(a) If the principal purpose of a contract is to furnish services in
the performance of which service employees will be used, the Act will
apply to the contract, in the absence of an exemption, even though the
use or furnishing of nonlabor items may be an important element in the
furnishing of the services called for by its terms. The Act is concerned
with protecting the labor standards of workers engaged in performing
such contracts, and is applicable if the statutory coverage test is met,
regardless of the form in which the contract is drafted. The proportion
of the labor cost to the total cost of the contract and the necessity of
furnishing or receiving tangible nonlabor items in performing the
contract obligations will be considered but are not necessarily
determinative. A procurement that requires tangible items to be supplied
to the Government or the contractor as a part of the service furnished
is covered by the Act so long as the facts show that the contract is
chiefly for services, and that the furnishing of tangible items is of
secondary importance.
(b) Some examples of covered contracts illustrating these principles
may be helpful. One such example is a contract for the maintenance and
repair of typewriters. Such a contract may require the contractor to
furnish typewriter parts, as the need arises, in performing the contract
services. Since this does not change the principal purpose of the
contract, which is to furnish the maintenance and repair services
through the use of service employees, the contract remains subject to
the Act.
(c) Another example of the application of the above principle is a
contract for the recurrent supply to a Government agency of freshly
laundered items on a rental basis. It is plain from the legislative
history that such a contract is typical of those intended to be covered
by the Act. S. Rept. 798, 89th Cong., 1st Sess., p. 2; H. Rept. 948,
89th Cong., 1st Sess., p. 2. Although tangible items owned by the
contractor are provided on a rental basis for the use of the Government,
the service furnished by the contractor in making them available for
such use when and where they are needed, through the use of service
employees who launder and deliver them, is the principal purpose of the
contract.
(d) Similarly, a contract in the form of rental of equipment with
operators for the plowing and reseeding of a park area is a service
contract. The Act applies to it because its principal purpose is the
service of plowing and reseeding, which will be performed by service
employees, although as a necessary incident the contractor is required
to furnish equipment. For like reasons the contracts for aerial spraying
and aerial reconnaissance listed in Sec. 4.130 are covered, even though
the use of airplanes, an expensive item of equipment, is essential in
performing such services. 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 Act. Such contracts are not
considered contracts for furnishing equipment within the meaning of the
Walsh-Healey Public Contracts Act. On the other hand, contracts under
which the contractor provides equipment with operators for the purpose
of construction of a public building or public work, such as road
resurfacing or dike repair, even where the work is performed under the
supervision of Government employees, would be within the exemption in
section 7(1) of the Act as contracts for construction subject to the
Davis-Bacon Act. (See Sec. 4.116.)
(e) Contracts for data collection, surveys, computer services, and
the like are within the general coverage of the Act even though the
contractor may be required to furnish such tangible items as written
reports or computer printouts, since items of this nature are considered
to be of secondary importance to the services which it is the principal
purpose of the contract to procure.
(f) Contracts under which the contractor receives tangible items
from the Government in return for furnishing services (which items are
in lieu of or in addition to monetary consideration granted by either
party) are covered by the Act where the facts show that the furnishing
of such services is the principal purpose of the contracts. For example,
property removal or disposal contracts which involve demolition of
buildings or other structures are subject to the Act when their
principal purpose is dismantling and removal (and no further
construction activity at the site is contemplated). However, removal or
dismantling contracts whose principal purpose is sales are not covered.
So-called ``timber sales'' contracts generally are not subject to the
Act because normally the services provided under such contracts are
incidental to the principal purpose of the contracts. (See also
Secs. 4.111(a) and 4.116(b).)
