[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: 29CFR4.116]

[Page 62-63]
 
                             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. 4.116  Contracts for construction activity.

    (a) General scope of exemption. The Act, in paragraph (1) of section 
7, exempts from its provisions ``any contract of the United States or 
District of Columbia for construction, alteration and/or repair, 
including painting and decorating of public buildings or public works.'' 
This language corresponds to the language used in the Davis-Bacon Act to 
describe its coverage (40 U.S.C. 276a). The legislative history of the 
McNamara-O'Hara Service Contract Act indicates that the purpose of the 
provision is to avoid overlapping coverage of the two acts by excluding 
from the application of the McNamara-O'Hara Act those contracts to which 
the Davis-Bacon Act is applicable and in the performance of which the 
labor standards of that Act are intended to govern the compensation 
payable to the employees of contractors and subcontractors on the work. 
(See H. Rept. 798, pp. 2, 5, and H. Rept. 948, pp. 1, 5, also Hearing, 
Special Subcommittee on Labor, House Committee on Education and Labor, 
p. 9 (89th Cong., 1st sess.).) The intent of section 7(1) is simply to 
exclude from the provisions of the Act those construction contracts 
which involve the employment of persons whose wage rates and fringe 
benefits are determinable under the Davis-Bacon Act.
    (b) Contracts not within exemption. Section 7(1) does not exempt 
contracts which, for purposes of the Davis-Bacon Act, are not considered 
to be of the character described by the corresponding language in that 
Act, and to which the provisions of the Davis-Bacon Act are therefore 
not applied. Such contracts are accordingly subject

[[Page 63]]

to the McNamara-O'Hara Act where their principal purpose is to furnish 
services in the United States through the use of service employees. For 
example, a contract for clearing timber or brush from land or for the 
demolition or dismantling of buildings or other structures located 
thereon may be a contract for construction activity subject to the 
Davis-Bacon Act where it appears that the clearing of the site is to be 
followed by the construction of a public building or public work atthe 
same location. If, however, no further construction activity at the site 
is contemplated the Davis-Bacon Act is considered inapplicable to such 
clearing, demolition, or dismantling work. In such event, the exemption 
in section 7(1) of the McNamara-O'Hara Act has no application and the 
contract may be subject to the Act in accordance with its general 
coverage provisions. It should be noted that the fact that a contract 
may be labeled as one for the sale and removal of property, such as 
salvage material, does not negate coverage under the Act even though 
title to the removable property passes to the contractor. While the 
value of the property being sold in relation to the services performed 
under the contract is a factor to be considered in determining coverage, 
where the facts show that the principal purpose of removal, dismantling, 
and demolition contracts is to furnish services through the use of 
service employees, these contracts are subject to the Act. (See also 
Sec. 4.131.)
    (c) Partially exempt contracts. (1) Instances may arise in which, 
for the convenience of the Government, instead of awarding separate 
contracts for construction work subject to the Davis-Bacon Act and for 
services of a different type to be performed by service employees, the 
contracting officer may include separate specifications for each type of 
work in a single contract calling for the performance of both types of 
work. For example, a contracting agency may invite bids for the 
installation of aplumbing system or for the installation of a security 
alarm system in a public building and for the maintenance of the system 
for one year. In such a case, if the contract is principally for 
services, the exemption provided by section 7(1) will be deemed 
applicable only to that portion of the contract which calls for 
construction activity subject to the Davis-Bacon Act. The contract 
documents are required to contain the clauses prescribed by Sec. 4.6 
for application to the contract obligation to furnish services through 
the use of service employees, and the provisions of the McNamara-O'Hara 
Act will apply to that portion of the contract.
    (2) Service or maintenance contracts involving construction work. 
The provisions of both the Davis-Bacon Act and the Service Contract Act 
would generally apply to contracts involving construction and service 
work where such contracts are principally for services. The Davis-Bacon 
Act, and thus the exemption provided by section 7(1) of the Act, would 
be applicable to construction contract work in such hybrid contracts 
where:
    (i) The contract contains specific requirements for substantial 
amounts of construction, reconstruction, alteration, or repair work 
(hereinafter referred to as construction) or it is ascertainable that a 
substantial amount of construction work will be necessary for the 
performance of the contract (the word ``substantial'' relates to the 
type and quantity of construction work to be performed and not merely to 
the total value of construction work (whether in absolute dollars or 
cost percentages) as compared to the total value of the contract); and
    (ii) The construction work is physically or functionally separate 
from, and as a practical matter is capable of being performed on a 
segregated basis from, the other work called for by the contract.

[48 FR 49762, Oct. 27, 1983; 48 FR 50529, Nov. 2, 1983]