Section 3109 as Statutory Authority
FAR 37.104(b) admonishes that “[a]gencies shall not award personal services contracts unless specifically authorized by statute (e.g., 5 U.S.C. 3109) to do so.” Both the FAR and GAO cite 5 U.S.C. § 3109, Employment of Experts and Consultants; Temporary or Intermittent, as an example of statutory authority for personal services contracts for federal agencies.
Originally enacted as the Administrative Expenses Act of 1946, section 3109 is currently divided into two major sections. Section 3109(b) provides authority to “procure by contract” the services of experts or consultants, whereas section 3109(d) authorizes the Office of Personnel Management (OPM) to prescribe regulations to “employ” an expert or consultant. In this context, the term “employ” appears to be synonymous with “appoint.” This division of section 3109 is consistent with FAR 37.104, which recognizes only two ways in which the government may obtain personal services: (1) via a contract or (2) via “direct hire under competitive appointment or other procedures required by the civil service laws.” An individual hired as an expert or consultant must either be a contractor or appointed as a federal employee because the relationships are mutually exclusive.
The FAR governs the procurement of services from experts and consultants. The OPM regulations, promulgated in 1995 and located at 5 C.F.R. part 304, govern the employment or appointment of experts and consultants as federal employees. Significantly, the OPM regulations do not control the procurement of experts and consultants. Indeed, 5 C.F.R. § 304.101 specifically notes that the regulations “do not apply . . . to the procurement of services by contracts under the procurement laws.”
Under the authority of section 3109 and 5 C.F.R. part 304, experts and consultants may be temporarily appointed as federal employees, including as Special Government Employees (SGE). A SGE is a federal employee who is “retained, designated, appointed, or employed” to perform temporary duties for less than 130 days during a 365-day period.Unlike a personal services contractor, a SGE is a type of federal employee, albeit not subject to competitive service hiring requirements and subject to fewer ethical rules.
Although it serves as a basic authority to procure personal services, section 3109(b) is insufficient authority by itself to obtain such services. The statute requires that section 3109’s procurement authority be used “[w]hen authorized by an appropriation or other statute.” To illustrate, the Department of Defense couples its 3109(b) authority with 10 U.S.C. § 129b, Authority to Procure Personal Services. The GAO determined that the Bureau of Engraving and Printing’s revolving fund, by itself, provided the requisite statutory authority. The Department of Homeland Security (DHS) similarly may rely on 6 U.S.C. § 392, Personal Services, or 6 U.S.C. § 391(b), Research and Development Projects—Procurement of Temporary and Intermittent Services and section 505 of the DHS Appropriations Act, Fiscal Year 2004.
Contracts with Organizations or Individuals
Under the authority of section 3109(b), a personal services contract for experts and consultants may be entered into with either an individual or an entity. The GAO has posited that personal services contracts may be awarded to entities. Other statutes, coupled with section 3109, also envision awards to entities.
Unwarranted GAO Concerns Regarding Contracts with Individuals
In a 2009 report, GAO stated that it viewed the law as “unsettled” as to whether section “3109 permits agencies to award procurement contracts in accordance with the FAR when they obtain the personal services of individual experts.” Although viewing FAR 13.003(d)’s authority to use simplified acquisition procedures for personal services contracts as applying to contracts for individual experts, the GAO was concerned that the language of section 3109(d) authorizing OPM to develop regulations establishing the criteria to employ an expert or consultant “may imply that these services should be obtained through appointment.”
Further, earlier opinions articulating GAO’s longstanding policy position that personal services should not be obtained by contract, but rather be performed by federal employees, have further clouded this issue. To illustrate, as late as 1995, in Mr. Jeffrey H. Smith, GAO noted that if services were “‘personal,’ then the relationship that exists between the government and the ‘contractor’ is governed not by the procurement laws and regulations, but the employment and compensation laws.” In an earlier opinion, Lynn Francis Jones, because of the employer-employee relationship of what was clearly an individual personal services contract, the GAO elected to “consider” the contractor an appointee for purposes of travel expense reimbursement.
To the extent GAO’s hesitancy still exists, it is at a minimum outdated. The plain language of section 3109(b), which discusses procurement, authorizes both individual and organizational personal services contracts: “experts or consultants or an organization thereof.” Further, statutes used in conjunction with 3109(b) clearly envision that the authority extends to individual personal services contractors. For example, enacted in 2002, 6 U.S.C. § 392 provides authority for both individual and entity contracts, stating that the Secretary of Homeland Security “may procure the temporary or intermittent services of experts or consultants (or organizations thereof) in accordance with section 3109 of title 5” and provides that the Secretary may procure such “personal services” without regard to section 3109’s pay cap when justified by an “urgent homeland security need.”
In addition, two separate regulatory regimes have developed implementing section 3109. The FAR controls procurements, and the OPM regulations control appointments and specifically note that they do not apply to procurements. Also, modern agency practice reflects the use of section 3109(b) for individual personal services contracts. That agencies use section 3109 for individual personal services contracts was evidenced by GAO’s 2009 report itself, which noted that the agency GAO examined—the National Institute of Standards and Technology (NIST)—had used its section 3109 authority to award individual personal services contracts. Further, language found in the advisory opinions issued by various agencies evidences a shared understanding that section 3109 authorizes the procurement of individual personal services experts and consultants.
Reportedly, in the past, agencies “actually temporarily appointed the person into the civil service, notwithstanding the provisions of civil service appointment procedures.” Developments in the law discussing the formalities required for federal civil service appointments undercut the validity of past agency practices involving both the procurement and appointment of individuals. As noted earlier, modern case law has made clear that an individual providing personal services to the government must either be procured by contract or appointed as a federal employee; the two relationships “are mutually exclusive.”
Time and Salary Limitations
Personal services contracts are time limited. Section 3109(b) permits the procurement of “temporary (not in excess of 1 year) or intermittent services of experts or consultants or an organization thereof…” These terms are not defined in the FAR. Although they do not govern the procurement of personal services, the OPM regulations, which define the terms for the same statute, albeit under the authority of section 3109(d), should be available as guidance when defining these terms for procurement purposes, in the absence of future FAR guidance.
The OPM regulations define “temporary” to include “a full-time, part-time, seasonal, or intermittent work schedule.” Further, the OPM regulations define “Intermittent” as “without a regularly scheduled tour of duty,” which appears to be the key distinction between the two types of employment. An intermittent employee may work occasionally or irregularly “on programs, projects or problems.” This approach is consistent with at least one GAO opinion addressing personal services contracts. In Lynn Francis Jones, the GAO determined that a personal services contractor with a “regularly scheduled tour of duty” could not be characterized as having been employed on an intermittent basis.
Some authorities limit intermittent personal services contracts to not more than 130 days cumulatively in a year. However, this restriction is compelled neither by section 3109 nor the FAR. Further, the OPM regulations place no time limit on initial intermittent appointments but do limit reappointments to perform the same duties to 130 days in some circumstances. The 130-day restriction appears to reflect 18 U.S.C. § 202’s limitation on persons appointed Special Government Employees or limitations imposed by the former Civil Service Commission (now OPM) on the intermittent hiring of experts and consultants.
Unless otherwise authorized by statute, section 3109(b) limits the compensation of personal services contractors to “the daily equivalent of the highest rate payable under section 5332 of [title 5],” which refers to the General Schedule (GS)—the pay schedule for most federal employees. In other words, the statute imposes a pay cap of GS-15, step 10. The statute permits an agency to exceed this pay cap “when specifically authorized by the appropriation or other statute authorizing the procurement of the services.” The Department of Homeland Security, for example, possesses statutory authority to exceed the pay cap “due to an urgent homeland security need.” The GS-15, step 10 pay cap does not apply to experts and consultants procured under section 3109, however, if the contractual relationship is that of an independent contractor, rather than an employer-employee-like relationship.
Gratuitous Services
Finally, experts and consultants procured, or appointed, under section 3109 may serve without pay if they agree in writing, in advance of performance, to waive all compensation. The Antideficieny Act (ADA), 31 U.S.C. § 1342, prohibits “an officer or employee of the United States Government” from accepting “voluntary services” for the United States, “or employ personal services exceeding that authorized by law except under emergency circumstances involving the safety of human life or the protection of property.” The purpose of the ADA’s prohibition is to preclude claims for future compensation. Free services are considered to be permissible “gratuitous” services, rather than impermissible “voluntary” services, if the service provider “executes an advance written agreement that (1) states that the services are offered without expectation of payment, and (2) expressly waives any future pay claims against the government.” This may also be accomplished through no-cost contracts in which it is clear that the agency incurs no financial obligation and the contractor is not entitled to any agency payment.
One caveat to the acceptance of gratuitous services is that the agency may not accept such services if the service provider is statutorily entitled to a rate of pay because the statutory entitlement cannot be waived. Experts and consultants procured under section 3109(b) may provide gratuitous services. Although their salary is statutorily capped at a GS-15, step 10 rate, there is no statutory minimum entitlement to compensation.
Conclusion
When coupled with another authorizing statute or appropriation, section 3109(b) authorizes agencies to procure the personal services of experts and consultants. Further, section 3109(b) applies to both organizational and individual personal services expert and consultant contracts, notwithstanding that such services are characterized by an employer-employee relationship. Although appearing to be government employees, individual personal services contractors lack the appointment required to be actual civil service employees. The clear language of relevant statutes and regulations, coupled with modern case law, suggests agencies have greater latitude in the procurement of personal services contracts than widely believed. This article has attempted to illuminate this hazy area of procurement law.