**FEDERAL ACTIVITIES INVENTORY REFORM ACT OF 1998**

\[\[Page 112 STAT. 2382\]\]\
Public Law 105-270\
105th Congress

**An Act**

> To provide a process for identifying the functions of the Federal
> Government that are not inherently governmental functions, and for
> other purposes. \<\<NOTE: Oct. 19, 1998 - \[S. 314\]\>\>
>
> Be it enacted by the Senate and House of Representatives of the United
> States of America in Congress assembled, \<\<NOTE: Federal Activities
> Inventory Reform Act of 1998. 31 USC 501 note.\>\>
>
> **SECTION 1. SHORT TITLE.**
>
> This Act may be cited as the \"Federal Activities Inventory Reform Act
> of 1998\".
>
> **SEC. 2. \<\<NOTE: Records.\>\> ANNUAL LISTS OF GOVERNMENT ACTIVITIES
> NOT INHERENTLY GOVERNMENTAL IN NATURE.**
>
> \(a\) \<\<NOTE: Deadline.\>\> Lists Required.\--Not later than the end
> of the third quarter of each fiscal year, the head of each executive
> agency shall submit to the Director of the Office of Management and
> Budget a list of activities performed by Federal Government sources
> for the executive agency that, in the judgment of the head of the
> executive agency, are not inherently governmental functions. The entry
> for an activity on the list shall include the following:
>
> \(1\) The fiscal year for which the activity first appeared on a list
> prepared under this section.
>
> \(2\) The number of full-time employees (or its equivalent) that are
> necessary for the performance of the activity by a Federal Government
> source.
>
> \(3\) The name of a Federal Government employee responsible for the
> activity from whom additional information about the activity may be
> obtained.
>
> \(b\) OMB Review and Consultation.\--The Director of the Office of
> Management and Budget shall review the executive agency\'s list for a
> fiscal year and consult with the head of the executive agency
> regarding the content of the final list for that fiscal year.
>
> \(c\) Public Availability of Lists.\--
>
> \(1\) Publication.\--Upon the completion of the review and
> consultation regarding a list of an executive agency\--
>
> \(A\) the head of the executive agency shall promptly transmit a copy
> of the list to Congress and make the list available to the public; and
>
> \(B\) \<\<NOTE: Federal Register, Publication.\>\> the Director of the
> Office of Management and Budget shall promptly publish in the Federal
> Register a notice that the list is available to the public.
>
> \(2\) Changes.\--If the list changes after the publication of the
> notice as a result of the resolution of a challenge under section 3,
> the head of the executive agency shall promptly\--
>
> \(A\) make each such change available to the public and transmit a
> copy of the change to Congress; and
>
> \[\[Page 112 STAT. 2383\]\]
>
> \(B\) \<\<NOTE: Federal Register, Publication.\>\> publish in the
> Federal Register a notice that the change is available to the public.
>
> \(d\) Competition Required.\--Within a reasonable time after the date
> on which a notice of the public availability of a list is published
> under subsection (c), the head of the executive agency concerned shall
> review the activities on the list. Each time that the head of the
> executive agency considers contracting with a private sector source
> for the performance of such an activity, the head of the executive
> agency shall use a competitive process to select the source (except as
> may otherwise be provided in a law other than this Act, an Executive
> order, regulations, or any executive branch circular setting forth
> requirements or guidance that is issued by competent executive
> authority). The Director of the Office of Management and Budget shall
> issue guidance for the administration of this subsection.
>
> \(e\) Realistic and Fair Cost Comparisons.\--For the purpose of
> determining whether to contract with a source in the private sector
> for the performance of an executive agency activity on the list on the
> basis of a comparison of the costs of procuring services from such a
> source with the costs of performing that activity by the executive
> agency, the head of the executive agency shall ensure that all costs
> (including the costs of quality assurance, technical monitoring of the
> performance of such function, liability insurance, employee retirement
> and disability benefits, and all other overhead costs) are considered
> and that the costs considered are realistic and fair.
>
> **SEC. 3. CHALLENGES TO THE LIST.**
>
> \(a\) Challenge Authorized.\--An interested party may submit to an
> executive agency a challenge of an omission of a particular activity
> from, or an inclusion of a particular activity on, a list for which a
> notice of public availability has been published under section 2.
>
> \(b\) Interested Party Defined.\--For the purposes of this section,
> the term \"interested party\", with respect to an activity referred to
> in subsection (a), means the following:
>
> \(1\) A private sector source that\--
>
> \(A\) is an actual or prospective offeror for any contract, or other
> form of agreement, to perform the activity; and
>
> \(B\) has a direct economic interest in performing the activity that
> would be adversely affected by a determination not to procure the
> performance of the activity from a private sector source.
>
> \(2\) A representative of any business or professional association
> that includes within its membership private sector sources referred to
> in paragraph (1).
>
> \(3\) An officer or employee of an organization within an executive
> agency that is an actual or prospective offeror to perform the
> activity.
>
> \(4\) The head of any labor organization referred to in section
> 7103(a)(4) of title 5, United States Code, that includes within its
> membership officers or employees of an organization referred to in
> paragraph (3).
>
> \(c\) Time for Submission.\--A challenge to a list shall be submitted
> to the executive agency concerned within 30 days after the publication
> of the notice of the public availability of the list under section 2.
>
> \[\[Page 112 STAT. 2384\]\]
>
> \(d\) \<\<NOTE: Deadline.\>\> Initial Decision.\--Within 28 days after
> an executive agency receives a challenge, an official designated by
> the head of the executive agency shall\--
>
> \(1\) decide the challenge; and
>
> \(2\) transmit to the party submitting the challenge a written
> notification of the decision together with a discussion of the
> rationale for the decision and an explanation of the party\'s right to
> appeal under subsection (e).
>
> \(e\) Appeal.\--
>
> \(1\) \<\<NOTE: Deadline.\>\> Authorization of appeal.\--An interested
> party may appeal an adverse decision of the official to the head of
> the executive agency within 10 days after receiving a notification of
> the decision under subsection (d).
>
> \(2\) Decision on appeal.\--Within 10 days after the head of an
> executive agency receives an appeal of a decision under paragraph (1),
> the head of the executive agency shall decide the appeal and transmit
> to the party submitting the appeal a written notification of the
> decision together with a discussion of the rationale for the decision.
>
> **SEC. 4. APPLICABILITY.**
>
> \(a\) Executive Agencies Covered.\--Except as provided in subsection
>
> (b), this Act applies to the following executive agencies:
>
> \(1\) Executive department.\--An executive department named in section
> 101 of title 5, United States Code.
>
> \(2\) Military department.\--A military department named in section
> 102 of title 5, United States Code.
>
> \(3\) Independent establishment.\--An independent establishment, as
> defined in section 104 of title 5, United States Code.
>
> \(b\) Exceptions.\--This Act does not apply to or with respect to the
> following:
>
> \(1\) General accounting office.\--The General Accounting Office.
>
> \(2\) Government corporation.\--A Government corporation or a
> Government controlled corporation, as those terms are defined in
> section 103 of title 5, United States Code.
>
> \(3\) Nonappropriated funds instrumentality.\--A part of a department
> or agency if all of the employees of that part of the department or
> agency are employees referred to in section 2105(c) of title 5, United
> States Code.
>
> \(4\) Certain depot-level maintenance and repair.\--Depot-level
> maintenance and repair of the Department of Defense (as defined in
> section 2460 of title 10, United States Code).
>
> **SEC. 5. DEFINITIONS.**
>
> In this Act:
>
> \(1\) Federal government source.\--The term \"Federal Government
> source\", with respect to performance of an activity, means any
> organization within an executive agency that uses Federal Government
> employees to perform the activity.
>
> \(2\) Inherently governmental function.\--
>
> \(A\) Definition.\--The term \"inherently governmental function\"
> means a function that is so intimately related to the public interest
> as to require performance by Federal Government employees.
>
> \[\[Page 112 STAT. 2385\]\]
>
> \(B\) Functions included.\--The term includes activities that require
> either the exercise of discretion in applying Federal Government
> authority or the making of value judgments in making decisions for the
> Federal Government, including judgments relating to monetary
> transactions and entitlements. An inherently governmental function
> involves, among other things, the interpretation and execution of the
> laws of the United States so as\--
>
> \(i\) to bind the United States to take or not to take some action by
> contract, policy, regulation, authorization, order, or otherwise;
>
> \(ii\) to determine, protect, and advance United States economic,
> political, territorial, property, or other interests by military or
> diplomatic action, civil or criminal judicial proceedings, contract
> management, or otherwise;
>
> \(iii\) to significantly affect the life, liberty, or property of
> private persons;
>
> \(iv\) to commission, appoint, direct, or control officers or
> employees of the United States; or
>
> \(v\) to exert ultimate control over the acquisition, use, or
> disposition of the property, real or personal, tangible or intangible,
> of the United States, including the collection, control, or
> disbursement of appropriated and other Federal funds.
>
> \(C\) Functions excluded.\--The term does not normally include\--
>
> \(i\) gathering information for or providing advice, opinions,
> recommendations, or ideas to Federal Government officials; or
>
> \(ii\) any function that is primarily ministerial and internal in
> nature (such as building security, mail operations, operation of
> cafeterias, housekeeping, facilities operations and maintenance,
> warehouse operations, motor vehicle fleet management operations, or
> other routine electrical or mechanical services).
>
> **SEC. 6. EFFECTIVE DATE.**
>
> This Act shall take effect on October 1, 1998.
>
> Approved October 19, 1998.
>
> LEGISLATIVE HISTORY\--S. 314:
>
> \-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\--
>
> SENATE REPORTS: No. 105-269 (Comm. on Governmental Affairs).\
> CONGRESSIONAL RECORD, Vol. 144 (1998):
>
> July 30, considered and passed Senate.
>
> Oct. 5, considered and passed House.