[Federal Register Volume 61, Number 18 (Friday, January 26, 1996)]
[Rules and Regulations]
[Pages 2627-2630]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1015]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 7, 11, and 37
[FAC 90-37; FAR Case 92-051 Item I]
RIN 9000-AF56
Federal Acquisition Regulation; Inherently Governmental Functions
AGENCIES: Department of Defense (DOD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Final rule.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council have agreed to revise the Federal
Acquisition Regulation (FAR) to implement Office of Federal Procurement
Policy (OFPP) Policy Letter 92-1, Inherently Governmental Functions.
This rule provides a definition of, and internal Government
responsibilities and procedures relating to, inherently governmental
functions. This regulatory action was not subject to Office of
Management and Budget review under Executive Order 12866, dated
September 30, 1993.
EFFECTIVE DATE: March 26, 1996.
FOR FURTHER INFORMATION CONTACT:
Mr. Peter O'Such (202) 501-1759 in reference to this FAR case. For
general information, contact the FAR Secretariat, Room 4037, GS
Building, Washington, DC 20405 (202) 501-4755. Please cite FAC 90-37,
FAR case 92-051.
SUPPLEMENTARY INFORMATION:
A. Background
This final rule implements the requirements of the Office of
Federal Procurement Policy (OFPP) Policy Letter 92-1, Inherently
Governmental Functions. The OFPP published its proposed policy letter
for public comment in the Federal Register at 56 FR 65279, December 16,
1991. OFPP evaluated public comments and published the final policy
letter in the Federal Register at 57 FR 45096, September 30, 1992.
A FAR proposed rule to implement the policy letter was published in
the Federal Register at 59 FAR 29696, June 8, 1994. Thirteen sources
submitted public comments. Minor revisions were made to the rule as a
result of those comments.
B. Regulatory Flexibility Act
The Department of Defense, the General Services Administration, and
the National Aeronautics and Space Administration certify that this
final rule will not have a significant economic impact on a substantial
number of small entities under the Regulatory Flexibility Act, 5 U.S.C.
601, et seq., because the rule pertains to internal Government
responsibilities and procedures relating to inherently governmental
functions.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the changes to
the FAR do not impose recordkeeping or information collection
requirements, or collections of information from offerors,
[[Page 2628]]
contractors, or members of the public which require the approval of the
Office of Management and Budget under 44 U.S.C. 3501, et seq.
List of Subjects in 48 CFR Part 7, 11, and 37
Government procurement.
Dated: January 11, 1996.
Edward C. Loeb,
Acting Director, Office of Federal Acquisition Policy.
Therefore, 49 CFR parts 7, 11, and 37 are amended as set forth
below:
The authority citation for 48 CFR parts 7, 11, and 37 continues to
read as follows:
Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
PART 7--ACQUISITION PLANNING
2. Section 7.000 is amended in paragraph (b) by removing the word
``and''; in paragraph (c) by removing the period at the end of the
sentence and inserting in its place ``; and''; and by adding paragraph
(d) to read as follows:
Sec. 7.000 Scope of part.
* * * * *
(d) Determining whether functions are inherently governmental.
3. Section 7.103 is amended by adding paragraph (p) to read as
follows:
7.103 Agency-head responsibilities.
* * * * *
(p) Ensuring that no purchase request is initiated or contract
entered into that would result in the performance of an inherently
governmental function by a contractor and that all contracts are
adequately managed so as to ensure effective official control over
contract performance.
4. Section 7.105 is amended by redesignating paragraphs (b)(9)
through (b)(19) as (b)(10) through (b)(20) and adding a new (b)(9) to
read as follows:
7.105 Contents of written acquisition plans.
* * * * *
(b) * * *
(9) Inherently governmental functions. Address the consideration
given to OFPP Policy Letter 92-1 (see subpart 7.5).
5. Subpart 7.5 is added to read as follows:
Subpart 7.5--Inherently Governmental Functions
Sec.
7.500 Scope of subpart.
7.501 Definition.
7.502 Applicability.
7.503 Policy.
Subpart 7.5--Inherently Governmental Functions
7.500 Scope of subpart.
The purpose of this subpart is to prescribe policies and procedures
to ensure that inherently governmental functions are not performed by
contractors. It implements the policies of Office of Federal
Procurement Policy (OFPP) Policy Letter 92-1, Inherently Governmental
Functions.
7.501 Definition.
Inherently governmental function means, as a matter of policy, a
function that is so intimately related to the public interest as to
mandate performance by Government employees. This definition is a
policy determination, not a legal determination. An inherently
governmental function includes 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: the act of governing,
i.e., the discretionary exercise of Government authority, and monetary
transactions and entitlements.
(a) An inherently governmental function involves, among other
things, the interpretation and execution of the laws of the United
States so as to--
(1) Bind the United States to take or not to take some action by
contract, policy, regulation, authorization, order, or otherwise;
(2) 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) Significantly affect the life, liberty, or property of private
persons;
(4) Commission, appoint, direct, or control officers or employees
of the United States; or
(5) 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 Federal funds.
(b) 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 operations, or
other routine electrical or mechanical services. The list of commercial
activities included in the attachment to Office of Management and
Budget (OMB) Circular No. A-76 is an authoritative, nonexclusive list
of functions which are not inherently governmental functions.
7.502 Applicability.
The requirements of this subpart apply to all contracts for
services. This subpart does not apply to services obtained through
either personnel appointments, advisory committees, or personal
services contracts issued under statutory authority.
7.503 Policy.
(a) Contracts shall not be used for the performance of inherently
governmental functions.
(b) Agency decisions which determine whether a function is or is
not an inherently governmental function may be reviewed and modified by
appropriate Office of Management and Budget officials.
(c) The following is a list of examples of functions considered to
be inherently governmental functions or which shall be treated as such.
This list is not all inclusive:
(1) The direct conduct of criminal investigations.
(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 for budget
requests.
(7) The direction and control of Federal employees.
(8) The direction and control of intelligence and counter-
intelligence operations.
(9) The selection or non-selection of individuals for Federal
Government employment, including the interviewing of individuals for
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 within
[[Page 2629]]
specified ranges and subject to other reasonable conditions deemed
appropriate by the agency).
(12) In Federal procurement activities with respect to prime
contracts--
(i) 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);
(ii) Participating as a voting member on any source selection
boards;
(iii) Approving any contractual documents, to include documents
defining requirements, incentive plans, and evaluation criteria;
(iv) Awarding contracts;
(v) 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);
(vi) Terminating contracts;
(vii) Determining whether contract costs are reasonable, allocable,
and allowable; and
(viii) 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 31 U.S.C. 952 (relating to private collection
contractors) and 31 U.S.C. 3718 (relating to private attorney
collection services), but not including--
(i) 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 case management techniques; and
(ii) 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 General Accounting Office, or other Federal
audit entity.
(d) The following is a list of examples of functions generally not
considered to be inherently governmental functions. However, certain
services and actions that are not considered to be inherently
governmental functions may approach being in that category because of
the nature of the function, the manner in which the contractor performs
the contract, or the manner in which the Government administers
contractor performance. This list is not all inclusive:
(1) Services that involve or relate to budget preparation,
including workload modeling, fact finding, efficiency studies, and
should-cost analyses, etc.
(2) Services that involve or relate to reorganization and planning
activities.
(3) Services that involve or relate to analysis, 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) Contractors providing assistance in contract management (such
as where the contractor might influence official evaluations of other
contractors).
(8) Contractors providing technical evaluation of contract
proposals.
(9) Contractors providing assistance in the development of
statements of work.
(10) Contractors providing support in preparing responses to
Freedom of Information Act requests.
(11) 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 4.402(b)).
(12) 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.
(13) Contractors participating in any situation where it might be
assumed that they are agency employees or representatives.
(14) Contractors participating as technical advisors to a source
selection board or participating as voting or nonvoting members of a
source evaluation board.
(15) Contractors serving as arbitrators or providing alternative
methods of dispute resolution.
(16) Contractors constructing buildings or structures intended to
be secure from electronic eavesdropping or other penetration by foreign
governments.
(17) Contractors providing inspection services.
(18) Contractors providing legal advice and interpretations of
regulations and statutes to Government officials.
(19) 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.
(e) Agency implementation shall include procedures requiring the
agency head or designated requirements official to 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. This
assessment should place emphasis on the degree to which conditions and
facts restrict the discretionary authority, decision-making
responsibility, or accountability of Government officials using
contractor services or work products. Disagreements regarding the
determination will be resolved in accordance with agency procedures
before issuance of a solicitation.
PART 11--DESCRIBING AGENCY NEEDS
6. Section 11.105 is added to read as follows:
11.105 Purchase descriptions for service contracts.
In drafting purchase descriptions for service contracts, agency
requiring activities shall ensure that inherently governmental
functions (see subpart 7.5) are not assigned to a contractor. These
purchase descriptions shall
(a) Reserve final determination for Government officials;
(b) Require proper identification of contractor personnel who
attend meetings, answer Government telephones, or work in situations
where
[[Page 2630]]
their actions could be construed as acts of Government officials
unless, in the judgment of the agency, no harm can come from failing to
identify themselves; and
(c) Require suitable marking of all documents or reports produced
by contractors.
PART 37--SERVICE CONTRACTING
7. Section 37.102 is revised to read as follows:
37.102 Policy.
(a) Agencies shall generally rely on the private sector for
commercial services (see OMB Circular No. A-76, Performance of
Commercial Activities and subpart 7.3).
(b) Agencies shall not award a contract for the performance of an
inherently governmental function (see subpart 7.5).
(c) Non-personal service contracts are proper under general
contracting authority.
8. Section 37.114 is added to read as follows:
37.114 Special acquisition requirements.
Contracts for services which require the contractor to provide
advice, opinions, recommendations, ideas, reports, analyses, or other
work products have the potential for influencing the authority,
accountability, and responsibilities of Government officials. These
contracts require special management attention to ensure that they do
not result in performance of inherently governmental functions by the
contractor and that Government officials properly exercise their
authority. Agencies must ensure that--
(a) A sufficient number of qualified Government employees are
assigned to oversee contractor activities, especially those that
involve support of government policy or decision making. During
performance of service contracts, the functions being performed shall
not be changed or expanded to become inherently governmental.
(b) A greater scrutiny and an appropriate enhanced degree of
management oversight is exercised when contracting for functions that
are not inherently governmental but closely support the performance of
inherently governmental functions (see 7.503(c)).
(c) All contractor personnel attending meetings, answering
Government telephones, and working in other situations where their
contractor status is not obvious to third parties are required to
identify themselves as such to avoid creating an impression in the
minds of members of the public or Congress that they are Government
officials, unless, in the judgment of the agency, no harm can come from
failing to identify themselves. They must also ensure that all
documents or reports produced by contractors are suitably marked as
contractor products or that contractor participation is appropriately
disclosed.
[FR Doc. 96-1015 Filed 1-25-96; 8:45 am]
BILLING CODE 6820-EP-M
