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APM 2012-01: Guidance on Inherently Governmental and Critical Functions and Information Collection -- FY 2012 Service Contract Inventory


To: Heads of Contracting Activity, Program Managers/Project Officers, Contracting Officer Reprsentatives

From: Angela Billups, Ph.D. /s/, Senior Procurement Executive

Subject: Guidance on Inherently Governmental and Critical Functions and Information Collection – FY 2012 Service Contract Inventory

Effective Date: March 1, 2012 (Revised June 11, 2012 – see “Summary of Revisions”)

    1. Purpose. The purpose of this guidance is to implement Office of Management and Budget (OMB) guidelines, information collection, and reporting requirements for inherently governmental and critical functions.
    2. Background. Federal Acquisition Regulation (FAR) Case 2012-001 implements the Office of Federal Procurement Policy (OFPP) Policy Letter 11-01, Performance of Inherently Governmental and Critical Functions, published in the Federal Register on September 12, 2011, see attached. The proposed FAR rule provides guidance to managers and the acquisition workforce alike on managing the performance of inherently governmental and critical functions. The OFPP Policy Letter clarifies when outsourcing of government services is appropriate and when it is not, and lists management responsibilities in strategic human capital planning and in the pre-award and post award of contracts. Agency managers  are required to ensure institutional knowledge  is maintained by sufficient personnel  with the requisite  training, experience  and expertise to oversee contractor effort; and all agencies are required  to analyze a number  of factors in order to right size its acquisition workforce necessary to maintain its mission and operations. This OFPP Policy Letter is the result of the mandate given to OFPP by Congress in Section 321 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 and replaces OFPP Letter 93-1.

      Section 743 of Division C of the Fiscal Year (FY) 2010 Consolidated Appropriations Act, P.L.111-117, requires civilian agencies to prepare an annual inventory of their service contracts and to analyze the inventory to determine if the mix of Federal employees and contractors is effective or if rebalancing may be required.

      Section 736 of Division D, of the Omnibus Appropriations Act, of 2009, P. L. 111-8 requires civilian agencies subject to the Federal Activities Inventory Reform Act (FAIR) Act of 1998 to give special consideration to using Government employees to perform these functions closely associated with inherently governmental functions. The OMB memorandum entitled "Managing the Multi-Sector Workforce" dated July 29, 2009, for criteria addressing the in­sourcing of work under Pub. L. 111-8 is available at:
    3. Definitions. "Inherently governmental functions" are defined in the OFPP Policy Letter as a function that is so intimately related to the public interest as to require performance by Government employees.

      OFPP Policy Letter 11-01 adds a new definition, "critical functions", which means a function that is necessary to the agency being able to effectively perform and maintain control of its mission and operations. Typically, critical functions are recurring and long-term in duration.

      Finally, "Acquisition function closely associated with inherently governmental functions" means supporting or providing advice or recommendations with regard to inherently governmental activities.

      Some examples of inherently governmental functions listed in the OFPP Policy Letter include:

      participation as a voting member on any source selection board; determining prices to be fair and reasonable; and, awarding contracts. The OFPP Policy Letter provides test whereby managers can determine if the needed tasks are inherently governmental functions.   Tasks that are closely associated with inherently governmental functions are those contractor duties that could expand to become inherently governmental functions.

      Some examples of closely associated with inherently governmental functions include: participating as a technical advisor to a source selection board; drafting the price negotiation memorandum; or, providing inspection services. These examples illustrate how an expansion of duties that are closely associated with inherently governmental functions could eventually lead to inherently governmental functions without sufficient management controls or oversight on the part of the Government.

      The OFPP Policy Letter includes three Appendices, which provide examples and a checklist to enable the acquisition workforce to effectively protect the government's interests. Appendix A

      provides examples of inherently governmental functions, whereas, Appendix B lists examples of closely associated with inherently governmental functions. Program and project managers as well as contracting officers will be impacted by the additional planning, documentation, and monitoring requirements. The HHS acquisition workforce should familiarize themselves with these lists in examining government requirements and be cognizant of them when developing an acquisition strategy. Appendix C is a responsibility checklist for managers and the acquisition workforce to use in mitigating tasks that are closely associated with inherently governmental functions from becoming inherently governmental functions.
    4. Scope. This guidance applies to all new requirements for procuring services, resulting in contracts awarded on or after March 1, 2012; specifically:
      • Each new contracts awarded for services with a total estimated value (including options) greater than the micro-purchase threshold ($3,000);
      • Each Task Order and Delivery Order (regardless of the source or award date of the basic contract, order, Blanket Purchase Agreement or other contractual vehicle; and,
      • Each modification to an award for services (regardless of the source or date of the basic award action) if the modification:
      • adds work, changes the performance  work statement, or otherwise  changes contractor performance requirement; and/or
    5. Roles and Responsibilities.

      A.   Requiring Activity Officials (Program/Project Managers/Contracting Officer's Representative and Other Requirements Developers) - shall review the OFPP Policy Letter 11-01 for guidance prior to choosing the category of services to be acquired. The requiring activity official shall ensure that IGFs are not being acquired and determine which of the following categories listed below is applicable to the prospective contract requirement:

      • Closely Associated for functions closely associated to inherently governmental
      • Critical Function for critical functions
      • Other Functions for all other functions

      Specifically, the requiring activity official shall input one of the following phrases into the "description of requirement" field of the purchase request: "Closely Associated", "Critical Functions", or "Other Functions", as applicable. Additionally, a meaningful description of the service shall be entered after the category of service designation.

      B.   Heads of Contracting Activity - shall work with their requiring activity and program officials to ensure that the "Description of Requirements" in the purchase requests for service acquisitions contain one of the above noted category of service designations.

      C.   Contracting Officers - shall review the purchase requests to ensure that all requirements for services meeting the criteria in Paragraph 4 above include a category of service designation and a meaningful description of the services to be acquired.   If not provided, the Contracting Official shall work with the requiring activity official to obtain a category designation and meaningful description. Additionally, this information shall be inserted in the description field for each new award within the contract writing system.

      Note: The information in the description field of the contract writing system is transmitted to the contract action report (CAR). Submission and accuracy of the CAR resides with the contracting officer who awards the contract action and releases the CAR to the Federal Procurement Data System (FPDS). General Services Administration (GSA) is updating the FPDS instructions for "Field 6M - Description of Requirements" to identify the following phrases, "Closely Associated", "Critical Functions" or "Other  Functions." An annual FPDS report for service contract inventories, which is currently being developed, will generate the description of requirement field for the most recently reported modification; therefore the description field for each modification of the covered contracts should also include this information.

      Training.   In accordance with the OFPP Policy Letter 11-01, HHS is reviewing the policy letter and reporting requirements and plans to provide training and assistance to help the acquisition workforce understand their roles and responsibilities.

      HSAR. The HHSAR will be amended, if required, upon publication of the FAR rule.

      Summary of June 11, 2012 revisions made to APM 2012-01:

      General: The phrases “inherently governmental functions, “critical functions” and “closely associated with inherently governmental functions” are spelled out rather than using acronyms.

      3. Definitions, Paragraph 4: Deleted reference to OFPP policy letter providing a test for closely associated with inherently governmental functions (policy letter only provides a test for inherently government functions).

      3. Definitions, Paragraph 6: Corrected references to Appendices B and C of the OFPP policy letter to reflect that they refer to closely associated with inherently governmental functions rather than critical functions.

      3. Definitions, Paragraphs 4, 5 and 6: Corrected all references to the acronym “CF” to closely associated with inherently governmental functions.

      5. Roles and Responsibilities, Note: Corrected “Critical Associated Functions” to say “Critical Functions”.

       Also see:

      Back to HHS Acquisition Policies

Content last reviewed on December 4, 2014