Breakout Session # 1802 Al Diaz, Vice President, Corporate Contracts

2. OUTSOURCING AND WORKPLACE ENVIRONMENT MAKE PERSONAL SERVICE FAR 37.104 OBSOLETE Breakout Session # 1802 Al Diaz, Vice President, Corporate Contracts Navy Exchange Service Command April 23, 2007 1:40pm-2:40 pm

3. UPDATE OR REMOVE • Government Outsourcing changing the working/workplace environment • Workplace reality necessitates change to reflect what we have for contractor support • Partnering and teaming relationships require close working relationships to properly support the customer

4. PERSONAL SERVICES CONTRACTS (FAR 37.104) • Characterized by the employer-employee relationship it creates between the Government and the contractor’s personnel • Agencies prohibited from awarding personal services contracts unless specifically authorized by statute

5. EMPLOYER-EMPLOYEERELATIONSHIP • Occurs as result of the contract’s terms, or • In the manner of its administration during performance, contractor personnel are subject to the relatively continuous supervision and control of a Government officer or employee.

6. DESCRIPTIVE ELEMENTS FOR ASSESSING PERSONAL SERVICES (37.104 (D)) • Performance on-site • Principal tools and equipment furnished by the Government • Services are applied directly to the internal effort of …an organizational subpart in furtherance of assigned function or mission

7. DESCRIPTIVE ELEMENTS (Cont) • Comparable services, meeting similar needs, are performed…using civil service personnel • Need for the type of service…can reasonably be expected to last beyond 1 year • Direct or indirect Government direction or supervision of contractor employees

8. BARRIER TO GOOD BUSINESS PRACTICES • Current support services contracts provisions do not allow for close working relationship with contractors • Contract provisions prohibit Personal Services • Prohibitions have forced agencies to create unwieldy procedural safeguards making contracts inefficient

9. RELATED ISSUES • Inherently Governmental Functions (FAR 7.503), positions only Government can fill • Organizational Conflicts of Interest (FAR 9.502), gaining inside information • Procurement Integrity (FAR 3.104), disclosing procurement information before contract award

10. INHERENT GOVERNMENT RESPONSIBILITY PROHIBITION • FAR, Part 7.5 and 37.104 preclude contractor involvement in inherently Government functions. • Prohibition to preclude contractors opportunity to represent themselves as Government employees • Entitlement to benefits, including pay and retirement benefits is an issue

11. ORGANIZATIONAL CONFLICTS OF INTEREST CONCERNS • Preparing specifications or work statements • Planned for use in competitive acquisitions • Preparing contractor cannot compete as a prime or subcontractor for a reasonable period of time

12. OCI EXAMPLES (CONT.) • Providing proposal evaluation services • Contractor cannot evaluate its own offer • Contractor may gain access to other contractors proprietary data in the course of evaluation • Contractor must agree to protect and not disclose that information.

13. PROCUREMENT INTEGRITYISSUES • Prohibition on disclosing procurement information before contract award • Cannot disclose contractor bid or proposal information • Cannot disclose source selection information • Many complications possible when contractors exposed or support the procurement process

14. CONTRACTORS PERFORMING PROHIBITED ACTIVITIES AS CURRENTLY DEFINED • In many areas, Personal Service Prohibitions don’t make sense • Inefficient to structure the workplace to preclude direct instructions to contractor personnel • Program and project management requires Federal and contractor personnel to work as team under direction of program managers

15. TIDEWATER GOVERNMENT INDUSTRY COUNCIL (TGIC) ADDRESSES THE ISSUE • May 2004, submitted letter to DAR Council • FAR provisions unnecessary in transformation environment • FAR provisions ignore “de facto” practices that Personal Services are being performed • Recommended provisions be modified to limit prohibitions to truly inherent government functions and better define those functions

16. TGIC ADDRESS THE ISSUE (Cont.) • March 2005, TGIC letter resubmitted to OMB Acquisition Advisory Panel (AAP) authorized by the Services Acquisition Reform Act (SARA) of 2003 • One objective of SARA is review of Government Acquisition to incorporate Commercial Best Practices and performance-based contracting

17. TGIC INITIATIVE ON PERSONAL SERVICES OUTCOME • AAP findings and recommendations in draft final report: • Removal of current prohibitions on personal service contracts • Allow Government employees to direct service contractors on the substance of the work performed so long as direction does not exceed scope of contract • Limits the extent of supervision to work authorized in the contract only (not in hiring, firing, leave approval promotions or performance ratings)

18. TGIC PERSONAL SERVICES RECOMMENDATION OUTCOME (CONT) • AAP recommends Office of Federal Procurement Policy provide specific policy guidance which defines where , to what extent and under what circumstances agencies can procure personal services by contract. • AAP recommends review of and establish uniform government wide policy and clauses for Organizational conflicts of Interest (OCI)

19. CONCLUSION • TIGIC timely initiative provided “deck plate” perspective and support for the elimination, extensive revision of FAR provisions related to Personal Services in Service Contracting. • All should be alert to Congressional requests for public comment in anticipation of further direction to OMB/OFP and later implementation by the FAR Council. • Detailed information available at http://www.acquisition.gov/comp/aap/prd.html.

20. QUESTIONS?