Overview
FAR Part 37 establishes the policies and procedures for acquiring and managing services by contract, applying to all service-related acquisitions regardless of contract type. It mandates the use of performance-based acquisition (PBA) methods to the maximum extent practicable and strictly distinguishes between personal and nonpersonal services to ensure the government does not bypass civil service laws.
Key Rules
- Performance-Based Acquisition (PBA) Preference: Agencies must use PBA methods for services as the primary choice, following an order of precedence: (1) Firm-Fixed-Price (FFP) PBA, (2) Non-FFP PBA, and (3) Non-performance-based contracts.
- Personal Services Prohibition: Agencies are prohibited from awarding personal services contracts—which create an employer-employee relationship between the government and contractor personnel—unless specifically authorized by statute.
- Inherently Governmental Functions: Contractors are strictly forbidden from performing "inherently governmental functions," such as policy-making or exercising sovereign government authority.
- Severable Services Funding: For executive agencies (excluding NASA), contracts for severable services may cross fiscal years provided the total period of performance does not exceed one year.
- Extension of Services: Contracting Officers may include an option to extend services for up to six months to avoid gaps in vital services during delays in new contract awards (e.g., due to protests).
- Uncompensated Overtime: While not encouraged, if uncompensated overtime is proposed for professional/technical services, the CO must perform a risk assessment to ensure technical expertise is not degraded by unrealistically low rates.
Responsibilities
- Contracting Officers (CO):
- Determining whether a service is "personal" or "nonpersonal" and documenting the rationale.
- Ensuring the use of PBA methods to the maximum extent practicable.
- Verifying that criminal history background checks are performed for child care service contracts.
- Conducting risk assessments on proposals involving uncompensated overtime.
- Program Managers / Officials:
- Accurately describing the requirement or problem using performance-based methods.
- Overseeing contractor activities to ensure functions do not expand into "inherently governmental" territory.
- Ensuring that a sufficient number of qualified government employees are available to manage and oversee the contract.
- Contractor Personnel:
- Identifying themselves as contractors in meetings, on the phone, and in documents to avoid being mistaken for government officials.
- Agency Heads:
- Establishing management practices to prevent fraud, waste, and abuse in service contracting.
- Providing waivers for certain cost limitations (e.g., severance payments to foreign nationals) when applicable.
Practical Implications
- Avoidance of "Shadow" Employees: In real-world scenarios, the government must avoid "continuous supervision and control" of contractor staff. If a government manager begins approving a contractor's leave or directing their daily tasks, they risk creating an illegal personal services contract.
- Transition Management: The "Continuity of Services" clause (FAR 52.237-3) is vital for high-stakes environments like IT infrastructure or base operations, allowing the government to force a phase-in/phase-out period so that a departing contractor must assist their successor.
- The "Contractor" Label: Because contractors often work side-by-side with feds, they must use "Contractor" in email signatures and introduce themselves as such in meetings to maintain transparency for the public and Congress.
- Focus on Results, Not Methods: Under PBA, the government should write a Performance Work Statement (PWS) that tells the contractor what the outcome should be, rather than a Statement of Work (SOW) that tells them how to do it, shifting the performance risk to the contractor.