How to Determine “Inherently Governmental Functions”

Posted on 09/21/2011 at 08:00 am

Office of Federal Procurement Policy (OFPP) Issues Letter with Guidance

In March 2009, the administration issued a memorandum to the Heads of Executive Departments and Agencies directing OMB/OFPP to issue guidance to clarify when governmental outsourcing of services is, and is not, appropriate. This new guidance from OFPP was recently issued September 12, 2011 and will be effective October 12, 2011 as OFPP Policy letter 11-01, Subject: Performance of Inherently Governmental and Critical Functions.

The issue of inherently government functions is not a new issue and in fact has been a concern of outsourcing for decades.  The President’s March 9, 2009 memorandum noted:

“…the line between inherently governmental activities that should not be outsourced and commercial activities that may be subject to private sector competition has been blurred and inadequately defined.”

Although adding clarity to the definition can be helpful, it’s equally important to understand that the new policy is not intended in any way to “… discourage the appropriate use of contractors. Contractors can provide expertise, innovation, and cost-effective support to Federal agencies for a wide range of services.”

The new policy letter provides the following:

  1. A single definition of ``inherently governmental function'' built around the well-established statutory definition in the Federal Activities Inventory Reform Act (FAIR Act), Public Law 105-270.
  2. Clarifies what functions are inherently governmental and must always be performed by Federal employees.
  3. Examples and tests to help agencies identify inherently governmental functions.

Some of the key components of the definition are:

  • “… a function that is so intimately related to the public interest as to require performance by Federal Government employees.”
  • “…require either the exercise of discretion in applying Federal Government authority or the making of value judgments in making decisions for the Federal Government, including judgments relating to monetary transactions and entitlements.”
  • “… the interpretation and execution of the laws of the United States so as —
    • “… to bind the United States to take or not to take some action by contract, policy, regulation, authorization, order…”
    • “…determine, protect, and advance United States economic, political, territorial, property, or other interests by military or diplomatic action, civil or criminal judicial proceedings, contract management…”
    • “…significantly affect the life, liberty, or property of private persons…”
    • “…to commission, appoint, direct, or control officers or employees of the United States“
    • “…to exert ultimate control over the acquisition, use, or disposition of the property, real or personal, tangible or intangible, of the United States, including the collection, control, or disbursement of appropriations and other Federal funds.”

However, the new policy definition also states:

“The term does not normally include… gathering information for or providing advice, opinions, recommendations, or ideas to Federal Government officials...."

The following are illustrative examples of work that is inherently governmental and examples of work closely associated – but perfectly legal to outsource with the appropriate government oversight and controls.  In these examples, there is a clear distinction between tasks that are decision making – an inherently governmental function - and providing support or advisory services - services that though may closely be associated with inherently government functions, may be performed by contractor support.   

Function

Work that is inherently governmental and therefore must be performed by Federal employees

Work that is closely associated with inherently governmental functions and that may be performed by either Federal employees or contractors

Budget Development

The determination of budget policy, guidance, and strategy, and the determination of Federal program priorities or budget requests.

Support for budget preparation, such as workforce modeling, fact finding, efficiency studies, and should cost analyses.

Policy and Regulatory Development

The determination of the content and application of policies and regulations.

Support for policy development, such as drafting policy documents and regulations, performing analyses, feasibility studies, and strategy options.

Human resources management

The selection of individuals for Federal Government employment, including the interviewing of individuals for employment, and the direction and control of Federal employees.

Support for human resources management, such as screening resumes in accordance with agency guidelines.

Acquisition planning, execution,

and management

During acquisition planning:

(1) Determination of requirements;

(2) Approval of a contract strategy, statement of work, incentive plans, and evaluation criteria;

(3) Independent determination of estimated cost based on input from either in-house or contractor sources or both.

 

Support acquisition planning by:

(1) Conducting market research;

(2) Developing inputs for government cost estimates; and

(3) Drafting statements of work and other pre-award documents.

 

Acquisition planning, execution,

and management

During source selection:

(1) Determination of price reasonableness of offers;

(2) Participation as a voting member on a source selection board; and

(3) Awarding of contracts.

Support source selection by:

(1) Preparing a technical evaluation and associated documentation;

(2) Participating as a technical advisor to a sourceselection board or as a nonvoting member of a source evaluation board; and

(3) Drafting the price negotiation memorandum.

 

Acquisition planning, execution,

and management

During contract management:

(1) Ordering of any changes required in contract performance or contract qualities;

(2) Determination of whether costs are reasonable, allocable, and allowable;

(3) Participation as a voting member on performance evaluation boards;

(4) Approval of award fee determinations or past performance evaluations; and

(5) Termination of contracts.

Support contract management by:

(1) Assisting in the evaluation of a contractor’s performance (e.g., by collecting information, performing an analysis, or making a recommendation for a proposed performance rating); and

(2) Providing support for assessing contract claims and preparing termination settlement documents.

 

For the complete OFPP policy letter with a more extensive list of examples of both a) inherently governmental functions and b) functions closely associated with the performance of inherently governmental functions; along with responsibilities of government agencies to comply with the updated policy see:  http://www.ofr.gov/OFRUpload/OFRData/2011-23165_PI.pdf .

- Randy Gaylor, Director

Tags: Acquisition  Inherently Governmental Functions  

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