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[Federal Register Volume 76, Number 87 (Thursday, May 5, 2011)]
[Rules and Regulations]
[Pages 25565-25566]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-10878]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 211 and 237

RIN 0750-AG72

Defense Federal Acquisition Regulations Supplement; Guidance on 
Personal Services (DFARS Case 2009-D028)

AGENCY: Defense Acquisition Regulations System, Department of Defense 
(DoD).

ACTION: Final rule.

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SUMMARY: DoD has adopted as final, with changes, the interim rule that 
amended the Defense Federal Acquisition Regulation Supplement (DFARS) 
to implement section 831 of the National Defense Authorization Act for 
Fiscal Year 2009, which required DoD to develop guidance on personal 
services contracts.

DATES: Effective Date: May 5, 2011.

FOR FURTHER INFORMATION CONTACT: Mr. Dustin Pitsch, 703-602-1014.

SUPPLEMENTARY INFORMATION: 

I. Background

    Section 831 required DoD to mitigate the risks associated with 
personal services by developing guidance enabling contracting officers 
to better distinguish between personal services and nonpersonal 
services. The interim rule amended DFARS parts 211 and 237 to (1) 
require that statements of work or performance work statements clearly 
distinguish between Government employees and contractor employees and 
(2) ensure that procedures are adopted to prevent contracts from being 
awarded or administered as unauthorized personal services contracts. 
The interim rule included an internal requirement for a program 
manager, or equivalent, certification that the service contract 
requirement does not include an unauthorized personal services 
arrangement. Because of the differing missions of DoD agencies, the 
interim rule required agencies to adopt their own procedures.
    DoD published an interim rule at 75 FR 54524 on September 8, 2010, 
to implement section 831 of the National Defense Authorization Act for 
Fiscal Year 2009 (Pub. L. 110-417, enacted October 28, 2009). The 
period for public comment closed on November 8, 2010. Five respondents 
provided public comments on the interim rule.

II. Discussion and Analysis

A. Support for DoD Actions

    Comment: A respondent noted the DFARS requirement for agency-level 
procedures to ensure that service contract requirements are vetted and 
approved in a manner that will prevent them from being awarded or 
administered as unauthorized personal services contracts. The 
respondent stated its support for Defense agencies taking internal 
action to ensure that no unauthorized personal services contracts are 
requested. Another respondent expressed support for the rule and stated 
that it ``helps create a boundary separating contractor and government 
employees in all workplace environments.''
    Response: The respondents' support is noted. No change to the DFARS 
in this area was requested or made.

B. Limit Applicability

    Comment: Two respondents specified that the DFARS should highlight 
and limit applicability of this rule solely to personal services 
contracts, not the general service contract population.
    Response: No change was made in the final rule in response to this 
comment. It is precisely because of the potential for a migration of a 
``general service contract'' into what is effectively a ``personal 
services contract'' that the rule is necessary. DoD, with strong 
encouragement from the DoD Office of Inspector General, has determined 
that there is a need to review all services for the purpose of ensuring 
the services do not become personal services.

C. Add More Guidance

    Comment: A respondent stated that DFARS 211.106 provides no actual 
guidance to the agencies as to what the distinction between Government 
employees and contractor employees is or how an agency is to make such 
a determination. At a minimum, the respondent states, it may be 
appropriate to include in DFARS 211.106 a cross reference to the 
characteristics and descriptive elements in FAR 37.104. The respondent 
thinks the rule does not provide any actionable direction to 
contractors on what behaviors would be acceptable for contractor 
employees based on the policies and practices of the location where the 
contractor employee is assigned.
    Response: A cross reference to FAR 37.104 and the characteristics 
and descriptive elements therein has been added to DFARS 211.106. 
However, the DFARS cannot unnecessarily repeat, paraphrase, or 
otherwise restate material contained in the FAR (see FAR 1.304(b)), so 
the DFARS addition was limited to a reference. Further, the agency-
level procedures are the appropriate location for the actionable, 
agency-specific direction to contractors on acceptable behaviors.

D. Add More Specific Contract Administration Procedures

    Comment: A respondent noted the absence in the interim rule, in 
DFARS parts 237 or 242, of procedures, guidance, or information 
focusing on postaward contract administration to prevent actual 
administration of a contract as an unauthorized personal services 
contract. The respondent recommended (a) referencing FAR 37.104(d) in 
DFARS 237.503 and (b)

[[Page 25566]]

possibly adding coverage in DFARS part 242 relating to contract 
administration.
    Response: DoD has added a cross reference to FAR 37.104(d) at DFARS 
237.503. In this final rule, no changes are made to DFARS subpart 242.

E. Editorial Recommendations

    Comment: A respondent proposed several clarifying edits. The 
respondent suggested moving some coverage from DFARS 237.503 to DFARS 
237.104 and providing additional cross references. The respondent also 
proposed to revise the title of the form at PGI 237.503(c).
    Response: Some of these recommendations have been accommodated in 
the changes noted above and as follows:
     New coverage at DFARS 237.104(d) has been added to point 
readers to the section entitled ``Agency-head responsibilities'' at 
DFARS 237.503 to ensure awareness of the certification requirement.
     The title of the certification at PGI 237.503(c) has been 
changed to ``Certification of Nonpersonal Services.''

III. Executive Order 12866 and Executive Order 13563

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This rule has been designated a ``significant regulatory 
action'' although not economically significant, under section 3(f) of 
Executive Order 12866. Accordingly, the rule has been reviewed by the 
Office of Management and Budget. This rule is not a major rule under 5 
U.S.C. 804.

IV. Regulatory Flexibility Act

    DoD certifies that this final rule will not have a significant 
economic impact on a substantial number of small entities within the 
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., 
because the change solely impacts internal Government operating 
procedures and will therefore not have a significant cost or 
administrative impact on contractors, subcontractors, or offerors. An 
initial regulatory flexibility analysis was not performed. No comments 
were received from small entities on this rule.

V. Paperwork Reduction Act

    The final rule does not contain any information collection 
requirements that require the approval of the Office of Management and 
Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

List of Subjects in 48 CFR Parts 211 and 237

    Government procurement.

Mary Overstreet,
Editor, Defense Acquisition Regulations System.

    Therefore, the Defense Acquisition Regulations system confirms as 
final the interim rule published at 75 FR 54524 on September 8, 2010, 
with the following changes:

0
1. The authority citation for 48 CFR parts 211 and 237 continues to 
read as follows:

    Authority:  41 U.S.C. 1303 and 48 CFR chapter 1.

PART 211--DESCRIBING AGENCY NEEDS

0
2. Revise section 211.106 to read as follows:

211.106  Purchase descriptions for service contracts.

    Agencies shall require that purchase descriptions for service 
contracts and resulting requirements documents, such as statements of 
work or performance work statements, include language to provide a 
clear distinction between Government employees and contractor 
employees. Agencies shall be guided by the characteristics and 
descriptive elements of personal-services contracts at FAR 37.104. 
Service contracts shall require contractor employees to identify 
themselves as contractor personnel by introducing themselves or being 
introduced as contractor personnel and displaying distinguishing badges 
or other visible identification for meetings with Government personnel. 
In addition, contracts shall require contractor personnel to 
appropriately identify themselves as contractor employees in telephone 
conversations and in formal and informal written correspondence.

PART 237--SERVICE CONTRACTING

0
3. Amend section 237.104 by adding paragraph (d) as follows:

237.104  Personal services contracts.

* * * * *
    (d) See 237.503(c) for requirements for certification and approval 
of requirements for services to prevent contracts from being awarded or 
administered in a manner that constitutes an unauthorized personal 
services contract.
* * * * *

0
4. Revise section 237.503 to read as follows:

237.503  Agency-head responsibilities.

    (c) The agency head or designee shall employ procedures to ensure 
that requirements for service contracts are vetted and approved as a 
safeguard to prevent contracts from being awarded or administered in a 
manner that constitutes an unauthorized personal services contract. 
Contracting officers shall follow the procedures at PGI 237.503, 
include substantially similar certifications in conjunction with 
service contract requirements, and place the certification in the 
contract file. The program manager or other official responsible for 
the requirement, at a level specified by the agency, should execute the 
certification. In addition, contracting officers and program managers 
should remain aware of the descriptive elements at FAR 37.104(d) to 
ensure that a service contract does not inadvertently become 
administered as a personal-services contract.

[FR Doc. 2011-10878 Filed 5-4-11; 8:45 am]
BILLING CODE 5001-08-P
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