FAR 17.604—Identifying management and operating contracts.
Plain-English Summary
FAR 17.604 explains how to identify a management and operating (M&O) contract by looking at both the contract’s purpose and the special relationship it creates between the Government and the contractor. This section focuses on the practical criteria used to recognize M&O contracts: use of Government-owned or Government-controlled facilities, the need for a close Government-contractor relationship in areas such as safety, security, cost control, and site conditions, the extent to which the work is separate from the contractor’s other business, and whether the work is closely tied to the agency’s mission and expected to continue long term. It also highlights the need for continuity of operations and special protections to manage an orderly transition if contractors change. In practice, this section helps contracting personnel determine when a contract should be treated as an M&O arrangement rather than a more ordinary service or operations contract, which matters because M&O contracts often require special oversight, administration, and transition planning.
Key Rules
Government facilities are central
An M&O contract generally involves Government-owned or Government-controlled facilities. This is especially true when the facilities are needed for national defense or mobilization readiness, to carry out the agency’s mission effectively, or because private industry is unwilling or unable to provide the needed facilities.
Close Government oversight is required
The Government must maintain a special, close relationship with the contractor and its personnel because of the nature of the work or because the work is performed in Government facilities. This relationship commonly extends to safety, security, cost control, and site conditions.
Work is separate from other business
The work should be wholly or at least substantially separate from the contractor’s other business activities, if any. This helps distinguish an M&O contract from broader commercial or integrated business arrangements.
Mission-related and long-term work
The work must be closely related to the agency’s mission and of a long-term or continuing nature. The section looks for an ongoing operational need rather than a short-term project or isolated task.
Continuity must be protected
There must be a need to ensure continuity of the work and to provide special protection for the orderly transition of personnel and work if the contractor changes. This reflects the operational importance and sensitivity of M&O arrangements.
Criteria are generally applied
The listed factors are criteria that can generally be used to identify M&O contracts; they are not presented as a rigid checklist in every case. Contracting personnel should evaluate the overall relationship and purpose of the work.
Responsibilities
Contracting Officer
Evaluate the contract’s purpose and operating environment against the M&O criteria, including facility ownership/control, mission connection, continuity needs, and the degree of Government oversight required. Ensure the contract structure and administration reflect the special relationship and transition concerns associated with M&O work.
Agency
Determine whether the work is tied closely to the agency mission, requires Government-controlled facilities, and needs long-term continuity protections. Support planning for orderly transition of personnel and work if contractor changes occur.
Contractor
Perform the work within the special oversight environment typical of M&O contracts, including compliance with Government requirements affecting safety, security, cost control, and site conditions. Keep the M&O work sufficiently distinct from other business activities when applicable and support transition planning as required.
Program/Technical Officials
Help assess whether the work is mission-critical, continuing, and dependent on Government facilities or close operational integration. Provide input on operational risks, continuity needs, and the controls needed to protect performance and transition.
Practical Implications
This section is a classification tool: it helps determine whether a requirement is truly an M&O contract, which can affect acquisition strategy, oversight, and administration.
A common pitfall is focusing only on the type of work and ignoring the relationship factors, especially the need for Government-controlled facilities and close operational control.
Another frequent issue is underestimating continuity and transition needs; M&O work often requires planning for seamless turnover to avoid mission disruption.
Contractors should expect more direct Government involvement in day-to-day operational areas such as safety, security, and site conditions than in many other contract types.
Contracting officers should document how the facts fit the criteria, because the determination depends on the overall arrangement, not just a single factor.
Official Regulatory Text
A management and operating contract is characterized both by its purpose (see 17.601 ) and by the special relationship it creates between Government and contractor. The following criteria can generally be applied in identifying management and operating contracts: (a) Government-owned or -controlled facilities must be utilized; for instance- (1) In the interest of national defense or mobilization readiness; (2) To perform the agency’s mission adequately; or (3) Because private enterprise is unable or unwilling to use its own facilities for the work. (b) Because of the nature of the work, or because it is to be performed in Government facilities, the Government must maintain a special, close relationship with the contractor and the contractor’s personnel in various important areas ( e.g., safety, security, cost control, site conditions). (c) The conduct of the work is wholly or at least substantially separate from the contractor’s other business, if any. (d) The work is closely related to the agency’s mission and is of a long-term or continuing nature, and there is a need- (1) To ensure its continuity; and (2) For special protection covering the orderly transition of personnel and work in the event of a change in contractors.