Procurement Information Circular

February 21, 2001


PURPOSE: To provide guidance on the use of contract support and the need to avoid personal services contracting.

BACKGROUND: Over the last year, several different reports have been issued concerning the use of contractor support and the need to avoid the perception of personal services contracting. The observations and recommendations in the reports include the following:

1. An assessment of NASA's implementation of Performance Based Contracting (PBC) was published in June 2000 (refer to

Among the PBC Assessment Team's observations was that every NASA center supplements its NASA workforce with support service contractor personnel. The team further observed that close NASA-contractor involvement, which is necessary in an integrated environment, leads to situations that are tantamount to personal services. As a result of this observation, the PBC Assessment Team recommended that a Procurement Information Circular (PIC) be issued to reinforce to Contracting Officers (COs) the need to avoid creating de facto personal services contracts, and to ensure the maximum feasible division of contractor and NASA activities.

2. A Procurement Management Survey Report of a center had the following observations concerning a contract:

As a result of these observations, the survey determined that the method by which the contractor currently provides contractor clerical and administrative support appears to match the FAR 37.104(a) definition of personal services. The survey recommended modification of the contract to include specific measures to prevent the perception or reality of Government supervision of contractor personnel.

3. The IG issued a report entitled "Agencywide Use of Support Service Contractors at NASA" in December 2000 (refer to: ). The report findings included the following:

As a result, the report included the following six recommendations:

4. The IG issued another report of support service contractors at a NASA center in January 2001. Among the findings were a lack of differentiation between civil servants and contractors and the re-employment of ex-civil servants as contractors, subcontractors, or consultants as a common practice. When these employees return to functions related to the efforts they previously supported, there is a perception of favoritism, and in some cases, conflicts of interest may exist.

As a result of these findings, the IG had the following recommendations applicable to the center in the report:


1. Procurement Officers are to remind COs and COTRs of the requirements of FAR 11.106, "Purchase descriptions for service contracts," when drafting purchase descriptions for service contracts. Specifically, agency requiring activities shall ensure that inherently governmental functions (see FAR Subpart 7.5) are not assigned to a contractor. These purchase descriptions shall: (a) Reserve final determination for Government officials; (b) Require proper identification of contractor personnel who attend meetings, answer Government telephones, or work in situations where their actions could be construed as acts of Government officials unless, in the judgment of the agency, no harm can come from failing to identify themselves; and (c) Require suitable marking of all documents or reports produced by contractors. Proper identification should also include email addresses.

2. Contracting officers and COTRs are reminded to review the descriptive elements listed in FAR 37.104 to ensure that they do not enter into a contract that may be perceived as being personal in nature.

3. NASA concurred with the IG recommendations in the above audits, including updating NPD 3310.1. Procurement Officers are to remind COs to review this NPD document and to incorporate it and any updates thereto into their COTR training. The NPD is going to be revised to specify how the Agency should properly distinguish between civil servants and contractors.

4. The Director of the Headquarters Personnel Division and the Director of the Procurement Analysis Division signed out a letter dated February 23, 2000, to Procurement Officers and Personnel Directors with the subject: Use of Contractor Support. This letter, which also provides guidance for avoiding personal services, is enclosed for your information. Procurement Officers are to share this guidance for avoiding personal services, including physically separating contract employees and the federal workforce with COs and COTRs.

EFFECTIVE DATE: This PIC is effective as dated and shall remain in effect until canceled or superceded.

HEADQUARTERS CONTACT: Jeff Cullen, Code HK, (202) 358-1784, e-mail:


R. Scott Thompson
Director, Contract Management Division

HQS Letter dated February 23, 2000

 Feb. 23, 2000



TO: NASA Centers

Attn: Personnel Director

Procurement Officer

FROM: FP/Director, Personnel Division

HC/Director, Analysis Division

SUBJECT: Use of Contractor Support

Years of downsizing combined with the 1998 Federal Activities Inventory Reform Act (FAIR) has encouraged NASA to look outside the Agency for performance of certain functions. Use of contractor support has enabled NASA to focus its limited FTE on core technical competencies while maintaining critical administrative support. Although use of contractor support provides an innovative staffing solution, it is critical that managers/supervisors understand how to properly define and manage the Agency-contractor relationship.

Federal contracting law and regulation prohibit contracting for 'personal services'. This is characterized by the existence of an employer/employee relationship. The central criterion in determining whether such a relationship exists is generally related to the nature of supervision. Simply stated, if a contractor employee is supervised by a Federal employee, a personal services relationship exists. Although this may not have been intended, co-location with the government staff and broad, non-specific contract language can easily lead to the appearance of such a relationship.

In determining whether an improper relationship exists, you should consider the various elements of supervision including assigning work, evaluating performance, giving instructions, providing training, making personnel selections, and controlling time and attendance. One must not focus on any single element or behavior, but rather on the whole relationship. Generally, when it becomes difficult to distinguish between the contract employee and Federal employee in the work setting, an employer/employee relationship may be construed.

Personal services contracts leave the Agency vulnerable in other areas. For example, if a personal services relationship exists, the contract employee could be entitled to use of the Federal employment discrimination complaints process. On August 31, 1999, NASA's Equal Opportunity Programs Office and Office of General Counsel issued a joint letter to NASA Centers (enclosed) advising on how to identify improper relationships and how to address worker complaints received from contractor employees. Because of the Government liability that can result, it is increasingly important that NASA Centers understand the current contractor/employer relationships within their Centers, and take steps to ensure that their Federal managers and supervisors understand how to properly work with contractor employees.

The use of contractor support is a valuable tool for NASA. In order to maximize the use of the authority, we must be prepared to properly manage it. The most effective way to reduce the risk of establishing a personal services relationship is to form a physical separation between the contract employees and Federal workforce. In administrative support positions, this is often accomplished through a pooling arrangement. However, recognizing that proximity is often needed to ensure efficiency, a number of steps should be taken to reduce the vulnerability if the Federal employees and contract employees must remain in close physical proximity.

    1. Start with the contract. Ensure that the contract clearly specifies expected tasks and work products.
    2. Use the contract as your guide. Limit work assignments provided directly to the contractor employee to those specifically addressed in the contract. Provide all other requests on a work order through the contracting officer.
    3. Engage the contractor employee's supervisor. Ensure that the contractor employee's supervisor makes regular contact with their employees and is responsible for all performance, discipline, training, and work assignments not specifically addressed in the contract.
    4. Train and re-educate. Provide training and periodic re-education to supervisors and managers who interact regularly with contractor employees in the workplace or manage contract work.

We encourage you to review your current contractor personnel providing services and take appropriate actions to ensure that there is no appearance of personal services. Should you have any questions on the information provided above, or need any further assistance, please contact Candy Irwin on 202-358-1206.

Joan S. Peterson



Anne C. Guenther