# definitions of inherently govermental and commercial fte

## 

OMB Memorandum M-05-12 (May 23, 2005) gives agencies the flexibility to
define function codes to fit their mission as follows: "Agencies may use
the DOD function code definitions or create definitions that are
tailored to fit their agency." We are in the process of developing DOI
definitions for the FY 2006 inventory submission. Further, we are
clarifying the definition of inherently governmental and commercial
reason codes as follows.

## Inherently Governmental (IG)

Inherently governmental activities normally fall into two categories:

1.  the exercise of sovereign government authority, (the act of
    governing) or

2.  the establishment of procedures and processes related to the
    oversight of monetary transactions or entitlements.

An IG activity involves:

1.  Binding the United States to take or not take some action by
    contract, policy, regulation, authorization, order or otherwise;

2.  Determining, protecting, and advancing economic, political,
    territorial, property, or other interests by military or diplomatic
    action, civil or criminal judicial proceedings, contract management,
    or otherwise;

3.  Significantly affecting the life, liberty, or property of private
    persons; or

4.  Exerting ultimate control over the acquisition, use, or disposition
    of United States property (real or personal, tangible or
    intangible), including establishing policies or procedures for the
    collection, control, or disbursement of appropriated and other
    federal funds.

What does this really mean?

IG activities require the exercise of **substantial** discretion. In
order to be coded as IG, FTE must have decision making and/or signature
authority. These generally include political appointees, commissioned or
warranted officers and senior level managers including CFO's, warranted
contracting officers, commissioned law enforcement FTE, etc. These FTE
have the authority to bind the government to take or not take some
action by contract, policy, regulation, authorization, or order.

It is generally at this senior level that the decision making authority
affects life, liberty, or property of private persons. While inherently
governmental activities require the exercise of substantial desertion,
not every exercise of discretion is evidence that an activity is
inherently governmental. Rather, the use of discretion shall be deemed
inherently governmental if it commits the government to a course of
action when two or more alternative courses of action exist and decision
making is not already limited or guided by existing policies,
procedures, directions, orders, and other guidance that (1) identify
specified ranges of acceptable decisions or conduct and (2) subject the
discretionary authority to final approval or regular oversight by agency
officials.

IG functions can not be performed by contractors. A function is either
inherently governmental or it isn't. There is no gray area. If
contractors are currently used to perform the function -- it isn't
inherently governmental. If it is a service listed in the yellow pages,
it probably isn't inherently governmental.

The following is a list of examples of functions considered to be IG.
This is [NOT]{.underline} all inclusive:

The direct conduct of criminal investigations. Law enforcement FTE
w/commissions.

Senior level program managers' determination of agency policy, such as
determining the content and application of regulations.

CFO's, Division and Deputy Division Director's determination of Federal
program priorities for budget request.

Supervisors of IG activities selection or non-selection of individuals
for Federal Government employment.

Supervisors of IG approval of position descriptions and performance
standards for Federal employees.

The determination of what Government property is to be disposed of and
on what terms.

The approval of Federal licensing actions and inspections.

The Competitive Sourcing Official (CSO) shall justify, in writing, any
designation of government personnel performing inherently governmental
activities. The justification shall be made available to OMB and the
public upon request. Bureaus/Offices are required to submit the IG
justifications w/each year's inventory.

## Commercial -- Reason Code A

A commercial activity unsuitable for competition. Sufficient written
justification shall be provided for reason code A FTE.

What does unsuitable for competition mean?

Both OMB and DOI require the following key elements to be in the written
justification:

A thorough definition of the function performed and the skills required.

A detailed explanation of the responsibilities and daily activities of
the function.

A comprehensive account of why it is necessary for the commercial
function to be categorized as unsuitable for competition.

Examples of reason code A activities:

Function requires specialized expertise of agency systems and procedures
unique to the public sector or only limited available in the private
sector.

Agency requires a sufficient number of trained and experienced staff
with historical knowledge to ensure continual performance of a core
function.

Agency has set aside FTEs for employment of physically and or mentally
challenged individuals.

Function is performed by a student intern as a part of formalized
program for federal recruitment.

## Commercial -- Reason Code B

Commercial FTE suitable for contract competition. These FTE are reviewed
for possible competition, however, not every functional area will be
looked at. Competitive sourcing competitions are not based on purely the
FAIR Act inventory commercial reason code B FTE.

## Commercial -- Reason Code C

Commercial FTE currently involved with an in-progress streamlined or
standard competition.

## Commercial -- Reason Code D

Commercial FTE who won a streamlined or standard competition within the
last five years.

## Commercial -- Reason Code E

Commercial FTE pending an agency approved restructuring decision such as
a realignment or closure.

## Commercial -- Reason Code F

Commercial FTE being performed by government personnel due to a
statutory prohibition against private sector performance.