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The rental cost is $7000.  SCA is inapplicable (no labor involved).  

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On ‎11‎/‎8‎/‎2019 at 3:14 PM, REA'n Maker said:

So when you contract with a dedicated carrier for Transportation Services (IAW FAR 47)  you "acquire a tangible item" (the truck), ergo, a supply? 

“Service contract” means a contract that directly engages the time and effort of a contractor whose primary purpose is to perform an identifiable task rather than to furnish an end item of supply.

Primary purpose:  provide a backhoe for a specified period of time. 

Since one of the more useful definitions in trying to figure out whether a software license or a subscription or a rental or a lease or anything else is a supply or a service is the FAR 37 definition of service, which you quote, I think it is important to point out that the key part of the definition is "directly engages the time and effort of a contractor [i.e. an employee...] to perform an identifiable task", not the "primary purpose" that you highlight. In this example the provision of a backhoe only engages the time and effort of a contractor employee for about the same amount of time purchasing the backhoe might take, i.e. working the rental/sales counter and maybe delivering and picking up the item, therefore the amount of time and effort the contractor employee spends on an identifiable task (providing a backhoe) is the same for a rental as for a purchase. The vast majority of the cost associated with the contract is in the equipment, not in the identifiable task a contractor employee performs. Otherwise, by your logic, any supply purchase would be a service contract because the "primary purpose" is to provide some supply.

In the FAR 47 transportation service example you are "directly engaging the time and effort of a [truck driver] whose primary purpose is to perform [the task of transporting something]. These two examples couldn't be more different.

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This thread doesn’t end.  I don’t think any post is going to change opinions.  The Anchorage Telephone Utility ASBCA case Jacques mentioned in the Nov7 post is interesting and shows similar issues aren’t clear cut even to the Boards.  On one hand we have the FAR definition of service and years of experience saying it’s a supply.  On the other hand we have business practices, industry classifications and FPDS codes, and accounting principles saying it’s a service.  Who knows? 

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Service contract or supply contract shouldn’t matter?  Labor prior to rental doesn’t count.  Commercial  Rental with standard delivery charges common to all rentals.  Delivery to site shouldn’t be subject to SCA should it?

Repairs are the responsibility of the rental company per standard commercial rental rates and terms.

Conclusion- there is no labor involved. SCA inapplicable. Government will provide routine servicing and will operate the backhoe. 

Unbelievable to me why there would be no classification for a standard commercial equipment rental without operator , with standard rates, standard delivery charges if you need it delivered, standard terms and conditions:  Sunbelt Rentals, United Rentals, Blue Rent, etc., etc., etc.

What kind of a contract would be used to rent a power tool, or a truck or car, or a chain saw,  or an air compressor, or a lawn mower, or some tables and chairs, etc., etc., etc.?

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10 hours ago, joel hoffman said:

Service contract or supply contract shouldn’t matter?

But it does and the bureaucracy of our Federal agencies has made it so, confusingly so.  Think about it?   Under the FAR definition and related to micro purchase the FAR is clear, the threshold of $2500 spins off of whether SCA applies or not.  That simple.   Then you have an agency (really a Department) like USDA that changes by policy the decision point away from application of SCA to a decision point as whether it is a "service" or "supply" as noted in my November 8 post where USDA says "Services (personal and non-personal) under $2,500" negating the SCA decision point all together.  

Also consider FAR 13.202 when you start talking about accepting standard commercial agreements.

A very tangled web where in the end acquisition offices are trying to manage appropriate use of a GPC and DOL is trying to enforce archaic labor laws.  Then there is the poor GPC coordinator that in some cases is not well versed in the nuisances of procurement regulations as a whole. 

My view is that the GPC was intended to make life simple for procurements up to the micro-purchase threshold and the regulations on whole should be changed to simply allow use of the card to the maximum of the MPT, period. 

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35 minutes ago, C Culham said:

A very tangled web where in the end acquisition offices are trying to manage appropriate use of a GPC and DOL is trying to enforce archaic labor laws.  

My view is that the GPC was intended to make life simple for procurements up to the micro-purchase threshold and the regulations on whole should be changed to simply allow use of the card to the maximum of the MPT, period. 

It’s more than just changing regulations to increase the threshold.  Dept of Labor, representing the labor constituency, is against any changes.  It’s been tried before and got nowhere

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What does the SCA apply to when there is no labor providing a service? The equipment rental company doesn’t fuel, grease or lube the equipment. The renter is responsible for that. . 

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25 minutes ago, joel hoffman said:

What does the SCA apply to when there is no labor providing a service? The equipment rental company doesn’t fuel, grease or lube the equipment. The renter is responsible for that. . 

I'm with you.  There is no service, there is no service employee, the proposed contract fails as a service contract under the test at FAR 37.101 ("a contract that directly engages the time and effort of a contractor whose primary purpose is to perform an identifiable task rather than to furnish an end item of supply") and also under the test at FAR 22.1003-1 ("the principal purpose of which is to furnish services in the United States through the use of service employees") -- and yet, some people still insist on calling a contract for the lease of a backhoe a service contract and maybe even subject to SCA.  And it is below the micropurchase threshold, and some will not allow the card to be used.  It makes no sense to me. 

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On 11/20/2019 at 9:52 PM, joel hoffman said:

What kind of a contract would be used to rent a power tool, or a truck or car, or a chain saw,  or an air compressor, or a lawn mower, or some tables and chairs, etc., etc., etc.?

Any takers, please? 

Second question, what’s the difference between those examples and renting a backhoe or say, a 19’ scissor man lift? 

If a service, are you going to apply the SCA to a one hour delivery to the customer and another hour for the return pickup, assuming that a rental exceeds $2500? 

No wonder the Government is hopelessly in debt. Sheesh. 

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20 hours ago, ji20874 said:

 

I'm with you.  There is no service, there is no service employee, the proposed contract fails as a service contract under the test at FAR 37.101 ("a contract that directly engages the time and effort of a contractor whose primary purpose is to perform an identifiable task rather than to furnish an end item of supply") and also under the test at FAR 22.1003-1 ("the principal purpose of which is to furnish services in the United States through the use of service employees") -- and yet, some people still insist on calling a contract for the lease of a backhoe a service contract and maybe even subject to SCA.  And it is below the micropurchase threshold, and some will not allow the card to be used.  It makes no sense to me. 

I don’t see it anywhere as clear cut as that.  You’re basing your position on a FAR definition.  We all know the FAR is full of wrong, erroneous and inconsistent language.  If the FAR committee is aware of it, they likely don’t want to bother addressing it.  The current language is simple.  If they try to elaborate or change it, they start to step on the SCA and all those implications.  

Lots of services exist that don’t meet the FAR definition.  For example cloud based storage.  There a company stores your data without involvement of employees.  Or home security systems where a company installs equipment which often is free and your house gets monitored forever without their involvement.  

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On ‎11‎/‎20‎/‎2019 at 5:32 PM, Witty_Username said:

In this example the provision of a backhoe only engages the time and effort of a contractor employee for about the same amount of time purchasing the backhoe might take...

I certainly get your logic in that context, and don't dispute it. A rental is definitely delivered in much the same way as a purchase, and the only real difference is that a rental comes with an end date.

My perspective is based on how the 'thing' is procured (as quantities, or rates/time), rather than how it is delivered (the relative labor component required, or lack thereof), as well as the fact that Part 2 defines “Supplies” as "all property except land or interest in land".

 

 

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The labor involved in “working the rental/sales counter” is not a service under a service contract or labor under a supply contract. There is no contract at that point. 

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FAR 2.101 defines supplies as "all property except land or interest in land. It includes (but is not limited to) public works, buildings, and facilities; ships, floating equipment, and vessels of every character, type, and description, together with parts and accessories; aircraft and aircraft parts, accessories, and equipment; machine tools; and the alteration or installation of any of the foregoing."  I think a backhoe is covered by this definition.

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On Ji20874,

This discussion continues for some crazy reason.  It’s not a clear cut issue so we should leave it at that.  The OP isn’t buying a backhoe but doing a short term rental in a market that is considered a service industry.  If I had to pick, I say supply.  But the evidence isn’t compelling.  I mentioned earlier the FAR definition is over simplistic.  

For fun I asked someone on the FAR Council what they thought?  The reply was don’t I have something better to do!

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