What is the difference between an inherently governmental activity and a commercial activity?
An inherently governmental activity is an activity that is so intimately related to the public interest as to mandate performance by government personnel. 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 or (2) the establishment of procedures and processes related to the oversight of monetary transactions or entitlements. A commercial activity is a recurring service that could be performed by the private sector, because it is not so intimately related to public interest to mandate performance by governmental personnel. As a result, commercial activities, unlike inherently governmental activities, are subject to competition in accordance with OMB Circular A-76.
