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Early in 2009, the Obama administration issued a Presidential Memorandum directing the Office of Management and Budget (OMB) to clarify when governmental outsourcing of services is, and is not, appropriate.

OMB wrote a Proposed Policy Letter, published in the Federal Register of March 31st, and has invited interested parties from both the public and private sectors to provide comments for consideration in the Final Policy Letter. The deadline is today.

Some key highlights in the letter include:

• Adopting the FAIR Act definition of “inherently governmental function” as the single government-wide definition of the term (FAIR Act definition: “an activity is inherently governmental when it is so intimately related to the public interest as to mandate [our italics] performance by Federal employees.”).
• Establishing guidance and “tests” to help agencies identify whether a function falls under the above-referenced definition.
• The letter includes examples of inherently governmental work, such as applying government authority or making value judgments for the government, such as monetary transactions.
• It also outlines tests agencies can use to determine whether or not it is appropriate to hire a contractor for the work.
• The “nature of the function test” would ask agency managers to consider whether the work under consideration would involve exercising the government’s sovereignty. If so, it should be deemed an inherently governmental function.
• The “discretion test” would have managers evaluate whether outsourcing the work to a contractor could effectively commit the government to a course of action.
• The letter states: “It is the policy of the Executive Branch to ensure that government action is taken as a result of informed, independent judgments made by government officials,” who are bound by law and are accountable to the president.

Comments can be emailed to .(JavaScript must be enabled to view this email address) (write “Proposed OFPP Policy Letter” in the subject line); additional contact details are listed in the Federal Register notice.

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