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Some Notes On Service Contracting

Posted by Vern Edwards, 13 August 2010 · 1,854 views

Although services account for most dollars obligated annually, FAR gives services short shrift. FAR Part 37 is only 18 pages long, including the table of contents and pages intentionally left blank. FAR does not define service or services. It defines service contract, but that definition is unsatisfactory because it tries to make a distinction between performing an identifiable task and furnishing an item of supply, despite the fact that furnishing an item of supply is an identifiable task. Taken altogether, the terms statement of work, performance work statement, and work statement appear in only 28 places in the FAR, while the noun specification (traditionally applied to supplies) appears in 190 places. Most of FAR was written when supplies accounted for the biggest share of annual obligations, and most of its clauses for services were developed from clauses for supplies.

The acquisition of services confronts the government with challenges not encountered in the acquisition of supplies, especially with respect to contractual description and contract quality assurance, and practitioners have not adequately responded to those challenges. For some time now I have been trying to work out a theory (system of ideas) about service contracting. What follows are some preliminary notes that reflect a work in progress. The notes are designed to be used as a basis for thinking about policy and procedure. Food for thought.

My thinking has been heavily influenced by T. P. Hill?s paper, entitled, ?On Goods and Services,? which appeared in The Review of Income and Wealth, Vol. 23, No. 4, pp. 315 ? 338, December 1977, and which has been cited in scholarly journals at least 561 times and by the Office of Management and Budget as a reference with respect to its work in developing a comprehensive product classification system. See 64 FR 18984, 18986 (April 26, 1999).

Some Preliminary Notes On Service Contracting

(in the interest of spurring further thought)

1. A service is a process in which labor and capital are employed by a service provider in order to bring about changes desired by the service recipient.

2. A service is always applied to a service object.

3. A service object is a person, a group of persons, an organization, a thing, a process, or information.

4. A service object can exist at the present time or be envisioned as existing at some future time.

5. The performance of a service changes the state of the service object.

6. The state of a service object is the set of its relevant attributes at a given point in time.

7. An attribute of a service object is a feature, quality, or characteristic of the object.

8. The result or outcome of a service is a new object state.

9. A service result may be tangible or intangible.

10. A service result may be transitory or permanent.

11. A bi-product of service performance, such as a physical or mathematical model, a report, a log, design drawings, or a test record, is called a performance artifact. A service object is not a performance artifact. A performance artifact is not a service result.

12. A performance artifact is always a tangible thing.

13. A performance artifact may or may not be evidence of a service result.

14. To inspect a service is to conclusively determine or infer the state of the service object by (a) observing the performance process, (b) examining the service object or performance artifacts, or ( c) both.

15. For inspection purposes, a service process or result may be directly examinable or only indirectly examinable.

16. A service process or result is directly examinable (a) when the acts of performance can be observed or (b) when the state of the service object can be determined through the senses, without the aid of an instrument.

17. A service process or result is only indirectly examinable (a) when the acts of performance are mental processes that cannot be observed and must be inferred on the basis of performance artifacts, such as reports and other records; (b) when it is necessary to use an instrument to aid the senses in order to determine the state of the service object; or ( c) when the state of the service object must be inferred based on observation of the performance process or examination performance artifacts, such as test records.

18. In order to contractually specify a service, one should use transitive verbs in the imperative mood, e.g.: Repair the engine. Clean the building. Treat the patient. Teach the students. Design a system. Maintain the facility. The general form is Do something to something.

19. A specification of a service is called a statement of work.

20. A statement of work can describe the service process, the service result, or both, and performance artifacts.

21. All statements of work are in some way and to some extent incomplete. This is unavoidable due to the intangibility of many elements of services, which make them difficult to describe, and to the inherent limitations of language and human planning.

22. A description of a service result is vague if it permits the inclusion of borderline cases, making one or more conclusions about the state of the service object a matter of opinion, instead of fact. Adjectives tend to be vague, but even numbers can be vague if not used carefully.

23. When the statement of work describes the service process, the result, whatever it may be, must be accepted if the contractor adhered to the specified process and executed it correctly.

24. When the statement of work describes both the process and the result, the result is acceptable if and only if the contractor both adhered to the specified process and produced the specified result, unless the statement of work is defective and the process cannot produce the desired result.

Please feel free to comment and/or challenge.