Government Proposes Policy Defining"Inherently Governmental Functions"

4.22.2010 - Posted in E&B Alerts - Government Contracts

The Office of Federal Procurement Policy (OFPP) recently issued a proposed policy letter (the "policy") to provide guidance to Executive Departments and agencies on circumstances when work must be reserved for performance by Federal government employees. See http://edocket.access.gpo.gov/2010/pdf/2010-7329.pdf. The policy categorizes government work into (1) inherently governmental, (2) functions closely associated with inherently governmental functions, (3) critical functions, and (4) non-critical functions. The policy adopts, for government-wide use, the definition of "inherently governmental function" set forth in the Federal Activities Inventory Reform ("FAIR") Act, P.L. 105-270, which is "a function that is so intimately related to the government interest as to require performance by Federal Government employees." For further guidance, the policy not only expands upon the definition of "inherently governmental," but also includes lists of examples of inherently governmental functions and functions closely associated with inherently governmental functions. Additionally, the policy defines a "critical function" as one that is "necessary to effectively perform and maintain control if its mission and operations," or would put the agency at risk of mission failure if outsourced.
In accord with settled practice, the policy provides that contractors may not perform inherently governmental functions. With regard to functions closely associated with inherently governmental functions, "special consideration" is given to federal employees, and, if ultimately performed by contractors, "greater attention" and oversight is mandated. Further, the policy seeks to ensure that "federal employees perform critical functions to the extent necessary for the agency to operate effectively and maintain control of its mission and operation." Finally, also in accord with past practice, there are no restrictions on contracting out non-critical work.

The policy, if implemented in its current form, will lead to significantly fewer contracting opportunities for service providers by expanding the number of "government-only" tasks. The new standards may also influence interactions between contractors and government acquisition officials during the transition and implementation of the policy. OFPP invites interested parties from both the public and private sectors to provide comments to be considered in the formulation of the final policy letter. Interested parties should submit comments in writing on or before June 1, 2010.For additional information, please contact Tim Connelly at [email protected] or (612) 236-0166.