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    Since we are paying for a cost per test or reportable item, is this considered a supply or service?


    FAR 37.101 defines a service contract as one 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." From the description provided in the Question Background, the Government will be receiving equipment to perform laboratory tests. Regardless of whether the equipment will be purchased or rented, this would be a supply contract. How the Government is being billed (per lab test in this case) is irrelevant. A good rule of thumb— If you can touch what you are buying, it's an item of supply. 

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