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  • Question

    Is this actually a supply contract or a credit card service contract? DLA is not buying the fuel; the individuals buy the fuel itself using the credit cards that are administered by AAFES for allocation of quantity as well as the prices established based on the price indicator in the contract plus margin for the contactor. DFAS pays the vendor and AAFES reimburses the DLA for the payments to the Prime contractor.


    Answer

    This does not appear to meet the definition of acquisition as defined in the
    FAR.
    FAR 2.101
    the acquiring by contract with appropriated funds of supplies or services (including construction) by and for the use of the Federal Government through purchase or lease, whether the supplies or services are already in existence or must be created, developed, demonstrated, and evaluated. Acquisition begins at the point when agency needs are established and includes the description of requirements to satisfy agency needs, solicitation and selection of sources, award of contracts, contract financing, contract performance, contract administration, and those technical and management functions directly related to the process of fulfilling agency needs by contract.  This transaction does not seem to fall within the following parameter, "any agency contract or agreement that is not a procurement contract (i.e., not a contract that uses appropriated funds to acquire property or services for the direct use of the United States)...is, by its nature, not subject to the FAR
     
    Although the Federal Acquisition Regulation does not apply to AAFES since AAFES does not obligate appropriated funds, the definition at FAR 37.101 is instructive wherein “Service contract” is defined as "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." In this instance, it appears the contractor is performing the task (aka service) of providing a continuing means (credit card and purchase terms) for "military personnel, their dependent family members or eligible DoD personnel and their eligible dependents" to purchase fuel in foreign countries.  By comparison, the FAR defines "supplies" as "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." 
     
    Based on the scope of the contract described, the AAFES customer POV fuel contract most closely aligns with services as defined by the FAR (although not prescriptive to AAFES). 

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