By Vern Edwards on Tuesday, October 15, 2002 - 11:09 am:

Ask a lawyer.

By Anonymous on Tuesday, October 15, 2002 - 02:07 pm:

I did and unfortunately their answers were only slightly more helpful than yours. If anyone has any better advice or experience in this area it would be greatly appreciated.

By formerfed on Tuesday, October 15, 2002 - 02:46 pm:

In that case, I'll take a stab. You should find a more knowledgable lawyer before taking any action though.

I did a quick search and I can't see where the SCA does not apply just because non-appropriated funds are involved. In my limited experiences with non-appropriated fund activities (or similar type funding such as user fees, deposit accounts, or revenue from seizures), the SCA did apply.

The fact that the contract initally contained the SCA implys that the Department of Labor believes it applies. I also read about disputes in Nash and Cibinic (classic textbook on government contract law) and if the Contracting Officer is on notice that Labor regards the procurement as subject to the Act, the matter is referred to Labor and their decision is binding.

As far as your liability, you said the government is removing the clause. You have a right to have the government explain in writing why this clause is removed. They have to do it by a contract modification and I assume this is a supplemental agreement requiring your signature. Even if it doesn't, you need to know why a clause is removed you feel applies.

Knowing the way Labor thinks and interprets these matters, I think Labor will insist you're liable.

By anonconorig on Tuesday, October 15, 2002 - 02:51 pm:

Anonymous 02:07:

Suggest you go to this site http://policy.fws.gov/do139.html. It gives a fairly concise and easily understood directive regarding concession contracts. Look carefully at the words "the government is not directly receiving good or services" In that case, it is not a procurement contract, thus a statute or regulation (think SCA) relevant to procurement is not applicable.

See if the scenario fits the contract. You may have your answer or a better understanding with which to work. Good luck.

By cm on Tuesday, October 15, 2002 - 03:09 pm:

Try the US Court of Appeals (for DC) case number 97-5046.

By Vern Edwards on Tuesday, October 15, 2002 - 03:51 pm:

Well, if you are foolish enough to accept an answer to such an important question from people you don't know, here is your question and my answer:

"What is the Contractor's liability if it accedes to the terms of the contract and does not comply with the SCA?"

According to the Department of Labor: "[C]oncession contracts are considered to be contracts in excess of $2,500 if the contractor's gross receipts under the contract may exceed $2,500." See 29 C.F.R. § 4.141(a). See, too, Ober United Travel Agency, Inc. v. U.S. Dept. of Labor, 135 F.3d 822, (CADC) 1998.

If the Department of Labor decides that the contract is convered by the Act, it could decide that you are liable for any underpayment of any required wages and fringe benefits. See 29 CFR 4.187. It could do this even if the agency did not include the appropriate clause in the contract. The Department could also declare you to be ineligible to receive future government contracts. See 29 CFR 4.188 and 4.190.

I do not know what the chances are that any of that might happen, but since the consequences are potentially catastrophic, the risks are high even if the changes are small. The way to protect yourself is to pay wages and fringes that are high enough to avoid any underpayment and to otherwise comply with the Act despite that fact that the buying agency does not demand that you do so.

By anonconorig on Tuesday, October 15, 2002 - 04:40 pm:

Vern;

Your case also addresses appropriated and non-appropriated funds.

I don't think anonymous is being foolish, he/she is just looking for some opinions that might steer them in the right direction, I think that is why we all visit an consider this forum stimulating.

Anonymous: while my previous site post explained how DOI looked at concession contracts from a rather wide view, I think there is one more place you might want look. While not totally on-point will give your counsel something to look at. Site www.oalj.dol.gov/-Look for Appeals case 88-cbv-7 entitled: Big Boy facilites, Inc. Involves cafeteria services to the Government

By Anonymous on Wednesday, October 16, 2002 - 09:02 am:

I really, really appreciate all the help. I was unaware of this website until a few weeks ago but will visit often. While I guess I was hoping there was some "smoking gun" that would lead us to an indication that the Act clearly doesn't apply I think we'll have to act as Vern suggested and take the safe course- the consequences of acting otherwise are just too dire. Unbelievably the client is upset that we're doing this- but if they're not willing to indemnify us we have no other choice.
Thanks all of you.

By Vern Edwards on Wednesday, October 16, 2002 - 09:30 am:

Anonymous:

Be sure to document your files about what you are doing and why. I would write to the contracting officer to confirm what you are doing and why you are doing it and place a copy in my file.

By formerfed on Wednesday, October 16, 2002 - 09:35 am:

One more suggestion. Have the client (assume it's the Army) write to Department of Labor explaining the situation and seek agreement. Two things will happen - either Labor agrees the SCA does not apply or they say it does and you and the client are back where you were when the contract started.

By Mike Harris on Friday, November 15, 2002 - 11:19 am:

Isn't this matter decided by Dept. of Labor regs at 29 CFR 4.133? That section basically says that concession contracts providing services to the general public are exempt from the Service Contract Act, but that contracts providing srevices (including food service) to Government personnel are covered.

By formerfed on Friday, November 15, 2002 - 12:47 pm:

Mike,

Right you are. Your response triggered my memory on this subject. I should have thought of this before. The government receives no benefit under a concession contract. Consequently the Comptroller General ruled concessions are not procurement contracts. On the other hand, where food services are provided directly to the government, it is a procurement contract.

By Vern Edwards on Friday, November 15, 2002 - 04:09 pm:

formerfed:

29 C.F.R. § 4.133 does not exempt all concession contracts, only certain ones. See the reg for examples. A concession contract to operate a cafeteria for government employees at a government facility is not exempt; a concession contract to operate a cafeteria for the public at a national park is exempt.