REPORT FOR THE
A DMINISTRATIVE C ONFERENCE OF THE U NITED S TATES

CONTRACTORS IN RULEMAKING

Bridget C.E. Dooling
The George Washington University
Regulatory Studies Center
&
Rachel Augustine Potter
University of Virginia

May 9, 2022

This report was prepared for the consideration of the Administrative Conference of the United
States. It does not necessarily reflect the views of the Conference (including its Council,
committees, or members).

Recommended Citation
Bridget C.E. Dooling & Rachel Augustine Potter, Contractors in Rulemaking (May 9, 2022)
(report to the Admin. Conf. of the U.S.).

CONTRACTORS
IN RULEMAKING
Report to the Administrative Conference
of the United States (ACUS)

Bridget C.E. Dooling & Rachel Augustine Potter
May 9, 2022
The views and recommendations expressed are those of the authors and do not necessarily reflect those of the
members of the Conference or its committees, except where formal recommendations of the Conference are cited.

1

Table of Contents
I.

Introduction ............................................................................................................... 1

II.

Background ................................................................................................................ 3
A.

Contractors in contemporary public administration ................................................................3

B.

Potential benefits of contractor use........................................................................................5

C.

Concerns about contracting for government services ..............................................................7

D.

Legal considerations............................................................................................................. 10

III.

How are contractors perceived in rulemaking? ......................................................... 23

A.

A wide variety of perceptions ............................................................................................... 23

B.

Discussion............................................................................................................................ 25

IV.

What tasks do contractors perform in rulemaking? ................................................... 25

A.

Contractor tasks by rulemaking stage ................................................................................... 26

B.

Ongoing activities and special projects ................................................................................. 32

C.

Discussion............................................................................................................................ 35

V.

Why do agencies use contractors in rulemaking? ...................................................... 37
A.

Advantages of relying on contractors ................................................................................... 37

B.

Disadvantages of relying on contractors ............................................................................... 39

C.

Discussion............................................................................................................................ 42

VI.

What are current agency practices for the use of contractors in rulemaking? ............ 43

A.

Written policies about contractors in rulemaking.................................................................. 44

B.

Integrating contractors into an agency’s workflow ................................................................ 45

C.

Transparency over contracted rulemaking tasks ................................................................... 47

D.

Discussion............................................................................................................................ 51

VII.

What other avenues do agencies use to enhance capacity?....................................... 53

A.

Pay agency employees overtime for surge work ................................................................... 54

B.

Hire full-time staff................................................................................................................ 54

C.

Hire temporary staff ............................................................................................................ 54

D.

Obtain informal assistance ................................................................................................... 58

E.

Borrow another agency’s contract ........................................................................................ 58

F.

Rely on Federally Funded Research and Development Centers .............................................. 59

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G.

Discussion............................................................................................................................ 60

VIII.

Proposed recommendations ..................................................................................... 61

A.

Taking stock of contractors in rulemaking ............................................................................. 61

B.

Considering the range of options to enhance capacity ........................................................... 63

C.

Developing written policies for contractors in rulemaking ..................................................... 63

D.

Optimizing transparency ...................................................................................................... 64

E.

Reevaluating rulemaking applications of “inherently governmental”..................................... 65

F.

Additional considerations and future research ...................................................................... 67

IX.

Appendix: Methodology for the Report ..................................................................... 69

A.

Overall approach ................................................................................................................. 69

B.

Survey instrument ............................................................................................................... 72

ii

Contractors are us—they’re feds—but in italics.1

To the extent that a contractor would be involved at all [in
rulemaking], which in and of itself strikes me as highly
irregular, I cannot think of an instance where such participation
would be anything more than clerical or non-substantive.2

I.

Introduction

In agencies across the federal government, contractors have become a ubiquitous presence. Often
working side-by-side with federal employees, contractors perform work that is both mundane
and substantive, routine and highly specialized. Private sector contractors3 have performed
services on behalf of the government since the Republic’s earliest days,4 but the scale and scope
of government reliance on contractors has increased considerably in recent decades. This trend
and its underpinnings are well-documented by scholars and oversight bodies, and the
consequences for the government and for society are well theorized. Attention to the issue can be
particularly acute on the heels of scandals, when a contractor or an agency has in some way
crossed the public-private line.5 But in the day-to-day, contractors round out the federal
workforce in important, if sometimes controversial, ways.
Little attention has been paid to the role of contractors in rulemaking.6 From a procurement
perspective, this oversight is somewhat logical since contracts for rulemaking are relatively
paltry when measured by the broader scale of federal procurement dollars; as one expert

1

Interview 13.
Survey response.
3
We use the term “private sector” in this report to mean non-governmental. The term encompasses both for-profit
and non-profit organizations.
4
For a detailed description of the role of the private sector in the 18 th and 19th century government, see JON D.
MICHAELS, CONSTITUTIONAL COUP (2017) and NICHOLAS R. PARRILLO, AGAINST THE PROFIT MOTIVE: THE SALARY
REVOLUTION IN AMERICAN GOVERNMENT, 1780-1940 (2013).
5
For example, abuses and scandals involving private sector contractors in Iraq and Afghanistan have garnered
sustained political, media, and academic attention to contractor use in the national security and intelligence arenas.
See, e.g., JENNIFER K. ELSEA, MOSHE SCHWARTZ & KENNON H. NAKAMURA, CONG. RESEARCH SERV., RL32419,
PRIVATE SECURITY CONTRACTORS IN IRAQ: BACKGROUND, LEGAL STATUS, AND OTHER ISSUES (2008); U.S. GOV’T
ACCOUNTABILITY OFFICE, GAO-21-255, PRIVATE SECURITY CONTRACTORS: DOD NEEDS TO BETTER IDENTIFY AND
MONITOR PERSONNEL AND CONTRACTS (2021); Dana Priest & William M. Arkin, National Security Inc., WASH.
POST., July 20, 2010; ALLISON STANGER, ONE NATION UNDER CONTRACT (2009); PAUL R. VERKUIL, OUTSOURCING
SOVEREIGNTY 43 (2007).
6
The Government Accountability Office (GAO) has evaluated certain agencies’ use of contractors for rulemaking.
E.g., U.S. GOV’T ACCOUNTABILITY OFFICE, GAO-HRD-89-102BR, OSHA CONTRACTING FOR FEDERAL
RULEMAKING ACTIVITIES (1989). McGarity produced an ACUS Report about regulatory analysis that considered the
role of contractors for that specific task. Thomas O. McGarity, Report to the Administrative Conference of the
United States, The Role of Regulatory Analysis in Regulatory Decisionmaking 23 (May 1985),
https://www.acus.gov/recommendation/agency-procedures-performing-regulatory-analysis-rules. See also THOMAS
O. MCGARITY, REINVENTING RATIONALITY 171 (1991).
2

1

described it to us, “rules aren’t aircraft carriers.”7 And in the scant places where scholars have
taken up the issue recently, they have raised hypothetical, but largely unsubstantiated, concerns
about the extensive use of contractors in rulemaking.8 The general lack of attention to contractors
in rulemaking has led some to the false impression that most or all rulemaking activities are
“inherently governmental”—an important concept that we describe in detail below—and are
therefore off-limits to contractors. However, this report establishes that contractors are used for a
wide variety of rulemaking tasks, and sometimes extensively so.
This report explores the ways that federal agencies use contractors to support the rulemaking
process. We begin with a discussion of the current academic literature on outsourcing for
government services and then outline legal considerations that apply to rulemaking contracts in
particular. Turning to a set of in-depth interviews with 45 agency officials, experts, and
contractors and a survey of agency rulemaking officials,9 we next unpack agency perspectives on
the appropriateness of contractors in rulemaking. We then provide an inventory of dozens of
discrete tasks that contractors have performed in the rulemaking context. We also consider the
reasons why agencies use (or do not use) contractors when writing rules. The next sections
highlight agency practices for managing contractors in rulemaking and discuss other ways that
agencies expand their capacity, beyond using contractors. We conclude with a set of proposed
recommendations.
Our research reveals wide variation in how agencies approach the use of contractors in
rulemaking. Not only do agencies have highly divergent attitudes about what contractors may
and should do in rulemaking, they also perceive different risks and benefits of contractor use and
manage contractors in different ways. What emerges is a complex picture, with contractors
essential to rulemaking at some agencies, occasionally useful to a subset of agencies, and kept
away from rulemaking at other agencies. Rulemaking differs from other functions that agencies
perform in important and meaningful ways; the goal of this report is to draw a clear portrait of
the contributions that contractors make in rulemaking, while also giving close consideration to
the risks and challenges associated with using contractors in this space.
Before proceeding, we offer two caveats on the scope of this report. First, the regulatory process
in the United States is expansive and, for the purposes of this report, we have limited the scope to
the rule writing process within federal agencies. Typically, this process ranges from the data
collection phase that precedes the publication of a proposed rule to the publication of a final rule
7

Interview 31 (suggesting that procurement oversight is often focused on high dollar value purchases like aircraft
carriers, rather than smaller dollar buys like rulemaking services).
8
See, e.g., JON D. MICHAELS, CONSTITUTIONAL COUP 111 (2017) (arguing that “[e]verywhere we look, the federal
government is engaged in deep service contracting: the outsourcing of sensitive policy design and policyimplementing responsibilities” including rulemaking activities (emphasis omitted)); PAUL R. VERKUIL,
OUTSOURCING SOVEREIGNTY 24-25, 191 (2007) (arguing that “[a]gencies contract with regularity for a variety of
private management services” including rulemaking activities and that some of these activities “cross[] the line”).
McGarity’s 1985 ACUS Report discussed several examples of agency reliance upon contractors to produce
regulatory impact analysis, one component of rulemaking that we discuss in more detail below. Thomas O.
McGarity, Report to the Administrative Conference of the United States, The Role of Regulatory Analysis in
Regulatory Decisionmaking 23 (May 1985), https://www.acus.gov/recommendation/agency-procedures-performingregulatory-analysis-rules.
9
See Section IX for a description of the methodological approach employed in the survey and the interviews.

2

in the Federal Register. This means that we generally exclude post-promulgation activities, such
as enforcement.10
Second, the research design we employ allows us to answer some questions better than others.
The dearth of information about contractors in rulemaking—from both a data transparency
perspective and a scholarly perspective—means that we began this project with little information
about the extent to which contractors perform rulemaking tasks. The design we employ is
qualitative, chronicling the roles that contractors take on in rulemaking, and any relevant issues
associated with their use. Our research permits us to say clearly that some agencies use
contractors for a variety of rulemaking tasks beyond what has previously been documented. It
does not, however, allow us to answer questions about “most agencies” or “most contracting
firms.” Our design, discussed in detail in Appendix A, followed a two-pronged approach: indepth interviews and a survey. The interviews feature officials and experts, including 27 agency
rulemaking officials from 6 agencies, 6 contractors, and 12 agency oversight officials and
scholars with expertise in contracting and procurement. The interviews followed a non-random
“snowball” recruitment strategy. The survey asked agency rulemaking contacts about contractor
involvement in specific, recently-issued rules. Both prongs richly illustrate agency practices
around contractors in rulemaking. Given this design, however, our research findings are not
necessarily generalizable to rulemaking practices across the administrative state.11 We therefore
eschew prevalence estimates, instead offering a descriptive summary that can serve as a roadmap
for future exploration that builds on our core finding, which is that contractors have a significant
presence in rulemaking.

II. Background
Contractor use in the rulemaking process is part of a larger landscape of government contracting.
The rise of government contracting, intended to improve the efficiency and effectiveness of
government, has drawn the attention of scholars and oversight bodies concerned about the
implications of this trend. This has given way to law and policy that shapes modern
contracting—including contracting for rulemaking activities—in important ways.

A.

Contractors in contemporary public administration

The extent to which government agencies today rely on private sector contractors to perform
bureaucratic functions is significant. In Fiscal Year (FY) 2020, the U.S. Government spent $665
billion on contracts for goods and services. Service contracts made up $391.8 billion, or roughly
59% of that total, encompassing a vast array of activities like professional services, logistics,

10

See, e.g., Miriam Seifter, Rent-a-Regulator: Design and Innovation in Environmental Decision Making, in
GOVERNMENT BY CONTRACT 94 (Jody Freeman and Martha Minow eds., 2009) (describing third-party entities used
for certification, compliance, and enforcement).
11
For instance, while we conducted seven interviews with rulemaking officials in one agency, these officials worked
in four different component units. Across these components respondents reported different practices and views with
respect to the use of contractors in rulemaking. This type of variation—within one agency—highlights how tailored
the rulemaking process can be to an individual unit and underscores why this type of research cannot explain
variation across a broad swath of government agencies.

3

general health care, information technology, and much more.12 Spending on services has been
increasing,13 while the size of the federal civilian workforce has remained relatively level since
roughly 1960, with approximately two million Full-Time Equivalents (FTEs).14 These trends are
well documented, with scholars referring to contractors as a “shadow” of government that
supplements the federal civilian workforce.15
Although there are mechanisms in place to track federal spending and procurement on a broader
level, there is no official accounting of the amount spent on services related to rulemaking per se.
At the outset, Congress appropriates monies to federal agencies by funding particular programs
and accounts. However, these allocations are rarely, if ever, made at the rule or even the contract
level; instead, they are often bundled in a way that makes associating their connection to
rulemaking difficult to parse. Thus, even though congressional appropriations and agency
budgets are public information, it is nearly impossible to track forward from appropriated dollars
to contracts for rulemaking services.
Another potential avenue for assessing spending for rulemaking services is through the federal
procurement system. Once an agency makes a contract award, it reports contract-related
spending and actions to a centralized procurement database managed by the General Services
Administration (GSA): the Federal Procurement Data System-Next Generation (FPDS). In this
system, agencies disclose which products or services they obtained via contract. However, the
system was designed for broader procurement oversight, not for oversight of niche functions like
rulemaking.16 And, as we explain throughout this report, rulemaking contractors perform work in
U.S. GOV’T ACCOUNTABILITY OFFICE, A SNAPSHOT OF GOVERNMENT-WIDE CONTRACTING FOR FY 2020 (2021),
https://www.gao.gov/blog/snapshot-government-wide-contracting-fy-2020-infographic#:~:text=In%20fiscal%
20year%202020%2C%20the,billion%20from%20fiscal%20year%202019”.
13
For example, a 2011 report by the Government Accountability Office documents that, over a five-year period,
spending on contracts for professional and management support services at civilian agencies increased 44 percent.
U.S. GOV’T ACCOUNTABILITY OFFICE, GAO-12-87, MANAGING SERVICE CONTRACTS: RECENT EFFORTS TO
ADDRESS ASSOCIATED RISKS COULD BE FURTHER ENHANCED (2011). See also Memorandum from Douglas W.
Elmendorf to Representative Chris Van Hollen, Federal Contracts and the Contracted Workforce (Mar. 11, 2015),
https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/49931-FederalContracts.pdf.
14
JOHN DIIULIO, BRING BACK THE BUREAUCRATS 15-16 (2014). In FY 2020, the executive branch reported 2.18
million civilian full-time equivalent employees. U.S. Office of Management and Budget, Historical Tables, Table
16.1—Total Executive Branch Civilian Full-Time Equivalent (FTE) Employees, 1981–2022,
https://www.whitehouse.gov/omb/historical-tables.
15
DANIEL GUTTMAN & BARRY WILLNER, THE SHADOW GOVERNMENT (1976). Light also describes contractors as a
“shadow of government.” PAUL C. LIGHT, THE TRUE SIZE OF GOVERNMENT 1-6 (1999). Estimates of the number of
contractors vary. According to the Washington Post, in 2010 the ratio of contractors to federal employees in the
Department of Homeland Security was one to one. Dana Priest & William M. Arkin, National Security Inc., WASH.
POST., July 20, 2010. Meanwhile, Light finds that, in 2017, across the federal government there were roughly three
private contractors for every one federal employee. PAUL C. LIGHT, THE GOVERNMENT INDUSTRIAL COMPLEX 36-38
(2019). Finally, Schooner and Swan note that the number of contractor support personnel in Iraq and Afghanistan
frequently exceeded the number of military personnel. Steven L. Schooner & Collin D. Swan, Dead Contractors:
The Un-examined Effect of Surrogates on the Public’s Casualty Sensitivity, 6 J. NAT'L SEC. L. & POL’Y 11, 17
(2012).
16
As one expert explained to us, the FPDS is “designed to help identify how tax dollars are allocated to contractors .
. . [it is] hard to go in and say how [a contract] applies to individual regs since this is not what the system was
designed to do.” Interview 33. Awards in the FPDS database do have codes denoting the product or service which
was purchased and some of those codes (e.g., regulatory analysis studies and cost benefit analysis studies) are
12

4

a variety of contexts and under different contracting vehicles (e.g., rulemaking services can be
just one service among many that a contractor provides to an agency). Thus, while the
information in the FPDS is public and does provide aggregate agency spending patterns, it is of
limited utility in terms of understanding the bigger picture of contractor roles in the federal
rulemaking process.
Two things are clear about contracted services for rulemaking, however. First, although it is not
possible to attach a total dollar figure to rulemaking contracts, they certainly amount to only a
small slice of overall federal spending on service contracts.17 Second, relying on contractors to
help with rulemaking fits into a broader trend towards outsourcing of government services, one
that has attracted the attention of scholars from a variety of disciplines, including public
administration, administrative law, political science, and economics.18 This literature, which we
review in brief below, highlights both the benefits and the risks associated with the government
contracting for services. Although this existing work does not engage deeply with the rulemaking
process, we draw out the implications for rulemaking where appropriate.

B.

Potential benefits of contractor use

The turn toward private sector provision of government services did not happen accidentally.
Rather, the use of contractors has increased in political and policy salience over time. In recent
decades, outsourcing—and privatization more generally—has found a series of bipartisan
political champions who advocated for managing federal work in this way. President Ronald
Reagan famously quipped “Government is not the solution to our problem, government is the
problem,” a line that was emblematic of his administration’s focus on getting the private sector
more involved in government work.19 Contracting was also a key part of subsequent presidents’
administrative management programs. For example, President Bill Clinton’s effort to “reinvent
government” and the associated National Performance Review (NPR) included a focus on

naturally associated with rulemaking. However, as Potter explains, those codes are not dispositive of all rulemaking
contracts, since agencies might reasonably classify rulemaking services under other headings (e.g., program
management and support). Rachel A. Potter, How much of Rulemaking is Done by Contractors?, BROOKINGS
INSTITUTION (Feb. 16, 2022), https://www.brookings.edu/research/how-much-of-rulemaking-is-done-by-contractors.
Additionally, the FPDS system includes an “award description” field that might theoretically be of use in linking
contracts to rulemaking functions. However, this field is often left blank or is otherwise unusable. A recent GAO
report found that the award description field in the FPDS “was inconsistent with the established standard in 24 to 35
percent of awards.” U.S. GOV’T ACCOUNTABILITY OFFICE, GAO-20-75, DATA ACT: QUALITY OF DATA
SUBMISSIONS HAS IMPROVED BUT FURTHER ACTION IS NEEDED TO DISCLOSE KNOWN DATA LIMITATIONS (2020).
17
For example, in evaluating contract spending associated with two services that are closely tied to rulemaking,
Potter shows that the total dollar amounts are little more than a rounding error in the broader picture of federal
spending on services. Rachel A. Potter, How much of Rulemaking is Done by Contractors?, BROOKINGS
INSTITUTION (Feb. 16, 2022), https://www.brookings.edu/research/how-much-of-rulemaking-is-done-by-contractors.
18
We note that different terminology is used in this literature, including “outsourcing,” “contracting,” “contracting
out,” and “privatizing,” among other terms. For purposes of this report, we use the terms outsourcing and
contracting interchangeably. We understand privatization to mean the conversion of formerly public assets into
private assets, which is not a topic we cover in this report.
19
Michaels describes how Reagan’s turn toward outsourcing was a second-best solution after earlier privatization
efforts were unsuccessful. JON D. MICHAELS, CONSTITUTIONAL COUP 87-98 (2017). Nevertheless, Reagan “laid the
groundwork for the Privatization Revolution to come” Id. at 98. See also Michal Laurie Tingle, Privatization and
the Reagan Administration: Ideology and Application, 6 YALE L. & POL’Y REV. 229, 229-231 (1988).

5

outsourcing.20 President George W. Bush also undertook a competitive sourcing initiative, which
required public-private competitions to decide how some federal work was to be completed.21
These political efforts were rooted in an understanding that buying goods and services from the
private sector would yield three principal benefits: efficiency, flexibility, and expertise.22
Efficiency refers to the idea that “private firms can provide goods and services ‘better, faster, and
cheaper’ than government.”23 In 2012, the Office of Management and Budget (OMB) reported
that “[g]overnment-wide strategic sourcing of items such as office supplies and domestic
shipping services has already saved nearly $200 million since FY 2010” and that “agency-level
strategic sourcing of goods like IT and medical equipment have saved hundreds of millions
more.”24 Cost-savings may also be available for other kinds of services, though this is
contested.25 In short, the idea is that at least for some goods and services, private firms are able
to provide a better deal for the taxpayer and for government, especially when the contracts are
awarded competitively.26

The NPR’s final report included numerous recommendations that involved streamlining government procurement
and encouraging agencies to consider private sector provision of government services. See AL GORE, FROM RED
TAPE TO RESULTS: CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS. REPORT OF THE NATIONAL
PERFORMANCE REVIEW (1993), https://files.eric.ed.gov/fulltext/ED384294.pdf. The NPR drew heavily from the
work of Osborne and Gaebler, who included contracting as one of 36 alternatives to standard delivery of
government services by public employees. DAVID OSBORNE & TED GAEBLER, REINVENTING GOVERNMENT 31
(1992).
21
This market-driven approach was premised upon the idea that requiring agencies to engage in commercial
competition with the private sector would induce cost savings and efficiency. See generally Steven L. Schooner,
Competitive Sourcing Policy: More Sail Than Rudder?. 33 PUB. CONT. L.J. 263 (2004); Keith Snavely & Uday
Desai, Competitive Sourcing in the Federal Civil Service, 40.1 AM. REV. PUB. ADMIN. 83 (2010).
22
Jody Freeman & Martha Minow, Introduction: Reframing the Outsourcing Debates, in GOVERNMENT BY
CONTRACT 15 (Jody Freeman and Martha Minow eds., 2009).
23
KEVIN R. KOSAR, CONG. RESEARCH SERV., RL33777, PRIVATIZATION AND THE FEDERAL GOVERNMENT: AN
INTRODUCTION (2006).
24
Joe Jordan, Historic Savings in Contracting – and Plans for More, WHITE HOUSE BLOG, Dec. 6, 2012,
https://obamawhitehouse.archives.gov/blog/2012/12/06/historic-savings-contracting-and-plans-more.
25
Compare Aaron Barkley, Cost and Efficiency in Government Outsourcing: Evidence from the Dredging Industry,
13 AM. ECON. J. MICROECON. 514, 517 (2021) (estimating savings of 23% for larger projects), with Paul Chassy &
Scott Amey, Bad Business: Billions of Taxpayer Dollars Wasted on Hiring Contractors, Project on Government
Oversight (Sept. 13, 2011), https://www.pogo.org/report/2011/09/bad-business-billions-of-taxpayer-dollars-wastedon-hiring-contractors/. Sclar also notes that, in practice, government’s efficiency gains are rarely realized to their
full theoretical potential; “Most public contracting takes place in markets that range from no competition
(monopoly) to minimal competition among very few firms (oligopoly). Although oligopoly is preferable to
monopoly, it is still far removed from the salutary competition venerated by privatization advocates.” ELLIOTT
SCLAR, YOU DON’T ALWAYS GET WHAT YOU PAY FOR: THE ECONOMICS OF PRIVATIZATION 69 (2001).
26
Where markets lack competitors for government contracts, this will impede efficiency. Jocelyn M. Johnston &
Barbara S. Romzek, The Promises, Performance, and Pitfalls of Government Contracting 3, in THE OXFORD
HANDBOOK OF AMERICAN BUREAUCRACY (Robert Durant ed. 2010); KEVIN R. KOSAR, CONG. RESEARCH SERV.,
RL33777, PRIVATIZATION AND THE FEDERAL GOVERNMENT: AN INTRODUCTION (2006). Efficiency is further
hampered when agencies themselves limit competition by offering non-competitive contracts, a trend that is
increasingly common. Recent government reports have decried decreased competition in the awarding of federal
procurement contracts. See AUTHOR REDACTED, CONG. RESEARCH SERV., R40516, COMPETITION IN FEDERAL
CONTRACTING: AN OVERVIEW OF THE LEGAL REQUIREMENTS (2015); MAJORITY STAFF OF H. COMM. ON
OVERSIGHT AND GOVERNMENT REFORM, MORE DOLLARS, LESS SENSE: WORSENING CONTRACTING TRENDS UNDER
THE BUSH ADMINISTRATION (June 2007).
20

6

Second, contracting for services may offer flexibility to agencies. As Fukuyama notes, “because
the rules for dismissing civil servants are so cumbersome, it is often easier to hire a contractor to
undertake a job, which can be terminated when no longer necessary.”27 This agility provides
agencies with “surge capacity” to manage high workload periods.28 For example, when Congress
passes a major piece of legislation, that new law may direct an agency to issue many new rules.
Such directives often include deadlines, which compel agencies to issue regulations quickly.
Including contractors in the regulatory workflow might help an agency to smooth out this sudden
demand for regulatory productivity. This type of support may be particularly useful for agencies
that issue rules infrequently, and which therefore do not maintain a large staff of regulatory
personnel.
Finally, outsourcing is one way for government agencies to expand their expertise.29 For
instance, it may be difficult for an agency to lure a top scientist with expertise in a niche area
away from a university or the private sector and into government service. Further, the services of
such an expert might only be required for a time-limited project. Hiring this expert as a
contractor allows the government to tap into expertise, without making an unnecessary long-term
investment.

C.

Concerns about contracting for government services

Despite the sizable potential benefits afforded by contracting, scholars and observers have also
noted its many potential downsides.30 A general theme is that efficiency may come at the
expense of important public law principles.31 We focus on three of the most prominent critiques
relating to the implications of contracting on government capacity, accountability, and ethics.
First, concerns about contracting for government services often focus on the hollowing out of
long-term government capacity.32 The crux of this concern is whether, in the context of broad
scale outsourcing of services, government retains the ability to meaningfully oversee the work
that contractors do. A 2008 report by the Government Accountability Office, for example, found
27

Francis Fukuyama, The Intrinsic Functions of Government 110, in PUBLIC SERVICE AND GOOD GOVERNANCE FOR
THE TWENTY-FIRST CENTURY (James L. Perry, ed., 2020).
28
OFFICE OF FEDERAL PROCUREMENT POLICY, INHERENTLY GOVERNMENTAL FUNCTIONS POLICY LETTER, 56 Fed.
Reg. 65279, 65280 (Dec. 16, 1991) (explaining that “[a]gencies award service contracts for various reasons, such as
. . . to meet the need for intermittent service”).
29
Id. at 65280 (explaining that agencies also award service contracts “to acquire special skills not available in the
Government”).
30
E.g., Martha Minow, Outsourcing Power: Privatizing Military Efforts and the Risks to Accountability,
Professionalism, and Democracy, in GOVERNMENT BY CONTRACT 123 (Jody Freeman and Martha Minow eds.,
2009).
31
E.g., Sharon Dolovich, How Privatization Thinks: The Case of Prisons, in GOVERNMENT BY CONTRACT 128
(Jody Freeman and Martha Minow eds., 2009) (noting the problem of using efficiency as the sole criterion of
success).
32
Recent scholarship has been highly critical of the extent of government reliance on contractors. Kimberly N.
Brown, We the People, Constitutional Accountability, and Outsourcing Government, 88 IND. L.J. 1347, 1363 (2013)
(characterizing the current situation as an “accountability vacuum”); PAUL C. LIGHT, THE GOVERNMENT INDUSTRIAL
COMPLEX 8-14 (2019) (referring to the “government-industrial complex”); JOHN DIIULIO, BRING BACK THE
BUREAUCRATS 6 (2014) (noting the “Leviathan by proxy”); JON D. MICHAELS, CONSTITUTIONAL COUP 111 (2017)
(describing a “Constitutional coup”); CHIARA CORDELLI, THE PRIVATIZED STATE 7-13 (2020) (discussing the
“regression to the state of nature”).

7

that nearly half of the contract specialists overseeing contracts at one Department of Defense
agency were themselves contractors.33 Examples like this naturally raise questions about whether
appropriate safeguards are in place to ensure work is done well and to prevent problems like selfdealing. Scholars have characterized the mechanisms to ensure that the government maintains
sufficient capacity as weak.34
Second, concerns about accountability have several dimensions.35 On a broad level, it is often
quite difficult for those outside the agency—be they members of Congress, scholars, the media,
or the public—to observe which government functions are being performed by a contractor
versus a government employee.36 Much of this disconnect owes to the fact that many federal
transparency laws do not apply to contractors in the same way they do to federal agencies and
their employees. One scholar explains, there are a number of “statutes mandating transparency at
an agency and individual level, including the Freedom of Information Act, the Government in
the Sunshine Act, the Federal Advisory Committee Act, and a host of financial and political
disclosure requirements imposed on anyone hoping to work for the federal government. None of
these rules apply to contractors.”37 Even when limited insight into what contractors do is
possible, the highly technical nature of some agency and therefore contractor work and the use of
subcontractors (which further extends the accountability chain) can also impede the ability of
those outside the agency to hold contractors to account. Relatedly, the government’s decision
about whether to outsource a particular function tends to be reviewed only in particular contexts,
such as contract disputes or the decision to privatize a function and not in the context of a
challenge under the Administrative Procedure Act (APA).38
U.S. GOV’T ACCOUNTABILITY OFFICE, GAO-08-360, DEFENSE CONTRACTING: ARMY CASE STUDY DELINEATES
CONCERNS WITH USE OF CONTRACTORS AS CONTRACT SPECIALISTS (2008).
34
Fukuyama discusses the weak enforcement of protection provisions associated with private sector competitions
managed under OMB Circular A-76, while Verkuil describes the feeble protections associated with the inherently
governmental function test, a standard we describe later in this report. Francis Fukuyama, The Intrinsic Functions of
Government 108, in PUBLIC SERVICE AND GOOD GOVERNANCE FOR THE TWENTY-FIRST CENTURY (James L. Perry,
ed., 2020); PAUL R. VERKUIL, OUTSOURCING SOVEREIGNTY 127-9 (2007).
35
By accountability we mean the ability of government to hold contractors responsible for the actions taken (or not
taken) during the course of a contractual relationship.
36
In her work examining the role of contractors in the defense arena, Minow acknowledges these oversight
challenges: “the lack of transparency and disclosure makes it difficult for the public—and for me—to know what is
going on with the military's use of private contractors. The private firms disclose some of their activities in
promoting their services, but they can resist media and Congressional inquiries, claiming that they need to do so to
protect proprietary information.” Martha Minow, Outsourcing Power: How Privatizing Military Efforts Challenges
Accountability, Professionalism, Democracy, 46 B.C. L. REV. 989, 999 (2005).
37
Francis Fukuyama, The Intrinsic Functions of Government 112, in PUBLIC SERVICE AND GOOD GOVERNANCE FOR
THE TWENTY-FIRST CENTURY (James L. Perry, ed., 2020). We understand this to refer to whether contractors have
obligations to act in accordance with these laws, e.g., FACA, when performing functions for agencies. There is a
separate issue of whether the government’s obligations under FACA are triggered when the government seeks the
advice of contractors or consultants. See Pebble Ltd. P’ship v. EPA, No. 3:14-cv-0171, slip op. (D. Alaska June 4,
2015) (providing examples of different holdings on this issue). Fukuyama further muses that “the lack of
transparency can then affect the legitimacy of government as a whole, as citizens are not sure who it is that is
responsible for delivering services, or whom to hold accountable when things go wrong.” Id. at 112. We discuss the
legal considerations associated with contractors and federal recordkeeping and disclosure laws in Section II(D) of
this report.
38
E.g., Just in Time Staffing v. United States, 143 Fed. Cl. 405 (Fed. Cl. 2019) (discussing relevance of inherently
governmental functions in a contract dispute); PAUL R. VERKUIL, OUTSOURCING SOVEREIGNTY 195 (2007) (“Since
33

8

Agencies may also struggle to effectively oversee the contractors that work for them. The use of
overly rigid contracting vehicles may lock agencies into suboptimal contract relationships. For
instance, an agency may be aware that a vendor is underperforming in some way, but be unable
to remedy the situation due to legal and procedural constraints. One scholar notes that a growing
tendency for agencies to use “omnibus” contracts, which bundle several services under one
umbrella, can exacerbate accountability problems as “they create a series of secondary
relationships between contractors and subcontractors that may displace government as a voice in
directing the production of goods and services.”39 Problems like these make it difficult for
agencies to exercise appropriate oversight, presenting another obstacle for contractor
accountability.
Third, ethics are a concern for anyone working in or for the government given the importance of
the public trust. However, the safeguards in place for government employees and contractors are
different. While government employees are subject to a host of ethics statutes and regulations
that relate to their positions, including disclosures of financial holdings and limitations on
political activities, contractors face many fewer limitations. Indeed, as one scholar notes, most
ethics restrictions “do not apply to government contractor personnel, even those employees
working side by side with and performing the same functions as government employees. As a
result, government contractor personnel may routinely be giving advice that is tainted by
conflicts of interest.”40
At their core, questions about contractor ethics center on employee allegiance. Federal
employees swear an oath to uphold the Constitution, report to others who have also sworn that
same oath, and are held to a wide array of ethical requirements to discourage self-interested
action in the course of employment.41 Contractors, in contrast, serve three sets of interests: their
contractual obligations to the government, the interests of their private sector employers, which
may have organizational goals that are different from or even conflict with those of the federal
1996, bid protests have been considered in the U.S. Court of Federal Claims. Judicial review of decisions whether to
treat a government function as inherent or not can be obtained by granting plaintiffs (government officials who lost
competitions and their unions) standing to challenge results under existing law.”); Nat’l Air Traffic Controllers
Ass’n v. Sec’y of the Dep’t Transp., 654 F.3d 654 (6th Cir. 2011) (discussing relevance of inherently governmental
functions to a privatization dispute). See also Kimberly N. Brown, We the People, Constitutional Accountability,
and Outsourcing Government, 88 IND. L.J. 1347, 1363 (2013). Agencies should also be aware that they may face
scrutiny for how they use contractors under the Federal Advisory Committee Act. E.g., Pebble Ltd. P’ship v. EPA,
No. 3:14-cv-0171, slip op. (D. Alaska June 4, 2015) (noting the possibility that FACA could apply to contractors
and denying, in relevant part, the government’s motion to dismiss).
39
PAUL C. LIGHT, THE TRUE SIZE OF GOVERNMENT 185 (1999).
40
Kathleen Clark, Report to the Administrative Conference of the United States, Ethics for an Outsourced
Government 23 (Mar. 10, 2011), https://www.acus.gov/report/kathleen-clarks-final-project-report. This report
informed an ACUS recommendation on the topic of contractor ethics. Admin. Conf. of the U.S., Recommendation
2011-3, Compliance Standards for Government Contractor Employees—Personal Conflicts of Interest and Use of
Certain Non-Public Information, 76 Fed. Reg. 48789, 48792 (Aug. 9, 2011). See also Kathleen Clark, Ethics,
Employees and Contractors: Financial Conflicts of Interest In and Out of Government, 62 ALA. L. REV. 961 (2011).
See also Daniel Guttman, Public Purpose and Private Service: The Twentieth Century Culture of Contracting Out
and the Evolving Law of Diffused Sovereignty, 52 ADMIN. L. REV. 859, 898-900 (2000) (documenting how thin
conflicts-of-interest provisions can be in practice).
41
We discuss contractor ethics requirements in the legal considerations section that follows.

9

agency, and their own individual interests. Contractors do not swear an oath42 and while some
are covered by ethical requirements arising from individual agency regulations,43 specific
contract terms, or due to their own companies’ policies, the result is uneven application of these
expectations.44

D.

Legal considerations

The APA is considered the “backbone for the rulemaking process”45 as it lays out the basic steps
that agencies must follow when promulgating new rules. The APA’s rulemaking language
speaks to what an agency must do in a procedural sense46 but it is not especially prescriptive with
respect to the details of how an agency must fulfill these basic requirements. For example, while
the APA requires that upon receiving comments on a proposed rule “the agency shall incorporate
in the rules adopted a concise general statement of their basis and purpose,”47 it does not indicate
how the agency might go about writing the concise general statement, who has that
responsibility, or whether a contractor might reasonably assist the agency in performing such a
function.48
It follows that, although it constitutes the core of the rulemaking process, the APA is not an
especially helpful guide to understand the legal considerations relevant to the question of
contractors in the rulemaking process.49 Instead, we consider three legal dimensions of particular
Verkuil explains the power of the oath: “the oath is meant to divide the public and private sectors… when freely
entered into, the oath can inspire those who take it and become a source of professional pride.” PAUL R. VERKUIL,
VALUING BUREAUCRACY: THE CASE FOR PROFESSIONAL GOVERNMENT 97 (2017).
43
Some agencies have adopted customized procurement regulations addressing potential conflict of interest issues
relating to ethics. For example, the Environmental Protection Agency limits the ability of certain Superfund
contractors to simultaneously provide rulemaking support. See 48 CFR § 1552.209-74(d) (stipulating that “The
Contractor and any subcontractors, during the life of this contract, shall be ineligible to enter into an EPA contract or
subcontract, which support’s EPA performance of Superfund Headquarters policy work including support for the
analysis and development of regulations, policies, or guidance that govern, affect, or relate to the conduct of
response action activities, unless otherwise authorized by the Contracting Officer” (emphasis added)).
44
Kathleen Clark, Report to the Administrative Conference of the United States, Ethics for an Outsourced
Government 28-30 (Mar. 10, 2011), https://www.acus.gov/report/kathleen-clarks-final-project-report (mapping
applicability of ethics restrictions); Admin. Conf. of the U.S., Recommendation 2011-3, Compliance Standards for
Government Contractor Employees—Personal Conflicts of Interest and Use of Certain Non-Public Information, 76
Fed. Reg. 48789, 48792 (Aug. 9, 2011).
45
RACHEL A. POTTER, BENDING THE RULES 28 (2019).
46
5 U.S.C. § 553 et seq. (2020).
47
5 U.S.C. § 553(c) (2020).
48
Scholars have considered ways that the APA could be used to help ameliorate problems caused by the status quo.
E.g., Jody Freeman, Extending Public Law Norms through Privatization, 116 HARV. L. REV. 1285, 1315 (2003)
(suggesting that Congress could amend the APA to subject contracts to its requirements); Alfred C. Aman,
Privatization and Democracy: Resources in Administrative Law, in GOVERNMENT BY CONTRACT 284 (Jody
Freeman and Martha Minow eds., 2009) (suggesting that the public should have an opportunity to comment on
proposed contracts, like they do for proposed rules). One scholar responded that this was using a “nuclear weapon to
kill a gnat.” Steven J. Kelman, Achieving Contracting Goals and Recognizing Public Law Concerns: A Contracting
Management Perspective, in GOVERNMENT BY CONTRACT 187 (Jody Freeman and Martha Minow eds., 2009).
49
Along similar lines, scholars have raised potential constitutional issues triggered by expansive use of contractors
in agency policymaking, but these concerns have yet to find traction in the courts. See, e.g., Gillian E. Metzger,
Privatization as Delegation, 103 COLUM. L. REV. 1367 (2003) (noting the inability of the state action doctrine to
42

10

relevance: federal procurement law and policy (with particular emphasis on the concept of an
“inherently governmental function”), ethics laws, and federal recordkeeping and disclosure
requirements.

1.

Federal procurement law and policy

A complete description of federal procurement law and policy—that is, the web of statutes,
regulations, guidance, and judicial opinions that constitute the legal environment in which
federal contracting takes place—is beyond the scope of this report. However, some
understanding of these policies and how they get made is helpful to understanding aspects of this
report and its recommendations.
The Federal Acquisition Regulation (FAR) “is the primary regulation for use by all executive
agencies in their acquisition of supplies and services with appropriated funds.”50 The Department
of Defense (DOD), the General Services Administration (GSA), and the National Aeronautics
and Space Administration (NASA) jointly issue the FAR under the authority of Title 41 of the
U.S. Code.51 Agencies may also implement or supplement the FAR with their own regulations,
as needed.52 The vision for the FAR and the agency regulations is “to deliver on a timely basis
the best value product or service to the customer, while maintaining the public’s trust and
fulfilling public policy objectives.”53 The Office of Federal Procurement Policy (OFPP), in the
OMB, is authorized by statute to provide “overall direction” for government-wide procurement
activities.54 Together, DOD, GSA, NASA, and OFPP comprise the FAR Council, which
manages the FAR.55
The FAR includes hundreds of provisions including those on improper business practices and
personal conflicts of interest;56 classified information;57 proper public notice of contracting

address constitutional concerns with privatization and advocating, instead, for such arrangements to be analyzed as
private delegations subject to extra scrutiny); Gillian E. Metzger, The Constitutional Duty to Supervise, 124 YALE
L.J. 1836, 1913-15 (2015) (explaining how courts could oversee the executive’s duty to supervise privatized
arrangements); JON D. MICHAELS, CONSTITUTIONAL COUP 119, 126-27 (2017) (arguing that contractors are a threat
to, among other things, the “administrative separation of powers” when retained by political appointees and
therefore more compliant with political direction than civil servants); Paul R. Verkuil, Outsourcing and the Duty to
Govern, in GOVERNMENT BY CONTRACT 314 (Jody Freeman and Martha Minow eds., 2009) (discussing limitations
on delegations to contractors as a matter of the Appointments Clause); Jack M. Beermann, Privatization and
Political Accountability, 28 FORDHAM URB. L.J. 1507, 1511-19 (2001) (considering how the Appointments Clause
and the Tenth Amendment might apply to certain privatization efforts).
50
FAR Foreword (2021), https://www.acquisition.gov/far/forwarda.
51
FAR 1.103 (2021); FAR 1.101 (2021), Title 41 U.S.C.
52
As explained in the U.S. Department of Labor Acquisition Regulation, “The purpose of the DOLAR is to
implement the FAR, and to supplement the FAR when coverage is needed for subject matter not covered in the
FAR.” DOLAR 2901.101(b). A list of agency-specific regulations is available at
https://www.acquisition.gov/content/regulations.
53
FAR 1.102 (2021).
54
Office of Federal Procurement Policy Act § 6, 41 U.S.C. § 1121 (2019).
55
41 U.S.C. § 421(f) (2019)
56
FAR Part 3 (2021).
57
FAR 4.4 (2021).

11

actions;58 competition requirements;59 contractor qualifications, including debarment and
suspension;60 types of contracting vehicles;61 opportunities for small businesses;62 applicability
of labor laws to acquisitions;63 environmental provisions;64 privacy and disclosure;65 foreign
acquisition;66 intellectual property;67 bonds, insurance, taxes, accounting, and finance;68 bid
protests;69 and much more. As of FY 2019, the FAR was almost 2,000 pages long. Apart from
the FAR, OFPP occasionally issues policy letters and other materials with guidance, some of
which gets added to Circular A-76, which “establishes Federal policy regarding the performance
of commercial activities.”70
There has long been a notion in procurement law that certain functions are reserved to the
government and therefore inappropriate for contractors.71 This principle finds its roots in
Supreme Court decisions in which the Court found the boundary lines of what Congress could
delegate to private industry.72 The first mention of “inherently governmental” functions in
federal procurement policy was in the 1979 revision of Circular A-76, which explained that its
various provisions did not apply to such functions because they must be kept in-house.73
Later revisions of Circular A-76 explained that “[c]ertain functions are inherently Governmental
in nature, being so intimately related to the public interest as to mandate performance only by
Federal employees. These functions are not in competition with the commercial sector.
Therefore, these functions shall be performed by Government employees.”74 While this line is
readily distinguishable on a conceptual level, practicable distinctions that apply to day-to-day
practice in government have been elusive. The principle does not, for example, expressly
reference rulemaking or other specific types of government action.

58

FAR Part 5 (2021).
FAR Part 6 (2021).
60
FAR Part 9 (2021).
61
FAR Part 16 (2021).
62
FAR Part 19 (2021).
63
FAR Part 22 (2021).
64
FAR Part 23 (2021).
65
FAR Part 24 (2021)
66
FAR Part 25 (2021).
67
FAR Part 27 (2021)
68
FAR Parts 28-32 (2021).
69
FAR Part 33 (2021).
70
OFFICE OF MANAGEMENT AND BUDGET, CIRCULAR A-76 (Aug. 4, 1983 rev. 1999),
https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A76/a076.pdf.
71
The exact articulation of this policy has gone through many iterations issued in legislation, the FAR, and in OFPP
guidance. Thomas J. Laubacher, Simplifying Inherently Governmental Functions: Creating a Principled Approach
from its Ad Hoc Beginnings, 46 PUB. CONT. L.J. 791, 793-94 (2017).
72
See, e.g., A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935); Carter v. Carter Coal Co., 298
U.S. 238 (1936).
73
OFFICE OF MANAGEMENT AND BUDGET, CIRCULAR A-76, 44 Fed. Reg. 20,556 (Apr. 5, 1979). See also Thomas J.
Laubacher, Simplifying Inherently Governmental Functions: Creating a Principled Approach from its Ad Hoc
Beginnings, 46 PUB. CONT. L.J. 791, 801-02 (2017).
74
OFFICE OF MANAGEMENT AND BUDGET, CIRCULAR A-76 p.1-2 (Aug. 4, 1983 rev. 1999),
https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A76/a076.pdf.
59

12

The Federal Activities Inventories Reform Act of 1998 defines inherently governmental
functions to include “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.”75 It goes
on to say that such functions involve “the interpretation and execution of the laws of the United
States so as . . . to bind the United States to take or not take some action by . . . regulation.”76 It
also notes that the definition does not “normally include” information-gathering or provision of
“advice, opinions, recommendations, or ideas” to the government.77 The line that emerges is one
of decision-making.
The FAR further elaborates with a list of 20 examples of functions that are considered to be
inherently governmental (e.g., “direct control of criminal investigations”), and 19 that are not
considered to be inherently governmental (e.g., “[s]ervices in support of acquisition planning”).78
The list includes rulemaking examples as well. The “determination of agency policy, such as
determining the content and application of regulations, among other things” is considered to be
inherently governmental, while a broad range of services associated with “planning activities,”
“analysis, feasibility studies, and strategy options to be used by agency personnel in developing
policy,” and—most directly—the “development of regulations” is not considered to be inherently
governmental.79 Again, the line is between advice-giving and decision-making.
The FAR also notes that there is a set of functions that are not considered to be inherently
governmental functions, but which “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.”80 The FAR does not define this category
of activities.
While the idea that some tasks are inappropriate for contractors has long been clear, the
challenge of finding the line in practice has drawn the attention of lawmakers, practitioners, and
academics.81 In 1985, ACUS issued a recommendation on the use of consultants in the
preparation of “regulatory analysis documents,” which was defined to include various forms of
analysis that agencies were required to prepare as part of their rulemaking activities. The
recommendation states:
75

Federal Activities Inventory Reform Act of 1998 § 5(2), Pub. L. No. 105-270.
Id.
77
Id. The FAR incorporates this definition, and also clarifies that “[t]his definition is a policy determination, not a
legal determination.” FAR 2.101 (2021).
78
Federal Acquisition Regulation; Inherently Governmental Functions, 61 Fed. Reg. 2627, 2628-29 (Jan. 26, 1996)
(establishing FAR 7.503(c)-(d)).
79
Federal Acquisition Regulation; Inherently Governmental Functions, 61 Fed. Reg. 2627, 2628-29 (Jan. 26, 1996)
(establishing FAR 7.503(c)-(d)).
80
FAR 7.503(d) (2021).
81
E.g., U.S. GOV’T ACCOUNTABILITY OFFICE, GAO/GGD-92-11, GOVERNMENT CONTRACTORS: ARE SERVICE
CONTRACTORS PERFORMING INHERENTLY GOVERNMENTAL FUNCTIONS? REPORT TO THE CHAIRMAN, FEDERAL
SERVICE, POST OFFICE AND CIVIL SERVICE SUBCOMMITTEE, COMMITTEE ON GOVERNMENTAL AFFAIRS, U.S. SENATE
(Nov. 1991); Steven L. Schooner, Contractor Atrocities at Abu Ghraib: Compromised Accountability in a
Streamlined, Outsourced Government, 16 STAN. L. & POL’Y REV. 549, 555 (2005); Martha Minow, Outsourcing
Power: How Privatizing Military Efforts Challenges Accountability, Professionalism, Democracy, 46 B.C. L. REV.
989, 1015 (2005).
76

13

Agencies can benefit from entering into consulting contracts with
qualified experts to aid in gathering and analyzing information for
regulatory analysis documents. However, agency personnel should
retain the ultimate responsibility for the contents of regulatory
analysis documents and guard against consultant conflict of interest.
To these ends, agencies should ensure that: (1) Agency employees,
not consultants, draft regulatory analysis documents, and (2) when
a regulatory analysis document relies upon consultant reports, the
reports are placed in the public file of the rulemaking proceeding,
even if the Freedom of Information Act’s exemption for intraagency memoranda, 5 U.S.C. 552(b)(5) might apply to portions of
the reports.82
OFPP has taken several steps over the last several decades to more fully explain how agencies
should determine whether an activity is inherently governmental.83 In 1991, OFPP issued a
proposed policy letter to further define the term “because executive agencies, Members of
Congress, and the General Accounting Office have from time to time either requested guidance
regarding, or inquired about, the propriety of awarding contracts for certain types of functions or
administering contracts in certain ways.”84 OFPP acknowledged that “[w]hile it is clear that
certain functions, such as the command of combat troops, may not be contracted, others, such as
building maintenance or food services, may be. There is, however, some difficulty in
determining whether services that fall between these extremes may be acquired by contract.”85
As we discuss below, rulemaking includes many activities that fall between these extremes.
Rulemaking tasks, like many government activities that involve internal administrative
processes, can readily be distinguished from the use of contractors to command combat troops.
Contractor involvement in analytical tasks, for example, is different, because “[t]he situation
considered here is more subtle. The contractor is not asked to perform government functions
directly (whether ‘inherent’ or not), but for help in making decisions.”86 In his report for ACUS
in 1985, McGarity considered the risk of “[p]olicymaking by [c]onsultants.” He explained that
consultants are sometimes asked to “exercise professional judgment in interpreting facts” and to
“be responsible for making the assumptions and drawing the inferences that underlie the
predictions that inform regulatory analysis,” examples of what he describes as “subtle
policymaking.”87 This raises questions: “If the contractor does all the work to prepare a decision,

82

Admin. Conf. of the U.S., Recommendation 85-2, Agency Procedures for Performing Regulatory Analysis of
Rules, 50 Fed. Reg. 28,364 (July 12, 1985).
83
Thomas J. Laubacher, Simplifying Inherently Governmental Functions: Creating a Principled Approach from its
Ad Hoc Beginnings, 46 PUB. CONT. L.J. 791, 793-94 (2017).
84
OFFICE OF FEDERAL PROCUREMENT POLICY, INHERENTLY GOVERNMENTAL FUNCTIONS POLICY LETTER, 56 Fed.
Reg. 65279, 65280 (Dec. 16, 1991).
85
OFFICE OF FEDERAL PROCUREMENT POLICY, INHERENTLY GOVERNMENTAL FUNCTIONS POLICY LETTER, 56 Fed.
Reg. 65279, 65280 (Dec. 16, 1991).
86
PAUL R. VERKUIL, OUTSOURCING SOVEREIGNTY 43 (2007).
87
Thomas O. McGarity, Report to the Administrative Conference of the United States, The Role of Regulatory
Analysis in Regulatory Decisionmaking 268-69 (May 1985), https://www.acus.gov/recommendation/agencyprocedures-performing-regulatory-analysis-rules.

14

has the decision line itself been crossed? When an official rubber-stamps a contractor’s
recommendation, who is performing the government function?”88
In a final policy letter issued in 1992, OFPP acknowledged that prior guidance to agencies lacked
detail and that “sometimes Federal agencies have permitted contractors to perform functions that
should be performed by Government personnel.”89 OFPP also accepted that the challenges would
endure.90 The ongoing ambiguity has led to criticism. In the introduction to their volume
Government by Contract, Jody Freeman and Martha Minow note that
[m]any critics are also concerned about the instability of the
‘inherently governmental’ designation and its failure in practice to
rule functions in or out of eligibility for contracting. If the
government may contract with private companies to provide
military, national security, and criminal justice functions, why not
contract out criminal prosecutions and executions or the Federal
Reserve Board’s regulation and supervision of national monetary
and financial systems?91
In 1993, Congress enacted the Government Performance and Results Act (GPRA), a law which
required agencies to develop a variety of strategic plans and accountability metrics. However, in
delegating this work to agencies, Congress carved out the “drafting” of certain management
tasks, including strategic plans, performance plans, and performance reports as inherently
governmental work that was to be reserved for performance by federal employees.92
In 2008, Congress required OMB, in consultation with federal stakeholders, to review and revise
the definition of “inherently governmental function.”93 In 2009, President Obama explained that
the line between inherently governmental activities that should not
be outsourced and commercial activities that may be subject to
private sector competition has been blurred and inadequately
defined. As a result, contractors may be performing inherently
governmental functions. Agencies and departments must operate

88

PAUL R. VERKUIL, OUTSOURCING SOVEREIGNTY 43 (2007).
OFFICE OF FEDERAL PROCUREMENT POLICY, POLICY LETTER ON INHERENTLY GOVERNMENTAL FUNCTIONS, 57
Fed. Reg. 45096, 45096 (Sept. 30, 1992).
90
Id. at 45100 (noting that “[a]dditional problems in this area will probably arise in the future” but that its 1992
guidance was “much more detailed than anything that was available to agencies in the past”). Subsequently,
Congress enacted the Federal Activities Inventory Reform Act of 1998 (FAIR Act). Federal Activities Inventory
Reform Act of 1998, Pub. L. No. 105-270 (Oct. 19, 1998), which required agencies to prepare annual lists of agency
activities that are not considered to be inherently governmental. FAIR Act § 2.
91
Jody Freeman & Martha Minow, Reframing the Outsourcing Debates, in GOVERNMENT BY CONTRACT:
OUTSOURCING AND AMERICAN DEMOCRACY 13-14 (Jody Freeman & Martha Minow eds. 2009).
92
Government Performance and Results Act, § 4, Pub. L. No. 103-62 (Aug. 3, 1993). An analogous provision
applies to the U.S. Postal Service. Id. § 7.
93
Duncan Hunter National Defense Authorization Act for Fiscal Year 2009, Pub. L. No. 110-417, § 321, 122 Stat.
4534, 4411 (Oct. 14, 2008).
89

15

under clear rules prescribing when outsourcing is and is not
appropriate.94
He directed OMB to “clarify when governmental outsourcing for services is and is not
appropriate,” consistent with the 2008 legislation.95
Following a proposed policy letter in 2010, OFPP issued a final policy letter in 2011.96 Among
other changes, the policy letter created a new category for “functions closely associated with the
performance of inherently governmental functions” in light of “the risk that performance may
impinge on Federal officials’ performance of an inherently governmental function.”97 These
activities “may be performed by either Federal employees or contractors.”98 The final policy
letter applies these categories to four functions: budget development, policy and regulatory
development, human resources management, and acquisition planning, execution, and
management.
As shown in Table 1, for “policy and regulatory development” functions, the final policy letter
explains that “[t]he determination of the content and application of policies and regulations” is
inherently governmental, while “[s]upport for policy development, such as drafting policy
documents and regulations, performing analyses, feasibility studies, and strategy options” is
closely associated with inherently governmental functions.99

94

Presidential Memorandum, Government Contracting, 74 Fed. Reg. 9755, 9755-9756 (Mar. 4, 2009).
Presidential Memorandum, Government Contracting, 74 Fed. Reg. 9755, 9756 (Mar. 4, 2009).
96
OFFICE OF FEDERAL PROCUREMENT POLICY, PROPOSED POLICY LETTER ON WORK RESERVED FOR PERFORMANCE
BY FEDERAL GOVERNMENT EMPLOYEES, 75 Fed. Reg. 16188 (Mar. 31, 2010); OFFICE OF FEDERAL PROCUREMENT
POLICY, FINAL POLICY LETTER 11-01 ON PERFORMANCE OF INHERENTLY GOVERNMENTAL FUNCTIONS, 76 Fed. Reg.
56227 (Sept. 12, 2011).
97
OFFICE OF FEDERAL PROCUREMENT POLICY, FINAL POLICY LETTER 11-01 ON PERFORMANCE OF INHERENTLY
GOVERNMENTAL FUNCTIONS, 76 Fed. Reg. 56227, 56238, 56241 (Sept. 12, 2011).
98
Id. at 56241.
99
Id. at 56241.
95

16

Table 1. Final Policy Letter: Functions100
Function

Inherently Governmental

Budget
development

The determination of budget policy,
guidance, and strategy, and the
determination of Federal program
priorities or budget requests.

Support for budget preparation, such as
workforce modeling, fact finding,
efficiency studies, and should-cost
analyses.

Policy and
regulatory
development

The determination of the content and
application of policies and regulations.

Support for policy development, such as
drafting policy documents and
regulations, performing analyses,
feasibility studies, and strategy options.

Human
resources
management

The selection of individuals for Federal
Government
employment, including the interviewing of
individuals
for employment, and the direction and
control of Federal
employees.

Support for human resources
management, such as
screening resumes in accordance with
agency guidelines.

Acquisition
planning,
execution, and
management

During acquisition planning:
(1) Determination of requirements,
(2) approval of a contract strategy,
statement of work, incentive plans, and
evaluation criteria,
(3) independent determination of
estimated cost based on input from either
in-house or contractor sources or both.

Support acquisition planning by:
(1) Conducting market research,
(2) developing inputs for government
cost estimates,
and
(3) drafting statements of work and
other preaward documents.

During source selection:
(1) Determination of price reasonableness
of offers,
(2) participation as a voting member on a
source selection board, and
(3) awarding of contracts.

During contract management:
(1) Ordering of any changes required in
contract performance or contract qualities,
(2) determination of whether costs are
reasonable, allocable, and allowable,
(3) participation as a voting member on
performance evaluation boards,
(4) approval of award fee determinations
or past performance evaluations, and
(5) termination of contracts.
100

Id. at 56234 (emphases added).

17

Closely Associated

Support source selection by:
(1) Preparing a technical evaluation and
associated documentation;
(2) participating as a technical advisor to
a source selection board or as a
nonvoting member of a source
evaluation board; and
(3) drafting the price negotiation
memorandum.
Support contract management by:
(1) Assisting in the evaluation of a
contractor’s performance (e.g., by
collecting information, performing an
analysis, or making a recommendation
for a proposed performance rating); and
(2) providing support for assessing
contract claims and preparing
termination settlement documents.

Intriguingly, the final policy letter notes that mere drafting of “official agency proposals for
legislation, Congressional testimony, responses to Congressional correspondence, or responses to
audit reports from an inspector general, the Government Accountability Office, or other Federal
audit entity” is inherently governmental.101 Although OFPP did not explain its reasoning for
placing legislative correspondence and other legislative drafting activities on the other side of the
inherently governmental line, it may be a reflection of what others have noted previously, which
is that “[a]nalysis and drafting are surely significant if not inherently governmental functions.”102
At least in the final policy letter, legislative drafting was over the line, whereas regulatory
drafting was not.
Under the final policy letter, when contractors are given tasks that are closely associated with
inherently governmental functions, “the Federal official’s review and approval must be
meaningful; that is to say, it cannot be a ‘rubber stamp’ where the government is completely
dependent on the contractor’s superior knowledge and is unable to independently evaluate the
merits of the contractor’s draft or to consider alternatives to that draft.”103 To this end, the final
policy letter includes a checklist designed for “special management attention to contractors’
activities to guard against their expansion into inherently governmental functions.”104 The
checklist is shown in Figure 1.

101

Id. at 56241.
PAUL R. VERKUIL, OUTSOURCING SOVEREIGNTY 111 (2007). See also Admin. Conf. of the U.S.,
Recommendation 85-2, Agency Procedures for Performing Regulatory Analysis of Rules, 50 Fed. Reg. 28,364 (July
12, 1985).
103
Id. at 56231.
104
Id. at 56232.
102

18

Figure 1. Checklist for Closely Associated Functions105
If the agency determines that contractor performance of a function closely associated with an inherently
governmental function is appropriate, the agency shall—
(1) limit or guide a contractor’s exercise of discretion and retain control of government operations by
both—
(i) establishing in the contract specified ranges of acceptable decisions and/or conduct; and
(ii) establishing in advance a process for subjecting the contractor’s discretionary decisions and
conduct to meaningful oversight and, whenever necessary, final approval by an agency official;
(2) assign a sufficient number of qualified government employees, with expertise to administer or
perform the work, to give special management attention to the contractor’s activities, in particular, to
ensure that they do not expand to include inherently governmental functions, are not performed in ways
not contemplated by the contract so as to become inherently governmental, do not undermine the
integrity of the government’s decisionmaking process as provided by subsections 5–1(a)(1)(ii)(b) and
(c), and do not interfere with Federal employees’ performance of the closely-associated inherently
governmental functions (see subsection 5–2(b)(2) for guidance on steps to take where a determination is
made that the contract is being used to fulfill responsibilities that are inherently governmental);
(3) ensure that the level of oversight and management that would be needed to retain government
control of contractor performance and preclude the transfer of inherently governmental responsibilities
to the contractor would not result in unauthorized personal services as provided by FAR 37.104;
(4) ensure that a reasonable identification of contractors and contractor work products is made
whenever there is a risk that Congress, the public, or other persons outside of the government might
confuse contractor personnel or work products with government officials or work products,
respectively; and
(5) take appropriate steps to avoid or mitigate conflicts of interest, such as by conducting pre-award
conflict of interest reviews, to ensure contract performance is in accordance with objective standards
and contract specifications, and developing a conflict of interest mitigation plan, if needed, that
identifies the conflict and specific actions that will be taken to lessen the potential for conflict of interest
or reduce the risk involved with a potential conflict of interest.

In 2011, Congress enacted the GPRA Modernization Act, which added the “drafting” of
performance updates, as well as the “development” of agency priority goals, to the list of
inherently governmental functions.106

2.

Ethics laws

In addition to federal procurement law and policy, several other statutes and policies intersect
with government contracts for rulemaking activities. Chief among them are federal ethics laws.
ACUS has previously explored the intersection of ethics rules and government contracting. In a
2011 project, Kathleen Clark produced a detailed report that surveyed the range of ethical
restrictions on federal employees and compared them to contractor duties, finding several
105
106

Id. at 56241-42.
GPRA Modernization Act of 2010, § 5, Pub. L. No. 111-352 (Jan. 4, 2011).

19

gaps.107 She explained that the “extensive and complex array of ethics statutes and regulations
restrict current and former government employees’ activities and financial interests . . . mostly
do not apply to contractor personnel.”108 She noted that while a patchwork of agency-specific
ethics rules apply to contractors in certain situations, “[t]here is no comprehensive regulation of
government contractor ethics, even of those individuals who are working in government offices,
side-by-side with government employees, providing services and exercising substantial
discretion.”109
Clark’s extensive work built on prior legislation and reports.110 In 2008, Congress directed OFPP
to issue a policy to address personal conflicts of interest for contractors involved in the
acquisition process.111 This narrow policy was issued by OFPP in 2009.112 More sweepingly, the
Acquisition Advisory Panel—which was established by Congress to review federal procurement
statutes, regulations, and policy113—wrote about the potential for two main types of conflicts of
interest associated with government contracting.114 The first type of conflict was organizational
conflicts of interest presented by the use of contractors in functions related to the procurement
process, in which the contractor presumably has ongoing business interests.115 An example of an
organizational conflict of interest is a situation where a contractor is retained to help develop a
contract that will be outsourced at a future point and this preliminary work gives them a
competitive advantage in competing for future contracts with that agency.116
The second type of conflict was personal conflicts of interest, which involve the applicability of
ethics rules to contractor employees.117 Government employees are subject to a host of ethical
rules intended to ensure that public interest is not eclipsed by the private interests of decision107

Kathleen Clark, Report to the Administrative Conference of the United States, Ethics for an Outsourced
Government 28-30, 41-49 (Mar. 10, 2011), https://www.acus.gov/report/kathleen-clarks-final-project-report
(mapping applicability of ethics restrictions).
108
Id. at 4.
109
Id.
110
See, e.g., U.S. GOV’T ACCOUNTABILITY OFFICE, GAO-08-169, DEFENSE CONTRACTING: ADDITIONAL PERSONAL
CONFLICT OF INTEREST SAFEGUARDS NEEDED FOR CERTAIN DOD CONTRACTOR EMPLOYEES (2008); REPORT OF THE
ACQUISITION ADVISORY PANEL TO THE OFFICE OF FEDERAL PROCUREMENT POLICY AND THE UNITED STATES
CONGRESS (2007), https://www.acquisition.gov/sites/default/files/page_file_uploads/ACQUISITION-ADVISORYPANEL-2007-Report_final.pdf. See also Thomas O. McGarity, Report to the Administrative Conference of the
United States, The Role of Regulatory Analysis in Regulatory Decisionmaking 269-78 (May 1985),
https://www.acus.gov/recommendation/agency-procedures-performing-regulatory-analysis-rules.
111
Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 § 841(a), Pub. L. No. 110-417 (Oct. 14,
2008).
112
Federal Acquisition Regulation; Preventing Personal Conflicts of Interest for Contractor Employees Performing
Acquisition Functions 76 Fed. Reg. 68017 (Nov. 2, 2011).
113
Services Acquisition Reform Act of 2003 § 1423 (part of National Defense Authorization Act for Fiscal Year FY
2004, P.L. 108-136, 117 Stat. 1392 (Nov. 24, 2003)).
114
REPORT OF THE ACQUISITION ADVISORY PANEL TO THE OFFICE OF FEDERAL PROCUREMENT POLICY AND THE
UNITED STATES CONGRESS 24-25, 391-419 (2007),
https://www.acquisition.gov/sites/default/files/page_file_uploads/ACQUISITION-ADVISORY-PANEL-2007Report_final.pdf.
115
Id. at 405-07.
116
See id. at 406. The Panel Report also mentioned concerns about confidentiality associated with these practices.
Id. at 392.
117
Id. at 407-14.

20

makers.118 In practice, this means required ethics training and disclosures of certain activities and
interests, as well as review of those disclosures, and investigations of alleged violations.119 Both
civil and criminal penalties are available for violations.120 The legal landscape for contractors is
different, and the Panel explained that “contractor personnel are not subject to the foregoing
comprehensive set of statutory and regulatory ethics rules, even though in some cases they are
working alongside government employees in the federal workplace and may appear to the public
to be government employees.”121 OFPP also previously acknowledged this issue in 1991, stating
that “agencies have occasionally relied on contractors so as to raise questions about . . . the
degree to which Government policy is created by private persons. Private persons may have
interests that are not in harmony with those of the public, and may be beyond the reach of
management controls otherwise applicable to public employees.”122
The ACUS recommendation that followed Clark’s report, 2011-3, noted the “substantial
disparity between the ethics rules regulating government employees and those applicable to
government contractor employees.”123 The recommendation articulated a definition of “high
risk” contract activities based on the susceptibility of the activities to be endangered by either
personal or organizational conflicts.124 This included, among other things, “[d]eveloping agency
policy or regulations,” tasks for which contractors “will receive access to information relating to
an agency’s deliberative processes, management operations, or staff that is not generally released
to the public” as well as “have access to certain business-related information, including trade
secrets, non-public financial information, or other non-public information that could be exploited
for financial gain.”125 The recommendation called on the FAR Council to develop model
language that agencies could use to address ethics issues for contracts involving high-risk
activities.126
With this recommendation, ACUS joined the Acquisition Advisory Panel and the GAO in
recommending additional steps to create new requirements to deal with both personal and
organizational conflicts of interest.127 The Administrative Law and Regulatory Practice Section
See 5 CFR 2635.101(a) (describing the duty “to place loyalty to the Constitution, laws and ethical principles
above private gain”).
119
Kathleen Clark, Report to the Administrative Conference of the United States, Ethics for an Outsourced
Government 4 (Mar. 10, 2011), https://www.acus.gov/report/kathleen-clarks-final-project-report.
120
REPORT OF THE ACQUISITION ADVISORY PANEL TO THE OFFICE OF FEDERAL PROCUREMENT POLICY AND THE
UNITED STATES CONGRESS 408-09 (2007),
https://www.acquisition.gov/sites/default/files/page_file_uploads/ACQUISITION-ADVISORY-PANEL-2007Report_final.pdf.
121
Id. at 409.
122
OFFICE OF FEDERAL PROCUREMENT POLICY, INHERENTLY GOVERNMENTAL FUNCTIONS POLICY LETTER, 56 Fed.
Reg. 65279, 65280 (Dec. 16, 1991).
123
Admin. Conf. of the U.S., Recommendation 2011-3, Compliance Standards for Government Contractor
Employees—Personal Conflicts of Interest and Use of Certain Non-Public Information, 76 Fed. Reg. 48789, 48792
(Aug. 9, 2011).
124
Id. at 48793-94.
125
Id. at 48794.
126
Id.
127
Kathleen Clark, Report to the Administrative Conference of the United States, Ethics for an Outsourced
Government (Mar. 10, 2011), https://www.acus.gov/report/kathleen-clarks-final-project-report; Admin. Conf. of the
118

21

of the American Bar Association also endorsed the ACUS recommendation.128 In 2014, the FAR
Council proposed a rule extending the “limitations on contractor employee personal conflicts of
interest to apply to the performance of all functions that are closely associated with the
inherently governmental functions.”129 The FAR Council withdrew the proposed rule in 2021,
citing “the passage of time since the proposed rule was issued in 2014, and the fact that section
829 did not require any changes to the FAR.”130

3.

Recordkeeping and disclosure frameworks

Another set of laws relevant to the use of contractors in rulemaking is the statutory requirements
that govern decision-making processes and associated disclosure requirements. For example,
certain governmental records must be retained by the government under the Federal Records
Act,131 and some must be disclosed under Freedom of Information Act.132 In addition, some
agencies are subject to additional process and disclosure requirements under the Government in
the Sunshine Act.133
These laws form a web of provisions that confer a measure of accountability upon government
actions. Contractors, however, are not subject to these various requirements.134 The
U.S., Recommendation 2011-3, Compliance Standards for Government Contractor Employees—Personal Conflicts
of Interest and Use of Certain Non-Public Information, 76 Fed. Reg. 48789 (Aug. 9, 2011);
U.S. GOV’T ACCOUNTABILITY OFFICE, GAO-08-169, ADDITIONAL PERSONAL CONFLICT OF INTEREST SAFEGUARDS
NEEDED FOR CERTAIN DOD CONTRACTOR EMPLOYEES (2008); REPORT OF THE ACQUISITION ADVISORY PANEL TO
THE OFFICE OF FEDERAL PROCUREMENT POLICY AND THE UNITED STATES CONGRESS 25 (2007),
https://www.acquisition.gov/sites/default/files/page_file_uploads/ACQUISITION-ADVISORY-PANEL-2007Report_final.pdf.
128
James W. Conrad, Jr., Report to the House of Delegates, A.B.A. SEC. ADMIN. LAW & REG. PRACTICE (2013),
available at
https://www.acus.gov/sites/default/files/documents/ABA%20Resolution%20110A%20and%20Report.pdf.
129
Federal Acquisition Regulation; Extension of Limitations on Contractor Employee Personal Conflicts of
Interest, Proposed Rule, 79 Fed. Reg. 18503, 18504 (Apr. 2, 2014).
130
Federal Acquisition Regulation; Extension of Limitations on Contractor Employee Personal Conflicts of
Interest, Proposed Rule; withdrawal, 86 Fed. Reg. 14862 (Mar. 19, 2021).
131
Federal Records Act, 44 U.S.C. Chapter 31 (2020).
132
Freedom of Information Act, 5 U.S.C. § 552 (2020). One partial exception to contractors’ exclusion from FOIA
and information disclosure more generally is the so-called “Shelby amendment.” Enacted in 1999, this amendment
required OMB to amend Circular A-110 to say that certain data obtained via a federal “award” is subject to FOIA.
Omnibus Consolidated and Emergency Supplemental Appropriations Act FY 1999, Pub. L. No. 105-277, 112 Stat.
2681, 2681-495 (Oct. 21, 1998) (Executive Office Appropriations Act FY 1999, title III). For rulemaking, this
means that contractor data used to support a regulatory analysis could be subject to potential disclosure if it was
obtained with an award as that term is used in the Shelby amendment and Circular A-110. However, Circular A-110
does not apply to contracts. OFFICE OF MANAGEMENT AND BUDGET, CIRCULAR A-110, SUBPART A (listing
definitions). ERIC A. FISCHER, CONG. RESEARCH SERV., R42983, PUBLIC ACCESS TO DATA FROM FEDERALLY
FUNDED RESEARCH: PROVISIONS IN OMB CIRCULAR A-110 (Mar. 1, 2013).
133
Government in the Sunshine Act, 5 U.S.C. § 552b (2020).
134
Kimberly N. Brown, We the People, Constitutional Accountability, and Outsourcing Government, 88 IND. L.J.
1347, 1362-63 (2013); Jody Freeman, Extending Public Law Norms through Privatization, 116 HARV. L. REV. 1285,
1306 (2003). See also Daniel Guttman, Public Purpose and Private Service: The Twentieth Century Culture of
Contracting Out and the Evolving Law of Diffused Sovereignty, 52 ADMIN. L. REV. 859, 901-05 (2000) (tracing the
development of case law on FOIA inapplicability to contractors). One notable exception to the broader rule that
contractors are not subject to accountability and disclosure requirements is that contractors are prohibited from

22

accountability blindspot in which contractors operate is important because, as scholars have
argued, accountability can suffer when the government turns to contractors.135 For Rosenbloom
and Piotrowsky, “when government activities are privatized or outsourced, democratic norms
embodied in constitutional and administrative law are apt to be lost.”136 These norms are deeply
embedded in the rulemaking process. When agencies rely on contractors for support in
rulemaking functions, activities that would otherwise be covered by these laws shift into the
blindspot.137

III. How are contractors perceived in
rulemaking?
While prior research has expressed concern that contractors are playing an increasing and
problematic role in rulemaking,138 this report offers the first detailed study of whether and how
agencies use contractors in the rulemaking process. As a threshold matter, we find wide variation
in whether agencies use contractors in the rulemaking process. Some respondents had the
perspective that the tasks involved in rulemaking are inherently governmental, and therefore out
of bounds for contractors. Others considered the use of contractors to be one of many ways to get
work done, as needed, amid competing demands on scarce agency resources. A third category of
respondents reported consistent and widespread use of contractors, such that they function much
like regular staff.

A. A wide variety of perceptions
A primary and surprising finding of this report is that views about contractor usage for
rulemaking functions vary greatly. On one end of the spectrum, one participant characterized the
use of contractors in rulemaking to be “highly irregular” outside of clerical or “non-substantive”
making political contributions to parties, committees, or candidates for public office while they are negotiating
contracts or performing contract work; see 52 U.S.C. § 30119(a)(1). The U.S. Court of Appeals for the D.C. Circuit
recently upheld the statutory ban on contractor contributions from individuals and firms; see Wagner v. Federal
Election Commission, 793 F.3d 1 (D.C. Cir. 2015) (en banc).
135
E.g., Jack Beermann, Privatization and Political Accountability, 28 FORDHAM URB. L.J. 1507 (2001); Kimberly
N. Brown, We the People, Constitutional Accountability, and Outsourcing Government, 88 IND. L.J. 1347 (2013).
136
David H. Rosenbloom & Suzanne J. Piotrowski, Outsourcing the Constitution and Administrative Law Norms, 35
AM. REV. PUB. ADMIN. 103, 103 (2005).
137
The practical consequences of subjecting contractors to these various regimes is worthy of deep consideration.
E.g., Steven J. Kelman, Achieving Contracting Goals and Recognizing Public Law Concerns: A Contracting
Management Perspective, in GOVERNMENT BY CONTRACT 185-86 (Jody Freeman and Martha Minow eds., 2009)
(discussing the challenges of applying FOIA to contractors). One notable exception to this accountability blindspot
is the Paperwork Reduction Act (PRA), 44 U.S.C. § 3501 et seq. (2020), a law which addresses both agency
information collection and recordkeeping requirements. Contractors are broadly subject to the PRA’s information
collection provisions. At least one agency, the Department of Education, has made the PRA’s applicability to
contractors explicit in their FAR supplement; see 48 CFR 3452.208-72.
138
See, e.g., JON D. MICHAELS, CONSTITUTIONAL COUP 111 (2017) (arguing that “[e]verywhere we look, the federal
government is engaged in deep service contracting: the outsourcing of sensitive policy design and policyimplementing responsibilities” including rulemaking activities (emphasis omitted)); PAUL R. VERKUIL,
OUTSOURCING SOVEREIGNTY 24-25, 191 (2007) (arguing that “[a]gencies contract with regularity for a variety of
private management services” including rulemaking activities and that some of these activities “cross[] the line”).

23

tasks.139 This response stakes out one view, which is that contractors should not, as a matter of
principle, be involved in the substantive aspects of the rulemaking process. Other respondents
had a more neutral perspective, but they still concluded that contractors’ roles should be limited
when it comes to rulemaking. One respondent explained that contractors “seldom—if ever—play
a role in our Agency’s rulemaking activities.”140 Another commented “I am not aware that
[agency name] has ever used contractors in its rulemaking.”141 And yet another respondent noted
that, in their experience, contractors “usually work in back-office (IT) roles,” but not on
rulemakings, which are handled by “[f]ull-time staff.”142
Among survey respondents who answered that contractors were not used in the rulemaking about
which they were surveyed, and who provided reasons from a pre-set list, the most frequentlyselected reasons were “need for expertise,” “past practices,” “adequacy of agency resources,”
and “consideration of inherently governmental functions.” One respondent explained that their
agency’s regulatory program is “robust,” and that the process is handled internally.143 Another
explained that “[w]e have a division [name omitted] that is responsible for handling the
rulemaking activities, in conjunction with other Agency divisions [names omitted] as
necessary.”144 Relatedly, one respondent raised the extent and complexity of rulemaking as
explanations for why contractors have not been used for rulemaking. They noted that their
agency “is a small agency” with rules that “tend to be non-significant as provided under EO
12866, and we tend to get few comments.”145 This view was supported by several personnel
from other agencies who also indicated that their agency does not use contractors in the
rulemaking process.
A middle group on this spectrum is characterized by the sense that an agency’s default is not to
use a contractor.146 One survey respondent explained that “[o]n occasion we might need actuarial
assistance for the development of Regulatory Impact Analysis.”147 Another indicated that their
team used a contractor to process comments when there was a contract in place, but that this
work is now handled internally.148 Our interviews revealed a rich range of perspectives about
when and why agencies engage contractors for rulemaking tasks. We describe these
considerations below in Section V.
At the other end of the spectrum, some respondents indicated that contractors are integral to
rulemaking. Some agencies lean on contractors to supplement their staff resources in an ongoing
139

Survey response.
Survey response.
141
Survey response.
142
Survey response. Here and throughout, we use gender-neutral pronouns to protect the identity of study
participants.
143
Survey response.
144
Survey response.
145
Survey response. Another response was similar: “Out of the 20+ regulations I have worked on, we have never
used an external contractor. There has not been a need for one.” Survey response. A third echoes a similar view:
“We are a small agency with relatively few rulemaking actions . . . . We have extremely limited resources, so cannot
afford contractors for rulemaking purposes, but we also don’t really have a need for those extra resources in most
cases.” Survey response.
146
Interview 12.
147
Survey response.
148
Survey response.
140

24

way. One interviewee explained that contractors are “basically staff augmentation”149 and
another indicated that “[c]ontractors are us—they’re feds—but in italics.”150 One survey
respondent indicated that “turnover and lack of staff” led to extensive use of contractors on at
least one rulemaking.151

B.

Discussion

In this section we describe views collected in the course of our research about whether to use
contractors in the rulemaking process. Quite clearly, views about the proper role of contractors in
rulemaking vary considerably. This may be, in part, because of ambiguity about what it means
for a task to be an inherently governmental function. While some interviewees expressed shock
about the possibility of using contractors to help with rulemaking, others found it not just normal
but necessary to pursue their agency’s mission.
This wide variation gives us pause. On the one hand agencies might be refraining from
contractor use when it would actually be permissible and possibly beneficial; on the other hand,
agencies might be treading close to or over the line in terms of which rulemaking tasks they
entrust to contractors. We do not opine on legal conclusions for any particular cases, but we offer
these descriptive findings for ACUS to consider. Overall, the wide variation we found suggests
that the general issue of contractor use in rulemaking is one that is ripe for additional debate and
consideration.

IV. What tasks do contractors perform in
rulemaking?
Among those agencies that use contractors for rulemaking functions, the types of tasks given to
contractors are wide-ranging. These tasks differ on several dimensions; for example, there are
differences in duration, contractor enmeshment into the workflow, and policy significance of the
tasks.
In terms of duration, some tasks map directly onto time-limited stages of a rulemaking project,
such as assistance with sorting and analyzing public comments, while others are ongoing, such as
writing and research assistance. Others are special one-time projects (e.g., drafting internal
guidelines for regulatory impact analysis or RIA) or more general, ongoing assistance (e.g.,
clerical support). The type of working relationship can vary, too, from specific, arms-length type
engagements, such as writing an expert report or literature review, to long-term staffing
assignments in which the contractors work side-by-side with agency employees.152 Tasks also
149

Interview 1.
Interview 13.
151
Survey response.
152
Frequency is another way in which contractor use varies. For example, with respect to comment management and
analysis, one interviewee said “I don’t think [reviewing comments] was ever done in-house” at their agency. On the
other hand, some reported turning to contractors for help with public comments only for rare, high-profile
rulemakings. Interview 9. One interviewee explained that their agency began using contractors because of a sudden
comment surge, the agency subsequently came to use contractors for this purpose more routinely. Interview 1.
150

25

range in terms of their policy significance, from the ministerial to those closely tied to policymaking. For example, contractors help with formatting documents, but they also help agencies
interact with the public and with other parts of the executive branch, including the regulatory
review process managed by the Office of Management and Budget (OMB).
This section offers a compilation of all tasks we uncovered in the course of this research.153

A.

Contractor tasks by rulemaking stage

Agencies follow a few general steps when promulgating rules.154 The rulemaking process
typically involves a pre-rule stage, the creation and publication of a proposed rule, a period for
public comment on the proposal, and the drafting and publication of a final rule. In Table 2, we
display contractor tasks arranged by these key rulemaking stages.

153

Of course, this list is not exhaustive and there may be additional tasks that did not arise in our research. Another
important caveat is that no respondent indicated that contractors were doing all of the tasks described below. Finally,
it should also be noted that in cataloging tasks in this section, we do not mean to imply that having contractors
support rulemaking efforts is an entirely new phenomenon; it is not. Writing in 1991, McGarity explains how
contractors were used to support regulatory impact analysis at some agencies. For instance, he notes that, at the time,
the Occupational Safety and Health Administration, “nearly always hire[d] contractors to survey the relevant
industry or industries, create an industry profile, and identify a range of feasible engineering controls” THOMAS O.
MCGARITY, REINVENTING RATIONALITY 171 (1991). McGarity previously considered these issues in a report for
ACUS in 1985, which is available on ACUS’s website. However, the breadth of tasks for which agencies rely on
contractor support—for regulatory impact analysis and also for ministerial and other kinds of substantive support
beyond regulatory impact analysis—is heretofore undocumented. Following broader trends of service outsourcing in
the federal government (discussed in Section II(A)), we suspect that the extent of rulemaking support at some
agencies has also increased over time, although we cannot verify this assertion using the methodology underlying
this report.
154
The basic steps of agency rulemaking are laid out in the APA; 5 U.S.C. § 553.

26

Table 2. Tasks Performed by Contractors during the Rulemaking Process
Pre-Rule Stage

Proposed Rule
Stage

Public Comment
Stage

Final Rule Stage &
Beyond

Plan regulatory
timelines and
strategies

Draft and edit
internal materials

Monitor comments
during comment
period

Same as Proposed
Rule Stage, plus:

Conduct research:
▪ Collect scientific
data (e.g.,
including
samples)
▪ Gather industry
or other data
▪ Perform risk
analysis
▪ Review
literature
▪ Conduct site
visits
▪ Determine
stakeholder
views
▪ Run surveys

Draft proposed rule:
▪ Write first draft
(or portions)
including
preamble and
regulatory text
▪ Review drafts
▪ Format
documents
Provide data or other
analytical support
Draft analyses:
▪ Prepare RIA and
other analytical
sections (e.g.,
RegFlex)
▪ Compose PRA
materials

Develop models
Help agency
understand and
reconcile reviewer
feedback from other
parts of agency (e.g.,
legal counsel) and
executive branch
(e.g., other agencies,
OMB, EOP)
reviewers

1.

Process comments:
▪ Transfer
comments from
agency to
regulations.gov,
and vice versa
▪ Maintain
integrity to CBI
▪ Organize into a
worksheet
▪ Analyze
comments,
including with
use of NLP/AI
tools
▪ Draft summaries
for final rule
preamble
▪ Help ensure
agency responds
to all comments

Develop fact sheets,
guidance, rollout
materials
Deliver
Congressional
Review Act reports
to Congress
Support
implementation
Provide litigation
support

Pre-rule stage

In this stage, the agency conducts internal planning and research, which might also include some
amount of formal or informal public engagement.

27

Plan regulatory timelines and strategies. Some contractors assist agencies in crafting or
recrafting regulatory programs. At one agency, this kind of help meant the contractor worked
with the agency to reformulate how a fee program worked, including a strategy for rewriting the
agency’s fee-related regulations.155 At another agency, an interviewee described that a FederallyFunded Research and Development Center (FFRDC)—a special kind of entity that is run by
contractors but is sponsored by a federal agency—serves as a “thought partner” for longer-term
regulatory planning.156 This involves helping to define strategic direction for policies over a
three- to five-year timeframe, and includes research as described just below. The FFRDC staff
are “deeply embedded” in strategic planning as well as helping to write particular rules.
Conduct research. Survey respondents indicated that contractors conduct preliminary or other
research.157 Interviewees reported that contractors help prepare advisory analyses that serve as
inputs into an agency’s regulatory decisions. This could include producing a recommendation to
the agency, or merely gathering information.158 It could also include technical or other scientific
data such as taking samples from site visits and running analysis on the samples.159 Others
mentioned environmental scans, literature reviews, white papers, surveys, dashboards, data
analyses, reports, and other types of policy analysis.160 Contractors also convene stakeholders to
gather views and other information at this stage.161
Develop models. In addition to the data-gathering and research tasks, contractors also assist with
building analytical models that agencies use for regulatory proposals.162 One interviewee
mentioned a contractor’s proprietary model that their agency paid to access, and which is also
used by industry groups for their own purposes.163

2.

Proposed rule stage

In this stage, agencies compile the statement of basis and purpose (or preamble) of the proposed
rule, along with the regulatory text, which all gets published in the Federal Register as the
“notice of proposed rulemaking” or “proposed rule.” The proposed rule can include certain
analytical material, including regulatory impact analysis, that helps justify the choices made by
the agency in the proposal. A number of policy decisions must be made to allow the agency to
complete this stage.
Draft and edit internal materials. Contractors help agency staff prepare memos for internal
deliberations.164

155

Interview 3; Interview 7.
Interview 22. We discuss FFRDCs more below in Section VII(F).
157
Survey responses.
158
Interview 1; Interview 16; Interview 27; Interview 22. One interviewee noted that part of the contract could
include a requirement for the contractor to convene an outside expert panel to review the contractor’s
recommendation. Interview 21.
159
Interview 14; Interview 23; Survey responses.
160
Interview 22; Interview 26; Interview 27.
161
Interview 22.
162
Interview 7.
163
Interview 15; Interview 18.
164
Interview 25.
156

28

Draft proposed rule. Proposed rules have multiple components, including the preamble, analysis
sections, and regulatory text, all of which might be worked on by a contractor.165 Some
respondents discussed broad contractor involvement in preamble development; others described
that certain aspects of a proposed rule, e.g., regulatory text, were exclusively handled by agency
employees.166 This could include writing the first draft, or editing agency staff work “for
clarity.”167 One interviewee estimated that any given preamble might be 60% written by federal
employees and 40% written by contractors.168 This person also called it “excruciatingly useful”
to have contractors review drafts because they could point out where the agency might not be
fully explaining their decisions.169 Two interviewees noted their agency’s use of an FFRDC to
formulate options and draft regulatory text.170 In one case, the FFRDC wrote the first draft, sent
it to agency staff who reviewed it to ensure alignment with the agency’s goals and to think
through any operational challenges, and then provided comments back to the FFRDC.171 From
there, the FFRDC made edits, and the revised draft was then put into departmental clearance for
internal agency review, with the FFRDC handling any necessary edits along the way. On the
more ministerial side, one respondent also shared that their agency uses contractors to make sure
rule and other documents align with templates and other formatting guidelines.172 Another noted
that contractors help prepare the word processing file into the format required for transmission to
the Federal Register for publication.173
Provide data and other analytical support. In the course of drafting the rule, the agency might
realize it is lacking data and turn to a contractor to help fill those gaps. Interviewees shared that
contractors might convene experts, undertake surveys of the relevant industry, and conduct
literature reviews.174 This helped one interviewee “see what was going on in the world.”175
Draft analyses. Beyond preparing inputs into the analytical materials noted just above,
contractors also help draft the analyses themselves.176 This sometimes includes different aspects
of RIA, including economic analysis, Paperwork Reduction Act (PRA) analysis, Regulatory
Flexibility Act analysis, and more.177 Some interviewees noted that they were unaware of their
agency ever asking a contractor to prepare an RIA “from soup to nuts” or in its entirety.178

165

Survey responses.
Interview 13; Interview 16; Interview 18; Interview 27.
167
Interview 25; Interview 27.
168
Interview 13.
169
Interview 13.
170
Interview 21; Interview 22.
171
Interview 22.
172
Interview 23.
173
Interview 3.
174
Interview 18; Interview 19.
175
Interview 18.
176
Interview 21.
177
Interview 13; Interview 16; Interview 20; Interview 21; Interview 25; Survey responses. This could include
statistical support, development of a survey, fielding a survey, drafting the package of written materials used to
support the agency’s request for OMB approval of an information collection request, attending internal meetings
within the agency or with OMB. Interview 20. This could also include developing estimates to be used in PRA
documentation. Interview 14; Interview 31.
178
Interview 19.
166

29

Another explained that their agency had done so, but that the results “left such a bad taste in
folks’ mouths” that “nobody really asked to use contractors after that.”179
Help respond to reviewer feedback from within the agency or executive branch. One contractor
explained that their firm helped their agency client address feedback received on the rule from
other government reviewers.180 For example, after the draft rule went to the agency’s legal
counsel for review, the contractor would help the agency staff “understand and reconcile”
feedback given. The contractor noted that they had “to understand the policy to be able to do
this,” and that their own subject matter knowledge grew over time. They described their function
as “extra hands” to help the agency work through reviewer comments. The contractor noted that
their firm fulfilled this function for feedback received from the OMB review process, though
they noted that the communication between OMB and the agency staff was always handled by
the agency staff. Survey respondents also indicated that contractors helped manage all or
portions of OMB review, as well as management of interagency collaborations or interagency
working groups.181

3.

Public comment stage

In this stage, the agency gathers and reviews public comments sent in during the comment
period. This stage might include some formatting and file management. It also involves reading
and considering the comments as required by the APA. Agencies discharge the APA requirement
to consider comments by writing responses to comments that get included in the preamble of the
final rule.182 An agency’s response to comments is informed by—and informs—the policy
choices it makes for the final rule.
Monitor comments during comment period. One interviewee noted that a contractor gave updates
to the agency as the comment period proceeded.183 This might include, for example, summaries
of who has filed comments and the number of comments received.
Process comments. Interviewees identified several distinct activities under this general topic.
Multiple respondents explained that for rulemakings with a large number of comments,
contractors help organize the comments in various ways.184 Part of this could involve extracting
comments from Regulations.gov, or adding comments received by the agency to the record on
Regulations.gov.185 A commonly mentioned task was organizing comments into a spreadsheet,
table, or other searchable database.186 This could also include the use of natural language
processing tools to help identify mass comment campaigns, for example, or subject matter

179

Interview 3.
Interview 25.
181
Survey responses.
182
See, e.g., Portland Cement Ass’n v. Ruckelshaus, 486 F.2d 375, 394 (D.C. Cir. 1973) (describing the agency’s
obligation to respond to “significant” comments submitted during the notice-and-comment process), cert. denied,
417 U.S. 921 (1974).
183
Interview 26.
184
Interview 1; Interview 3; Interview 14; Interview 15; Interview 20.
185
Interview 9.
186
Interview 1; Interview 13; Interview 18; Interview 26.
180

30

themes.187 The contractor might take the first pass at determining these groupings, perhaps using
text analysis tools, or the agency might provide the contractor with categories it should use.188
This could also be an iterative process with multiple rounds of feedback between the agency and
the contractor on the comment categories.189 One interviewee noted that contractors help
“maintain integrity” to any confidential business information that may have been submitted as
part of a comment.190 Contractors also develop summaries of the comments.191 One former
agency employee noted that “we ended up reading [the comments] anyway” and that their
agency never used the summaries verbatim, explaining that the contractors were helpful to sort
and summarize the comments—and helpful to get a sense of which issues attracted a lot of
comments—but that only agency staff had the subject matter expertise needed to consider the
comments.192 Others agreed, and the term “subject matter expertise” came up in other interviews
apropos of why agency staff were better-suited to review comment substance.193
Draft preamble response to comments. One respondent noted that their agency directed
contractors to write language for the preamble responding to comments “to answer this way, that
way,” after which the agency staff would review the contractor’s work.194 In that case, agency
staff would review the contractor’s draft.195 Contractors might also help the agency ensure that it
is responding to all comments received.196

4.

Final rule stage and beyond

In this stage, the agency writes the final text for its preamble, which can include regulatory
impact analysis and a response to comments, and also includes the regulatory text. This final rule
is what will become law. The tasks described above for contractors during the proposed rule
stage also occur in the final rule stage. In addition, although our research plan did not set out to
include downstream activities like implementation assistance, compliance, and enforcement
activities, we include here the post-promulgation tasks that respondents shared with us of their
own accord.
Develop fact sheets, guidance, rollout materials. One interviewee noted that contractors would
help prepare communications materials that the agency would use to announce the rule to the
public.197 Survey respondents also indicated that contractors helped with public outreach,
including meetings, fact sheet preparation, press release drafting, etc.198

187

Interview 6; Interview 26; Interview 27.
Interview 13; Interview 15.
189
Interview 26; Interview 27.
190
Interview 13.
191
Interview 6; Interview 20; Interview 27.
192
Interview 18.
193
Interview 9; Interview 13; Interview 14.
194
Interview 15.
195
Interview 15.
196
Interview 20.
197
Interview 13.
198
Survey responses.
188

31

Deliver Congressional Review Act reports to Congress. This includes the use of a contractor to
deliver reports to Congress as required by the Congressional Review Act, “due to the antiquated
submission methods required for those reports.”199
Support implementation. One interviewee noted that contractors could staff an implementation
hotline or take other actions to support a rule’s implementation.200 Another explained that
contractors help with outreach and education, monitoring and evaluation, and systems support
for data collection systems used by the public.201
Provide litigation support. One interviewee noted that contractors helped agency staff review the
rulemaking record in litigation to find support for the agency’s position.202

B.

Ongoing activities and special projects

The tasks described above fit neatly into the stages of rulemaking; however, many contractor
tasks seem to float across a rulemaking project. And a subset of tasks involves one-time special
projects. Table 3 shows these types of tasks.

199

Survey response. Recently, ACUS recommended that Congress should pass technical reforms to the
Congressional Review Act. The recommendations included requiring these reports to be submitted electronically.
Admin. Conf. of the U.S., Recommendation 2021-8, Technical Reform of the Congressional Review Act, 87 Fed.
Reg. 1719 (Jan. 12, 2022). See also Jesse M. Cross, Technical Reform of the Congressional Review Act (Nov. 30,
2021) (report to the Admin. Conf. of the U.S.).
200
Interview 13.
201
Interview 22.
202
Interview 13.

32

Table 3. Ongoing Activities and Special Projects Performed by Rulemaking
Contractors
Ongoing Activities

Special Projects

Project management
▪ Keep master document templates, project plans,
timelines, document flow

Develop guidelines for
regulatory analysis
Coordinate interagency review

Meeting and negotiation support
▪ Attend internal policy meetings
▪ Take notes
▪ Help make slides for internal policy briefings
▪ Facilitate meetings with external stakeholders
▪ Convene expert panels
▪ Handle operations for negotiated rulemaking
Writing & editing services
▪ Edit documents for style, clarity, grammar
▪ Ensure documents conform with drafting templates

Recommend program design
changes that that lead to new
regulations
Develop IT systems for
rulemaking process (e.g.,
document management system)
One-off reviews of rule-related
documents

Statistical/data support
▪ Offer statistical support, collecting, pooling, and
analyzing data
Policy development
▪ Develop guidance documents
▪ Review agency drafts and provide substantive
comments and feedback
Training
General support

1.

Ongoing activities

Project management. One respondent explained that their agency relies on contractors to help
manage the workflow of regulatory projects.203 This involves keeping master documents up to
date to avoid version control issues, maintaining templates, keeping the project plan up to date,
and providing overall project management support. One interviewee called this “start to finish”
support of a rulemaking.204 In that case, the contractor was also providing policy research
analysis, comment analysis, editing assistance, document management through all stages of the
203
204

Interview 1.
Interview 25.

33

rulemaking, and communications support once the final rule was issued.205 Another interviewee
described using an FFRDC for rulemaking project management.206
Meeting and negotiation support. Contractors might attend internal agency policy meetings to
stay updated on internal thinking and also to take notes for the agency.207 One respondent noted
that contractors contributed information that would be used on slides for internal briefings.208 A
contractor might also take notes in meetings with external stakeholders and help the agency
determine whether the stakeholder offered something new beyond the comment they
submitted.209 One interviewee, who has experience at an agency that used negotiated rulemaking
procedures, explained that it was standard for the agency to hire a contractor to serve as a
facilitator of the negotiation.210 This would involve managing communications between the
agency and the negotiating parties, as well as strategizing about how to move the negotiation
forward. Another interviewee whose agency used a contractor to conduct negotiated rulemaking
noted that contractors helped organize those negotiations.211
Writing and editing services. Several respondents mentioned contractors helping to improve the
quality of various written documents by writing first drafts or editing.212
Statistical/data support. One interviewee explained that their agency uses contractors to do
routine data analysis of the agency’s multiple, large data sets using “set formulas or
methodologies.”213
Training. One contractor shared that their firm offers regular training to agency staff on the
rulemaking process in general as well as on drafting techniques.214 Another mentioned having
contractors offer training to agency employees on plain writing techniques.215
General support. One respondent acknowledged that contractors served as support staff at their
agency, serving as administrative assistants, paralegals, and in clerical roles.216

2.

Special projects

Develop guidelines for regulatory analysis. Interviewees from two agencies explained that they
use contractor support to help prepare agency-wide guidelines for the preparation of regulatory
impact analyses, including economic analysis.217

205

Interview 25.
Interview 22.
207
Interview 14; Interview 25.
208
Interview 13.
209
Interview 13.
210
Interview 9.
211
Interview 16.
212
Interview 25.
213
Interview 21.
214
Interview 36.
215
Interview 24.
216
Interview 8.
217
Interview 18; Interview 19; Interview 23.
206

34

Coordinate interagency review. One respondent explained that their agency uses contractors to
help the agency respond when the Office of Information and Regulatory Affairs (OIRA, part of
the OMB) sends other agencies’ rules over for review.218 Contractors help triage requests,
working closely with agency staff to determine which of the agency’s components should review
the draft regulation. Contractors also circulate documents internally using standing email
distribution lists and otherwise solicit staff input. If agency reviewers have comments, the
contractors gather them up, and a staff member takes it from there.
Develop IT systems for rulemaking process (e.g., document management system). One
interviewee shared that their agency worked with a contractor to build an in-house version of
what would ultimately be replaced by Regulations.gov.219
One-off reviews of rule-related documents. One interviewee explained that the agency they
previously worked for retained them later as a consultant to review draft documents on an ad hoc
basis. This would include reviewing an analysis that an agency staff member had written or
providing input on a literature review, tasks that they could do despite not being “as involved in
what was happening at [the agency].”220

C.

Discussion

Agencies use contractors for a wide range of rulemaking activities, far greater than has
previously been documented. The tasks range from administrative tasks that do not involve the
exercise of discretion to those deeply embedded into the agency’s planning and deliberations.
The inherently governmental function test draws a line at decision-making, but rulemaking offers
a rich set of examples that demonstrate how challenging it can be to apply the test to tasks that
feed into complex and interactive agency decision-making processes.
The set of tasks involved in managing public comments illustrates this principle. Aspects of this
function could be considered ministerial, such as downloading the comments from
Regulations.gov. But there are other, discretionary tasks embedded in managing, and certainly in
responding to, comments. How comments are organized may tend to emphasize different issues
more than others, the summaries may give the impression of more or fewer significant issues,
and all of this could shape agency impressions of the public’s reactions to the rule.
This is just one example of the points of discretion and judgment that are upstream from the
ultimate policy choices reflected in an agency’s rule. The concern is that when contractors
exercise judgment as part of tasks like this, their own interests could manifest, either knowingly
or unknowingly. Close collaboration between the agency staff and contractors, rather than having
the contractor handle things alone, may help to blunt some of the risk of improper influence.
Some agency interviewees reported that they would use contractor-developed comment tables to
orient them to which comments to read on different issues, but then rely on their own subject
matter expertise and judgment to interpret the comments.

218

Interview 23.
Interview 6.
220
Interview 11.
219

35

As another example, writing up responses to comments to include in the preamble to the final
rule is a task that is laden with policy choices. While we did not encounter anyone who indicated
that this task was entirely delegated to contractors, it seems clear that if contractors write the
preamble or even just edit it, they have the potential to influence the rule’s outcome. Indeed,
when contractors are seen as a member of the team, agencies may welcome their views. As one
interviewee described it, albeit in another context, good work is good work no matter who does
it, and why shouldn’t the government accept this kind of help from contractors?221 For contracts
in which the contractors are working side-by-side with agency staff and there is considerable
trust, this might especially be the case. The flip side of this is that decisions might be made
iteratively—through the course of the drafting process itself222—and therefore contractor
involvement along the way almost necessarily involves some measure of influence. It is these
points of influence where management control and contractor ethics are likely their most
important. If managers are unaware of contractor conflicts-of-interest, this will inhibit their
ability to properly supervise their work.
When it comes to determining what is inherently governmental, this granular discussion shows
that managing the public comments includes a mix of ministerial and policymaking tasks, and as
such “managing comments” does not lend itself to a binary classification of inherently
governmental, or not. Overall, the activities described in this section prompt questions about the
systemic use of contractors, as well as queries about contractor use of any given task. At a
systemic level, one-time engagements are different in kind from multi-year contracts in which
contractors work side-by-side with agency staff.223 The latter offers the opportunity for
efficiency, with deeply interconnected workflows between agency and contractor, but it also
opens the door to more significant harm from self-dealing. A looming question, discussed more
below, is how agencies come to rely to extensively on contractors for certain regulatory projects.
The roots of this question are worthy of additional study. A review of ongoing contracts that
effectively supplement agency staff could be an effective way to assess whether such
arrangements are ultimately in the public interest.
One-time or special project contracts, while they can be conducted at more of an arm’s length
and offer opportunities to bolster agency capacity and credibility, can have their own challenges,
including misaligned expectations, duplicative work, and other ethical concerns. For example,
contracting for access to a proprietary model introduces the potential for conflicts of interest as
well as challenges in compiling the administrative record if the model is not publicly-available.
One-time contracts can also beget longer-term arrangements, as the contractor gets to know the
agency’s needs, and the agency becomes comfortable with the contractor’s work. What might be
a reasonable, iterative business development strategy for a contractor can be a slippery slope for
221

Interview 31.
Interview 5.
223
These arrangements may come close to “personal services” contracts, which are generally prohibited by the FAR.
FAR § 37.104. A personal services contract, “by its express terms or as administered, makes the contractor
personnel appear to be, in effect, Government employees.” FAR § 2.101. This prohibition may have become a dead
letter. See generally Collin D. Swan, Note, Dead Letter Prohibitions and Policy Failures: Applying Government
Ethics Standards to Personal Services Contractors, 80 GEO. WASH. L. REV. 668 (2012). Accord Steven J. Kelman,
Achieving Contracting Goals and Recognizing Public Law Concerns: A Contracting Management Perspective, in
GOVERNMENT BY CONTRACT 176 (Jody Freeman and Martha Minow eds., 2009) (noting that the prohibition on
personal services contracts is often “skirted de facto”).
222

36

an agency, especially if the agency very much needs assistance. In general, it would be helpful to
consider how existing contract management techniques account for this type of incremental
creep, and to consider whether modified controls and other policies could better address
contractor arrangements.

V. Why do agencies use contractors in
rulemaking?
Contractors perform many functions in rulemaking, but sometimes agencies use them and
sometimes they do not. What factors guide this decision? In this section we recount how agency
officials perceive the advantages and disadvantages of contractors in rulemaking. Some of these
benefits and drawbacks are straightforward and discussed extensively in the academic literature
reviewed earlier, whereas others are more specific to the rulemaking process.

A.

Advantages of relying on contractors

Agency respondents highlighted numerous benefits associated with contractor use. Most notably,
contractors bring outside expertise to the rulemaking process. Often this expertise is highly
domain-specific and not a skill set that the agency requires on a full-time basis. For example, one
interviewee at an agency that regularly issues economically significant rules noted that when it
came time for the agency to revise its guidelines for the Value of a Statistical Life (VSL), they
used a contractor to hire academics with niche expertise in this field.224 This contract allowed the
agency to write new standards that were consistent with current academic research on the VSL,
something that would not have been possible internally given the agency’s own in-house
expertise. Contractors may also have access to tools that the agency does not, such as survey
software or panels of survey respondents225 or have expertise in managing big projects,
something the agency may not have.226 By hiring a contractor, the agency can expand its toolkit
for specific projects.
Not all contractor expertise is specific to individual rulemaking projects, however. For instance,
interviewees at multiple agencies highlighted how useful contractors can be in writing rules.227
Often program staff have subject matter expertise in other fields like engineering, and this
expertise does not necessarily translate to rule writing and drafting.228 Contractors can offer
writing skills that complement agency staff expertise, stepping up to either draft documents
directly or edit and revise documents initiated by program staff.
Contractors can also serve in a surge capacity function, helping to ease workloads during peak
rulemaking periods. Because contractors are free from government hiring requirements, they
may be able to quickly increase staffing in response to demands during the rulemaking process

224

Interview 19.
Interview 18.
226
Interview 32.
227
Interview 1; Interview 13; Interview 15.
228
Interview 5; Interview 13.
225

37

and decrease it after the surge has passed.229 One contractor we interviewed noted that they
simply assigned more staff from another of the firm’s divisions to help out when a rule hit a
particularly time-sensitive period (such as comment processing), something that may not be as
easily accomplished within an agency setting.230 This ability to add staff during peak periods can
be especially useful when contractors can quickly assemble a diverse team with different skill
sets.231
Flexibility is another important advantage of incorporating contractors into the rulemaking
process. This point was most often raised by our subjects in terms of ability to staff up quickly
during peak periods. Some agencies face difficulties in hiring full-time equivalent (FTE) staff.
These difficulties arise because of FTE caps imposed on agencies, as well as budgetary concerns
regarding financing a FTE line in future years.232 Additionally, hiring a new federal employee
can be a cumbersome and time-intensive process;233 one agency interviewee suggested that while
it takes an agency about eight months to hire a new FTE, it would only take a contractor about
three months to find and hire someone with the desired expertise.234
One agency respondent also noted that contractor flexibility was particularly useful during
periods of transition between presidential administrations.235 Often these periods are
characterized by a push to complete new rules by the outgoing administration and, subsequently,
a demand for new rules by the incoming administration—all without accompanying staff
increases. Contractors can help agencies smooth the workflow during these transition periods.
Neutrality, or the ability of a contractor to serve in an arm’s length capacity, can also be an asset
in the rulemaking process. The nature of the regulatory relationship makes it such that regulated
entities may be hesitant to share information directly with agencies and may even sometimes put
229

Contractors have a comparative advantage relative to government agencies in terms of the ability to staff up
quickly. However, this advantage is not absolute. One contractor we spoke with indicated that it was hard for them
to staff one agency rulemaking project that was particularly “intense,” “visible,” and on an accelerated timeline.
Although the firm rose to the occasion, they faced staff burnout issues the next time a similarly intense agency
project arose. Interview 25.
230
Interview 26.
231
Interview 1; Interview 25; Interview 26.
232
Interview 16.
233
See, e.g., U.S. MERIT SYSTEMS PROTECTION BOARD, REFORMING FEDERAL HIRING: BEYOND FASTER AND
CHEAPER” REPORT TO THE PRESIDENT AND THE CONGRESS OF THE UNITED STATES (2006),
https://www.mspb.gov/studies/studies/Reforming_Federal_Hiring_Beyond_Faster_and_Cheaper_224102.pdf;
NAT’L COMMISSION ON MILITARY, NATIONAL, AND PUBLIC SERVICE, INSPIRED TO SERVE: FINAL REPORT TO
CONGRESS (2020), https://www.volckeralliance.org/sites/default/files/attachments/Final%20Report%20%20National%20Commission.pdf; Eric Katz, The Federal Government Has Gotten Slower at Hiring New
Employees for 5 Consecutive Years, GOV’T EXEC., Mar. 1, 2018,
https://www.govexec.com/management/2018/03/federal-government-has-gotten-slower-hiring-new-employees-fiveconsecutive-years/146348/.
234
Interview 19; Interview 21.
235
This respondent explained that staffing needs changed significantly between the Obama administration, which
had a robust regulatory agenda, and the Trump administration, which issued fewer rules in that program area. This
person also mentioned that several agency staff departed in the Trump administration. Then, in the Biden
administration, they expected an increase in the number of rules to be issued, which meant they needed to ramp up
staff resources once again. This experience made this respondent conclude that using contractors was a better use of
resources than hiring new staff who might again be left without much to do in a future administration. Interview 1.

38

agencies in an adversarial role; contractors can be used as an outside third party in such
situations.236 The interviewee who noted that contractors are regularly used as mediators in
negotiated rulemaking, or “reg neg,” explained that having a neutral broker between the agency
and the negotiating stakeholders can set the right tone.237 Another official at a different agency
indicated that contractors were very helpful when the agency needed to collect data about the
industry it regulated; industry partners were reluctant to give potentially sensitive information
directly to the agency, but more willing to acquiesce to data requests when a contractor was
making the request.238
There are myriad other benefits associated with contractor use. Numerous respondents noted
their impression that contractors can exclusively focus on a specific rulemaking task.239 Agency
employees typically have multiple assignments on their plates, often dividing their attention over
multiple projects. This might include long-term projects that lack firm internal deadlines, but
which the agency nevertheless wants to complete. Once a specific task is delegated to a
contractor, the task is more likely to get the contractor’s undivided attention and to be completed
in a timely fashion. Another benefit is that contractors can serve as a point of stability and
institutional memory, particularly in program areas where federal employees tend to cycle in and
out.240 Finally, one person noted that contractors were often a set of “fresh eyes” in that they
asked questions about agency practices and sometimes served as a “good push” to update those
practices.241

B.

Disadvantages of relying on contractors

Although contractors in rulemaking confer numerous benefits, many respondents pointed out the
disadvantages and risks of using contractors in this setting. An overarching theme that united
such comments was the disconnect in workplace culture and shared values between contractors
and agency employees. At its worst these concerns center on trust issues—like whether a
contractor is more likely to disclose confidential information242 or violate ex parte
communication rules during rulemaking243—or a perceived lack of professionalism among some
contractors.244
The majority of the concerns raised, however, regarded the fact that contractors are often
(understandably) unfamiliar with agency workflow and processes and that this lack of familiarity
can breed problems.245 For example, one agency official explained that contractors they had
236

Interview 6; Interview 30.
Interview 9.
238
Interview 18; Interview 19.
239
Interview 6; Interview 13; Interview 18; Interview 19; Interview 23.
240
Interview 13; Interview 25.
241
Interview 6.
242
Interview 1.
243
Interview 5. A somewhat related issue is whether agency contacts with their contractors can be considered ex
parte communications. United Steelworkers of America v. Marshall, 647 F.2d 1189, 1218 (D.C. Cir. 1980)
(declining to require disclosure of a consultant’s report because the consultant was the “functional equivalent” of
agency staff for purposes of ex parte analysis).
244
Interview 6.
245
Interview 7; Interview 18; Interview 31.
237

39

worked with in the past had general experience conducting cost-benefit analysis (CBA), but were
less familiar with CBA in a regulatory context. Specifically, this official noted that the contractor
was not well acquainted with the CBA requirements in OMB Circular A-4,246 which cost the
agency in terms of a slowed rulemaking process and increased time spent overseeing the
contractor. An agency can run into these problems even when using an experienced government
contractor, as internal rulemaking processes and workflows are often agency-specific.
A related downside associated with the use of contractors in rulemaking is the resource-intensive
nature of contract management. Several agency officials noted that considerable time and
resources must be devoted to building the knowledge of first, how to set up contracts and,
second, how to oversee contractors.247 Many indicated that it might not be worth the effort to use
a contractor for smaller or less important rules.248 Not only must the official(s) overseeing the
contract bridge any workplace culture gaps, but they must also do so within the scope of the
existing contract and the time frame of the rulemaking. Sometimes when a specific rulemaking
task is delegated to a contractor, it might move at a different pace than tasks that are being
managed internally at the agency. Sometimes this is a quicker pace, but other times it is,
unfortunately, slower.249 Additionally the contract must be structured to put the agency on the
best footing; for example, if an agency contracts out for an analysis at the proposed rule stage,
the contract must be structured so that the contractor is available to make amendments at the
final rule stage or the agency must ensure that it has the in-house expertise on hand to handle any
changes.250
The lurking potential for personal or organizational conflicts of interest is another risk of relying
on contractors in rulemaking.251 One expert noted a specific type of contractor self-dealing

246

Interview 19.
Interview 5; Interview 21. Kelman notes that “the vast majority of what good program and contract managers
need to be good at are the same things that any good manager needs to be good at.” Steven J. Kelman, Achieving
Contracting Goals and Recognizing Public Law Concerns: A Contracting Management Perspective, in
GOVERNMENT BY CONTRACT 174 (Jody Freeman and Martha Minow eds., 2009) (emphasis in original). However,
contract managers face considerable obstacles to effectively overseeing contracts. For instance, Michaels notes that
while procurement personnel are “well positioned to ensure that the contractors are not being wasteful or
fraudulent,” they are “not necessarily well versed in the substantive policy or legal domains within which the
contractors are working,” JON D. MICHAELS, CONSTITUTIONAL COUP 133-34 (2017). Additionally, strong contract
management skills are not always valued within an agency. Kettl explains that at “in an agency dominated by
scientists, technical expertise, not administrative finesse, marked the fast track upward. Technicians and other
scientifically trained contract managers thus had strong motivation to escape from the task . . . as quickly as
possible,” DONALD F. KETTL, SHARING POWER 123 (1993). Finally, the GAO has repeatedly identified shortages in
agencies’ acquisition workforces as an area that not only places contracts at risk, but government more broadly. See,
e.g., U.S. GOV’T ACCOUNTABILITY OFFICE, GAO-21-119SP, HIGH-RISK SERIES: DEDICATED LEADERSHIP NEEDED
TO ADDRESS LIMITED PROGRESS IN MOST HIGH-RISK AREAS (2021).
248
Interview 3; Interview 13; Interview 14; Interview 23.
249
Interview 7.
250
Interview 19.
251
Recent ProPublica reporting highlights how this kind of risk can present itself in the course of agency
policymaking. ProPublica reports that over a 12-year period, McKinsey & Company, a consulting firm, provided
the Food and Drug Administration (FDA) with upwards of $50 million in consulting services, including helping the
agency to define its strategic goals and objectives and also to develop a “new operating model” for its drug
247

40

within agencies that might arise in response to rulemaking contracts; specifically, the prospect of
relying on the same contractor for different regulatory functions could create perverse incentives
for the contractor.252 For example, a contractor that helped to write program regulations might be
motivated to steer the rules in such a way that resulted in more profitable business margins for its
contract to help with regulatory enforcement after the rule is finalized.
A recent ACUS report raises a specific possibility for self-dealing in rulemaking contracts
related to the use of AI to manage public comments:
FiscalNote [a contracting firm] works with government agencies
while simultaneously providing “Issues Management” tools to make
it easier for private organizations to track regulatory changes and
submit comments on proposed rules. Consultants might be able to
monetize their access to the inner workings of agency notice and
comment systems by advising clients on how to carefully draft
comments in order to achieve the desired agency classification and
avoid being filtered out by an algorithm. They may also charge a
premium for this “insider” expertise, disadvantaging stakeholders
who do not hire their services.253
Although conflicts of interest concerns were raised by the experts we spoke with, this risk was
less salient for agency officials. Few mentioned this potential. However, one agency official
noted that they preferred to work with their agency’s Federally-Funded Research and
Development Center (FFRDC)254 on sensitive rulemakings because those entities have stronger
conflict of interest protections in place than most contractors and, therefore, avoid many of these
potential issues.255

regulation division. Ian MacDougall, McKinsey Never Told the FDA it was Working for Opioid Makers While Also
Working for the Agency, PROPUBLICA (Oct. 4, 2021),
https://www.propublica.org/article/mckinsey-never-told-the-fda-it-was-working-for-opioid-makers-while-alsoworking-for-the-agency. During the same time period, the firm “counted among its clients many of the country’s
biggest drug companies—not least those responsible for making, distributing and selling the opioids that have
ravaged communities across the United States, such as Purdue Pharma and Johnson & Johnson.” Id. The overlap
between McKinsey’s agency client and its private sector clients raises important questions about the advice it
provided to the agency—and to members of the pharmaceutical industry—when the firm’s own financial interests
were at stake or when the clients’ interests conflicted.
ProPublica also reported that McKinsey failed to disclose these organizational conflicts to the FDA in a
clear violation of its contract with FDA. This shows the limits of a conflicts-of-interest regime that places the onus
on the contractor to disclose its potential conflicts. Although the FDA’s contracts with McKinsey were not clearly
tied to rulemaking, this type of organizational conflict of interest poses obvious risks in that context. For example,
consider a contractor assisting an agency’s regulatory development while also advising clients on how to comment
on, comply with, or push back on an agency’s regulations.
252
Interview 31.
253
David Freeman Engstrom, Daniel E. Ho, Catherine M. Sharkey & Mariano-Florentino Cuéllar, Report to the
Administrative Conference of the United States, Government by Algorithm: Artificial Intelligence in Federal
Administrative Agencies 63, https://www-cdn.law.stanford.edu/wp-content/uploads/2020/02/ACUS-AI-Report.pdf.
254
We discuss FFRDCs in greater detail in Section VII(F) of the report.
255
Interview 21.

41

Another risk of contracting out rulemaking functions is the potential for a “slippery slope,” a
concern with at least two dimensions. First, some respondents worried about crossing the
inherently governmental line with rulemaking.256 Current guidance indicates that making policy
choices is an inherently governmental function, and that many of the tasks listed in the prior
section can be considered “closely associated with inherently governmental functions.” Many
delegated tasks, like the drafting of a proposed rule, reflect a policy decision that has already
been made by agency personnel. However, there is some concern that because rulemaking
involves iterative and complex decision-making, there is potential for contractors to creep up
to—or even pass—the inherently governmental function line. While the OFPP final policy letter
included a checklist to be used when agencies use a contractor for functions that are closely
associated with inherently governmental functions, only one interviewee mentioned that their
agency uses such a checklist.257 In that case, the checklist was part of a larger procurement
package agency staff fill out to justify using a contractor. The extent to which it actually
informed management practices throughout the contract’s administration—which was OFPP’s
stated goal—is unclear.
A second concern regards the potentially additive nature of rulemaking contracts, where in some
cases an agency can add rulemaking tasks à la carte. At least one agency official worried that
rulemaking contracts have the potential—incrementally—to become unwieldy and difficult to
manage.258 When this happened with a prior contract at the official’s agency, the Contracting
Officer Representative was forced to find innovative ways to fund a contract that grew to be
much larger than initially planned.
Finally, as noted earlier, transparency is limited with contractors. With respect to rulemaking,
one expert noted that transparency is a core value.259 To the extent that contractors engage in
proprietary work that is more shielded from the public than agency work, contractor use is
potentially in conflict with this core value.

C.

Discussion

Agencies grapple with a complex set of advantages and disadvantages surrounding their choices
to turn to contractors for rulemaking support. The findings of this section are closely related to
those from the prior sections of this report: understandings of these advantages and
disadvantages are colored by perceptions of the appropriateness of contractors in rulemaking
more generally. And respondents told us about the benefits and drawbacks of contractor use in
the context of the specific tasks for which they personally had experience working with
contractors.
We emphasize that given the number of legal, political, and operational constraints that agencies
work under, the benefits of using contractors in rulemaking are numerous and considerable.
Agencies can benefit from a contractor’s outside expertise, flexibility (including surge capacity),
perceived neutrality, and their ability to concentrate on a specific set of tasks. Contractors also
256

Interview 21.
Interview 1.
258
Interview 16.
259
Interview 31.
257

42

can serve as sources of workforce stability and institutional memory and offer an outsider’s
perspective on agency work.
Although contractors offer the possibility of access to these benefits, the road to get there can be
fraught. With respect to disadvantages, a lack of shared culture and values can limit contractor
effectiveness and agencies may struggle to muster resources to adequately manage contractors.
Using contractors may also expose agencies to new levels of ethical risk that are not present or
are significantly lessened when government employees perform rulemaking work. Specifically,
relying on contractors can lead to a slippery slope, where contractor work unintentionally creeps
up to—and potentially even encroaches on—the performance of tasks that are inherently
governmental.
Additionally, the potential for conflicts of interest—both on the personal and organizational
levels—warrants special consideration in rulemaking. Rules issued by government agencies can
have considerable financial and policy implications, meaning those with special access to an
agency’s decision-making on a rule could inappropriately use that information for financial or
personal gain in the short- or long-term. We note that this issue did not rate as highly salient in
our conversations with agency officials. While we have no reason to suspect that there is
widespread abuse happening on this dimension, the normative consequences are such that we
flag the issue as one that both ACUS and agency officials ought to pay special attention to
moving forward. Agencies should structure rulemaking contracts and manage rulemaking
contractors in ways that account for potential conflicts of interest.
The findings in this section highlight a recurrent theme of this report: the critical importance of
agency managers to the successful use of contractors in rulemaking. Harnessing the benefits of
contractors—while simultaneously minimizing the disadvantageous aspects of contractor use—
requires savvy and competent government managers who are willing to shoulder the risks and
burdens to reap the rewards. This observation is consistent with broader academic arguments
about the vital role of strong management in overseeing government contracts.260

VI. What are current agency practices for the
use of contractors in rulemaking?
Among agencies that rely on contractors in rulemaking, there are a wide variety of practices
regarding how to manage contractors. Most of these practices are informal and unwritten; below
we lay out some of the different approaches to contractor and task management in rulemaking
that respondents shared with us.

For example, Kettl argues that “[g]overnment relationships with the private sector are not self-administering; they
require, rather, aggressive management by a strong, competent government.” DONALD F. KETTL, SHARING POWER 6
(1993), See also supra note 247.
260

43

A. Written policies about contractors in rulemaking
While agencies have written policies in place about all manner of activities, our research did not
uncover any instances of written agency policies about the use of contractors in rulemaking
specifically. No interview subject or survey respondent definitively indicated the existence of
such a policy.261 Instead, agency practices about what contractors do in rulemaking follow
informal norms, fall under broader agency “umbrella” policies that cover contractor use or
procurement, or are of a more idiosyncratic nature. For example, one former contractor noted
that it was difficult to operate in a “standard practice” because an agency’s policy about what
contractors could do in rulemaking was highly variable and subject to change over time.262
Despite the lack of official written policies, there is widespread but incomplete awareness of the
existence of an inherently governmental function line with respect to rulemaking. The awareness
is widespread in that many agency officials noted that contractors should not be involved in
making policy decisions.263 One agency official described what contractors can do as
“everything up to pushing the big red policymaking button,”264 while another indicated that
contractors should be “kept out of the policy piece.”265 Often such statements were organically
volunteered by respondents, whereas other times respondents offered this information when
asked more specifically about tasks that contractors should not or do not do.
Awareness of an inherently governmental function line is incomplete in that few respondents
were able to explicitly name the terms “inherently governmental function” or “IGF” and many
could not articulate a clear sense of where the “policy line” at their agency fell for rulemaking.
For example, one contractor that we spoke with indicated they had not heard of the term “IGF”
in the many years they had been performing rulemaking work for their agency, but that this lack
of knowledge had not “interfered” with their work.266 Of course, the term “inherently
governmental function” is a term of art; someone might not need to know the exact words to
perform their job effectively. However, the lack of familiarity with the term suggests that at least
some respondents might not know that there is an official line in the procurement regulations or
how to decide what contractors should and should not do. On the agency side, one expert noted
that the responsibility to maintain the inherently governmental function line with contractors in
rulemaking rested with senior agency management, precisely because not all staff were familiar
with such principles.267
Among respondents who were more familiar with the inherently governmental function
principle, several expressed confusion with how to apply the principle to rulemaking in practice.
261

The survey asked respondents about the factors that guided decisions about tasks that a contractor took on versus
an agency employee. Four respondents indicated that a “written agency policy on contracting for rulemaking” was a
factor. We followed up with all four respondents; two indicated that this selection was made in error or that their
understanding was incorrect upon more careful consideration. The remaining two did not respond to our follow-up
inquiries.
262
Interview 31.
263
Interview 1; Interview 15; Interview 16; Interview 23; Interview 25; Interview 26.
264
Interview 16.
265
Interview 15.
266
Interview 25.
267
Interview 29.

44

For example, one former agency official stated that it would be appropriate for contractors to
work on writing a proposed rule if all policy decisions had been made.268 However, this person
also noted that, in practice, policy decisions were rarely settled at the outset. Rather, in this
person’s nearly 30 years of rule writing experience, with the exception of one rule, the official
could not think of another case where the program did not make changes based on writers’
questions and feedback. On a different point, one expert noted that using contractors in
rulemaking “can get really muddy” because of the technical nature of rulemaking.269 For
instance, if an agency contracted out for a highly technical portion of the rulemaking, it might be
difficult to have enough subject matter expertise in-house to evaluate the work and make sure it
was consistent with the agency’s policy decisions. Given these difficulties, a third agency official
noted that more examples of what constitutes an inherently governmental function or activities
that are closely associated with inherently governmental functions in the context of rulemaking
would be helpful.270

B. Integrating contractors into an agency’s workflow
While some tasks given to contractors are done at an arm’s length (e.g., taking soil samples and
writing a technical report), others are done side-by-side with agency staff. For the latter, the lack
of written rulemaking policies combined with divergent attitudes towards the appropriateness of
contractors in rulemaking means that agencies have numerous ways to incorporate—or limit—
contractors into the rulemaking workflow.
For example, respondents reported different approaches to inviting contractors to rulemakingrelated meetings. At an agency that relied extensively on contractors to complete rulemakings,
one contractor reported that they regularly attended policy meetings related to rulemaking
projects and that their input was welcomed at these meetings. This contractor noted that:
[W]e work very closely with [the agency] get access to their
systems, kind of work as part of their team, attend their staff
meetings and hear most of what they’re saying. Having that very
open collaborative process I think it is very useful because it
eliminates pretty much most of the distance between client and us.271
In contrast, other agencies had a more limited approach to which meetings contractors could
attend. For example, one agency official indicated that contractors were not invited to attend
meetings with agency leadership due to issues of “trust.”272 Another senior official noted that
they could not recall ever being in a substantive meeting with a contractor present and that
contractors were not allowed to brief political appointees at their agency.273
The confluence of limitations on contractor access to meetings, the compartmentalization of
rulemaking by program areas, and the discrete nature of some contractor tasks means that for
268

Interview 5.
Interview 31.
270
Interview 4.
271
Interview 25.
272
Interview 13.
273
Interview 15.
269

45

some agencies contractor work becomes inward-facing. In these cases, contractors tend not to
represent the agency externally, either to the public or to other component units (e.g., if the
agency is part of a broader department). For instance, contractors at one agency were not allowed
to interact with the agency’s Office of General Counsel, since it was understood that the
attorney-client relationship did not extend to contractors.274 Additionally, one expert noted that
contractors are barred from attending meetings related to FAR rulemakings.275 However,
contractors’ roles are not universally constrained to be internally-facing. As the prior section
illuminated, many contractors have explicitly outward-facing roles and are given limited license
to act on the agency’s behalf.276
Assigning contractors government email addresses is another way that agencies integrate
contractors into rulemaking. At one agency where contractors were integrated into the
rulemaking workflow, a contractor noted that having an agency email address not only helped
them to coordinate with agency officials, but also helped make them feel a part of the agency’s
team.277 Meanwhile at other agencies, officials noted that contractors were still delineated from
agency staff despite having agency email addresses, either because the contractors were required
to disclose their affiliation in their email signature278 or because the email address had a specific
extension that denoted contractor status.279 Importantly, agency policies regarding contractor
email addresses are not specific to rulemaking, but rather are part of broader agency policies
regarding contractor use.
Finally, the way that contractors are integrated into the social fabric and culture of an agency
differs. Some rulemaking contractors sit on-site and work side-by-side with agency staff,280
whereas others work remotely.281 Some contractors felt that the agency treated them like their
own staff and that the relationship between agency personnel and contractors was highly
collegial.282 However, at other agencies there were cultural barriers between contractors and
agency personnel. For instance, at one agency in our interview sample, each one of the five
people we interviewed independently offered that contractors were decidedly not part of the
culture of their agency. While the agency did use contractors for some tasks, they were not
rulemaking tasks. Even then, one person indicated that contractors were physically segmented
off from agency staff and there was an implicit message that agency staff were discouraged from
“cross-pollinating” in a social way with contractors.283

274

Interview 21.
Interview 32; FAR Operating Guide, 21-22 (July 1, 2015),
https://www.acq.osd.mil/dpap/dars/docs/far_dfars_guide/FAR_Operating_Guide_July_2015.pdf (“Attendance at
team meetings is limited to Government employees. Other attendees will be allowed only on a case-by-case basis as
approved by all FAR Principals and should not be present during substantive discussions of the case.”).
276
For example, some contractors convene stakeholders on behalf of the agency, serve as negotiators in an agency’s
regulatory negotiation proceedings, and even participate in the agency’s meetings with OMB.
277
Interview 25.
278
Interview 1.
279
Some agencies include the extension “.ctr” in contractors’ email addresses. Interview 23.
280
Interview 25.
281
Interview 26; Interview 36.
282
Interview 25; Interview 26.
283
Interview 10.
275

46

C. Transparency over contracted rulemaking tasks
Transparency is a core feature of the rulemaking process, but it is not evenly distributed across
contractors and agency personnel. In the absence of agency policies on contractors in
rulemaking, transparency over contracted tasks is handled on an ad hoc basis. We consider two
types of transparency: internal transparency and external transparency. By internal transparency,
we mean visibility within the agency as to which tasks in a rulemaking are performed by
contractors versus agency personnel. By external transparency, we mean transparency outside of
the agency to the public and other stakeholders.
Like other aspects of contracting for rulemaking, there are divergent levels of internal
transparency at the agencies we contacted. At some agencies, managers, typically at the program
level, are keenly aware of which tasks contractors have done and what the scope of work for a
particular rulemaking contract entails (and what it excludes).284 This was not the case
universally, however; a program official at one agency noted that staff would have trouble
discerning which documents in a rulemaking were prepared by contractors, as there was no
obvious way to distinguish the workproducts.285
Several officials interviewed for this project noted that senior leadership is ultimately responsible
for making policy choices in rulemaking and deciding how the process should be managed
internally.286 To them, keeping oversight at the management level mitigates concerns about selfdealing from contractors, because all major policy decisions related to the rule are centralized
within one tier of the agency.287 This form of hierarchy places extra emphasis on internal
transparency; to ensure that contractors are not performing inherently governmental functions
and that ethics requirements are being followed (among other considerations), management must
have insight into which jobs are being done by whom. While respondents overseeing the day-today interactions with contractors expressed confidence in their own oversight, we observed that
at senior leadership levels there was generally less visibility into how a rule was put together.
Instead, we heard the sentiment from more senior leaders that knowing what tasks had been
performed by a contractor was “below my level.”288
Generally speaking, our interviews and our informal review of agency rulemaking materials
suggest that contractor contributions to rulemaking have limited external transparency. However,
the extent of visibility can vary by the type of task at hand. For example, while comment analysis
is often a task performed by contractors, interviewees explained that the contractor’s role is not
usually disclosed in the final rule.289 Agency officials noted that while contractors may provide
an agency with a matrix of comments or some other form of comment summary, this analysis is
reviewed by agency staff and is not a final agency product. In the case of rule text drafting,
284

Interview 1.
Interview 15.
286
Interview 15.
287
There are potential problems with managing risk in this way. Verkuil describes how this strategy can backfire if
agency officials simply rubber-stamp contractor workproduct. The risk is particularly acute “in those [agencies]
strapped for decision personnel [where] the temptation to let the contractors do the thinking for them may be too
hard to resist.” PAUL R. VERKUIL, OUTSOURCING SOVEREIGNTY 46 (2007).
288
Interview 4; Interview 13; Interview 15.
289
Interview 1; Interview 22.
285

47

officials similarly noted that contractors’ role is also not discernible, even in an instance where
the contractor wrote the first draft of a proposed rule.290 However, respondents were again
careful to highlight the agency’s role in overseeing contractors’ work—redrafting text where
necessary or revisiting the underlying comments to make sure the core issues were reflected in a
comment summary.291
One task where there is sometimes greater transparency—internally and externally—is
contractor assistance with regulatory impact analysis (RIA).292 Contractors who work on RIAs
might be academics or industry experts who are known in their respective fields and as one
agency official put it, “it never occurred to us not to” disclose the work that these outside experts
did.293 Another official suggested that divulging who worked on an RIA is in keeping with
academic standards about coauthorship and while disclosure was “not a legal requirement,” it
seemed like the right thing to do.294 Finally, a third official indicated that being transparent about
who worked on an RIA (and their associated levels of expertise) could actually enhance public
perceptions of the legitimacy and quality of the agency’s analysis.295
Transparency over contractor use in RIA need not be burdensome or overly formal. Figure 2
below shows an example of an agency, the Office of the Inspector General at the Department of
Health and Human Services (HHS), disclosing that a proposed rule’s RIA relied on analyses
from two actuarial firms, in addition to analysis conducted by another unit in its department, the
Center for Medicare and Medicaid Services’ Office of the Actuary. Both contracted firms—
Milliman and Wakely Consulting Group—are mentioned by name and each firm’s analysis is
discussed extensively in the RIA section of the proposed rule. Additionally, the agency posted
both contractor’s analytical reports as “supporting material” in the proposed rule’s docket on
Regulations.gov and solicited comment on the contractors’ assumptions.296

290

Interview 3.
Interview 1; Interview 14; Interview 15; Interview 17.
292
Interview 3; Interview 18; Interview 19. Additionally, ACUS has previously recommended that agencies place
RIA consultant reports in the rulemaking docket. See Admin. Conf. of the U.S., Recommendation 85-2, Agency
Procedures for Performing Regulatory Analysis of Rules, 50 Fed. Reg. 28,364 (July 12, 1985) (recommending that
“when a regulatory analysis document relies upon consultant reports, the reports are placed in the public file of the
rulemaking proceeding, even if the Freedom of Information Act’s exemption for intra-agency memoranda, 5 U.S.C.
552(b)(5) might apply to portions of the reports”).
293
Interview 19.
294
Interview 3. The D.C. Circuit found that a consultant’s report that synthesized information in the rulemaking
record was part of the agency’s internal, deliberative process that did not need to be disclosed in the record. United
Steelworkers of America v. Marshall, 647 F.2d 1189, 1218-20 (D.C. Cir. 1980). Lubbers highlights that the court
drew a distinction between synthesizing existing information and generating new information. JEFFREY S. LUBBERS,
A GUIDE TO FEDERAL AGENCY RULEMAKING 359 (2019) (citing Marshall, 647 F.2d at 1220).
295
Interview 19.
296
Wakely Consulting Group, Estimates of the Impact on Beneficiaries, CMS, and Drug Manufacturers in CY2020
of Eliminating Rebates for Reduced List Prices at Point-of-Sale For the Part D Program, www.regulations.gov
Document ID: HHSIG-2019-0001-0003 (Aug. 30, 2018); Milliman, Inc., Impact of Potential Changes to the
Treatment of Manufacturer Rebates, www.regulations.gov Document ID: HHSIG-2019-0001-0002, (Jan. 31, 2019)
291

48

Figure 2. Example of Contractor Disclosure in Proposed Rule Text

Notes: Screenshot of HHS’s proposed rule on safe harbor regulation concerning
prescription pharmaceutical discounts (RIN 0936-AA08; 84 FR 2340 February
6, 2019; text highlighting added for emphasis). This text discloses that the agency
relied on the analyses of two actuarial firms to explore the potential impacts of
the proposed policy changes. Both the Milliman and Wakely Consulting Group
analyses were discussed in the text of the proposed rule and both analyses were
included in the proposed rule’s docket on Regulations.gov.
Another way to increase contractor-related transparency in a non-burdensome way is for
contractors’ reports to clearly disclose relevant contract information. Figure 3 offers an example
of this; it shows the cover sheet for a contractor report that was used in an RIA for a rule issued
by the FDA. Specifically, it displays the names of the individual contractors, the names of the
two contracted firms (the Institute of Food Technologists and RTI International), and the
associated contract number for the contract supporting this work. Each of these three pieces of
information are important: disclosing individual names increases transparency related to
potential personal conflicts of interest, disclosing firm names increases transparency related to
potential organizational conflicts of interest, and having the contract number allows interested
parties to connect the work to relevant contracting actions and procurement databases.

49

Figure 3. Example of Contractor Disclosure in Rule RIA

Notes: Screenshot of the cover sheet for a contractor report prepared by the
Institute of Food Technologists and RTI International in support of the Food and
Drug Administration’s rule on “Mitigation Strategies to Protect Food Against
Intentional Adulteration” (RIN 0910-AG63; 81 FR 34166 May 27, 2016). Text
highlighting added to show the contractor affiliations and associated contract
number. Individual contractor names are also disclosed.
Agencies disclosing contractors’ roles in performing specific tasks is not the only form of
transparency over contractors in rulemaking. One expert noted that, on the front end, competition
over a contract to perform a rulemaking task is a form of transparency.297 And, on the back end,
the Federal Procurement Data System and USAspending.gov (the more user-friendly interface
for public procurement data) provide some information about which firms receive federal
contracts. However, the FPDS is a spending database and it does not include contract-related
documents (e.g., the scope of work for a contract, task orders, etc.). Additionally, as we
explained earlier in Section II, this system does not provide detailed information about the nature
of services performed under a contract (e.g., the name of the rule, rulemaking tasks). This makes

297

Interview 29.

50

it difficult to discern rulemaking contracts from other types of professional services in the
data.298
Enhanced external transparency around contractors in rulemaking is not necessarily an
unmitigated good. Publicly disclosing that the text of a proposed rule was drafted by a contractor
or a comment analysis initially compiled by a contractor, for example, might needlessly undercut
the legitimacy of an agency’s rulemaking enterprise.299 Raising these kinds of concerns may
often not be warranted, particularly if the agency has good contractor oversight practices in
place.
Relatedly, one expert noted that transparency around specific contractor tasks in the rulemaking
process might invite frivolous or otherwise unwarranted legal challenges to a rule.300 Further, the
expert worried that it might not be journalists who mine the data in practice, but rather
competitor firms eager to disrupt an awarded contract by undermining the rule. The expert
preferred to keep these kinds of competitive disagreements to the bid protest venue rather than
having them spill over into APA review of agency rules. As ACUS and the government weigh
options for external transparency, unintended consequences like this should be considered.301

D. Discussion
Among the agencies we studied, practices around contractors in rulemaking are not standardized
or written down. This absence of formalization means that the way contractors interact with
agencies varies meaningfully across agencies, resulting in different approaches to handling all
manner of contractor interactions from their exposure to officials within the agency to whether
contractors are invited to the holiday party. Practices can also vary across rules within the same
agency. Variation among agencies is to be expected and, in and of itself, it is not problematic.
However, in the context of inherently governmental functions, this kind of variation introduces
risk for at least two reasons.

The Project on Government Oversight (POGO) has proposed transparency reforms to the government’s
procurement spending database that would partially address some of the issues raised here. Specifically, POGO
recommends that the database should be improved “so it becomes the one-stop shop for all federal spending
information. This means including actual copies of contracts, delivery or task orders, modifications, amendments,
other transaction agreements, grants, and leases.” Scott Amey, Best Practices for Federal Spending, Testimony
before the H. Comm. on Science, Space and Technology, Subcomm. on Investigations and Oversight and Subcomm.
on Energy (Oct. 21, 2021), https://www.pogo.org/testimony/2021/10/pogo-testimony-best-practices-for-federalspending. This would likely be a very resource-intensive change. Rulemaking contracts are only one slice of the
service contract reporting that would need to be overhauled to achieve this goal. As such, while the change would
vastly improve transparency, calling for broad changes to the FPDS or USAspending.gov is beyond the scope of this
report.
299
Verkuil notes that contractors may enjoy less deference in judicial review, potentially putting government
interests at greater risk. PAUL R. VERKUIL, OUTSOURCING SOVEREIGNTY 109-11 (2007).
300
Interview 29.
301
The government’s need to balance transparency interests against other needs is not limited to the issue of
contractor use. See, e.g., Cary Coglianese, Richard Zeckhauser & Edward A. Parson, Seeking Truth for Power:
Informational Strategy and Regulatory Policy Making, 89 MINN. L. REV. 277, 279 (2004) (noting that “while
transparency serves important goals, it also inhibits some beneficial government activities”).
298

51

First, agency officials may not be well positioned to spot or prevent potential violations of the
inherently governmental standard. As this section documented, at the staff level there is
widespread but incomplete understanding of the term inherently government function and what it
means in the context of rulemaking. At the same time, the lack of internal transparency
surrounding rule production means that agency leaders, who are expected to be responsible for
maintaining the inherently governmental line, do not always have sufficient insight into which
tasks agency staff are performing and which tasks contractors are performing.302 This problem is
exacerbated by senior leaders who adopt an attitude that who does what in a rulemaking is a
detail that is “below my paygrade.”
Second, when it comes to rulemaking, contractor roles are not always as clearly delineated as
one might hope. In some cases, contractors can be deeply enmeshed with an agency, functioning
for many intents and purposes as agency staff. Meanwhile, in other cases, interviewees noted that
contractor roles can creep—starting with one smaller task and then over time growing to
encompass more and larger tasks.303 These kinds of entanglements can become problematic in
rulemaking when the policy decisions associated with a rule—a part of rulemaking that is
definitionally inherently governmental—are not settled matters from the outset. Unfortunately,
the nature of rulemaking means that it can be very difficult, and perhaps at times impossible, to
neatly segment off the policy aspect of the rule from its production. For example, someone
drafting a rule preamble or a regulatory analysis might reasonably ask questions or make
suggestions that ultimately result in a policy being tweaked or changed in some way. The
implications of this feedback are different if the person in question is a contractor rather than an
agency employee.
These two points suggest that agencies might be well served to adopt written policies regarding
appropriate contractor roles in and contractor management strategies for rulemaking. A policy
like this might accomplish multiple goals simultaneously. By taking a clear stand on what the
term inherently governmental function means in the context of rulemaking, this document could
serve as an educational resource for staff with limited knowledge about the principle and what it
means for rulemaking. Additionally, the policy could function as an internal management control
to help agency leaders preserve the inherently governmental function line in the rulemaking
arena.
This section has also raised the question of what obligations an agency should have in terms of
disclosing contractors’ rulemaking contributions outside of the agency. Currently, external
transparency is limited and ad hoc, making it hard for anyone outside the agency to have insight
into contractor roles. We see value in encouraging disclosure around contractors in rulemaking,
but we are cautious about encouraging transparency for transparency’s sake. Sunlight may not be
the best disinfectant given the potential for unintended consequences.
In our estimation, the costs of creating a system where all contractor rulemaking roles are
publicly disclosed for all rulemakings outweigh the benefits. Instead, we urge a bespoke
302

This finding is consistent with earlier research. E.g., Daniel Guttman, Public Purpose and Private Service: The
Twentieth Century Culture of Contracting Out and the Evolving Law of Diffused Sovereignty, 52 ADMIN. L. REV.
859, 873 (2000) (noting lack of internal transparency about which materials were prepared by contractors).
303
Interview 1; Interview 21.

52

approach, where agencies consider where external disclosure of contractors’ rulemaking
contributions is both feasible and in the public interest. By feasible, we mean that an agency
would be able to clearly articulate the contractor’s role without excessive cost to the agency and
that disclosing the contractor’s role would not compromise the contractor’s confidential business
information in some way. By in the public interest, we mean that disclosing a contractor’s role
would not unduly undermine the agency’s position or invite unwarranted or frivolous lawsuits.
One practice that threads this needle, for example, is making contractor-drafted inputs into a
regulatory impact analysis available in the docket on Regulations.gov. Importantly, we see value
in agencies standardizing external disclosure practices across their rulemaking projects, ideally
as part a broader written policy concerning contractors in rulemaking. This will help the public
know what to expect in agency materials.

VII. What other avenues do agencies use to
enhance capacity?
This report has summarized how some agencies use contractors to enhance their capacity, as
“basically staff augmentation”304 or to access a specific technical skill. However, as explained
above, agencies have a wide range of reasons counseling for and against the use of contractors
for any given task. From the perspective of one respondent: “this is all about . . . how do you get
the work done right” given that there are “lots of different resources.”305
In the course of speaking with participants in this project, a recurring theme was that agencies
have options to expand their capacity in addition to or instead of using contractors. For example,
one respondent, an attorney, noted that when they give advice to internal clients about
procurement decisions, they begin by asking about the client’s goals and authorities.306
Depending on the responses, they might counsel the client towards the use of a grant,
cooperative agreement, or a contract.307
In this section, we offer brief summaries of the different methods to enhance agency capacity
that respondents shared with us. Together these sorts of strategies—some of which come from
rulemaking examples while others are more general—form what one respondent described as
“rich human capital planning”308 that can help an agency achieve its mission while operating
within constraints.

304

Interview 1.
Interview 16.
306
Interview 4.
307
Interview 4. Although it did not come up in our research, public-private partnerships might be yet another way to
structure certain programs to leverage the private sector. An ACUS project from 2018 offers several resources on
these topics. Administrative Conference of the United States, Public-Private Partnerships Project,
https://www.acus.gov/research-projects/public-private-partnerships.
308
Interview 33.
305

53

A.

Pay agency employees overtime for surge work

Some respondents explained that overtime or compensatory time for full-time staff are their
agencies’ strategies for handling surges in workload. One noted they spent their Christmas
holiday working on a time-sensitive rule.309 Another explained that when managers authorized
overtime, staff would work late nights and through the weekend, and that this was normal
approach to deal “with the onslaught” of a big rule.310 While overtime and compensatory time
might be reasonable ways to deal with surge needs, they are unlikely to be good solutions for
long-term capacity needs.

B.

Hire full-time staff

An obvious solution for an agency facing labor needs is to hire more agency employees. This is a
seemingly straightforward strategy, and many respondents explained that they had been able to
hire sufficient staff. However, other respondents perceived roadblocks to hiring, even when a
need was present. “Hiring is hard,” shared one respondent.311 It might take many months to hire
a full-time staff member.312 There might also be a cap on how many staff an agency can
employ.313 Also, budget tactics like the sequester “made us more cautious” about hiring full-time
staff because of funding instability.314

C.

Hire temporary staff

Agencies may also supplement their regular staff with short-term employees. This could include
hiring term employees; bringing staff in from other programs, agencies, or departments, as well
as from outside the federal government; rehiring retired employees; and hiring experts or
consultants using a pathway other than a contract.

1.

Term employees

One approach is to create positions that cover a fixed period of time. The U.S. Digital Service,
for example, “operates on a tour-of-service model with a maximum term of four years” and most
people serving for one or two years.315 In addition to the academic fellowships noted below, the
Securities and Exchange Commission hires fellows to serve as financial economists as term
employees for two to four years.316 These hires do not carry the long-term budget considerations
of a regular full-time equivalent employee, and therefore may be helpful to meet short-term
needs.317
309

Interview 23.
Interview 9.
311
Interview 18; Interview 19.
312
Interview 21.
313
Interview 18.
314
Interview 21.
315
U.S. Digital Service, Apply to USDS, https://www.usds.gov/apply.
316
U.S. Securities and Exchange Commission, DERA Careers, https://www.sec.gov/dera/dera-careers.
317
Although it did not come up in our interviews, we note the existence of the “special government employee”
designation, which can be used to hire individuals for short periods. 18 U.S.C. § 202. See also U.S. GOV’T
ACCOUNTABILITY OFFICE, GAO-16-458, FEDERAL WORKFORCE: OPPORTUNITIES EXIST TO IMPROVE DATA ON
SELECTED GROUPS OF SPECIAL GOVERNMENT EMPLOYEES (2016); CYNTHIA BROWN, CONG. RESEARCH SERV.,
310

54

2.

Executive branch rotations

One recurring strategy was to enhance capacity by borrowing staff from other offices. This
involves temporarily reassigning personnel from one program to another, either within the same
agency or from a different agency.
Several respondents shared that their offices either sent staff out to help other programs, or
received that kind of support from other programs.318 As an example, one program with expertise
handling large volumes of comments sent staff to help a program in the same agency that
received a large number of comments in response to a request for information.319 Another
respondent noted that staff from field or regional offices might come for a few months to crosstrain and help with regulatory projects.320 Another shared that staff came from a different
Cabinet department to help set up a program that was similar to their own.321 One idea that came
up in an interview was sending a seasoned economist to supervise a contractor producing an RIA
at another agency, or simply to provide a trained outsider’s perspective to help a less experienced
agency draft an RIA.322

3.

External rotations and fellowship programs

Another authority that agencies can use for rotations or fellowship is the Intergovernmental
Personnel Act (IPA). Under the IPA, federal agencies can temporarily accept the services of
employees of institutions of higher education or “other organizations,” a term that includes
employees from State or local governments, including Tribal organizations; associations of State
or local public officials; any nonprofit organization which has as one of its principal functions
the offering of professional advisory, research, educational, or development services, or related
services, to governments or universities concerned with public management; or a federally
funded research and development center (FFRDC).323 One respondent noted that their agency
receives support from state government detailees under this authority.324
One instantiation of these programs brings academics into government. The Securities and
Exchange Commission’s (SEC) Division of Economic and Risk Analysis, for example, hosts
visiting fellows to serve as financial economists for one year with the possibility of extension.325
The FDA participates in a rotational program with universities and industry for Doctor of
Pharmacy graduates.326 Another example is the Oak Ridge Institute for Science and Education
(ORISE) program for fellows. This STEM-focused fellowship connects “college students, recent
LSB10183, ADVISING THE PRESIDENT: RULES GOVERNING ACCESS AND ACCOUNTABILITY OF PRESIDENTIAL
ADVISORS (Aug. 6, 2018).
318
Interview 3; Interview 16.
319
Interview 3.
320
Interview 5.
321
Interview 16.
322
Interview 31. While this holds some promise, one interviewee noted that agency rulemaking can be highly
technical such that a generalist economist, or one with a different specialty area, might struggle. Id.
323
5 U.S.C. § 3371-3375; 5 C.F.R. Part 334.
324
Interview 16.
325
U.S. Securities and Exchange Commission, DERA Careers, https://www.sec.gov/dera/dera-careers.
326
U.S. Food and Drug Administration, Regulatory Pharmaceutical Fellowship, https://www.fda.gov/aboutfda/center-drug-evaluation-and-research-cder/regulatory-pharmaceutical-fellowship.

55

graduates, postdocs, and faculty to STEM internship and fellowship programs” at the U.S.
Department of Energy and “more than a dozen other federal agencies.”327 One respondent
explained that their agency might turn to an ORISE fellow for policy analysis that could
ultimately feed into regulatory work.328
These kinds of programs, whether they are ongoing and formal like those listed above or
informal and based on word-of-mouth,329 can help both academics and agency staff keep their
skills and knowledge up to date, and agencies can “rely on that expertise considerably.”330 One
respondent explained that after their fellowship was complete, they continued for a period of
time as a contractor to review documents as needed.331
A 2010 report from the Office of Personnel Management documented how infrequently IPAs
were used at that time.332 Guidance from OPM and other programs like the General Services
Administration’s Office of Evaluation Sciences has likely improved uptake of this option since
then, though summary statistics are not available.333 Additionally, agencies are not necessarily on
their own to locate support. The Partnership for Public Service recently launched a program
designed to match those outside of government with IPA opportunities in the federal
government.334 Initiatives like this help make it easier for agencies and potential IPA employees
to find each other.

4.

Retired employees

Several respondents noted the practice of hiring back retired federal workers. A special hiring
authority exists to permit agencies to hire back retirees who then become “reemployed
annuitants.”335 Prior to a statutory change in 2012, a retired federal worker could not

327

Oak Ridge Institute for Science and Education, STEM Internships and Fellowships,
https://orise.orau.gov/internships-fellowships/index.html. Many agencies have internship and externship programs
that bring undergraduate and graduate students temporarily on board; these student workers could potentially
support the rulemaking process.
328
Interview 19.
329
Informal arrangements might include a setup where an agency does not bring on fellows under a structured,
cyclical program, but rather on a more ad hoc or as-needed basis.
330
Interview 9; Interview 11. Another respondent explained that such fellowships can facilitate a continuous
exchange of ideas to keep staff sharp and aware of the research frontier. Interview 12.
331
Interview 11 and follow-up email correspondence with interviewee.
332
U.S. OFFICE OF PERSONNEL MGMT, REPORT TO CONGRESS ON NURSING FACULTY AND THE INTERGOVERNMENTAL
PERSONNEL ACT MOBILITY PROGRAM: THE FORUM, FINDINGS, AND RECOMMENDATIONS 7 (Apr. 2010),
https://www.opm.gov/policy-data-oversight/hiring-information/intergovernment-personnel-act/nursing.pdf.
333
E.g., U.S. Office of Personnel Management, Intergovernment Personnel Act, Policy, Data, Oversight,
https://www.opm.gov/policy-data-oversight/hiring-information/intergovernment-personnel-act; U.S General
Services Administration, Office of Evaluation Sciences, Intergovernmental Personnel Act Toolkit: Internal Guide
for IPAs (Fall 2020), https://oes.gsa.gov/assets/files/ipa-toolkit-oes.pdf.
334
Partnership for Public Service, IPA Talent Exchange Program, https://ourpublicservice.org/ipa-talent-exchange.
335
Interview 16; U.S. OFFICE OF PERSONNEL MANAGEMENT, CSRS AND FERS HANDBOOK, CHAPTER 100
REEMPLOYED ANNUITANTS (Oct. 2013), https://www.opm.gov/retirement-services/publications-forms/csrsfershandbook/c100.pdf. Former employees can also be rehired as contractors (Interview 20), in the manner described
throughout this report. However, some respondents raised ethical issues with this rehiring of former employees as
contractors, as it has the potential to create a “revolving door” scenario and to invite perceptions of pay inequity
between current agency personnel and the individual(s) who has left the agency. Interview 20; Interview 36.

56

simultaneously draw their pension and receive a salary from the federal government.336 While
retired workers could be rehired, the pension amount would be offset by a salary reduction—
a significant disincentive.337 Although Congress granted some waivers, it ultimately changed the
law to allow “dual compensation” in certain circumstances, such as “for employees in positions
for which there is exceptional difficulty in recruiting or retaining qualified employees.”338
Under this program, the agency pays the employed annuitant like a regular employee. From the
perspective of one reemployed annuitant, this option allowed the agency to benefit from the
employee’s rulemaking skills and allowed the employee to continue drawing a salary and doing
the “fun stuff” for a short period of time, while stepping back from the management
responsibilities that came with their seniority when they were a regular employee.339 They also
noted that an agency might be more comfortable sharing confidential information with rehired
employees rather than contractors.340 Another respondent noted that as a reemployed annuitant
they felt more free to give their unvarnished opinions and push the agency to try new
perspectives and approaches.341
On the one hand, this approach can be a way to hire back someone whose expertise is valued,
who does not need to learn the basics, and who can come back if inadequate succession planning
left a problematic gap.342 On the other hand, these arrangements made some respondents
uncomfortable. In particular, they worried about the perception of a retiree drawing their federal
pension while also earning additional income, such that it might look “like a setup from the
beginning.”343 Also, junior staff, who might have been eager to step up into more senior roles,
might feel displaced by returning, more senior colleagues.344

5.

Experts or consultants

Agencies can also hire individuals as experts or consultants under a special program that makes
them “essentially” a government employee.345 As explained by the Office of Personnel
Management, agencies can retain experts or consultants for up to one year or on an intermittent
basis.346 Although our interviews did not surface instances of agencies using this specific
authority for rulemaking support, it is a promising potential avenue for capacity enhancement
when an agency needs short-term access to particular expertise.

336

Moving Ahead for Progress in the 21st Century Act (MAP–21) § 100121, Pub. L. No. 112–141, 126 Stat. 405
(July 6, 2012).
337
Interview 6.
338
KATELIN P. ISAACS, CONG. RESEARCH SERV., R43755, PHASED RETIREMENT: IN BRIEF 2 (Oct. 8, 2014). Phased
retirement is another option. See generally id.
339
Interview 5.
340
Interview 5.
341
Interview 6.
342
Interview 20.
343
Interview 20.
344
Interview 20.
345
Interview 16.
346
U.S. Office of Personnel Management, Fact Sheet: Expert and Consultant Pay, https://www.opm.gov/policy-dataoversight/pay-leave/pay-administration/fact-sheets/expert-and-consultant-pay/; 5 U.S.C. § 3109.

57

D.

Obtain informal assistance

Turning to a method that is less formal than hiring, several respondents noted that they might
informally consult over email, by phone, or in person with government colleagues who have
relevant expertise.347 While such consultation with peers does not rise to the level of a part- or
full-time assignment, it remains an important, informal avenue to supplement in-house capacity.
Informal support might also include extended engagements when one part of an agency with
particular expertise “steps in” to support another part of agency, for example with the production
of an RIA.348 For example, one program might temporarily and partially “lend” staff to another
program to help out with comment processing or document drafting and review. One respondent
described this kind of arrangement as “almost like a detail” and as especially useful for a
rulemaking project that is time-sensitive or high-profile.349
Another method of informal assistance can come from the OMB and interagency review
processes under Executive Order 12,866.350 One respondent explained that their agency’s
regulations benefited from expertise shared as a result of White House, OMB, and interagency
review.351 Another respondent noted that when their agency updates its guidelines for economic
analysis of rules, they will send it to OIRA economists to solicit their feedback on it.352

E.

Borrow another agency’s contract

One respondent explained that an agency can allow other agencies to take advantage of their
existing contractors.353 This might be especially helpful if the agency does not have time to begin
a new contract for their work and the contractor’s skills are a good match for the agency’s needs.
Under an interagency agreement, one agency can transfer funds to the agency with the contract,
including some funding to offset the administrative burden of the contracting agency. The
contracting agency then issues a task order under its contract but for the other agency’s purposes,
and the contracting agency serves as a “middle man” throughout. Other than the GSA
Schedules,354 which are a series of contracts that GSA sets up for government-wide use, there is
no central database of contracts that agencies can borrow from peer agencies in this manner.
Instead, the arrangements are driven by informal networks. The contracting agency might be
especially willing to facilitate a transaction like this if it has a particular interest in getting the
task done.

347

Interview 7; Interview 24.
Interview 19.
349
Interview 19.
350
Interview 31.
351
Interview 9.
352
Interview 23.
353
Interview 16.
354
The Federal Supply Schedule is an online catalog where federal agencies can purchase a standardized set of
products and services in a streamlined manner. The schedule is maintained by GSA and can be accessed at
https://www.gsaadvantage.gov.
348

58

F.
Rely on Federally Funded Research and Development
Centers
Some respondents mentioned that having a Federally Funded Research and Development Center
(FFRDC) can be especially useful for rulemaking projects.355 FFRDCs are a special kind of
entity that is sponsored by a government agency but operated by a contractor.356 Under the FAR,
FFRDCs cater to a “special long-term research or development need which cannot be met as
effectively by existing in-house or contractor resources.”357 They are required “to operate in the
public interest with objectivity and independence, to be free from organizational conflicts of
interest, and to have full disclosure of its affairs to the sponsoring agency.”358 One respondent
explained that pre-decisional information about their agency’s rules could be used for financial
gain, and as such should not be shared with contractors, but could be shared with the agency’s
FFRDC because of the protections in place.359
As part of their unique status, FFRDCs have “access, beyond that which is common to the
normal contractual relationship, to Government and supplier data, including sensitive and
proprietary data, and to employees and installations equipment and real property.”360 This special
access should not be used by the FFRDC “to compete with the private sector,” but the FFRDC is
allowed to work for an entity other than its sponsor agency “when the work is not otherwise
available from the private sector.”361
As GAO has explained, FFRDCs receive multi-year awards from sponsoring agencies following
competitions,362 some of which are recompeted at the end of that term and some of which are
extended through a sole source process without competition.363 These longer-term arrangements
can be more stable but can also suffer from concerns about lack of competition, mission creep—
FFRDCs were intended to help with research and development, the boundaries of which can blur
in practice—and other challenges.364

355

Interview 21.
FAR 35.017 et seq.; see generally MARCY E. GALLO, CONG. RESEARCH SERV., R44629, FEDERALLY FUNDED
RESEARCH AND DEVELOPMENT CENTERS (FFRDCS): BACKGROUND AND ISSUES FOR CONGRESS (Apr. 3, 2020).
357
FAR 35.017(a)(2).
358
Id.
359
Interview 22.
360
FAR 35.017(a)(2).
361
Id.
362
As an example, the MITRE Corporation operates several FFRDCs. This includes the National Security
Engineering Center, which works with the Department of Defense and the Intelligence Community; the Center for
Advanced Aviation System Development, which works with the Federal Aviation Administration; the Center for
Enterprise Modernization, which works with Department of the Treasury and the Department of Veterans Affairs;
the Homeland Security Systems Engineering and Development Institute, which works with the Department of
Homeland Security; the CMS Alliance to Modernize Healthcare, which works with the Centers for Medicare and
Medicaid Services; and the National Cybersecurity FFRDC, which works with National Institute of Standards and
Technology (NIST). MITRE Corp, We Operate FFRDCs, https://www.mitre.org/centers/we-operate-ffrdcs.
363
U.S. GOV’T ACCOUNTABILITY OFFICE, GAO-16-458, FEDERAL WORKFORCE: OPPORTUNITIES EXIST TO IMPROVE
DATA ON SELECTED GROUPS OF SPECIAL GOVERNMENT EMPLOYEES (2016).
364
Id.; CYNTHIA BROWN, CONG. RESEARCH SERV., LSB10183, ADVISING THE PRESIDENT: RULES GOVERNING
ACCESS AND ACCOUNTABILITY OF PRESIDENTIAL ADVISORS (Aug. 6, 2018).
356

59

Not all agencies have an associated FFRDC, but those respondents whose agencies did have one
and who had used them for rulemaking expressed considerable confidence in them. They “are
here for the mission and for the long run.”365 One respondent explained that FFRDC staff are
“staff extenders” for their agency.366 Their agency has an internal committee to oversee the tasks
assigned to the FFRDC, which will sometimes recommend that the agency go with a regular
contractor if the FFRDC is not needed to complete the work because, for example, it is not
confidential.367 Because the relationships are long-term, the lack of a ramp-up period means that
can be a “core set of individuals who can do the bulk of the work.”368 The FFRDC can
subcontract to add particular expertise where needed, but at this person’s agency the choice of
subcontractor was reviewed by agency staff.369 These personnel changes could go more quickly
than in the federal government, with the FFRDC able to bring new expertise online in three
months.370 Like other contractors, specific task orders govern the assignments.371 The tasks are
not as limited as with other contractors, because this respondent’s understanding was that the
FFRDC was permitted to do inherently governmental work.372
While FFRDCs began as a way to bring scientific and technical expertise to the government in
wartime, their missions have expanded over time.373 The application of FFRDCs to rulemaking
is an interesting development that would benefit from additional consideration.

G.

Discussion

This section describes different methods to bring outside expertise into the government. There
are likely other options that did not emerge through our interviews. For example, advisory
committees convened under the Federal Advisory Commission Act, or other gatherings of
experts like the Technical Expert Panels convened by the Centers for Medicare and Medicaid
Services,374 can also bring specific expertise to the government.
These various avenues for capacity enhancement demonstrate that there are a wide range of
options for agencies to consider as they plan for future workforce and expertise needs.
Undoubtedly, not all of these options will be appropriate or applicable for every agency or
program’s situation. The larger finding is that, while agencies sometimes rely on contractors for
rulemaking tasks, there are also other sources of extra capacity and expertise that they can and do
use.

365

Interview 21.
Interview 22.
367
Id.
368
Interview 21.
369
Id.
370
Id.
371
Id.
372
Id.
373
MARCY E. GALLO, CONG. RESEARCH SERV., R44629, FEDERALLY FUNDED RESEARCH AND DEVELOPMENT
CENTERS (FFRDCS): BACKGROUND AND ISSUES FOR CONGRESS 1-3 (Apr. 3, 2020).
374
Centers for Medicare & Medicaid Services, Technical Expert Panels, https://www.cms.gov/Medicare/QualityInitiatives-Patient-Assessment-Instruments/MMS/Technical-Expert-Panels.
366

60

Additionally, this examination points to areas where common capacity needs might be met by
pooling resources across agencies. For instance, one set of respondents expressed enthusiasm
about the idea of having a cadre of well-trained economists who could work government-wide on
the economic analysis of rules.375 A rotation program that “everyone will do eventually,” and
that everyone will benefit from eventually, could encourage agencies to lend out valuable
employees for short-term assignments.376

VIII. Proposed recommendations
This report has provided a descriptive account of contractors in rulemaking: how they are
perceived, what they do, and what agency practices dictate their use. It has also detailed other
ways that agencies enhance their capacity beyond using contractors. Recounting these factors
gives rise to many normative and practical considerations; below we outline areas that merit
either additional action or additional research. By way of conclusion, we propose six
recommendations that build on the report’s findings.

A.

Taking stock of contractors in rulemaking

A key takeaway from this report is that views about the proper role of contractors in rulemaking
vary widely. At some agencies, contractors are an indispensable part of the rulemaking process;
meanwhile, at others they play a negligible or even nonexistent role when it comes to rules. As
Section V explained, there are many reasons for these divergent practices, yet across agencies it
is clear that no one entity or policy bears full responsibility for how contractors are used in
rulemaking.
Rulemaking follows a team production approach; agency leaders set broad policy directions,
procurement officials navigate the specifics of rulemaking related contracts, regulatory offices
coordinate and support rulemaking, program personnel work on programmatic aspects of rules,
agency attorneys provide legal review, agency economists produce or otherwise assist with
regulatory impact analysis, and so on. This fragmented approach makes it so that no one party is
necessarily aware of or responsible for which contractors are doing what for which rules—and
whether the agency-contractor balance in rulemaking activities makes sense from the broader
perspective of the agency’s workforce structure and needs.
In light of this, we make the following recommendation:
Recommendation #1: All rulemaking agencies should take stock of if and how
contractors contribute to their rulemaking processes.
This recommendation is targeted at all agencies that issue rules, not just agencies that regularly
issue rules or actively use contractors in rulemaking. Among respondents in agencies that did not
or only sporadically used contractors, many could not articulate a compelling rationale for why
375
376

Interview 31.
Id.

61

their agency avoided or otherwise did not use contractors. While contractors are by no means
necessary in rulemaking, agencies may stand to benefit from an evaluation of what bringing
contractors into the rulemaking fold might mean. Upon consideration, these agencies may decide
to continue to refrain from using contractors, but doing so should, in our view, be the result of an
active policy decision rather than having past practices, general skepticism about contractors, or
inertia guide decision-making.
Among agencies that actively use contractors in rulemaking (or those that decide, upon
consideration, that greater engagement is worth pursuing), this recommendation suggests a
careful evaluation of how the agency could and should be employing contractors. Specifically,
we encourage consideration of the following questions:
•

Does the agency’s mission, scope of rulemaking activities, or rulemaking content counsel
towards special caution with respect to using contractors for rulemaking? For example,
what kind of potential organizational or personal conflicts of interest might be implicated
by the subject matter of a rule being considered for contractor involvement?

•

Which rulemaking functions do contractors perform at the agency?

•

What factors, internal and external to the agency, contributed to past engagements being
viewed as successful or problematic?

•

What management controls are in place, both at the front end and during the performance
of a contract, to ensure contractors are appropriately used in rulemaking? Is the agency
using contractors for functions like rule drafting or editing that involve the exercise of
discretion and therefore warrant special management controls?

•

With respect to contractors in rulemaking, how does the agency implement ACUS’s
contractor ethics recommendations?377

•

How does the agency’s funding structure inform its level of reliance upon contractors for
rulemaking tasks? If contractors have been functioning side-by-side with agency staff for
extended periods, might it better serve the public interest to hire additional agency staff?

•

For contracted rulemaking functions that may be performed across programs (or agencies
within a department), what structures are in place that might enable or inhibit peer
programs (or agencies) to take advantage of an existing contract?

These is a non-exhaustive set of suggestions, and our hope is that any agency “stock taking” of
contractors in rulemaking would be a holistic and comprehensive exercise.

377

Admin. Conf. of the U.S., Recommendation 2011-3, Compliance Standards for Government Contractor
Employees—Personal Conflicts of Interest and Use of Certain Non-Public Information, 76 Fed. Reg. 48789, 48792
(Aug. 9, 2011).

62

B.

Considering the range of options to enhance capacity

This report has also shown the wide range of ways that agencies bolster their internal expertise
and capacity. It is clear that, while contractors can play a role in some rulemaking activities,
agencies are not limited to using contractors to address expertise or capacity needs. We note that
although these various techniques might not be appropriate for all agencies or all tasks, they form
a menu of sorts that agencies should be aware of as they do their human capital planning.
Recommendation #2: When evaluating resource needs for ongoing or upcoming
rulemaking projects, agencies should consider the array of options to enhance capacity
and expertise.
As we have documented in detail, these options include paying overtime, approving
compensatory time, hiring more full-time staff, hiring temporary staff—including term
employees, borrowing staff from elsewhere in the executive branch, using the Intergovernmental
Personnel Act or other fellowship programs to bring people in from outside of government,
rehiring retired employees, or hiring experts or consultants. The menu also includes obtaining
informal assistance from peers, borrowing another agency’s contract, or building a relationship
with a Federally-Funded Research and Development Center.
To get started, the agency might consider the following questions:
•

What other forms of workforce capacity enhancement (see Section VII) is the agency
already using to support rulemaking? How have these approaches helped to meet the
agency’s needs?

•

Which of these methods does the agency not use, and why?

•

Is the agency producing rules in an optimal manner given its unique set of challenges and
opportunities?

C.

Developing written policies for contractors in rulemaking

Two additional takeaways of this report inform our next recommendation. First, our research
indicates that agencies have not developed written policies for contractors in rulemaking.
Second, in the absence of more formal policy, attitudes can fill the vacuum and play a significant
role in determining when contractors are used and the type of agency access they have within a
particular rulemaking project.
Together these two findings suggest that a lack of standardization can lead to uneven use and
management of contractors across rulemaking projects. This has the potential to be particularly
acute in agencies that heavily rely on contractors to complete rulemaking tasks. Because having
a written policy could improve the rulemaking process and mitigate potential risks, we include it
in our next recommendation:
Recommendation #3: As appropriate, agencies should consider adopting
written policies for using contractors in rulemaking.
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When developing written policies for rulemaking agencies should grapple with which
rulemaking tasks are inherently governmental and which are closely associated with inherently
governmental functions, and also commit to how they will handle issues around transparency.
Specifically, agencies are advised to consider the following questions:
•

Given the policy context of the agency’s rulemakings and the policymaking processes
that are in place, which tasks does the agency consider to be inherently
governmental? Which tasks are considered closely associated with inherently
governmental?

•

What management controls are in place to ensure that only agency employees are
conducting inherently governmental rulemaking tasks?

•

Which types of rulemaking-related meetings should contractors be invited to? From
which meetings should they be excluded as a matter of practice?

•

How will the agency monitor compliance with a written policy for contractors in
rulemaking?

•

Consistent with the next recommendation, what are the agency’s policies for internal
and external transparency of contractor use for different rulemaking tasks?

•

Would additional written guidance or an agency-specific supplemental FAR
provision help standardize and improve ethics requirements to minimize potential for
organizational and personal conflicts of interest? Are there other provisions that could
help agencies cope with the potential for these conflicts?

•

In what situations should agency personnel seek out other avenues for rulemaking
support instead of contractors? Which forms of support are available at the agency
and how can they be used?

•

How might training plans better incorporate procurement law and policy, e.g.,
inherently governmental functions and those that are closely associated with
inherently governmental functions?

•

How is OFPP’s checklist for closely associated functions deployed in practice to
ensure adequate management controls not just at the beginning of a contract, but
throughout?

D.

Optimizing transparency

As this report has shown, there are opportunities to improve disclosure of contractor involvement
in rulemaking. Internal and external transparency serve different and important purposes, each of
which warrant careful consideration. Increased internal transparency would likely strengthen
agency oversight of contractors and improve decision-makers’ awareness of how contractors
64

may influence materials developed internally. The virtues of external transparency trade off
against unintended consequences of additional disclosures; agencies are advised to consider
these trade-offs and home in on areas where additional external transparency serves the public
interest. These values are reflected in the fourth recommendation:
Recommendation #4: Agencies should bolster internal transparency about
contractor involvement. With respect to external transparency, agencies should
consider disclosing contractor involvement when such disclosure serves the
public interest on balance.
The following points may help agencies determine the right balance of transparency:
•

What internal transparency mechanisms are in place to ensure that agency managers
and leaders have visibility into which tasks were performed by contractors?

•

Which contractor-performed tasks, if any, should be externally disclosed in the
rulemaking process? Technical or other expert reports that form part of the
rulemaking record, for example, should be placed in the docket to the extent
practicable.378 Disclosure of day-to-day writing or project management support, on
the other hand, might reasonably vary. For the latter, internal management controls
might be a superior way to ensure proper accountability.

•

When and how should contractor-prepared materials be disclosed? For example,
should contractor-produced reports include contractor contact information and logos?
Should the agency upload a separate document to the Regulations.gov docket
disclosing contractor involvement? If so, for which tasks? Is it feasible to include
relevant contracting or procurement-related tracking numbers?

E.
Reevaluating rulemaking applications of “inherently
governmental”
As noted above, current procurement policy does not offer much guidance that is tailored to the
kinds of rulemaking activities discussed in detail in this report. Regulatory drafting is one area
where additional guidance may be warranted. Existing guidance indicates that drafting of
legislative materials (e.g., legislative proposals, testimony, responses to Congressional
correspondence, or responses to audits) is an inherently governmental function. Congress has
also designated the drafting of strategic plans and other management documents as inherently
governmental. ACUS has previously recommended that while contractors can be helpful “in
gathering and analyzing information or regulatory analysis,” “agencies should ensure that . . .
[a]gency employees, not consultants, draft regulatory analysis documents.”379 Existing guidance,

378

This is consistent with ACUS Recommendation 85-2, which encouraged agencies to place consultant reports in
the rulemaking docket. Admin. Conf. of the U.S., Recommendation 85-2, Agency Procedures for Performing
Regulatory Analysis of Rules, 50 Fed. Reg. 28,364 (July 12, 1985).
379
Admin. Conf. of the U.S., Recommendation 85-2, Agency Procedures for Performing Regulatory Analysis of
Rules, 50 Fed. Reg. 28,364 (July 12, 1985).

65

however, expressly includes regulatory drafting as closely associated with inherently
governmental work, meaning it can be delegated to contractors.
This discrepancy may be explained by the practical realities of how much labor is required to
conduct rulemaking; it includes analytical tasks (like RIA), the compilation of a factual record,
and the need to manage and read comments (potentially numbering into the millions), legal
analysis, and program decisions, among the many other tasks that we have discussed above.
These realities may encourage a narrower reading of “inherently governmental” as it applies to
rulemaking. Drafting legislative materials, on the other hand, generally might not have this same
kind of workload, so walling these functions off from contractors could be viewed as less
disruptive to agency workflow.
Yet, drafting legislative proposals is akin to regulatory drafting in that both activities culminate
in binding law. The stakes of these substantive functions are more similar than not. Other forms
of legislative drafting (e.g., Congressional correspondence) can involve important separation of
power and constitutional authorities, but they can also be fairly routine such that aspects of
drafting could be handled by a contractor. This is similar to regulatory drafting, which, as this
report has shown, implicates a wide variety of tasks, ranging from the ministerial to the highly
discretionary. In short, the substantive distinction between drafting legislative materials and
drafting rulemaking materials is not immediately apparent. This report has accumulated
information about rulemaking activities that could spur additional thinking about whether the
safeguards in current policy adequately protect the public interest.
In addition, when it comes to rulemaking activities, agencies are largely left to navigate the
application of the inherently governmental function test on their own and to parse the appropriate
line for those tasks that are closely associated with inherently governmental functions. In
practice, as we detailed in Section VI, this has led to a situation where agency understandings of
inherently governmental functions are widespread but incomplete.
The conversations we had with agency officials and experts through the course of this project
underscored the fact that each agency’s rulemaking apparatus is unique. When it comes to
writing rules, each agency faces different challenges and opportunities. At the same time, many
of the questions raised in this report about the appropriate ways to use contractors in rulemaking
were common across interviewees for this report. And at least one participant suggested that
having more examples of what constitutes an inherently governmental function or activities that
are closely associated with inherently governmental functions in the context of rulemaking
would be helpful.380
OMB is well-positioned to evaluate these issues and their connection with inherently
governmental and closely associated functions, as laid out in this fifth recommendation:
Recommendation #5: OMB should evaluate whether, in light of this report’s
findings, additional clarification and guidance is warranted for rulemaking

380

Interview 4.

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tasks that are currently classified as closely associated with inherently
government functions.
Drawing on its own procurement expertise in OFPP and its regulatory expertise in OIRA, OMB
might consider whether the contractor-performed tasks inventoried in this report fall within
broader understandings of inherently governmental functions and whether current agency
practices align with broader procurement best practices. Specifically, and in light of the many
ways contractors are used in rulemaking, OMB could revisit the 2011 policy guidance describing
functions closely associated with rulemaking.

F.

Additional considerations and future research

The descriptive findings in this report highlight just how much remains unknown about the role
of contractors in rulemaking. These gaps in our knowledge raise important and substantive
questions. We view this report as an entrée into a larger research agenda exploring the nuances
associated with the patterns we have identified, as outlined in the sixth and final
recommendation:
Recommendation #6: ACUS should commission additional research addressing
important outstanding questions about contractors in rulemaking and draw upon
the expertise of its membership to consider how the following ideas could be
shaped into meaningful recommendations.
We note five strands of research ripe for additional development and consideration:
1. Contract structure and management. Contracts for rulemaking services are noteworthy
because aspects of these services can usually be classified as “closely associated” with
inherently governmental functions. Additionally, rulemaking involves many steps and
iterative work, posing potential challenges in crafting and overseeing contracts for
rulemaking services. How might agencies optimally structure rulemaking contracts in
light of these special challenges? What are best practices for communicating with and
managing rulemaking contractors?
2. Extent of contractor rulemaking support at some agencies. As this report has noted, some
agencies rely on contractors in rulemaking in a regular and extensive fashion. Do these
situations arise organically, or are they the result of intentional agency design choices?
Anecdotal evidence suggests the former, when perhaps a contractor obtains a contract for
one discrete function (e.g., comment analysis, data analysis) and over time the work
expands to many functions.381
Where rulemaking contractors function more like staff, this raises an additional set of
questions about whether the agency has retained sufficient governance and oversight
capabilities. What are the root causes of extensive reliance on contractors in agency
rulemaking? In agencies facing this situation, is rulemaking unique or does the imbalance
381

Interview 1; Interview 21.

67

extend to other agency functions? Do certain contract structures give rise to this
phenomenon? Is the public interest put at particular risk in these scenarios?
3. Rulemaking support from FFRDCs. Interviewees highlighted FFRDCs as a promising
source for rulemaking support. For agencies that have a steady regulatory workload, an
FFRDC might be worth considering to serve as rulemaking “staff extenders”382 where
hiring is not feasible. More research is needed, however, to understand what rulemaking
activities are appropriate for FFRDCs as opposed to regular contractors, because use of
this special entity is constrained by law.
4. Cross-cutting rulemaking support. Many agencies contract for the same kinds of support
in rulemaking and a standing contract, organized through GSA or another agency, might
help streamline access to these services and enhance capacity governmentwide. Are there
areas where having government-wide rulemaking service providers might enhance
government capacity? For instance, many agencies use contractors for comment analysis
support; are there ways to improve the process by which agencies access these services so
that each agency does not need to establish its own contract? Relatedly, as discussed in
Section VII, regulatory impact analysis is another area where agencies frequently seek
contractor support; would having a cadre of well-trained government economists who
could work on a rotational basis across agencies improve analytical quality? Or are there
other ways that agencies could supplement this capacity?
5. Procurement-related transparency reforms. This research has highlighted the disconnect
that exists between public procurement systems and the individual contracts that allow
contractors to assist agencies in rulemaking (among other services). In theory, public
spending and procurement databases could be tied to rulemaking contracts in concrete
ways that could assist in oversight and planning, but this is not possible right now. Which
databases or other resources should agencies and the public rely on for these purposes?
What kinds of reforms might facilitate use of these databases to track the roles of
contractor firms and contractor personnel in rulemaking? How can these data be used to
further enhance internal and external transparency in rulemaking without overly
burdening agency workflows? Is there a way to structure the data to allow agencies to be
aware of and potentially borrow other agencies’ rulemaking contracts? Would a
requirement that agencies disclose their general contracting practices, including the
safeguards they have in place, increase procurement-related transparency? If so, which
practices should be included in the disclosure?

382

Interview 22.

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IX. Appendix: Methodology for the Report
A.

Overall approach

The rulemaking outputs of federal agencies vary considerably, both in terms of volume and type
of rules. Given this variation, we anticipated considerable diversity in the use of contractors to
support the creation of those outputs. Our research design attempts to capture this diversity with
the goal of assessing both the depth of use of regulatory contractors within agencies and the
breadth of regulatory contracting practices across agencies. To that end, we relied on interviews
and a survey to gather information to evaluate contractor use in rulemaking.383 We supplemented
these techniques with our own reading of the scholarly literature as well as research obtained
from government websites, including the Federal Procurement Data System-Next Generation,
agency rulemaking dockets on Regulations.gov, and individual agency websites.
We conducted 36 interviews with agency oversight officials, experts, rulemaking officials
(current and former), and contractors; these interviews constituted the crux of the project.
Because we encouraged respondents to invite knowledgeable colleagues to accompany them to
the interviews, our interviews spanned 45 individuals. These interviews were semi-structured,
meaning that we prepared a set of standard questions for each type of interviewee and then used
these questions as a starting point for each interview. As appropriate, we asked follow-up
questions during the interviews, particularly when an interviewee mentioned a new topic that we
had not yet encountered or made a comment that in some way conflicted with our understanding
of that agency’s practices.
We discuss the recruitment practices associated with each phase of the project in the sections that
follow. The interviews were approximately 60 minutes long, with some shorter and many longer;
all except one were completed in one session. All were conducted virtually via Zoom or by
phone.
To encourage candor, all survey and interview subjects were given promises of confidentiality,
such that direct quotes would not be attributed to them individually or to their agency without
their explicit permission. Accordingly, in the body of the report we refer to subjects in general
terms (e.g., referencing them by the type of agency with which they were associated), and do not
provide additional identifying information unless we were explicitly given permission to do so
by the respondent. To further protect respondent confidentiality, we use gender neutral pronouns
throughout the report to refer to participants in the report.

1.

Oversight and expert interviews

From July 2021 to January 2022, we conducted eight interviews with 12 agency oversight
officials and scholars with expertise in contracting and procurement. The purpose of these
interviews was to ascertain the history of federal policy with respect to regulatory contracting, as
well as the scope of current agency regulatory practices and any potential issues or problems
about which overseers and other experts might be aware. Our recruitment strategy was to target
The interview and survey protocols were reviewed and approved by the University of Virginia’s Institutional
Review Board (UVA IRB-SBS #4467).
383

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high-profile individuals with domain-specific knowledge, relying in some cases on our own
personal networks and in other cases on suggestions from ACUS staff and members. For
oversight officials, we interviewed individuals at agencies with cross-cutting oversight authority
with respect to procurement and/ or rulemaking, such as the General Services Administration,
the Government Accountability Office, and the Office of Management and Budget. We also met
with scholars with expertise in rulemaking, contracting, and procurement.

2.

Survey

The survey portion of this project gauged the breadth of contractor involvement in rulemaking
across a wide swath of agencies. Specifically, we sought access to individuals with a current
working knowledge of the different potential roles contractors had taken on for rulemakings
within their agency; our intent was to gather information from “front line” rulemaking personnel
on recent rulemakings. To do this, we identified all regulatory contacts listed for “completed
actions” on the Unified Agenda of Regulatory and Deregulatory Actions (“Unified Agenda”) for
a recent term.384 This yielded a list of 324 contacts in 47 unique agencies.385
On September 8, 2021, we fielded an online Qualtrics survey, the “2021 Survey on the Role of
Contractors in Rulemaking,” via email to the 324 contacts.386 The survey addressed contractor
roles with respect to the specific rule for which the individual was the named contact and took
between 7 to 10 minutes to complete; Section IX(B) of the report contains the survey instrument.
To further encourage respondents to complete the survey, we followed up with email reminders
one week, two weeks, and three weeks after our initial email. We received 51 responses to the
survey, of which 38 were complete, for a response rate of 12.5%.387
The survey asked respondents whether they would be willing to provide additional input into the
project. We used this question to recruit several additional respondents for the rulemaking
official interviews, as discussed below.

3.

Rulemaking official interviews

The interviews allowed us to plumb the depth of agency choices about contractor use in
rulemaking. From August to December 2021, we conducted 24 interviews with 27 agency
rulemaking officials from six agencies and four interviews with six agency contractors engaged
in rulemaking work. These semi-structured interviews aimed to elicit the nature of contracting
relationships at the agency, as well as current agency policies regarding both rulemaking and
384

The Unified Agenda is a semiannual report on agency rulemakings; each entry in the report includes contact(s) at
the agency who were involved with the development of that rule. We selected a recent edition of the Unified
Agenda, but we do not disclose which term we used so as to further protect respondents’ confidentiality. We
excluded completed actions that had a final action status of “Withdrawn” from our sample, since these rules did not
undergo the full regulatory development cycle.
385
In some cases, more than one person was listed as the regulatory contact. When this happened, we randomly
selected one of the individuals listed to reduce overall respondent burden. We excluded contacts that had no
associated email address.
386
We closed the survey on October 6, 2021. Prior to fielding the survey, ACUS gave advance notice of the survey
to ACUS representatives for the 47 agencies included in the survey.
387
In calculating the response rate, we exclude from the denominator 20 respondents for whom we received email
bouncebacks. We use the number of complete responses (38) for the numerator.

70

contracting. Most of our interviewees were program staff (including some Contracting Officer
Representatives or CORs), although we also spoke with individuals in general counsel offices,
centralized regulatory development offices, budget planning offices, and economic analysis
divisions, among others.388 Our subjects included current officials, as well as several retired
rulemaking officials. The interviews spanned six agencies, including three Cabinet-level
departments, two independent agencies within the executive branch, and one independent
regulatory commission; we chose some of these agencies because they were active in producing
rules and others because they were less active. We were referred to the six contractors we
interviewed by ACUS or agency interviewees, who suggested these individuals as highly
knowledgeable about a particular area of contracting for rulemaking.
We began by contacting the ACUS member for each selected agency. Initial interview
participants were identified by their respective ACUS member as a person familiar with
rulemaking (and, potentially, contracting relating to that topic). Subsequent interviewees were
selected via a chain referral or “snowball” technique.389 As previously noted, we also used the
survey to identify additional respondents. We conducted between one and seven interviews at
each agency, stopping when we reached a saturation point, wherein interviewees were providing
repetitive information consistent with what we had already learned. However, in two cases we
interviewed only one person at an agency.

388

We note also that our design did not focus on contracting officers or contracting officer representatives within
agencies. While these important roles deserve further study, our aim in this report was to connect with agency staff
who are close to the rulemaking process. Additional research is merited to connect the findings of this report to the
procurement apparatus within agencies.
389
This is in keeping with ACUS guidance on the use of interviews for its projects. See Jennifer Nou & Gregory
Huber, Qualitative Research Methods: A Guide for ACUS Consultants (2019),
https://www.acus.gov/sites/default/files/documents/ACUS%20Consultant%20Guide%2012%2010%202019%20FIN
AL.pdf.

71

B.

Survey instrument

2021 Survey on the Role of Contractors in Agency Rulemaking

Purpose of the Study: Welcome to the 2021 Survey on the Role of Contactors in Agency Rulemaking. This
survey is part of a project for the Administrative Conference ofthe United States (ACUS), which is exploring
how agencies use contractors in the rulemaking process. The purpose of the study is to gather information
on the wide set ofrulemaking tasks that contractors perform for federal agencies and how agencies make
decisions about these tasks. The project is descriptive in nature—it will not explore legal questions like
whether a speciﬁc task was appropriately assigned to a contractor. For more information about the project,
please visit the ACUS project webpage: https://www.acus.gov/research-projects/contractors-rulemakings.
Voluntary Participation: You have been selected to participate in this study because you were listed in a
recent Uniﬁed Agenda of Regulatory and Deregulatory Actions as the regulatory contact for a rulemaking at
your agency. The ideal respondent is an agency oﬃcial with ﬁrsthand knowledge of the agency practices
with respect to the rule identiﬁed. If another oﬃcial at your agency is better suited to answer these
questions, you can share the survey link with them; the link is not unique. Your participation is voluntary.

72

Time Required: This survey should take 7 to 10 minutes to complete.
Timeline: We would be very grateful if you could complete the survey by October 6,2021.
Risks and Beneﬁts: There are no anticipated risks in this study. There are no direct beneﬁts to you for
participating in this research study. You will receive no payment forparticipating in the study.
Conﬁdentiality of Responses: In the project report for ACUS, survey responses will not be connected to
particular agencies unless you give explicit permission at the end of this survey. The report will never name
individual respondents. Rather, the project report will use survey responses to provide aggregated
information about agency practices. For example, the report will summarize recommended best practices
(but not which agency they come from).

Whom to Contact with Questions:
Bridget Dooling (J.D.)
Research Professor
Regulatory Studies Center, Trachtenberg School
The George Washington University
805 21st St NW, Suite 600
Washington, DC 20052
(202) 994-3989
bdooling@gwu.edu
Rachel Augustine Potter (Ph.D., M.P.P.)
Associate Professor
Department of Politics
University of Virginia
1540 Jeﬀerson Park Avenue
Charlottesville, VA 22903
(434) 924-3614
rapotter@virginia.edu

73

To obtain more information about the study, ask questions about the research procedures, express concerns
about your participation, or report illness, injury or other problems, please contact: Tonya R. Moon, Ph.D.
Chair, Institutional Review Board for theSocial and Behavioral Sciences One Morton Dr Suite 500 University
of Virginia, P.O. Box 800392 Charlottesville, VA 22908-0392 Telephone: (434) 924-5999 Email:
irbsbshelp@virginia.edu Website: https://research.virginia.edu/irb-sbs Website for Research Participants:
https://research.virginia.edu/research-participants UVA IRB-SBS #4467.
Please click on the arrow in the lower right to begin.

Intro questions
We are contacting you because you were listed as a point of contact in the Uniﬁed Agenda for the following
rule that was recently issued by your agency: "${e://Field/Title}"(RIN ${e://Field/RIN}).
Are you familiar with this regulation and how it was created within your agency?
Yes
No

You have indicated that you are not familiar with this regulation and how it was created within your
agency. If another oﬃcial at your agency is best suited to answer these questions, we would appreciate it
if you would share the survey link with them.

Please select the name of your agency.

What is your title? Please also include the oﬃce in which you work.

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Consider the following activities related to the production of the rule titled: "${e://Field/Title}" (RIN
${e://Field/RIN}). For each of the following activities indicate the level of contractor involvement.
“Contractor” refers to the person or entity with whom the agency contracted. If multiple people worked
under the same contract, please record that as one contractor.
Select N/A if a particular step did not apply to this rulemaking.

No
contractor
Preliminary or other research (e.g., literature
review)
Technical or other scientiﬁc testing used as inputsin the
rulemaking process
Stakeholder or other public outreach (e.g., meetings,
fact-sheet preparation, press releasedrafting)
Drafting all or part of the Paperwork ReductionAct
statement
Drafting all or part of the Regulatory Impact
Analysis
Drafting all or part of the Regulatory Flexibility,
federalism, or other analyses
Drafting all or part of the Statement of Basis and
Purpose
Drafting all or part of other portions of the
preamble
Drafting all or part of internal agency decision
memos
Processing and management of some or all public
comments
Drafting all or part of the proposed rule regulatorytext
Drafting all or part of the ﬁnal rule regulatory text

75

One
contractor

More than
one
contractor

N/A

No
contractor
Management of all or portions of internal agency
drafting and review
Management of all or portions of OMB / OIRA
review
Management of interagency collaborations or
interagency working groups
Other (please explain)

76

One
contractor

More than
one
contractor

N/A

With respect to the rule titled "${e://Field/Title}" (RIN ${e://Field/RIN}), what factors guided decisions
about tasks that a contractor took on versus an agency employee? Check all that apply:
Written agency policy on contracting
Unwritten agency policy on contracting
Written agency policy on contracting for rulemaking
Unwritten agency policy on contracting for rulemaking
Consideration of inherently governmental functions
Adequacy of agency resources
Past practices
Need for expertise
Ethical considerations
Other (please explain)
Don't know

If available, please provide a web link for the written agency policy on contracting for rulemaking.

77

Evaluative block
Is there anything else you would like us to know about the role of contractors in rulemaking at your
agency?

Would you be willing to talk with us in more detail about your responses?
Yes
No
Please provide your name and contact information (email and phone number).

Who else should we contact, at your agency or elsewhere, to learn more about the role of contractors in the
rulemaking process? If you can, please provide name, organization,and contact information (email and/or
phone number).

Are you willing to have your responses attributed to your agency in the report? The default is that your
responses will not be connected to your agency in the report to ACUS.
Yes
No
Powered by Qualtrics

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