Overview
Subpart 37.5 prescribes the policies and procedures for the management oversight of service contracts, implementing the mandates of OFPP Policy Letter 93-1. Its primary objective is to ensure that government agencies effectively define, award, and administer service contracts to achieve timely results within budget while preventing the outsourcing of inherently governmental functions.
Key Rules
- Definition of Best Practices: The FAR defines "best practices" as practical, experience-based techniques used to detect problems in acquisition and improve the overall procurement process.
- Applicability & Thresholds: These oversight requirements do not apply to service contracts below the Simplified Acquisition Threshold (SAT) or to services that are merely incidental to supply contracts.
- Specific Exclusions: The subpart expressly excludes:
- Construction services (as defined in FAR 2.101).
- Personal services contracts authorized by statute.
- Services obtained via personnel appointments or advisory committees.
- Interagency agreements where the work is performed by in-house Federal employees.
- Residual Responsibility: Even when a contract is excluded (e.g., below the SAT), the FAR notes that "good management practices" should still be applied.
Responsibilities
Agency Heads (or Designees)
- Requirement Definition: Ensure services are clearly defined with appropriate performance standards so offerors understand the needs.
- Financial & Timeline Oversight: Ensure contracts are administered to provide services within budget and on schedule.
- Control of Governmental Functions: Establish procedures to ensure "inherently governmental functions" remain performed by Government personnel and are not contracted out.
- Strategy & Training: Develop implementation strategies and initiate staff training to ensure effective service contracting policies.
Contracting Officials
- Utilization of Best Practices: Responsible for ensuring that "best practices" techniques are integrated into the entire lifecycle of the service contract, from initial contracting through management and administration.
Practical Implications
- Preventing "Scope Creep" and Waste: By requiring clear performance standards and definitions, this subpart forces Program Managers to articulate what they want to achieve (outcomes) rather than just who they want to hire, reducing the risk of paying for underperformance.
- The "Inherently Governmental" Wall: This subpart serves as a critical checkpoint for agencies hiring consultants or professional services. It prevents contractors from moving into roles that involve discretionary authority or value judgments that must be reserved for civil servants.
- Scalability of Oversight: While the subpart formalizes oversight for large-scale service contracts, the exclusion of sub-SAT contracts allows for administrative agility in smaller buys, provided that "common sense" management is still utilized.
- Emphasis on Training: The mandate for staff training highlights that service contracting is often more complex than supply contracting; effective oversight requires a workforce trained in performance-based monitoring rather than just "checking boxes."