FAR 37.101—Definitions.
Plain-English Summary
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.
Key Rules
Adjusted hourly rate formula
When uncompensated overtime is proposed, the hourly rate must be adjusted by multiplying the 40-hour-week rate by 40 and dividing by the proposed hours per week. This converts the rate to reflect the longer workweek and allows fair comparison of labor pricing.
Child care services scope
Child care services is defined broadly and includes protective services, social services, health and mental health care, day care, education, foster care, residential care, recreational or rehabilitative programs, and detention, correctional, or treatment services. The definition is important because it identifies a broad category of service work that may be subject to special acquisition considerations elsewhere in the FAR.
Nonpersonal services standard
A nonpersonal services contract exists when contractor personnel are not subject to the supervision and control normally associated with Government employees, either by contract terms or by how the contract is administered. This distinction helps prevent unauthorized personal services arrangements and preserves the contractor’s independent status.
Service contract definition
A service contract is one whose primary purpose is to obtain the contractor’s time and effort to perform an identifiable task rather than to deliver a supply. The definition covers both personal and nonpersonal services and applies to professional and nonprofessional work performed individually or organizationally.
Common service contract categories
The definition expressly includes several common service areas, such as maintenance and repair, routine real property maintenance, 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. These examples help users recognize when a requirement falls within Part 37’s service-contract framework.
Uncompensated overtime definition
Uncompensated overtime means hours worked without additional pay beyond an average 40-hour week by direct-charge employees who are exempt from the Fair Labor Standards Act. Compensated personal absences, such as holidays, vacation, and sick leave, are counted in the normal workweek when calculating uncompensated overtime.
Responsibilities
Contracting Officer
Identify whether the requirement is a service contract and whether it is personal or nonpersonal in nature. Apply the adjusted hourly rate formula when offerors propose uncompensated overtime, and ensure the solicitation and evaluation approach reflect the correct labor pricing and contract classification.
Agency
Structure acquisitions in a way that complies with service contracting policy and avoids unauthorized personal services relationships. Use the definitions in this section to support acquisition planning, requirement development, and oversight of service contract administration.
Contractor
Classify labor pricing correctly when proposing uncompensated overtime and disclose rates in a way that allows the Government to evaluate them on a comparable basis. Ensure personnel and work practices remain consistent with the contract’s nonpersonal or personal service structure as applicable.
Offeror
When proposing labor hours that exceed 40 per week without additional compensation, calculate and present the adjusted hourly rate using the FAR formula. Make sure the proposal clearly reflects the proposed workweek and the treatment of compensated absences.
Program/Requirements Office
Describe the requirement accurately so it can be recognized as a service contract or another acquisition type. Provide enough detail for the contracting officer to determine whether the work falls into one of the listed service categories and whether special service-contract rules may apply.
Practical Implications
The biggest day-to-day impact is pricing: if an offer includes uncompensated overtime, the Government must normalize the hourly rate before comparing offers, or it may overvalue a lower nominal rate.
Misclassifying a requirement as nonpersonal when the Government actually directs and controls contractor staff can create an unauthorized personal services relationship.
The list of service contract examples is not exhaustive, so contracting personnel should not assume work outside the list is excluded from Part 37.
For contractors, failing to account for uncompensated overtime correctly can distort indirect rates, labor mix, and proposal realism.
For agencies, accurate definition use affects acquisition planning, labor-hour analysis, and the choice of contract structure, especially for recurring support services and technical assistance work.
Official Regulatory Text
As used in this part- Adjusted hourly rate (including uncompensated overtime) is the rate that results from multiplying the hourly rate for a 40-hour work week by 40, and then dividing by the proposed hours per week which includes uncompensated overtime hours over and above the standard 40-hour work week. For example, 45 hours proposed on a 40-hour work week basis at $20 per hour would be converted to an uncompensated overtime rate of $17.78 per hour ($20.00 x 40 / 45 = $17.78). Child care services means child protective services (including the investigation of child abuse and neglect reports), social services, health and mental health care, child (day) care, education (whether or not directly involved in teaching), foster care, residential care, recreational or rehabilitative programs, and detention, correctional, or treatment services. Nonpersonal services contract means a contract under which the personnel rendering the services are not subject, either by the contract’s terms or by the manner of its administration, to the supervision and control usually prevailing in relationships between the Government and its employees. Service contract means a contract that directly engages the time and effort of a contractor whose primary purpose is to perform an identifiable task rather than to furnish an end item of supply. A service contract may be either a nonpersonal or personal contract. It can also cover services performed by either professional or nonprofessional personnel whether on an individual or organizational basis. Some of the areas in which service contracts are found include the following: (1) Maintenance, overhaul, repair, servicing, rehabilitation, salvage, modernization, or modification of supplies, systems, or equipment. (2) Routine recurring maintenance of real property. (3) Housekeeping and base services. (4) Advisory and assistance services. (5) Operation of Government-owned equipment, real property, and systems. (6) Communications services. (7) Architect-Engineering (see subpart 36.6 ). (8) Transportation and related services (see part 47 ). (9) Research and development (see part 35 ). Uncompensated overtime means the hours worked without additional compensation in excess of an average of 40 hours per week by direct charge employees who are exempt from the Fair Labor Standards Act. Compensated personal absences such as holidays, vacations, and sick leave shall be included in the normal work week for purposes of computing uncompensated overtime hours.