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FAIR Act Inventory
User's Guide


August 15, 2000

Inventory Scope
Inventory Format
The FAIR Act Challenge and Appeals Process
The Annual Management Report


The Office of Management and Budget has developed this WEB page and FAIR Act User's Guide to assist the public in its review and understanding of the inventories of commercial activities that agencies have developed under the Federal Activities Inventory Reform Act (FAIR) Act.

To see the actual inventory of any specific agency, you should go to the Internet WEB page for that agency. OMB has required all agencies to post their inventories on their Internet Web sites, so that persons interested in filing challenges, and other interested members of the public, can have quick and easy access to them. For those who do not have Internet access, an agency's inventory may also be obtained by contacting that agency's FAIR Act Point-of-Contact (who is identified in the Federal Register Notification which OMB issues, announcing that the agency's inventory is available for public review).

If your do not have a printer, but need a paper copy of the FAIR Act, this User Guide, OMB Circular A-76 or its Supplemental Handbook, contact the Office of Federal Procurement Policy, NEOB Room 9013, Office of Management and Budget, 725 17th Street, N.W. Washington, DC 20503; telephone No. (202) 395-7579, or e-mail your request to mchristi@omb.eop.gov.


The FAIR Act directs Federal agencies to issue each year an inventory of all commercial activities performed by Federal employees, e.g., those activities that are not inherently governmental. OMB is to review each agency's Commercial Activities Inventory and consult with the agency regarding its content. Upon the completion of this review and consultation, the agency must transmit a copy of the inventory to Congress and make it available to the public. The FAIR Act establishes a limited administrative appeals process under which an interested party may challenge the omission or the inclusion of a particular activity on the inventory as a commercial activity. With completion of the inventory, including the challenge and appeals process, the FAIR Act requires agencies to review the activities on the inventory.

OMB issued FAIR Act implementation guidance through revisions to OMB Circular A-76, "Performance of Commercial Activities," and to its Supplemental Handbook. OMB Circular A-76 Transmittal Memorandums 20 and 22 provide further guidance, as does the OMB Deputy Director's Memorandum to Heads of Agencies, dated April , 27, 2000. These revisions inform agencies of the FAIR Act's requirements; implement the statutory requirements of the FAIR Act; and place the FAIR Act's requirements in the context of the Federal Government's larger review of its reinvention, competition and privatization efforts. Copies of these issuances are found on OMB's Internet Web site [you can link to each issuance from the cover sheet for this guide], and paper copies can be obtained from the Office of Federal Procurement Policy.


The FAIR Act applies by its own terms to the following executive agencies: (1) an executive department named in 5 USC 101, (2) a military department named in 5 USC 102, and (3) an independent establishment as defined in 5 USC 104. The FAIR Act does not apply to: (1) the General Accounting Office, (2) a Government corporation or a Government controlled corporation as defined in 5 USC 103, (3) a non-appropriated funds instrumentality if all of its employees are referred to in 5 USC 2105(c), or (4) Depot-level maintenance and repair of the Department of Defense as defined in 10 USC 2460.

For purposes of the FAIR Act, there are two kinds of activities that are performed by Federal employees: those activities that are "commercial" in nature (and are, therefore, included on an agency's FAIR Act inventory) and those that are "inherently governmental" (and are, therefore, omitted from the inventory). The FAIR Act requires each agency to prepare an inventory of its activities that "are not inherently governmental functions" (i.e., are "commercial"), and the FAIR Act defines an "inherently governmental function" as one "that is so intimately related to the public interest as to require performance by Federal Government employees." In 1992, the Office of Federal Procurement Policy (OFPP) issued Policy Letter 92-1, dated September 23, 1992 (57 Federal Register 45096) (Appendix 5 of the A-76 Revised Supplemental Handbook), which provides guidance on the identification of Inherently Governmental activities. This guidance conforms to the definition provided at Section 5 (2) of the FAIR Act.


In accordance with the FAIR Act, Circular A-76 and its Revised Supplemental Handbook, each agency is required to submit to OMB, by June 30 of each year, a Commercial Activities Inventory of all commercial activities performed by Federal employees, in the order or format shown below. Note: this is a change from the 1999 FAIR Act inventory which required the same information, but permitted each agency to organize the information in a format most useful to the agency. OMB believes that by imposing some consistency through the reporting format, interested parties should become more familiar with the report both within and across agencies. There is a definition of each information element provided at the "Definitions" available from this WEB page.


Organization unit.








Activity function code.


Reason code.


Year the activity first appeared on FAIR Act Commercial Activities Inventory
(initial value will be 1999).


Name of a Federal employee responsible for the activity or contact person from whom additional information about the activity may be obtained.


Year of cost comparison or conversion (if applicable).


CIV/FTE savings (if applicable).


Estimated annualized Cost Comparison dollar savings (if applicable).


Date of completed Post-MEO Performance Review (if applicable).

If an agency identifies no commercial activities that are performed by Federal employees, it is still required to submit an inventory to OMB -- stating that the agency has no commercial activities being performed by Federal employees. Such an inventory is subject to OMB review and consultation, and must be sent to Congress and published for challenge by interested parties.


Section 3 of the FAIR Act established a two-tiered administrative challenge and possible appeals process that permits interested parties to challenge the inclusion or the omission of an activity from the FAIR Act inventory. Section 3(b) of the FAIR Act defines "interested party" as:


A private sector source that (A) is an actual or prospective offeror for any contract or other form of agreement to perform the activity; and (B) has a direct economic interest in performing the activity that would be adversely affected by a determination not to procure the performance of the activity from a private sector source.


A representative of any business or professional association that includes within its membership private sector sources referred to in a. above.


An officer or employee of an organization within an executive agency that is an actual or prospective offeror to perform the activity.


The head of any labor organization referred to in section 7103(a) (4) of title 5, United States Code that includes within its membership officers or employees of an organization referred to in c. above.

If an interested party has any questions about the agency's inventory or the agency's challenge-and-appeals process (e.g., to which agency official should the party address its challenge), the party should contact the agency FAIR Act Point-of-Contact, provided in the OMB Federal Register Notification that an agency's inventory is publicly available.

An initial challenge to the inclusion or omission of an activity must be filed with the designated agency Point-of-Contact within 30 working days after publication of OMB's Federal Register notice stating that the inventory is publically available. The challenge must set forth the activity being challenged with as much specificity as possible, and the reasons for the interested party's belief that the particular activity should be reclassified as inherently Governmental (and therefore be deleted from the inventory) or as commercial (and therefore be added to the inventory) in accordance with OFPP Policy Letter 92-1 on inherently Governmental functions (see Appendix 5) or as established by precedent (such as when other agencies have contracted for the activity or undergone competitions for this or similar activities).

To be considered valid for purposes of the FAIR Act, a challenge must:

  • be submitted in writing;
  • be submitted by an interested party, as defined in the FAIR Act and OMB Circular A-76 and its Supplemental Handbook;
  • be received by the organization's point of contact within 30 working days of the date that of the OMB Federal Register notice of availability and web site access. The agency's initial FAIR Act Point-of-Contact and telephone number is provided with the OMB Federal Register notification of the release of the inventory.
  • set forth the activity being challenged for omission or inclusion on the inventory as specifically as possible," i.e., provide sufficient description of the activity in question, by organization, location, and function and the number of FTE excluded from or included on the inventory to enable the decision-maker to reasonably identify the activity being challenged; and,
  • provide "the reasons for the challenge."

Decisions and other communications, including rejections of challenges that do not meet the criteria above, shall be in writing. The decision-maker to the substance of a challenge must be at the same or higher level in the organization as the individual who made the determination on the original FAIR submission for the activity being challenged. Decisions should be transmitted to interested parties "within 28 working days of receiving the challenge." The notification must include a discussion of the rationale for the decision and, if the decision is adverse, an explanation of the party's right to file an appeal.

An interested party may then appeal an adverse decision to an initial challenge within 10 working days after receiving the written notification of the decision. The agency head may delegate the responsibility to receive and decide appeals to the official identified in paragraph 9.a of the Circular (or an equivalent senior policy official), without further delegation. To be considered for purposes of the FAIR Act Administrative Appeal process, filed in response to an agency response to a valid challenge, the appeal must be submitted:

  • in writing;
  • by a challenger(s), whose valid challenge was denied or rejected by the agency; and
  • within 10 working days of the challenger's receipt of the written decision on the challenge.

Authority to decide appeals may be delegated no lower than the Assistant Secretary or equivalent level. Decisions shall be in writing, and should be made and transmitted to the appellant within 10 working days of receipt of the appeal. Decisions on appeals must:

  • refer to the decision being appealed;
  • state whether the appeal is upheld or denied; and
  • state and discuss the reason[s] [rationale] for the decision.


OMB's FAIR Act implementation guidance, at Appendix 2, paragraph I of the A-76 Revised Supplemental Handbook (Transmittal No. 20), requires each agency to submit an annual report on its management of commercial activities. That report, which is to accompany, for the first time, the Year 2000 FAIR Act Inventory, provides:

  • A brief description of the Year 1999 Inventory Process.
  • The "number of FAIR Act administrative challenges and appeals" that the agency received in response to the 1999 Inventory.
  • A brief description of the agency's Year 2000 Inventory process, and
  • A "description of the agency's review process" under Section 2(d) of the FAIR Act.

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