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Wage and Hour Division (WHD)

Ruling Letters - McNamara O’Hara Service Contract Act - 2006-2

September 15, 2006

Fran P. Mainella, Director
National Park Service
U.S. Department of the Interior
1849 C Street, N.W.
Washington, D.C. 20240

Dear Ms. Mainella:

This is in response to your letter of April 7, 2006, setting forth the National Park Service’s (NPS’) reasons for not incorporating the provisions of the McNamara-O’Hara Service Contract Act (SCA) (41 U.S.C. §§ 351-358) into the incumbent concession contract, No. CC-8073-3-0019, and the Solicitation for the new concession contract, No. CC-GOGA001-05.  These contracts provide ferry transportation services to the Golden Gate National Recreation Area, including food and beverage services on the vessels, and shuttle access service for persons with disabilities on Alcatraz Island.  It is NPS’ position that SCA does not apply to the referenced contracts because NPS concession contracts are governed exclusively by the NPS Concessions Management Improvement Act of 1998 (1998 NPS Concessions Act), 16 U.S.C. §§ 5951-5966, and its implementing regulations, 36 C.F.R. Part 51.  Further, if these concession contracts are determined to be subject to SCA, it is NPS’ position that an exemption from SCA for these contracts would be in the public interest, in accord with the remedial purpose of the SCA, and necessary to avoid serious impairment of Government business. 

Based on the language of the SCA, if a contract is “entered into” by and with     the Government, and if its principal purpose is “to furnish services in the United States through the use of service employees,” it is subject to the Act.  41 U.S.C. 351(a).  The SCA is intended to be applied to a wide variety of service contracts, the nomenclature, type, or particular form of contract used by procurement agencies is not determinative of coverage.  29 C.F.R. § 4.111(a).  To illustrate this point, the SCA regulations provide a listing of contracts that have been found to come within the coverage of the Act.  29 C.F.R. § 4.130(a).  Among the types of service contracts included on this list are contracts for concession services.  29 CFR § 4.130(a)(11).   The SCA authorizes the Secretary of Labor under “special circumstances” to allow reasonable exemptions from the Act that are consistent with its purpose, 41 U.S.C. § 353(b), and the Secretary has issued an exemption   for certain kinds of concession contracts as provided in 29 C.F.R. § 4.133(b).  Exempt concession contracts are those “principally for the furnishing of food, lodging, automobile fuel, souvenirs, newspaper stands, and recreational equipment to the general public as distinguished from the United States Government and its personnel.”  However, 29 C.F.R. § 4.133(b) also provides that “[w]here concession contracts … include substantial requirements for services other than those stated, those services are not exempt” and may require the application of the SCA stipulations and wage determination that sets forth the minimum wages and fringe benefits to be paid to service employees performing on the contract.  41 U.S.C. § 351(a) and 29 C.F.R. § 4.141(a).   Thus, if the principal purpose of the concession contracts in question is to provide services through the use of service employees, then the contract is covered by SCA, unless the services performed under these concession contracts are among those identified as exempt in 29 C.F.R. 4.133(b).  

It is NPS’ position that “all” NPS concession contracts are generally not subject to coverage under SCA as they are exclusively governed by the 1998 NPS Concessions Act and its implementing regulations.  Further, NPS maintains that “[t]he operations provided by NPS concessioners are not for the benefit of the government, but are a benefit for the visiting public.”  In support of this position,  NPS cites to the legislative history of the 1998 NPS Concessions Act  and a brief filed by the Solicitor General in the case of National Park Hospitality Ass’n v. Dept. of Interior, 538 U.S. 803 (2003).  We do not find these materials to be persuasive. 

The plain language of SCA dictates that it applies to “every contract” the principal purpose of which is to furnish services in the United States through the use of service employees.  The Act does not contain any provision that limits coverage to those contracts in which the Government procures the services for itself or is the beneficiary of such services.  41 U.S.C. § 351(a).  Department of Labor (DOL) regulations also are also clear that SCA coverage of service contracts does not depend on the government receiving direct benefit from the services provided.  At 29 C.F.R. § 4.133(a), the regulations provide as follows:

[T]here is no limitation under SCA relating to the beneficiary of the services, nor is there any limitation that the Act covers only contracts for services of direct benefit to the Government, as distinguished from the general public.  If the principal purpose of the Government contract is to provide services through the use of service employees, the contract is covered by SCA, regardless of the beneficiary of the services or the source of funds from which the contractor is paid for the services, and regardless of whether the contractor performs the work in its own establishment, on a Government installation, or elsewhere.

Id. (emphasis added). In promulgating this final rule, DOL specifically rejected the contention that the Act should not be applied to “contracts which primarily benefit the public,” by stating that “[t]he language of the Act makes no distinction based on the beneficiary of the contract services, and further, the Act’s legislative history provides no evidence of a Congressional intent to so limit coverage.”  See the preamble to the SCA Final Rule: 48 Fed. Reg., pg. 49,753 (October 27, 1983).   The preamble referenced the district court decision District Lodge No. 166, IAMAW v. TWA Services, Inc., et al., 25 WH Cases 208 (M.D. Fla. 1981), in which the court stated that “the SCA does not explicitly, or implicitly, exclude concession contracts from its coverage.”  25 WH Cases at 210.  Thus, even though NPS concession contracts may not be generally viewed as “contracts for the procurement of goods and services for the benefit of the government,” as NPS claims, this position does not serve to defeat SCA coverage.

The Solicitor General’s brief in National Park Hospitality Ass’n v. Dept. of Interior, 538 U.S. 803 (2003), which you have cited, also does not support NPS’s position.  Although it is true that the Solicitor General argues in that brief that most NPS concession contracts are not “procurement” contracts, that distinction is  not relevant to the question whether a contract falls within the scope of the SCA.   On the other hand, the Solicitor General repeatedly characterized NPS concession contracts throughout the brief as contracts for the provision of services to the general public.   See pg. 40 (concession contracts have the “main purpose of providing service to visitors”) and pg. 54 (citing legislative history stating that “contracts made with these operators in the national parks are made … for service to be furnished to the public who go to the parks”) (emphasis added).  As we have explained, contracts for the provision of services to the general public fall within the scope of the SCA.

Similarly, the 1998 NPS Concessions Act does not contain any language exempting NPS concession contracts from coverage under SCA.  The Senate and House committee reports on the 1998 NPS Concessions Act provide that concession contracts “do not constitute contracts for the procurement of goods and services for the benefit of the government or otherwise.”  S.Rep. No. 202, 105th Cong., 2d See. 39 (1998).  This language, however, says nothing about whether NPS concession contracts should be considered “contracts for the furnishing of services” within the meaning of SCA.  Further, the 1998 NPS Concessions Act use of the term “concession contracts,” as opposed to “service contracts” or “contracting for services,” and extending the terms of NPS concession contracts for up to 20 years as opposed to five year terms for service contracts are also not factors used by SCA to determine coverage.  By its terms,    it is enough to assert SCA coverage if the contract is “entered into” by and with the Government and if its principal purpose is “to furnish services in the     United States through the use of service employees.”

Thus, contrary to NPS’ interpretation of 29 C.F.R. § 4.133(b) and its preamble, DOL can find no language that expressly excludes all NPS concession contracts providing services to the public from SCA coverage.  Rather, DOL’s express intention in promulgating 29 C.F.R. § 4.133(b) was “to exempt certain types of concession contracts pursuant to the Secretary’s authority under section 4(b) of the Act.”  48 Fed. Reg. at 49753.  Clearly, 29 C.F.R. § 4.133(b) sets forth the types of concession contracts let by Federal agencies that may qualify for the exemption. 

Because the concession contracts in question provide principally ferry transportation services to and from Alcatraz Island, California, they are not within any of the categories of concession contracts that are specifically exempted under 29 C.F.R. § 4.133(b) and are covered by SCA.  Moreover, when a concession contract is principally for services covered by the SCA, the remaining services are deemed incidental to the overall purpose of the contract and thus are also subject to the requirements of the SCA.  Our understanding of the concession contracts in question is that the food and beverage services provided on the vessels are incidental to the transportation services provided visitors and NPS staff that are not exempt under 29 C.F.R. 4.133(b).  While the food and beverage concession services provided might be exempt pursuant to 29 C.F.R.  § 4.133(b) if awarded under a separate contract, they are covered by the SCA in this case because they are incidental to the overall purpose of the contracts in question to furnish transportation services to and from Alcatraz Island, California, services that are clearly covered by the SCA.

The Secretary of Labor’s authority under 41 U.S.C. § 353(b) of the Act and 29 C.F.R. § 4.123 of the Regulations for providing variances, tolerances or exemptions under the SCA are limited to “…special circumstances where he [she] determines that such…exemption is necessary and proper in the public interest or to avoid serious impairment of Government business, and is in accord with the remedial purposes of this Act to protect prevailing labor standards.”  Thus, to grant a blanket exemption for all NPS concession contracts requires a strong and affirmative showing that such exemption is necessary and proper in the public interest or to avoid serious impairment of Government business, while giving due regard to the remedial purposes of the Act to protect prevailing labor standards.  Upon consideration of the limited information submitted, we decline to grant such an exemption. 

Inasmuch as the concession contracts in question are principally for ferry transportation services, these contracts are subject to SCA coverage.  Therefore, pursuant to 29 C.F.R. § 4.5(c)(2), please take all necessary steps to incorporate the SCA stipulations and the applicable wage determination(s) into the current concession contract (CC-8073-3-0019) within thirty (30) days of receipt of this letter and apply these stipulations  and applicable wage determination(s) prospectively from such date.  In addition, please ensure that the SCA stipulations and applicable wage determination(s) are incorporated in Solicitation No. CC-GOGA001-05.  Please inform us of your actions in this matter as soon as possible.

This letter constitutes a final ruling in this matter.  Under the regulations at        29 C.F.R. § 8.7, any aggrieved party may file a petition for review of this final determination with the Department of Labor’s Administrative Review Board within sixty (60) days.  Any appeal should be addressed to the Administrative Review Board, U.S. Department of Labor, 200 Constitution Avenue, N.W., Room S-4309, Washington, D.C. 20210.

Sincerely,

 

Alfred B. Robinson, Jr.
Acting Administrator


cc: Mr.James Spinosa
     Mr. Robert Remar
     Mr. Charles S. Birenbaum
     Mr. Robert Spagat
     Ms. Eleanor Morton
     Mr.Dmitri Iglitzin