Overview
FAR Subpart 37.4 establishes the policies and procedures for acquiring the services of health care professionals (such as doctors and dentists) through nonpersonal services contracts. It ensures that while the government receives essential medical services, these providers remain independent contractors, thereby protecting the government from direct medical liability.
Key Rules
- Independent Contractor Status: Contracts must explicitly state that the provider is an independent contractor and the relationship is "nonpersonal" as defined in FAR 37.101.
- Professional Autonomy: While the government can evaluate the administrative and general quality of services, it is strictly prohibited from controlling medical judgments, diagnoses, or specific treatment decisions.
- Indemnification: Contractors are required to indemnify the government for any liability resulting from their acts or omissions (or those of their employees/agents) during performance.
- Mandatory Insurance: Contractors must maintain medical liability insurance at levels at least equal to the prevailing local community standards for their specific medical specialty.
- Flow-down Requirements: These requirements, including the need for liability insurance, must be flowed down to any subcontracts for health care services.
- Mandatory Clause: The contracting officer must include FAR clause 52.237-7, Indemnification and Medical Liability Insurance, in all solicitations and contracts for these services.
Responsibilities
- Contracting Officers (COs):
- Must verify "evidence of insurability" from the apparent successful offeror before awarding the contract.
- Must verify actual "evidence of insurance" (proof of the policy) before the contractor begins performance.
- Ensures the correct regulatory clauses are included in solicitations and resulting contracts.
- Contractors:
- Responsible for obtaining and maintaining adequate liability insurance.
- Responsible for the professional conduct and medical outcomes of their staff.
- Must ensure all subcontractors are compliant with the same indemnification and insurance standards.
Practical Implications
- Risk Mitigation: This subpart is primarily a risk-management tool. By requiring indemnification and insurance, the government shifts the legal and financial burden of medical malpractice from the taxpayer to the private contractor.
- Operational Boundary: In a real-world clinic or hospital setting, government managers must be careful not to "supervise" the medical decisions of contract doctors. Doing so could inadvertently convert the relationship into a personal services contract, potentially making the government liable for malpractice.
- Pre-Award Diligence: For contractors, the requirement to show "evidence of insurability" before award means they must have active coordination with insurance providers during the proposal phase, not just after they win the work.
- Local Market Benchmarking: Since insurance must meet "local community" standards, the cost of performance can vary significantly based on the geographic location of the medical facility (e.g., higher premiums in high-litigation areas).