(a) Section 2(a) of the Act covers contracts (and any bid
specification therefor) ``entered into by the United States'' and
section 2(b) applies to contracts entered into ``with the Federal
Government.'' Within the meaning of these provisions, contracts entered
into by the United States and contracts with the Federal Government
include generally all contracts to which any agency or instrumentality
of the U.S. Government becomes a party pursuant to authority derived
from the Constitution and laws of the United States. The Act does not
authorize any distinction in this respect between such agencies and
instrumentalities on the basis of their inclusion in or independence
from the executive, legislative, or judicial branches of the Government,
the fact that they may be corporate in form, or the fact that payment
for the contract services is not made from appropriated funds. Thus,
contracts of wholly owned Government corporations, such as the Postal
Service, and those of nonappropriated fund instrumentalities under the
jurisdiction of the Armed Forces, or of other Federal agencies, such as
Federal Reserve Banks, are included among those subject to the general
coverage of the Act. (Brinks, Inc. v. Board of Governors of the Federal
Reserve System, 466 F. Supp. 116 (D DC 1979); 43 Atty. Gen. Ops. ------
(September 26, 1978).) Contracts with the Federal Government and
contracts entered into ``by the United States'' within the meaning of
the Act do not, however, include contracts for services entered into on
their own behalf by agencies or instrumentalities of other Governments
within the United States, such as those of the several States and their
political subdivisions, or of Puerto Rico, the Virgin Islands, Guam, or
American Samoa.
(b) Where a Federal agency exercises its contracting authority to
procure services desired by the Government, the method of procurement
utilized by the contracting agency is not controlling in determining
coverage of the contract as one entered into by the United States. Such
contracts may be entered into by the United States either through a
direct award by a Federal agency or through the exercise by another
agency (whether governmental or private) of authority granted to it to
procure services for or on behalf of a Federal agency. Thus, sometimes
authority to enter into service contracts of the character described in
the Act for and on behalf of the Government and on a cost-reimbursable
basis may be delegated, for the convenience of the contracting agency,
to a prime contractor which has the responsibility for all work to be
done in connection with the operation and management of a Federal plant,
installation, facility, or
program, together with the legal authority to act as agency for and on
behalf of the Government and to obligate Government funds in the
procurement of all services and supplies necessary to carry out the
entire program of operation. The contracts entered into by such a prime
contractor with secondary contractors for and on behalf of the Federal
agency pursuant to such delegated authority, which have such services as
their principal purpose, are deemed to be contracts entered into by the
United States and contracts with the Federal Government within the
meaning of the Act. However, service contracts entered into by State or
local public bodies with purveyors of services are not deemed to be
entered into by the United States merely because such services are paid
for with funds of the public body which have been received from the
Federal Government as a grant under a Federal program. For example, a
contract entered into by a municipal housing authority for tree
trimming, tree removal, and landscaping for an urban renewal project
financed by Federal funds is not a contract entered into by the United
States and is not covered by the Service Contract Act. Similarly,
contracts let under the Medicaid program which are financed by
federally-assisted grants to the States, and contracts which provide for
insurance benefits to a third party under the Medicare program are not
subject to the Act.
