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Equipment Rental Supply or Service


Stevie22

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Will you rent it from an equipment rental company or rental car agency using their commercial terms and conditions with payment by Government Purchase Card? 

See a one of the latest replies from the above Referenced thread:

“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.“

Of course, if you want the dealer to service this vehicle or equipment, that would involve a service...

Will you seek quotes? 

Thus, an initial answer might be, “It depends...”.

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The timing of this, at least as far as vehicle rentals, couldn’t be more coincidental for me.  GSA is moving forward on Category Management.  DoD has supplied most of the help on Transportation services.  The project, in part, involved analyzing motor vehicle rentals across the government using FPDS codes, WO23 for services.  A subgroup looked at many contracts agencies awarded for details including clauses and other terms and conditions.  Just about everything is categorized as services.  The exceptions mostly are long term vehicle leases.

Its quite an interesting effort and clearly shows potential for cost savings

https://www.gsa.gov/cdnstatic/2017FedFleet__Category_Mgmt___Acquisition_Gateway.pptx.PDF

I believe the planned contract vehicles to achieve those savings look at this as services.

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Stevie22,

If the contract is simply for the rental of a vehicle for use by a Government operator, that is likely a supply contract.  A vehicle is an item of supply.  

If the contract is for the rental of a vehicle with a contractor employee as operator, that is likely a service contract.

If the contract is for broad fleet management services which includes providing vehicles for use by Government operators, that is likely a service contract.

What are you contracting for?

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Ji20874,

From the prior thread it’s not that simple.  Vehicle rental, especially short term like Hertz rental car, is categorized as a service by government accountants.  All someone does is pay to use the vehicle and aren’t responsible for anything.   It’s never considered as property.  It’s funded by service object class money.  The FPDS code is service.  
 

If you know the category management people working on this, give them a shout.  

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If you lease a water pump with no operator and no services so that Government employees can pump out a flooded basement, would you call that a service contract?  I wouldn’t — I would call it leasing a tangible item of supply, and would structure the contract accordingly.  The FAR allows for contracts for both (1) purchase of supplies or services and (2) lease of supplies.  I disagree with the apparently prevalent notion that supplies cannot be leased, but may only be obtained as incidental to a service.  I disagree with the apparently prevalent notion that an item of supply is not an item of supply unless the Government purchases it and puts it in its property records.  To me, an item of supply remains an item of supply, whether we purchase it or lease it.  I believe in both (1) and (2) — but these notions suggest that only (1) is possible.

But we’re doing all this talking without the original poster’s further input.  Stevie22, what are you contracting for?  Equipment rental without operator such as for wildland firefighting?  for construction?  Vehicle rental such as for bus transportation of prisoners?  sedan for use by a courier?

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On 3/6/2020 at 7:45 AM, Stevie22 said:

Is equipment or vehicle rental without drivers/operators considered a supply or service acquisition? 

I say supply, but as this conversation never seems to go away, suggest that the CO (yourself/some one else) make the decision and move forward. 

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I say supply too.  There is a decision point that @Stevie22 should consider in the decision process that  the OP  will use to move forward.   It is a point missing from the discussion I linked and casually brushed on in this discussion thread.   That point being best demonstrated by just reading FAR 7.4 and any agency supplements thereto.  FAR 7.4 provides the considerations when acquiring an asset to determine if lease, lease with option to purchase or purchase is the best route.  My read of the FAR suggests that lease is used synonymous with rental when it comes to items of acquisition other than real property.

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It appears that Stevie, the original poster, has left the building shortly after posing the original question.

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  • 6 months later...

Unless you have the power to trump the FAR, its a supply end of story per the office I work in.  This of course correlates to the GPC card as well. The FAR is the law and the law says you MUST use supply clause and provisions.  Our office does not care what GSA or any other agency has to say, if you don't trump the FAR, then you don't trump the FAR. 

8.1104(e) is FORCING you to use supply clauses. 

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7 hours ago, Robert92 said:

Unless you have the power to trump the FAR, its a supply end of story per the office I work in.  This of course correlates to the GPC card as well. The FAR is the law and the law says you MUST use supply clause and provisions.  Our office does not care what GSA or any other agency has to say, if you don't trump the FAR, then you don't trump the FAR. 

8.1104(e) is FORCING you to use supply clauses. 

Depends on the purpose of categorization, right?

For example, if the purpose is for application of the non-manufacturer rule,  13 CFR § 121.406(b)(4) states that “[t]he rental of an item(s) is a service and should be treated as such in the application of the nonmanufacturer rule and the limitation on subcontracting.”

Then the PSC Manual, Defense Acquisition Guidebook, and SBA regulations state equipment rentals/leasing are services.

FAR Part 37 gives a definition for service contract for the purposes of that part (e.g., clauses, policies and procedures).

FAR 8.1104(e) is simply stating what clauses to use and doesn’t really categorize anything.

FAR Subpart 22.10 categorizes services for applicability of Service Contract Labor Standards.

 

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"FAR 8.1104(e) is simply stating what clauses to use and doesn’t really categorize anything."  Exactly.  So if you use a "service" clause, you just broke the law.  Again you have to ask yourself, what manual, guidebook, comic book, etc trumps the FAR?  At some point your office just has to make a business decision and stick with it.  Otherwise you can make yourself go nuts. 

"FAR Part 1.602-2 Responsibilities states that contracting officers should be allowed wide latitude to exercise business judgment. I believe the determination that a lease with the overwhelming majority of the costs are equipment related could not reasonably be questioned if solicited and awarded as a supply requirement."

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If only we all had a central point of procurement policy to resolve these fundamental and recurring questions. I would call it "Office of  Federal Procurement Policy" and I would give it the mission to provide overall direction for government-wide procurement policies, regulations and procedures and to promote economy, efficiency, and effectiveness in acquisition processes.

If only ....

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On 9/26/2020 at 2:37 PM, Robert92 said:

"FAR 8.1104(e) is simply stating what clauses to use and doesn’t really categorize anything."  Exactly.  So if you use a "service" clause, you just broke the law. 

What law?

Do you think inclusion of service clauses in leases is addressed in FAR or prohibited by law or some other rule? I don’t read but four clauses FAR 8.1104(e) says to exclude.  Many (most) leasing of vehicles is going to be a commercial acquisition so the service vs supply clause set argument is moot.

Nonetheless, in exercising initiative, Government members of the Acquisition Team may assume if a specific strategy, practice, policy or procedure is in the best interests of the Government and is not addressed in the FAR, nor prohibited by law (statute or case law), Executive order or other regulation, that the strategy, practice, policy or procedure is a permissible exercise of authority.

On 9/27/2020 at 7:34 AM, here_2_help said:

If only we all had a central point of procurement policy to resolve these fundamental and recurring questions. I would call it "Office of  Federal Procurement Policy" and I would give it the mission to provide overall direction for government-wide procurement policies, regulations and procedures and to promote economy, efficiency, and effectiveness in acquisition processes.

If only ....

Well played!

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On 9/27/2020 at 10:34 AM, here_2_help said:

If only we all had a central point of procurement policy to resolve these fundamental and recurring questions. I would call it "Office of  Federal Procurement Policy" and I would give it the mission to provide overall direction for government-wide procurement policies, regulations and procedures and to promote economy, efficiency, and effectiveness in acquisition processes.

If only ....

True but that will never happen unless our community and Congress decide major changes are needed.  OFPP was created 46 years ago with a clear multipoint mission.  The FAR got produced and it was much less voluminous than it is now.  Policy direction and decisions by OFPP was relatively simple by today’s standards.  Our field of practitioners became risk adverse.  Most won’t do anything out of their established comfortable processes unless they see a step-by-step method of doing that.  When new regulations are prepared, publication for comments generate huge number of responses because no segments of the public want to bear changes.  Many new laws get passed every year by Congress wanting to “fix” the system.  Look how long it took for the increase in micro-purchase threshold to make it from statute to regulation.  I don’t know exact numbers but I wouldn’t be surprised If OFPP staffing hasn’t changed.  I do know OFPP personnel are severely overworked and put in very long hours.  

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I think there is some value in the fog of war, so to speak.  I am okay with individual contracting officers making business decisions, one way or the other, even if two contracting officers might make different decisions in what seems like identical circumstances.

If OFPP, or any individual agency, did make a rock-solid rule about something like this, then we would be arguing about exceptions to the rule and so forth.  As a wise man once said, I teach them correct principles and let them govern themselves.

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3 hours ago, formerfed said:

When new regulations are prepared, publication for comments generate huge number of responses because no segments of the public want to bear changes.  Many new laws get passed every year by Congress wanting to “fix” the system.  Look how long it took for the increase in micro-purchase threshold to make it from statute to regulation.

Quote

Although there were no public comments, two corrections were made to the final rule to: (1) Add the threshold at DFARS 215.403-1(c)(4)(B) and 225.7201; and (2) update the threshold pointer, an address, and web page citation at DFARS 252.225-7004.

Although the actual CPI of 258.115 for March 2020 was lower than the projected CPI of 258.606 for March 2020 used for the proposed rule, the difference was insignificant and did not result in revisions to any proposed threshold increases. The final rule is based on the actual CPI of 258.115 for March 2020. The CPI as of the end of March 2020, 6 months before the effective date of the rule, is used as the cutoff in order to allow time for approval and publication of the final rule.

  

I'm having trouble separating your incorrect opinions from unsupported assertions.

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Really?  Take a look at any recent regulatory change and track back to when the action was initiated.   The micro purchase threshold is a good example.  Legislative actions happened in 2017 and 2018.  The FAR change did happen until a few months ago.

Then here’s a list of just open FAR actions that go back as long as five years

https://www.acq.osd.mil/dpap/dars/opencases/farcasenum/far.pdf

The CARES act provides for reimbursement of contractors whose employees cannot work.   Let’s see how long it takes before that happens. 

 

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