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  • Question

    Is the deconstruction / removal and disposal of a "modular office" and "cage" as well as the supply and fabrication of a replacement modular office with a mezzanine a construction effort or merely a commodity cupped with a service? I ask since the majority of the estimated dollar value for this effort is associated with the replacement modular office with a mezzanine and not for corresponding services (e.g. removal of existing structure, disposal of disgarded materials, electrical hook-ups, etc.). Per the FAR's definition of construction and personal property as well as the "The Government Contracts Reference Book's definitions for real property, plant equipment and property cupped with logic, it appears this effort falls within the realms of and policies governing services and contracts involving construction verses the procurement of a commodity only. However, the definitions are not clear; therefore, clarification is being sought.


    Answer

    I cannot clarify whether this requirement is a commodity, service, or construction based on the information available. The entire acquisition package would be required to include the Independent Government Cost Estimate (IGCE) and Market Research Report. Does the IGCE provide a separate breakdown for the demolition and installation of the new modular facility? Is the labor for either easily categorized under Davis Bacon Act or Service Contract Act? Is the labor a significant portion of either the demolition of the old modular facility or installation of the new facility?
     
    How would industry handle the demolition and installation of a new facility? What does market research indicate? Would commercial industry contract first for the demolition and then a second contract for installation of the new modular requirement? Does the project require modification of the existing government facility that the modular unit will be installed in? This could include connections for water, electricity, sewer, air conditioning, heat, and IT cables, etc.  Was there any identifiable area of cost dominance? Demolition and removal labor, installation labor, modular facility cost?
     
    Answering these questions will often tell you whether a requirement meets the definition for a services, supply, or construction. Review the definitions of in FAR 2.101 and FAR 37.101. The definitions are:
     
    "Construction" means construction, alteration, or repair (including dredging, excavating, and painting) of buildings, structures, or other real property. For purposes of this definition, the terms "buildings, structures, or other real property" include, but are not limited to, improvements of all types, such as bridges, dams, plants, highways, parkways, streets, subways, tunnels, sewers, mains, power lines, cemeteries, pumping stations, railways, airport
    facilities, terminals, docks, piers, wharves, ways, lighthouses, buoys, jetties, breakwaters, levees, canals, and channels. Construction does not include the manufacture, production, furnishing, construction, alteration, repair, processing, or assembling of vessels, aircraft, or other kinds of personal property (except that for use in subpart 22.5, see definition at 22.502).
     
    "Supplies" means all property except land or interest in land. It includes (but is not limited to) public works, buildings, and facilities; ships, floating equipment, and vessels of every character, type, and description, together with parts and accessories; aircraft and aircraft parts, accessories, and equipment; machine tools; and the alteration or installation of any of the foregoing.
     
    "Service contract" means a contract that directly engages the time and effort of a contractor whose primary purpose is to perform an identifiable task rather than to furnish an end item of supply. A service contract may be either a non-personal or personal contract. It can also cover services performed by either professional or nonprofessional personnel whether on an individual or organizational basis. Some of the areas in which service contracts are found include the following:
     
    (1) Maintenance, overhaul, repair, servicing, rehabilitation, salvage, modernization, or modification of supplies, systems, or equipment.
     
    (2) Routine recurring maintenance of real property.
     
    (3) Housekeeping and base services.
     
    (4) Advisory and assistance services.
     
    (5) Operation of Government-owned equipment, real property, and systems.
     
    (6) Communications services.
     
    (7) Architect-Engineering (see Subpart 36.6).
     
    (8) Transportation and related services (see Part 47).
     
    (9) Research and development (see Part 35).
     
     
    Contracts for dismantling, demolition, or removal of improvements are subject to either the Service Contract Act (4l U.S.C. 351-358) or the Davis-Bacon Act (40 U.S.C. 3141 et seq.). If the contract is solely for dismantling, demolition, or removal of improvements, the Service Contract Act applies unless further work which will result in the construction, alteration, or repair of a public building or public work at that location is contemplated. If such further construction work is intended, even though by separate contract, then the Davis-Bacon Act applies to the contract for dismantling, demolition, or removal.
     
    The last sentence of the last paragraph may require that you complete this requirement as a construction contract under Davis Bacon Act..
     
    You may want to review the federal supply schedules for contracts offering modular facilities. These are commonly commodity contracts that include the cost of installation. However, evaluate your contractor carefully. Some contractors did not perform demolition or complete modification to the existing building, if required, in order to perform utility connections.
     
    There are too many variables for me to give you an exact response even for this small dollar requirement. IAW FAR 1.602-2, the contracting officer has wide latitude to make decisions in this area and support the decision with a short determination and findings for the contract file.
     

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