FAR 52.237-3—Continuity of Services.
Plain-English Summary
FAR 52.237-3, Continuity of Services, is a transition clause used in service contracts to prevent disruption when a contract ends and a successor—either the Government or a new contractor—takes over. It addresses the contractor’s obligation to provide phase-in training, cooperate in an orderly and efficient transition, and, when the Contracting Officer gives written notice, furnish phase-in/phase-out services for up to 90 days after expiration. The clause also requires the contractor to negotiate a transition plan in good faith with the successor, including a training program and transfer dates for each division of work, subject to Contracting Officer approval. It further covers staffing continuity, including keeping as many personnel as practicable on the job, disclosing necessary personnel records, allowing on-site interviews, and negotiating transfer of earned fringe benefits for employees who move to the successor. Finally, it establishes reimbursement for reasonable phase-in/phase-out costs and allows a fee, but only up to a pro rata portion of the original contract fee. In practice, this clause is designed to protect mission-critical services, reduce transition risk, and give the Government a mechanism to manage continuity at contract end.
Key Rules
Services must continue
The contractor acknowledges that the services are vital to the Government and must not be interrupted at contract expiration. This sets the expectation that end-of-contract transition is part of performance, not an optional afterthought.
Phase-in training required
The contractor must furnish phase-in training and cooperate to make the transition orderly and efficient. This includes helping a successor understand the work, processes, and staffing needed to keep services running.
Written notice triggers transition support
Upon the Contracting Officer’s written notice, the contractor must provide phase-in/phase-out services for up to 90 days after expiration. The notice requirement gives the Government control over whether post-expiration support is needed and for how long, within the clause’s limit.
Good-faith transition plan
The contractor must negotiate in good faith with the successor to determine the nature and extent of transition services. The plan must include a training program and transfer dates for each division of work, and it must be approved by the Contracting Officer.
Maintain experienced staffing
During the phase-in/phase-out period, the contractor must provide enough experienced personnel to keep services at the required proficiency level. The clause is intended to preserve operational continuity, not just administrative handoff.
Support employee transfer
The contractor must allow as many personnel as practicable to remain on the job, disclose necessary personnel records, and permit on-site interviews by the successor. If employees agree to transfer, the contractor must release them on a mutually agreeable date and negotiate transfer of earned fringe benefits.
Reimbursement and fee limits
The contractor is entitled to reimbursement for reasonable phase-in/phase-out costs incurred during the agreed post-expiration period, plus a fee (profit) capped at a pro rata portion of the original contract fee. The clause does not guarantee unlimited transition profit or open-ended cost recovery.
Responsibilities
Contracting Officer
Issue written notice if phase-in/phase-out support is needed after expiration; review and approve the transition plan; ensure the transition period does not exceed the clause’s 90-day limit; and administer reimbursement and fee limits consistent with the contract.
Contractor
Provide phase-in training, cooperate in an orderly transition, negotiate in good faith with the successor, maintain sufficient experienced personnel during transition, disclose necessary personnel records, allow interviews, release employees when mutually agreeable, and perform transition support as directed by written notice.
Successor Contractor or Government Successor
Work with the incumbent contractor to develop the transition plan, participate in good-faith negotiations, conduct on-site interviews as allowed, and coordinate staffing and training needs to assume the services without interruption.
Agency
Plan for continuity of mission-critical services, determine whether post-expiration transition support is needed, and ensure the contract administration process supports an orderly handoff to the successor.
Practical Implications
This clause makes transition planning a contract performance obligation, so contractors should not wait until the last weeks of performance to prepare handoff materials, training, and staffing plans.
The 90-day post-expiration support period is not automatic in every case; it depends on written notice from the Contracting Officer, so both sides should track expiration dates and transition decisions closely.
Contractors should document reasonable phase-in/phase-out costs carefully, because only reasonable costs incurred within the agreed period are reimbursable and the fee is capped on a pro rata basis.
Employee transfer issues can become a major friction point; contractors should be ready to share necessary personnel records, coordinate interviews, and address fringe benefit transfer discussions early and lawfully.
A common pitfall is assuming the clause guarantees the successor will hire incumbent staff or that all transition costs will be fully recoverable; the clause requires cooperation, not guaranteed staffing outcomes or unlimited compensation.
Official Regulatory Text
As prescribed in 37.110 (c) , insert the following clause: Continuity of Services (Jan 1991) (a) The Contractor recognizes that the services under this contract are vital to the Government and must be continued without interruption and that, upon contract expiration, a successor, either the Government or another contractor, may continue them. The Contractor agrees to- (1) Furnish phase-in training; and (2) Exercise its best efforts and cooperation to effect an orderly and efficient transition to a successor. (b) The Contractor shall, upon the Contracting Officer’s written notice, (1) furnish phase-in, phase-out services for up to 90 days after this contract expires and (2) negotiate in good faith a plan with a successor to determine the nature and extent of phase-in, phase-out services required. The plan shall specify a training program and a date for transferring responsibilities for each division of work described in the plan, and shall be subject to the Contracting Officer’s approval. The Contractor shall provide sufficient experienced personnel during the phase-in, phase-out period to ensure that the services called for by this contract are maintained at the required level of proficiency. (c) The Contractor shall allow as many personnel as practicable to remain on the job to help the successor maintain the continuity and consistency of the services required by this contract. The Contractor also shall disclose necessary personnel records and allow the successor to conduct on-site interviews with these employees. If selected employees are agreeable to the change, the Contractor shall release them at a mutually agreeable date and negotiate transfer of their earned fringe benefits to the successor. (d) The Contractor shall be reimbursed for all reasonable phase-in, phase-out costs ( i.e., costs incurred within the agreed period after contract expiration that result from phase-in, phase-out operations) and a fee (profit) not to exceed a pro rata portion of the fee (profit) under this contract. (End of clause)