FAR 37.1—Subpart 37.1

Definitions.

FAR 37.101 provides the core definitions used throughout FAR Part 37, which governs service contracting. This section defines adjusted hourly rate (including uncompensated overtime), child care services, nonpersonal services contract, service contract, and uncompensated overtime, and it also identifies common categories of work that are treated as service contracts, such as maintenance and repair, housekeeping and base services, advisory and assistance services, operation of Government-owned equipment and systems, communications services, architect-engineering services, transportation and related services, and research and development. The purpose of these definitions is to establish consistent terminology for acquisition planning, solicitation drafting, pricing, labor-hour evaluation, and administration of service contracts. In practice, these definitions help contracting officers determine whether a requirement is a service contract, whether it is personal or nonpersonal in nature, and how to evaluate labor rates when offerors propose uncompensated overtime. They also matter because misclassifying a requirement can lead to improper contract type selection, flawed pricing analysis, or unauthorized personal services relationships. For contractors, the definitions affect how labor is priced and disclosed, especially when employees work more than a standard 40-hour week without extra pay. For agencies, the definitions support compliance with procurement policy and help ensure service acquisitions are structured and administered correctly.

Policy.

FAR 37.102 sets the government-wide policy framework for acquiring services. It establishes performance-based acquisition as the preferred approach, requires agencies to use it to the maximum extent practicable, and sets an order of precedence for service acquisitions, including those made under supply contracts or orders. It also identifies important exceptions, such as architect-engineer services, construction, utility services, and services incidental to supply purchases. Beyond acquisition method, the section addresses reliance on the private sector for commercial services, the prohibition on contracting for inherently governmental functions, and the general authority for non-personal service contracts. It assigns program officials responsibility for clearly describing service needs, directs agencies to adopt management practices to prevent fraud, waste, and abuse, and requires service acquisitions to be cost-effective, competition-friendly, and free of conflicts of interest. The section also requires agencies to have sufficiently trained and experienced personnel to oversee contract administration, to align service contracts involving products with the FAR’s product/environmental requirements, and to observe special limitations on lowest-price technically acceptable source selection for certain services outside DoD. In practice, this section is the core policy statement that shapes how agencies plan, compete, award, and manage service contracts.

Contracting officer responsibility.

FAR 37.103 assigns the contracting officer the central gatekeeping role for service acquisitions. It covers five main topics: determining whether a proposed service contract is personal or nonpersonal, seeking legal review in doubtful cases, documenting the file with the legal opinion and factual rationale when required, using performance-based acquisition methods to the maximum extent practicable, ensuring child care service contracts include criminal history background checks for covered employees, and meeting service contractor reporting requirements under the Service Contracts Inventory rules. The purpose of the section is to prevent improper service contracting arrangements, especially personal services contracts that are not authorized, and to promote sound acquisition planning, accountability, and compliance. In practice, this means the contracting officer must actively analyze the nature of the work, build a defensible file, and make sure the contract structure and administration align with FAR and agency-specific requirements. It also means service acquisitions are not just about price and schedule; they must be properly classified, documented, performance-based where possible, and reported correctly.

Personal services contracts.

FAR 37.104 explains what a personal services contract is, why such contracts are generally prohibited, and how to tell when a service arrangement crosses the line into an employer-employee relationship with the Government. It covers the legal prohibition on using contracts to obtain personal services unless Congress has specifically authorized that approach, the core test of whether Government personnel exercise relatively continuous supervision and control over contractor personnel, and the distinction between permissible oversight of contract results and impermissible supervision of individuals. The section also lists practical indicators that suggest a contract may be personal in nature, such as performance on-site, Government-furnished tools and equipment, direct support to an agency’s mission, use of civil service personnel for similar work, expected duration beyond one year, and the need for Government direction to protect the Government’s interests or retain control of the function. It further requires legal review when specific statutory authority is cited and notes special limits and coordination requirements for personal services contracts involving individual experts or consultants, including Classification Act constraints and Office of Personnel Management requirements. In practice, this section is meant to prevent agencies from bypassing civil service hiring rules and to help contracting officers identify, document, and manage arrangements that could be viewed as personal services contracts.

Competition in service contracting.

FAR 37.105 explains how competition requirements apply to service contracts. It addresses two main topics: when service contracts must be awarded through sealed bidding, and how the general competition rules in statute and FAR part 6 apply to service acquisitions. The section makes clear that services are not exempt from competition requirements simply because they are services; instead, the normal competition framework applies unless another statute says otherwise. It also recognizes that competition for services can be achieved in different ways depending on the nature of the service, so the government is not limited to price-only competition. In practice, this section tells contracting officers to choose a contracting method that satisfies competition rules while fitting the service being bought, and it reminds contractors that service procurements may be competed under a variety of evaluation approaches, not just lowest price.

Funding and term of service contracts.

FAR 37.106 addresses how the government funds service contracts and how long those contracts may run. It covers three related topics: the general rule for service contracts funded with annual appropriations, the special authority to award or extend certain severable service contracts across fiscal years for up to one year, and the requirement that agencies with statutory multiyear authority consider using that authority to support economical business operations when buying services. In practice, this section is about matching the contract term to the availability of appropriated funds and the legal authority behind the acquisition strategy. It helps contracting officers avoid violating fiscal law by obligating funds beyond their period of availability, while also giving agencies flexibility to buy ongoing services efficiently when the law permits. The section is especially important for service acquisitions that span the end of a fiscal year, involve options or orders, or may benefit from longer-term funding structures.

Service Contract Labor Standards.

FAR 37.107 is a short but important cross-reference provision that points contracting officers and contractors to the Service Contract Labor Standards statute, 41 U.S.C. chapter 67, when determining whether a service contract is covered. It explains that the statute establishes minimum wages, fringe benefits, and other working conditions for certain service contracts, but it does not itself define coverage in detail. Instead, coverage is determined by the statute’s own definitions and exceptions, together with the implementing regulations. In practice, this section matters because it reminds acquisition personnel that Service Contract Labor Standards applicability is a threshold issue that must be resolved before award and administered correctly throughout performance. If the statute applies, the contract must include the required labor standards terms and the contractor must comply with wage and benefit obligations for covered service employees. If it does not apply, those requirements are not imposed under this statute, but the contracting officer still must make the coverage determination carefully and consistently.

Small business Certificate of Competency.

FAR 37.108 addresses a narrow but important exception to the Small Business Administration’s Certificate of Competency (COC) process in certain service procurements. It applies when the Government needs the highest level of competence obtainable and signals that need in the solicitation by requiring a technical/management proposal, followed by a technical evaluation and source selection. In that situation, the normal small business referral and COC procedures in FAR subpart 19.6 may not apply. The practical effect is that a contracting officer may not be required to refer a small business’s responsibility issue to SBA for a COC determination when the procurement is structured as a highly competitive, technically evaluated service acquisition. This section matters because it affects how responsibility determinations are handled, how small business offerors are evaluated, and when SBA gets the opportunity to review a small business’s capability to perform. It is a limited carve-out, not a general waiver of small business protections, and it should be applied only when the solicitation and acquisition method clearly fit the described circumstances.

Services of quasi-military armed forces.

FAR 37.109 implements the statutory prohibition in 5 U.S.C. 3108 against contracting with “Pinkerton Detective Agencies or similar organizations.” In practical terms, this section tells agencies and contractors when a services contract is barred because the vendor is essentially offering a quasi-military armed force for hire, and when it is not barred even if the contractor provides armed guards, protective services, or general investigative/detective services. The section is narrow but important: it protects the government from using private organizations that function like mercenary or paramilitary forces, while allowing ordinary security and investigative services that do not rise to that level. It also clarifies that the prohibition applies to contracts with the organization itself or its employees, regardless of how the contract is labeled or structured. For contracting officers, the key practical task is to look past the contract title and evaluate the nature of the organization and the services being offered. For contractors, the main significance is understanding that armed security work is not automatically prohibited, but a quasi-military character can make the arrangement unlawful.

Solicitation provisions and contract clauses.

FAR 37.110 tells contracting officers which solicitation provisions and contract clauses must or may be used in service acquisitions, especially when the work will be performed on Government installations or when continuity of service is critical. It specifically addresses the mandatory use of the Site Visit provision at 52.237-1 for most services on Government installations, the mandatory use of the Protection of Government Buildings, Equipment, and Vegetation clause at 52.237-2 for services on Government installations, and the discretionary use of the Continuity of Services clause at 52.237-3 when uninterrupted performance is vital and transition risk is high. It also points contracting officers to FAR 9.508 for conflict-of-interest provisions and clauses that may be important in service procurements, and it reminds them to include any other FAR-prescribed provisions and clauses that apply based on the acquisition’s specific facts and conditions. In practice, this section is about tailoring service solicitations and contracts to the operating environment, protecting Government property, reducing transition disruptions, and ensuring ethics and other mandatory clauses are not overlooked. For contractors, it signals that service contracts may include site access requirements, property-protection obligations, continuity expectations, and conflict-of-interest restrictions that can affect pricing, staffing, and transition planning.

Extension of services.

FAR 37.111 addresses how the Government can keep recurring or continuing services in place when award of a new contract is delayed by events outside the contracting office’s control, such as bid protests or alleged mistakes in bid. It authorizes the contracting officer to include an option clause in solicitations and contracts that allows the Government to require continued performance of the services for a limited period, rather than negotiating a short bridge extension each time a delay occurs. The section also explains that the extended performance must stay within the contract’s existing scope, limits, and rates, except that rates may be adjusted only when the Secretary of Labor revises prevailing labor rates. It further limits the use of this extension authority by allowing the option to be exercised more than once, but only up to a total of 6 months of extended performance. In practice, this provision is a planning tool for service acquisitions: it helps agencies avoid service gaps, gives contractors notice that continuation may be required, and sets clear boundaries on pricing and duration.

Government use of private sector temporaries.

FAR 37.112 addresses when and how the Government may buy temporary help services from private-sector temporary help firms. It covers the limited purpose for which these services may be used—brief or intermittent needs for specific skills—the legal status of those services as not being personal services, and the key prohibitions against using them to bypass normal civil service recruitment or to replace a Federal employee. It also ties the acquisition to the requirements in 5 CFR Part 300, Subpart E, which sets the authority, criteria, and conditions for using private-sector temporaries, as well as any applicable agency procedures. In practice, this section is meant to give agencies flexibility for short-term staffing gaps while protecting the civil service system and preventing contractors from being used as a substitute for hiring or for inherently governmental workforce decisions.

Severance payments to foreign nationals.

Special acquisition requirements.

FAR 37.114 addresses special acquisition requirements for service contracts that produce advice, opinions, recommendations, ideas, reports, analyses, or other work products because those services can influence Government authority, accountability, and decision-making. The section is designed to prevent contractors from performing inherently governmental functions, to ensure Government officials retain and properly exercise their own authority, and to require stronger management controls when contractors support functions that are not inherently governmental but closely support inherently governmental activities. It also covers staffing oversight, limits on changing or expanding contract performance into inherently governmental work during performance, and disclosure requirements for contractor personnel who may appear to be Government employees in meetings, on telephones, or in other public-facing settings. In practice, this means agencies must actively manage these contracts, maintain enough qualified Government oversight, and make sure contractor status is visible to avoid confusion, improper delegation, or the appearance that contractors are speaking or acting for the Government. For contractors, the rule means careful attention to role boundaries, identification practices, and how deliverables are labeled and presented.

Uncompensated overtime.