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TITLE VIII--ACQUISITION POLICY, ACQUISITION MANAGEMENT, AND RELATED MATTERS

Subtitle D — Provisions Relating to Acquisition Workforce and Inherently Governmental Functions

DHNDAA Section

House Armed Services Report 110-652

SEC. 831. DEVELOPMENT OF GUIDANCE ON PERSONAL SERVICES CONTRACTS.

(a) Guidance Required- Not later than 270 days after the date of the enactment of this Act, the Secretary of Defense shall develop guidance related to personal services contracts to--

(1) require a clear distinction between employees of the Department of Defense and employees of Department of Defense contractors;

(2) provide appropriate safeguards with respect to when, where, and to what extent the Secretary may enter into a contract for the procurement of personal services; and

(3) assess and take steps to mitigate the risk that, as implemented and administered, non-personal services contracts may become personal services contracts.

(b) Definition of Personal Services Contract- In this section, the term `personal services contract' has the meaning given that term in section 2330a(g)(5) of title 10, United States Code.

This section would require the Secretary of Defense to develop guidance that provides a clear definition of personal services contracts and guidance on the use of such contracts. The committee is concerned about the apparent growth in the use of personal services contracts by the Department of Defense. These are contracts characterized by an employer-employee relationship between the government and contractor personnel. Normally, the Department and all federal agencies are required to hire employees in accordance with civil service laws, and Part 37.104 of the Federal Acquisition Regulation (FAR) prohibits the award of personal services contracts unless specifically authorized by statute. Despite this prohibition, however, the Acquisition Advisory Panel, established under section 1423 of the National Defense Authorization Act for Fiscal Year 2004 (Public Law 108-136), noted that many, if not all, agencies have contractors performing activities that are considered to be personal services. For example, the Government Accountability Office recently observed that the working environment for contractors at the Army's Contracting Center of Excellence reflected aspects of all six of the FAR criteria for assessing the existence of a personal services contract (Defense Contracting: Army Case Study Delineates Concerns with Use of Contractors as Contract Specialists, GAO-08-360, March 2008). The Government Accountability Office further noted that the distinction between personal and non-personal services contracts is murky. The Government Accountability Office also observed that the Department of Defense lacks guidance on mitigating the risk of a contract becoming one for personal services. This section would implement the Government Accountability Office findings.