FAR Part 37: Service Contracting

In plain English

FAR Part 37 provides policies and procedures specific to acquiring and managing services by contract. It emphasizes performance-based acquisition as the preferred method and covers special requirements for various service types, including advisory and assistance, dismantling/demolition, health care, and others. Contractors need to understand these rules because they affect how service contracts are structured, competed, and administered.

Key rules

• Agencies must use performance-based acquisition methods to the maximum extent practicable for services, except for certain architect-engineer services and construction. (37.102)
• The contracting officer must determine whether a proposed service contract is personal or nonpersonal and document the file, obtaining legal review in doubtful cases. (37.103)
• Personal services contracts are characterized by an employer-employee relationship and are generally prohibited unless specifically authorized by statute. (37.104)
• Contracts for services must be awarded through sealed bidding when conditions in 6.401(a) are met, and competition requirements apply fully. (37.105)
• The term of service contracts funded by annual appropriations generally cannot extend beyond the end of the fiscal year, except as authorized by law. (37.106)
• The Service Contract Labor Standards statute may set minimum wages and fringe benefits for certain service contracts. (37.107)
• For certain high-competence service contracts, the small business Certificate of Competency procedures may not apply. (37.108)
• Contracts with quasi-military armed forces, such as Pinkerton Detective Agencies, are prohibited. (37.109)

Who does what

In practice

• When bidding on service contracts, expect performance-based requirements that focus on results rather than hours, unless an exception applies.
• Be prepared to identify uncompensated overtime if the solicitation is for professional or technical services on an hours basis.
• For health care services, ensure you can provide evidence of medical liability insurance before award and performance.
• Understand that personal services contracts are rare and require specific statutory authorization; most service contracts are nonpersonal.

Common pitfalls

• Assuming a service contract is personal when it is actually nonpersonal, or vice versa, can lead to improper contract type and legal issues.
• Failing to include required clauses or provisions, such as those for site visit or protection of government property, can result in noncompliant solicitations.
• Overlooking the Service Contract Labor Standards statute may lead to wage violations and penalties.
• Not accounting for uncompensated overtime in proposals for hours-based services can cause pricing errors and compliance problems.

Written by AI from this part's codified text (2026-10-04); cited sections are checked against the part. A guide, not legal advice: the regulation text, the solicitation and your contract rule.