(a) General scope of exemption. The Act, in paragraph (1) of section
7, exempts from its provisions ``any contract of the United States or
District of Columbia for construction, alteration and/or repair,
including painting and decorating of public buildings or public works.''
This language corresponds to the language used in the Davis-Bacon Act to
describe its coverage (40 U.S.C. 276a). The legislative history of the
McNamara-O'Hara Service Contract Act indicates that the purpose of the
provision is to avoid overlapping coverage of the two acts by excluding
from the application of the McNamara-O'Hara Act those contracts to which
the Davis-Bacon Act is applicable and in the performance of which the
labor standards of that Act are intended to govern the compensation
payable to the employees of contractors and subcontractors on the work.
(See H. Rept. 798, pp. 2, 5, and H. Rept. 948, pp. 1, 5, also Hearing,
Special Subcommittee on Labor, House Committee on Education and Labor,
p. 9 (89th Cong., 1st sess.).) The intent of section 7(1) is simply to
exclude from the provisions of the Act those construction contracts
which involve the employment of persons whose wage rates and fringe
benefits are determinable under the Davis-Bacon Act.
(b) Contracts not within exemption. Section 7(1) does not exempt
contracts which, for purposes of the Davis-Bacon Act, are not considered
to be of the character described by the corresponding language in that
Act, and to which the provisions of the Davis-Bacon Act are therefore
not applied. Such contracts are accordingly subject to the McNamara-
O'Hara Act where their principal purpose is to furnish services in the
United States through the use of service employees. For example, a
contract for clearing timber or brush from land or for the demolition or
dismantling of buildings or other structures located thereon may be a
contract for construction activity subject to the Davis-Bacon Act where
it appears that the clearing of the site is to be followed by the
construction of a public building or public work at the same location.
If, however, no further construction activity at the site is
contemplated the Davis-Bacon Act is considered inapplicable to such
clearing, demolition, or dismantling work. In such event, the exemption
in section 7(1) of the McNamara-O'Hara Act has no application and the
contract may be subject to the Act in accordance with its general
coverage provisions. It should be noted that the fact that a contract
may be labeled as one for the sale and removal of property, such as
salvage material, does not negate coverage under the Act even though
title to the removable property passes to the contractor. While the
value of the property being sold in relation to the services performed
under the contract is a factor to be considered in determining coverage,
where the facts show that the principal purpose of removal, dismantling,
and demolition contracts is to furnish services through the use of
service employees, these contracts are subject to the Act. (See also
Sec. 4.131.)
(c) Partially exempt contracts. (1) Instances may arise in which,
for the convenience of the Government, instead of awarding separate
contracts for construction work subject to the Davis-Bacon Act and for
services of a different type to be performed by service employees, the
contracting officer may include separate specifications for each type of
work in a single contract calling for the performance of both types of
work. For example, a contracting agency may invite bids for the
installation of a plumbing system or for the installation of a security
alarm system in a public building and for the maintenance of the system
for one year. In such a case, if the contract is principally for
services, the exemption provided by section 7(1) will be deemed
applicable only to that portion of the contract which calls for
construction activity subject to the Davis-Bacon Act. The contract
documents are required to contain the clauses prescribed by Sec. 4.6 for
application to the contract obligation to furnish services through the
use of service employees, and the provisions of the McNamara-O'Hara Act
will apply to that portion of the contract.
(2) Service or maintenance contracts involving construction work.
The provisions of both the Davis-Bacon Act and the Service Contract Act
would generally apply to contracts involving construction and service
work where such contracts are principally for services. The Davis-Bacon
Act, and thus the exemption provided by section 7(1) of the Act, would
be applicable to construction contract work in such hybrid contracts
where:
(i) The contract contains specific requirements for substantial
amounts of construction, reconstruction, alteration, or repair work
(hereinafter referred to as construction) or it is ascertainable that a
substantial amount of construction work will be necessary for the
performance of the contract (the word ``substantial'' relates to the
type and quantity of construction work to be performed and not merely to
the total value of construction work (whether in absolute dollars or
cost percentages) as compared to the total value of the contract); and
(ii) The construction work is physically or functionally separate
from, and as a practical matter is capable of being performed on a
segregated basis from, the other work called for by the contract.
[48 FR 49762, Oct. 27, 1983; 48 FR 50529, Nov. 2, 1983]
