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Memorandum - Authority to use Personal Service Contracts and How the FTCA Would Cover Their Services

Les Morris
Acting Director
Division of Legislation and Regulations
U.S. Department of Health and Human Services

Barbara Hudson
Office of the General Counsel
U.S. Department of Health and Human Services

DATE: February 21, 1997

SUBJECT: Personal Services Contracts

The purpose of this opinion is to ascertain the scope of IHS’s authority to use personal services contracts in carrying out its statutory responsibilities. First, we note that a personal services contract is characterized by the employer-employee type of relationship. In other words, the Federal government exercises day-to-day control and supervision over an individual under a personal services contract. (See Bird v. United States, 949 F2d 1079 (10th Cir. 1991))

Because obtaining personnel by contract, rather than by direct hire, circumvents personnel laws, an agency may not do so unless such action has been specifically authorized by Congress. (Fort Bragg Association of Educators v. Federal Labor Relations Authority, 870 F2d 698 (D.C. Cir. 1989)) This bar against the use of personal services contracts is reflected in the Federal Acquisition Regulations (FAR) at 48 C.F.R. 37 104(b), which states, “Agencies shall not award personal services contracts unless specifically authorized by statute to do so.”

We believe the FY 1995 appropriation act provides IHS with the specific statutory authority required by the FAR. In the FY 1995 appropriation act (Department of the Interior and Related Agencies Appropriations, 1995, Pub. L. 103–332, 108 Stat. 2499, 2527 (1994)), Congress stated,

That in fiscal year 1995 and thereafter (a) the Secretary may enter into personal services contracts with entities, either individuals or organizations, for the provision of services in facilities owned, operated or constructed under the jurisdiction of the Indian Health Service, (b) the Secretary may exempt such a contract from competitive contracting requirements upon adequate notice of contracting opportunities to individuals and organizations residing in the geographic vicinity of the health facility, (c) consideration of individuals and organizations shall be based solely on the qualifications established for the contract and the proposed contract price, and (d) individuals providing health care services pursuant to these contracts are covered by the Federal Tort Claims Act.

Clearly, this language indicates that IHS may use personal services contracts. Now, we address the extent of this authority. Based on the plain meaning of the words quoted above, we make several conclusions. First, the agency is specifically authorized to enter into personal service contracts with either individuals or organizations.

Second, we view the words “provision of services” in clause (a) as broad authority encompassing all services necessary to carry out IHS’ statutory responsibilities except those functions that must be carried out by federal employees because they are inherently federal responsibilities. This broad interpretation is supported by the fact that in clause (d) Congress limited Federal Tort Claims Act (FTCA) coverage to a subset of such services, namely the provision of health care services. There would be no need for such a limitation in clause (d) if the words “provision of services” in clause (a) encompassed only health services.

Third, the services must be delivered in facilities owned, operated or constructed by IHS. Certainly, the vast majority, if not all, services provided by IHS are in circumstances where the IHS owns the facility, is operating the facility, or is constructing the facility. Thus, based on the wording of the appropriation act, we believe the IHS has very broad legal authority to use personal services contracts for support staff services including clerical, administrative, health care services, preventive health services, and all services related to the construction of health care and community sanitation facilities, including inspection and engineering services.

We do note that the appropriation language indicates that only individuals providing health care services pursuant to these contracts are covered by the Federal Tort Claims Act (FTCA). The United States is a sovereign and is immune from suit except to the extent that it has unequivocally consented to be sued. (United States v. Orleans, 425 U.S. 807, 814, 96 S. Ct. 1972 (1976), United States v. King, 395 U.S. 1, 4, 89 S. Ct. 1501 (1969)) Waivers of sovereign immunity are narrowly construed. (Lane v. Pena, 116 S. Ct. 2092 (1996)) Consistent with these principles, a close reading of the language indicates that Congress only extended FTCA coverage to individuals providing health care services pursuant to personal services contracts.

We have consulted with attorneys in the Business and Administrative Law Division of OGC who concur with our opinion that (1) IHS has broad statutory authority to enter personal services contracts and that (2) FTCA coverage is limited to individuals providing health care services within the scope of their employment under these types of contracts.

We hope this information is helpful to you. If you have further questions, please call me at 301–443–0406.