On September 12, 2011, the Office of Management and Budget (OMB) published the attached final policy letter which provides Executive Departments and agencies guidance on managing the performance of inherently governmental and critical functions. The initial proposed guidelines and policy letter, published on March 31, 2010, made no mention of the Indian Self-Determination and Education Assistance Act (ISDEAA or Act) or Indian tribes operating programs under the Act and thus failed to address the difference between the delegation of governmental functions to commercial contractors and the delegation of federal functions to tribes under the ISDEAA. Although the final policy letter still does not explicitly mention the ISDEAA or tribes, in OMB’s response to public comments, the agency made clear that the policy letter is not intended to modify or otherwise affect any rights or limitations set forth under the ISDEAA.
OMB’s final policy letter on the performance of inherently governmental and critical functions clarifies what functions are inherently governmental and must always be performed by federal employees. The final policy letter defines “inherently governmental function” as “a function that is so intimately related to the public interest as to require performance by Federal Government employees” which tracks the statutory definition in the Federal Activities Inventory Reform Act, 10 U.S.C. § 2883. The final policy letter also explains what agencies must do when work is “closely associated” with inherently governmental functions and requires agencies to identify their “critical functions” to ensure they have sufficient internal capability to maintain control over functions that are core to the agency’s mission and operations.
Based on multiple provisions in the ISDEAA, such as section 4(j) which states that no tribal contract under the Act “shall be construed to be a procurement contract” as well as other provisions in Title I, IV, and V of the Act, contracts under the Act are not subject to OMB guidelines applicable to commercial contracts. The proposed policy letter caused tribes to be concerned that without an explicit exception for ISDEAA in the policy letter, OMB staff may not be aware of the unusual right of tribes to administer certain federally-funded programs (especially, but not limited to, Bureau of Indian Affairs and Indian Health Service programs) and attempt to decline tribal contract proposals.
Representatives of tribal organizations submitted comments on the proposed policy letter requesting that language be added to the policy letter exempting federal government agreements with tribal organizations under the ISDEAA. Tribal comments explained the statutory and policy reasons for differentiating ISDEAA agreements from government procurement contracts, including the fact that the ISDEAA, Title V, section 510, expressly exempts ISDEAA agreements from the application of federal acquisition regulations.
In response, OMB explained that the final policy letter’s focus is on the relationship between the federal government and its contractors (entities who are providing a product or service for the direct benefits of an agency under a federal procurement contract). The response states “[t]he policy letter is not intended to modify or otherwise affect any rights or limitations set forth under the Act, including either the right of Tribal governments to assume and carry out functions under the ISDEAA or limitations imposed by the ISDEAA on a Tribal government’s ability to assume responsibility for an inherently Federal function as that term is used under the Act.”
Although tribes did not receive the express exemption in the policy letter itself, OMB’s statements in the Notice of Final Policy Letter to clarify the final policy letter is not meant to affect tribes’ ISDEAA contracts can be used to show the intent of OMB not to interfere with the rights of tribes under the ISDEAA.
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