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What is the commercial activities (CA) program?

The Office of Management and Budget's (OMB) Circular A-76, "Performance of Commercial Activities," sets the policies and procedures that executive branch agencies must use in identifying commercial-type activities and determining whether these activities are best provided by the private sector, by government employees, or by another agency through a fee-for-service agreement. The term typically used to describe this process is "competitive sourcing." OMB Circular A-76 states:

The longstanding policy of the federal government has been to rely on the private sector for needed commercial services. To ensure that the American people receive maximum value for their tax dollars, commercial activities should be subject to the forces of competition.

The Federal Activities Inventory Reform (FAIR) Act of 1998 (P.L. 105-270) requires executive agencies to make an annual accounting of the commercial activities performed by federal employees and submit them to OMB. OMB Circular A-76 also requires that agencies account for inherently governmental activities performed by federal employees.

The agency lists that result from these requirements are referred to as "FAIR Act inventories."

After OMB reviews and approves an agency's inventory, the agency must post it on its public website. It is important to remember that the inventory reflects activities, which are not the same as positions. One single employee may perform both inherently governmental and commercial activities.

What is a commercial activity?

OMB Circular A-76 defines a commercial activity as:

A recurring service that could be performed by the private sector and is resourced, performed, and controlled by the agency through performance by government personnel, a contract, or a fee-forservice agreement. A commercial activity is not so intimately related to the public interest as to mandate performance by government personnel. Commercial activities may be found within, or throughout, organizations that perform inherently governmental activities or classified work.

Examples of commercial activities include:

Automated data processing


Food services

Facilities/grounds/utilities maintenance

Mail and file

Architecture and civil engineering

Library services

Motor pool/vehicle maintenance

Accounts management.

What is an inherently governmental activity?

An inherently governmental activity is defined as:

An activity that is so intimately related to the public interest as to mandate performance by government employees. These activities require the exercise of substantial discretion in applying government authority and/or in making decisions for the government.

Inherently governmental activities normally fall into two categories:

(1) The exercise of sovereign government authority

(2) The establishment of procedures and processes related to the oversight of monetary transactions or entitlements.

An inherently governmental activity involves:

Binding the United States to take or not take some action by contract, policy, regulation, authorization, order, or otherwise;

Determining, protecting, and advancing economic, political, territorial, property, or other interests by military or diplomatic action, civil or criminal judicial proceedings, contract management, or otherwise;

Significantly affecting the life, liberty, or property of private persons; or

Exerting ultimate control over the acquisition, use, or disposition of United States property (real or personal, tangible or intangible), including establishing policies or procedures for the collection, control, or disbursement of appropriated and other federal funds.

While inherently governmental activities require the exercise of substantial discretion, not every exercise of discretion is evidence that an activity is inherently governmental. Rather, the use of discretion is deemed inherently governmental if it commits the government to a course of action when two or more alternative courses of action exist and decision making is not already limited or guided by existing policies, procedures, directions, orders, and other guidance that (1) identify specified ranges of acceptable decisions or conduct and (2) subject the discretionary authority to final approval or regular oversight by agency officials.

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