[Code of Federal Regulations]
[Title 48, Volume 1]
[Revised as of October 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR37.102]

[Page 732-733]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
                CHAPTER 1--FEDERAL ACQUISITION REGULATION
 
PART 37_SERVICE CONTRACTING--Table of Contents
 
                 Subpart 37.1_Service Contracts_General
 
Sec.  37.102  Policy.

    (a) Performance-based contracting (see Subpart 37.6) is the 
preferred method for acquiring services (Public Law 106-398, section 
821). When acquiring services, including those acquired under supply 
contracts, agencies must--
    (1) Use performance-based contracting methods to the maximum extent 
practicable, except for--
    (i) Architect-engineer services acquired in accordance with 40 
U.S.C. 541-544 (see part 36);
    (ii) Construction (see part 36);
    (iii) Utility services (see part 41); or
    (iv) Services that are incidental to supply purchases; and
    (2) Use the following order of precedence (Public Law 106-398, 
section 821(a));
    (i) A firm-fixed price performance-based contract or task order.
    (ii) A performance-based contract or task order that is not firm-
fixed price.
    (iii) A contract or task order that is not performance-based.
    (b) Agencies shall generally rely on the private sector for 
commercial services (see OMB Circular No. A-76, Performance of 
Commercial Activities and subpart 7.3).
    (c) Agencies shall not award a contract for the performance of an 
inherently governmental function (see subpart 7.5).
    (d) Non-personal service contracts are proper under general 
contracting authority.
    (e) Agency program officials are responsible for accurately 
describing the need to be filled, or problem to be resolved, through 
service contracting in a manner that ensures full understanding and 
responsive performance by contractors and, in so doing, should obtain 
assistance from contracting officials, as needed.

[[Page 733]]

    (f) Agencies shall establish effective management practices in 
accordance with Office of Federal Procurement Policy (OFPP) Policy 
Letter 93-1, Management Oversight of Service Contracting, to prevent 
fraud, waste, and abuse in service contracting.
    (g) Services are to be obtained in the most cost-effective manner, 
without barriers to full and open competition, and free of any potential 
conflicts of interest.
    (h) Agencies shall ensure that sufficiently trained and experienced 
officials are available within the agency to manage and oversee the 
contract administration function.

[61 FR 2630, Jan. 26, 1996, as amended at 62 FR 12694, Mar. 17, 1997; 62 
FR 44815, Aug. 22, 1997; 66 FR 22083, May 2, 2001]