What is inherently governmental?

Comptroller General David Walker said it’s time to question the phrase’s meaning

Testimony, video of hearing on federal acquisition

It’s been more than 40 years since the government defined what an inherently governmental job is. Although federal agencies conduct reviews each year to identify functions the private sector could perform, some officials say it is increasingly difficult to draw a line between the responsibilities of federal employees and those of private contractors. Others have expressed concern that contractors are performing inherently governmental functions.

The definition of that term has taken on new significance as the government struggles to maintain an adequate acquisition workforce. David Walker, comptroller general and head of the Government Accountability Office, said it’s time to reconsider what “inherently governmental” means.

“A lot has happened since those definitions were determined,” Walker said during testimony before the Senate Homeland Security and Governmental Affairs Committee. “My concern is…we may be asking contractors to do things civil servants ought to be doing.”

Agencies’ workloads are increasing, causing them to compete with one another for a limited supply of skilled acquisition workers at the same time that they are outsourcing more work to the private sector. Between 2000 and 2006, spending on government contracts grew 89 percent — from about $219 billion to $415 billion. Although workloads have increased, particularly since the 2001 terrorist attacks, the federal acquisition workforce has shrunk as compared with its size in the 1990s.

Several factors have contributed to the government’s acquisition workforce problems. Walker cited bureaucratic hiring policies, obsolete classification and compensation approaches, and insufficient numbers of authorized positions as possibly contributing to the government’s increased spending on contractors. Whatever the reasons, the situation compounds the risks associated with awarding and managing government contracts, he added.

“We need to look at when and under what circumstances is it appropriate to be contracting and when is it not,” Walker said.

He said two functions that should stay inside the “inherently governmental” line are policy-making and oversight of the functions that are central to agencies’ missions.

Some agencies have already strayed outside that line, said Sen. Joe Lieberman (I-Conn.), chairman of the Homeland Security and Governmental Affairs Committee. He said the Internal Revenue Service and the Homeland Security Department have hired contractors to assist in writing regulations, and other agencies have hired contractors to help federal contracting officers.

“There is an irony that now contractors are hired to oversee other contractors and assist agencies with the process of awarding contracts,” Lieberman said.

Defining “inherently governmental” is a challenge that officials have wrestled with for decades. In 1966, the Office of Management and Budget issued Circular A-76, a policy that defined inherently governmental functions. OMB wrote that the public interest is so linked to certain functions that only federal employees should perform them. The government could outsource the job of maintaining public buildings, for example, but not responsibility for commanding combat troops, according to OMB.

Officials often review the concept, and they have found it increasingly fuzzy.
An OMB spokeswoman said agencies must be judicious about how they use contractors and must manage them appropriately. “Although we have become more reliant on contractors to support our missions, we are not changing the definition of what is inherently governmental,” she said.
A recent report from the Services Acquisition Reform Act (SARA) panel recommended that OFPP update the principles agencies use to determine the functions that only government employees should perform.

“It would be appropriate for OFPP to consider the current governmental and contractor landscape and adopt a set of general principles and best practices for identifying those functions,” the report stated.

In its recommendations, the panel noted that those principles should be general enough for agencies to apply on a case-by-case basis. No formal definition of inherently governmental is necessary, the panel wrote.

More importantly, it said agencies must consider their workforce limitations when making contract decisions. “Agencies, consistent with their mission, need to define what their core needs are for government employees,” said Marcia Madsen, chairwoman of the SARA panel and a partner at the law firm Mayer Brown Rowe and Maw.

She added that agencies must maintain a capability for performing central functions without contractors. They cannot let their institutional knowledge dry up, she said.

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Nonprofits play a greater role in governmentThe roles and responsibilities of federal agencies and for-profit contractors have become more difficult to separate. So have the functions of nonprofit organizations, which increasingly play a significant role in delivering public services and meeting national goals, according to the Government Accountability Office. In his testimony before Congress on July 24, Stanley Czerwinski, GAO’s director of strategic issues, said the federal government should pay more attention to the following policy issues because of the nonprofit sector’s important role as a partner of the federal government.

Czerwinski said the federal government should be concerned about nonprofit institutions in terms of:
  • Strengthening their internal governance.
  • Improving their financial status.
  • Providing better data on their financial status and sources of federal funding.
— Florence Olsen

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