Agencies must not contract for personal services unless specifically authorized by statute (e.g., 5 U.S.C. 3109).

(a)A personal services contract exists when the Government supervises or controls contractor employees, or appears to do so, as if they were Government employees. This type of contract circumvents civil service laws that require the Government to competitively hire and appoint its own employees.

(b)The Government exercising relatively continuous supervision and control over multiple contractor personnel is frequently a key indicator of a personal services contract. However, judgment is required because service contracts often involve interaction with contractor employees—such as ordering and reviewing specific work—that do not constitute the type of supervision or control that would convert a contractor employee into a Government employee.

When administering contracts, agencies must avoid making contractor personnel appear to be, in effect, Government employees, unless a statute provides otherwise.

(a)Agencies must not award a contract for the performance of an inherently governmental function (see part 7).

(b)Service contracts require special oversight if the contract work:

(1)Supports an inherently governmental function, including contracts providing recommendations, analyses, reports, or similar work products that can influence government decision-making; or

(2)May approach becoming inherently governmental because of the nature of the function, the manner in which the contractor performs the contract, or the manner in which the Government administers contractor performance.

(c)Agencies must carefully develop requirements for such work to ensure contracted functions do not expand into inherently governmental functions.

Agencies must actively administer contracts to ensure contract functions do not expand into inherently governmental functions, including—

(a)Assigning sufficient qualified Government employees to actively oversee contractor work and monitor for potential encroachment on inherently governmental functions, particularly when the work supports Government policy or decision-making.

(b)Requiring contractor personnel to identify themselves as contractors when attending meetings, answering government phones, or in any situation where their status might be unclear to the public or Congress, unless the agency determines no confusion or harm would result.

(c)Ensuring contractor-produced documents are clearly marked as contractor products or include appropriate disclosure of contractor involvement.

When essential to the agency's mission, agencies may contract for advisory and assistance services (A&AS) to obtain—

(a) Management and professional support services;

(b) Studies, analyses, and evaluations (see 37.402-3 for limitations on evaluative work); or

(c) Engineering and technical services.

A&AS contracts must not be awarded for purposes of—

(a) Performing work of a policy-making, decision-making, or managerial nature which is the direct responsibility of agency officials;

(b) Bypassing or undermining personnel ceilings, pay limitations, or competitive employment procedures;

(c) Aiding in influencing or enacting legislation; or

(d) Obtaining professional or technical advice which is readily available within the agency or another Federal agency.

Agencies must not contract for A & AS to conduct evaluations or analyses of any aspect of a proposal submitted for an initial contract award unless—

(a) The head of the agency has determined covered personnel with the required training and capabilities to perform the evaluation or analysis are not readily available in the agency or from another Federal agency (41 U.S.C. 1709).

(1) The head of the agency may consider the associated administrative burden when assessing the feasibility of using covered personnel from other agencies. Such considerations may include—

(i) The time and cost associated with searching for suitable personnel;

(ii) Potential travel costs;

(iii) The amount of such costs in relation to the acquisition value; and

(iv) Potential competing demands for the personnel in meeting the agency’s mission.

(2) The contracting officer must ensure, to the maximum extent practicable, any such determination is made prior to issuing the solicitation and in accordance with agency procedures. Once the solicitation is released, any determination of a need for A&AS support in analyzing proposals for the initial contract award must be made prior to granting the A&AS contractor access to any proposal material.

(b) The contractor is a Federally-Funded Research and Development Center (FFRDC) as authorized in 41 U.S.C. 1709(c) and the work placed under the FFRDC's contract meets the criteria of part 35; or

(c) Such functions are otherwise authorized by law.

The following activities and programs are excluded or exempted from the definition of A&AS:

(a) Routine information technology services unless they are an integral part of a contract for the acquisition of advisory and assistance services.

(b) Architectural and engineering services as defined in 40 U.S.C. 1102.

(c) Research on theoretical mathematics and basic research involving medical, biological, physical, social, psychological, or other phenomena.

Agencies must ensure A&AS is not contracted for on a preferential basis to former Government employees.

When evaluating proposals for initial contract award, agencies must not use A & AS to support evaluation unless the conditions at 37.402-3 are satisfied.

(a) Agencies must administer A & AS contracts with sufficient oversight to ensure prohibited practices at 37.402-2 are not performed.

(b) Agencies must not pay for A & AS evaluations or analyses of any aspect of a proposal submitted for an initial contract award unless the conditions at 37.402-3 are satisfied.

Ensure that contracts for nonpersonal child care services include requirements for criminal history background checks on employees who will perform child care services under the contract in accordance with 34 U.S.C. 20351 and agency procedures.

Agencies must ensure nonpersonal health care services contracts with physicians, dentists and other health care providers include indemnification and medical liability insurance.

To ensure adequate medical liability insurance is obtained, the contracting officer must insert the necessary value(s) in paragraph (a) of contract clause 52.237-7. Agencies determine the value(s) by considering the standard coverage prevailing within the local community for the specific medical specialty, or a higher amount if necessary to protect the Government’s interests.

Insert the clause at 52.237-7, Indemnification and Medical Liability Insurance, in solicitations and contracts for nonpersonal health care services.

Before making award, the contracting officer must obtain proof that the apparent successful offeror will be able to obtain the required medical liability insurance (e.g., letter of intent from a reputable insurer, underwriting approval letter).

After contract award, but before performance begins, the contracting officer must obtain proof that the contractor holds an active policy for the required medical liability insurance.

Contracts for dismantling of buildings, ground improvements, and other real property structures and for the removal of such structures or a portion of them (hereafter referred to as dismantling, demolition, or removal of improvements) must comply with one of two labor standards statutes. Service Contract Labor Standards (41 U.S.C. chapter 67) apply when the contract is solely for dismantling, demolition, or removal. However, if the Government plans any follow-on construction, alteration, or repair work of a public building or public work at the same location—even under a separate contract—then the Construction Wage Rate Requirements (40 U.S.C. chapter 31, subchapter IV) apply (see part 22).

The standard bonding requirements (see part 28) in 40 U.S.C. chapter 31, subchapter III do not apply to contracts solely for dismantling, demolition, or removal of improvements. However, the contracting officer may require the contractor to furnish a performance bond or other security in an amount that the contracting officer considers adequate to—

(a) Ensure completion of the work;

(b) Protect property to be retained by the Government;

(c) Protect property to be provided as compensation to the contractor; and

(d) Protect the Government against damage to adjoining property.

Agencies must structure contracts to carefully balance payment terms and title rights to protect the Government’s interests.

(a) Contracts for dismantling or demolition may be structured so that either the Government pays the contractor for performing the work, or the contractor pays the Government for the right to salvage and remove the resulting materials.

(b) The contracting officer must evaluate all salvageable property to determine its usefulness to the Government. When property is worth more to the Government than its salvage value to the contractor, the contract must specifically designate it for Government retention. For all other property, which the contractor will own, the contracting officer must determine its fair market value. This valuation affects both payment structure and any potential termination compensation.

(a) Insert the clause at 52.237-4, Payment by Government to Contractor, in solicitations and contracts solely for dismantling, demolition, or removal of improvements whenever the contracting officer determines that the Government must make payment to the contractor in addition to any title to property that the contractor may receive under the contract. If the contracting officer determines that all material resulting from the dismantling or demolition work is to be retained by the Government, use the basic clause with its Alternate I.

(b) Insert the clause at 52.237-5, Payment by Contractor to Government in solicitations and contracts for dismantling, demolition, or removal of improvements whenever the contractor is to receive title to dismantled or demolished property and a net amount of compensation is due to the Government, except if the contracting officer determines that it would be advantageous to the Government for the contractor to pay in increments and the Government to transfer title to the contractor for increments of property only upon receipt of those payments.

(c) Insert the clause at 52.237-6, Incremental Payment by Contractor to Government, in solicitations and contracts for dismantling, demolition, or removal of improvements if—

(1) The contractor is to receive title to dismantled or demolished property and a net amount of compensation is due the Government; and

(2) The contracting officer determines that it would be advantageous to the Government for the contractor to pay in increments (e.g., to encourage greater competition or participation of small business concerns), and for the Government to transfer title to the contractor for increments of property only upon receipt of those payments.

Agencies must ensure solicitations do not incentivize the use of uncompensated overtime (10 U.S.C. 4507).

Agencies must not contract with organizations that offer quasi-military armed forces for hire, or with their employees, regardless of the contract’s character (5 U.S.C. 3108). An organization providing guard or protective services is not considered a quasi-military armed force, even though the guards are armed or the organization provides general investigative or detective services.

(a)Part 31 specifies cost allowability limitations for severance payments to foreign nationals under service contracts outside the United States. However, agencies may waive or except the cost limitations in certain circumstances (see 10 U.S.C. 3744 and 41 U.S.C. 4304).

(b)Waivers.

(1)The head of the agency may waive such severance cost limitations when the contract—

(i)Provides significant support services for members of the armed forces stationed or deployed outside the United States; or

(ii)Provides significant support for employees of an executive agency posted outside the United States; and

(iii)The head of the agency determines the conditions outlined in 52.237-8(b) are present.

(2)Waivers cannot be granted if the severance is a result of the curtailment or termination of basing rights of the United States military at the request of the host government (see part 31).

(3)Waivers may only be granted prior to contract award.

(c)Applicability. The Secretary of Defense may determine that the cost allowability limitations on severance do not apply in military banking contracts (10 U.S.C. 3744(a)(13) and (14)).

(a)Agencies may hire temporary help service firms to provide workers for short-term or occasional needs (5 U.S.C. 3109). These arrangements are not considered personal services contracts. However, agencies cannot use temporary help to avoid normal Federal hiring processes or replace existing Federal employees.

(b)All temporary help contracts must comply with the requirements in 5 CFR part 300, subpart E, Use of Private Sector Temporaries, and agency procedures.

(c)Contracting officers should consult with cognizant civilian personnel offices for expertise when exercising this authority.

(a)Insert the provision at 52.237-1, Site Visit, in solicitations for services to be performed on Government installations, unless the solicitation is for construction.

(b)Insert the clause at 52.237-2, Protection of Government Buildings, Equipment, and Vegetation, in solicitations and contracts for services to be performed on Government installations, unless a construction contract is contemplated.

(c)Insert the clause at 52.237-3, Continuity of Services, in solicitations and contracts for services, when—

(1)The services under the contract are considered vital to the Government and must be continued without interruption and when, upon contract expiration, a successor, either the Government or another contractor, may continue them; and

(2)The Government anticipates difficulties during the transition from one contractor to another or to the Government. Examples of instances where use of the clause may be appropriate are services in remote locations or services requiring personnel with special security clearances.

(d)Insert the provision at 52.237-8, Restriction on Severance Payments to Foreign Nationals, in solicitations that meet the criteria in 37.802-3(b).

(e)Insert the clause at 52.237-9, Waiver of Limitation on Severance Payments to Foreign Nationals when the head of an agency has granted a waiver pursuant to 37.802-3(b).

(f)Insert the provision at 52.237-10, Identification of Uncompensated Overtime, in solicitations valued above the simplified acquisition threshold, for professional or technical services to be acquired on the basis of the level of effort rather than performance outcome required.

Agencies must ensure an offeror’s use of uncompensated overtime will not degrade the level of technical expertise required to meet Government requirements. When offerors propose uncompensated overtime, contracting officers must assess potential risks posed, including by—

(a)Using adjusted hourly rates instead of standard hourly rates for all proposed hours;

(b)Reviewing whether unrealistically low labor rates or costs might lead to poor quality or inadequate service; and

(c)Examining whether uncompensated overtime is distributed unevenly across skill levels or concentrated in critical technical positions.

(a) Contracts funded by annual appropriations must not extend beyond the end of the fiscal year of the appropriation except when authorized (see part 32).

(b) The head of the agency may enter into a contract, exercise an option, or place an order under a contract for severable services for a period that begins in one fiscal year and ends in the next fiscal year if the period of the contract awarded, option exercised, or order placed does not exceed one year (10 U.S.C. 3133 and 41 U.S.C. 3902). Funds made available for a fiscal year may be obligated for the total amount of an action entered into under this authority.

(c) Agencies with statutory multiyear authority should consider the use of this authority to encourage and promote economical business operations when acquiring services.