FAR 37.403—Contract clause.
Plain-English Summary
FAR 37.403 tells contracting officers when to use the contract clause at 52.237-7, Indemnification and Medical Liability Insurance, for nonpersonal health care services. Its purpose is to make sure the Government addresses liability and insurance issues up front when it buys health care services from a contractor rather than from an employee or personal-services relationship. The section has two main parts: a mandatory rule for solicitations and contracts for nonpersonal health care services, and a discretionary rule allowing the clause to be added to bilateral purchase orders awarded under FAR part 13 procedures. In practice, this means the contracting officer must identify whether the requirement is for nonpersonal health care services and then decide whether the clause must be included or may be added depending on the acquisition method. For contractors, the clause can affect pricing, insurance coverage, risk allocation, and compliance obligations, so it is important to know whether the clause is required before submitting an offer or accepting an order.
Key Rules
Mandatory clause use
The contracting officer must insert FAR 52.237-7, Indemnification and Medical Liability Insurance, in solicitations and contracts for nonpersonal health care services. This is a required clause, not a discretionary one, when the acquisition falls within that category.
Applies to nonpersonal services
The rule applies only to nonpersonal health care services, meaning the services are contracted for as an independent contractor relationship rather than as personal services. Correctly classifying the requirement is essential because the clause requirement depends on that distinction.
Optional for bilateral purchase orders
The contracting officer may include the clause in bilateral purchase orders for nonpersonal health care services awarded under FAR part 13 procedures. This gives the Government flexibility to add the clause when using simplified acquisition methods, but it is not mandatory in every such purchase order.
Clause placement matters
The requirement is to insert the clause in the solicitation and contract, which means offerors should see the indemnification and insurance terms before award. Early inclusion helps ensure pricing, risk assumptions, and insurance commitments are addressed during competition or negotiation.
Responsibilities
Contracting Officer
Determine whether the requirement is for nonpersonal health care services and, if so, insert FAR 52.237-7 in the solicitation and contract. For bilateral purchase orders under FAR part 13, decide whether to include the clause based on the acquisition circumstances and document the decision as appropriate.
Contractor
Review the solicitation or order for the indemnification and medical liability insurance clause, confirm the ability to comply, and account for any insurance or risk-allocation requirements in pricing and performance planning. If the clause is included, the contractor must meet the contractual obligations it imposes.
Agency
Ensure acquisition personnel correctly identify nonpersonal health care service requirements and use the proper clause when required. Agencies should also support consistent policy and oversight so the clause is applied uniformly where applicable.
Practical Implications
Contracting officers should verify the service classification early; if the work is actually personal services or otherwise mischaracterized, the clause decision may be wrong.
Contractors should check for the clause before final pricing because indemnification and medical liability insurance requirements can materially affect cost and risk.
For simplified acquisitions, bilateral purchase orders do not automatically require the clause, so officers need to make an affirmative decision rather than assume it is included.
Failure to include a required clause can create compliance problems, while including it unnecessarily can impose avoidable burden or confusion on the contractor.
Because the clause addresses both indemnification and medical liability insurance, contractors should confirm that their insurance coverage and internal risk controls align with the contract terms before performance begins.
Official Regulatory Text
The contracting officer shall insert the clause at 52.237-7 , Indemnification and Medical Liability Insurance, in solicitations and contracts for nonpersonal health care services. The contracting officer may include the clause in bilateral purchase orders for nonpersonal health care services awarded under the procedures in part 13 .