Inherently Governmental: Insourcing the Acquisition Process

competitivesourcingAccording to a new draft policy letter published by OMB last Thursday, the Office of Federal Procurement Policy will expand its definition of “inherently governmental” soon.  The OFPP will now use the definition from the Federal Activities Inventory Reform Act (FAIR Act) of 1998, replacing the definition from Subpart 7.5 of the Federal Acquisition Regulation.  We’ll examine in this three-part series what these changes mean, especially in light of GAO findings that DoD does not adequately support contractor personnel.

The draft policy letter reads that OMB will “adopt the FAIR Act definition of  “inherently governmental function” as the single government-wide definition of this term.”

The difference between the FAIR Act and the FAR is that FAIR’s definition of “inherently governmental” is broader.  The FAR enumerates examples of functions that cannot be outsourced (including some federal powers enumerated in the Constitution in Article 1, Section 8), for example, drafting congressional testimony, collecting taxes, crafting foreign policy or writing agency responses to an Inspector General’s audit.

The FAIR Act, on the other hand, considers “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” to be inherently governmental.

Assuming OMB adopts the draft policy letter on May 31, contractors will be 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 lists some 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 change leaves the status of many contractor acquisition personnel uncertain.  According to ExecutiveBiz, as of December ‘09, DoD estimates that over 207,000 contractor personnel are directly supporting operations in the Iraq and Afghanistan theaters, and DoD expects to increase the number of contractors in Afghanistan as more troops deploy.  Estimates for the number of additional contractors required to support the troop increase range from 26,000 to 56,000.  In fact, DoD isn’t quite sure exactly how many contractor personnel operate overseas, as its Synchronized Pre-deployment and Operational Tracker (SPOT) suffers from serious shortcomings.

While Defense Secretary Robert Gates’ plan to increase the federal government’s acquisition workforce by 20,000 personnel (9,000 new hires, 11,000 jobs insourced) has garnered legislative support, it’s unclear how DoD plans to train the 9,000 new personnel needed and deploy them in time to support the troop surge in Afghanistan.

Next week: can the DCMA adapt to the new inherently governmental definition quickly?

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