Limitations
Management and operating contracts cannot be used for inherently governmental functions, and contracting officers must ensure compliance with these limitations before authorization.
Overview
FAR 17.603 outlines specific limitations on the use of management and operating (M&O) contracts by federal agencies. The section prohibits authorizing M&O contracts for certain inherently governmental functions, such as directing government personnel (except for incidental supervision during training), exercising police or regulatory powers (except for guard or plant protection), determining basic government policies, performing day-to-day agency management, or functions better handled under FAR subpart 45.3 (use and rental of government property). The regulation also clarifies that once an authorization is issued under FAR 17.602(a), it is considered valid regardless of these limitations. Additionally, it references FAR subpart 22.5 for requirements related to project labor agreements.
Key Rules
- Prohibited Functions for M&O Contracts
- M&O contracts cannot be used for inherently governmental functions, including personnel management, policy determination, regulatory enforcement, or core agency management.
- Exceptions and Validity
- Authorizations issued under FAR 17.602(a) are deemed valid even if they touch on restricted areas, and the section does not retroactively invalidate such authorizations.
- Reference to Project Labor Agreements
- For labor agreement requirements, contracting officers must consult FAR subpart 22.5.
Responsibilities
- Contracting Officers: Must ensure M&O contracts do not cover prohibited functions and reference appropriate FAR subparts for labor agreements.
- Contractors: Should not propose or accept work involving restricted functions under M&O contracts.
- Agencies: Must oversee compliance and ensure authorizations are properly issued and documented.
Practical Implications
- This section exists to prevent contractors from performing inherently governmental functions, maintaining clear boundaries between government and contractor roles.
- It impacts daily contracting by requiring careful review of contract scopes and functions.
- Common pitfalls include inadvertently assigning prohibited functions to contractors or misunderstanding the scope of valid authorizations.