37.104 Personal services contracts.

(a) A personal services contract is characterized by the employer-employee relationship it creates

between the Government and the contractor’s personnel. The Government is normally required to

obtain its employees by direct hire under competitive appointment or other procedures required by

the civil service laws. Obtaining personal services by contract, rather than by direct hire,

circumvents those laws unless Congress has specifically authorized acquisition of the services by

contract.

(b) Agencies shall not award personal services contracts unless specifically authorized by statute

(e.g., 5 U.S.C. 3109) to do so.

(c)

(1) An employer-employee relationship under a service contract occurs when, as a result of (i) the

contract’s terms or (ii) the manner of its administration during performance, contractor personnel

are subject to the relatively continuous supervision and control of a Government officer or employee.

However, giving an order for a specific article or service, with the right to reject the finished

product or result, is not the type of supervision or control that converts an individual who is an

independent contractor (such as a contractor employee) into a Government employee.

(2) Each contract arrangement must be judged in the light of its own facts and circumstances, the

key question always being: Will the Government exercise relatively continuous supervision and

control over the contractor personnel performing the contract. The sporadic, unauthorized

supervision of only one of a large number of contractor employees might reasonably be considered

not relevant, while relatively continuous Government supervision of a substantial number of

contractor employees would have to be taken strongly into account (see (d) of this section).

(d) The following descriptive elements should be used as a guide in assessing whether or not a

proposed contract is personal in nature:

(1) Performance on site.

(2) Principal tools and equipment furnished by the Government.

(3) Services are applied directly to the integral effort of agencies or an organizational subpart in

furtherance of assigned function or mission.

(4) Comparable services, meeting comparable needs, are performed in the same or similar agencies

using civil service personnel.

(5) The need for the type of service provided can reasonably be expected to last beyond 1 year.

(6) The inherent nature of the service, or the manner in which it is provided, reasonably requires

directly or indirectly, Government direction or supervision of contractor employees in order to-

(i) Adequately protect the Government’s interest;

(ii) Retain control of the function involved; or
(iii) Retain full personal responsibility for the function supported in a duly authorized Federal officer

or employee.

(e) When specific statutory authority for a personal service contract is cited, obtain the review and

opinion of legal counsel.

(f) Personal services contracts for the services of individual experts or consultants are limited by the

Classification Act. In addition, the Office of Personnel Management has established requirements

which apply in acquiring the personal services of experts or consultants in this manner (e.g.,

benefits, taxes, conflicts of interest). Therefore, the contracting officer shall effect necessary

coordination with the cognizant civilian personnel office.

Parent topic: Subpart 37.1 - Service Contracts-General