Overview
FAR Subpart 7.5 establishes the policies and procedures to ensure that "inherently governmental functions"—tasks so intimately related to the public interest as to mandate performance by Government employees—are never outsourced to contractors. It provides a framework for identifying these functions and ensures that the Government maintains control over its core missions, policy-making, and discretionary authority.
Key Rules
- General Prohibition: Contracts shall not be used for the performance of inherently governmental functions, which involve the exercise of substantial discretionary authority or the making of value judgments on behalf of the Government.
- Applicability: These regulations apply to all service contracts but do not apply to personnel appointments, advisory committees, or specific personal services contracts authorized by statute.
- Categories of Functions:
- Inherently Governmental (Prohibited): Includes criminal investigations, command of military forces, determining agency policy, directing Federal employees, awarding or terminating contracts, and approving FOIA responses.
- Closely Associated Functions (Permitted with Caution): Includes budget preparation assistance, feasibility studies, technical evaluations, and acquisition planning support. While allowable, these require high levels of oversight to prevent them from becoming inherently governmental in practice.
- OMB Oversight: The Office of Management and Budget (OMB) serves as the final arbiter and may review or modify agency decisions regarding whether a specific function is inherently governmental.
Responsibilities
- Agency Head (or Designated Requirements Official):
- Must provide a written determination to the Contracting Officer stating that none of the functions in a Statement of Work (SOW) are inherently governmental.
- Must ensure that this determination is submitted concurrently with the SOW or any modifications.
- Must resolve any disagreements regarding the determination before a solicitation is issued.
- Contracting Officer (CO):
- Must ensure the required written determination is present in the contract file before proceeding with a solicitation.
- Must monitor the contract to ensure the performance does not evolve into inherently governmental territory.
- Contractors:
- Must refrain from performing any tasks listed in FAR 7.503(c).
- Must identify themselves as contractors when attending meetings or working in situations where they might be mistaken for Government employees.
Practical Implications
- The "Gray Area" Management: Many tasks listed in 7.503(d) (e.g., providing legal advice or technical evaluations) are "closely associated" with inherently governmental functions. In practice, agencies must implement strict oversight to ensure the contractor provides options and data, while the Government official makes the final decision.
- Procurement Integrity: A contractor cannot vote on a Source Selection Board or make final "allowability" determinations on costs. If a contractor is used to draft a SOW, the Government must be careful to avoid organizational conflicts of interest or the appearance that the contractor is defining the Government’s requirements.
- Documentation Compliance: For every service acquisition, the contract file must contain the "7.503(e) Determination." Without this written memo from the program office, the Contracting Officer cannot legally release the solicitation.
- Transparency: To prevent "de facto" government control, contractors working in federal facilities are often required to wear badges or use email signatures that clearly state their company affiliation, preventing them from inadvertently exercising the "direction and control" reserved for federal supervisors.