Roadmap for dealing with contractor employees.
Subject: Government contractors (Laws, regulations and rules)
Author: Post, Kathleen
Pub Date: 01/01/2012
Publication: Name: U.S. Army Medical Department Journal Publisher: U.S. Army Medical Department Center & School Audience: Professional Format: Magazine/Journal Subject: Health Copyright: COPYRIGHT 2012 U.S. Army Medical Department Center & School ISSN: 1524-0436
Issue: Date: Jan-March, 2012
Topic: Event Code: 930 Government regulation; 940 Government regulation (cont); 980 Legal issues & crime Advertising Code: 94 Legal/Government Regulation Computer Subject: Government regulation
Organization: Government Agency: United States. Army
Geographic: Geographic Scope: United States Geographic Code: 1USA United States
Accession Number: 284015861
Full Text: For many persons doing business in today's integrated environment, the road to government contracting is as perilous and treacherous as Frodo Baggins' journey from Middle Earth to Mordor. (1) As it was for Frodo Baggins, vigilance is required--integration of contract employees into the workplace has added an additional layer of complexity which requires thoughtful oversight to ensure the working relationship between government and contractor is maintained in proper balance, and to enforce the prohibition on contractors performing inherently governmental functions.

A snapshot of a typical day at a medical treatment facility or one of its satellite clinics would show civilian employees and military personnel working alongside a cadre of contractor employees, all performing medically-related mission essential functions. Working behind this scene to ensure that uninterrupted health care is provided to our Soldiers serving on 2 war fronts is the Army's acquisition force who, on a daily basis, contract for a variety of medical services, ranging from physicians and nurses to imaging maintenance, as well as laboratory and hospital housekeeping services. In 2010 alone, the contracting center of excellence and 6 regional contracting offices acquired over $1.67 billion ([10.sup.9]) in specialized health care services and supplies (source: Army Contracting Business Intelligence System).

With the Army having moved toward achieving total Army integration by maximizing the contributions of the Army National Guard, the US Army Reserve, and the Active Army through a "one team, one fight" concept, the current operational tempo finds increasing numbers of contractors in both Iraq and Afghanistan. Recent statistics indicate there are over 224,000 DoD contractor personnel in the US Central Command area of operations, creating a 1:1 military to contractor ratio in both Iraq and Afghanistan. (2) There is no question that management of contractor activities by government employees is an integral part of doing business every day and is a critical link in US Army Medical Command's (MEDCOM) mission to Promote, Sustain and Enhance Soldier Health.

Whether as a civilian or armed services member, properly managing relationships with contractor employees is essential not only to the acquisition process but is the ethical obligation of every government employee. It rests on a rather simple but often misunderstood premise: contractor employees are not government employees and therefore cannot be managed in the same manner. The genesis of the relationship is found and subsequently defined by the contract, which forms the basis of the rights and obligations of the parties similar to the Uniform Code of Military Justice* or civil service rules and regulations. Adding complexity to this simple premise is the fact that, while contractors are not generally supervised by government employees, for personal health care services and medical malpractice purposes, there is generally language in the performance work statement that requires such supervision:

Look or sound familiar? Wait a minute, did I not just say "contractor employees are not government employees and therefore cannot be managed in the same manner?" For medical malpractice reasons, healthcare providers in a personal services contract are generally supervised by civilian or military personnel. It is a unique exception to the general rule but one which exists within the MEDCOM with great regularity. However, this exception to the supervision requirement does not change the scope of the general guidelines on managing relationships with contract employees. It is essential that our medical force understand and employ the proper guidelines in effectively supporting the full spectrum of operations within the confines of the law.

Contracting with the United States rests on the basic premise that its rules are found in the laws and regulations which govern it. Because the acquisition process is structured and restricted, even the contracting officer has no authority to deviate from these laws or regulations. It is important to remember from the outset that any acquisition finds its genesis and guidance in the Federal Acquisition Regulation (48 CFR chap 1). Thus, any acquisition activity generally begins, continues, and ends under the guidance provided under this regulation. Understanding the basic legal framework for the relationship with exists between the government employee and the contractor employee will help frame how you analyze issues which will inevitably surface.

Just as the role of the government is governed by law, the role of the contractor is limited by law and provides a legal barrier which distinguishes the role of the contractor from that of the government employee in the federal workplace. For this reason, contractors cannot perform inherently governmental functions such as making management decisions on behalf of the government. (3) Inherently governmental functions also include activities that require the exercise of government authority to include monetary transactions and entitlements. Because of the strict prohibition against contractors performing inherently governmental functions, contractor employees must identify themselves as a contractor in phone, correspondence, and other communication.

It is important to remember that even in the context of medical services, it is a business relationship which exists between the government and the contractor. The contractor is furnishing supplies and services for a negotiated price. Performance requirements by the contractor and the obligations of the government are established solely by the terms of the contract. The only person with authority to change the terms of the contract, and thereby the requirements to be performed under the contract, is the contracting officer.

At this juncture, it is also important to note that the military chain of command can only exercise management control through the contract and does not exercise direct control over contractors and its employees. Commanders must manage whatever issues arise under the contract through either the contracting officer or the contracting officer's representative (COR). The COR is appointed by the contracting officer to be his or her eyes and ears on the ground to ensure the contractor is performing in accordance with the terms and conditions of the contract. While the COR is an important communication liaison between the commander and the contracting officer and an important player in contractor management and control, it must be understood that the COR does not exercise direct control over the contractor nor its employees. Only the contractor can directly supervise its employees (with the personal services exception noted above). While the COR can communicate the commander's needs to the contractor, any changes to the contract's requirements must be made by the contracting officer, the sole government official with authority to modify the contract.

Because the relationship between the government and the contractor is framed by the terms of the contract, the answers to issues are generally found there as well. Additional guidance can also be found in MEDCOM Regulation 715-3. (3)

General rules require, for instance, that government employees not direct the contractor to pay its employees a particular salary or to give performance bonuses. Contractor employees are also not authorized to participate in social events, training holidays, organizational day activities, or other similar events unless specified in the contract or an exception has been obtained. This is not because the Grinch stole Christmas, (4) but because any activity performed by the contractor's employees is governed by the terms of the contract and by the Joint Ethics Regulation. (5)

Spoiler: Just as Frodo Baggins successfully made the journey from Middle Earth to Mordor, every government employee can successfully navigate the labyrinth of business in today's integrated environment. Learning to manage expectations and understanding the contractual framework which governs the working relationship that exists between government and contract employees is the essential first step in keeping MEDCOM's mission to "Promote, Sustain and Enhance Soldier Health."


(1.) Tolkien JRR. The Lord of the Rings [trilogy]. New York: HarperCollins Publishers LLC; 2007 [reissue].

(2.) Contractor Support of US Operations in USCENTCOM AOR, Iraq and Afghanistan [5A Paper]. Washington DC: Office of Deputy Assistant Secretary of Defense (Program Support); September 2010.

(3.) MEDCOM Regulation 715-3: Contractor/Contractor's Employees and MEDCOM Personnel Relationships. Fort Sam Houston, Texas: US Army Medical Command; June 14, 1999.

(4.) Dr Seuss. How the Grinch Stole Christmas!. New York: Random House; 1957.

(5.) Department of Defense 5500.7-R: Joint Ethics Regulation. Washington, DC: US Dept of Defense; 1993 w/ update 2006.

* The Uniform Code of Military Justice (UCMJ), a federal law (64 Stat. 109, 10 USC, chap 47) is the judicial code which pertains to members of the United States military. Under the UCMJ, military personnel can be charged, tried, and convicted of a range of crimes, including both common-law crimes (eg, arson) and military-specific crimes (eg, desertion).

Kathleen Post, JD

Kathleen Post is a Contract Law Attorney Advisor with the Office of the Staff Judge Advocate, US Army Medical Command, Fort Sam Houston, Texas.
This is a personal services contract and is intended to
   create an employer-employee relationship between
   the government and the individual contract health
   care providers (HCPs) only to the extent necessary
   for providing healthcare services required under this
   contract. The performance of the healthcare services by
   the individual HCPs under a personal services contract are
   subject to the day-to-day supervision, clinical oversight,
   and control by healthcare facility personnel comparable
   to that exercised over military and civil service HCPs
   engaged in comparable healthcare services.
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