Inherently Governmental Function

An inherently governmental function is a government activity that is so intimately connected to the public interest and exercise of sovereign authority that it must be reserved for federal government employees and cannot be contracted out to private companies.

What is an Inherently Governmental Function?

The concept of inherently governmental functions is established in the FAR at 7.503 and in OMB Circular A-76. It reflects the principle that certain government functions involve the exercise of sovereign authority or discretion that private contractors cannot legitimately hold, because doing so would delegate governmental power to private parties who are not accountable to the public in the way federal employees are.

FAR 7.503(c) provides a non-exhaustive list of inherently governmental functions, including:

• Determining what supplies or services are to be acquired by the government
• Awarding, administering, or terminating contracts: only a warranted contracting officer can sign contracts
• Determining whether contract costs are allowable, allocable, and reasonable
• Determining agency policy priorities
• Directing and controlling law enforcement actions
• Commanding military forces
• Making determinations on bid protests
• Approving agency positions on legislative proposals
• Executing criminal prosecutions or civil suits on behalf of the government
• Settling contractor claims

Functions that are "closely associated" with inherently governmental functions require careful oversight but can be contracted out. For example, a contractor can help draft a contract but cannot sign it. A contractor can assist with source selection analysis but cannot make the award decision.

Why Inherently Governmental Functions matter for government contractors

Understanding the line between inherently governmental and contractable functions affects scope writing in advisory and assistance services contracts. Contracts that inadvertently assign inherently governmental functions to contractors can be found improper, and contracting officers who allow contractors to perform these functions expose themselves and the agency to legal and audit risk. Contractors performing advisory work (strategic planning, program analysis, staff augmentation) should be particularly careful not to step into roles that constitute inherently governmental functions, making final decisions, signing documents with binding effect, or representing the government in legal proceedings. When a contractor's work scope blurs this line, legal counsel review is essential.

Example

A management consulting firm is hired to support a DoD program office. The contract scope includes: analysis of contractor proposals (allowed), drafting source selection evaluation criteria (allowed with oversight), briefing the SSEB on evaluation methodologies (allowed), scoring proposals (close call, requires careful supervision), and signing evaluation report findings as the official record (not allowed, only government evaluators can sign). The contracting officer reviews the PWS to ensure that the consulting firm's scope stops short of official actions that constitute inherently governmental functions, and ensures government employees review and sign all official evaluation documents.

Frequently Asked Questions

Can a contractor assist with writing an RFP?

Yes. Assisting with drafting procurement documents is not inherently governmental. However, the decisions embedded in that assistance, what requirements to include, what evaluation criteria to use, whether to use a small business set-aside, must be made by the government official. The contractor provides analysis and drafts language; the contracting officer makes the decisions and signs the documents.

What is the difference between inherently governmental and critical functions?

Critical functions are those that are not inherently governmental but are so essential to agency operations that over-reliance on contractors creates unacceptable risk to the agency's ability to perform its mission without contractors. Both concepts require careful management, but critical functions can be contracted out if the government maintains sufficient oversight capability.

Can a contractor act as the Contracting Officer's Representative (COR)?

No. The COR role involves official government functions, monitoring contract performance, certifying invoices, and approving contractor deliverables, that are inherently governmental in character. Only a government employee can be designated as a COR. Contractors may assist CORs with data collection and analysis, but the official COR functions must be performed by a government employee.

Where does advisory and assistance services work fall?

Advisory and assistance services (A&AS) is a frequently contracted function that sits in the gray zone close to inherently governmental activities. Agencies are permitted to contract for analysis, studies, and advice, but government officials must make final decisions. The OCI rules are particularly important for A&AS contractors, who often develop deep knowledge of government programs through their advisory work.