7.503 Policy.

(a) Contracts shall not be used for the performance of inherently governmental functions.

(b) Agency decisions which determine whether a function is or is not an inherently governmental

function may be reviewed and modified by appropriate Office of Management and Budget officials.

(c) The following is a list of examples of functions considered to be inherently governmental

functions or which shall be treated as such. This list is not all inclusive:

(1) The direct conduct of criminal investigations.

(2) The control of prosecutions and performance of adjudicatory functions other than those relating

to arbitration or other methods of alternative dispute resolution.

(3) The command of military forces, especially the leadership of military personnel who are members

of the combat, combat support, or combat service support role.

(4) The conduct of foreign relations and the determination of foreign policy.

(5) The determination of agency policy, such as determining the content and application of

regulations, among other things.

(6) The determination of Federal program priorities for budget requests.

(7) The direction and control of Federal employees.

(8) The direction and control of intelligence and counter-intelligence operations.

(9) The selection or non-selection of individuals for Federal Government employment, including the

interviewing of individuals for employment.

(10) The approval of position descriptions and performance standards for Federal employees.

(11) The determination of what Government property is to be disposed of and on what terms

(although an agency may give contractors authority to dispose of property at prices within specified

ranges and subject to other reasonable conditions deemed appropriate by the agency).

(12) In Federal procurement activities with respect to prime contracts-

(i) Determining what supplies or services are to be acquired by the Government (although an agency

may give contractors authority to acquire supplies at prices within specified ranges and subject to

other reasonable conditions deemed appropriate by the agency);

(ii) Participating as a voting member on any source selection boards;

(iii) Approving any contractual documents, to include documents defining requirements, incentive

plans, and evaluation criteria;

(iv) Awarding contracts;

(v) Administering contracts (including ordering changes in contract performance or contract
quantities, taking action based on evaluations of contractor performance, and accepting or rejecting

contractor products or services);

(vi) Terminating contracts;

(vii) Determining whether contract costs are reasonable, allocable, and allowable; and

(viii) Participating as a voting member on performance evaluation boards.

(13) The approval of agency responses to Freedom of Information Act requests (other than routine

responses that, because of statute, regulation, or agency policy, do not require the exercise of

judgment in determining whether documents are to be released or withheld), and the approval of

agency responses to the administrative appeals of denials of Freedom of Information Act requests.

(14) The conduct of administrative hearings to determine the eligibility of any person for a security

clearance, or involving actions that affect matters of personal reputation or eligibility to participate

in Government programs.

(15) The approval of Federal licensing actions and inspections.

(16) The determination of budget policy, guidance, and strategy.

(17) The collection, control, and disbursement of fees, royalties, duties, fines, taxes, and other public

funds, unless authorized by statute, such as 31 U.S.C. 3718 (relating to private attorney collection

services), but not including-

(i) Collection of fees, fines, penalties, costs, or other charges from visitors to or patrons of mess

halls, post or base exchange concessions, national parks, and similar entities or activities, or from

other persons, where the amount to be collected is easily calculated or predetermined and the funds

collected can be easily controlled using standard case management techniques; and

(ii) Routine voucher and invoice examination.

(18) The control of the treasury accounts.

(19) The administration of public trusts.

(20) The drafting of Congressional testimony, responses to Congressional correspondence, or agency

responses to audit reports from the Inspector General, the Government Accountability Office, or

other Federal audit entity.

(d) The following is a list of examples of functions generally not considered to be inherently

governmental functions. However, certain services and actions that are not considered to be

inherently governmental functions may approach being in that category because of the nature of the

function, the manner in which the contractor performs the contract, or the manner in which the

Government administers contractor performance. This list is not all inclusive:

(1) Services that involve or relate to budget preparation, including workload modeling, fact finding,

efficiency studies, and should-cost analyses, etc.

(2) Services that involve or relate to reorganization and planning activities.

(3) Services that involve or relate to analyses, feasibility studies, and strategy options to be used by

agency personnel in developing policy.
(4) Services that involve or relate to the development of regulations.

(5) Services that involve or relate to the evaluation of another contractor’s performance.

(6) Services in support of acquisition planning.

(7) Contractors providing assistance in contract management (such as where the contractor might

influence official evaluations of other contractors).

(8) Contractors providing technical evaluation of contract proposals.

(9) Contractors providing assistance in the development of statements of work.

(10) Contractors providing support in preparing responses to Freedom of Information Act requests.

(11) Contractors working in any situation that permits or might permit them to gain access to

confidential business information and/or any other sensitive information (other than situations

covered by the National Industrial Security Program described in 4.402(b)).

(12) Contractors providing information regarding agency policies or regulations, such as attending

conferences on behalf of an agency, conducting community relations campaigns, or conducting

agency training courses.

(13) Contractors participating in any situation where it might be assumed that they are agency

employees or representatives.

(14) Contractors participating as technical advisors to a source selection board or participating as

voting or nonvoting members of a source evaluation board.

(15) Contractors serving as arbitrators or providing alternative methods of dispute resolution.

(16) Contractors constructing buildings or structures intended to be secure from electronic

eavesdropping or other penetration by foreign governments.

(17) Contractors providing inspection services.

(18) Contractors providing legal advice and interpretations of regulations and statutes to

Government officials.

(19) Contractors providing special non-law enforcement, security activities that do not directly

involve criminal investigations, such as prisoner detention or transport and non-military national

security details.

(e) Agency implementation shall include procedures requiring the agency head or designated

requirements official to provide the contracting officer, concurrent with transmittal of the statement

of work (or any modification thereof), a written determination that none of the functions to be

performed are inherently governmental. This assessment should place emphasis on the degree to

which conditions and facts restrict the discretionary authority, decision-making responsibility, or

accountability of Government officials using contractor services or work products. Disagreements

regarding the determination will be resolved in accordance with agency procedures before issuance

of a solicitation.

Parent topic: Subpart 7.5 - Inherently Governmental Functions