Overview
FAR 7.503 establishes the policy that "inherently governmental functions" must be performed by government employees and cannot be outsourced to private contractors. The section provides exhaustive examples of prohibited tasks and requires a formal written determination by the agency before any service contract can be solicited.
Key Rules
- Prohibition of Outsourcing: Contracts shall not be used for any function that is inherently governmental, which generally involves the exercise of substantial discretion in applying government authority or making value judgments for the Federal Government.
- Inherently Governmental Examples: The regulation lists 20 specific categories of prohibited functions, including:
- Directing and controlling Federal employees.
- Awarding, administering, or terminating contracts.
- Determining budget policy, priorities, and strategy.
- Conducting foreign relations and military command.
- Voting on source selection boards or performance evaluation boards.
- Functions Not Inherently Governmental: The regulation identifies 19 categories that are permissible for contractors but may "approach" the prohibited line, such as providing technical advice, developing draft regulations, or assisting in acquisition planning.
- Mandatory Written Determination: Before a solicitation is issued, the agency head or a designated requirements official must provide the Contracting Officer with a written determination confirming that none of the functions in the Statement of Work (SOW) are inherently governmental.
- OMB Oversight: Decisions made by agencies regarding the classification of a function are subject to review and modification by the Office of Management and Budget (OMB).
Practical Implications
- While contractors are frequently used to provide "support services" (such as drafting a Statement of Work or performing technical evaluations of proposals), the final decision-making authority and accountability must remain exclusively with a federal official.
- Contracting Officers must ensure that the "written determination" is included in the contract file for all service requirements to prevent the "shadowing" of government roles by private entities.