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Is Construction Considered a Service?


aordway

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No, the narrow interpretation is better. Any interpretation that turns a book purchase into a service contract is a faulty interpretation of the FAR generally and a faulty application of FAR Subpart 7.5 particularly.

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jj:

“Better” in what sense? The various dictionary definitions that Vern provided certainly permitted a “service” to not be mutually exclusive to a supply. What makes the interpretation “faulty”? Is it faulty because the drafters of the rules on inherently governmental functions already knew what “services” were, that it has a singular meaning, and certainly could not have meant to include something that could also be characterized as a supply?

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Better in a sense that it makes sense.

Faulty in a sense that it isn't helpful or productive.

Part of our professional expertise is being able to discern between a service and a supply (and construction). To be practical, a definition used in the workplace has to help in this discernment. If the definition being considered is not helpful in this discernment, then it isn't a useful definition.

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Why does it "make sense" that the government can delegate to a contractor the performance of an inherently governmental function if it does so through something that we characterize as a contract for supplies? Would your answer change if my hypothetical had emphasized more the "subscription service" aspect of the book and its updates?

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No. A subscription for a periodical is treated as a supply contract -- always, I hope. And a supply contract is never covered by FAR Subpart 7.5.

I cannot see how the Government could delegate to a contractor the performance of an inherently governmental function through the issuance of a supply contract.

But I'm intrigued -- are you suggesting that a Government agency's decision to follow a certain practice fromthe private sector as explained and updated in a periodical could mean the Government has delegated its inherently governmental responsibility to the perodical publisher? For example, a decision by the State Department to follow the recommendations in the JOURNAL OF THE FRIENDS OF IRELAND (I'm making this up) in matters affecting Ireland, in connection with a subscription to the periodical, could somehow be a violation of FAR Subpart 7.5? My thought is that it might be a poor agency decision, but the contract for the purchase the subscription is wholly outside FAR Subpart 7.5. [This assumes the periodical is a real bona fide periodical, with other subscribers in the marketplace -- the nefarious and sinister implications of imagining a phony periodical contract as a cover for payments to a non-Governmental organization to establish policy, well, isn't that the realm of novels?]

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Guest Vern Edwards

I will now think of the animal husbandry interpretation when we procure consulting services for Noise and Vibration analyses.

Thank you, Vern.

You're welcome! I almost said something about it in the earlier post, but then decided that it was better to be discrete.

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Guest Vern Edwards

I understand - I'm talking within the context of the FAR -- that's what this whole string is about...

ji20874:

I posted #22 to show you that a "whole string" is about whatever the participants want to talk about, regardless of the OP's original intentions. Your ongoing participation with Jacques (who is out to lunch on the whole subscription thing) has helped me prove my point. B)

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I think FAR Subpart 7.5 is about "implementing" for contracting folk a portion of OMB Circular A-76's discussion of inherently governmental functions, which, in turn, implements the FAIR Act and other laws. Pub. L. 110-417, sec. 321(a)(2)(C ) basically calls on OMB to develop a single consistent definition of "inherently governmental functions" and provides that such functions "should only be performed by officers or employees of the Federal Government or members of the Armed Forces." Under Pub. L. 111-117, sec. 743(e)(2)(C ), agency heads shall ensure that the agency is not using contractor employees to perform inherently governmental functions.

I don't see anything in these statutes or in the Circular to suggest that the Government can abdicate its responsibility to perform inherently government functions through government employees EXERCISING DISCRETION, even if it could do so through a contract that is characterized as a contract for supplies.

JJ20874 seems to take issue with the plausibility of my specific hypothetical. That's fine. Assume for sake of argument that it is possible to take away the exercise of discretion of government employees, and that what is placed in its stead is not a contractor (or contractor employee) performing a service contract under FAR Part 37, but a decision-making "tool" (really, decision-making system or tool where the use of the tool's results are made mandatory) that changes over time without Government control we characterize as a supply (based on authorities entirely outside the context of FAR Subpart 7.5 and the authorities to which it relates). How does a narrow interpretation of FAR 7.502's language, "contracts for services," help contracting officers advise others about the restrictions related to contracting out inherently governmental functions?

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I asked, "How does a narrow interpretation of FAR 7.502's language, 'contract for services,' help contracting officers advise others about the restrictions related to contracting out inherently governmental functions." A reasonable answer to that question might focus on practicalities, rather than on whether or not FAR Subpart 7.5 is a complete statement of the rules relating to contracting out. For instance, one might reasonably conclude the risk of a false negative under the current rule/interpretation is smaller than the risk of a false positive a broader applicability statement (or a broader interpretation of that applicability statement).

None of this changes, however, the actual source prohibition on contracting out inherently governmental functions, whether you view the source of that prohibition to be in statute or the Circular.

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Guest Vern Edwards

A reasonable answer would be based on not only the words in FAR, but also the intent behind the policy. There is a massive, and I mean massive, literature -- official, scholarly, and journalistic -- that explains that intent. The answer is that COs must not award contracts that would require private sector firms do work with their personnel that is supposed to be done only by government personnel. Look at the examples in FAR 7.503( c ). Don't award any contract for that kind of work.

Period. Game over. End of story.

You are smothering yourself under faulty inference, wild conjecture, clutched straws, and fantastic misinterpretation. Take a deep breath, and come back to Earth.

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Vern, I admit my hypotheticals may not be particularly realistic, but you haven't identified an improper inference or what language I am misinterpreting. I'm not clear from your Post #36 on what, if any, significance you assign to the language in FAR 7.502 ("The requirements of this subpart apply to all contracts for services").

Edit: It may not really matter to me what the answer is to the applicability of FAR Subpart 7.5 is for purposes of my hypotheticals. FAR 7.103(s) requires the agency head or designee to prescribe procedures for ensuring "that no purchase request is initiated or contract entered into that would result in the performance of an inherently governmental function by a contractor." Obviously this language does not use the word, "services" or the phrase "contracts for services." In other words, even if FAR 7.502 allows a CO to effectively ignore Subpart 7.5 when awarding a contract for a supply, FAR 7.103(s) doesn't allow the Government to ignore the rules prohibiting contracting out inherently governmental functions.

Edited by Jacques
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Guest Vern Edwards

What is forbidden by FAR 7.503 is contracting for performance of an inherently government function by contractor personnel. But your hypotheticals are not about that. They are about contracting for procedures and tools to be used by government personnel to perform inherently governmental functions.

You seem to think that a CO will violate FAR 7.503 if he awards a contract for books describing procedures that government personnel will follow when performing inherently governmental functions or for tools that they will use. But a contract for the purchase of books or tools is not a contract for the performance of a function. So I don't get the connection between your hypotheticals and the issue that I thought was at hand. It's not the realism of your hypotheticals that I question; it's their relevance.

Your line of reasoning is very hard to follow.

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It's not the realism of your hypotheticals that I question; it's their relevance.

Fair enough. I was trying to eliminate the government employee’s exercise of discretion, so that the regularly updated books or the AI software was not a TOOL, but was effectively displacing the employee’s exercise of discretion. I obviously wasn’t successful.

So, coming at it from a different tact, if the cashier function were an inherently governmental one, and the government bought self-service checkout machines that effectively eliminated the need for cashiers, would the contract for the delivery of the checkout machines be consistent with outsourcing rules? I suspect those who believe it is would emphasize that the contractor is not performing the function, the machine is.

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Guest Vern Edwards
So, coming at it from a different tact, if the cashier function were an inherently governmental one, and the government bought self-service checkout machines that effectively eliminated the need for cashiers, would the contract for the delivery of the checkout machines be consistent with outsourcing rules? I suspect those who believe it is would emphasize that the contractor is not performing the function, the machine is.

I hope I'm not being tactless in pointing out that you are taking a different tack.

FAR Subpart 7.5 does not require that government personnel exercise discretion or do it properly. What it does is prohibit agencies from contracting out inherently governmental functions in which government personnel must exercise discretion. If government personnel are doing the work, then FAR has nothing to say about whether they actually exercise discretion or how they go about it. It is a contracting regulation.

In the case of your hypo of a contract for self-service checkout machines, I think the answer would depend on who would be overseeing their use. If the contractor were only delivering, installing, and maintaining them, and government personnel were overseeing their use, then I don't think there would be a problem. But if contractor personnel were overseeing their use, then I think you would have a service contract that violates FAR 7.503.

I think this thread has lost steam, don't you? I'm moving on.

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  • 4 months later...

This is my first post so bear with me.

It appears that the councils suggest that the Government only contracts for either supplies or services (see FAR 2.101 definition of Acquisition). I can't readily think of anything that doesn't fall neatly into one of those categories but that's a separate discussion. Clearly, FAR 2.101 appears to define construction as a service. With that as my foundation - here is the "so what?":

I don't have an issue with clause selections as stated but seemingly unsupported by some. What I do feel is a reasonable workforce concern or at least topic of discussion/training is determining things like statutory applications such as 10 USC 2410a. Does the statutory exemption apply to construction? The example project I will provide is a painting project to paint...let's say, 20 facilities starting in Sep and ending 300 days or so later. I have more issues but will leave it at this for now and check on the responses.

Thanks in advance!

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Guest Vern Edwards

Here is 10 USC 2410a:

(a) Authority.—
(1) The Secretary of Defense, the Secretary of a military department, or the Secretary of Homeland Security with respect to the Coast Guard when it is not operating as a service in the Navy, may enter into a contract for a purpose described in paragraph (2) for a period that begins in one fiscal year and ends in the next fiscal year if (without regard to any option to extend the period of the contract) the contract period does not exceed one year.
(2) The purpose of a contract described in this paragraph is as follows:
(A) The procurement of severable services.
( B ) The lease of real or personal property, including the maintenance of such property when contracted for as part of the lease agreement.
( b ) Obligation of Funds.— Funds made available for a fiscal year may be obligated for the total amount of a contract entered into under the authority of subsection (a).

You say the painting job is a "project." Game over. A painting project is not a severable service and painting is not a lease of real or personal property. You said nothing about the painting project being maintenance of real or personal property being contracted for as part of a lease.

And the councils do not in any way suggest that the government contracts only for supplies and services.

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Vern,

First, thank you for taking the time. Not trying to be dense, but what is it in the term "project" that makes it "Game over."? What if I called it a painting service, would that change anything? I will do the leg work and research it if you can help guide the discussion. Perhaps, because I failed by not mentioning that this is painting of real property, using fiscal year funds, specifically for repair work as defined in DFARS 222.402-70(d)(1).

More, importantly I would like to know how and where I can determine that a painting project is not a severable service. I get that severable service is a fiscal law issue and I have read some relevant informational/regulatory guides but can't find one that addressed construction explicitly or otherwise. They use the term services and I haven't found anything that precludes construction from being a service and in fact I have found plenty that suggests construction is a service. Additionally, I can only find bona fide case law on materials (supplies) and services. In my experience, services come in two flavors 1) entire (non-severable), and 2) severable

One of my original questions still stands - does 10 USC 2410a apply to construction? If not, why not?

NOTE: DFARS 222.402-70 further discusses the fact that some contract work can be characterized as construction as a service.

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The example yopu provided is for a project to paint 20 buildings. Read Part 22 as well as your citation to DFARS 222.402-70 Installation support contracts. Painting of facilities is considered construction for application of the labor laws for construction, including the Davis-Bacon Wage rates.

The example project I will provide is a painting project to paint...let's say, 20 facilities starting in Sep and ending 300 days or so later. I have more issues but will leave it at this for now and check on the responses.

Thanks in advance!

First, this discusses work to be done under a facilities support contract.

Secondly, DOL and DoD worked out those detailed standards for painting as a small effort that is all or part of an individual "service call":

(1) Individual service calls or orders which will require a total of 32 or more

work-hours to perform shall be considered to be repair work subject to the Construction Wage Rate Requirements.

  • (2) Individual service calls or orders which will require less than 32 work-hours
to perform shall be considered to be maintenance subject to the Service Contract Labor Standards.
  • (3) Painting work of 200 square feet or more to be performed under an individual service call or order shall be considered to be subject to the Construction
Wage Rate Requirements statute regardless of the total work-hours required.

I don't see how you would issue a service call to your contractor to paint 20 buildings. A contract to paint 20 buildings that required painting when you awarded it in one fiscal year is a bonafide need of that fiscal year. Why would that be any different than the thousands of other routine repair projects awarded at FY year end?
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Guest Vern Edwards

10 USC 2410a applies only to severable services.

Let's assume for the purpose of our discussion that painting is a service. Services are considered to be either "entire" (non-severable) or "severable."

A service is entire when it is a one-time job that will be paid for upon completion or through progress payments.

A service is severable when it is continuing and recurring and will be paid for periodically -- weekly, monthly, etc.

Construction work, like all projects, entails completion of a job with a beginning and an ending. If considered a service, it is a service entire.

Construction contracts do not call for work that is continuing and recurring. Unlike an annual janitorial services contract, under which the contractor cleans the same restroom again and again in the course of a period of performance and the government pays by the month, a construction contract requires the contractor to build the restroom once and complete the job by a specified date, and the government pays upon completion or through progress payments.

Thus, 10 USC 2410a does not apply to construction.

If my explanation of the difference between services that are entire and services that are severable is not enough for you, go to www.gao.gov., download the Red Book, Volume I, and read pages 5-23 through 5-28, which explain in great detail. See also Severable Services Contracts, GAO Dec. B-317636, 2009 CPD ¶ 89, April 21, 2009.

Please allow me to compliment you on your thoughtfully constructed and well-written posts. I wish others would take the same pains. Apparently, some people are not capable.

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Maybe I can simplify the question so that it is in harmony with the original posting header.

1) Can anyone demonstrate if construction is considered a service?
2) If it is a service would/could 10 USC 2410a apply?

NOTE: Being new here I started by reading the Terms of Use of the site and Bob has some sage advice in stating that the purpose of this site is at least in part for the edification of the community at large and posters should post citations to laws, regulations, and decisions to help facilitate learning. This will help separate the chaff from the wheat.

Joel,

Thanks. I am familiar with those references as well as the Prevailing Wage Resource Book itself. I think I poorly explained what information I was seeking. I really wanted to find out if the project as I defined it (construction) is also considered a service for purposes of apply a statutory exception such as 10 USC 2410a. Simply suggesting that the described painting project is not a severable service has closed the deal for me and I want more information as to "why". I am limiting inserting my own suppositions because I don't want to derail the question at hand and start talking about any specifics while neglecting the original question. I would like to resolve one issue before moving on to the next when possible (e.g. types of services, but still 100% service - A&E, R&D, Advisory and Assistance, Utilities, Sustenance/Food Service, Construction, etc.). A quadrilateral can be one or more of a few things, but those things, square, rectangle, trapezoid are still quadrilaterals and don't have to be mutual exclusive. I am wondering is construction is a service in a similar thought process. If it is a service I assume it could be entire (non-severable) or severable. If it is severable 10 USC 2410a could apply.

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Vern,

Thank you for your kind words, it truly means a lot to have you say that. I have re-read the cited Red Book passages and I was confident in my understanding until page 5-28 (583) and the window cleaning service scenario. If I get 10 buildings painted I have half of my project completed which is of some value, which lends credence to severable.

Personally, I was of the opinion that yes construction is a service, and it is service entire so 10 USC 2410a does not apply and the Defense Departments have to follow the bona fide fiscal rules laid out in DoD Financial Management Reg 7000.14-R Vol 11a para 020510, which basically state performance has to start within 90 days - in other words if you write a contract Sep 30th performance usually should start before the calendar year ends.

Unless I have clearly missed the mark, I am settling under the auspices that the describe painting project is an entire "nonseverable" construction service.

Thank you all for your patience and contributions. I will continue to monitor in case you have any additional recommended reading.

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Guest Vern Edwards

Jamaal:

You should also read the U.S. Army Judge Advocate General's 2014 Fiscal Law Deskbook, Chapter 3, pages 3-15 through 3-19 and 3-20. On page 3-20 it says: "Contracts for construction are considered similar to non-severable service contracts."

http://www.loc.gov/rr/frd/Military_Law/pdf/fiscal-law-deskbook_2014.pdf

As for the GAO's page 5-28 comment about the window cleaning, it seems to me that window cleaning by its nature is continuing and recurring. If we consider the painting of a facllity as continuing and recurring, then maybe your 20 facility painting project is severable. But is it a service or is it 20 separate construction projects under one contract? If the painting is procured as ongoing "maintenance," then maybe 10 USC 2410a does apply.

As to your question whether anyone can demonstrate that construction is not a service, the posts that precede yours went into the matter in considerable detail. I think it's the best any of us can do.

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Jaamal – Within the context of the FAR I do not think I can demonstrate that construction is a service. Why? FAR Part 2, FAR Part 36 and FAR Part 22.4 lay the frame work to establish construction as a separate and specific category of Federal acquisition that is given special consideration and treatment that mimic customary practices of the construction industry. The definition established by the principles of the FAR are further supported by the North American Industrial Classification System where Construction is covered under a separate Sector (number 23).

As such the FAR draws the line, yes sometimes blurry, as to what is construction by FAR definition and what is service, again by FAR definition.

As has been stated in the thread there could be the situation when the line so blurred that it creates a dilemma as to what a specific acquisition is and whether specific fiscal principles apply or not but I would offer such an instance would be very rare considering the history of Federal acquisition and designation of construction versus service standards.

The references provided already in this thread help provide the historic view that keeps construction as it is in Federal acquisition.

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C Culham:

Just when I thought everything was hashed out pretty well you lured me in with the golden ticket (definition of service(s)).

Can you provide the reference to the FAR definition of a service (not service contract) or were you stating that the definition is implied by the FAR principles you mentioned?

I am aware of FAR 2.101 - "Aquisition", which states services include construction.

For those in the Air Force AFI 63-138, Aquisition of Services para 1.2.1.4 and 1.2.1.8 don't help either. It basically says construction is a service but don't apply these rules unless...

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