Public Contract Law Journal

Simplifying Inherently Governmental Functions: Creating a Principled Approach from Its Ad Hoc Beginnings

by Thomas J. Laubacher

Thomas J. Laubacher ( serves as a Regulatory Counsel in the Food and Drug Administration’s Center for Tobacco Products. An earlier version of this Article was submitted in partial satisfaction of the requirements for the degree of Master of Laws in Government Procurement at The George Washington University Law School. The author wishes to thank his wife for her constant support and encouragement and the librarians for all their help in the completion of this Article. The author also wishes to acknowledge Professor Christopher Yukins for his insight and guidance in the development of this Article. The views expressed in this Article are solely those of the author and do not reflect the official policy or position of the Center for Tobacco Products, Food and Drug Administration, Department of Health and Human Services, or any other U.S. government agency.

I.   Introduction

In 1961, thousands of babies across Europe, the Middle East, and Canada were born with “flipperlike arms and legs and other defects.”1 But this massive problem was not occurring in the United States.2 Thanks to a U.S. Food and Drug Administration (FDA) employee, Dr. Frances Oldham Kelsey, the cause of these defects, thalidomide, had not been approved for sale in the United States to combat morning sickness.3 The company that sought approval for the drug, Merrell, complained to Dr. Kelsey’s supervisors and accused her of being a “petty bureaucrat.”After all, the drug’s availability across Europe should have equaled a straightforward approval.5 If the approval request had not landed on Dr. Kelsey’s desk but rather on the desk of a contractor working for FDA — looking to meet monthly approval quotas or fearing retaliation from his supervisors, this horrible drug might not have been kept off U.S. shelves.

Every day, Americans rely on the federal government for services. These services include ensuring the food they eat is free from poisons and hazardous chemicals, protecting citizens from criminals and foreign enemies, and overseeing travel across the United States. Providing these services across fifty states to over 300 million people takes an enormous bureaucracy and an annual budget in the trillions of dollars.6 But the U.S. government’s workforce is not enough to accomplish all these tasks so the federal government supplements its bureaucracy by spending hundreds of billions of dollars on goods and services each year.7

While obtaining goods and services through contracts allows the government to tap into the advantages of private industry, some services provided by the government are too important to be performed by an outside contractor. As shown by Dr. Kelsey and her withholding of thalidomide’s FDA approval,8 some functions of the government must go beyond making investors happy. These inherently governmental functions must be performed by government employees, who have sworn to uphold the Constitution.9

One can easily grasp the concept of an inherently governmental function as something too important for a non-federal employee to handle.10 However, the task of defining and identifying these inherently governmental functions proves to be more difficult. Over the past five decades, the federal government wrestled with the definition of inherently governmental functions. Several definitions of the term have been put forth and numerous lists of what are and what are not inherently governmental functions have been presented, codified, and rescinded.11 This hodgepodge of definitions, lists, and instructions on inherently governmental functions brought confusion and uncertainty to federal contracting, as agencies tried to complete their missions by outsourcing commercial functions without a clear idea of the division between commercial functions and inherently governmental functions.12 When the federal government tried to rein in inappropriate outsourcing in 2009, its procurement workforce often pushed back — arguing no adequate definition for inherently governmental function exists.13

In an attempt to clear up this confusion over inherently governmental functions, Congress directed the executive branch to come up with a single definition of inherently governmental functions.14 Following a Memorandum from President Obama, the Office of Management and Budget (OMB)’s Office of Federal Procurement Policy issued Policy Letter 11-01, which attempted to create a single definition of inherently governmental functions.15 The effectiveness of this definition and categorizations have been debated — some say the definition does not encompass enough functions and others say it does not draw a bright enough line between inherently governmental functions and functions closely related to inherently governmental functions.16 The Policy Letter also failed to establish what should be done if an agency violates the requirement not to contract out inherently governmental functions.17

In the past, when Congress believed the executive branch over-contracted and allowed non-government workers to perform inherently governmental functions, Congress would pass a law defining that function as inherently governmental or would remove its funding.18 However, persuading members of Congress to agree on anything slightly controversial in today’s political climate is nearly impossible,19 and even with agreement, it often takes years for ideas to become actual legislation.20 If the political party controlling Congress matches the party of the President, relying on Congress as a check against executive power is practically futile.21

The judiciary is better suited to answer questions over whether a particular function is inherently governmental or not. Courts not only can exercise injunctive power to immediately stop an executive agency from allowing contractors to perform inherently governmental functions but can also review facts of specific cases to apply previously derived standards.22 This authority makes the courts a more efficient and effective mechanism than relying on Congress to create simple, overarching legislation affecting inherently governmental functions — hoping that the executive branch follows the legislation as intended. A case can progress through the judiciary without politicians holding it hostage and using it as a political pawn. While courts may be better suited to hear, and decide, arguments over what is inherently governmental, case law surrounding this issue is rather sparse, and some courts decline to make a ruling based on the political question doctrine.23

Part II of this Article begins with an historical look at outsourcing work performed for the federal government and reviews the development of the term “inherently governmental functions” over the past half-century. Part III discusses the various forums available to prevent a federal agency from outsourcing inherently governmental functions. Part IV analyzes previous suggestions for changes to the area of inherently governmental functions in federal procurement. Part V proposes a simplified definition of inherently governmental functions.

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