FAR 7.503—Policy.
Plain-English Summary
FAR 7.503 states the core policy on inherently governmental functions: agencies may not use contracts to perform work that must be reserved to government officials and employees. It explains that agency judgments about whether a function is inherently governmental can be reviewed and changed by appropriate Office of Management and Budget officials, which underscores that this is a governmentwide control issue, not just an agency preference. The section then gives a nonexclusive list of functions that are inherently governmental or must be treated that way, including criminal investigations, prosecutions and adjudications, military command, foreign policy, agency policy decisions, budget priorities, direction of federal employees, intelligence operations, hiring decisions, approval of position descriptions and performance standards, property disposal decisions, procurement decisions, FOIA release decisions, security clearance hearings, licensing actions, budget policy, collection and control of public funds, treasury account control, administration of public trusts, and drafting congressional or audit responses. It also lists functions generally not inherently governmental, such as budget support, reorganization planning, policy analysis support, regulation development support, acquisition planning support, technical proposal evaluation support, statement-of-work support, and FOIA support, while warning that these services can become problematic depending on how they are structured and administered. In practice, this section is meant to help agencies draw the line between permissible contractor support and prohibited contractor control, especially in sensitive areas where contractors could influence official judgment or exercise governmental authority. For contractors, it signals that even when a service is allowed, the contract must be carefully written and managed so the contractor does not make decisions reserved to the Government.
Key Rules
No contracting for inherently governmental work
Contracts may not be used to perform functions that are inherently governmental. These are duties that require the exercise of sovereign authority or official discretion that must remain with Government personnel.
OMB may review agency determinations
If an agency decides a function is or is not inherently governmental, that determination may be reviewed and modified by appropriate OMB officials. Agencies therefore must be prepared to justify their classification decisions.
Illustrative list of prohibited functions
The section lists examples such as criminal investigations, prosecutions, military command, foreign relations, policy determinations, budget priorities, direction of federal employees, intelligence operations, hiring decisions, property disposal decisions, procurement decisions, FOIA release decisions, security clearance hearings, licensing actions, budget policy, public fund control, treasury account control, public trust administration, and drafting congressional or audit responses.
Procurement decisions stay with the Government
In prime contract activities, contractors may not decide what supplies or services to acquire, vote on source selection boards, approve requirements or evaluation criteria, award or terminate contracts, administer contracts, determine cost allowability or reasonableness, or vote on performance evaluation boards. These are core Government functions even when contractors may assist.
Some support services are allowed
The section identifies functions generally not inherently governmental, including budget support, reorganization and planning support, policy analysis support, regulation development support, performance evaluation support, acquisition planning support, technical proposal evaluation support, statement-of-work support, and FOIA support. These may be contracted for if structured so the contractor does not exercise official authority or judgment reserved to the Government.
Context can make support work problematic
Even when a service is not inherently governmental, it may approach that line depending on the nature of the work, how the contractor performs it, or how the Government manages it. Agencies must guard against contractor access or influence that effectively lets the contractor make or shape official decisions.
FOIA and audit responses require judgment
Approval of FOIA releases and administrative appeals, as well as drafting congressional testimony and responses to congressional correspondence or audit reports, are treated as inherently governmental because they involve official judgment and Government accountability. Routine, nonjudgmental FOIA responses may be excepted when statute, regulation, or policy removes discretion.
Public funds and licensing are sensitive
Collection, control, and disbursement of fees, royalties, duties, fines, taxes, and other public funds are inherently governmental unless a statute authorizes private collection services. Similarly, approval of Federal licensing actions and inspections remains a Government responsibility.
Responsibilities
Contracting Officer
Ensure the solicitation and contract do not assign inherently governmental functions to a contractor. Structure the work so any permissible support is advisory or ministerial only, and keep final decisions, approvals, and official judgments with Government personnel.
Agency Program Officials
Identify which functions are inherently governmental, document the rationale for classification decisions, and ensure contractor support does not cross into decision-making, supervision, or official approval authority.
OMB Officials
Review and, when appropriate, modify agency determinations about whether a function is inherently governmental. Provide governmentwide oversight to prevent improper outsourcing of sovereign functions.
Contractor
Perform only the support functions assigned by the contract and avoid making official decisions, exercising discretion reserved to the Government, or acting as a voting member on boards or panels that perform inherently governmental tasks.
Federal Employees
Retain control over policy, hiring, procurement, enforcement, adjudication, public fund handling, and other inherently governmental activities. Supervise contractor work so it remains within lawful support boundaries.
Practical Implications
This section is a major boundary-setting rule: if a task involves official judgment, coercive authority, or Government accountability, it likely cannot be outsourced.
A common pitfall is writing a contract for “support” work that, in practice, lets the contractor shape requirements, evaluate competitors, or influence awards and terminations.
Another risk is overreliance on contractors in sensitive administrative areas like FOIA, budget, or personnel support, where the contractor may end up making decisions instead of assisting Government staff.
Agencies should review both the statement of work and day-to-day administration; a permissible contract can become improper if the contractor is allowed too much access, authority, or independence.
Contractors should watch for roles that sound advisory but include voting, approval, or final-review authority, because those are red flags for inherently governmental concerns.
Official Regulatory Text
(a) Contracts shall not be used for the performance of inherently governmental functions. (b) Agency decisions which determine whether a function is or is not an inherently governmental function may be reviewed and modified by appropriate Office of Management and Budget officials. (c) The following is a list of examples of functions considered to be inherently governmental functions or which shall be treated as such. This list is not all inclusive: (1) The direct conduct of criminal investigations. (2) The control of prosecutions and performance of adjudicatory functions other than those relating to arbitration or other methods of alternative dispute resolution. (3) The command of military forces, especially the leadership of military personnel who are members of the combat, combat support, or combat service support role. (4) The conduct of foreign relations and the determination of foreign policy. (5) The determination of agency policy, such as determining the content and application of regulations, among other things. (6) The determination of Federal program priorities for budget requests. (7) The direction and control of Federal employees. (8) The direction and control of intelligence and counter-intelligence operations. (9) The selection or non-selection of individuals for Federal Government employment, including the interviewing of individuals for employment. (10) The approval of position descriptions and performance standards for Federal employees. (11) The determination of what Government property is to be disposed of and on what terms (although an agency may give contractors authority to dispose of property at prices within specified ranges and subject to other reasonable conditions deemed appropriate by the agency). (12) In Federal procurement activities with respect to prime contracts- (i) Determining what supplies or services are to be acquired by the Government (although an agency may give contractors authority to acquire supplies at prices within specified ranges and subject to other reasonable conditions deemed appropriate by the agency); (ii) Participating as a voting member on any source selection boards; (iii) Approving any contractual documents, to include documents defining requirements, incentive plans, and evaluation criteria; (iv) Awarding contracts; (v) Administering contracts (including ordering changes in contract performance or contract quantities, taking action based on evaluations of contractor performance, and accepting or rejecting contractor products or services); (vi) Terminating contracts; (vii) Determining whether contract costs are reasonable, allocable, and allowable; and (viii) Participating as a voting member on performance evaluation boards. (13) The approval of agency responses to Freedom of Information Act requests (other than routine responses that, because of statute, regulation, or agency policy, do not require the exercise of judgment in determining whether documents are to be released or withheld), and the approval of agency responses to the administrative appeals of denials of Freedom of Information Act requests. (14) The conduct of administrative hearings to determine the eligibility of any person for a security clearance, or involving actions that affect matters of personal reputation or eligibility to participate in Government programs. (15) The approval of Federal licensing actions and inspections. (16) The determination of budget policy, guidance, and strategy. (17) The collection, control, and disbursement of fees, royalties, duties, fines, taxes, and other public funds, unless authorized by statute, such as 31 U.S.C. 3718 (relating to private attorney collection services), but not including- (i) Collection of fees, fines, penalties, costs, or other charges from visitors to or patrons of mess halls, post or base exchange concessions, national parks, and similar entities or activities, or from other persons, where the amount to be collected is easily calculated or predetermined and the funds collected can be easily controlled using standard case management techniques; and (ii) Routine voucher and invoice examination. (18) The control of the treasury accounts. (19) The administration of public trusts. (20) The drafting of Congressional testimony, responses to Congressional correspondence, or agency responses to audit reports from the Inspector General, the Government Accountability Office, or other Federal audit entity. (d) The following is a list of examples of functions generally not considered to be inherently governmental functions. However, certain services and actions that are not considered to be inherently governmental functions may approach being in that category because of the nature of the function, the manner in which the contractor performs the contract, or the manner in which the Government administers contractor performance. This list is not all inclusive: (1) Services that involve or relate to budget preparation, including workload modeling, fact finding, efficiency studies, and should-cost analyses, etc. (2) Services that involve or relate to reorganization and planning activities. (3) Services that involve or relate to analyses, feasibility studies, and strategy options to be used by agency personnel in developing policy. (4) Services that involve or relate to the development of regulations. (5) Services that involve or relate to the evaluation of another contractor’s performance. (6) Services in support of acquisition planning. (7) Contractors providing assistance in contract management (such as where the contractor might influence official evaluations of other contractors). (8) Contractors providing technical evaluation of contract proposals. (9) Contractors providing assistance in the development of statements of work. (10) Contractors providing support in preparing responses to Freedom of Information Act requests. (11) Contractors working in any situation that permits or might permit them to gain access to confidential business information and/or any other sensitive information (other than situations covered by the National Industrial Security Program described in 4.402 (b)). (12) Contractors providing information regarding agency policies or regulations, such as attending conferences on behalf of an agency, conducting community relations campaigns, or conducting agency training courses. (13) Contractors participating in any situation where it might be assumed that they are agency employees or representatives. (14) Contractors participating as technical advisors to a source selection board or participating as voting or nonvoting members of a source evaluation board. (15) Contractors serving as arbitrators or providing alternative methods of dispute resolution. (16) Contractors constructing buildings or structures intended to be secure from electronic eavesdropping or other penetration by foreign governments. (17) Contractors providing inspection services. (18) Contractors providing legal advice and interpretations of regulations and statutes to Government officials. (19) Contractors providing special non-law enforcement, security activities that do not directly involve criminal investigations, such as prisoner detention or transport and non-military national security details. (e) Agency implementation shall include procedures requiring the agency head or designated requirements official to provide the contracting officer, concurrent with transmittal of the statement of work (or any modification thereof), a written determination that none of the functions to be performed are inherently governmental. This assessment should place emphasis on the degree to which conditions and facts restrict the discretionary authority, decision-making responsibility, or accountability of Government officials using contractor services or work products. Disagreements regarding the determination will be resolved in accordance with agency procedures before issuance of a solicitation.