[Code of Federal Regulations]
[Title 29, Volume 1]
[Revised as of July 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 29CFR4.107]

[Page 57-58]
 
                             TITLE 29--LABOR
 
PART 4_LABOR STANDARDS FOR FEDERAL SERVICE CONTRACTS--Table of Contents
 
    Subpart C_Application of the McNamara-O'Hara Service Contract Act
 
Sec. 4.107  Federal contracts.

    (a) Section 2(a) of the Act covers contracts (and any bid 
specification therefor) ``entered into by the United

[[Page 58]]

States'' and section 2(b) applies to contracts entered into ``with the 
Federal Government.'' Within the meaning of these provisions, contracts 
entered into by the United States and contracts with the Federal 
Government include generally all contracts to which any agency or 
instrumentality of the U.S. Government becomes a party pursuant to 
authority derived from the Constitution and laws of the United States. 
The Act does not authorize any distinction in this respect between such 
agencies and instrumentalities on the basis of their inclusion in or 
independence from the executive, legislative, or judicial branches of 
the Government, the fact that they may be corporate in form, or the fact 
that payment for the contract services is not made from appropriated 
funds. Thus, contracts of wholly owned Government corporations, such as 
the Postal Service, and those of nonappropriated fund instrumentalities 
under the jurisdiction of the Armed Forces, or of other Federal 
agencies, such as Federal Reserve Banks, are included among those 
subject to the general coverage of the Act. (Brinks, Inc. v. Board of 
Governors of the Federal Reserve System, 466 F. Supp. 116 (D DC 1979); 
43 Atty. Gen. Ops. ------ (September 26, 1978).) Contracts with the 
Federal Government and contracts entered into ``by the United States'' 
within the meaning of the Act do not, however, include contracts for 
services entered into on their own behalf by agencies or 
instrumentalities of other Governments within the United States, such as 
those of the several States and their political subdivisions, or of 
Puerto Rico, the Virgin Islands, Guam, or American Samoa.
    (b) Where a Federal agency exercises its contracting authority to 
procure services desired by the Government, the method of procurement 
utilized by the contracting agency is not controlling in determining 
coverage of the contract as one entered into by the United States. Such 
contracts may be entered into by the United States either through a 
direct award by a Federal agency or through the exercise by another 
agency (whether governmental or private) of authority granted to it to 
procure services for or on behalf of a Federal agency. Thus, sometimes 
authority to enter into service contracts of the character described in 
the Act for and on behalf of the Government and on a cost-reimbursable 
basis may be delegated, for the convenience of the contracting agency, 
to a prime contractor which has the responsibility for all work to be 
done in connection with the operation and management of a Federal plant, 
installation, facility, or program, together with the legal authority to 
act as agency for and on behalf of the Government and to obligate 
Government funds in the procurement of all services and supplies 
necessary to carry out the entire program of operation. The contracts 
entered into by such a prime contractor with secondary contractors for 
and on behalf of the Federal agency pursuant to such delegated 
authority, which have such services as their principal purpose, are 
deemed to be contracts entered into by the United States and contracts 
with the Federal Government within the meaning of the Act. However, 
service contracts entered into by State or localpublic bodies with 
purveyors of services are not deemed to be entered into by the United 
States merely because such services are paid for with funds of the 
public body which have been received from the Federal Government as a 
grant under a Federal program. For example, a contract entered into by a 
municipal housing authority for tree trimming, tree removal, and 
landscaping for an urban renewal project financed by Federal funds is 
not a contract entered into by the United States and is not covered by 
the Service Contract Act. Similarly, contracts let under the Medicaid 
program which are financed by federally-assisted grants to the States, 
and contracts which provide for insurance benefits to a third party 
under the Medicare program are not subject to the Act.