OFPP to Expand “Inherently Governmental” Definition

According to a draft policy letter published by OMB today, the Office of Federal Procurement Policy plans to adopt the definition of “inherently governmental” functions from the Federal Activities Inventory Reform Act (FAIR Act) of 1998, to supplant the current definition in Subpart 7.5 of the Federal Acquisition Regulation.

The letter says OMB intends to “adopt the FAIR Act definition of  “inherently governmental function” as the single government-wide definition of this term.”

The definition of “inherently governmental” found in the FAIR Act is considerably broader than the specific examples enumerated in the FAR.  FAR covers things like drafting 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, as well as tax collection and foreign policy decisions.  FAIR’s definition, on the other hand, “includes activities 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.”

Under the new standard, contractors are prohibited from “exert[ing] 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” but they can still provide “advice, opinions, recommendations, or ideas to Federal Government officials.”

FAIR also enumerates the following responsibilities as “safe” for contractors: 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.

Basically, this rule change shuts contractors out of the decision-making process in government acquisitions.  Contractors can still advise procurement officers, but this new standard makes it harder for contractors to play a meaningful role in acquisitions.

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