Overview
FAR Subpart 37.1 establishes the foundational policies and procedures for acquiring services by the federal government. It distinguishes between personal and nonpersonal services, mandates a preference for performance-based acquisition (PBA) methods, and provides guidelines for managing service contracts to prevent the performance of inherently governmental functions by contractors.
Key Rules
- Performance-Based Acquisition (PBA) Priority: PBA is the preferred method for service contracting. Agencies must use a specific order of precedence: (1) Firm-Fixed Price PBA, (2) Non-fixed price PBA, and finally (3) Non-performance-based contracts.
- Personal vs. Nonpersonal Services: Agencies are generally prohibited from awarding personal services contracts (which create an employer-employee relationship) unless specifically authorized by statute. Most service contracts must be "nonpersonal," where the contractor is responsible for the supervision of its own personnel.
- Inherently Governmental Functions: Contractors are strictly prohibited from performing inherently governmental functions. For contracts that "closely support" such functions, agencies must provide enhanced management oversight.
- Severable Services Funding: Under 10 U.S.C. 3133 and 41 U.S.C. 3902, agencies may enter into a contract for severable services that crosses fiscal years, provided the total period does not exceed one year.
- Extension of Services: Contracting Officers (COs) may include a clause allowing for the extension of services for up to 6 months to handle delays such as bid protests or administrative hurdles.
- Uncompensated Overtime: While not encouraged, if used for professional/technical services based on an hourly rate, the CO must conduct a risk assessment to ensure that low labor rates or unbalanced overtime do not degrade technical quality.
- Identification of Contractors: Contractor personnel must identify themselves (e.g., in meetings or on the phone) to avoid being mistaken for Government officials.
Responsibilities
- Contracting Officers (COs):
- Determine if a service is personal or nonpersonal and document the contract file accordingly.
- Ensure performance-based methods are used to the maximum extent practicable.
- Verify that criminal history background checks are performed for child care service contracts.
- Obtain legal counsel review in "doubtful cases" regarding contract types or statutory authorities.
- Agency Program Officials:
- Accurately describe the requirement or problem to be solved.
- Develop requirements in performance-based terms to ensure contractor understanding and responsive performance.
- Provide sufficient oversight of contractor activities, particularly those supporting policy or decision-making.
- Contractors:
- Properly identify themselves as contractors in all interactions with the public or Congress.
- Mark all produced documents and reports as contractor-generated products.
- Disclose uncompensated overtime rates when proposing on professional/technical hourly-based solicitations.
Practical Implications
- Avoiding "Constructive" Personal Services: In the real world, a nonpersonal services contract can "degrade" into a personal services contract if a Government manager begins providing daily, direct supervision to contractor employees. This creates legal and liability risks for the agency.
- Bridge Contracts: The "Extension of Services" rule (FAR 52.237-3) is a vital tool for maintaining continuity during protests. However, it is limited to 6 months, forcing agencies to move quickly on long-term solutions.
- Cost Realism: When contractors propose uncompensated overtime, the Government must look past the "sticker price." An adjusted hourly rate is used to evaluate whether the contractor's staff is being spread too thin, which could lead to burnout or turnover in key technical positions.
- The "Pinkerton" Rule: While the FAR prohibits "quasi-military" organizations, it clarifies that standard armed guard and protective services are permissible, allowing for the widespread use of private security on federal installations.