Work Reserved for Performance by Federal Government Employees, 16188-16197 [2010-7329]
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16188
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to the risk of a slip/fall type accident.
The petitioner asserts that this petition
upon approval will be mandated
throughout the Carlisle Mine and will
provide no less than the same measure
of protection afforded by the standard.
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Docket Number: M–2010–015–C.
Petitioner: Sunrise Coal, LLC, 1183
East Canvasback Drive, Terre Haute,
Indiana 47802.
Mine: Carlisle Mine, MSHA I.D. No.
12–02349, located in Sullivan County,
Indiana.
Regulation Affected: 30 CFR 75.1700
(Oil and gas wells).
Modification Request: The petitioner
requests a modification of the existing
standard to permit mine through or near
(whenever the safety barrier diameter is
reduced to a distance less than the
District Manager would approve
pursuant to 75.1700) plugged oil and gas
wells penetrating the Indian V coal
seam. The petitioner has listed in this
petition a complete list of procedures to
be utilized when plugging oil and gas
wells. Persons may review these
procedures at the MSHA address listed
in this notice. The petitioner asserts that
the proposed alternative method will at
all times guarantee no less than the
same measure of protection afforded to
the miners under 30 CFR 75.1700.
Docket Number: M–2010–016–C.
Petitioner: Lone Mountain Processing,
Inc., Drawer C, St. Charles, Virginia
24282.
Mine: Huff Creek No. 1 Mine, MSHA
I.D. No. 15–17234, Darby Fork No. 1
Mine, MSHA I.D. No. 15–02263, Clover
Fork No. 1 Mine, MSHA I.D. No. 15–
18647, all located in Harlan County,
Kentucky.
Regulation Affected: 30 CFR 75.208
(Warning devices).
Modification: The petitioner requests
a modification of the existing standard
to permit a readily visible warning to be
posted, or a physical barrier to be
installed on the second row of
permanent roof support outby
unsupported roof to impede travel
beyond permanent support, except
during the installation of roof supports.
The petitioner asserts that the proposed
alternative method will at all times
guarantee no less than the same measure
of protection afforded by the
appropriate portion of 30 CFR 75.208.
Dated: March 26, 2010.
Patricia W. Silvey,
Director.
[FR Doc. 2010–7197 Filed 3–30–10; 8:45 am]
BILLING CODE 4510–43–P
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LEGAL SERVICES CORPORATION
295–1500 or
FR_NOTICE_QUESTIONS@lsc.gov.
Sunshine Act Meetings of the Board of
Directors and Five Committees of the
Board
Dated: March 29, 2010.
Patricia D. Batie,
Corporate Secretary.
Notice
[FR Doc. 2010–7388 Filed 3–29–10; 4:15 pm]
DATE AND TIME: The Legal Services
Corporation Board of Directors will
meet on April 7, 2010 at 12 p.m.,
Eastern Time.
LOCATION: Legal Services Corporation,
3333 K Street, NW., Washington, DC
20007, 3rd Floor Conference Center.
PUBLIC OBSERVATION: For all meetings
and portions thereof open to public
observation, members of the public who
are unable to attend but wish to listen
to the proceedings may do so by
following the telephone call-in
directions given below. You are asked to
keep your telephone muted to eliminate
background noises. From time to time
the Chairman may solicit comments
from the public.
BILLING CODE 7050–01–P
Call-in Directions for Open Session(s)
• Call toll-free number: 1–(866) 451–
4981;
• When prompted, enter the
following numeric pass code:
5907707348;
• When connected to the call, please
‘‘MUTE’’ your telephone immediately.
STATUS OF MEETING: Open.
MATTERS TO BE CONSIDERED:
Board of Directors
Agenda
Open Session
1. Approval of agenda;
2. Consider and act on nominations
for the Chairman of the Board of
Directors;
3. Consider and act on nominations
for the Vice Chairman of the Board of
Directors;
4. Consider and act on delegation to
Chairman of authority to make
Committee assignments;
5. Public comment;
6. Consider and act on other business;
7. Consider and act on motion to
adjourn meeting.
CONTACT PERSON FOR INFORMATION:
Katherine Ward, Executive Assistant to
the Vice President & General Counsel, at
(202) 295–1500. Questions may be sent
by electronic mail to
FR_NOTICE_QUESTIONS@lsc.gov.
SPECIAL NEEDS: Upon request, meeting
notices will be made available in
alternate formats to accommodate visual
and hearing impairments. Individuals
who have a disability and need an
accommodation to attend the meeting
may notify Katherine Ward, at (202)
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OFFICE OF MANAGEMENT AND
BUDGET
Office of Federal Procurement Policy
Work Reserved for Performance by
Federal Government Employees
AGENCY: Office of Management and
Budget, Office of Federal Procurement
Policy.
ACTION: Notice of proposed policy letter.
SUMMARY: The Office of Federal
Procurement Policy (OFPP) in the Office
of Management and Budget (OMB) is
issuing a proposed policy letter to
provide guidance to Executive
Departments and agencies on
circumstances when work must be
reserved for performance by Federal
government employees. The
Presidential Memorandum on
Government Contracting, issued on
March 4, 2009, directs OMB to clarify
when governmental outsourcing of
services is, and is not, appropriate,
consistent with section 321 of the
National Defense Authorization Act
(NDAA) for FY 2009. Section 321
requires OMB to (i) create a single
definition for the term ‘‘inherently
governmental function’’ that addresses
any deficiencies in the existing
definitions and reasonably applies to all
agencies; (ii) establish criteria to be used
by agencies to identify ‘‘critical’’
functions and positions that should only
be performed by federal employees; and
(iii) provide guidance to improve
internal agency management of
functions that are inherently
governmental or critical. The
Presidential Memorandum is available
at https://www.whitehouse.gov/
the_press_office/.
Memorandum-for-the-Heads-ofExecutive-Departments-and-AgenciesSubject-Government/.
Section 321 may be found at https://
thomas.loc.gov/cgi-bin/query/
F?c110:5:./temp/~c110wWVqGQ:
e178256.
Comment Date: 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 to
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the address below on or before June 1,
2010.
ADDRESSES: Comments may be
submitted by any of the following
methods:
• E-mail:
OFPPWorkReserved@omb.eop.gov.
• Facsimile: 202–395–5105.
• Mail: Office of Federal Procurement
Policy, ATTN: Mathew Blum, New
Executive Office Building, Room 9013,
724 17th Street, NW., Washington, DC
20503.
Instructions: Please submit comments
only and cite ‘‘Proposed OFPP Policy
Letter’’ in all correspondence. All
comments received will be posted,
without change, to https://
www.whitehouse.gov/omb/
procurement/workreserved/
work_comments.html, without
redaction, so commenters should not
include information that they do not
wish to be posted (for example because
they consider it personal or businessconfidential).
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FOR FURTHER INFORMATION CONTACT:
Mathew Blum, OFPP, (202) 395–4953 or
mblum@omb.eop.gov.
SUPPLEMENTARY INFORMATION:
A. Overview
OFPP is issuing a proposed policy
letter to provide guidance addressing
when work must be reserved for
performance by federal employees. The
policy letter is intended to implement
direction in the President’s March 4,
2009, Memorandum on Government
Contracting that requires OMB to
‘‘clarify when governmental outsourcing
for services is and is not appropriate,
consistent with section 321 of Public
Law 110–417 (31 U.S.C. 501 note).’’ The
proposed policy letter would:
• Clarify what functions are
inherently governmental and must
always be performed by federal
employees. 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, would
replace existing definitions in regulation
and policy. The FAIR Act defines an
activity as inherently governmental
when it is so intimately related to the
public interest as to mandate
performance by Federal employees.
Examples and tests would be provided
to help agencies identify inherently
governmental functions.
• Help agencies identify when other
functions (or portions of functions) need
to be performed by Federal employees.
Existing guidance addressing functions
closely associated with inherently
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governmental functions would be
strengthened to ensure that performance
of such functions does not expand to
include performance of inherently
governmental functions or otherwise
interfere with federal employees’ ability
to carry out their inherently
governmental responsibilities. In
addition, consistent with section 321, a
new category, ‘‘critical function,’’ would
be defined to help agencies identify and
build sufficient internal capacity to
effectively perform and maintain control
over functions that are core to the
agency’s mission and operations.
• Outline a series of agency
management responsibilities to
strengthen accountability for the
effective implementation of these
policies. Agencies would be required to
take specific actions, before and after
contract award, to prevent contractor
performance of inherently governmental
functions and overreliance on
contractors in ‘‘closely associated’’ and
critical functions. Agencies would also
be required to develop agency-level
procedures, provide training, and
designate senior officials to be
responsible for implementation of these
policies.
After public comment is considered
and the policy letter is finalized,
appropriate changes will be made to the
Federal Acquisition Regulation (FAR).
B. Background
The Presidential Memorandum on
Government Contracting requires the
Director of OMB to develop guidance
addressing when governmental
outsourcing of services is, and is not,
appropriate. The Memorandum states
that the line between inherently
governmental activities that should not
be outsourced and commercial activities
that may be subject to private-sector
performance has become blurred, which
may have led to the performance of
inherently governmental functions by
contractors and, more generally, an
overreliance on contractors by the
government. It directs OMB to clarify
when outsourcing is, and is not,
appropriate, consistent with section 321
of the NDAA for FY 2009.
Section 321 directed OMB to: (1)
Create a single, consistent definition for
the term ‘‘inherently governmental
function’’ that addresses any
deficiencies in the existing definitions
and reasonably applies to all agencies;
(2) develop criteria for identifying
critical functions with respect to the
agency’s missions and structure; (3)
develop criteria for determining
positions dedicated to critical functions
which should be reserved for federal
employees to ensure the department or
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agency maintains control of its mission
and operations; (4) provide criteria for
identifying agency personnel with
responsibility for (a) maintaining
sufficient organic expertise and
technical capability within the agency,
and (b) issuing guidance for internal
activities associated with determining
when work is to be reserved for
performance by Federal employees; and
(5) solicit the views of the public
regarding these matters.
OMB’s OFPP reviewed current laws,
regulations, policies, and reports
addressing the definition of inherently
governmental functions and the
reservation of work for government
employees. The review was conducted
with the assistance of an interagency
team that included representatives from
the Chief Acquisition Officers Council
and the Chief Human Capital Officers
Council. As part of this effort, OFPP
reviewed the definition of inherently
governmental functions in the Federal
Activities Inventory Reform Act (FAIR
Act), Public Law 105–270, section 2383
of title 10 (which cites to definitions in
the Federal Acquisition Regulation
(FAR)), the FAR, OMB Circular A–76,
OFPP Policy Letter 92–1, Inherently
Governmental Functions (which was
rescinded and superseded by OMB
Circular A–76 in 2003) and reports by
the Government Accountability Office
(GAO). OFPP also reviewed the analyses
in a recent report by the Congressional
Research Service, Inherently
Governmental Functions and
Department of Defense Operations:
Background, Issues, and Options for
Congress (June 2009) and relevant
findings and recommendations set forth
in the Report of the Acquisition
Advisory Panel (January 2007), available
at https://www.acquisition.gov/comp/
aap/documents/Chapter6.pdf. The
Panel concluded, among other things,
that ‘‘[t]here is a need to assure that the
increase in contractor involvement in
agency activities does not undermine
the integrity of the government’s
decision-making processes.’’ See the
Panel’s Report at 392.
To supplement this review, OMB held
a public meeting and solicited
comments from the public last spring
and summer to inform the development
of guidance. Comments were
specifically sought regarding the
definition of inherently governmental
functions and criteria for identifying
critical functions. See 74 FR 25775 (May
29, 2009) for a copy of the notice. OMB
received 11 comments addressing these
issues. For a copy of public comments,
go to https://www.whitehouse.gov/omb/
assets/procurement_govcontracting/
public_comments.pdf. For a transcript
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of the public meeting, go to https://
www.whitehouse.gov/omb/assets/
procurement_gov_contracting/
transcript_public_meeting.pdf.
Respondents generally favored the
definition of ‘‘inherently governmental
function’’ found in the FAIR Act. Some
concern was raised regarding changes
made to the definition by OMB Circular
A–76 when the Circular was revised in
2003.
Some respondents recommended that
the criteria OMB develops to identify
critical functions and positions reserved
for federal employees be tied to mission
performance. Some cautioned that these
criteria should also guard against the
contracting out of a function if such
action poses too great a risk of creating
a single point of mission failure.
However, at least one commenter
expressed the view that, as long as the
overall function is managed by a federal
employee, not every position
performing a critical function needs to
be performed by federal employees in
order to protect the government’s
interest and prevent mission failure.
Another commenter stated that tasks
closely associated with governmental
decision-making should not be
contracted out unless the government
can effectively guard against or
otherwise mitigate conflicts of interest.
Based on this review and
consideration of the public comments,
OFPP has: (1) Developed a proposed
policy letter and (2) formulated a list of
tailored questions to elicit feedback on
specific issues that will help inform its
deliberations in shaping final guidance.
C. Proposed Policy Letter
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1. Summary
OFPP has developed a proposed
policy letter to improve the rules
addressing the proper roles of the public
and private sectors in performing work
for the government. The policy letter is
designed to address a number of
weaknesses with existing rules that are
affecting the efficiency and effectiveness
of government performance. These
weaknesses are summarized below
along with a brief description of how
they would be addressed.
Concern: The line has been blurred
between functions that are inherently
governmental and those that are not,
potentially leading to confusion and to
inappropriate judgments about when
contractors may perform work that
should be reserved for performance by
Federal employees.
Proposed actions: Adopt the FAIR Act
definition of ‘‘inherently governmental
function’’ as the single government-wide
definition of this term. (The FAIR Act
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defines an activity as inherently
governmental when it is so intimately
related to the public interest as to
mandate performance by Federal
employees.) Develop guidance to help
agencies identify whether a given
function falls within the definition of
‘‘inherently governmental function’’ or is
otherwise closely associated with the
performance of inherently governmental
functions. Provide tests for analyzing
whether a function is inherently
governmental based on the nature of the
function and the level of discretion to be
exercised in performing the function.
Reinforce management
responsibilities—both before and after
contract award—to guard against
contractor performance of inherently
governmental functions.
Concern: Some government
organizations may be overly reliant on
contractors to perform critical functions
that, while not inherently governmental,
still need to be performed by Federal
employees.
Proposed actions: Provide guidance
for determining the criticality of
functions. Identify criteria for
determining when positions dedicated
to performing critical functions must or
should be reserved for Federal employee
performance. Hold appropriate officials
accountable for ensuring adequate
analysis has been performed to establish
the sufficiency of internal capability in
the event that contractors are to perform
part of the function.
Concern: There is insufficient
management attention focused on
ensuring work is properly reserved for
federal employees and maintaining
certain critical capability levels inhouse. An appropriate governance and
review structure must be established to
support the successful performance of
these duties.
Proposed actions: Require agencies to
develop agency-level procedures,
conduct training, periodically review
internal controls used to monitor
implementation of this authority, and
designate one or more senior officials to
be responsible for implementation and
maintenance of the policy.
2. Inherently Governmental Functions
There are three main sources for
definitions and guidance addressing
inherently governmental function: (1)
The FAIR Act, (2) the FAR, and (3) OMB
Circular A–76.
a. Definition. The FAIR Act, FAR, and
Circular A–76 each make clear that the
term ‘‘inherently governmental
function’’ addresses functions that are so
intimately related to the public interest
as to require performance by federal
government employees. There are some
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variations in the language used by the
three sources to describe the types of
functions included in the definition. In
particular, the FAIR Act states that the
term includes activities that require the
‘‘exercise of discretion’’ in applying
‘‘Federal Government authority,’’
whereas the Circular speaks in terms of
the exercise of ‘‘substantial discretion’’
in applying ‘‘sovereign’’ Federal
government authority. It is unclear what
the impact of this type of variation has
been. This notwithstanding, these
variations can create confusion and
uncertainty.
The proposed policy letter adopts the
FAIR Act definition as the single,
government-wide definition. This
definition reflects longstanding OFPP
guidance that had been set out in OFPP
Policy Letter 92–1. 57 FR 45096
(September 30, 1992). Most public
commenters expressed general
satisfaction with the statutory definition
in the FAIR Act, while also
acknowledging uncertainties as to its
construction and application in
particular circumstances.
b. Guidance. The proposed policy
letter provides guidance to help
agencies determine whether a given
function meets the definition of an
‘‘inherently governmental function.’’ The
proposed policy letter retains a list of
examples of inherently governmental
functions, currently found in FAR
Subpart 7.5. OFPP would also create
tests for agencies to use in determining
whether functions not appearing on the
list otherwise fall within the definition
of inherently governmental. The ‘‘nature
of the function’’ test would ask agencies
to consider whether the direct exercise
of sovereign power is involved. Such
functions are uniquely governmental
and, therefore, inherently governmental.
The ‘‘discretion’’ test would ask agencies
to evaluate whether the discretion
associated with the function, when
exercised by a contractor, would have
the effect of committing the government
to a course of action. This test was
included in OFPP Policy Letter 92–1,
Inherently Governmental Functions, and
currently may be found in OMB Circular
A–76 (see Attachment A, para. B(1)(b)),
which rescinded Policy Letter 92–1.
OFPP seeks to clarify and reinforce
that agencies have both pre-award and
post-award responsibilities for
evaluating whether a function is
inherently governmental and taking
steps to avoid transferring inherently
governmental authority to a contractor,
such as through inadequate attention to
contract administration. For proposed
work, a determination that the work is
not inherently governmental should be
made prior to issuance of the
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solicitation, preferably during
acquisition planning. For ongoing
contracts, agencies should review how
work is performed, focusing, in
particular, on functions that are closely
associated with inherently
governmental activities and professional
and technical services, to ensure the
scope of the work or the circumstances
have not changed to the point that
inherently governmental authority has
been transferred to the contractor.
3. Functions That Are Closely
Associated With Inherently
Governmental Functions
Policy guidance addressing inherently
governmental functions must also
address functions closely associated
with inherently governmental functions
to properly ensure that work that is
intimately related to the public interest
is performed by Federal employees.
Closely associated functions approach
the status of inherently governmental
work because of the nature of these
functions and the risk that their
performance, if not appropriately
managed, may materially limit Federal
officials’ performance of inherently
governmental functions.
The proposed policy letter retains an
illustrative list of functions closely
associated with inherently
governmental functions from current
FAR coverage. The guidance requires
agencies to take a number of steps
related to these functions. First, the
proposed policy letter reiterates the
requirement set forth in section 736 of
Division D of the Omnibus
Appropriations Act, 2009, Public Law
111–8, to give special consideration to
reserving these functions to
performance by federal employees.
Second, the proposed policy letter lays
out the responsibilities agencies must
perform if they determine that
contractor performance of a function
closely associated with an inherently
governmental function is appropriate.
These responsibilities include preestablishing in the contract specified
ranges of acceptable decisions,
subjecting the contractor’s discretionary
decision to final approval by an agency
official, assigning a sufficient number of
qualified federal employees with
appropriate expertise to administer the
work, and taking steps to avoid or
mitigate conflicts of interest. Each of
these actions is designed to help ensure
that the contractor’s activities do not
expand to include inherently
governmental responsibilities. Although
these actions should currently be taken,
they are not enumerated in one
guidance document and often are given
insufficient management attention (see
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paragraph 5, below, for additional
discussion on new agency
responsibilities for management and
monitoring).
4. Critical functions
Since at least the early 1990s,
government-wide policy addressing
when work must be reserved for Federal
employees has focused almost
exclusively on the definition of
‘‘inherently governmental’’ functions
and functions closely associated with
inherently governmental functions. This
narrow focus has been cited as a cause
of inadequate attention to maintaining a
residual Federal core capability when
considering contractor performance of
critical functions that are tied to an
agency’s mission. The Acquisition
Advisory Panel, established by Congress
in 2003 to review the federal acquisition
system, concluded in its 2007 report
that the consequences of this inattention
to contractor performance of critical
functions include ‘‘the loss of
institutional memory, the inability to be
certain whether the contractor is
properly performing the specified work
at a proper price and the inability to be
sure that decisions are being made in
the public interest rather than in the
interest of the contractors performing
the work.’’ Following the issuance of the
Panel’s report, Congress, in the FY 2009
NDAA, directed OMB to develop
criteria for agencies to use in identifying
‘‘critical’’ functions and in determining
when such functions, or parts thereof,
must be retained for performance by
federal employees.
Consistent with section 321 of the FY
2009 NDAA, the proposed policy letter
provides guidance to address the
handling of critical functions and the
maintenance of a core capability by
Federal employees. The proposed policy
letter would define critical function to
mean a function whose importance to
the agency’s mission and operation
requires that at least a portion of the
function must be reserved to federal
employees in order to ensure the agency
has sufficient internal capability to
effectively perform and maintain control
of its mission and operations. Agencies
would be held responsible for ensuring
a sufficient number of positions
performing critical work are filled by
federal employees with appropriate
training, experience, and expertise to
understand the agency’s requirements,
formulate alternatives, manage the work
product, and manage any contractors
used to support the Federal workforce.
The proposed guidance would also
require agencies to evaluate whether
they have sufficient internal capability
on a case-by-case basis, taking into
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account factors such as the agency’s
mission, the complexity of the function
and need for specialized skill, and the
effect of contractor default on mission
performance. The proposed guidance is
built around the general principle that
the more critical a function is, the
greater the need for internal capability
to maintain control of the agency’s
mission and operations. This is most
obviously the case where the function is
critical to achievement of the agency’s
core mission, but even for functions that
may not be viewed as critical, such as
functions that are not directly involved
in performing the core mission, the
agency may determine that the function
is, nonetheless, sensitive enough as to
require that many, most, or, in some
situations, all positions be filled by
Federal employees.
Finally, if an agency determines that
it has sufficient internal capability to
control its mission and operations, the
proposed policy would require the
consideration of cost to establish the
extent to which additional critical work
is performed by Federal employees,
unless performance and risk
considerations in favor of Federal
employee performance would clearly
outweigh cost considerations.
5. Management Attention
A clear understanding of
responsibilities and heightened
management attention will be required
to ensure that work that should be
performed by Federal employees is
reserved for performance by them.
The proposed policy letter lays out
the determinations that must be
documented by the agency head or
designated requirements official before a
contract solicitation is issued to show
that functions to be acquired by contract
are not inherently governmental. It
would also require agencies to
determine (also before issuing a
solicitation) that they have sufficient
internal capability to control their
mission and operations. During contract
performance, agencies would be
required to (1) monitor how contractors
are performing contracts, especially
those involving work closely associated
with inherently governmental functions
or professional and technical services,
and (2) take appropriate action where
internal control of mission and
operations is at risk due to
inappropriate or excessive reliance on
contractors to perform critical functions.
Finally, the proposed policy letter
would require agencies to strengthen
internal agency management. Each
agency with 100 or more full-time
federal employees in the prior fiscal
year would be required to identify one
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or more senior officials to be
accountable for the development and
implementation of agency policies,
procedures, and training to ensure the
appropriate reservation of work for
federal employees. The selected officials
would be expected to facilitate the
meaningful involvement of all relevant
offices. In addition, agencies would be
expected to develop and maintain (1)
internal procedures, to be reviewed by
agency management every two years,
and (2) training plans to help their
employees understand and meet their
responsibilities.
D. Solicitation of Public Comment
OFPP welcomes comments on the
proposed policy letter. Respondents are
also encouraged to offer their views on
the following questions, many of which
are designed to help elicit feedback on
specific aspects of the draft guidance.
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1. Definitions
a. If the FAIR Act definition of
‘‘inherently governmental’’ is adopted,
what additional definitional
clarification is needed, if any?
b. What additional guidance should
be provided to make clear that
identifying ‘‘critical’’ work is driven by
mission and circumstance, which will
differ between agencies and within
agencies over time? Is there a term other
than ‘‘critical’’ that might be used to
more clearly convey this principle?
c. What, if any, additional guidance
should be provided to address what is
meant by the term ‘‘public interest’’?
2. Inherently Governmental Functions
a. Does the ‘‘discretion’’ test (which is
derived from OMB Circular A–76,
Attachment A and, before that, OFPP
Policy Letter 92–1) help or hinder
identification of inherently
governmental functions? How might the
language in the proposed policy letter
be improved to make it more useful?
b. Does the proposed ‘‘nature of the
function’’ test help in the identification
of inherently governmental functions?
How might the coverage of this test in
the proposed policy letter be improved
to make it more useful?
c. Should consideration be given to
establishing a ‘‘principal-agent’’ test that
would require agencies to identify
functions as inherently governmental
where serious risks could be created by
the performance of these functions by
those outside government, because of
the difficulty of ensuring sufficient
control over such performance?
d. What, if any, additional guidance
might help agencies differentiate
between circumstances where
contractors are being used appropriately
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to inform government officials and those
where contractors are limiting or
constraining government exercise of
inherently governmental
responsibilities?
e. What, if any, changes should be
made to existing laws that currently
deem specific functions or the work
performed by specific organizations to
be inherently governmental?
3. Closely Associated and Critical
Functions
a. Should the policy letter set out a
presumption, or a requirement, in favor
of performance of ‘‘closely associated’’
and/or critical functions by federal
employees?
b. What, if any, additional guidance
may help agencies differentiate between
critical functions and functions that are
closely associated with the performance
of inherently governmental functions?
c. Should these categories be merged
and treated in identical fashion? Why or
why not?
d. What, if any, additional guidance
might be provided to help agencies
identify the extent to which a critical
function may be performed by a
contractor?
e. Should the policy clarify whether
determinations regarding criticality are
to be made at the departmental or
component level?
4. Non-critical Functions
a. What, if any, additional guidance
may help agencies differentiate between
functions that are critical and those that
are not?
b. Should guidance allow agency
heads to identify categories of service
contracts that may be presumed to be
non-critical? Why or why not?
5. Specific Functions
a. What functions, in particular, are
the most difficult to properly classify as
inherently governmental, closely
associated with inherently
governmental, critical, or non-critical—
and why? What specific steps should be
taken to address this challenge?
b. What should guidance say—in
place of, or in addition to, the draft
guidance or currently existing federal
regulations or policies—to address the
use (if any) of contractors performing
any of the following functions?
i. Pre-award acquisition support, such
as acquisition planning, market
research, development of independent
government cost estimates, and
preparation of documentation in
support of contract award, including
preparation of: price negotiation
memoranda and price reasonableness
determinations, technical evaluations,
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determinations of responsibility,
determinations and findings, and
justifications;
ii. Post-award acquisition support,
such as functions involving the use of
contractors to manage other contractors,
the development of contractor
performance assessments, review of
contract claims, and the preparation of
termination settlement proposals;
iii. Procurement management reviews;
iv. Management of Federal grantees;
v. Strategic planning;
vi. Lead systems integration;
vii. Physical security involving:
A. Guard services, convoy security
services, pass and identification
services, plant protection services, the
operation of prison or detention
facilities;
B. Security services other than those
described in A; or
C. The use of deadly force, including
combat, security operations performed
in direct support of combat, and
security that could evolve into combat;
viii. Cyber security, including IT
network security;
ix. Support for intelligence activities,
such as covert operations;
x. The assistance, reinforcement or
rescue of individuals who become
engaged in hostilities or offensive
responses to hostile acts or
demonstrated hostile intentions; and
xi. Intelligence interrogation of
detainees, including interrogations in
connection with hostilities.
c. Should the guidance provide an
illustrative list of functions that are
presumed to be critical? Why or why
not? If so, what functions should be
included on the list?
6. Human Capital Planning
a. How, if at all, should this guidance
address the problem of limitations on
the number of authorized Federal
positions and the impact of such
limitations on decisions about reserving
work for Federal employees?
b. How, if at all, should this guidance
address the potential nexus between
decisions regarding reserving work for
Federal employees and the
unavailability of certain capabilities and
expertise among Federal employees
(e.g., ‘‘hard to fill’’ labor categories), and
the impact of Federal salary limits on
hiring people with those capabilities
and expertise?
c. Should the guidance address when
it is appropriate to temporarily contract
for performance of work that is
generally reserved for Federal
employees?
d. How, if at all, should this guidance
address situations where there is no
basis to reserve work for Federal
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employees, but the government is not in
a position to provide adequate oversight
of a contractor, whether due to the
unavailability of federal employees with
the skills needed for contract
management or for other reasons?
e. What, if any, additional guidance
might be provided to help an agency
analyze whether it has the best mix of
private and public sector labor? Are
there benchmarks that exist to help
agencies make this determination? Can
the concept of ‘‘overreliance’’ be
effectively understood without also
providing guidance on ‘‘underreliance’’?
Why or why not?
7. Scope of Coverage
a. How, if at all, should the draft
guidance address advisory and
assistance services? What, if any,
changes should be considered to FAR
Subpart 37.2 to improve how agencies
draw upon the skills of the public and
private sectors?
b. How, if at all, should the draft
guidance address personal services
contracting? What, if any, changes
should be considered to FAR Subpart
37.104 to improve how agencies draw
upon the skills of the public and private
sectors?
c. What additional guidance, if any,
would be beneficial to improve
understanding and implementation of
policies addressing functions that must
be reserved for performance by Federal
employees?
d. What additional guidance, if any,
would be beneficial to improve
understanding and implementation of
policies addressing functions that may
be performed by contractors?
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8. Form of Coverage
Is an OFPP policy letter an effective
vehicle to serve as the main document
for consolidated policy guidance on the
subject of work reserved for Federal
employees and maintaining certain
critical capability levels in-house? Does
it effectively address the affected
stakeholder communities? If not, which
communities are not properly addressed
and what form should the guidance take
and why?
9. Implementation
a. What best practices (e.g.,
flowcharts, decision trees, checklists,
handbooks) exist to help agencies
identify which functions should be
reserved for performance by Federal
employees? Note: Respondents are
encouraged to submit copies of, or
provide citations to, relevant documents
with their responses.
b. What questions arise most
frequently that might be suitably
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addressed in a question and answer
format? Examples of questions might
include the following:
• What steps should contractor
employees be required to take when
working on a government site to ensure
their status is clearly understood?
• Under what, if any, circumstances
may a contractor attend a policy-making
meeting?
• Under what, if any, circumstances
may a contractor represent an agency at
a policy-making meeting?
10. Management Responsibilities
What, if any, additional guidance
should be provided to ensure the
policies and practices discussed in the
draft guidance are given appropriate
management attention?
11. Inventories of Federal and
Contractor Employees
a. What is the best way to optimize
the value of Federal employee
inventories that agencies prepare under
the FAIR Act and OMB Circular A–76
to support policies for identifying work
to be reserved for performance by
Federal employees?
b. What is the best way to optimize
the value of the contractor employee
inventory required by section 743 of
Division C of the FY 2010 Consolidated
Appropriations Act, Public Law 111–
117 (for civilian agencies) and section
807 of the National Defense
Authorization Act for FY 2008, Public
Law 110–181 (for defense agencies), to
support policies for identifying work to
be reserved for performance by Federal
employees and those that may continue
to be performed by contractors?
Daniel I. Gordon,
Administrator, Office of Federal Procurement
Policy.
Policy Letter No. 10–XX
To the Heads of Executive Departments And
Establishments
Subject: Work Reserved for Performance by
Federal Government Employees
1. Purpose. This guidance establishes
Executive Branch policy addressing when
work must be reserved for performance by
federal employees. The policy is intended to
assist agency officers and employees in
ensuring that only federal employees perform
work that is inherently governmental or
otherwise needs to be reserved to the public
sector.
Nothing in this guidance is intended 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.
Reliance on contractors is not, by itself, a
cause for concern, provided that the work
that they perform is not work that should be
reserved for federal employees and that
federal officials are appropriately managing
contractor performance.
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2. Authority. This policy letter is issued
pursuant to section 6(a) of the Office of
Federal Procurement Policy Act, 41 U.S.C.
405(a), the President’s March 4, 2009,
Memorandum on Government Contracting,
and section 321 of the FY 2009 National
Defense Authorization Act, Public Law 110–
417.
3. Definitions.
‘‘Inherently governmental function,’’ as
defined in section 5 of the Federal Activities
Inventory Reform Act, Public Law 105–270,
means a function that is so intimately related
to the public interest as to require
performance by Federal Government
employees.
(a) The term includes functions that
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. An inherently
governmental function involves, among other
things, the interpretation and execution of
the laws of the United States so as—
(1) To bind the United States to take or not
to take some action by contract, policy,
regulation, authorization, order, or otherwise;
(2) To 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, or
otherwise;
(3) To significantly affect the life, liberty,
or property of private persons;
(4) To commission, appoint, direct, or
control officers or employees of the United
States; or
(5) 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.
(b) The term does not normally include—
(1) Gathering information for or providing
advice, opinions, recommendations, or ideas
to Federal Government officials; or
(2) Any function that is primarily
ministerial and internal in nature (such as
building security, mail operations, operation
of cafeterias, housekeeping, facilities
operations and maintenance, warehouse
operations, motor vehicle fleet management
operations, or other routine electrical or
mechanical services).
’’Critical function’’ means a function that is
necessary to the agency being able to
effectively perform and maintain control of
its mission and operations. A function that
would not expose the agency to risk of
mission failure if performed entirely by
contractors is not a critical function.
4. Policy. It is the policy of the Executive
Branch to ensure that government action is
taken as a result of informed, independent
judgments made by government officials.
Adherence to this policy will ensure that the
act of governance is performed, and decisions
of significant public interest are made, by
officials who are ultimately accountable to
the President and bound by laws controlling
the conduct and performance of Federal
employees that are intended to protect or
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benefit the public and ensure the proper use
of funds appropriated by Congress. To
implement this policy, agencies must reserve
certain work for performance by federal
employees and take special care to retain
sufficient management oversight over how
contractors are used to support government
operations and ensure that Federal
employees have the technical skills and
expertise needed to maintain control of the
agency mission and operations.
(a) Performance of work by federal
employees. To ensure that work that should
be performed by federal employees is
properly reserved for government
performance, agencies shall:
(1) Ensure that service contractors do not
perform inherently governmental functions
(see section 5–1);
(2) Give special consideration to federal
employee performance of functions closely
associated with inherently governmental
functions and, when such work is performed
by contractors, provide greater attention and
an enhanced degree of management oversight
of the contractors’ activities to ensure that
contractors’ duties do not expand to include
performance of inherently governmental
functions (see section 5–2a); and
(3) Ensure that federal employees perform
critical functions to the extent necessary for
the agency to operate effectively and
maintain control of its mission and
operations (see section 5–2b).
(b) Management of federal contractors.
When work need not be reserved for Federal
performance and contractor performance is
appropriate, agencies shall take steps to
employ an adequate number of government
personnel to ensure that contract
administration protects the public interest
through the active and informed management
and oversight of contractor performance,
especially where contracts have been
awarded for the performance of critical
functions, functions closely associated with
the performance of inherently governmental
functions, or where, due to the nature of the
contract services provided, there is a
potential for confusion as to whether an
activity is being performed by government
employees or contractors. Contract
management should be appropriate to the
nature of the contract, ensure that the
contract is under the control of government
officials at all times, and make clear to the
public when citizens are receiving service
from contractors.
(c) Strategic human capital planning. (1)
As part of strategic human capital planning,
agencies shall—
(i) Dedicate a sufficient amount of work on
critical functions to performance by federal
employees in order to build competencies
(both knowledge and skills), provide for
continuity of operations, and retain
institutional knowledge of government
operations, including those unique to the
agency’s mission;
(ii) Ensure that sufficient personnel is
available to manage and oversee the
contractor’s performance and evaluate and
approve or disapprove the contractor’s work
products and services, recruiting and
retaining the necessary federal talent where
it is lacking; and
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(iii) Consider the impact of decisions to
establish a specified level of government
employee authorizations (or military end
strength) or available funding on the ability
to use Federal employees for work that
should be reserved for performance by such
employees.
(2) Agencies’ annual Human Capital Plan
for Acquisition shall identify specific
strategies and goals for addressing both the
size and capability of the acquisition
workforce, including program managers and
contracting officer technical representatives.
The number of personnel required to
administer a particular contract is a
management decision to be made after
analysis of a number of factors. These
include, among others:
(i) The scope of the activity in question;
(ii) The technical complexity of the project
or its compontents;
(iii) The technical capability, numbers, and
workload of federal mangement officials;
(iv) The inspection techniques available;
(v) The proven adequacy and reliability of
contractor project management;
(vi) The sophistication and track record of
contract administration organizations within
the agency; and
(vii) The importance and criticality of the
function.
5. Implementation guidelines and
responsibilities. Agencies shall use the
guidelines below to determine (1) whether
their requirements involve the performance
of inherently government functions,
functions closely associated with inherently
governmental functions, or critical functions;
and (2) the type and level of management
attention necessary to ensure that functions
that should be reserved for federal
performance are not materially limited by or
effectively transferred to contractors. The
latter determination typically requires
agencies to consider the totality of
circumstances surrounding how, where, and
when work is to be performed.
5–1. Inherently governmental functions.
Agencies shall ensure that inherently
governmental functions are reserved
exclusively for performance by federal
employees.
(a) Determining whether a function is
inherently governmental. Every federal
government organization performs some
work that is so intimately related to the
public interest as to require performance by
federal government employees. Agencies
should review the definition of inherently
governmental function in section 3, any other
statutory provisions that identify a function
as inherently governmental, and the
illustrative list of inherently governmental
functions in Appendix A. In no case should
any function described in the definition,
identified in statute as inherently
governmental, or appearing on the list be
considered for contract performance. If a
function is not listed in Appendix A or
identified in a statutory provision as
inherently governmental, agencies should
determine whether the function otherwise
falls within the definition in section 3 by
evaluating, on a case-by-case basis, the nature
of the work and the level of discretion
associated with performance of the work
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using the tests below. A function meeting
either of these tests would be inherently
governmental.
(1) The nature of the function. Functions
which involve the exercise of sovereign
powers—that is, powers that are uniquely
governmental—are inherently governmental
by their very nature. Examples of functions
that, by their nature, are inherently
governmental are an ambassador representing
the United States, a police officer arresting a
person, and a judge sentencing a person
convicted of a crime to prison. A function
may be classified as inherently governmental
based strictly on its uniquely governmental
nature and without regard to the type or level
of discretion associated with the function.
(2) The exercise of discretion. (i) A
function requiring the exercise of discretion
shall be deemed inherently governmental if
the exercise of such discretion commits the
government to a course of action where two
or more alternative courses of action exist
and decision making is not already limited or
guided by existing policies, procedures,
directions, orders, and other guidance that:
(A) Identify specified ranges of acceptable
decisions or conduct concerning the overall
policy or direction of the action; and
(B) Subject the discretionary authority to
final approval or regular oversight by agency
officials.
(ii) The fact that decisions are made, and
discretion exercised, by a contractor in
performing its duties under the contract—
such as how to allocate the contractor’s own
or subcontract resources, what conclusions to
emphasize and, unless specified in the
contract, what techniques and procedures to
employ, whether and whom to consult, what
research alternatives to explore given the
scope of the contract, or how frequently to
test—is not determinative of whether the
contractor is performing an inherently
government function. A function involving
the exercise of discretion may be
appropriately performed consistent with the
restrictions in this section where the
contractor does not have the authority to
decide on the overall course of action, but is
tasked to develop options or implement a
course of action, and the agency official has
the ability to countervail the contractor’s
action. By contrast, contractor performance
would be inappropriate where the
contractor’s involvement is or would be so
extensive, or the contractor’s work product so
close to a final agency product, as to
effectively preempt the federal officials’
decision-making process, discretion or
authority.
(b) Responsibilities—(1) Pre-award.
Agencies shall determine prior to issuance of
a solicitation that none of the functions to be
contracted are inherently governmental. The
agency head or designated requirements
official shall provide the contracting officer,
concurrent with transmittal of the statement
of work (or any modification thereof), a
written determination that none of the
functions to be performed are inherently
governmental. If a function is not listed in
Appendix A, it still may be inherently
governmental. Accordingly, the
determination should take into
consideration, as necessary, the tests in
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paragraph (a). The file should include the
analysis that supports the determination and
this analysis should establish, at a minimum,
that:
(i) The function to be contracted does not
appear on the list in Appendix A;
(ii) A statute, such as an annual
appropriations act, does not identify the
function as inherently governmental or
otherwise require it to be performed by
Federal employees; and
(iii) The proposed role for the contractor is
not so extensive that the ability of senior
agency management to develop and consider
options is or would be preempted or
inappropriately restricted.
(2) Post-award. Agencies should review, on
an ongoing basis, the functions being
performed by their contractors, paying
particular attention to the way in which
contractors are performing, and agency
personnel are managing, contracts involving
functions that are closely associated with
inherently governmental functions (see
subsections 5–2a and Appendix B) or
contracts for professional and technical
services. If a determination is made that the
contractor is performing work that is
inherently governmental (or involves
unauthorized personal services), but the
contract, properly defined, does not entail
performance of inherently governmental
functions, the agency shall take prompt
action to ensure performance by government
employees of the inherently governmental
responsibilities. In some cases, government
control over, and performance of, these
responsibilities can be reestablished by
strengthening contract oversight using
government employees with appropriate
subject matter expertise and following the
protocols identified in FAR 37.114 (see also
section 5.2a, below). In other cases, agencies
may need to in-source work on an
accelerated basis through the timely
development and execution of a hiring plan
timed, if possible, to permit the non-exercise
of an option or the termination of that
portion of the contract being used to fulfill
inherently governmental responsibilities.
5–2. Other work that must be reserved for
federal employees. In some cases, work that
is not inherently governmental must also be
reserved for performance by federal
employees. Such reservation will be required
under certain circumstances for functions
that are closely associated with the
performance of inherently governmental
functions and critical functions.
5–2a. Functions closely associated with the
performance of inherently governmental
functions. Agencies shall give special
consideration to federal employee
performance of functions closely associated
with inherently governmental functions.
(a) Determining whether a function is
closely associated with the performance of an
inherently governmental function. Certain
services and actions that generally are not
considered to be inherently governmental
functions may approach being in that
category because of the nature of the function
and the risk that performance may impinge
on federal officials’ performance of an
inherently governmental function. Appendix
B provides a list of examples of functions
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that are closely associated with the
performance of inherently governmental
functions.
(b) Special consideration for federal
employee performance.
(1) If the agency determines the function is
closely associated with the performance of an
inherently governmental function, section
736 of Division D of the Omnibus
Appropriations Act, 2009, Public Law 111–
8, requires civilian agencies subject to the
FAIR Act to give special consideration to
using federal employees to perform the
function. Civilian agencies shall refer to OMB
Memorandum M–09–26, Managing the MultiSector Workforce (July 29, 2009), Attachment
3 for criteria addressing the in-sourcing of
work under Public Law 111–8. Memorandum
M–09–26 explains that federal employee
performance would be expected if either
contractor performance causes the agency to
lack sufficient internal expertise to maintain
control of its mission and operations or
analysis suggests that public sector
performance is more cost effective and it is
feasible to hire federal employees to perform
the function. The OMB Memorandum is
available at https://www.whitehouse.gov/omb/
assets/memoranda_fy2009/m-09-26.pdf.
(2) The Department of Defense shall—
(i) Ensure special consideration is given to
federal employee performance consistent
with the requirements of 10 U.S.C. 2463; and
(ii) To the maximum extent practicable,
minimize reliance on contractors performing
functions closely associated with inherently
governmental functions consistent with 10
U.S.C. 2330a.
(c) Responsibilities. If the agency
determines that contractor performance of a
function closely associated with an
inherently governmental function is
appropriate and cost-effective, the agency
shall—
(1) Limit or guide a contractor’s exercise of
discretion and retain control of government
operations by both—
(i) Pre-establishing in the contract specified
ranges of acceptable decisions and/or
conduct; and
(ii) Pre-establishing a process for subjecting
the contractor’s discretionary decisions and/
or conduct to final approval by the agency
official;
(2) Assign a sufficient number of qualified
government employees, with expertise to
administer or perform the work, to give
heightened management attention to the
contractor’s activities, in particular, to ensure
that they do not expand to include inherently
governmental functions, are not performed in
ways not contemplated by the contract so as
to become inherently governmental, do not
undermine the integrity of the government’s
decision-making process, and do not interfere
with federal employees’ performance of the
closely-associated inherently governmental
functions (see section 5–1(b)(2) for guidance
on steps to take where a determination is
made that the contract is being used to fulfill
responsibilities that are inherently
governmental);
(3) Ensure that a reasonable identification
of contractors and contractor work products
is made whenever there is a risk that
Congress, the public, or other persons outside
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of the government might confuse contractor
personnel or work products with government
officials or work products, respectively; and
(4) Take appropriate steps to avoid or
mitigate conflicts of interest, such as by:
(i) Conducting pre-award conflict of
interest reviews, to ensure contract
performance is in accordance with objective
standards and contract specifications, and
developing a conflict of interest mitigation
plan, if needed, that identifies the conflict
and specific actions that will be taken to
lessen the potential for conflict of interest or
reduce the risk involved with a potential
conflict of interest;
(ii) Physically separating contractor
personnel from government personnel at the
worksite;
(iii) Ensuring contractors are clearly
identified as such in work product and on
work support systems, such as in electronic
mail systems and phone messaging systems,
and on signature blocks, security and other
identification badges, and office name plates;
(iv) Having contractor personnel work offsite, if cost-effective and without derogation
to the work to be performed;
(v) Excluding contractors from subsequent
competitions if conflicts cannot be avoided;
or
(vi) Performing work with federal
employees if (A) contractor conflicts cannot
be satisfactorily resolved or (B) decisionmaking would be at risk of being transferred
to the private sector because contractors have
such influence and insight into government
decision making or government officials
would rely too heavily on contractor inputs
(or rely almost exclusively on contractor factfinding or memory).
(5) Make a written determination
concurrent with transmittal of the statement
of work (or any modification thereof) to the
contracting officer that
(i) The function is closely associated with
an inherently governmental function;
(ii) Private sector performance of the
function is appropriate and the most cost
effective source of support for the agency;
and
(iii) The agency has sufficient internal
capability to control its missions and
operations, oversee the contractor’s
performance of the contract, limit or guide
the contractor’s exercise of discretion, ensure
reasonable identification of contractors and
contractor work products, and avoid or
mitigate conflicts of interest and
unauthorized personal services.
5–2b. Critical functions. Agencies shall
dedicate a sufficient number of federal
employees to the performance of critical
functions so that federal employees may
maintain control of agencies’ mission and
operations.
(a) Criteria for determining when critical
positions must be reserved for federal
employee performance. Determining the
criticality of a function requires the exercise
of informed judgment by agency officials. In
making that determination, the officials shall
consider the importance that a function holds
for the agency and its mission and
operations. The more critical the function,
the more important that the agency have
internal capability to maintain control of its
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mission and operations. Examples of highly
critical functions might include: designing
and constructing the next generation of
satellites at the National Aeronautics and
Space Administration, analyzing areas of tax
law that impose significant compliance
burdens on taxpayers for the Internal
Revenue Service’s Office of the Taxpayer
Advocate, and performing mediation services
for the Federal Mediation and Conciliation
Service. Where a critical function is not
inherently governmental, the agency may
appropriately consider filling positions
dedicated to the function with both federal
employees and contractors. However, to meet
its fiduciary responsibility to the taxpayers,
the agency must have a sufficient internal
capability to control its mission and
operations and must ensure it is cost effective
to contract for the services.
(1) Sufficient internal capability—
(i) Generally requires that an agency have
an adequate number of positions filled by
federal employees with appropriate training,
experience, and expertise (organic and
technical) to understand the agency’s
requirements, formulate alternatives, take
other appropriate actions to properly manage
and be accountable for the work product, and
continue critical operations in the event of
contractor default; and
(ii) Further requires that an agency have
the ability and internal expertise to manage
any contractors used to support the federal
workforce and evaluate their work product.
(2) Determinations concerning what
constitutes sufficient internal capability must
be made on a case-by-case basis taking into
account, among other things:
(i) The agency’s mission;
(ii) The complexity of the function and the
need for specialized skill;
(iii) The current strength of the agency’s inhouse organic and technical expertise;
(iv) The current strength (capability and
capacity) of the agency’s acquisition
workforce;
(v) The effect of contractor default on
mission performance; and
(vi) The enforceability of criminal
sanctions for crimes performed by
contractors as compared to those applicable
to federal employees.
(b) Responsibilities—(1) Pre-award. (i)
Agencies shall determine prior to issuance of
a solicitation for private-sector performance
of any aspect of a critical function that the
agency has sufficient internal capability to
control its mission and operations. The
agency head or designated requirements or
human capital official shall provide the
contracting officer, concurrent with
transmittal of the statement of work (or any
modification thereof) a written determination
and analysis.
(ii) If an agency has sufficient internal
capability to control its mission and
operations, the extent to which additional
work is performed by federal employees
should be determined consistent with the
parameters set forth in subsection (2)(ii)
below.
(2) Post-award. (i) Agencies should be alert
for situations where internal control of
mission and operations is at risk due to
overreliance on contractors to perform
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critical functions. In these situations,
requiring activities should work with their
human capital office to develop and execute
a hiring and/or development plan. Requiring
activities should also work with the
acquisition office to address the handling of
ongoing contracts and the budget and finance
offices to secure the necessary funding to
support the needed in-house capacity.
Agencies should also consider application of
the responsibilities outlined in 5–2a(c), as
appropriate.
(ii) If an agency has sufficient internal
capability to control its mission and
operations, the extent to which additional
work is performed by federal employees
should be based on cost considerations
unless performance and risk considerations
in favor of federal employee performance
will clearly outweigh cost considerations.
Supporting cost analysis should address the
full costs of government and private sector
performance and provide like comparisons of
costs that are of a sufficient magnitude to
influence the final decision on the most cost
effective source of support for the
organization.
6. Additional agency responsibilities. (a)
Duty of federal employees. Every federal
employee has an obligation to help avoid the
performance by contractors of
responsibilities that should be reserved to
federal employees. As part of this obligation,
federal employees who rely on contracts or
their work product must take appropriate
steps, in accordance with agency procedures,
to ensure that any final agency action
complies with the laws and policies of the
United States and reflects the independent
conclusions of agency officials and not those
of contractors, who may not be motivated
solely by the public interest, and who may
be beyond the reach of management controls
applicable to federal employees. These steps
shall include increased attention and
examination where contractor work product
involves advice, opinions, recommendations,
reports, analyses, and similar deliverables
that are to be considered in the course of a
federal employee’s official duties and may
have the potential to influence the authority,
accountability, and responsibilities of the
employee.
(b) Development of agency procedures.
Agencies shall develop and maintain internal
procedures to address the requirements of
this guidance. Such procedures shall be
reviewed by agency management no less than
every two years.
(c) Training. Agencies shall develop
training plans to help their employees
understand and meet their responsibilities
under this guidance. The plan should
include training, no less than every two
years, to improve employee awareness of
their responsibilities.
(d) Review of internal management
controls. Agencies should periodically
evaluate the effectiveness of their internal
management controls for reserving work for
federal employees and identify any material
weaknesses in accordance with OMB
Circular A–123, Management’s
Responsibility for Internal Control, and
OFPP’s Guidelines for Assessing the
Acquisition Function, available at https://
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(e) Designation of responsible management
official(s). Each federal agency with 100 or
more full-time employees in the prior fiscal
year shall identify one or more senior
officials to be accountable for the
development and implementation of agency
policies, procedures, and training to ensure
the appropriate reservation of work for
federal employees in accordance with this
guidance. Each such agency shall submit the
names and titles of the designated officials,
along with contact information, to OMB by
June 30 of each year. This information may
be provided with the agency’s submission of
commercial and inherently governmental
activities submitted pursuant to the FAIR Act
and OMB Circular A–76.
7. Federal Acquisition Regulatory Council.
Pursuant to subsections 6(a) and 25(f) of the
Office of Federal Procurement Policy Act, 41
U.S.C. 405(a) and 421(f), the Federal
Acquisition Regulatory Council shall ensure
that the policies established herein that
pertain to the acquisition of services are
incorporated in the FAR in a timely manner.
8. Judicial review. This policy letter is not
intended to provide a constitutional or
statutory interpretation of any kind and it is
not intended, and should not be construed,
to create any right or benefit, substantive or
procedural, enforceable at law by a party
against the United States, its agencies, its
officers, or any person. It is intended only to
provide policy guidance to agencies in the
exercise of their discretion concerning
federal contracting. Thus, this policy letter is
not intended, and should not be construed,
to create any substantive or procedural basis
on which to challenge any agency action or
inaction on the ground that such action or
inaction was not in accordance with this
policy letter.
9. Effective date. This policy letter is
effective [insert date 30 days after issuance of
final policy letter]
Appendix A. Examples of inherently
governmental functions
The following is an illustrative list of
functions considered to be inherently
governmental.
1. The direct conduct of criminal
investigation.
2. The control of prosecutions and
performance of adjudicatory functions (other
than those relating to arbitration or other
methods of alternative dispute resolution).
3. The command of military forces,
especially the leadership of military
personnel who are members of the combat,
combat support or combat service support
role.
4. The conduct of foreign relations and the
determination of foreign policy.
5. The determination of agency policy,
such as determining the content and
application of regulations, among other
things.
6. The determination of Federal program
priorities or budget requests.
7. The direction and control of Federal
employees.
8. The direction and control of intelligence
and counter-intelligence operations.
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9. The selection or non-selection of
individuals for Federal Government
employment.
10. The approval of position descriptions
and performance standards for Federal
employees.
11. The determination of what Government
property is to be disposed of and on what
terms (although an agency may give
contractors authority to dispose of property
at prices with specified ranges and subject to
other reasonable conditions deemed
appropriate by the agency).
12. In Federal procurement activities with
respect to prime contracts:
(a) determining what supplies or services
are to be acquired by the Government
(although an agency may give contractors
authority to acquire supplies at prices within
specified ranges and subject to other
reasonable conditions deemed appropriate by
the agency);
(b) participating as a voting member on any
source selection boards;
(c) approval of any contractual documents,
to include documents defining requirements,
incentive plans, and evaluation criteria;
(d) awarding contracts;
(e) administering contracts (including
ordering changes in contract performance or
contract quantities, taking action based on
evaluations of contractor performance, and
accepting or rejecting contractor products or
services);
(f) terminating contracts;
(g) determining whether contract costs are
reasonable, allocable, and allowable; and
(h) participating as a voting member on
performance evaluation boards.
13. The approval of agency responses to
Freedom of Information Act requests (other
than routine responses that, because of
statute, regulation, or agency policy, do not
require the exercise of judgment in
determining whether documents are to be
released or withheld), and the approval of
agency responses to the administrative
appeals of denials of Freedom of Information
Act requests.
14. The conduct of administrative hearings
to determine the eligibility of any person for
a security clearance, or involving actions that
affect matters of personal reputation or
eligibility to participate in government
programs.
15. The approval of federal licensing
actions and inspections.
16. The determination of budget policy,
guidance, and strategy.
17. The collection, control, and
disbursement of fees, royalties, duties, fines,
taxes and other public funds, unless
authorized by statute, such as title 31 U.S.C.
952 (relating to private collection contractors)
and title 31 U.S.C. 3718 (relating to private
attorney collection services), but not
including:
(a) collection of fees, fines, penalties, costs
or other charges from visitors to or patrons
of mess halls, post or base exchange
concessions, national parks, and similar
entities or activities, or from other persons,
where the amount to be collected is easily
calculated or predetermined and the funds
collected can be easily controlled using
standard cash management techniques, and
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(b) routine voucher and invoice
examination.
18. The control of the Treasury accounts.
19. The administration of public trusts.
20. The drafting of Congressional
testimony, responses to Congressional
correspondence, or agency responses to audit
reports from the Inspector General, the
Government Accountability Office, or other
federal audit entity.
Appendix B. Examples of functions
closely associated with the performance
of inherently governmental functions
The following is an illustrative list is of
functions that are closely associated with the
performance of inherently governmental
functions.
1. Services that involve or relate to budget
preparation, including workforce modeling,
fact finding, efficiency studies, and shouldcost analyses.
2. Services that involve or relate to
reorganization and planning activities.
3. Services that involve or relate to
analyses, feasibility studies, and strategy
options to be used by agency personnel in
developing policy.
4. Services that involve or relate to the
development of regulations.
5. Services that involve or relate to the
evaluation of another contractor’s
performance.
6. Services in support of acquisition
planning.
7. Assistance in contract management
(particular where a contractor might
influence official evaluations of other
contractors’ offers).
8. Technical evaluation of contract
proposals.
9. Assistance in the development of
statements of work.
10. Support in preparing responses to
Freedom of Information Act requests.
11. Work in any situation that permits or
might permit access to confidential business
information and/or any other sensitive
information (other than situations covered by
the National Industrial Security Program
described in FAR 4.402(b)).
12. Dissemination of information regarding
agency policies or regulations, such as
attending conferences on behalf of an agency,
conducting community relations campaigns,
or conducting agency training courses.
13. Participation in any situation where it
might be assumed that participants are
agency employees or representatives.
14. Participation as technical advisors to a
source selection board or as nonvoting
members of a source evaluation board.
15. Service as arbitrators or provision of
alternative dispute resolution (ADR) services.
16. Construction of buildings or structures
intended to be secure from electronic
eavesdropping or other penetration by
foreign governments.
17. Provision of inspection services.
18. Drafting of legal advice and
interpretations of regulations and statutes to
government officials.
19. Provision of special non-lawenforcement security activities that do not
directly involve criminal investigations, such
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as prisoner detention or transport and nonmilitary national security details.
[FR Doc. 2010–7329 Filed 3–30–10; 8:45 am]
BILLING CODE P
MORRIS K. UDALL AND STEWART L.
UDALL FOUNDATION
Sunshine Act Meetings
Time and Date: 9 a.m. to 12 p.m.,
Friday, April 16, 2010.
Place: The offices of the Morris K. Udall
and Stewart L. Udall Foundation, 130
South Scott Avenue, Tucson, AZ 85701.
Status: This meeting will be open to the
public, unless it is necessary for the
Board to consider items in executive
session.
Matters To Be Considered: (1) A report
on the U.S. Institute for Environmental
Conflict Resolution; (2) A report from
the Udall Center for Studies in Public
Policy; (3) A report on the Native
Nations Institute; (4) Program Reports;
and (5) A Report from the Management
Committee.
Portions Open to the Public: All
sessions with the exception of the
session listed below.
Portions Closed to the Public: Executive
session.
Contact Person for More Information:
Ellen K. Wheeler, Executive Director,
130 South Scott Avenue, Tucson, AZ
85701, (520) 901–8500.
Dated: March 24, 2010.
Ellen K. Wheeler,
Executive Director, Morris K. Udall and
Stewart L. Udall Foundation, and Federal
Register Liaison Officer.
[FR Doc. 2010–7012 Filed 3–30–10; 8:45 am]
BILLING CODE 6820–FN–M
NATIONAL AERONAUTICS AND
SPACE ADMINISTRATION
[Notice (10–036)]
NASA Advisory Council; Space
Operations Committee; Meeting
AGENCY: National Aeronautics and
Space Administration.
ACTION: Notice of meeting.
SUMMARY: In accordance with the
Federal Advisory Committee Act, Public
Law 92–463, as amended, the National
Aeronautics and Space Administration
announces a meeting of the NASA
Advisory Council Space Operations
Committee.
DATES: Tuesday, April 13, 2010, 3–5
p.m. CDT.
ADDRESSES: NASA Johnson Space
Center’s Gilruth Center, Lone Star
E:\FR\FM\31MRN1.SGM
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Agencies
[Federal Register Volume 75, Number 61 (Wednesday, March 31, 2010)]
[Notices]
[Pages 16188-16197]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-7329]
=======================================================================
-----------------------------------------------------------------------
OFFICE OF MANAGEMENT AND BUDGET
Office of Federal Procurement Policy
Work Reserved for Performance by Federal Government Employees
AGENCY: Office of Management and Budget, Office of Federal Procurement
Policy.
ACTION: Notice of proposed policy letter.
-----------------------------------------------------------------------
SUMMARY: The Office of Federal Procurement Policy (OFPP) in the Office
of Management and Budget (OMB) is issuing a proposed policy letter to
provide guidance to Executive Departments and agencies on circumstances
when work must be reserved for performance by Federal government
employees. The Presidential Memorandum on Government Contracting,
issued on March 4, 2009, directs OMB to clarify when governmental
outsourcing of services is, and is not, appropriate, consistent with
section 321 of the National Defense Authorization Act (NDAA) for FY
2009. Section 321 requires OMB to (i) create a single definition for
the term ``inherently governmental function'' that addresses any
deficiencies in the existing definitions and reasonably applies to all
agencies; (ii) establish criteria to be used by agencies to identify
``critical'' functions and positions that should only be performed by
federal employees; and (iii) provide guidance to improve internal
agency management of functions that are inherently governmental or
critical. The Presidential Memorandum is available at https://www.whitehouse.gov/the_press_office/.
Memorandum-for-the-Heads-of-Executive-Departments-and-Agencies-
Subject-Government/.
Section 321 may be found at https://thomas.loc.gov/cgi-bin/query/
F?c110:5:./temp/~c110wWVqGQ: e178256.
Comment Date: 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 to
[[Page 16189]]
the address below on or before June 1, 2010.
ADDRESSES: Comments may be submitted by any of the following methods:
E-mail: OFPPWorkReserved@omb.eop.gov.
Facsimile: 202-395-5105.
Mail: Office of Federal Procurement Policy, ATTN: Mathew
Blum, New Executive Office Building, Room 9013, 724 17th Street, NW.,
Washington, DC 20503.
Instructions: Please submit comments only and cite ``Proposed OFPP
Policy Letter'' in all correspondence. All comments received will be
posted, without change, to https://www.whitehouse.gov/omb/procurement/workreserved/work_comments.html, without redaction, so commenters
should not include information that they do not wish to be posted (for
example because they consider it personal or business-confidential).
FOR FURTHER INFORMATION CONTACT: Mathew Blum, OFPP, (202) 395-4953 or
mblum@omb.eop.gov.
SUPPLEMENTARY INFORMATION:
A. Overview
OFPP is issuing a proposed policy letter to provide guidance
addressing when work must be reserved for performance by federal
employees. The policy letter is intended to implement direction in the
President's March 4, 2009, Memorandum on Government Contracting that
requires OMB to ``clarify when governmental outsourcing for services is
and is not appropriate, consistent with section 321 of Public Law 110-
417 (31 U.S.C. 501 note).'' The proposed policy letter would:
Clarify what functions are inherently governmental and
must always be performed by federal employees. 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, would replace existing definitions in
regulation and policy. The FAIR Act defines an activity as inherently
governmental when it is so intimately related to the public interest as
to mandate performance by Federal employees. Examples and tests would
be provided to help agencies identify inherently governmental
functions.
Help agencies identify when other functions (or portions
of functions) need to be performed by Federal employees. Existing
guidance addressing functions closely associated with inherently
governmental functions would be strengthened to ensure that performance
of such functions does not expand to include performance of inherently
governmental functions or otherwise interfere with federal employees'
ability to carry out their inherently governmental responsibilities. In
addition, consistent with section 321, a new category, ``critical
function,'' would be defined to help agencies identify and build
sufficient internal capacity to effectively perform and maintain
control over functions that are core to the agency's mission and
operations.
Outline a series of agency management responsibilities to
strengthen accountability for the effective implementation of these
policies. Agencies would be required to take specific actions, before
and after contract award, to prevent contractor performance of
inherently governmental functions and overreliance on contractors in
``closely associated'' and critical functions. Agencies would also be
required to develop agency-level procedures, provide training, and
designate senior officials to be responsible for implementation of
these policies.
After public comment is considered and the policy letter is
finalized, appropriate changes will be made to the Federal Acquisition
Regulation (FAR).
B. Background
The Presidential Memorandum on Government Contracting requires the
Director of OMB to develop guidance addressing when governmental
outsourcing of services is, and is not, appropriate. The Memorandum
states that the line between inherently governmental activities that
should not be outsourced and commercial activities that may be subject
to private-sector performance has become blurred, which may have led to
the performance of inherently governmental functions by contractors
and, more generally, an overreliance on contractors by the government.
It directs OMB to clarify when outsourcing is, and is not, appropriate,
consistent with section 321 of the NDAA for FY 2009.
Section 321 directed OMB to: (1) Create a single, consistent
definition for the term ``inherently governmental function'' that
addresses any deficiencies in the existing definitions and reasonably
applies to all agencies; (2) develop criteria for identifying critical
functions with respect to the agency's missions and structure; (3)
develop criteria for determining positions dedicated to critical
functions which should be reserved for federal employees to ensure the
department or agency maintains control of its mission and operations;
(4) provide criteria for identifying agency personnel with
responsibility for (a) maintaining sufficient organic expertise and
technical capability within the agency, and (b) issuing guidance for
internal activities associated with determining when work is to be
reserved for performance by Federal employees; and (5) solicit the
views of the public regarding these matters.
OMB's OFPP reviewed current laws, regulations, policies, and
reports addressing the definition of inherently governmental functions
and the reservation of work for government employees. The review was
conducted with the assistance of an interagency team that included
representatives from the Chief Acquisition Officers Council and the
Chief Human Capital Officers Council. As part of this effort, OFPP
reviewed the definition of inherently governmental functions in the
Federal Activities Inventory Reform Act (FAIR Act), Public Law 105-270,
section 2383 of title 10 (which cites to definitions in the Federal
Acquisition Regulation (FAR)), the FAR, OMB Circular A-76, OFPP Policy
Letter 92-1, Inherently Governmental Functions (which was rescinded and
superseded by OMB Circular A-76 in 2003) and reports by the Government
Accountability Office (GAO). OFPP also reviewed the analyses in a
recent report by the Congressional Research Service, Inherently
Governmental Functions and Department of Defense Operations:
Background, Issues, and Options for Congress (June 2009) and relevant
findings and recommendations set forth in the Report of the Acquisition
Advisory Panel (January 2007), available at https://www.acquisition.gov/comp/aap/documents/Chapter6.pdf. The Panel
concluded, among other things, that ``[t]here is a need to assure that
the increase in contractor involvement in agency activities does not
undermine the integrity of the government's decision-making
processes.'' See the Panel's Report at 392.
To supplement this review, OMB held a public meeting and solicited
comments from the public last spring and summer to inform the
development of guidance. Comments were specifically sought regarding
the definition of inherently governmental functions and criteria for
identifying critical functions. See 74 FR 25775 (May 29, 2009) for a
copy of the notice. OMB received 11 comments addressing these issues.
For a copy of public comments, go to https://www.whitehouse.gov/omb/assets/procurement_govcontracting/public_comments.pdf. For a
transcript
[[Page 16190]]
of the public meeting, go to https://www.whitehouse.gov/omb/assets/procurement_gov_contracting/transcript_public_meeting.pdf.
Respondents generally favored the definition of ``inherently
governmental function'' found in the FAIR Act. Some concern was raised
regarding changes made to the definition by OMB Circular A-76 when the
Circular was revised in 2003.
Some respondents recommended that the criteria OMB develops to
identify critical functions and positions reserved for federal
employees be tied to mission performance. Some cautioned that these
criteria should also guard against the contracting out of a function if
such action poses too great a risk of creating a single point of
mission failure. However, at least one commenter expressed the view
that, as long as the overall function is managed by a federal employee,
not every position performing a critical function needs to be performed
by federal employees in order to protect the government's interest and
prevent mission failure. Another commenter stated that tasks closely
associated with governmental decision-making should not be contracted
out unless the government can effectively guard against or otherwise
mitigate conflicts of interest.
Based on this review and consideration of the public comments, OFPP
has: (1) Developed a proposed policy letter and (2) formulated a list
of tailored questions to elicit feedback on specific issues that will
help inform its deliberations in shaping final guidance.
C. Proposed Policy Letter
1. Summary
OFPP has developed a proposed policy letter to improve the rules
addressing the proper roles of the public and private sectors in
performing work for the government. The policy letter is designed to
address a number of weaknesses with existing rules that are affecting
the efficiency and effectiveness of government performance. These
weaknesses are summarized below along with a brief description of how
they would be addressed.
Concern: The line has been blurred between functions that are
inherently governmental and those that are not, potentially leading to
confusion and to inappropriate judgments about when contractors may
perform work that should be reserved for performance by Federal
employees.
Proposed actions: Adopt the FAIR Act definition of ``inherently
governmental function'' as the single government-wide definition of
this term. (The FAIR Act defines an activity as inherently governmental
when it is so intimately related to the public interest as to mandate
performance by Federal employees.) Develop guidance to help agencies
identify whether a given function falls within the definition of
``inherently governmental function'' or is otherwise closely associated
with the performance of inherently governmental functions. Provide
tests for analyzing whether a function is inherently governmental based
on the nature of the function and the level of discretion to be
exercised in performing the function. Reinforce management
responsibilities--both before and after contract award--to guard
against contractor performance of inherently governmental functions.
Concern: Some government organizations may be overly reliant on
contractors to perform critical functions that, while not inherently
governmental, still need to be performed by Federal employees.
Proposed actions: Provide guidance for determining the criticality
of functions. Identify criteria for determining when positions
dedicated to performing critical functions must or should be reserved
for Federal employee performance. Hold appropriate officials
accountable for ensuring adequate analysis has been performed to
establish the sufficiency of internal capability in the event that
contractors are to perform part of the function.
Concern: There is insufficient management attention focused on
ensuring work is properly reserved for federal employees and
maintaining certain critical capability levels in-house. An appropriate
governance and review structure must be established to support the
successful performance of these duties.
Proposed actions: Require agencies to develop agency-level
procedures, conduct training, periodically review internal controls
used to monitor implementation of this authority, and designate one or
more senior officials to be responsible for implementation and
maintenance of the policy.
2. Inherently Governmental Functions
There are three main sources for definitions and guidance
addressing inherently governmental function: (1) The FAIR Act, (2) the
FAR, and (3) OMB Circular A-76.
a. Definition. The FAIR Act, FAR, and Circular A-76 each make clear
that the term ``inherently governmental function'' addresses functions
that are so intimately related to the public interest as to require
performance by federal government employees. There are some variations
in the language used by the three sources to describe the types of
functions included in the definition. In particular, the FAIR Act
states that the term includes activities that require the ``exercise of
discretion'' in applying ``Federal Government authority,'' whereas the
Circular speaks in terms of the exercise of ``substantial discretion''
in applying ``sovereign'' Federal government authority. It is unclear
what the impact of this type of variation has been. This
notwithstanding, these variations can create confusion and uncertainty.
The proposed policy letter adopts the FAIR Act definition as the
single, government-wide definition. This definition reflects
longstanding OFPP guidance that had been set out in OFPP Policy Letter
92-1. 57 FR 45096 (September 30, 1992). Most public commenters
expressed general satisfaction with the statutory definition in the
FAIR Act, while also acknowledging uncertainties as to its construction
and application in particular circumstances.
b. Guidance. The proposed policy letter provides guidance to help
agencies determine whether a given function meets the definition of an
``inherently governmental function.'' The proposed policy letter
retains a list of examples of inherently governmental functions,
currently found in FAR Subpart 7.5. OFPP would also create tests for
agencies to use in determining whether functions not appearing on the
list otherwise fall within the definition of inherently governmental.
The ``nature of the function'' test would ask agencies to consider
whether the direct exercise of sovereign power is involved. Such
functions are uniquely governmental and, therefore, inherently
governmental. The ``discretion'' test would ask agencies to evaluate
whether the discretion associated with the function, when exercised by
a contractor, would have the effect of committing the government to a
course of action. This test was included in OFPP Policy Letter 92-1,
Inherently Governmental Functions, and currently may be found in OMB
Circular A-76 (see Attachment A, para. B(1)(b)), which rescinded Policy
Letter 92-1.
OFPP seeks to clarify and reinforce that agencies have both pre-
award and post-award responsibilities for evaluating whether a function
is inherently governmental and taking steps to avoid transferring
inherently governmental authority to a contractor, such as through
inadequate attention to contract administration. For proposed work, a
determination that the work is not inherently governmental should be
made prior to issuance of the
[[Page 16191]]
solicitation, preferably during acquisition planning. For ongoing
contracts, agencies should review how work is performed, focusing, in
particular, on functions that are closely associated with inherently
governmental activities and professional and technical services, to
ensure the scope of the work or the circumstances have not changed to
the point that inherently governmental authority has been transferred
to the contractor.
3. Functions That Are Closely Associated With Inherently Governmental
Functions
Policy guidance addressing inherently governmental functions must
also address functions closely associated with inherently governmental
functions to properly ensure that work that is intimately related to
the public interest is performed by Federal employees. Closely
associated functions approach the status of inherently governmental
work because of the nature of these functions and the risk that their
performance, if not appropriately managed, may materially limit Federal
officials' performance of inherently governmental functions.
The proposed policy letter retains an illustrative list of
functions closely associated with inherently governmental functions
from current FAR coverage. The guidance requires agencies to take a
number of steps related to these functions. First, the proposed policy
letter reiterates the requirement set forth in section 736 of Division
D of the Omnibus Appropriations Act, 2009, Public Law 111-8, to give
special consideration to reserving these functions to performance by
federal employees. Second, the proposed policy letter lays out the
responsibilities agencies must perform if they determine that
contractor performance of a function closely associated with an
inherently governmental function is appropriate. These responsibilities
include pre-establishing in the contract specified ranges of acceptable
decisions, subjecting the contractor's discretionary decision to final
approval by an agency official, assigning a sufficient number of
qualified federal employees with appropriate expertise to administer
the work, and taking steps to avoid or mitigate conflicts of interest.
Each of these actions is designed to help ensure that the contractor's
activities do not expand to include inherently governmental
responsibilities. Although these actions should currently be taken,
they are not enumerated in one guidance document and often are given
insufficient management attention (see paragraph 5, below, for
additional discussion on new agency responsibilities for management and
monitoring).
4. Critical functions
Since at least the early 1990s, government-wide policy addressing
when work must be reserved for Federal employees has focused almost
exclusively on the definition of ``inherently governmental'' functions
and functions closely associated with inherently governmental
functions. This narrow focus has been cited as a cause of inadequate
attention to maintaining a residual Federal core capability when
considering contractor performance of critical functions that are tied
to an agency's mission. The Acquisition Advisory Panel, established by
Congress in 2003 to review the federal acquisition system, concluded in
its 2007 report that the consequences of this inattention to contractor
performance of critical functions include ``the loss of institutional
memory, the inability to be certain whether the contractor is properly
performing the specified work at a proper price and the inability to be
sure that decisions are being made in the public interest rather than
in the interest of the contractors performing the work.'' Following the
issuance of the Panel's report, Congress, in the FY 2009 NDAA, directed
OMB to develop criteria for agencies to use in identifying ``critical''
functions and in determining when such functions, or parts thereof,
must be retained for performance by federal employees.
Consistent with section 321 of the FY 2009 NDAA, the proposed
policy letter provides guidance to address the handling of critical
functions and the maintenance of a core capability by Federal
employees. The proposed policy letter would define critical function to
mean a function whose importance to the agency's mission and operation
requires that at least a portion of the function must be reserved to
federal employees in order to ensure the agency has sufficient internal
capability to effectively perform and maintain control of its mission
and operations. Agencies would be held responsible for ensuring a
sufficient number of positions performing critical work are filled by
federal employees with appropriate training, experience, and expertise
to understand the agency's requirements, formulate alternatives, manage
the work product, and manage any contractors used to support the
Federal workforce. The proposed guidance would also require agencies to
evaluate whether they have sufficient internal capability on a case-by-
case basis, taking into account factors such as the agency's mission,
the complexity of the function and need for specialized skill, and the
effect of contractor default on mission performance. The proposed
guidance is built around the general principle that the more critical a
function is, the greater the need for internal capability to maintain
control of the agency's mission and operations. This is most obviously
the case where the function is critical to achievement of the agency's
core mission, but even for functions that may not be viewed as
critical, such as functions that are not directly involved in
performing the core mission, the agency may determine that the function
is, nonetheless, sensitive enough as to require that many, most, or, in
some situations, all positions be filled by Federal employees.
Finally, if an agency determines that it has sufficient internal
capability to control its mission and operations, the proposed policy
would require the consideration of cost to establish the extent to
which additional critical work is performed by Federal employees,
unless performance and risk considerations in favor of Federal employee
performance would clearly outweigh cost considerations.
5. Management Attention
A clear understanding of responsibilities and heightened management
attention will be required to ensure that work that should be performed
by Federal employees is reserved for performance by them.
The proposed policy letter lays out the determinations that must be
documented by the agency head or designated requirements official
before a contract solicitation is issued to show that functions to be
acquired by contract are not inherently governmental. It would also
require agencies to determine (also before issuing a solicitation) that
they have sufficient internal capability to control their mission and
operations. During contract performance, agencies would be required to
(1) monitor how contractors are performing contracts, especially those
involving work closely associated with inherently governmental
functions or professional and technical services, and (2) take
appropriate action where internal control of mission and operations is
at risk due to inappropriate or excessive reliance on contractors to
perform critical functions.
Finally, the proposed policy letter would require agencies to
strengthen internal agency management. Each agency with 100 or more
full-time federal employees in the prior fiscal year would be required
to identify one
[[Page 16192]]
or more senior officials to be accountable for the development and
implementation of agency policies, procedures, and training to ensure
the appropriate reservation of work for federal employees. The selected
officials would be expected to facilitate the meaningful involvement of
all relevant offices. In addition, agencies would be expected to
develop and maintain (1) internal procedures, to be reviewed by agency
management every two years, and (2) training plans to help their
employees understand and meet their responsibilities.
D. Solicitation of Public Comment
OFPP welcomes comments on the proposed policy letter. Respondents
are also encouraged to offer their views on the following questions,
many of which are designed to help elicit feedback on specific aspects
of the draft guidance.
1. Definitions
a. If the FAIR Act definition of ``inherently governmental'' is
adopted, what additional definitional clarification is needed, if any?
b. What additional guidance should be provided to make clear that
identifying ``critical'' work is driven by mission and circumstance,
which will differ between agencies and within agencies over time? Is
there a term other than ``critical'' that might be used to more clearly
convey this principle?
c. What, if any, additional guidance should be provided to address
what is meant by the term ``public interest''?
2. Inherently Governmental Functions
a. Does the ``discretion'' test (which is derived from OMB Circular
A-76, Attachment A and, before that, OFPP Policy Letter 92-1) help or
hinder identification of inherently governmental functions? How might
the language in the proposed policy letter be improved to make it more
useful?
b. Does the proposed ``nature of the function'' test help in the
identification of inherently governmental functions? How might the
coverage of this test in the proposed policy letter be improved to make
it more useful?
c. Should consideration be given to establishing a ``principal-
agent'' test that would require agencies to identify functions as
inherently governmental where serious risks could be created by the
performance of these functions by those outside government, because of
the difficulty of ensuring sufficient control over such performance?
d. What, if any, additional guidance might help agencies
differentiate between circumstances where contractors are being used
appropriately to inform government officials and those where
contractors are limiting or constraining government exercise of
inherently governmental responsibilities?
e. What, if any, changes should be made to existing laws that
currently deem specific functions or the work performed by specific
organizations to be inherently governmental?
3. Closely Associated and Critical Functions
a. Should the policy letter set out a presumption, or a
requirement, in favor of performance of ``closely associated'' and/or
critical functions by federal employees?
b. What, if any, additional guidance may help agencies
differentiate between critical functions and functions that are closely
associated with the performance of inherently governmental functions?
c. Should these categories be merged and treated in identical
fashion? Why or why not?
d. What, if any, additional guidance might be provided to help
agencies identify the extent to which a critical function may be
performed by a contractor?
e. Should the policy clarify whether determinations regarding
criticality are to be made at the departmental or component level?
4. Non-critical Functions
a. What, if any, additional guidance may help agencies
differentiate between functions that are critical and those that are
not?
b. Should guidance allow agency heads to identify categories of
service contracts that may be presumed to be non-critical? Why or why
not?
5. Specific Functions
a. What functions, in particular, are the most difficult to
properly classify as inherently governmental, closely associated with
inherently governmental, critical, or non-critical--and why? What
specific steps should be taken to address this challenge?
b. What should guidance say--in place of, or in addition to, the
draft guidance or currently existing federal regulations or policies--
to address the use (if any) of contractors performing any of the
following functions?
i. Pre-award acquisition support, such as acquisition planning,
market research, development of independent government cost estimates,
and preparation of documentation in support of contract award,
including preparation of: price negotiation memoranda and price
reasonableness determinations, technical evaluations, determinations of
responsibility, determinations and findings, and justifications;
ii. Post-award acquisition support, such as functions involving the
use of contractors to manage other contractors, the development of
contractor performance assessments, review of contract claims, and the
preparation of termination settlement proposals;
iii. Procurement management reviews;
iv. Management of Federal grantees;
v. Strategic planning;
vi. Lead systems integration;
vii. Physical security involving:
A. Guard services, convoy security services, pass and
identification services, plant protection services, the operation of
prison or detention facilities;
B. Security services other than those described in A; or
C. The use of deadly force, including combat, security operations
performed in direct support of combat, and security that could evolve
into combat;
viii. Cyber security, including IT network security;
ix. Support for intelligence activities, such as covert operations;
x. The assistance, reinforcement or rescue of individuals who
become engaged in hostilities or offensive responses to hostile acts or
demonstrated hostile intentions; and
xi. Intelligence interrogation of detainees, including
interrogations in connection with hostilities.
c. Should the guidance provide an illustrative list of functions
that are presumed to be critical? Why or why not? If so, what functions
should be included on the list?
6. Human Capital Planning
a. How, if at all, should this guidance address the problem of
limitations on the number of authorized Federal positions and the
impact of such limitations on decisions about reserving work for
Federal employees?
b. How, if at all, should this guidance address the potential nexus
between decisions regarding reserving work for Federal employees and
the unavailability of certain capabilities and expertise among Federal
employees (e.g., ``hard to fill'' labor categories), and the impact of
Federal salary limits on hiring people with those capabilities and
expertise?
c. Should the guidance address when it is appropriate to
temporarily contract for performance of work that is generally reserved
for Federal employees?
d. How, if at all, should this guidance address situations where
there is no basis to reserve work for Federal
[[Page 16193]]
employees, but the government is not in a position to provide adequate
oversight of a contractor, whether due to the unavailability of federal
employees with the skills needed for contract management or for other
reasons?
e. What, if any, additional guidance might be provided to help an
agency analyze whether it has the best mix of private and public sector
labor? Are there benchmarks that exist to help agencies make this
determination? Can the concept of ``overreliance'' be effectively
understood without also providing guidance on ``underreliance''? Why or
why not?
7. Scope of Coverage
a. How, if at all, should the draft guidance address advisory and
assistance services? What, if any, changes should be considered to FAR
Subpart 37.2 to improve how agencies draw upon the skills of the public
and private sectors?
b. How, if at all, should the draft guidance address personal
services contracting? What, if any, changes should be considered to FAR
Subpart 37.104 to improve how agencies draw upon the skills of the
public and private sectors?
c. What additional guidance, if any, would be beneficial to improve
understanding and implementation of policies addressing functions that
must be reserved for performance by Federal employees?
d. What additional guidance, if any, would be beneficial to improve
understanding and implementation of policies addressing functions that
may be performed by contractors?
8. Form of Coverage
Is an OFPP policy letter an effective vehicle to serve as the main
document for consolidated policy guidance on the subject of work
reserved for Federal employees and maintaining certain critical
capability levels in-house? Does it effectively address the affected
stakeholder communities? If not, which communities are not properly
addressed and what form should the guidance take and why?
9. Implementation
a. What best practices (e.g., flowcharts, decision trees,
checklists, handbooks) exist to help agencies identify which functions
should be reserved for performance by Federal employees? Note:
Respondents are encouraged to submit copies of, or provide citations
to, relevant documents with their responses.
b. What questions arise most frequently that might be suitably
addressed in a question and answer format? Examples of questions might
include the following:
What steps should contractor employees be required to take
when working on a government site to ensure their status is clearly
understood?
Under what, if any, circumstances may a contractor attend
a policy-making meeting?
Under what, if any, circumstances may a contractor
represent an agency at a policy-making meeting?
10. Management Responsibilities
What, if any, additional guidance should be provided to ensure the
policies and practices discussed in the draft guidance are given
appropriate management attention?
11. Inventories of Federal and Contractor Employees
a. What is the best way to optimize the value of Federal employee
inventories that agencies prepare under the FAIR Act and OMB Circular
A-76 to support policies for identifying work to be reserved for
performance by Federal employees?
b. What is the best way to optimize the value of the contractor
employee inventory required by section 743 of Division C of the FY 2010
Consolidated Appropriations Act, Public Law 111-117 (for civilian
agencies) and section 807 of the National Defense Authorization Act for
FY 2008, Public Law 110-181 (for defense agencies), to support policies
for identifying work to be reserved for performance by Federal
employees and those that may continue to be performed by contractors?
Daniel I. Gordon,
Administrator, Office of Federal Procurement Policy.
Policy Letter No. 10-XX
To the Heads of Executive Departments And Establishments
Subject: Work Reserved for Performance by Federal Government
Employees
1. Purpose. This guidance establishes Executive Branch policy
addressing when work must be reserved for performance by federal
employees. The policy is intended to assist agency officers and
employees in ensuring that only federal employees perform work that
is inherently governmental or otherwise needs to be reserved to the
public sector.
Nothing in this guidance is intended 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. Reliance on contractors is not, by itself, a
cause for concern, provided that the work that they perform is not
work that should be reserved for federal employees and that federal
officials are appropriately managing contractor performance.
2. Authority. This policy letter is issued pursuant to section
6(a) of the Office of Federal Procurement Policy Act, 41 U.S.C.
405(a), the President's March 4, 2009, Memorandum on Government
Contracting, and section 321 of the FY 2009 National Defense
Authorization Act, Public Law 110-417.
3. Definitions.
``Inherently governmental function,'' as defined in section 5 of
the Federal Activities Inventory Reform Act, Public Law 105-270,
means a function that is so intimately related to the public
interest as to require performance by Federal Government employees.
(a) The term includes functions that 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. An inherently governmental function involves, among
other things, the interpretation and execution of the laws of the
United States so as--
(1) To bind the United States to take or not to take some action
by contract, policy, regulation, authorization, order, or otherwise;
(2) To 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, or otherwise;
(3) To significantly affect the life, liberty, or property of
private persons;
(4) To commission, appoint, direct, or control officers or
employees of the United States; or
(5) 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.
(b) The term does not normally include--
(1) Gathering information for or providing advice, opinions,
recommendations, or ideas to Federal Government officials; or
(2) Any function that is primarily ministerial and internal in
nature (such as building security, mail operations, operation of
cafeterias, housekeeping, facilities operations and maintenance,
warehouse operations, motor vehicle fleet management operations, or
other routine electrical or mechanical services).
''Critical function'' means a function that is necessary to the
agency being able to effectively perform and maintain control of its
mission and operations. A function that would not expose the agency
to risk of mission failure if performed entirely by contractors is
not a critical function.
4. Policy. It is the policy of the Executive Branch to ensure
that government action is taken as a result of informed, independent
judgments made by government officials. Adherence to this policy
will ensure that the act of governance is performed, and decisions
of significant public interest are made, by officials who are
ultimately accountable to the President and bound by laws
controlling the conduct and performance of Federal employees that
are intended to protect or
[[Page 16194]]
benefit the public and ensure the proper use of funds appropriated
by Congress. To implement this policy, agencies must reserve certain
work for performance by federal employees and take special care to
retain sufficient management oversight over how contractors are used
to support government operations and ensure that Federal employees
have the technical skills and expertise needed to maintain control
of the agency mission and operations.
(a) Performance of work by federal employees. To ensure that
work that should be performed by federal employees is properly
reserved for government performance, agencies shall:
(1) Ensure that service contractors do not perform inherently
governmental functions (see section 5-1);
(2) Give special consideration to federal employee performance
of functions closely associated with inherently governmental
functions and, when such work is performed by contractors, provide
greater attention and an enhanced degree of management oversight of
the contractors' activities to ensure that contractors' duties do
not expand to include performance of inherently governmental
functions (see section 5-2a); and
(3) Ensure that federal employees perform critical functions to
the extent necessary for the agency to operate effectively and
maintain control of its mission and operations (see section 5-2b).
(b) Management of federal contractors. When work need not be
reserved for Federal performance and contractor performance is
appropriate, agencies shall take steps to employ an adequate number
of government personnel to ensure that contract administration
protects the public interest through the active and informed
management and oversight of contractor performance, especially where
contracts have been awarded for the performance of critical
functions, functions closely associated with the performance of
inherently governmental functions, or where, due to the nature of
the contract services provided, there is a potential for confusion
as to whether an activity is being performed by government employees
or contractors. Contract management should be appropriate to the
nature of the contract, ensure that the contract is under the
control of government officials at all times, and make clear to the
public when citizens are receiving service from contractors.
(c) Strategic human capital planning. (1) As part of strategic
human capital planning, agencies shall--
(i) Dedicate a sufficient amount of work on critical functions
to performance by federal employees in order to build competencies
(both knowledge and skills), provide for continuity of operations,
and retain institutional knowledge of government operations,
including those unique to the agency's mission;
(ii) Ensure that sufficient personnel is available to manage and
oversee the contractor's performance and evaluate and approve or
disapprove the contractor's work products and services, recruiting
and retaining the necessary federal talent where it is lacking; and
(iii) Consider the impact of decisions to establish a specified
level of government employee authorizations (or military end
strength) or available funding on the ability to use Federal
employees for work that should be reserved for performance by such
employees.
(2) Agencies' annual Human Capital Plan for Acquisition shall
identify specific strategies and goals for addressing both the size
and capability of the acquisition workforce, including program
managers and contracting officer technical representatives. The
number of personnel required to administer a particular contract is
a management decision to be made after analysis of a number of
factors. These include, among others:
(i) The scope of the activity in question;
(ii) The technical complexity of the project or its compontents;
(iii) The technical capability, numbers, and workload of federal
mangement officials;
(iv) The inspection techniques available;
(v) The proven adequacy and reliability of contractor project
management;
(vi) The sophistication and track record of contract
administration organizations within the agency; and
(vii) The importance and criticality of the function.
5. Implementation guidelines and responsibilities. Agencies
shall use the guidelines below to determine (1) whether their
requirements involve the performance of inherently government
functions, functions closely associated with inherently governmental
functions, or critical functions; and (2) the type and level of
management attention necessary to ensure that functions that should
be reserved for federal performance are not materially limited by or
effectively transferred to contractors. The latter determination
typically requires agencies to consider the totality of
circumstances surrounding how, where, and when work is to be
performed.
5-1. Inherently governmental functions. Agencies shall ensure
that inherently governmental functions are reserved exclusively for
performance by federal employees.
(a) Determining whether a function is inherently governmental.
Every federal government organization performs some work that is so
intimately related to the public interest as to require performance
by federal government employees. Agencies should review the
definition of inherently governmental function in section 3, any
other statutory provisions that identify a function as inherently
governmental, and the illustrative list of inherently governmental
functions in Appendix A. In no case should any function described in
the definition, identified in statute as inherently governmental, or
appearing on the list be considered for contract performance. If a
function is not listed in Appendix A or identified in a statutory
provision as inherently governmental, agencies should determine
whether the function otherwise falls within the definition in
section 3 by evaluating, on a case-by-case basis, the nature of the
work and the level of discretion associated with performance of the
work using the tests below. A function meeting either of these tests
would be inherently governmental.
(1) The nature of the function. Functions which involve the
exercise of sovereign powers--that is, powers that are uniquely
governmental--are inherently governmental by their very nature.
Examples of functions that, by their nature, are inherently
governmental are an ambassador representing the United States, a
police officer arresting a person, and a judge sentencing a person
convicted of a crime to prison. A function may be classified as
inherently governmental based strictly on its uniquely governmental
nature and without regard to the type or level of discretion
associated with the function.
(2) The exercise of discretion. (i) A function requiring the
exercise of discretion shall be deemed inherently governmental if
the exercise of such discretion commits the government to a course
of action where two or more alternative courses of action exist and
decision making is not already limited or guided by existing
policies, procedures, directions, orders, and other guidance that:
(A) Identify specified ranges of acceptable decisions or conduct
concerning the overall policy or direction of the action; and
(B) Subject the discretionary authority to final approval or
regular oversight by agency officials.
(ii) The fact that decisions are made, and discretion exercised,
by a contractor in performing its duties under the contract--such as
how to allocate the contractor's own or subcontract resources, what
conclusions to emphasize and, unless specified in the contract, what
techniques and procedures to employ, whether and whom to consult,
what research alternatives to explore given the scope of the
contract, or how frequently to test--is not determinative of whether
the contractor is performing an inherently government function. A
function involving the exercise of discretion may be appropriately
performed consistent with the restrictions in this section where the
contractor does not have the authority to decide on the overall
course of action, but is tasked to develop options or implement a
course of action, and the agency official has the ability to
countervail the contractor's action. By contrast, contractor
performance would be inappropriate where the contractor's
involvement is or would be so extensive, or the contractor's work
product so close to a final agency product, as to effectively
preempt the federal officials' decision-making process, discretion
or authority.
(b) Responsibilities--(1) Pre-award. Agencies shall determine
prior to issuance of a solicitation that none of the functions to be
contracted are inherently governmental. The agency head or
designated requirements official shall provide the contracting
officer, concurrent with transmittal of the statement of work (or
any modification thereof), a written determination that none of the
functions to be performed are inherently governmental. If a function
is not listed in Appendix A, it still may be inherently
governmental. Accordingly, the determination should take into
consideration, as necessary, the tests in
[[Page 16195]]
paragraph (a). The file should include the analysis that supports
the determination and this analysis should establish, at a minimum,
that:
(i) The function to be contracted does not appear on the list in
Appendix A;
(ii) A statute, such as an annual appropriations act, does not
identify the function as inherently governmental or otherwise
require it to be performed by Federal employees; and
(iii) The proposed role for the contractor is not so extensive
that the ability of senior agency management to develop and consider
options is or would be preempted or inappropriately restricted.
(2) Post-award. Agencies should review, on an ongoing basis, the
functions being performed by their contractors, paying particular
attention to the way in which contractors are performing, and agency
personnel are managing, contracts involving functions that are
closely associated with inherently governmental functions (see
subsections 5-2a and Appendix B) or contracts for professional and
technical services. If a determination is made that the contractor
is performing work that is inherently governmental (or involves
unauthorized personal services), but the contract, properly defined,
does not entail performance of inherently governmental functions,
the agency shall take prompt action to ensure performance by
government employees of the inherently governmental
responsibilities. In some cases, government control over, and
performance of, these responsibilities can be reestablished by
strengthening contract oversight using government employees with
appropriate subject matter expertise and following the protocols
identified in FAR 37.114 (see also section 5.2a, below). In other
cases, agencies may need to in-source work on an accelerated basis
through the timely development and execution of a hiring plan timed,
if possible, to permit the non-exercise of an option or the
termination of that portion of the contract being used to fulfill
inherently governmental responsibilities.
5-2. Other work that must be reserved for federal employees. In
some cases, work that is not inherently governmental must also be
reserved for performance by federal employees. Such reservation will
be required under certain circumstances for functions that are
closely associated with the performance of inherently governmental
functions and critical functions.
5-2a. Functions closely associated with the performance of
inherently governmental functions. Agencies shall give special
consideration to federal employee performance of functions closely
associated with inherently governmental functions.
(a) Determining whether a function is closely associated with
the performance of an inherently governmental function. Certain
services and actions that generally are not considered to be
inherently governmental functions may approach being in that
category because of the nature of the function and the risk that
performance may impinge on federal officials' performance of an
inherently governmental function. Appendix B provides a list of
examples of functions that are closely associated with the
performance of inherently governmental functions.
(b) Special consideration for federal employee performance.
(1) If the agency determines the function is closely associated
with the performance of an inherently governmental function, section
736 of Division D of the Omnibus Appropriations Act, 2009, Public
Law 111-8, requires civilian agencies subject to the FAIR Act to
give special consideration to using federal employees to perform the
function. Civilian agencies shall refer to OMB Memorandum M-09-26,
Managing the Multi-Sector Workforce (July 29, 2009), Attachment 3
for criteria addressing the in-sourcing of work under Public Law
111-8. Memorandum M-09-26 explains that federal employee performance
would be expected if either contractor performance causes the agency
to lack sufficient internal expertise to maintain control of its
mission and operations or analysis suggests that public sector
performance is more cost effective and it is feasible to hire
federal employees to perform the function. The OMB Memorandum is
available at https://www.whitehouse.gov/omb/assets/memoranda_fy2009/m-09-26.pdf.
(2) The Department of Defense shall--
(i) Ensure special consideration is given to federal employee
performance consistent with the requirements of 10 U.S.C. 2463; and
(ii) To the maximum extent practicable, minimize reliance on
contractors performing functions closely associated with inherently
governmental functions consistent with 10 U.S.C. 2330a.
(c) Responsibilities. If the agency determines that contractor
performance of a function closely associated with an inherently
governmental function is appropriate and cost-effective, the agency
shall--
(1) Limit or guide a contractor's exercise of discretion and
retain control of government operations by both--
(i) Pre-establishing in the contract specified ranges of
acceptable decisions and/or conduct; and
(ii) Pre-establishing a process for subjecting the contractor's
discretionary decisions and/or conduct to final approval by the
agency official;
(2) Assign a sufficient number of qualified government
employees, with expertise to administer or perform the work, to give
heightened management attention to the contractor's activities, in
particular, to ensure that they do not expand to include inherently
governmental functions, are not performed in ways not contemplated
by the contract so as to become inherently governmental, do not
undermine the integrity of the government's decision-making process,
and do not interfere with federal employees' performance of the
closely-associated inherently governmental functions (see section 5-
1(b)(2) for guidance on steps to take where a determination is made
that the contract is being used to fulfill responsibilities that are
inherently governmental);
(3) Ensure that a reasonable identification of contractors and
contractor work products is made whenever there is a risk that
Congress, the public, or other persons outside of the government
might confuse contractor personnel or work products with government
officials or work products, respectively; and
(4) Take appropriate steps to avoid or mitigate conflicts of
interest, such as by:
(i) Conducting pre-award conflict of interest reviews, to ensure
contract performance is in accordance with objective standards and
contract specifications, and developing a conflict of interest
mitigation plan, if needed, that identifies the conflict and
specific actions that will be taken to lessen the potential for
conflict of interest or reduce the risk involved with a potential
conflict of interest;
(ii) Physically separating contractor personnel from government
personnel at the worksite;
(iii) Ensuring contractors are clearly identified as such in
work product and on work support systems, such as in electronic mail
systems and phone messaging systems, and on signature blocks,
security and other identification badges, and office name plates;
(iv) Having contractor personnel work off-site, if cost-
effective and without derogation to the work to be performed;
(v) Excluding contractors from subsequent competitions if
conflicts cannot be avoided; or
(vi) Performing work with federal employees if (A) contractor
conflicts cannot be satisfactorily resolved or (B) decision-making
would be at risk of being transferred to the private sector because
contractors have such influence and insight into government decision
making or government officials would rely too heavily on contractor
inputs (or rely almost exclusively on contractor fact-finding or
memory).
(5) Make a written determination concurrent with transmittal of
the statement of work (or any modification thereof) to the
contracting officer that
(i) The function is closely associated with an inherently
governmental function;
(ii) Private sector performance of the function is appropriate
and the most cost effective source of support for the agency; and
(iii) The agency has sufficient internal capability to control
its missions and operations, oversee the contractor's performance of
the contract, limit or guide the contractor's exercise of
discretion, ensure reasonable identification of contractors and
contractor work products, and avoid or mitigate conflicts of
interest and unauthorized personal services.
5-2b. Critical functions. Agencies shall dedicate a sufficient
number of federal employees to the performance of critical functions
so that federal employees may maintain control of agencies' mission
and operations.
(a) Criteria for determining when critical positions must be
reserved for federal employee performance. Determining the
criticality of a function requires the exercise of informed judgment
by agency officials. In making that determination, the officials
shall consider the importance that a function holds for the agency
and its mission and operations. The more critical the function, the
more important that the agency have internal capability to maintain
control of its
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mission and operations. Examples of highly critical functions might
include: designing and constructing the next generation of
satellites at the National Aeronautics and Space Administration,
analyzing areas of tax law that impose significant compliance
burdens on taxpayers for the Internal Revenue Service's Office of
the Taxpayer Advocate, and performing mediation services for the
Federal Mediation and Conciliation Service. Where a critical
function is not inherently governmental, the agency may
appropriately consider filling positions dedicated to the function
with both federal employees and contractors. However, to meet its
fiduciary responsibility to the taxpayers, the agency must have a
sufficient internal capability to control its mission and operations
and must ensure it is cost effective to contract for the services.
(1) Sufficient internal capability--
(i) Generally requires that an agency have an adequate number of
positions filled by federal employees with appropriate training,
experience, and expertise (organic and technical) to understand the
agency's requirements, formulate alternatives, take other
appropriate actions to properly manage and be accountable for the
work product, and continue critical operations in the event of
contractor default; and
(ii) Further requires that an agency have the ability and
internal expertise to manage any contractors used to support the
federal workforce and evaluate their work product.
(2) Determinations concerning what constitutes sufficient
internal capability must be made on a case-by-case basis taking into
account, among other things:
(i) The agency's mission;
(ii) The complexity of the function and the need for specialized
skill;
(iii) The current strength of the agency's in-house organic and
technical expertise;
(iv) The current strength (capability and capacity) of the
agency's acquisition workforce;
(v) The effect of contractor default on mission performance; and
(vi) The enforceability of criminal sanctions for crimes
performed by contractors as compared to those applicable to federal
employees.
(b) Responsibilities--(1) Pre-award. (i) Agencies shall
determine prior to issuance of a solicitation for private-sector
performance of any aspect of a critical function that the agency has
sufficient internal capability to control its mission and
operations. The agency head or designated requirements or human
capital official shall provide the contracting officer, concurrent
with transmittal of the statement of work (or any modification
thereof) a written determination and analysis.
(ii) If an agency has sufficient internal capability to control
its mission and operations, the extent to which additional work is
performed by federal employees should be determined consistent with
the parameters set forth in subsection (2)(ii) below.
(2) Post-award. (i) Agencies should be alert for situations
where internal control of mission and operations is at risk due to
overreliance on contractors to perform critical functions. In these
situations, requiring activities should work with their human
capital office to develop and execute a hiring and/or development
plan. Requiring activities should also work with the acquisition
office to address the handling of ongoing contracts and the budget
and finance offices to secure the necessary funding to support the
needed in-house capacity. Agencies should also consider application
of the responsibilities outlined in 5-2a(c), as appropriate.
(ii) If an agency has sufficient internal capability to control
its mission and operations, the extent to which additional work is
performed by federal employees should be based on cost
considerations unless performance and risk considerations in favor
of federal employee performance will clearly outweigh cost
considerations. Supporting cost analysis should address the full
costs of government and private sector performance and provide like
comparisons of costs that are of a sufficient magnitude to influence
the final decision on the most cost effective source of support for
the organization.
6. Additional agency responsibilities. (a) Duty of federal
employees. Every federal employee has an obligation to help avoid
the performance by contractors of responsibilities that should be
reserved to federal employees. As part of this obligation, federal
employees who rely on contracts or their work product must take
appropriate steps, in accordance with agency procedures, to ensure
that any final agency action complies with the laws and policies of
the United States and reflects the independent conclusions of agency
officials and not those of contractors, who may not be motivated
solely by the public interest, and who may be beyond the reach of
management controls applicable to federal employees. These steps
shall include increased attention and examination where contractor
work product involves advice, opinions, recommendations, reports,
analyses, and similar deliverables that are to be considered in the
course of a federal employee's official duties and may have the
potential to influence the authority, accountability, and
responsibilities of the employee.
(b) Development of agency procedures. Agencies shall develop and
maintain internal procedures to address the requirements of this
guidance. Such procedures shall be reviewed by agency management no
less than every two years.
(c) Training. Agencies shall develop training plans to help
their employees understand and meet their responsibilities under
this guidance. The plan should include training, no less than every
two years, to improve employee awareness of their responsibilities.
(d) Review of internal management controls. Agencies should
periodically evaluate the effectiveness of their internal management
controls for reserving work for federal employees and identify any
material weaknesses in accordance with OMB Circular A-123,
Management's Responsibility for Internal Control, and OFPP's
Guidelines for Assessing the Acquisition Function, available at
https://www.whitehouse.gov/omb/assets/omb/procurement/memo/a123_guidelines.pdf
(e) Designation of responsible management official(s). Each
federal agency with 100 or more full-time employees in the prior
fiscal year shall ident