboration and expansion upon the term. In addition to these definitions, there are numerous statutory, regulatory, and policy provisions designating specific functions as inherently governmental or, alternatively, commercial. (A commercial function is one that could be performed by contractor employees, although there is generally no requirement that contractor employees perform commercial functions.) Such designations also help establish the meaning of inherently governmental function by specifying what is-and is not-included within this category. Similarly, while not offering their own definitions of inherently governmental function, the Government Accountability Office (GAO) and the federal courts have developed tests that they use in identifying specific functions as inherently governmental or commercial. However, a judicial declaration that a particular function is inherently governmental under a constitutional test would not necessarily preclude the executive branch from contracting out this function. The 110th Congress tasked OMB with reviewing existing definitions of inherently governmental function and developing a "single consistent definition" of this term. Partly in response to this charge, OMB, though the OFPP, issued Policy Letter 11-01. Policy Letter 11-01 adopts the FAIR Act's definition of inherently governmental function, rather than establishing a new definition. However, Policy Letter 11-01 does establish two tests for identifying inherently governmental functions, as well as defines a critical function as one "that is necessary to the agency being able to effectively perform and maintain control of its mission and operations."

An ¿inherently governmental function¿ is one that, as a matter of law and policy, must be performed by fed. gov¿t. employees and cannot be contracted out because it is ¿intimately related to the public interest.¿ This report provides background, issues, and options for Congress on defining inherently governmental functions within the context of U.S. Dept. of Defense (DoD) operations. The report focuses upon DoD because of the specific functions that it performs; its prominent role in fed. contracting; its unique workforce, which consists of military and civilian personnel; and recent allegations that DoD, among other agencies, has improperly contracted out inherently governmental functions. Charts and tables.

"On March 4, 2009, President Obama issued a Presidential Memorandum focusing on government contracting. In this memorandum, the President challenged the Office of Management and Budget (OMB) to develop a single definition for the term "inherently governmental functions" that would apply to all agencies and provide guidance to agencies in order for them to identify critical functions and positions that should be retained by federal employees. In adherence to the President's memorandum, the Office of Federal Procurement Policy (OFPP) drafted a proposed policy letter that attempts to provide clarity to the agencies by defining inherently governmental functions and guidance as to how to determine which functions can be outsourced to contractors. This paper will provide an analysis of the proposed policy letter and will outline several challenges the government is currently facing by failing to classify certain functions as inherently governmental. This paper also recommends that OFPP create a list that captures all the functions that should not be outsourced to contractors in order to provide consistency amongst agencies and accountability for governmental decisions"--Page iii.

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