Personal Services Contracts with Host Country Residents Procedures (after Kate Puzey)

Peace Corps | MS 743a Personal Services Contracts with Host Country Residents Procedures Page 1

MS 743a Personal Services Contracts with Host Country

Residents Procedures

Effective Date: May 5, 2017

Responsible Office: Office of Acquisition and Contract Management

Supersedes: 01/04/13

Table of Contents

1.0 Purpose

2.0 Applicability

3.0 Contracting Authority

3.1 Delegation of Authority

3.2 Additional Procurement Authority

3.3 Contractor in Host Country

3.4 Contractor is Not a Host Country Resident

4.0 Definitions

5.0 Contract Award

5.1 Exemptions

5.2 Requirements for Competition when Awarding Contracts Greater than $3,000 USDE

5.2.1 Long-term Contracts

5.2.2 Short-term Contracts

5.2.3 PSC Renewals

5.2.4 Justification

5.3 Personal Services Contract Template

5.4 Statement of Work

5.5 Review of PSC Candidates

5.6 Negotiations Conducted by Contracting Officer

5.7 Contract File

5.8 Contract Benefits

6.0 Contract Term

6.1 Exercising Options

7.0 Contract Provisions

8.0 Security Certifications and Employment Suitability

8.1 Access to Classified Information

8.2 Security Certification for PSCs

8.3 Suitability for Short-term PSCs

8.4 Intelligence Background Information Certification

8.5 Employment Suitability for Former Volunteers

9.0 Determining Permanent Residency

10.0 Compensation

10.1 Legal Framework for Peace Corps Personal Services Contract Compensation

10.2 Total Contract Compensation

10.3 Basic Compensation

10.4 Increases in Compensation after Initial Contract Award

10.4.1 Long-term Personal Services Contracts Awarded at Post

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10.5 Benefits

10.5.1 General Policy

10.5.2 Exceptions and Special Circumstances

10.5.3 Requesting and Authorizing Exceptions on Benefits

10.6 Cash Awards

10.7 Effect of Local Law

10.8 Credit Hour Policy

10.9 Administrative Leave Policy

11.0 Pay Currency

12.0 Training

13.0 Travel

13.1 Short-term Contracts

13.2 Long-term Contracts

13.3 Former Volunteers

13.4 Contracts Beginning Near a Former Volunteer’s COS Date

13.5 Medical Travelers Insurance

14.0 Per Diem

15.0 Billing

15.1 Payments for Personal Services Contracts Greater than 180 Days

15.2 Vouchers for Personal Services Contracts 180 Days or Less

15.3 Local Law Requirements for Payments

15.4 Approval by the Country Director or Designated Representative

15.5 U.S. Tax Status

15.6 Timely Close Out of Contracts

16.0 Housing

17.0 Insurance

17.1 Health and Accident Insurance

17.2 Automobile Insurance

18.0 Evaluation of a Contractors Performance

19.0 Termination of Contract

19.1 Requirement for Written Notice of Termination

19.2 Written Notification of Inadequate Performance

20.0 Applicability of Manual Sections

21.0 Contract closeout and File Retention

1.0 Purpose

The purpose of this procedural document is to establish procedures for the award and

administration of Personal Services Contracts to residents of Peace Corps host countries.

Please see Overseas Contracting Handbook for forms referenced.

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2.0 Applicability

The provisions of this procedures section apply to Peace Corps Personal Services Contracts

awarded for personal services in the host country to residents of the host country, regardless of

citizenship awarded or substantively modified after November 21, 2011. For Peace Corps

Personal Services Contracts awarded in the host country to residents of the host country, before

November 21, 2011 see MS 743 Procedures. It does not apply to contracts issued by Peace Corps

posts or Peace Corps Washington to non-resident third country nationals (TCNs) or to non-

resident U.S. citizens. Procedures section 744 should be referred to for guidance in those

instances.

3.0 Contracting Authority

3.1 Delegation of Authority

Peace Corps personnel who have been delegated procurement authority via MS 114 or as

delegated by the Chief Acquisition Officer may execute Personal Services Contracts, provided

that the following conditions are met:

(a) The amount of the contract (base year plus all option periods) does not exceed the

amount of procurement authority which has been delegated to them;

(b) U.S. Government conflict of interest requirements are adhered to; and

are properly obligated via a contract to preclude violation of the Anti-Deficiency Act, 31

U.S.C. 1341.

3.2 Additional Procurement Authority

If the price of the total amount of the base plus all option periods exceeds the Contracting

Officer’s delegated procurement authority, a delegation of additional procurement authority is

required from OACM prior to awarding the contract. Posts are reminded to allow sufficient time

to request additional procurement authority from OACM and to provide any required advance

notice to the contractor of its intent to exercise its option. Once additional procurement authority

has been provided by OACM to award the contract with option periods, additional approval is

not required to award the remaining option periods nor subsequent renewals of the same

contractor in the same position.

3.3 Contractor in Host Country

When the prospective PSC is already in the country where the Personal Services Contract will be

performed, the contract will be negotiated and executed by the Contracting Officer or designee

delegated procurement authority. Contracting Officers shall request an additional delegation of

procurement authority from OACM if the contract amount exceeds their delegated authority

prior to awarding such Personal Services Contracts. See MS 114 and Section 3.2 of this section.

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3.4 Contractor is Not a Host Country Resident

When the prospective PSC is not residing in the host country and is not a resident of the host

country, the contract shall be executed under the authorities of MS 744.

4.0 Definitions

(a) Competition means offers requested from as many potential offerors as is practicable

under the circumstances;

(b) Contractor means Personal Services Contractor (see 4.16);

procurement authority and thereby is authorized to enter into, administer, or terminate

contracts and make related determinations and findings;

(d) Credit Hours means those hours which a personal services contractor under a maxi-flex

schedule elects to work in excess of his or her basic work requirement and which may be

used to vary the length of a succeeding workweek or workday.

(e) Determinations and Findings (D&F) means a written approval by an authorized official

that is required by statute or regulation as a prerequisite to taking certain contracting

actions. The Determination is the conclusion or decision. The Findings are the statements

of fact or rationale supporting the determination;

(f) FAR means the Federal Acquisition Regulations, which specify the uniform policies and

procedures for acquisition by U.S. Government agencies;

(g) Host Country means a foreign country in which there is a Peace Corps program or

interest;

(h) Host Country National (HCN) means an individual who is a citizen of the foreign

country in which there is a Peace Corps program or interest;

(i) Host Country Resident (HCR) (see "Resident" below)

(j) Inherently Governmental Functions means actions so intimately related or inherent to

the public interest as to require performance by authorized U.S. Government personnel

(k) Local Compensation Plan (LCP) means guidance developed by the U.S. Embassy or

equivalent organizations if no U.S Embassy exists, for a specific host country intended to

bring uniformity to the compensation (wage and benefits) offered to individuals hired

locally by U.S. Government Agencies. Peace Corps Personal Services Contractors are not

subject to the LCP;

(l) Local currency means the currency of the host country;

(m) Long-term contract means a contractual term of service in excess of 260 days;

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(n) Long-term resident means an individual who, at the time of contracting, has dwelled in

the host country permanently or continuously;

(o) Personal Service Agreement (PSA) means a type of agreement that has in some cases

replaced Personal Services Contracts at the Department of State. A PSA creates an

employer/employee relationship between the parties to the PSA. Peace Corps does not

have the necessary statutory authority to enter into PSAs;

(p) Personal Services Contract means a legal agreement with an individual for the

performance of work under the direct supervision and control of Peace Corps authorized

personnel;

(q) Personal Services Contractor (PSC) means the individual performing work pursuant to a

Personal Services Contract;

(r) Retirement means the point where an individual stops working entirely with the Peace

Corps;

(s) Severance means a payment made in lump sum at the time a contract relationship is

ended in its entirety;

(t) Short-term contract means a contractual term of service of less than 260 work days;

(u) Third country means a country other than the United States or the host country of the

applicable Peace Corps program;

(v) Third Country National (TCN) means an individual who is neither a host country

national nor a U.S. national.

5.0 Contract Award

5.1 Exemptions

Under the Class Justification and Determination of June 14, 2010, signed by the Chief

Acquisition Officer, personal services contracts are exempt as follows:

(a) Personal Services Contracts Awarded in the U.S.:

(1) Advertising and competition requirements for extensions and renewals of

personal services contracts with individuals not recruited locally for continuing

service. A renewal is a new personal service contract with the same individual for

the same continued service.

(b) Personal Services Contracts Awarded at Post:

(1) an exception for Government-wide point of entry (GPE) and other advertising

methods under FAR 5 under 5.102(a)(5)(iii); and

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(2) limited competition as authorized by FAR 6.303-1(c) of the Federal Acquisition

Regulation (FAR).

(3) Advertising and competition requirements for extensions and renewals of

personal services contracts for continuing service. A renewal is a new personal

service contract with the same individual for the same continued service.

5.2 Requirements for Competition when Awarding Contracts Greater than $3,000 USDE

5.2.1 Long-term Contracts

New long-term contracts, must be advertised locally in accordance with Embassy/Post practice

for direct-hire employees or PSCs (e.g., Post/Embassy bulletin board or website, in a general

circulation newspaper) or using some other method that would reasonably be expected to

produce at least three potentially qualified candidates. For short-term Personal Services

Contracts (with a value under $25,000 and less than one year), advertising is not required, if

three qualified candidates are identified and reviewed. In all cases, the PSC file must contain a

written record documenting the selection process.

5.2.2 Short-term Contracts

Short-term PSC contracts competition is also required. Qualified Candidates shall be placed on a

list maintained at post. Post will pull qualified candidates from the list for the training

contracts. Once a PSC has been placed on the list they do not need to re-compete for the same

position. However for each contracting event all qualified candidates must be reviewed and the

best candidate in the interests of the Peace Corps must be chosen.

5.2.3 PSC Renewals

Renewals or extensions of Personal Services Contracts with the same individual for continuing

contract service in the same position do not need to be publicized or competed.

5.2.4 Justification

If competition is not possible for reasons other than those in Section 5.1 above, the Contracting

Officer must prepare a written justification supporting a non-competitive award, have it

approved by the Country Director and OACM and place it in the contract file.

5.3 Personal Services Contract Template

The Personal Services Contract Template available in the Overseas Contracting Handbook

(OCH) shall be used for all Personal Services Contracts awarded under this procedures section

except for Peace Corps Medical Officers (PCMOs), Regional Medical Officers (RMOs), Medical

Assistants (MAs), and Back-up Medical Providers, for which a specialized template is available

in the OCH. The blanks should be filled in appropriately and the statement of work attached.

Unless directed to do so by OACM, the Contracting Officer at Post shall not deviate from the

template. Any requests to deviate from the template shall be made in writing by the Contracting

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Officer, and shall be subject to submission to the Chief Acquisition Officer or his/her OACM

Designee for final approval.

5.4 Statement of Work

Before soliciting for a Personal Services Contract award, a written detailed statement of work

and a statement of required minimum qualifications covering duties to be performed shall be

prepared. A copy of the statement of work and required minimum qualifications shall be

provided to potential candidates. A document titled “Statement of Work Elements” available in

the Overseas Contracting Handbook provides additional guidance on the preparation of

statements of work.

5.5 Review of PSC Candidates

Authorized Peace Corps personnel and volunteers with appropriate qualifications shall be

responsible for reviewing and evaluating the qualifications of potential contractors. If deemed

appropriate, interviews may be conducted with the potential contractors before a recommended

selection is submitted to the Contracting Officer. Current PSCs with appropriate qualifications

may assist in source selection of Personal Services Contracts. However, final selection of the

PSC and the final decision on the contract award must be made by a Peace Corps Contracting

Officer.

5.6 Negotiations Conducted by Contracting Officer

The Contracting Officer shall conduct negotiations with the recommended source. If the

Contracting Officer can negotiate compensation in accordance with this section, then an award to

the PSC candidate may be made. In the event an agreement cannot be reached, the Contracting

Officer shall enter into negotiations with the next highest rated candidate. Additional guidance

on negotiating compensation is found in section 15.0 of this procedures section. The

compensation discussed within Section 10.0 of these procedures shall be understood prior to and

adhered to during negotiations with candidates for a Personal Services Contract.

5.7 Contract File

The contract file shall include documentation and justification for selection of the personal

services contractor and the basis of the stated compensation and benefits. This justification shall

be recorded in the selection memo.

5.8 Contract Benefits

The only benefits authorized for personal services contracts awarded under MS 743 are those

listed in the contract benefits attachment, as appropriate. Benefits provided are dependent on the

length of the contract. Any benefit or allowance not expressly stated in the benefits attachment

shall not be authorized for any personal services contractor. They shall not be incorporated by

reference.

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6.0 Contract Term

Personal services contracts may be awarded for up to five years, subject to the availability of

funds for obligation at the time of contract execution.

6.1 Exercising Options

Only Contracting Officers are authorized to exercise options as stated in the contract. The

options shall be exercised bi-laterally; signed by Peace Corps and the personal services

contractor. Options shall be exercised at amounts specified in the contract or an amount to be

determined by applying provisions (or formula) provided in the basic contract. Firm option

prices are established during initial contract negotiation and shall not be changed unless

otherwise authorized by other provisions of this procedures section.

Contracting Officers are reminded to allow sufficient time to provide the required advance notice

of Peace Corps' intent to exercise its option to the personal services contractor. When exercising

an option, Contracting Officers must insure the availability of funds and the issuance of the

appropriate obligations to cover the services provided under the option.

7.0 Contract Provisions

As appropriate, the contract template available in the Overseas Contracting Handbook will be

used when negotiating and preparing personal services contracts with host country residents.

8.0 Security Certifications and Employment Suitability

All resident personal services contractors shall have a suitability and security investigation as

required by the Office of Safety and Security. The document titled “Guidance for Overseas

Background Checks/Background Checks of Overseas Staff”, available in the Overseas

Contracting Handbook, promulgated by the Information and Personnel Security Division of the

Office of Safety and Security, outlines the requirements for host country resident personal

services contracts.

8.1 Access to Classified Information

Foreign nationals are not permitted access to classified information or material.

8.2 Security Certification for PSCs

For all host country resident PSCs contracted for 260 work days or more, the Contracting Officer

must ask the Regional Security Officer (RSO) or his or her designee to conduct a background

investigation (as per 12 FAM 422.4, 19, 20) of the proposed PSC prior to executing the contract.

If completion of the appropriate investigation will be delayed, the Contracting Officer must

obtain a temporary security certification from the RSO before execution of the Personal Services

Contract. The CD must request re-certification of a continuously employed PSC every five years

in accordance with 12 FAM 420. Documentation of the security certification will be filed in the

individual PSCs contract file at post.

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At those posts where there is no U.S. Mission and no resident RSO (or RSO Foreign Service

National Investigator), a post must follow the procedures outlined in section 8.3.

8.3 Suitability for Short-term PSCs

Prior to executing a Personal Services Contract with a host country resident for a contractual

term of service of fewer than 260 work days (short-term PSC), the following administrative

process must be completed and documented. The Contracting Officer must ensure that:

(a) an appropriate check with relevant law enforcement entities concerning the proposed

contractor is completed and documented;

(b) the appropriate reference and previous employment checks are conducted;

Checks (no exterior checks); and

(d) the Contracting Officer must review this information prior to contract execution.

This administrative process must be repeated every three years for any short-term PSC

contracting with Peace Corps on a recurring basis. Documentation of the Peace Corps generated

security certification for short-term PSCs must be filed in the individual PSCs contract file at

post. Should any derogatory information be developed in the course of a Peace Corps generated

employment suitability certification for short-term PSCs, the case must be referred to the RSO

for final adjudication before contract execution.

8.4 Intelligence Background Information Certification

Personal Services Contractors are subject to the policy and eligibility standards set forth in Peace

Corps Manual Section 611 concerning eligibility of applicants with intelligence backgrounds.

Individuals who have prior connections with intelligence activities through employment, related

work, or even family relations may be ineligible for a personal services contract depending upon

whether they meet the eligibility requirements set forth in Manual Section 611. Prospective PSCs

are required to complete the Intelligence Background form provided as Attachment A to Manual

Section 611, in addition to being certified through the appropriate security clearance process.

Prospective PSCs who are uncertain as to whether to answer yes or no to the questions set forth

in Attachment A should contact the Post Contracting Officer for additional information or

guidance. The Post Contracting Officer, in turn, may consult with the Office of the General

Counsel, as appropriate. If the PSC responds in the affirmative on the Intelligence Background

Certification, the Contracting Officer must contact the Office of General the Counsel for review

and decision regarding suitability for contracting.

8.5 Employment Suitability for Former Volunteers

No additional suitability check is required for any former Volunteer whose Peace Corps

termination date does not pre-date the proposed contract execution date by more than nine

months; unless it is known that the contractor will require access to classified information during

the contractual assignment.

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9.0 Determining Permanent Residency

There is no precise test of whether an individual is permanently residing in the Host Country. In

most cases, it is clear where the individual is permanently residing. In cases where there is some

question, the Contracting Officer determines whether or not an individual is a host or non-host

country resident by taking into account certain indicators.

(a) The following are indications that the individual is permanently residing in the Host

Country:

(1) The individual is a Host Country National.

(2) The individual is admitted for permanent residency in the Host Country.

(3) The individual is subject to the laws of the Host Country comparable to other

citizens and permanent residents of the Host Country.

(4) The individual is physically present in the Host Country.

(5) The individual maintains a residence in the Host Country.

(6) The individual pays taxes to the Host Country.

(b) The following are indications that the individual is not permanently residing in the Host

Country:

(1) The individual is not a Host Country National.

(2) The individual is not admitted for permanent residency in the Host Country.

(3) The individual is not subject to the laws of the Host Country comparable to other

citizens and permanent residents of the Host Country.

(4) The individual is physically present in the Host Country but it is temporary.

(5) The individual has residence in the Host Country but maintains a residence in

another country.

(6) The individual is not subject to Host Country taxes.

(7) The individual is maintains a tax home in another country, i.e., is subject to the

tax laws of another country.

In summary, when determining residency to which country does the individual have a closer

connection – the Host Country or another country.

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10.0 Compensation

10.1 Legal Framework for Peace Corps Personal Services Contract Compensation

Peace Corps PSCs are considered employees of the United States Government except for “the

purposes of any law administered by the Office of Personnel Management (except that the

President may determine the applicability to such individuals of provisions of the Foreign

Service Act of 1980 (22 U.S.C. 3901 et seq.))”. Because they may be considered employees of

the U.S. Government, they may be given compensation, allowances or benefits that derive from

an employer-employee relationship with the U.S. Government. Peace Corps PSCs are solely

entitled to the compensation and benefits specified within the terms of their contracts unless, in

rare cases, local law overrides such agreed upon benefits. See Section 10.7.

The Peace Corps may provide PSCs with benefits that are comparable to those given to Peace

Corps direct-hire FSNs or PSCs of other agencies. Peace Corps is not subject to the Department

of State's local compensation plan or regulations governing direct-hire Foreign Service National

employees when establishing compensation packages for PSCs. The starting points for

establishing a compensation package for Peace Corps PSCs are the requirements of the position

and the salary range of the position.

As such, Peace Corps PSCs are subject to the cost principles for commercial organizations. Cost

principles generally allow certain benefits to be included in PSC contracts, even certain

allowable benefits that are inherent to an employer-employee relationship with the U.S.

Government (e.g., leave), subject to the principles below on the implications of such benefits in

the context of an employer-employee relationship under local law.

10.2 Total Contract Compensation

Overall Personal Services Contract compensation can be thought of in two main categories: (1)

basic compensation (similar to an employee's salary) and (2) benefits. The overall contract

compensation (basic compensation and benefits) must be "fair and reasonable" for the services

being performed. A fair compensation is in line with the fair market value of the services

delivered under contract as well as realistic in terms of the contractor's ability to provide the

services delivered under the contract. A reasonable compensation is compensation that a prudent

and competent buyer would be willing to pay, given available data on both local market

conditions and alternatives for meeting the services to be provided under contract. "Fair and

reasonable" is a determination made by the Contracting Officer awarding the contract.

If benefits provided in a particular host country are high, the overall compensation provided

should be adjusted by decreasing the basic compensation provided under the contract in order to

provide total contract compensation that is fair and reasonable.

10.3 Basic Compensation

The policy for basic compensation for Peace Corps personal services contracts is that the

negotiated base compensation shall be fair and reasonable. This determination must be made by

the Contracting Officer prior to awarding the contract. Contracting Officers should use such

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factors as salary history and a local market survey (by Peace Corps or other organizations) of

positions with similarly required qualifications, skill sets, certifications, and work requirements.

The range of compensation in the applicable State Department Local Compensation Plan may be

considered as well for determining fair and reasonable base compensation. Except as found in

the current contract template provided by the Office of Acquisition and Contract Management,

the terms grade, step, local compensation plan, employee, or employment shall not be included in

the verbiage of Peace Corps personal services contracts.

The basic compensation shall be inserted in the applicable blanks in the contract template for the

base year and option periods prior to contract award. A cost of living increase may be considered

by the Contracting Officer during negotiations for the option periods. Basic compensation shall

be negotiated for all contract periods of performance (base and option) at the time of contract

award. Increases to basic compensation shall only be made in extraordinary circumstances or

with contemplated increases in the Statement of Work and shall only be made by contract

modification after a period of performance (base or option period) is complete. Changes to the

State Department LCP do not result in changes to the contract basic compensation. The basic

compensation in the contract itself is what determines basic compensation to be paid.

10.4 Increases in Compensation after Initial Contract Award

10.4.1 Long-term Personal Services Contracts Awarded at Post

Any increase in basic compensation shall be made only by contract modification. The preferred

time to make changes to basic compensation is after the period of performance is completed and

before the start of a new period of performance. However, if certain conditions are met, increases

to basic compensation may be made during the period of performance, i.e. mid-term.

(a) Increases when Exercising an Option

The Contracting Officer may increase basic compensation after a period of performance

and before the start of a new period of performance (base or option) only as follows:

(1) The increase is associated with a compensation/cost of living adjustment that is

specifically tied to the Local Compensation Plan (LCP) and the amount of the

increase is less than or equal to the increase reflected in the most recent LCP; or

(2) The increase is for a pre-planned annual compensation increase for a PSC (similar

to an FSN step increase) that was anticipated at the time of initial contract award

and is included in the post’s operational plan/budget.

(b) Increases during Contract Performance

The Contracting Officer may increase basic compensation during a period of contract

performance (base or option) only when all of the following conditions are met:

(1) The Contracting Officer determines in writing that the increase should be granted

to maintain fairness and equity between FSN and PSC compensation

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(2) The amount of the increase is less than or equal to the cost of living increase

specifically reflected in the LCP that became effective after the start of the current

period of performance;

(3) Funding is available to cover the cost associated with the increase for all post staff

affected by the change; and

(4) The Contracting Officer receives written approval from the Regional Director.

All other compensation increases (i.e., increases based on other salary surveys, mass

compensation adjustments, etc.) that are not specifically tied to the LCP must be

authorized by the Chief Acquisition Officer or his/her designee in writing prior to

implementation.

10.5 Benefits

10.5.1 General Policy

Benefits can include compensation for such items as leave, meal allowance, severance, social

security, and retirement. The Peace Corps' general policy for contractors serving under Peace

Corps personal services contracts is that benefits shall be paid equivalent to the benefits paid to

host country Foreign Service Nationals under the Local Compensation Plan at the time of

contract award. The Local Compensation Plan itself shall not be stated in the contract but rather

the benefits provided shall be individually stated directly in the benefits section of the contract.

Each benefit shall be individually listed to provide clarity to the agreement between the Peace

Corps and contractor, as contractors are only entitled to the benefits stated within the contract. If

the terms of the benefits are long they may become a further attachment to the contract. For

example, if the terms of a local social security benefit are long the benefits section of the contract

may state "local social security as detailed in attachment 4 to this contract."

10.5.2 Exceptions and Special Circumstances

(a) Severance if appropriate, may be paid, but may not exceed that provided to host country

Foreign Service Nationals under the Local Compensation Plan with the additional

provision that the Contracting Officer determines it is in the interests of the Peace Corps

to pay severance at the time the contract relationship is ended. Appropriateness is

determined by the Contracting Officer and takes into consideration such things as the

performance and conduct of the PSC and the circumstances under which the contract

relationship has ended (e.g., resignation by PSC, non-renewal, or termination for cause or

convenience).

(b) Retirement may be provided by participation in the local social security and retirement

system if provided for in the LCP. If warranted the retirement plan will be incorporated

into the contract and managed by Peace Corps.

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other retirement plan managed by another Government agency (e.g., where participation

is limited to employees of the U.S. Government) with approval from the CFO.).

(d) In no case shall an annuity (multiple reoccurring benefits) type benefit be paid after the

final period of performance of the contract.

10.5.3 Requesting and Authorizing Exceptions on Benefits

As set forth in Section 10.5.1, the Contracting Officer may not deviate from benefits in the LCP

(deleting, adding or modifying a benefit) without an exception approved by the Chief

Acquisition Officer. A Contracting Officer may request an exception from the Chief Acquisition

Officer. The request must state the basis for the exception and be cleared first by the Regional

Director, then by the Office of the General Counsel, before submission to the Chief Acquisition

Officer for final approval. Posts are encouraged to discuss the situation with the Office of

Acquisition and Contract Management before submitting a formal request for an exception.

10.6 Cash Awards

At the sole discretion of the Country Director, cash awards may be made in recognition of

extraordinary services. Post shall develop an awards program that outlines the eligibility criteria

and process for the awards program. An award may be accompanied with an appropriate

ceremony and should not be perceived as an annual entitlement. The Contracting Officer must

ensure that the funding is available in the Post's budget. When the award is made, the

Contracting Officer must issue a unilateral modification to the individual's contract to include the

award amount into the contract, in order for the award to be paid out through the contract.

10.7 Effect of Local Law

The Agency's general policy on benefits provided to PSCs is in Section 10.4 of this procedures

section. In some countries, and under certain conditions (e.g., where the contractor has worked

for Peace Corps for a specified extensive period of time, e.g., two years) PSCs may be deemed,

under local law, as employees with certain attendant benefits and protections. Generally,

employee benefits under local law are set forth in the LCP. However, in some cases, a PSC may

contend that he or she is entitled to a specified benefit under local law which is not set forth in

the Local Compensation Plan or in his or her contract. Before accepting a PSC's assertion that he

or she is entitled to additional benefits under local law, the Contracting Officer must have

obtained reliable advice as to the pertinent local law. Typically, this is accomplished through

consultation with the embassy. In the case of remaining uncertainty, however, the Contracting

Officer may obtain local legal advice after obtaining the approval of OACM and the Office of

the General Counsel. The Chief Acquisition Officer may authorize a local law benefit. Any

request for a local law benefit shall be made in writing by the Contracting Officer, and shall be

subject to written concurrence, first by the Regional Director, then by the General Counsel,

before submission to the Chief Acquisition Officer for final approval.

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10.8 Credit Hour Policy

The Country Director, at his or her discretion, may establish a written credit hour policy for

personal services contractors in accordance with Manual Section 630, section 4.8.1.1.8. The

credit hour policy, if established, should be thoroughly explained to the personal services

contractor upon contract signing.

Up to 24 hours of earned credit time may be paid out in a lump sum upon contract expiration

when no follow-on contract is to be issued, subject to the availability of funding. The personal

services contract will be modified immediately by the Contracting Officer to add funding so

payment can be made during contract closeout. The HRMS administrator shall receive a copy of

the modification.

10.9 Administrative Leave Policy

The Country Director, at his or her discretion may establish a written administrative leave policy

for personal services contractors in accordance with Manual Section 630, section 4.8.1.3.3,

Excused Absence.

11.0 Pay Currency

The currency in which compensation is paid to PSCs shall be in accordance with the prevailing

local compensation practice of the Embassy, except that all US Citizen and US Permanent

Resident (Green Card Holder) PSCs shall be paid in US dollars. Any request for exception must

state the basis for the exception and be cleared first by the Regional Director, then by the Office

of the General Counsel, then by the Chief Financial Officer, before submission to the Chief

Acquisition Officer for final approval. Posts are encouraged to discuss the situation with the

Office of Acquisition and Contract Management before submitting a formal request for an

exception.

12.0 Training

Training may be authorized only if directly related to assigned responsibilities.

Any personal services contractor receiving pay as well as some or all of the additional expenses

incurred in government funded training that exceeds 40 hours, to include Continuing Medical

Education (CME) and Medical Overseas Staff Training (MOST) conferences, must sign a form

titled “Continued-Service Agreement for Personal Service Contractors Assigned to Training

through Non-Government Facilities” prior to training. This form is available in the Overseas

Contracting Handbook. Following the training he or she must continue to provide service to the

Peace Corps for a period equal to at least three times the length of the training period, unless the

contract is involuntarily terminated. The length will be based on length and expense of training.

If the personal services contractor terminates his or her contract before the completion of the

training or completion of the required period of continued service, the contractor shall reimburse

the Peace Corps the pro-rated amount of the additional expenses incurred by the Peace Corps in

Peace Corps | MS 743a Personal Services Contracts with Host Country Residents Procedures Page 16

connection with his or her training. Reimbursement shall cover tuition fees, material costs,

books, travel and transportation costs directly related to the training.

The Peace Corps may withhold monies due the personal services contractor to cover the cost of

reimbursement to the Peace Corps for training in the event the personal services contractor fails

to fulfill his or her continued service agreement or to reimburse the Peace Corps for the

additional educational expenses incurred.

13.0 Travel

13.1 Short-term Contracts

If the contract services are short-term and are to be performed in a locality other than that of the

contractor's residence or place of business, the Peace Corps will normally pay reasonable travel

costs involved in transporting the contractor from his or her residence or place of business to the

site where the services are to be performed and return costs upon completion of services, in

accordance with the provisions of Peace Corps Manual Sections 812 and 813.

13.2 Long-term Contracts

If the contract services are long-term and the contractor is a resident of the country, the Peace

Corps will not pay for relocation travel expenses of the contractor or dependents, required to

obtain the contract.

13.3 Former Volunteers

A former Volunteer entering into a Personal Services Contract overseas prior to his or her return

to the U.S. from a Volunteer assignment must be contracted under MS 744. In the rare case that a

former Volunteer decides to become a permanent resident of the host country, s/he should be

contracted under MS 743. In such case, the Peace Corps will pay transportation costs necessary

to the performance of the contract which are over and above the amount of any return home

transportation payment the former Volunteer has previously received from the Peace Corps at the

time of his or her service completion.

13.4 Contracts Beginning Near a Former Volunteer's COS Date

If a Volunteer's Close of Service (COS) date is shortly before the beginning of contract

performance, the Contracting Officer shall require the potential PSC to be available in the host

country when the contract starts. Any travel between the former Volunteer's COS date and the

start date of the contract will be at the expense of the former Volunteer.

13.5 Medical Travelers Insurance

At the discretion of the Country Director and in the event that the Peace Corps requires the PSC

to travel outside of the host country in performance of his or her contract duties, the Peace Corps

may provide hospitalization and medical treatment to the PSC, while the PSC is outside the host

country on official travel, for illnesses, injuries, or conditions that, in the judgment of the Peace

Peace Corps | MS 743a Personal Services Contracts with Host Country Residents Procedures Page 17

Corps, began during the Contractor's travel or so near to the beginning of such travel that the

onset of the illness, injury, or condition could not have been known, and for which immediate

medical treatment or hospitalization is reasonably required. The reasonable costs of such

hospitalization and medical treatment may be paid directly by the Peace Corps or may be

covered by insurance purchased by the Peace Corps. The PSC shall remain personally

responsible for all medical or insurance costs that the Peace Corps, in its discretion, does not

cover.

14.0 Per Diem

When authorized by the Country Director, per diem for the in-country travel of PSCs shall be

authorized and paid in accordance with the prevailing Peace Corps in-country per diem rate(s)

established for the locality pursuant to Peace Corps Manual Section 813.

PSCs shall be briefed by the post Director of Management and Operations, or designee,

regarding the requirements for a signed written Travel Authorization and the procedures/forms

for filing per diem claims, including the required documentation necessary to support per diem

claims. The contractor must file a travel voucher within 10 days of completion of travel.

15.0 Billing

PSCs are not paid for services until they have performed the services required by their contracts.

Vouchers are required to claim reimbursement for per diem and other travel related costs

authorized in conjunction with the contracted services.

15.1 Payments for Personal Services Contracts Greater than 180 Days

Contract payments for Personal Services Contracts greater than 180 days will generally be paid

via the Peace Corps designated Personal Services Contract payment system. This system is

designed to generate biweekly payments automatically without the submission of vouchers. Post

staff are responsible for requesting that the PSCs be included in the system so that all appropriate

deductions and allotments are made, in accordance with the contract.

15.2 Vouchers for Personal Services Contracts 180 Days or Less

In order to initiate the payment process for short-term Personal Services Contracts, the PSC must

submit a proper voucher to the Peace Corps. Vouchers will normally be submitted bi-weekly.

Vouchers must include the contract number; a statement of the period covered; days and hours

worked; and the PSC's signature certifying that the services were rendered and that payment has

not been received for those services.

15.3 Local Law Requirements for Payments

Some countries local laws may require payment within a specified time frame with relation to

completion of work. In these cases a translated version of the local labor law must be submitted

to Global Accounts Payable in order to ensure prompt payment.

Peace Corps | MS 743a Personal Services Contracts with Host Country Residents Procedures Page 18

15.4 Approval by the Country Director or Designated Representative

The Country Director, or designated Peace Corps employee, shall indicate that satisfactory

services have been received and approve the voucher for payment in a timely manner. PSCs

should be paid for their service as soon after completion of the service as possible, but in no case

should the payment be transmitted to the PSC more than 30 days after the receipt of a proper

invoice.

15.5 U.S. Tax Status

All U.S. citizen PSCs are considered Government personnel for U.S. tax purposes and F.I.C.A.

contributions and U.S. Federal Income Tax withholding shall be deducted in accordance with

regulations and rulings of the Social Security Administration and the U.S. Internal Revenue

Service, respectively. W-2s will be issued to US Citizen PSCs and filed with the Internal

Revenue Service.

As an employee, the contractor is not eligible for the “foreign earned income” exclusion under

the IRS Regulations (see 26 CFR 1.911-3(c)(3)).

15.6 Timely Close Out of Contracts

(a) Contracting Officers are responsible for the timely close-out of completed contracts

issued by post. OACM in Washington is responsible for the close-out of contracts issued

in Washington. For contracts awarded by OACM in Washington, the post is responsible

for providing the Contracting Officer the following information:

(1) The personal services contractor's final compensation voucher signed by the

contractor and approved by the Contracting Officer for payment by PC/W (to be

submitted to the Contracting Officer);

(2) The personal services contractor’s signed voucher for unused annual leave and

eligible credit hours and a purchase requisition with funds (for long-term

contracts only); and

(3) A completed and signed personal services contractor's release (an attachment to

the personal services contract template(s)).

(b) OGAP/VPS will provide the following information to the Contracting Officer in support

of close-out:

(1) A copy of each pre-contract cost voucher processed by the post if file is not

complete.

forwarded to OGAP for payment. A duplicate package shall not be sent to OGAP.

Peace Corps | MS 743a Personal Services Contracts with Host Country Residents Procedures Page 19

16.0 Housing

Host Country Residents contracted in this procedures section are not eligible for Peace Corps-

provided or -reimbursed housing.

17.0 Insurance

17.1 Health and Accident Insurance

PSCs are covered by the Federal Employees Compensation Act or the claims settlement

authorities in the Peace Corps Act. Therefore PSCs do not need to obtain health and accident

insurance prior to commencement of the contract. However, all PSCs should be advised that

making claims through FECA can be a long and complex process and not all claims are settled to

the satisfaction of the claimant. If a PSC chooses to buy health and accident insurance, the cost

of health and accident insurance may be reimbursed under the Personal Services Contract as a

benefit or paid directly to the insurance agent on behalf of the PSC. The benefit terms in the

Personal Services Contract shall specify the insurance coverage and the amount to be

reimbursed. Because health and accident insurance may be unavailable or prohibitively

expensive depending upon local conditions, the recommended minimum coverage is left to the

discretion of the Country Director to establish for the post. In the event PSCs are required to

travel outside of the host country under their Personal Services Contracts, they may be required

to complete an insurance application in order to receive health and accident coverage while on

official travel.

17.2 Automobile Insurance

In many countries Peace Corps obtains automobile insurance centrally to cover their fleet and

any drivers. However in some countries additional automobile insurance is required. In these

instances additional automobile may be obtained by the PSC in the minimum amounts

determined by the Country Director as commensurate with any legal requirements of the locality

and sufficient to meet normal and customary claims. It is recommended that Country Directors

review coverage limits with the Administrative Officer of the U.S. Embassy and that such

insurance meet the minimum recommended for personal vehicles owned by mission

personnel. See MS 524 and 526. The cost of automobile insurance may be reimbursed under the

contract as a benefit or paid directly to the insurance agent on behalf of the PSC. The benefit

terms in the contract shall specify the insurance coverage and the amount to be reimbursed.

18.0 Evaluation of Contractor Performance

It is U.S. Government policy that a PSC's performance be evaluated during and at the completion

of each contract. Only complete and objective written performance evaluations may be utilized

in the acquisition process to access the PSC's past performance and in considering the contractor

for future awards. All evaluations shall be kept confidential to the extent feasible while still

allowing the content of the evaluation to be utilized for contracting decision-making purposes.

Peace Corps | MS 743a Personal Services Contracts with Host Country Residents Procedures Page 20

The post's evaluation should consist of input from more than one staff member and may include

recommendations for new contract awards, change of role, termination of an existing contractual

relationship, or no new contract awards. A copy of each evaluation shall be provided to the

personal services contractor to which he/she may provide comments as part of the final

evaluation.

All PSCs with the exception of Peace Corps Medical Officers (PCMOs) and Regional Medical

Officers (RMOs) will be evaluated using a form titled “Personal Services Contract Performance

Evaluation” available in the Overseas Contracting Handbook by the Country Director, or other

Peace Corps personnel as designated by the Country Director, during and at the completion of

their in-country work. A copy of the evaluation will be maintained by the Contracting Officer

with copies forwarded to OACM, and the program office, if requested.

Long-term Peace Corps Medical Officers (PCMOs) and Regional Medical Officers (RMOs)

shall be evaluated in accordance with Office of Health Services (OHS) procedures using the

evaluation forms they provide.

19.0 Contract Termination

The following subparagraphs describe the rights and responsibilities of personal services

contractors and of the Peace Corps should a contract be terminated before the contracted period

of performance has ended.

19.1 Requirement for Written Notice of Termination

Under the mandatory FAR Termination Clause (FAR 52.249-12) for personal services contracts,

the Peace Corps may terminate the contract upon at least 15 calendar days' written notice by the

Contracting Officer to the personal services contractor. Notice of intent to terminate must first be

given to OACM. The personal services contractor, with the written consent of the Contracting

Officer, may terminate the contract upon at least 15 calendar days' written notice to the

Contracting Officer.

19.2 Written Notification of Inadequate Performance

If termination of a contract is contemplated because of the failure of the personal services

contractor to adequately perform the contracted services, the Contracting Officer shall advise the

contractor in writing of his/her deficiencies and provide him or her a reasonable opportunity to

correct the deficiencies. Continued failure to perform on the part of the personal services

contractor requires detailed documentation and will become part of the contract record, subject to

legal review, in case of a formal dispute.

20.0 Applicability of Manual Sections

All Peace Corps manual sections apply to Personal Service Contractors unless otherwise

stated. Manual sections that give additional benefits to PSCs are listed below and marked as

applicable or not applicable depending on the citizenship of the PSC:

Peace Corps | MS 743a Personal Services Contracts with Host Country Residents Procedures Page 21

(All Duties and Responsibilities apply)

Manual Section

Host country residents

MS 002 Peace Corps Manual

Applicable

MS 114 Delegation of Authority

Applicable

MS 269 HIPAA Administration

Applicable

MS 405 Classified National Security Information

Applicable

MS 511 Property Management

Applicable

MS 523 Motorcycles and Bicycles

Applicable

MS 542 Peace Corps IT Security Policies and Procedures

Applicable

MS 545 Mobile Information Technology Device Policy

Applicable

MS 547 Use of Government Technology Services and

Equipment

Applicable

MS 601 Administration of the Peace Corps Personnel System

Not Applicable

MS 603 Direct Hire Position Classification

Not Applicable

MS 604 Family Members and Domestic Partners

Not Applicable

MS 611 Eligibility for PC Employment or VT Service of

Applicants w Intelligence Backgrounds

Applicable

MS 613 Trial Period Procedures for Foreign Service

Employees

Not Applicable

MS 620 Direct Hire Merit Selection and Promotion

Not Applicable

MS 622 Direct Hire Within Grade Salary Increases

Not Applicable

MS 625 Direct Hire Premium Pay

Not Applicable

MS 626 Direct Hire Performance Appraisal System

Not Applicable

MS 630 Direct Hire Hours of Duty

Not Applicable

MS 632 Direct Hire Telework Program

Not Applicable

MS 635 Absence and Leave

Not Applicable

MS 636 Employee Volunteer Program

Applicable

MS 641 Standards of Conduct for Peace Corps Staff

Employees

Applicable

MS 642 Conditions of Service for Overseas USDH Staff

Not Applicable

MS 643 Limited Personal Use Of Government Office

Equipment

Applicable

MS 646 Staff Alcohol Use

Applicable

MS 652 Disciplinary Procedure for Foreign Service Employees

Not Applicable

MS 653 Equal Employment Opportunity and Affirmative

Employment

Applicable

Peace Corps | MS 743a Personal Services Contracts with Host Country Residents Procedures Page 22

MS 655 Employee Grievances

Not Applicable

MS 658 Direct Hire Employee Assistance Program

Not Applicable

MS 659 Direct Hire Labor Management Relations

Not Applicable

MS 662 Direct Hire Incentive Awards Program

Applicable

MS 664 In Service Employee Training

Applicable

MS 671 Separation Process for Direct Hire Employees

Not Applicable

MS 673 Detailing Direct Hire Employees

Not Applicable

MS 682 Staff Safety and Health Program

Not Applicable

MS 691 Direct Hire Employment of Foreign Service Nationals

Not Applicable

MS 693 Direct Hire Employment of US Citizens Abroad

Not Applicable

MS 699 Report of Foreign Service National Employees and

Personal Services Contractors

Applicable

MS 703 Centrally Billed Account Travel Card Program

Applicable

MS 704 Administrative Control of Funds

Applicable

MS 706 Individually Billed Travel Card Program

Applicable

MS 731 Peace Corps Purchase Card Program

Applicable

MS 758 Authorized Certifying Officers

Applicable

MS 760 Overseas Imprest Management

Applicable

MS 762 Staff Personal Property Loss or Damage

Applicable

MS 775 Settlement of Claims Arising Abroad

Applicable

MS 776 Claims Against the US Government Under the Federal

Tort Claims Act

Applicable

MS 777 Billing and Collection Procedures

Applicable

MS 778 Waiver of Claims for Erroneous Payments

Applicable

TBD Legal

MS 812 Peace Corps Staff Travel and Transportation

Not Applicable

MS 832 Cables

Applicable

MS 834 Staff Telephone and Fax Use

Applicable

MS 835 International Mail and Distribution - Policy

Not Applicable

MS 835 International Mail and Distribution - Procedures

Not Applicable

MS 897 Privacy Act Administration

Applicable

MS 899 Breach Notification Response Plan

Applicable

IPS 2-05 Compensatory Time Off for Travel

Not Applicable

IPS 5-10 Direct Hire Automated System for Human Resource

Not Applicable

Peace Corps | MS 743a Personal Services Contracts with Host Country Residents Procedures Page 23

21.0 Contract Close-Out and File Retention

At the completion of the contract, the contract file must be properly closed-out and retained at

post. In addition to the evaluation required by Section 19.0 above, the file must contain a signed

statement by both the PSC and the Contracting Officer, that the contract has been completed and

that both parties have fulfilled all of their obligations under the contract, including payments

(see the "Contractor's Release" Form, which is an attachment to the personal services contract

template(s)). Closed-out contracts must be retained at Post. After the retention period of 5 years,

the files may be destroyed.