Mission Critical Function
Mission “Critical Function”:
Improving Outsourcing Decisions within the Intelligence Community
Evan Sills[*]
1
Table of Contents
I.INTRODUCTION
II.THE HISTORY OF “INHERENTLY GOVERNMENTAL FUNCTIONS”
A.Office of Management and Budget’s (“OMB”) Circular A-76
B.Federal Acquisition Regulation
C.Federal Activities Inventory Reform (“FAIR”) Act
III. The IC’S INCREASING NEED FOR CONTRACTORS
A.Expansion of the Intelligence Community After 9/11
B.Government Agencies’ Increased Demand for Information from the IC
C.Role of Contractors within the IC
IV.THE “CRITICAL FUNCTION” DEFINITION WILL PROTECT INSTITUTIONAL MEMORY, IMPROVE OVERSIGHT, AND INCREASE TRANSPARENCY THROUGHOUT THE IC
A.Origin of the “Critical Function” – the Acquisition Advisory Panel
B.The OFPP’s “Critical Function” Definition and Rationale
V.PROPOSED POLICY LETTER QUESTIONS TO THE PUBLIC SEEKING FEEDBACK TO IMPROVE THE “CRITICAL FUNCTION” DEFINITION
A.What additional guidance should be provided to make clear that “critical” work is driven by mission and circumstance, which will differ between agencies and within agencies over time?
B.Should the policy letter set out a presumption, or a requirement, in favor of performance of “closely associated” and/or critical functions by federal employees?
C.What, if any, additional guidance might be provided to help agencies identify the extent to which a critical function may be performed by a contractor?
VI.IMPROVING TRANSPARENCY WILL BENEFIT IC AGENCIES BY PROTECTING INSITUTIONAL MEMORY AND LOWERING COSTS
VII.CONCLUSION
I.INTRODUCTION...... 3
II.THE HISTORY OF “INHERENTLY GOVERNMENTAL FUNCTIONS”...... 7
A.Office of Management and Budget’s (OMB) Circular A-76.8
B.Federal Acquisition Regulation...... 10
C.Federal Activities Inventory Reform (FAIR) Act...... 11
III. The IC’S INCREASING NEED FOR CONTRACTORS...... 13
A.Expansion of the Intelligence Community After 9/11...14
B.Government Agencies’ Increased Demand for Information from the IC 16
C.Role of Contractors within the IC...... 17
IV.THE “CRITICAL FUNCTION” DEFINITION WILL PROTECT INSTITUTIONAL MEMORY, IMPROVE OVERSIGHT, AND INCREASE TRANSPARENCY THROUGHOUT THE IC 19
A.Origin of the “Critical Function” – the Acquisition Advisory Panel 20
B.The OFPP’s “Critical Function” Definition and Rationale 22
V.PROPOSED POLICY LETTER QUESTIONS TO THE PUBLIC SEEKING FEEDBACK TO IMPROVE THE “CRITICAL FUNCTION” DEFINITION 26
A.What additional guidance should be provided to make clear that “critical” work is driven by mission and circumstance, which will differ between agencies and within agencies over time? 27
B.Should the policy letter set out a presumption, or a requirement, in favor of performance of “closely associated” and/or critical functions by federal employees? 29
C.What, if any, additional guidance might be provided to help agencies identify the extent to which a critical function may be performed by a contractor? 31
VI.IMPROVING TRANSPARENCY WILL BENEFIT IC AGENCIES BY PROTECTING INSITUTIONAL MEMORY AND LOWERING COSTS 33
VII.CONCLUSION...... 37
I.Introduction
Robert Gates does not know how many contractors work in his office: the Office of the Secretary of Defense.[1] [KML1] Since 9/11,[2][EPS2][R3], contractors have become so vital to the defense of the United States that the Federal Government is no longer able to protect its citizens without them.[3] This phenomenon has been especially true in the Intelligence Community (IC);[4] the IC’s budget ballooned from around $30 billion on September 10, 2001, to over $7580 billion in 2010.[5]
This expansion has raised concerns that core intelligence functions are being performed by contractors instead of government employees.[6] During the summer of 2010, of an estimated 854,000 workers with top-secret security clearances working in the Ffederal Ggovernment, 265,000 of them were contractors.[7] Due to the importance of actionable intelligence data to prevent future terrorist attacks, agencies are forced to use contractors based onout of necessity. necessity instead of making normative determinations such asbased on price, best value, and whether contractors are allowed to perform such functions[KML4].[8] This has led to the preferred “inherently governmental function” [9] (“IGF”) test being subordinated to the higher priority of national security. While scholars and government officials have long fought over what functions contractors may perform, most solutions have focused on redefining IGFs as opposed to an alternative test.[10]
In the spring of 2010, the Office of Federal Procurement Policy (“OFPP”) issued a proposed policy letter (2010 proposed policy letter),[11] thatwhich was finalized on September 12, 2011 (2011 final policy letter),[12] calling foradvancing a new term called “critical functions” that recharacterizes the issue of what government work should be outsourced.[13] This policy letter was finalized on September 12, 2011.[14] A “critical function” is defined as “a function that is necessary to the agency being able to effectively perform and maintain control of its mission and operations.”[15] While this new definition could be seen as just another formulation of an old problem – outsourcing IGFs,[16] - instead it presents an opportunity to move the debate in a new direction and change the way Ggovernment decides what to outsource.
ThisA new definition will better enablewill help the Ggovernment to better control costs and improve transparency by allowing agencies to acknowledge when contractors are performing “core functions” instead of trying to abide by policies that do not contain the flexibility to deal with IC demands. Additionally, it will enable empower agencies to protect their institutional memories and control their mission objectives.[17] These benefits are particularly important in the IC, where transparency is notoriously opaque and costs continue to skyrocket with little public justification.[18] “Critical functions” focus on whether an agency has the capacity to perform the functions required to carry out its mission instead of on who is performing tasks traditionally done by government employees.[19][KML5] This shift in focus will allows agencies to move past the IGF problem and return to traditional government contracting concerns such as cost and transparency.[20][KML6]
This Note will evaluate the new “critical function” test for government outsourcing and apply it to the IC. The Executive Branch’s goal should be to balance Congress’ needdesire for oversight, transparency, and best value,[21] with the IC’s important mission and unusual activities that involvinge highly specialized skills using information that is often classified, even from most Congressmen.[22] [KML7]The Government must also consider the evolution of the private sector that serves the IC and their its need for balancing contractual risks, protecting proprietary information, and encouraging innovation.[23] Section II will review the history and current state of “inherently governmental functions.” Section III will highlight the changed nature of the IC after 9/11 and its growing reliance on contractors to meet greater demands. ThenNext, Section IV will explain the origin and rationale for the new “critical function” definition and how it meets different needs than the IGF definition. Section V will answer assess how the final policy letter responds to questions proffered byto the public asked by the draftproposed policy letter and how the new “critical functions” definition can improve contracting within the IC communitycan help the IC to understand and effectively utilize the final “critical function” definitionsome of the questions that were posed presented in the proposed policy letter to the public, aiming to make the “critical function” definition more effective. Finally, Section VI will look at the benefits that this new test will provideprovides to the Ffederal Ggovernment, namely transparency and lower costs.
II.THE HISTORY OF “INHERENTLY GOVERNMENTAL FUNCTIONS”
Determining what functions are at the core of Ggovernment goes dates back to this country’s inception.[24] While the Constitution is relatively silent on what functions government employees must perform, some clues can be gleaned from the assignment of powers in Articles I and II of the United States Constitution.[25] [KML8][??9] Following government expansion during the New Deal and World War II, President Eisenhower began advocating for the use of contractors instead of increasing expanding government offices to obtain perform the products or services.[26] In 1966, President Johnson’s administration formally created the Circular A-76 through the Bureau of the Budget (the OMB’s predecessor).[27] This was the beginning of thea continuing ongoing search quest to balance government oversight with private sector efficiencyies.
In the past 60 years, three major sources of guidance on agencies’ outsourcing abilities have evolved: the Circular A-76, the Federal Acquisition Regulation (“FAR”), and the Federal Activities Inventory Reform (“FAIR”) Act. While all of these have helped agencies to determine when and what to outsource, they have failed to protect agencies from losing their institutional memory and controlling their core functions. This Note addresses these definitions chronologically.
A.Office of Management and Budget’s (“OMB”) Circular A-76
The Circular A-76 is the original source of the “inherently governmental function” definition and has been revised several times to adapt to an administration’s preferences for contracting.[28] Currently, the A-76it defines an “inherently governmental activityfunction” as “. . . an activity that is so intimately related to the public interest as to mandate performance by government personnel.”[29] It distinguishes actions that require exercises of “substantial discretion” and states that only those actions that are not guided by “existing policies, procedures, directions, orders, and other guidance. . .” are ones that must be performed by government employees.[30] The A-76 definition became the baseline for all later debates on how to improve agency outsourcing decisions.[31] The final key part of the A-76 in deciding when to outsource is the policy statement, which has continued to focuses on the value of the private sector and competition.[32]
SinceIn the 2003 revision, the A-76 IGF definition was expanded by limiting the restriction on outsourcing to those activities which were “substantially inherently governmental[KML10].” Since then, Congress has attempted to limit activities that can be outsourced due to concerns overf giving excessive policy discretion to contractors and, the likelihood that contractors would perform IGFs.[33] Even in 1991, there was concern that the A-76 was too general to provide adequate policy guidance to agencies.[34] The constant shifting and interplay between the OMB, under various administrations, and Congress, has made the A-76 IGF definition ineffectual and confusing.[35] While the A-76 process has been successful in creating competition in certain areas, it has failed to draw clear lines between IGFs and functions that should be available for contractors to aid the agency’s missionfor outsourcing.[36]
B.Federal Acquisition Regulation
The FAR definition of “inherently governmental function” is identical to that of the Circular A-76.[37][KML11] Significantly, FAR Subpart 7.5 details the policy requirements for service contracts and contains a non-exhaustive list of activities that are considered IGFs, including: criminal prosecutions, combat forces, determination and direction of agency policy, “direction and control of intelligence and counter-intelligence operations”, and control of government contracts and budgets.[38] Additionally, there is a non-exhaustive list of activities that are not IGFs, but may “approach” being an IGF including: conducting factual findings and studies, supporting and developingment of budgets, regulations and planning,” and providing legal advice.[39]
While these lists provide some context and concrete examples of IGFs to agencies, they fail to elaborate on how agencies should use these lists. [KML12]Additionally, these lists are supposed to apply equally to all government contracts;[40] they and do not differentiate between varying agency needs. These drawbacks make the FAR definition of IGFs inadequate unable to adapt to the needs of agencies to protect their core functions.
C.Federal Activities Inventory Reform (“FAIR”) Act
Building on the existing statutory guidelines provided to agencies regarding outsourcing of IGFs, Congress enacted the FAIR Act in 1998, for the purpose of “provid[ing] a process for identifying the functions of the Federal Government that are not inherently governmental functions. . .”[41] It The Aact defines IGFs as “so intimately related to the public interest as to require performance by Federal Government employees.”[42] This shift in focus towards the public interest is consistent with the change in the A-76 policy statement.[43] Additionally, the FAIR Act provides general lists of what qualifies as an IGF and what does not.[44][KML13]
Most importantly, the FAIR Act requires every agency to compile an annual list of IGF and non-IGF activities performed by its employees.[45] It also requires agencies to use the A-76 when contracting out activities deemed to be non-IGFs.[46] This The Act provides is the only definition that considers the differences between agencies when trying toin formulatinge a list of IGFs.[47]
Unfortunately, the FAIR Act has not effectively reduced the outsourcing of IGFs because its definition and accompanying guidance are vague in classifying what makes an activity inherently governmental.[48] The FAIR Act reporting requirements have revealed problems with outsourcing IGFs, but have failed to provide agencies with a solution to the problems of losing institutional memory and maintaining control over their core functions.
Without a mechanism for agencies to control outsourcing decisions, they will be unable to effectively utilize private sector expertise and serve the public. After more than forty years of attempting to define what activities are IGFs,[49] [KML14]agencies needed a new method of controlling their core functions.
III. The IC’S INCREASING NEED FOR CONTRACTORS
“We could not perform our function without them. They serve as are our ‘reserves,’ providing flexibility and expertise we can’t acquire . . . [O]nce they are on board, we treat them as if they’re part of the total force.” –Ronald Sanders, former Cchief of Hhuman Ccapital for the Office of Director of National Intelligence[50]
Although the end of the Cold War began prompted some transformations within the IC, the events of September 11, 2001, caused more profoundly changeds to the IC’s on their size and objectives.[51] First, Islamic extremism al- Qaeda displayed a new type of threat that was unfamiliar incompatible to with the IC’s previous existing expectations that the IC had for its targets.[52] Second, following 9/11, the need for information greatly increased as the number of intelligence clients within the Ffederal Ggovernment expanded.[53] Finally, al-Qaeda’s ability to launch this the September 119/11 attack showed demonstrated the increased need to acquire intelligence on new novel types of organizational threats (non-state actors), weaponry (airplanes), and vulnerabilities (transportation systems).[54]
These factors placed enormous pressure on the IC to not only produce a much greater quantity of intelligence data, but also to predict and prevent a future attack. As the more recent Fort Hood attack,[55] attempted Christmas bombing,[56] and Yemen cargo bomb plot[57] have showedshown, the stakes are high and failure can havehas dire consequences. This section will detail the integral role that private sector contractors play in the current IC and how they have enabled these agencies to fulfill their missions.
A.Expansion of the Intelligence Community After 9/11
IC agencies have beenare rapidly expanding in number of employees, budget allocations, and responsibility. For example, the Defense Intelligence Agency (“DIA”) has more than doubled its number of employees from 7,500 in 2002, to 16,500 in 2010,[58] while and, at the Department of Homeland Security (“DHS”), there are as many federal employees as contractors.[59] Since 9/11, agencies have built 33 new buildings, containing amassing 17 million square feet of space for top-secret intelligence production.[60] The National Security Agency’s (“NSA”’s) budget has doubled, while and the Federal Bureau of Investigation (“FBI”) has seen an increase in its intelligence responsibility as their the number of jJoint tTerrorism tTask fForces have grown from 35 to 106.[61]
A major component in contributor to the growth of the IC has been record spending by these agenciesRecord spending by the DoD and DHS have led to an enormous expansion in the use of contractors. Congress spent over $7580 billion on intelligence last yearin 2010.[62] In 2007, a PowerPoint presentation prepared by the Director of National Intelligence (“DNI”) senior procurement executive gave a presentation stating revealed that at least 70% of the intelligence budget was going to contractors.[63] This growth has involved not only an expansion ofexpanded Ggovernment as well as , but also the market for private contractors that support themit.
B.Government Agencies’ Increased Demand for Information from the IC
Since the end of the Cold War ended, both the type of intelligence needed and the number of consumers demanding timely analysis haves increased.[64] There are over 700,000 local law enforcement bureaus officers acrossand 18,000 governmental offices that require intelligence to protect the United States from threats.[65] Meeting the needs of this growing expanding list of consumers is complicated by the fact that IC agencies must analyze ever-growing an amounts enormous mountains of [KML15]data that continues to grow.[66] Following 9/11, this ballooning in both directions – enormous increases in information inputs and work-product outputs – placed greater pressures on the IC and, by necessity, they it turned to contractors to handle theis increased workload.[67][KML16]
No plan was in place to control all of these new contractors as they began working in the IC. With the IC expanding in many directions at once, contractors became more crucial to achieving agency objectives.[68] Unfortunately, another a by-product of this dual -increase was a less useful work-product. Local law enforcement agencies, seeking more information from the IC community, received “little meaningful guidance” either vague unclassified documents[69] or nothing at all, while the IC focused on the Ffederal Ggovernment’s needs instead of the needs of local communities.[70]
C.Role of Contractors within the IC
ADuring a detailed investigation of into the relationship between the IC and contractors, conducted during the summer of 2010, by the Washington Post during the summer of 2010, wrotedescribes, “w[W]hat started as a temporary fix in response to the terrorist attacks has turned into a dependency . . . .”[71] The IC performs vital work that is fundamental to the protection of the American people, but currently it is incapable of operating effectively without private contractors.[72] The Government typically seeks contractors for three reasons: (1) to start a new government office or program; (2) when an office requires specialized expertise; or (3) when surge capacity is needed.[73] All three of these factors are present in the IC and explain their its reliance on contractors to achieve their its missions.