You may be able to rent a backhoe from GSA and use the GPC to make the payment.  Here's the GSA Short Term Rentals (STR) website for further research:

https://www.gsa.gov/buying-selling/products-services/transportation-logistics-services/vehicle-leasing/fleet-solutions/short-term-rentals-str

A backhoe is an item of supply, whether you purchase it or rent it.  

The SCA (and FAR subpart 22.10) “applies to all Government contracts, the principal purpose of which is to furnish services in the United States through the use of service employees....  This subpart does not apply to individual contract requirements for services in contracts not having as their principal purpose the furnishing of services.”  FAR 22.1003-1.

The principal purpose of your action is not the furnishing of services, it is the furnishing of an item of supply.  Even if a contractor employee delivers the backhoe to your worksite, SCA doesn’t cover the driver.

Think of it like this:  If we needed a camera to take a photo, we could buy or rent the camera.  Either way, we could require the contractor to deliver the camera to our office.  For a rental, we could also require the contractor to pick it up at the end of the rental period.  But the principal purpose of the action is to get a tangible object, a camera, an item of supply.  IMHO, this would not be a service.

IMHO, renting a backhoe for government use is not a service (based on the information shared in the original posting).

They contend that it isn't a supply since we are not taking possession of the backhoe.

IMHO, they are wrong.

You might persuade them, or elevate the matter, or abide their decision.  Or, use the GSA STR tool.  Best wishes!

Renting or leasing an item is a partial acquisition of the item.  For example, the Navy through the Military Sealift Command charters (leases) vessels from private contractors.  Such charter party agreements are considered as supply contracts.  If you want to do some deep research on this, there have been some ASBCA cases where the nature of a lease has been discussed.

One last thought -- the question is not whether or not you're taking possession of the backhoe -- that is an irrelevant question -- the correct and pertinent question is whether the principal purpose of the acquisition (purchase or rental) is to furnish services in the United States through the use of service employees.  Sometimes, you have to ask the right question to get the right answer.

ji20874 said:

IMHO, they are wrong.

You might persuade them, or elevate the matter, or abide their decision.  Or, use the GSA STR tool.  Best wishes!

Try this on your coordinator.

The company providing is a rental service.   I say this noting that NAICS Code 532 is titled "Rental and Leasing Services".

The reasoning I believe appropriate is this however based on FAR reference.

Rental of equipment is a service industry.  However its primary purpose is not the providing of labor as a service but furnishing of equipment.   As such applicable labor law is not SCA (FAR 22.10)  but Walsh Healy (FAR subpart 22.6)  

With SCA not applicable use of the GPC is appropriate as the $2500 threshold is related to application of labor laws.

Walsh Healy doesn't apply since the contract is under $15,000.

It is appears the FAR and DOL guidance is silent on this topic of rental equipment without an operator.

Maquoketa said:

Walsh Healy doesn't apply since the contract is under $15,000.

Walsh Healy applies but compliance is not required as under $15k.  SCA does not even apply.

Read the FAR carefully and note the "or" regarding manufacture OR furnish of.

29 CFR 4.117 and possibly 29 CFR 4.131-134 might also help you convince folks.

Maquoketa said:

They contend that it isn't a supply since we are not taking possession of the backhoe.

Not that taking possession is a sole determining factor, but the Government is taking possession.  How else could it be used? 

Also, I would ask the GPC coordinator what labor category / wage rate this "SCA" acquisition falls under.  Then I'd ask how they came to their answer.

Sheesh. Maybe a robot operator cones with the backhoe.  

Maybe it is construction work...

joel hoffman said:

Sheesh. Maybe a robot operator cones with the backhoe.  

Maybe it is construction work...

A federal employee will be operating the equipment.  The rental services contractor will at most be delivering the equipment and potentially coming back out to fix any breakdowns, or exchanging equipment.  Can you explain further your thoughts?

On 7/25/2019 at 12:00 PM, ji20874 said:

The SCA (and FAR subpart 22.10) “applies to all Government contracts, the principal purpose of which is to furnish services in the United States through the use of service employees....  This subpart does not apply to individual contract requirements for services in contracts not having as their principal purpose the furnishing of services.”  FAR 22.1003-1.

I thought that ji expressed what a service  is pretty well. 

I was being facetious.

Maquoketa said:

A federal employee will be operating the equipment.  The rental services contractor will at most be delivering the equipment and potentially coming back out to fix any breakdowns, or exchanging equipment.

 After a fair amount of research, but not necessarily exhaustive, here is the closest I can get to the question as posted by the OP (see bold below).  Yes, it is an excerpt from a CFR citation I already posted but now sharing for the good of the order.   As thoughts dribble out as to what the OP is receiving as the "rental" what labor law would apply may very well change.  From this view the GPC coordinator may actually be on to something as together with the OP they know all the facts we do not.   From that view I suggest the OP ask the GPC coordinator to cite the actual references that leads him/her to the conclusion that SCA does apply and together they review all applicable regulations to determine the course. 

The following goes to whole of the discussion in this thread as to what exactly is being furnished.

"29 CFR 4.131 Furnishing services involving more than use of labor.

(a) If the principal purpose of a contract is to furnish services in the performance of which service employees will be used, the Act will apply to the contract, in the absence of an exemption, even though the use or furnishing of nonlabor items may be an important element in the furnishing of the services called for by its terms. The Act is concerned with protecting the labor standards of workers engaged in performing such contracts, and is applicable if the statutory coverage test is met, regardless of the form in which the contract is drafted. The proportion of the labor cost to the total cost of the contract and the necessity of furnishing or receiving tangible nonlabor items in performing the contract obligations will be considered but are not necessarily determinative. A procurement that requires tangible items to be supplied to the Government or the contractor as a part of the service furnished is covered by the Act so long as the facts show that the contract is chiefly for services, and that the furnishing of tangible items is of secondary importance.

(b) Some examples of covered contracts illustrating these principles may be helpful. One such example is a contract for the maintenance and repair of typewriters. Such a contract may require the contractor to furnish typewriter parts, as the need arises, in performing the contract services. Since this does not change the principal purpose of the contract, which is to furnish the maintenance and repair services through the use of service employees, the contract remains subject to the Act.

(c) Another example of the application of the above principle is a contract for the recurrent supply to a Government agency of freshly laundered items on a rental basis. It is plain from the legislative history that such a contract is typical of those intended to be covered by the Act. S. Rept. 798, 89th Cong., 1st Sess., p. 2; H. Rept. 948, 89th Cong., 1st Sess., p. 2. Although tangible items owned by the contractor are provided on a rental basis for the use of the Government, the service furnished by the contractor in making them available for such use when and where they are needed, through the use of service employees who launder and deliver them, is the principal purpose of the contract.

(d) Similarly, a contract in the form of rental of equipment with operators for the plowing and reseeding of a park area is a service contract. The Act applies to it because its principal purpose is the service of plowing and reseeding, which will be performed by service employees, although as a necessary incident the contractor is required to furnish equipment. For like reasons the contracts for aerial spraying and aerial reconnaissance listed in § 4.130 are covered, even though the use of airplanes, an expensive item of equipment, is essential in performing such services. In general, contracts under which the contractor agrees to provide the Government with vehicles or equipment on a rental basis with drivers or operators for the purpose of furnishing services are covered by the Act. Such contracts are not considered contracts for furnishing equipment within the meaning of the Walsh-Healey Public Contracts Act. On the other hand, contracts under which the contractor provides equipment with operators for the purpose of construction of a public building or public work, such as road resurfacing or dike repair, even where the work is performed under the supervision of Government employees, would be within the exemption in section 7(1) of the Act as contracts for construction subject to the Davis-Bacon Act. (See § 4.116.)..."

The napkins case is interesting -- thanks for sharing it.  I can imagine that a government cafeteria contracts for linen service for a period of time -- every morning, the contractor delivers clean napkins, and every evening, it picks up the dirty napkins and launders them -- the linen service retains ownership of the napkins.  This is not a contract for a one-time rental of napkins, but is a contract for a full linen service. So yes, SCA applies.  The backhoe case is different.  It all hinges on the single "principal purpose" of the contract.

As I said, the purpose for the machine may well be for construction. If the operator came with the machine, the operator would then be under the DB Act. 

As it is, they are renting construction equipment -no operator - no service being performed by a service employee.

If the government doesn't end up with government-accountable property, it's a service; in this case, the use of a piece of equipment for a specified period of time after which the government has no further claim.  Ownership stays with the renter. 

If you rented the backhoe but never used it, it would cost the same, correct?  Don't conflate the acquisition (rental) with the item (backhoe).  You're not getting a backhoe; you're getting use of it for a time.

 SCA/Walsh-Healy  weren't part of the OP's scenario.  GSA certainly thinks rental is a service:

On ‎7‎/‎25‎/‎2019 at 12:49 PM, policyguy said:

You may be able to rent a backhoe from GSA and use the GPC to make the payment.  Here's the GSA Short Term Rentals (STR) website for further research:

https://www.gsa.gov/buying-selling/products-services/transportation-logistics-services/vehicle-leasing/fleet-solutions/short-term-rentals-str

I find this thread interesting that so many good contracting minds and we cannot even come close to consensus on whether this is a service or a supply...  

Personally, I would not call it a service and even if I were pressed into calling it a service, I would still argue that SCA doesn't apply since there are no employees.  If SCA doesn't apply, then you should be able to use the GPC since the $2,500 limit wouldn't be applicable. So call it what you want, you should still be able to argue that you can use your card.

Desparado said:

Personally, I would not call it a service..

I agree.

On 7/25/2019 at 4:06 PM, C Culham said:

Try this on your coordinator.

The company providing is a rental service.   I say this noting that NAICS Code 532 is titled "Rental and Leasing Services".

The reasoning I believe appropriate is this however based on FAR reference.

Rental of equipment is a service industry.  However its primary purpose is not the providing of labor as a service but furnishing of equipment.   As such applicable labor law is not SCA (FAR 22.10)  but Walsh Healy (FAR subpart 22.6)  

With SCA not applicable use of the GPC is appropriate as the $2500 threshold is related to application of labor laws.

I asked someone who is a CFO and over a procurement office.  He said it’s an accounting issue.  For short term rentals the asset remains the property of the supplier.  They own the asset and depreciate it.  Revenue from the lease is treated as service income because there’s not an intent for the customer to ever take title.  The example he used is rental cars.  When government employees rent vehicles, it’s funded with 21, service money.  Employees pay to use a vehicle for transportation and return it when finished.

States that charge sales tax on products but not services don’t generally collect taxes on vehicle rentals.  

Carl’s NAICS code point agrees with that as does the WO23 PSC for vehicle rental.

formerfed said:

I asked someone who is a CFO and over a procurement office.  He said it’s an accounting issue.  For short term rentals the asset remains the property of the supplier.  They own the asset and depreciate it.  Revenue from the lease is treated as service income because there’s not an intent for the customer to ever take title.  The example he used is rental cars.  When government employees rent vehicles, it’s funded with 21, service money.  Employees pay to use a vehicle for transportation and return it when finished.

States that charge sales tax on products but not services don’t generally collect taxes on vehicle rentals.  

Carl’s NAICS code point agrees with that as does the WO23 PSC for vehicle rental.

On the other hand, FAR Part 8 specifically directs contracting officers to "Insert ... (e) The provisions and clauses prescribed elsewhere in the FAR for solicitations and contracts for supplies..." when leasing motor vehicles.  FAR 8.1104.

The FAR is all over the map when it comes to classifying a rental/lease as a supply vs. service.  I don't think one rule applies across the board.  When asking whether something is a supply or service, first determine why you need to make that classification, and then apply the rules that apply to that specific determination.  Unless there is specific language to the contrary, what would stop you from classifying a rental/lease as a supply for one determination and a service for something else.  For example, pursuant to FAR Part 8, include provisions and clauses for supplies in a motor vehicle lease, but also include 52.217-8, Option to Extend Services, in case you need to extend the length of that lease.

Edit: For the record, I agree with those saying the backhoe rental should be treated as a supply for purposes of SCA applicability and use of the GPC.

Desparado said:

I find this thread interesting that so many good contracting minds and we cannot even come close to consensus on whether this is a service or a supply...

Renting equipment shares elements of both a service and a supply, so it ends up being treated differently in different contexts or for different purposes.  

On one hand, from a Product Service Code perspective, it falls under Category W, which suggests a service.  In the context of a delivery schedule, rentals more closely resemble a service than a supply, as the item must be furnished across a range of dates, much like a severable service, and generally unlike a simple supply contract, which typically would have only a delivery date.

On the other hand, you have the examples in this thread and the following.

Quote

The “Termination” clause incorporated will depend on the classification of the contract (service or supply). In Blue Ridge Leasing, ENG BCA No. 4666, 82-1 BCA 15,734, the board held that a 12 month auto leasing contract at a fixed monthly rental was a supply contract. The board was not swayed by the Government’s argument that it was a service contract since services were “ancillary to the principal purpose…[i.e.,] the procurement for a time of a motor vehicle.” Blue Ridge’s appeal was sustained, and it was allowed general termination costs, instead of mere rental payments.

2 Federal Contract Management ¶ 12.09.  @Lionel Hutz's reference to Part 8 seems consistent with Blue Ridge.  Another fun decision is Anchorage Telephone Utility, GSBCA No. 7030, 84-1 BCA ¶ 17,020, where the Board seems almost frustrated by the whole issue:  "We are not persuaded that this contract can fairly be characterized as either a supply contract or a service contract for the purposes of this appeal.  Sometimes we have no choice but to pick one of two almost equally unappealing alternatives."

Lionel Hutz said:

On the other hand, FAR Part 8 specifically directs contracting officers to "Insert ... (e) The provisions and clauses prescribed elsewhere in the FAR for solicitations and contracts for supplies..." when leasing motor vehicles.  FAR 8.1104.

We have to be careful with words here.  That FAR quote talks about leasing.  The point I made is about short term rental.  Accounting makes a distinction in that lease is “A lease is a contract to rent an asset, be it land, a building, or machinery, for a set period of time and for set payment terms. Leases often come with many conditions in terms of the allowed use of the asset and even required maintenance terms.

A typical lease is often long term, ranging from 1 year to as many as 10 or 20 years. Significant penalties can be incurred by either party, the lessor (owner of the asset) or the lessee (user of the asset), in the event that either party violates the lease.”

Rent often is an more or less informal agreement with terms of a day or two up to a month or more. There’s never intent to take title.

Vehicle rentals are a good example.  You lease a car for three years, for example.  You agree to provide insurance, maintenance and keep in proper condition.  In essence you are completely responsible for it.  You also have various options at the end including keeping it.  Not much different than a Hertz rental.

formerfed said:

We have to be careful with words here.  That FAR quote talks about leasing.  The point I made is about short term rental.  Accounting makes a distinction in that lease is “A lease is a contract to rent an asset, be it land, a building, or machinery, for a set period of time and for set payment terms. Leases often come with many conditions in terms of the allowed use of the asset and even required maintenance terms.

A typical lease is often long term, ranging from 1 year to as many as 10 or 20 years. Significant penalties can be incurred by either party, the lessor (owner of the asset) or the lessee (user of the asset), in the event that either party violates the lease.”

Rent often is an more or less informal agreement with terms of a day or two up to a month or more. There’s never intent to take title.

Vehicle rentals are a good example.  You lease a car for three years, for example.  You agree to provide insurance, maintenance and keep in proper condition.  In essence you are completely responsible for it.  You also have various options at the end including keeping it.  Much different than a Hertz rental.

I'm not really sure what you are quoting there, but it doesn't appear in the FAR. 

The FAR makes no distinction between rental and lease of motor vehicles.  In fact, FAR 8.1101 Definitions, states, "'Leasing' means the acquisition of motor vehicles, other than by purchase from private or commercial sources, and includes the synonyms 'hire' and 'rent.'"

Not unusual this thread departed from the OP's question with regard to application of SCA and how application or not would dictate whether the micro-purchase card could be used at the $7000 level.  I hope that the OP and GPC coordinator arrived at the conclusion that it could.  This said and reading the further comments especially the citations offered by @Jacques I was reminded of the following discussion thread.  I am left wondering in todays world of FAR Part 12 whether the categorization  regarding termination clauses would even apply.

Enjoy the read.....

On ‎7‎/‎25‎/‎2019 at 1:00 PM, ji20874 said:

A backhoe is an item of supply, whether you purchase it or rent it.

If the price is expressed in terms of a period of performance, it's not a supply.  You are paying for the rights to use the item for a specified period of time (a service), not 'acquiring a tangible item' (a supply).  No one would ever classify 'data rights' as a supply simply because data is tangible.

Lionel Hutz said:

Edit: For the record, I agree with those saying the backhoe rental should be treated as a supply for purposes of SCA applicability and use of the GPC.

I'm not sure why it has to be 'treated as a supply' simply because SCA is not applicable.  SCA is not applicable because labor is not involved. That's like saying database subscriptions should be 'treated as a supply for purposes of SCA applicability' 

Regarding leases, a lessor pays rent on a lease for a conveyance of property, which is the legal process of transferring property from one owner to another (in this context, for a specified period).   If you rent a backhoe and it seizes because someone forgot to put oil in it, it's not your problem. If you lease a backhoe and it seizes because someone forgot to put oil in it, it is your problem.

Desparado said:

If SCA doesn't apply, then you should be able to use the GPC since the $2,500 limit wouldn't be applicable. So call it what you want, you should still be able to argue that you can use your card.

The SCA doesn't apply to professional consulting services either, i.e., SCA applicability has nothing to do with the GPC rules.

REA'n Maker said:

If the price is expressed in terms of a period of performance, it's not a supply.

I disagree — but to each his own, right?  In my contracting officer practice, a backhoe is an item of supply — purchase or lease, a backhoe is an item of supply.

This thread is a good example of why the procurement profession receives so much criticism.  Despite our beliefs, a contract is not the end result.  😀  Rather we are there to support various agency programs and achieving mission needs.

In this instance we are talking about short term backhoe rental.  The commercial industry describes itself as a service.  Government accountants say it’s a service.  The applicable code to report work is a service.  But we want to disregard FAR part 12 because the government looks at this differently.

Then we complicate with asking if the SCA applies.  Next is an analogy to argue with about an ancient court case that covers a year long vehicle lease.  

Lots of good arguments are made with more recent decisions.  Of course GSA offers short term rentals which they tell agencies to fund with service money. 

Regardless of it being a supply or service, who cares?  A program needs a backhoe.  It doesn’t matter as long as it’s there.  If we pick one method, who’s going to prove it wrong? 

The part of this that really stretches logic is whether the SCA applies.  Read the purpose and intent of the Act.  It has very little to do with DOL current philosophy.  Our job is providing acquisition support to the government.  It’s not saying we did a contract that’s 100% compliant with regulations, didn’t receive any nicks during contract review processes, and is protest free.  It’s about getting the agency what they want, when they need it, and represents economy and efficiency.

REA'n Maker said:

The SCA doesn't apply to professional consulting services either, i.e., SCA applicability has nothing to do with the GPC rules.

So explain how GPC rules differ from the definition of micro purchase and thresholds in FAR 2.101.

@formerfed I pose the same question to you.

C Culham said:

So explain how GPC rules differ from the definition of micro purchase and thresholds in FAR 2.101.

@formerfed I pose the same question to you.

The card threshold is $2500 when the SCA is applicable

formerfed said:

in this instance we are talking about short term backhoe rental.  The commercial industry describes itself as a service.  Government accountants say it’s a service.  The applicable code to report work is a service.

I base my practice on the simple definition of service contract in FAR 37.101 — that’s all I need.  And, for the question in the OP, that is all that matters.  Please read it.

As I said, to each his own, right?

I’ll add one more comment and quit this thread.  The reason industry characterizes this type of work as a service is for short term use, the customer isn’t really responsible for much and has restricted use.  The company delivers the backhoe, sets it up, instructs on use, and comes back later and retrieves it.  There’s never any semblance of the customer taking ownership, even for a limited time.  They are providing the capability to dig.  

But this entire area is fuzzy.  There doesn’t seem any answer and convincing arguments exist for each side.

Quote

The company delivers the backhoe, sets it up, instructs on use, and comes back later and retrieves it.  There’s never any semblance of the customer taking ownership, even for a limited time.  They are providing the capability to dig.

Perhaps, if someone steals it and takes it away, it becomes a supply to the thief.😋

ji20874 said:

And, for the question in the OP, that is all that matters

 I think you err in this quote.  For the question in the OP what matters is whether SCLS applies not whether one wants to wring their hands over the supply service determinationi.  Now if you want to go beyond micro- purchase looking at other categorizations such as FAR 37.101 makes sense.

FAR 2.101 (emphasis added) -   "“Micro-purchase threshold” means $3,500, except it means-

           (1) For acquisitions of construction subject to 40 U.S.C. chapter 31, subchapter IV, Wage Rate Requirements (Construction), $2,000;

           (2) For acquisitions of services subject to 41 U.S.C. chapter 67, Service Contract Labor Standards, $2,500; and

           (3) For acquisitions of supplies or services that, as determined by the head of the agency, are to be used to support a contingency operation; to facilitate defense against or recovery from cyber, nuclear, biological, chemical or radiological attack; to support a request from the Secretary of State or the Administrator of the United States Agency for International Development to facilitate provision of international disaster assistance pursuant to 22 U.S.C. 2292 et seq.; or to support response to an emergency or major disaster (42 U.S.C. 5122), as described in 13.201(g)(1), except for construction subject to 40 U.S.C. chapter 31, subchapter IV, Wage Rate Requirements (Construction) (41 U.S.C. 1903)–

                (i) $20,000 in the case of any contract to be awarded and performed, or purchase to be made, inside the United States; and

                (ii) $30,000 in the case of any contract to be awarded and performed, or purchase to be made, outside the United States."

bob7947 said:

Perhaps, if someone steals it and takes it away, it becomes a supply to the thief.😋

Notwithstanding the prevalence of fraud, waste, and abuse in government contracting, the theft would NOT be a transaction governed by the FAR.  I wouldn't even call it an "Other Transaction." 

It seems to me that one should decide that it is a service contract before deliberating whether SCA/SCLS applies.  

Answering the first question (is it a service contract?) as NO allows the original poster to proceed with the acquisition as a micropurchase.  For the original poster, NO is a reasonable answer based on FAR 37.001.

However, if one relies on something other than FAR 37.001 for the definition of a service contract, and answers the first question (is it a service contract?) as YES, only then does he or she need to consider the second question of whether SCA/SCLS applies.  YES to the second question means the acquisition cannot be done as a micropurchase; NO means it can.

Because I answer NO to the first question (is it a service contract?) based on the definition of service contract in 37.001, I don’t have to bother with the second question of whether SCA/SCLS applies

ji20874 said:

It seems to me...

Following FAR 2.101 there are 2 decision points when not a contingency based on categorization of what wage rates apply not whether a service or construction as defined by FAR Part 37 but by certain USC's that relate to the definitions of FAR Part 22 for either and that are specifically referenced not only in 2.101 but FAR Part 22.  FAR 1.108 suggests that as defined by 2.101  another part of the FAR is not applicable to defining or determining what threshold applies.   

By example using the OP's situation and if a statement were required as why the $7,000 procurement was made it would be bad premise to say because FAR Part 37 definition does not apply rather it would be more appropriate to state that 41 USC Chapter 67, SCLS does not apply.

If SCLS does not apply, nor Wage Requirements (Construction) then the micro-purchase can continue to the full non-contingency threshold.

Carl,

Right.  However, one need not reach to 41 USC Chapter 67 to know that SCA/SCLS doesn’t apply to the original poster’s situation — he or she may instead simply look to FAR 22.1003-1.

Renting a backhoe for a short period without any operator should be a simple commercial item transaction. The rental company provides standard terms and conditions in  its rental contract. If you are going to lease the backhoe for a set period, then it would certainly be a commercial item lease acquisition. 
 
You’d think that this would be  covered in a reg somewhere. Tool and Equipment Rentals.
 
What if the installation needed to rent a special tool for a task to be performed by government employees? You’d check with local rental companies like United Rentals, Blue Rents, Sunbelt Rentals, etc. Select somebody to rent from , go down and sign the paperwork and have it delivered or pick it up - and there Ya Ah!  Bing bang boom. I do it often for my church projects.  If individuals,  companies, churches, etc. can rent tools and equipment so simply, why can’t the government do it simply? I thought that was the beauty of  commercial Item acquisition methods. 

What’s the difference between renting a tool for a specific job and renting a backhoe for a specific job? How would you rent a tool?  How would you rent a tool that you need the rental company to deliver then later pick up? 

...it’s the govt forms...the forms...the forms...They send you the terms and conditions and rental agreement. Too big for a GPC? You send them a purchase order, right?

On 11/6/2019 at 10:30 PM, C Culham said:

So explain how GPC rules differ from the definition of micro purchase and thresholds in FAR 2.101.

@formerfed I pose the same question to you.

Is the point of this question that the MPT is $3500, the GPC may be used for procurments under the MPT,  but the GPC limitation for actions subject to the SCA is only $2500?  If this thread was about proper use of the GPC, that would be relevant;  however, as it relates to the question of whether an equipment rental is a supply or service, it doesn't seem relevant. 

I'm not following the meaning of GPC rules and MPT thresholds "differing".  They are two different things.

On 11/7/2019 at 8:46 AM, ji20874 said:

I base my practice on the simple definition of service contract in FAR 37.101 — that’s all I need.  And, for the question in the OP, that is all that matters.  Please read it.

As I said, to each his own, right?

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.

Equipment rental should be the same type contract for renting tools from an equipment rental company or renting a backhoe from that company. 

They have standard hourly, daily or monthly rental rates for either one and standard delivery rates.

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?

A truck is an item of supply.  A contract for the purchase or lease of a truck is a contract for an item of supply.

A transportation services contract where the contractor provides transportation services (driver, loaders, storage, weighing, routing, and so forth) in addition to a truck (which contractor employees drive, load, store, weigh, route, and so forth) is probably better characterized as a contract for a service.

Off topic but here’s an interesting twist.  Companies are offering car subscription services

https://www.cnbc.com/2018/12/01/forget-leasing-or-buying-a-car-these-companies-let-you-subscribe.html

REA'n Maker said:

If this thread was about proper use of the GPC, that would be relevant;

The thread is as the OP posed this   "I contend that it is exempted from SCA since the federal employee will be operating it and I can use the GPC to pay for it. "  

REA'n Maker said:

I'm not following the meaning of GPC rules and MPT thresholds "differing".  They are two different things.

They might be the same thing.  Consider the DEPARTMENT OF DEFENSE GOVERNMENT CHARGE CARD GUIDEBOOK FOR ESTABLISHING AND MANAGING PURCHASE, TRAVEL, AND FUEL CARD PROGRAMS and that it states that a GPC Micro-purchase at Table I-1 on Page I-8 is "Services subject to 41 U.S.C. chapter 67, Service Contract Labor Standards".  And, this on page I-10 "For more information about which types of services are subject to labor stand- ards, see: FAR Subpart 22.10, Service Contract Labor Standards Department of Labor (DOL) 29 CFR Part 541. When purchasing services not listed in 29 CFR Part 541, the applicable MPT applies. (Ref. https://www.acq.osd.mil/dpap/pdi/pc/docs/DoD_Govt_Charge_Card_Guide_11-14-18.pdf)

Then consider USDA and their statement that "For USDA purposes, the micro-purchase limit is $3,500 for supplies, $2,500 for services, and $2,000 for construction."   And, this

"The purchase card should be used unless it is clearly in the best interest of the government to use more formal contracting methods. The purchase card can be used to buy:

• Goods (supplies) under $3,500

• Services (personal and non-personal) under $2,500

• Personal property under $3,500

• Construction under $2,000"

  (Ref. https://www.dm.usda.gov/procurement/ccsc/docs/pcref/Department_PurchaseCardProgramGuide_v2.1.pdf)

Overall not one mention of labor standards by USDA!!!!!

Hopefully now you know why I posed the question to you. 

PS - So much for consistency in Federal procurement!!!!!!!!

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

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.

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?

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.?

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.

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

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. .

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.

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.

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.

formerfed,

Let's keep it to the matter at hand -- lease of a backhoe (without an operator).

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".

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.

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.

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!