FAR Part 37 SERVICE CONTRACTS

Service Contracts Governed by: The Service Contracts Act OMB Circular A-76 Performance Based Acquisition

Service Contracts General SC policy Includes the following: Performance based acquisition is the preferred method Reliance on the Private sector for commercial services No contracting for inherently governmental functions Describing the services requirement in a manner that ensures full understanding and performance by contractors Services obtained in the most cost effective manner, without barriers to full and open competition and free of any potential conflicts of interest.

Definitions  Service Contract….  A contract for the time and services of individuals or organizations in support of a government objective  A contract that directly engages the time and effort of a contractor whose primary purpose is to perform an identifiable task rather than furnish and end item of supply  Service contracts can be:  Personal or Non Personal,  Professional or Non Professional

Definitions  Personal Services Contract: (Continuous Govt. Control)  A contract under which the personnel providing the services are subject to the supervision and control usually prevailing in relationships between employers and employees  Non-Personal Services Contract: (Govt. Hands Off)  A contract under which the personnel providing the services are not subject to the supervision and control usually prevailing in relationships between employers and employees

Service Contract Act (SCA)  Requires contractors and subcontractors on fed contracts and DC area contracts in excess of $2500 to pay service employees no less than the monetary wage and fringe benefits found prevailing in the locality or in the bargaining agreement. (OSHA Enforced)  Service Employee: person employed in performance of a contract except executive, administrative or professional

Service Contract Act (SCA) Does not include:  Contracts for construction, alteration and/or repair  Work covered by the Walsh-Healy Act  Contracts for the carriage of freight or personnel by vessel, airplane, bus, truck, railway line, or oil and gas pipeline where published tariff rates are published.  Contracts for the furnishing of services by radio, telephone, telegraph, or cable companies subject to the Communications Act of 1934  Contracts for public utility services including electric light and power, water, steam and gas  Contracts for direct services to a federal agency by an individual or individuals  Contracts for operation of postal contract stations  Services performed outside of the geographical scope

OMB Circular A-76 Provides guidance to define “inherently governmental” and “commercial” functions  An inherently governmental activity is one that is so intimately related to the public interest as to mandate performance by government personnel.  Activities require the exercise of substantial discretion in applying government authority  The exercise of Sovereign Government authority  Establishment of procedures and processes related to the oversight of monetary transactions or entitlements.

OMB Circular A-76  Inherently Governmental Activity involves:  Binding the US to take or not to take some action by contract, policy, regulation, authorization, order or otherwise  Determining, protecting and advancing economic, political, territorial, property or other interests by military or diplomatic action, civil or criminal judicial proceedings, contract management or otherwise  Significantly affecting the life, liberty or property of private persons  Exerting ultimate control over the acquisition, use of disposition of US property including establishing policies and procedures for the collection, control or disbursement of appropriated and other federal funds

Advisory and Assistance Services OK to:  Obtain outside points of view to avoid limited judgment on critical issues  Obtain advice regarding developments in industry, university or foundation research  Obtain the opinions, special knowledge or skills of noted experts  Enhance the understanding of, and develop alternative solutions to complex issues  Support and improve the operation of organizations  Ensure the more efficient or effective operation of managerial or hardware systems

Advisory and Assistance Services Not OK to:  Perform work of a policy, decision making, or managerial nature which is the direct responsibility of the agency officials  Bypass or undermine personnel ceilings, pay limitations, or competitive employment procedures  Contract for, on a preferential basis, former federal employees  Specifically aid in influencing or enacting legislation  Obtain professional or other technical advice, which is readily available within the agency or another federal agency

Performance Based Acquisition  Intended to insure that required outcome quality levels are achieved and that total payment is related to the degree that outcomes achieved meet contract standards.  Describe the requirement in terms of results required rather than the methods of performing the work  Use measureable performance standards and quality assurance plans  Specify procedures for reductions of fees or for reductions to the price of fixed price contracts when services are not performed or do not meet specifications  Include performance incentives where appropriate  Use Quality assurance surveillance plans to determine that the services conform to contract requirements

Performance Based Acquisition  7 steps to conducting Performance Based Service Acquisition: 1.Establish an integrated solutions team 2.Describe the problem that needs solving 3.Examine private and public sector solutions 4.Develop a performance work statement or statement of objectives 5.Decide how to measure and manage performance 6.Select the right contractor 7.Manage performance

Performance Based Acquisition  Benefits:  Increase likelihood of meeting mission needs  Focus on intended results not process  Better value and enhanced performance  Less performance risk  No detailed specification or process description is needed  Contractor has flexibility in proposing solutions  Better competition is present  Contractor buy-in and shared interests  Shared incentives permit innovation and cost effectiveness  Less likelihood of successful protest  Surveillance is less frequent but more meaningful  Results are documented for Government Performance and Results Act reporting  Variety of solutions from which to choose

SERVICE CONTRACTS QUESTIONS