An Inherently Governmental Function is a duty or responsibility so intimately related to the public interest that it must be performed by government employees and not outsourced to private contractors. These functions are rooted in the exercise of sovereign powers — including decision-making that affects life, liberty, property, and the constitutional rights of citizens — and cannot be delegated without compromising governmental authority or accountability.
Federal law and regulation clearly distinguish between functions that may be contracted out and those that are inherently governmental. These distinctions are critical for maintaining public trust, safeguarding democratic control, and ensuring legal and policy compliance in the federal acquisition process.
Legal and Regulatory Foundations
The primary legal definition of inherently governmental functions is found in:
- Federal Activities Inventory Reform (FAIR) Act of 1998
- Federal Acquisition Regulation (FAR) Subpart 7.5
- Office of Management and Budget (OMB) Circular A-76
- OFPP Policy Letter 11-01: Performance of Inherently Governmental and Critical Functions
These documents collectively outline what constitutes an inherently governmental function, provide examples, and offer guidance on how agencies should manage the distinction between governmental and contractor-performed work.
Core Characteristics of Inherently Governmental Functions
A function is considered inherently governmental when it:
- Involves discretionary decision-making on behalf of the United States government
- Directly affects the life, liberty, or property of private persons
- Has a significant impact on national interests, policy, or public accountability
- Represents the exercise of sovereign powers under law
Unlike commercial functions, which can be performed under government oversight, inherently governmental functions require the direct involvement of federal officials who are accountable to the public and bound by civil service ethics and laws.
Examples of Inherently Governmental Functions
Federal guidance provides a list of common examples that are considered inherently governmental. These include:
- Conducting criminal investigations
- Issuing or revoking licenses or permits
- Awarding and administering contracts
- Authorising the use of military force
- Approving agency policies and regulations
- Determining budget priorities
- Representing the United States in litigation or diplomatic negotiations
- Making final decisions on federal benefit entitlements
These are functions that must remain under government control to uphold transparency, integrity, and constitutional governance.
What Is Not an Inherently Governmental Function?
Tasks that support government operations but do not involve sovereign decision-making are generally not inherently governmental and may be contracted out. These may include:
- IT support and software development
- Facility maintenance and logistics
- Legal research or clerical assistance
- Data entry and administrative support
- Technical consulting, when not tied to policy authority
However, even these commercial functions may be deemed critical or closely associated with inherently governmental tasks, requiring heightened oversight and internal capacity planning.
Closely Associated Functions: A Gray Area
OMB and FAR guidance recognise a category of tasks that are not inherently governmental per se but are so closely related to them that improper use of contractors could lead to a loss of government control or undue influence. These are called functions closely associated with inherently governmental functions.
Examples include:
- Preparing contract solicitations or evaluation criteria
- Developing policy recommendations
- Preparing budget justifications
- Evaluating contractor performance
- Drafting responses to audits or congressional inquiries
In such cases, agencies must:
- Ensure federal employees retain final decision-making authority
- Limit contractor involvement to technical or advisory roles
- Maintain robust internal staffing and review procedures
This helps avoid conflicts of interest and ensures the government remains the ultimate authority.
Why the Distinction Matters
The distinction between inherently governmental and commercial functions is not merely technical — it has real operational and legal consequences:
- Accountability: Only government employees are subject to civil service rules, conflict of interest laws, and disciplinary procedures.
- Legal authority: Contractors cannot bind the government, make regulatory decisions, or obligate funds.
- Public trust: Delegating sovereign functions to private interests risks undermining confidence in impartial governance.
- Risk management: Agencies that inappropriately contract out such functions may face protests, legal challenges, or funding clawbacks.
Understanding and respecting this boundary is essential for ethical, effective acquisition management.
Oversight and Agency Responsibilities
Agencies are responsible for ensuring that inherently governmental functions are performed only by appropriate personnel. This includes:
- Conducting workforce inventories to identify which functions are governmental
- Reviewing all contracted services for compliance with FAR Subpart 7.5
- Training acquisition personnel and program managers on function classification
- Designating inherently governmental functions in statements of work (SOW)
- Engaging in risk assessments for closely associated functions
These processes are essential for maintaining proper boundaries between public authority and private support.
Role of Contractors in Federal Operations
Contractors remain vital to federal operations, providing a wide range of services and capabilities that the government cannot efficiently maintain in-house. However, they must operate under clear legal constraints.
Permissible contractor roles include:
- Technical advising and analysis
- Drafting documents with federal oversight
- Providing subject matter expertise
- Performing administrative and logistical tasks
What contractors cannot do:
- Make binding decisions
- Interpret laws or policy on behalf of the government
- Supervise federal employees
- Perform inherently governmental functions unless specifically authorised by statute (rare)
By delineating roles clearly, agencies avoid mission risk and legal non-compliance.
Best Practices for Agencies and Program Offices
Agencies can strengthen compliance and governance by:
- Classifying functions early during acquisition planning
- Including function designation in acquisition plans and performance work statements
- Ensuring that internal staff are available to make and document final decisions
- Limiting contractor roles in sensitive areas like budgeting, procurement, or policy development
- Using quality assurance surveillance plans (QASPs) to monitor contractor performance near this boundary
These practices promote ethical contracting and prevent delegation creep into prohibited areas.
Conclusion: Protecting Sovereignty Through Functional Boundaries
An Inherently Governmental Function is more than a technical term — it is a foundational concept in safeguarding democratic governance. By clearly distinguishing between what contractors may do and what must remain in the hands of federal employees, agencies uphold the principles of accountability, fairness, and transparency.
Contractors serve as valuable partners, but the exercise of sovereign authority belongs only to the government. Recognising this boundary ensures that federal actions reflect the public interest, not private influence, and that government operations remain lawful, ethical, and effective.
