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    An order request has been submitted for the rental Bus Service cost is over $2500. If pricing information for the rental is over 50% of total cost is this contract considered a suppy?


    Answer

    The question of "service or supply" is a common one, and vehicle rental a prime example. On the one hand, the bus itself is an item of supply. The definition of "service contract" at FAR 37.101 is "...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 (italics added)." In your case, the bus is "furnished" to the Government. However, if the contract is for the rental of a vehicle with the contractor providing an employee to drive the bus, it could change the calculus. You stated the "rental" portion is over 50% of the total, which means the cost for a contractor employee to drive the bus is less than 50%. However, it's not clear if the driver portion is above the $2,500 threshold for application of the Service Contract Labor Standards statute. FAR 22.1002-1 states: "Service contracts (italics added) over $2,500 shall contain mandatory provisions regarding minimum wages and fringe benefits, safe and sanitary working conditions, notification to employees of the minimum allowable compensation, and equivalent Federal employee classifications and wage rates." So the question becomes— is this contract covered by the requirements of the Service Contract Labor Standards statute? It appears so. Chapter 14 of the Dept. of Labor's Field Operations Handbook states: “In general, contracts under which the contractor agrees to provide the government with vehicles or equipment on a rental basis with drivers or operators for the purpose of furnishing services are covered by the SCA” (section 14d12(b)(3)). Smart contracting professionals can come down on both sides of this argument, so the contracting officer should use his/her business judgment and document the file with the determination.

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