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Part 13 BPAs and the Service Contract Act


August

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I am looking for confirmation of, or arguments against the following position:

The Service Contract Act does not apply to orders against Part 13 BPAs for services that are under $2,500, regardless of how many dollars are placed in orders against the BPA.

A BPA is not a contract - the orders are the contracts, therefore 22.1007 applies only to the order.

Thanks for your review.

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No arguments here. Agree that Part 13 BPAs are not contracts.

FAR States "This Subpart 22.10 applies to all Government contracts, the principal purpose of which is to furnish services in the United States through the use of service employees..."

I also agree that the SCA would apply at the order level only since the order itself is what constitutes a contract.

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Let me preface my remarks with the underlying assumption that your BPA is for services of the nature that would be subject to the SCA and its minimum wage and fringe benefit requirements, e.g. not professional services.

Is your only point that SCA doesn't apply to orders under $2,500, or are you suggesting that you do not need to have terms in the blanket purchase agreement regarding the SCA; e.g., that the vendor understands and agrees that orders issued against the BPA in excess of the $2,500 threshold require the vendor to pay the minimum SCA wages and fringes?

You are correct that the SCA would apply to orders above the threshold, but if that is not set forth in the agreement, what do you do when an order for $10,000 is issued against the BPA and the vendor does not comply with the SCA minimum wage payment because he billed at the labor prices contained in the BPA which did not reflect paying SCA wages because that was not discussed between the parties in establishing the agreement?

You cannot get around the labor law by entering into a services BPA which ignores the SCA minimum wages and fringes in the pricing part of its agreement. I think it wise to have terms in the BPA that the vendor will comply with the SCA on orders that are applicable. If that means there are two sets of labor rates established in your BPA, one for orders below the SCA threshold and one for orders above then you will both (contractor and government) be better off when you start doing business together. No need to set yourself up for misunderstandings.

If you intend to enter into a BPA for servcies (non-professional) that contemplates orders both above and below the threshold that invokes the application of the SCA and associated minimum wage and fringe benefit requirements, then you should be thinking about laying out in the agreement the circumstances when compliance with the SCA is required.

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Now you got my curiosity up. What service are you buying $2,500 or less at at time that will add up to Millions? Thats a lot of orders to manage.

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I would not agree with the same being true for a task order type contract (IDIQ). An IDIQ contract is a contract and the SCA would apply based on the estimated value of the contract being over $2,500. Remember, the SCA applies to all Government contracts whose value exceeds the threshold. In an IDIQ contract, the contractor is required to keep performing under that single contract for every order issued. Once the orders aggregate over $2,500 and the minimum wages and fringes have not been paid because you did not incorporate the requirement, you will likely be hearing from the contractor employees via the DOL and would find yourself in a pickle. Orders are contracts by FAR definition, but so are IDIQ contracts (and requirements contracts as well).

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Let me also express concern about a BPA that may possibly rack up $1mil in orders at $2.5 k or less...potentially at least 400 orders - an average of about 33 a month or 1.65 orders for each working ay of the average month. If you actually have requirements that estimate $4,125/day (an amount that would invoke the SCA), your BPA presents the appearance of deliberate attempt to skirt the labor laws - not a good news story. I assume the intent is to place and pay for orders by credit card to streamline administration of the work. However, even at that, that is a lot of effort compared to awarding one IDIQ contract for all of the work - or better yet a fixed priced contract.

I hope there is more to the story that would shed light on why this approach.

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Guest Vern Edwards

Not only an attempt to skirt labor laws, but requirements splitting to avoid full and open competition requirements, synopsis, and FAR Part 15.

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I would not agree with the same being true for a task order type contract (IDIQ). An IDIQ contract is a contract and the SCA would apply based on the estimated value of the contract being over $2,500. Remember, the SCA applies to all Government contracts whose value exceeds the threshold. In an IDIQ contract, the contractor is required to keep performing under that single contract for every order issued. Once the orders aggregate over $2,500 and the minimum wages and fringes have not been paid because you did not incorporate the requirement, you will likely be hearing from the contractor employees via the DOL and would find yourself in a pickle. Orders are contracts by FAR definition, but so are IDIQ contracts (and requirements contracts as well).

Don't be too hasty to proclaim that task orders are contracts for all purposes. See, http://www.asbca.mil/Decisions/2012/57400%20MCC%20Construction%20Corporation%207.16.12%20WEB.pdf

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Likewise do not be too hasty on making a decision regarding SCA as it applies to the BPA effort you are discussing. Remember in the end it is the contractor's responsibility to comply with SCA, regardless of what a CO might think, and ultimately it will be DOLs determination of whether SCA applies regardless of your determination of whether the BPA's are contracts or not.

While I understand your conclusions I would be very careful as you may lead contractors down the wrong path. From my view a discussion with DOL on applicability of SCA, no matter how difficult that might be to accomplish, would be the best approach.

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Good find..This goes back to 1982 but the GAO report clearly says the SCA applies to BPAs in excess of $2,500 ($1 MiL certainly meets that standard). And the report also says that the DOL regulations define contracts to include BPAs. As they say sometimes, what's old is what's new.

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Guest Vern Edwards

That GAO report did not cite any specific section of Title 29 of the CFR in support of its assertion that the DOL applies the $2,500 threshold to the BPA and not to individual calls against the BPA. I did a Westlaw search of Title 29 and found no express mention of BPAs whatsoever, much less a rule saying that the dollar threshold applies to the BPA itself. So what regulation was GAO talking about?

GAO may/must have been talking about 29 CFR 4.142:

4.142 Contracts in an indefinite amount.

(a) Every contract subject to this Act which is indefinite in amount is required to contain the clauses prescribed in Sec. 4.6 for contracts in excess of $2,500, unless the contracting officer has definite knowledge in advance that the contract will not exceed $2,500 in any event.

(B) Where contracts or agreements between a Government agency and prospective purveyors of services are negotiated which provide terms and conditions under which services will be furnished through the use of service employees in response to individual purchase orders or calls, if any, which may be issued by the agency during the life of the agreement, these agreements would ordinarily constitute contracts within the intendment of the Act under principles judicially established in United Biscuit Co. v. Wirtz, 17 WH Cases 146 (C.A.D.C.), a case arising under the Walsh-Healey Public Contracts Act. Such a contract, which may be in the nature of a bilateral option contract or basic ordering agreement and not obligate the Government to order any services or the contractor to furnish any, nevertheless governs any procurement of services that may be made through purchase orders or calls issued under its terms. Since the amount of the contract is indefinite, it is subject to the rule stated in paragraph (a) of this section. The amount of the contract is not determined by the amount of any individual call or purchase order.

Note the mention of "calls" in paragraph (B), which is a clue. But does that mean that the SCA applies to individual calls valued at less than $2,500?

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i am reading this citation this way...

Every contract indefinite in amount is required to contain the SCA clauses unless the CO has definite knowledge that the "contract" will not exceed $2,500. Where contracts or agreements provide terms and conditions under which services are furnished through the use of service employees in response to orders or calls (covers both IDIQ contracts and agreement), such agreements ordinarily constitute "contracts" within the intent of the Act (Service Contract Act) even if the Government is not obligated to order any services and the contractor is not obligated to furnish any services. Since the amount of the contract (agreement) is indefinite, it is subject to the rule requiring that it contain SCA clauses. The amount of the contract is not determined by the amount of any individual call or purchase order.

Translation... I believe this requires the SCA to apply to the agreement (contract) and the terms of the SCA (minimum wages and fringes) apply to every order/call, regardless of the value of the individual call. I note here that there is by what seems like common practice in my experience to interchange the terms order and call when speaking of ordering services under a BPA.

In short, I think this does say the SCA applies to individual orders less than $2,500 and this is the rule August should follow in awarding and administering his BPA.

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Guest Vern Edwards

I agree with your analysis. Interesting. I learned something, because I had thought that the act applied on a call by call basis, each call being a contract, but not the BPA itself, so that if a call was below the threshold the SCA would not apply. I wonder how the SCA is actually being implemented in the field.

I feel like a dummy.

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You've got company. I understood it the same way for the longest time. Your finding the CFR citation helped everyone learn something. The FAR definition of a contract establishes that it includes all types of commitments that obligate the government to an expenditure of funds. BPAs do not do that (obligate to an expenditure of funds) but calls/orders against the BPA do, once there is an acceptance of the offer (performance of work). Wonder if the DOL, SBA, and FAR definitions of contract will ever be one and the same.

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Guest Vern Edwards

The lesson learned here is that agencies can strike off in different directions when implementing statutes under their unique jurisdiction. DOL could not care less how the FAR councils define contract when it comes to labor laws.

It makes sense though. If the SCA were applied at the call level, agencies could use BPA's to avoid the SCA and its higher labor rates, even though they are paying millions to a contractor to do the same kind of work with the same workers.

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