UIPL12-01a2.pdf

ETA Advisory File Text

POLICY LETTER 92-1 TO THE HEADS OF EXECUTIVE AGENCIES AND DEPARTMENTS SUBJECT Inherently Governmental Functions Purpose . This policy letter establishes Executive Branch policy relating to service contracting and inherently governmental functions. Its purpose is to assist Executive Branch officers and employees in avoiding an unacceptable transfer of official responsibility to Government contractors. 1. Authority. This policy letter is issued pursuant to section 6 a of the Office of Federal Procurement Policy OFPP Act as amended codified at 41 U.S.C. Section 405. 2. Exclusions. Services obtained by personnel appointments and advisory committees are not covered by this policy letter. 3. Background. Contractors when properly used provide a wide variety of useful services that play an important part in helping agencies to accomplish their missions. Agencies use service contracts to acquire special knowledge and skills not available in the Government obtain cost effective services or obtain temporary or intermittent services among other reasons. Not all functions may be performed by contractors however. Just as it is clear that certain functions such as the command of combat troops may not be contracted it is also clear that other functions such as building maintenance and food services may be contracted. The difficulty is in determining which of these services that fall between these extremes may be acquired by contract. Agencies have occasionally relied on contractors to perform certain functions in such a way as to raise questions about whether Government policy is being created by private persons. Also from time to time questions have arisen regarding the extent to which de facto control over contract performance has been transferred to contractors. This policy letter provides an illustrative list of functions that are as a matter of policy inherently governmental see Appendix A and articulates the practical and policy considerations that underlie such determinations see Section 7 . As stated in Section 9 however this policy letter does not purport to specify which functions are as a legal matter inherently governmental or to define the factors used in making such legal determination. Thus the fact that a function is listed in Appendix A or a factor is set forth in Section 7 b does not necessarily mean that the function is inherently governmental as a legal matter or that the factor would be relevant in making the legal determination. 4. Definition. As a matter of policy an inherently governmental function is a function that is so intimately related to the public interest as to mandate performance by Government employees. These functions include those activities that require either the exercise of discretion in applying Government authority or the making of value judgments in making decisions for the Government. Governmental functions normally fall into two categories 1 the act of governing i.e. the discretionary exercise of Government authority and 2 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 to a bind the United States to take or not to take some action by contract policy regulation authorization order or otherwise b determine protect and advance its economic political territorial property or other interests by military or diplomatic action civil or criminal judicial proceedings contract management or otherwise c significantly affect the life liberty or property of private persons d commission appoint direct or control officers of employees of the United States or e 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 appropriated and other Federal funds. Inherently governmental functions do not normally include gathering information for or providing advice opinions recommendations or ideas to Government officials. They also do not include functions that are 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 and operations or other routine electrical or mechanical services. The detailed list of examples of commercial activities found as an attachment to Office of Management and Budget OMB Cir. No. A-76 is an authoritative nonexclusive list of functions that are not inherently governmental functions. These functions therefore may be contracted. 5. Policy. a Accountability . 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 who are ultimate accountable to the President. When the Government uses service contracts such informed independent judgment is ensured by 1 prohibiting the use of service contracts for the performance of inherently governmental functions See Appendix A 2 providing greater scrutiny and an appropriate enhanced degree of management oversight see subsection 7 f when contracting for functions that are not inherently governmental but closely support the performance of inherently governmental functions see Appendix B 3 ensuring in using the products of those contracts 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 have interests that are not in concert with the public interest and who may be beyond the reach of management controls otherwise applicable to public employees and 4 ensuring that reasonable identification of contractors and contractor work products is made whenever there is a risk that the public Congress or other persons outside of the Government might confuse them with Government officials or with Government work products respectively. b OMB Circular No. A-76 . This policy letter does not purport to supersede or otherwise effect any change in OMB Circular No. A-76 Performance of Commercial Activities. c Drafting of Congressional testimony responses to Congressional correspondence and agency responses to audit reports from an Inspector General the General Accounting Office or other Federal audit entity . While the approval of a Government document is an inherently governmental function its drafting is not necessarily such a function. Accordingly in most situations the drafting of a document or portions thereof may be contracted and the agency should review and revise the draft document to the extent necessary to ensure that the final document expresses the agency s views and advances the public interest. However even though the drafting function is not necessarily an inherently government function it may be inappropriate for various reasons for a private party to draft a document in particular circumstances. Because of the appearance of private influence with respect to documents that are prepared for Congress or for law enforcement or oversight agencies and that may be particularly sensitive contractors are not to be used for the drafting of Congressional testimony responses to Congressional correspondence or agency responses to audit reports from an Inspector General the General Accounting Office or other Federal audit entity. 6. Guidelines. If a function proposed for contract performance is not found in Appendix A the following guidelines will assist agencies in understanding the application of this policy letter determining whether the function is as a matter of policy inherently governmental and forestalling potential problems. a The exercise of discretion . While inherently governmental functions necessarily involve the exercise of substantial discretion not every exercise of discretion is evidence that such a function is involved. Rather the use of discretion must have the effect of committing the Federal Government to a course of action when two or more alternative courses of action exist e.g. purchasing a minicomputer than a mainframe computer hiring a statistician rather than an economist supporting proposed legislation rather than opposing economist supporting proposed legislation rather than opposing it devoting more resources to prosecuting one type of criminal case than another awarding a contract to one firm rather than another adopting one policy rather than another and so forth . A contract may thus properly be awarded where the contractor does not have the authority to decide on the course of action to be pursued but is rather tasked to develop options to inform an agency decision maker or to develop or expand decisions already made by Federal officials. Moreover the mere fact that decisions are made by the contractors in performing his or her duties e.g. how to allocate the contractor s own or subcontract resources what techniques and procedures to employ whether and whom to consult what research alternatives to explore given the scope of the contract what conclusions to emphasize how frequently to test is not determinative of whether he or she is performing an inherently government function. b Totality of the circumstances . Determining whether a function is an inherently governmental function often is difficult and depends upon an analysis of the factors of the case. Such analysis involves consideration of a number of factors and the presence or absence of any one is not in itself determinative of the issue. Nor will the same emphasis necessarily be placed on any one factor at different times due to the changing nature of the Government s requirements. The following factors should be considered when deciding whether award of a contract might effect or the performance of a contract has effected a transfer of official responsibility 1 Congressional legislative restrictions or authorizations. 2 The degree to which official discretion is or would be limited i.e. whether the contractor s involvement in agency functions is or would be so extensive or his or her work product is so far advanced toward completion that the agency s ability to develop and consider options other than those provided by the contractor is restricted. 3 In claims adjudication and related services i the finality of any contractor s action affecting individual claimants or applicants and whether or not review of the contractor s action is de novo i.e. to be effected without the appellate body s being bound by prior legal rulings or factual determinations on appeal of his or her decision to an agency official ii the degree to which contractor activities may involve wide-ranging interpretations of complex ambiguous case law and other legal authorities as opposed to being circumscribed by detailed laws regulations and procedures. iii the degree to which matters for decision by the contractor involve recurring fact patterns or unique fact patterns and iv The contractor s discretion to determine an appropriate award or penalty. 4 The contractor s ability to take action that will significantly and directly affect the life liberty or property of individual members of the public including the likelihood of the contractor s need to resort to force in support of a police or judicial function whether force especially deadly force is more likely to be initiated by the contractor or by some other person and the degree to which force may have to be exercised in public or relatively uncontrolled areas. Note that contracting for guard convoy security and plant protection services armed or unarmed is not proscribed by these policies. 5 The availability of special agency authorities and the appropriateness of their application to the situation at hand such as the power to deputize private persons. 6 Whether the function in question is already being performed by private persons and the circumstances under which it is being performed by them. c Finality of agency determinations . Whether or not a function is an inherently governmental function for purposes of this policy letter is a matter for agency determination. However agency decisions that a function is or is not an inherently governmental function may be reviewed and if necessary modified by appropriate OMB officials. d Preaward responsibilities . Whether a function being considered for performance by contract is an inherently governmental function is an issue to be addressed prior to issuance of the solicitation. e Post-award responsibilities . After award even when a contract does not involve performance of an inherently governmental function agencies must take steps to protect the public interest by playing an active informed role in contract administration. This ensures that contractors comply with the terms of the contract and that Government policies rather than private ones are implemented. Such participation should be appropriate to the nature of the contract and should leave no doubt that the contract is under the control of Government officials. This does not relieve contractors of their performance responsibilities under the contract. Nor does this responsibility to administer the contract require Government officials to exercise such control over contractor activities to convert the contract or portion thereof to a personal service contract. In deciding whether Government officials have lost or might lose control of the administration of a contract the following are relevant considerations the degree to which agencies have effective management procedures and policies that enable meaningful oversight of contractor performance the resources available for such oversight the actual practice of the agency regarding oversight the duration of the contract and the complexity of the tasks to be performed. f Management controls . When functions described in Appendix B are involved additional management attention to the terms of the contract and the manner of performance is necessary. How close the scrutiny or how extensive or stringent the management controls need to be is for agencies to determine. Examples of additional control measures that might be employed are 1 developing carefully crafted statements of work and quality assurance plans as described in OFPP Policy Letter 91-2 Service Contracting that focus on the issue of Government oversight and measurement of contractor performance 2 establishing audit plans for periodic review of contracts by Government auditors 3 conducting preaward conflict of interest reviews to ensure contract performance in accordance with objective standards and contract specifications 4 physically separating contractor personnel from Government personnel at the worksite and 5 requiring contractors to a submit reports that contain recommendations and that explain and rank policy or action alternatives if any b describe what procedures they used to arrive at their recommendations c summarize the substance of their deliberations d report any dissenting views e list sources relied upon and or f otherwise make clear the methods and considerations upon which their recommendations are based. g Identification of contractor personnel and acknowledgment of contractor participation . Contractor personnel attending meetings answering Government telephones and working in other situations where their contractor status is not obvious to third parties must be required to identify themselves as such to avoid creating an impression in the minds of members of the public or the Congress that they are Government officials unless in the judgment of the agency no harm can come from failing to identify themselves. All documents or reports produced by contractors are to be suitably marked as contractor products. h Degree of reliance The extent of reliance on service contractors is not by itself a cause for concern. Agencies must however have a sufficient number of trained and experienced staff to manage Government programs properly. The greater the degree of reliance on contractors the greater the need for oversight by agencies. What number of Government officials is needed to oversee a particular contract is a management decision to be made after analysis of a number of factors. These include among others the scope of the activity in question the technical complexity of the project or its components the technical capability numbers and workload of Federal oversight officials the inspection techniques available and the importance of the activity. Current contract administration resources shall not be determinative. The most efficient and cost effective approach shall be utilized. i Exercise of approving or signature authority . Official responsibility to approve the work of contractors is a power reserved to Government officials. It should be exercised with a thorough knowledge and understanding of the contents of documents submitted by contractors and a recognition of the need to apply independent judgment in the use of these work products. 7. Responsibilities. a Heads of agencies . Heads of departments and agencies are responsible for implementing this policy letter. While these policies must be implemented in the Federal Acquisition Regulation FAR it is expected that agencies will take all appropriate actions in the interim to develop implementation strategies and initiate staff training to ensure effective implementation of these policies. b Federal Acquisition Regulatory Council . Pursuant to subsections 6 a and 25 f of the OFPP Act as amended 41 U.S.C. Sections 405 a and 421 f the Federal Acquisition Regulatory Council shall ensure that the policies established herein are incorporated in the FAR within 210 days from the date this policy letter is published in the Federal Register . Issuance of final regulations within this 210-day period shall be considered issuance in a timely manner as prescribed in 41 U.S.C. Section 405 b . c Contracting officers . When requirements are developed when solicitations are drafted and when contracts are being performed contracting officers are to ensure 1 that functions to be contracted are not among those listed in Appendix A of this letter and do not closely resemble any functions listed here 2 that functions to be contracted that are not listed in Appendix A and that do not closely resemble them are not inherently governmental functions according to the totality of the circumstances test in subsection 7 b above 3 that the terms and the manner of performance of any contract involving functions listed in Appendix B of this letter are subject to adequate scrutiny and oversight in accordance with subsection 7 f above and 4 that all other contractible functions are properly managed in accordance with subsection 7 e above. d All officials . When they are aware that contractor advice opinions recommendations ideas reports analyses and other work products are to be considered in the course of their official duties all Federal Government officials are to ensure that they exercise independent judgment and critically examine these products. 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. Information contact. For information regarding this policy letter contact Richard A. Ong Deputy Associate Administrator the Office of Federal Procurement Policy 725 17th Street N.W. Washington DC 20503. Telephone 202 395-7209. 10. Effective date. This policy letter is effective 30 days after the date of publication. signed by Allan V. Burman Administrator APPENDIX A The following is an illustrative list of functions considered to be inherently governmental functions footnote With respect to the actual drafting of Congressional testimony of responses to Congressional correspondence and of agency responses to audit reports from the Inspector General the General Accounting Office or other Federal audit entity see special provisions in subsection 6 c of the text of the policy letter The direct conduct of criminal investigation. The control of prosecutions and performance of adjudicatory functions other than those relating to arbitration or other methods of alternative dispute resolution . The command of military forces especially the leadership of military personnel who are members of the combat combat support or combat service support role. The conduct of foreign relations and the determination of foreign policy. The determination of agency policy such as determining the content and application of regulations among other things. The determination of Federal program priorities or budget requests. The direction and control of Federal employees. The direction and control of intelligence and counter-intelligence operations. The selection or nonselection of individuals for Federal Government employment. The approval of position descriptions and performance standards for Federal employees. 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 . 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 and g determining whether contract costs are reasonable allocable and allowable. 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. 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. The approval of Federal licensing actions and inspections. The determination of budget policy guidance and strategy. 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. Section 952 relating to private collection contractors and title 31 U.S.C. Section 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 b routine voucher and invoice examination. The control of the treasury accounts. The administration of public trusts APPENDIX B The following list is of services and actions that are not considered to be inherently governmental functions. However they may approach being in that category because of the way in which the contractor performs the contract or the manner in which the government administers contractor performance. When contracting for such services and actions agencies should be fully aware of the terms of the contract contractor performance and contract administration to ensure that appropriate agency control is preserved. This is an illustrative listing and is not intended to promote or discourage the use of the following types of contractor services Services that involve or relate to budget preparation including workload modeling fact finding efficiency studies and should-cost analyses etc. Services that involve or relate to reorganization and planning activities. Services that involve or relate to analyses feasibility studies and strategy options to be used by agency personnel in developing policy. Services that involve or relate to the development of regulations. Services that involve or relate to the evaluation of another contractor s performance. Services in support of acquisition planning. Contractors providing assistance in contract management such as where the contractor might influence official evaluations of other contractors . Contractors providing technical evaluation of contract proposals. Contractors providing assistance in the development of statements of work. Contractors providing support in preparing responses to Freedom of Information Act requests. Contractors working in any situation that permits or might permit them to gain access to confidential business information and or any other sensitive information other than situations covered by the Defense Industrial Security Program described in FAR 4.402 b . Contractors providing information regarding agency policies or regulations such as attending conferences on behalf of an agency conducting community relations campaigns or conducting agency training courses. Contractors participating in any situation where it might be assumed that they are agency employees or representatives. Contractors participating as technical advisors to a source selection board or participating as voting or nonvoting members of a source evaluation board. Contractors serving as arbitrators or providing alternative methods of dispute resolution. Contractors constructing buildings or structures intended to be secure from electronic eavesdropping or other penetration by foreign governments. Contractors providing inspection services. Contractors providing legal advice and interpretations of regulations and statutes to Government officials. Contractors providing special non-law enforcement security activities that do not directly involve criminal investigations such as prisoner detention or transport and non-military national security details.