Personal services contracts
Personal services contracts are generally prohibited unless specifically authorized by statute, and agencies must rigorously assess and document compliance to avoid creating unauthorized employer-employee relationships.
Overview
FAR 37.104 addresses personal services contracts, which are characterized by an employer-employee relationship between the government and contractor personnel. The regulation emphasizes that, except where specifically authorized by statute, agencies must not award personal services contracts because they circumvent civil service laws and competitive hiring processes. The section provides criteria for identifying when a contract is personal in nature, such as continuous government supervision, use of government-furnished equipment, and the nature and duration of the services. It also requires legal review when statutory authority is cited and mandates coordination with personnel offices for contracts involving individual experts or consultants due to additional requirements like benefits, taxes, and conflict of interest rules.
Key Rules
- Prohibition Without Statutory Authority
- Agencies cannot award personal services contracts unless specifically authorized by law (e.g., 5 U.S.C. 3109).
- Employer-Employee Relationship Criteria
- Contracts are considered personal if contractor personnel are under continuous government supervision and control.
- Assessment Factors
- Several factors help determine if a contract is personal, including on-site performance, government-furnished tools, direct application to agency missions, similarity to civil service roles, expected duration, and the need for government direction.
- Legal and Personnel Office Review
- Legal counsel must review contracts citing statutory authority, and coordination with personnel offices is required for expert/consultant contracts.
Responsibilities
- Contracting Officers: Must ensure contracts are not personal services unless authorized, assess contracts using provided criteria, obtain legal review when citing statutory authority, and coordinate with personnel offices for expert/consultant contracts.
- Contractors: Should avoid arrangements that create an employer-employee relationship with the government unless specifically authorized.
- Agencies: Must oversee compliance, avoid unauthorized personal services contracts, and ensure proper legal and personnel office involvement.
Practical Implications
- This section exists to prevent circumvention of civil service laws and ensure proper hiring practices.
- It impacts daily contracting by requiring careful structuring of service contracts to avoid unauthorized personal services.
- Common pitfalls include inadvertently creating personal services contracts through contract administration or failing to obtain required legal or personnel office reviews.