Inherently Governmental
Excerpt from the
Commercial Activities Inventory
Executive Department of Virginia State Government
2004-2005 Fiscal Year
Full Inventory is published as http://leg2.state.va.us/dls/h&sdocs.nsf/By+Year/RD1702005/$file/RD170.pdf |
Enabling legislation: §§ 2.2-5512 and 2.2-5513, Code of Virginia
http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+2.2-5512
http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+2.2-5513
Guidance in determining inherently governmental functions
Extensive research occurred in order to develop guidance for identifying inherently governmental functions within Virginia state government. This included conversations with individuals outside the Commonwealth such as other state governments, the Council of State Government, the National Association of State Budget Officers and the Federal government Office of Management and Policy which publishes the federal definition of inherently governmental. Within our state government, research included conversations with the Office of the Attorney General, Division of Legislative Services, Department of Accounts, Department of General Services, Department of Planning and Budget, and the Commonwealth Competition Council, as well as a review of the Constitution of Virginia. While each agency was familiar with the term, there were only two references within Virginia state government:
- The Agency Procurement and Surplus Property Manual (APSPM)2 states that in Phase One of their long-standing “Make or Buy” Analysis Procedures, a list of all services must be made of (1) those being provided or proposed to be provided by the agency to the public or to other agencies and (2) the services the agency provides or contracts for in support of its operations. Once that is done, their guidance states that consideration should be given to the public acceptability of contracting. Determination is then made of which services are close to the fundamental purpose of government (such as judicial, police, tax collection, revenue disbursement, intergovernmental affairs) or which are essential to the government’s ability to protect the health, safety and welfare of its citizens (such as regulatory functions). The APSPM stresses exercising caution in considering services of this nature to be provided by contractors. While some parts of a particular service may be suitable for being provided by a contractor, others may not.
- The Privatization/Competition Manual3 defines an inherently governmental activity as being so intimately related to the public interest as to mandate performance by state employees.
The federal government has the most extensive guiding principle4 on inherently governmental functions found during this research. This policy letter establishes the federal executive branch policy relating to service contracting and inherently governmental functions. Its purpose is to assist executive branch officers and employees in avoiding an unacceptable transfer of official responsibility to government contractors.
This research suggests that an “inherently governmental” activity in the Commonwealth of Virginia is one that is so intimately related to the public interest, public well being, and public trust as to mandate its performance by the governmental entity, state employees, and their direct agents. “Inherently governmental” includes:
- the act of governing;
- authority to collect and spend public revenues, and
- entitlements (from the Constitution of Virginia).
The public interest, public well being, and public trust require that inherently governmental activities be uninterrupted and continuous to alleviate risk and fulfill the Constitutional mandate.
Authority for “governmental activity” is established in the Constitution of Virginia:
- people have a right to uniform government of Virginia;
- governmental activity should produce the greatest degree of happiness and safety, and be most effectively secured against the danger of maladministration; and,
- exhibit a firm adherence to justice, moderation, temperance, frugality and virtue by frequent recurrence to fundamental principles.
Examples of inherently governmental activities:
- an effective system of education throughout the Commonwealth;
- free elections;
- transportation system;
- defense from enemy attack on the soil of Virginia;
- intercourse with other and foreign states;
- taxation and assessments at fair market value;
- ultimate control over the acquisition, use, or disposition of the property, real or personal, tangible or intangible, of the Commonwealth, including the collection, control or disbursement of appropriated and other state funds; and
- natural resources for the benefit, enjoyment and general welfare of the people of the Commonwealth.
The act of governing, as in the exercise of government authority, implies discretion:
- discretion in making policy decisions;
- discretion in interpretation and execution of the laws of the Commonwealth to commit the government to a course of action;
- discretion in determining strategy;
- discretion in establishing the level of state control that is required over an activity; and,
- discretion in making activities available to private performance, particularly in considering factors like institutional knowledge, as well as other tangible and intangible factors.
The greater the amount of discretion involved in performing the activity, the more likely it is inherently governmental. In addition to the degree of discretion, the effect of an inherently governmental activity is that it commits government. For example, decisions, regulations, and policies are commitments of government. Activities, however, that support making decisions, regulations, and policies are not necessarily inherently governmental. The totality of circumstances must be considered in recognizing “inherently governmental” activities, not only discretion.
2 Agency Procurement and Surplus Property Manual, September 1998, Department of General Services, Division of Purchases and Supply, Richmond, Virginia 23219, Chapter 4, General Procurement Guidelines & Planning, 4.25 Make-or-Buy Analysis, and Annex 4-C, “Make or Buy” Analysis Procedures
3 The Privatization/Competition Manual, 1998, Commonwealth Competition Council, Richmond, Virginia, 23219, page 14.
4 Policy Letter 92-1 to the heads of Federal government executive agencies and departments, September 23, 1992, http://www.arnet.gov/Library//OFPP/PolicyLetters/Letters/PL92-1.html. This policy letter was issued pursuant to section 6(a) of the Office of Federal Procurement Policy (OFPP) Act, as amended, codified at 41 U.S.C. [section] 405.
Reprinted from the Commercial Activities Inventory, 2004-2005 Fiscal Year, Commonwealth of Virginia, Executive Department, Report dated October 5, 2005, issued by the Secretary of Administration, pages 6 - 8