Summary of Allowable Benefits for a U.S. Government Personal Services Contract (PSC) Employee

 

(1) Personal services contractors (PSCs) are government employees for purposes of the Internal Revenue Code and are therefore subject to social security (FICA) and federal income tax withholdings. As employees, they are ineligible for the "foreign earned income" exclusion under the Internal Revenue Service (IRS) regulations.

 

(2) Personal services contractors are treated on par with other government employees except for programs based on any law administered by the federal Office of Personnel Management (OPM). While PSCs are ineligible to participate in any of the OPM programs, the following fringe benefits are provided as a matter of policy:

 

(i) The employer's FICA contribution for retirement purposes

 

(ii) A contribution against the actual cost of the PSC's annual health and life insurance costs

 

(a) The contribution for health insurance shall not exceed 72% of the actual cost to the PSC for his/her annual health insurance, or the maximum U.S. Government contribution for a direct-hire employee, as announced by the OPM, whichever is less.

 

(b) The contribution for life insurance shall be up to 50% of the actual annual costs to the PSC for life insurance, not to exceed $500.00 per year.

 

(iii) PSCs shall receive the same percentage pay comparability adjustment (commonly referred to as Cost Of Living Adjustment, or "COLA") as U.S. Government employees subject to the availability of funds.

 

(iv) PSCs shall receive an annual salary increase subject to satisfactory performance documented in their annual written evaluation. The increase will be fixed at the next "step" for the PSC's specific GS-equivalent grade.

 

(v) PSCs shall receive the following allowances and differentials provided in the State Department's Standardized Regulations (Government Civilians Foreign Areas) on the same basis as U.S. Government employees:

 

* Temporary lodging allowance

* Living quarters allowance

* Post allowance

* Supplemental post allowance

* Separate maintenance allowance

* Education allowance

* Educational travel

* Post differential

* Payments during evaluation/authorized departure 

* Danger pay

 

(vi) Health room services may be provided for overseas postings

 

(vii) PSCs are eligible to receive benefits for injury, disability, or death under the Federal Employees' Compensation Act. This law is administered by the Department of Labor.

 

(viii) PSCs are eligible to earn four hours of annual leave and four hours of sick leave for each two-week period. However, if the contractor has had previous USAID PSC service (i.e., has served under other personal services contracts covered by Sec. 636(a)(3) of the FAA or other statutory provisions applicable to USAID) and/or previous U.S. Government direct-hire service (civilian and/or military service), s/he will earn vacation leave based on the time in service as follows:

 

* Up to 3 years of service - 4 hours of vacation leave for each two-week period

* Over 3 years and up to 15 years of service - 6 hours of vacation leave for each two-week period (including 10 hours vacation leave for the final pay period of the calendar year)

* 15+ years of service - 8 hours of vacation leave for each two-week period

 

(ix) Additional PSC benefits

 

* 401(k) program for full-time PSCs

* Eligibility for Cash Awards

* Paid government holidays

* Medevac Coverage (100% reimbursement)

* Training allowance

* Commuter benefits (Washington-based PSCs only)

 

(3) Retired U.S. Government employees may be awarded Personal Services Contracts without any reduction in or offset against their government annuity.

 

The above is a simplified version of a small section of the USAID Acquisition Regulations (AIDAR), Appendix D. If you have any questions, we encourage you to view the entire document at the USAID website.