The Last Word

The FAIR Act is still unfair

December 1, 2000

wo years after enactment, the 1998 Federal Activities Inventory Reform (FAIR) Act continues to wreak chaos throughout the federal government. Designed to identify jobs that are not inherently governmental and that are therefore eligible for contracting out, FAIR has produced unnecessary work and confusion as agencies struggle to define a term that no longer has meaning. Almost nothing is "inherently governmental" these days-not battlefield support, citizenship training, toll-free phone service or prison management. Except for a handful of law enforcement positions, virtually everything the federal government does is commercially available.

FAIR started with a simple question: Just how many federal jobs can be contracted out to the private sector? But the answers have been anything but simple, if only because they depend on definitions embedded in an obscure federal budget order that dates back to the Eisenhower administration. The original purpose of the order was to discourage the federal government from producing goods or services already commercially available. The Eisenhower administration was particularly worried that a growing federal government would steal jobs from the private sector.

Over the years, however, the order has actually become a tool for taking jobs from government. During the Reagan administration, for example, the process for deciding when to contract out federal jobs was redesigned. Not only was the federal government prohibited from producing goods or services that were commercially available, but it had to review work that could be done by private firms, given the chance to compete. Under what appeared to be a slight semantic revision, the burden of proof shifted from proving that a service is not commercially available to proving that a service could never be available.

The FAIR act took this burden of proof one step further by ordering the federal government to cough up a list of every job not deemed inherently governmental. Unfortunately, the law never defined "inherently governmental" in terms of this fast-growing economy. Instead, it relies on a 10-year-old budget document that defines the term as "a function so intimately related to the public interest as to mandate performance by government employees." Although the definition comes with a list of examples, no one can be sure just what the phrase "intimately related to the public interest" means. Commanding military forces is an example of inherently governmental activity, but planning a military operation apparently is not. A federal criminal investigation is protected from being contracted out, but not the imprisonment of an illegal immigrant. Even if we could untangle this definition, it is unclear whether the executive order's basic concepts are still relevant. The question no longer is whether a product or service is inherently governmental or com- mercially available, but whether its production by a federal employee is core to government's mission. Agencies could easily contract out inherently governmental functions that are only tangentially related to mission performance, while delivering core functions that are commercially available.

Consider the map makers at NASA. The Management Association for Private Photogrammetric Surveyors, which represents private map makers, challenged NASA's decision to leave its map makers off its 1999 FAIR inventory, thereby declaring map-making an inherently governmental activity. Lots of private companies make maps and surveys, albeit few with the access needed to map the lunar surface.

Under the FAIR Act, NASA had little choice but to use a procedural loophole to keep its map-making work in-house. Map making may be commercially available, but it is essential to NASA's twin missions of mapping both the heavens and the Earth. How can the agency's Mission to Planet Earth monitor the effects of manmade and natural changes on the earth's environment without an internal mapping capacity? In its 2000 FAIR Act inventory, NASA provided an airtight defense for protecting core competencies. Agency officials say seven kinds of commercially available activities should never be contracted out:

Mission-related studies, technical analyses and evaluations.
Agency-specific research and development to meet long-term needs.
Testing and evaluation.
Writing of statements of work, evaluations of contractor proposals and reviews of contractor performance.
Corporate memory of NASA research and development.
Emergency response and trouble- shooting.
Assignments mandated by Congress.

Private firms might challenge the decision to keep certain jobs under each category in-house, but NASA recognizes that contractors have important roles to play-not the least of which is to manage the space shuttle. The agency spends more than 80 percent of its discretionary budget on procurement, and much of that is for labor.

But NASA also recognizes that its employees must be able to build the occasional satellite. Its definitions of such core competencies are fuel for the debate on how to make better use of the FAIR Act.