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    Is this legal? Is this small business contractor, by creating and directing the use of this Leave Form, caused the COR to be placed into a violation of "privity of contract" situation between subcontractor employees, subcontractor company, and the contractor, in the handling of Leave Requests. Note: Prior to this new Leave Request form process being set up by the contractor/CEO/COO, this same small business contractor had earlier been insisting that government personnel sign the Time & Attendance record for each contractor employee and subcontractor employee.


    Answer

    This is a GREAT question, thank you!  I wish I was the contracting officer on this contract, it would make my day to bring this “contractor/CEO/COO” in for a “little educational chat”.
     
    I’ll start by saying this would ONLY be close to being legal if this contract were a personal service contract.  See FAR
    37.104(b)Agencies shall not” (emphasis added) “award personal services contracts unless specifically authorized by statute (e.g., 5 U.S.C. 3109) to do so.”
    Note: Your Homeland Security Acquisition Regulation (HSAR) provides your agency a little extra latitude on pay limitations associated with personal service contracts.  If you’re interested, the reference is 3037.104-70(b).
     
    However, by the tenor of your question, I am going to assume this is not a valid, authorized personal service contract.  Therefore, there is potentially contract law, fiscal law, and labor law violations with your scenario.  The least of which is most certainly the “privity of contract” issue on subcontractor personnel which you mentioned.
     
    The overwhelming majority of service contracts the government enters into are NON-personal service contracts.  As mentioned, we are only allowed to award personal service contracts if it is authorized by statute.  As such, the problem occurs when a contract becomes an improper personal service contract because of the way it is being administered.  In your case, approving contractor “vacation or off – time” is administering the contract in such a way that it is or has become an improper personal service contract!!
     

    I’ll go back to the Federal Acquisition Regulation (FAR): 37.104 -- Personal Services Contracts.
    (a) A personal services contract is characterized by the employer-employee relationship it creates between the Government and the contractor’s personnel.  The Government is normally required to obtain its employees by direct hire under competitive appointment or other procedures required by the civil service laws. Obtaining personal services by contract, rather than by direct hire, circumvents those laws unless Congress has specifically authorized acquisition of the services by contract.  FAR 37.104(d) provides additional guidance on whether your contract may be deemed a personal service contract.
     

    Back to your scenario:  Having government personnel sign contractor and subcontractor employee leave requests (as you describe) makes contractor employees appear to be supervised by government employees, which is improper.  In my opinion you have crossed the threshold.  We recommend you describe this situation to your contracting officer and possibly contracts attorney as soon as possible!  They should want to know this so it can be rectified.  At the least, your contractor needs to be reminded of their responsibility for supervising their employees and their subcontractors including their internal process of approving employee vacation time.  Again, if this is an improper personal service contract, there are most likely fiscal law issues (the Purpose Statute) and labor law and personnel policy issues.
     
    One final note for the benefit of other readers:  Often times because of the context or terminology used it may appear that the government is the one “approving” a contractor employee taking time off, when in reality they are not.  This is especially so when the contractor employees are doing staff augmentation or working in the same work area as government employees.  Here’s how it happens: a contractor employee goes to their contractor supervisor and asks for time off covering a specific period.  The supervisor says “sure, is the government customer ok with it?”  Then the contractor employee comes to the government and says “can I take leave on…?” They use the term “leave” because they know that is a term you are familiar with even though it is most likely not called leave in the company’s labor policies.  Contractors want to keep their customers satisfied.  If the government said “no” and the employee really needed the time off, their issue would be with their supervisor and not the government per se.  It would be incumbent upon the supervisor to approach the government and say “my employee needs time off, we will provide a qualified replacement in the event the government requires support during the time-frame…” assuming of course the contractor employee was not identified as key and essential personnel in accordance with proper contract terms and conditions.

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