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    An interesting buy came into my office. (However, it may actually belong to another office, so I may not have a chance to work on it at all.) The maintenance shops at my base use 1990's DEC VAX computer systems, and they are obviously running into sustainability issues. A VAX replacement system is therefore in the works, but there is disagreement as to whether it is a commodity or a service. The replacement system is a commodity, but it will be sold through a value-added resaler that provides installation services. (The service may also include documenting current software configurations.) What would be the appropriate method to determine service vs supply in a peculiar situation such as this? Would the services be considered incidental? Thank you for your help!


    Answer

    If the primary purpose of the contract is to provide an item (the replacement system) rather than perform a service (installation of the system), then the contract should be considered as a contract for supplies. Any services would be to support the supply item, and are not stand alone services.

     

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