(a) Sometimes service contracts are entered into for an extended
term exceeding one year; however, their continuation in effect is
subject to the appropriation by Congress of funds for each new fiscal
year. In such event, for purposes of this Act, a contract shall be
deemed entered into upon the contract anniversary date which occurs in
each new fiscal year during which the terms of the original contract are
made effective by an appropriation for that purpose. In other cases a
service contract, entered into for a specified term by a Government
agency, may contain a provision such as an option clause under which the
agency may unilaterally extend the contract for a period of the same
length or other stipulated period. Since the exercise of the option
results in the rendition of services for a new or different period not
included in the term for which the contractor is obligated to furnish
services or for which the Government is obligated to pay under the
original contract in the absence of such action to extend it, the
contract for the additional period is a wholly new contract with respect
to application of the Act's provisions and the regulations thereunder
(see Sec. 4.143(b)).
(b) With respect to multi-year service contracts which are not
subject to annual appropriations (for example, concession contracts
which are funded through the concessionaire's sales, certain operations
and maintenance contracts which are funded with so-called ``no year
money'' or contracts awarded by instrumentalities of the United States,
such as the Federal Reserve Banks, which do not receive appropriated
funds), section 4(d) of the Act allows such contracts to be awarded for
a period of up to five years on the condition that the multi-year
contracts will be amended no less often than once every two years to
incorporate any new Service Contract Act wage determination which may be
applicable. Accordingly, unless the contracting agency is notified to
the contrary (see Sec. 4.4(d)), such contracts are treated as wholly new
contracts for purposes of the application of the Act's provisions and
regulations thereunder at the end of the second year and again at the
end of the fourth year, etc. The two-year period is considered to begin
on the date that the contractor commences performance on the contract
(i.e., anniversary date) rather than on the date of contract award.
