Page images

(h) Activities such as engineering, planning, design, inspection, quality control, testing, marking, packaging, and repackaging and shipping may be incidental, ancillary or necessary to manufacturir Nevertheless, such operations are not, standing alone, or in combination, considered "manufacturing," i.e. fabrication or production. The proposed performance solely of such activities does not qualify a firm as a manufacturer.

ises a significant portion of the required component parts needed for the final product even if the bidder will only perform assembly operations under a particular procurement.

(c) Firms which only perform minimal operations upon the item being procured cannot qualify as manufacturers. To allow any such bidder to do So would obviously frustrate the purposes of the Act. As stated in the Decision of the Hearing Examiner "In re Brentwood Radios, Inc.," 12 WH Cases 158, 162 (1954);

$ 50-206.52 Assembler.

(a) As a result of changing technology in the area of manufacturing, the Department has concluded that it is now necessary to provide a fuller discussion of the standards that an assembler must meet to qualify as a manufacturer.

(b)(1) “Assembly" means piecing or bringing together various interdependent or interrelated parts or components so as to make an operable whole or unit. (Decision of the Comptroller General, B-164770, September 3, 1968 (not officially published).) A firm which produces final items on its premises by assembling component parts, all or some of which have been purchased from others, will generally be considered to be a "manufacturer" where it performs a series of assembly operations utilizing machines, tools and workers which constitute substantial and significant fabrication or production of the desired product. The qualifications of a bidder as a manufacturer who proposes to “assemble” must be decided on the basis of all the facts and circumstances surrounding a particular procurement.

(2) Thus, the determination of whether a bidder proposing to assemble a final product from component parts is an eligible manufacturer must rest on whether the bidder has demonstrated an independent ability, with its plant, equipment and personnel, to perform a significant or substantial portion of the manufacturing operations and efforts required in producing the final product for which the government contracted.

(3) In the alternative, a bidder may aiso qualify as a manufacturer if it has the facilities to produce on its prem

Confident that the Act and Regulations defining a manufacturer contemplate something more than the occasional and isolated performance of such a simple assembly operation on but two Government contract items of a sundry nature, as disclosed by the record in this case, I have concluded that the corporation cannot justifiedly be regarded as bona fide manufacturer, even of such items, qualified to do business with the Government. Except for the negligible amount of time expended by the two officers of the corporation on such assembly operation over seven years of corporate existence, the corporation has at no time engaged in any other assembly or manufacturing operations for the Government and in no civilian production at all. (See also “Tyco, Inc. v. Hodgson,” 67 CCH Labor Cases | 32,652 (E.D. Va., 1971 (not officially published)); and "In re John F. Noble Company,” Decision of the Trial Examiner, PC-184, March 29, 1945.) As the court stated in George v. Mitchell," 282 F.2d 486, 493 (C.A. D.C., 1960), while Congress in enacting the Walsh-Healey Public Contracts Act “may have been concerned for the small businessman capable of sustaining the administrative burdens of bidding for and processing Government contracts, we do not think it intended to protect producers who could not independently perform those minimal contracting functions."

(d) Packaging by itself does not constitute "assembly.” For example, a bidder who proposes to supply bottles of aspirin in units of 100 and whose only operations would be the purchase in bulk of the aspirin and the bottles, the transferring of the aspirin from the bulk container to the bottles, and the labeling, wrapping, and shipping of the bottled aspirin, would not qualify as a manufacturer. Furthermore, a bidder proposing to purchase a hose and a clamp and place the clamp on the hose to make a “hose assembly,” and then package and ship the item, is not a manufacturer within the intent of the Act. (See also Decision of the Comptroller General, B-164770, September 3, 1968 (not officially published).)

$ 50-206.53 Regular dealer.

(a) A bidder may qualify as a regular dealer under 41 CFR 50-201.101(b) if it owns, operates, or maintains a store, warehouse, or other establishment in which the commodities or goods of the general character described by the specifications and required under the contract are bought, kept in stock, and sold to the public in the usual course of business. The storage of goods in a public warehouse will not in itself satisfy the place of business requirements of this definition unless there is a continuing right (i.e. bona fide written lease agreement) to a specified, identified amount of space in the warehouse. A bidder who desires to qualify for award as a regular dealer must show to the satisfaction of the contracting agency prior to any award that it is engaged in an established, regular business meeting all the criteria of 41 CFR 50-201.101(a)(2). It is not enough in the case of a regular dealer to show only that arrangements have been made to set up such a business; efore an at: rd can be made, it is essential that it shows an already established business regularly dealing in the particular goods or goods of the general character offered to the Government.

(b) A bidder must be able to show before award:

(1) That the bidder has an establishment or leased or assigned space in which it regularly maintains a stock of goods in which it claims to be a dealer; if the space is in a public warehouse, it must be maintained on a continuing, and not on a demand, basis;

(2) That the stock maintained is a true inventory from which sales are made; the requirement is not satisfied by a stock of sample or display goods, or by a stock consisting of surplus

goods remaining from prior orders, or by stock unrelated to the supplies which are the subject of the bid, or by a stock maintained primarily for the purpose of token compliance with the Act from which few, if any, sales are m.ade;

(3) That the goods stocked are of the same general character as the goods to be supplied under the contract; to be of the same general character, the items to be supplied must be either identical with those in stock or goods for which dealers in the same line of business would be an obvious source;

(4) That sales are made regularly from stock on a recurring basis; they cannot be only occasional and constitute an exception to the usual operations of the business; the proportion of sales from stock that will satisfy the requirements will depend upon the character of the business;

(5) That sales are made regularly in the usual course of business to the public, i.e., to purchasers other than Federal, State, or local Government agencies; this requirement is not satisfied if the contractor merely seeks to sell to the public but has not yet made such sales; if Government agencies are the sole purchasers, the bidder will not qualify as a regular dealer; the number and amount of sales which must be made to the public will necessarily vary with the amount of total sales and the nature of the business; and

(6) That the business is an e: lished and going concern; it is not sufficient to show that arrangements have been made to set up such a business.

(c) With regard to the test in paragraphs (b) (5) and (6) of this section, as stated in the Decision of the Administrator, “In re Herbert Co.” (9 WH Cases 561, 562 (1950)): “It is plain that the Act and Regulations intended to bar from receipt of Government contracts those persons whose regular method of operation is to secure contracts and thereafter buy elsewhere the goods necessary to fill the contract. While it was not contemplated by the regulations that every Government contract awarded to a dealer be filled from stock on hand, it was the name of the principal. Brokers from whom foreign-made goods consigned directly to the Government are purchased need not qualify as regular dealers under 41 CFR 50-201.101(a)(2) since the contract itself is not subject tc the Act.

intention to require that Government contracts should be awarded only to those dealers who maintain a stock of goods of the general character required under the Government contract in question, and who, as a regular course of business dealings, make sales from such stocks. It is not sufficient for a dealer to show that some sales are made from stock, or that sales from stock are not unusual in his business; rather he must show that in the usual course of his business a very substantial amount of his sales are made from stocks on hand” (emphasis added).

(d) Coal dealers are exempted from the regular dealer requirements of the Act on certain express terms and conditions which are set forth in 41 CFR 50-201.604(a). The exemption will be applicable only if these conditions are complied with. If they are not, the general definition of regular dealers contained in 41 CFR 50-201.101(a)(2) of the regulations would be applicable.

$ 50–206.56 Administrative exemptions.

Sections 50-201.101(a)(3)(ii) and 50201.601 of Regulations 41 CFR Part 50-201, provide for the granting of exceptions and exemptions from the application of section 1(a) of the Act upon request by the head of the contracting agency to the Administrator, Wage and Hour Division. Such request should contain all pertinent information enabling the Administrator to determine if such exemption is necessary to avoid the serious impairment of the conduct of Government business. Any such request will be published in the FEDERAL REGISTER as a proposal with time for public comment.



Sec. 50-210.0 General enforcement policy. 50-210.1 Coverage under the Walsh-Healey

Public Contracts Act of truck drivers employed by oil dealers.

$ 50-206.54 Regular dealer in particular

products. In addition to the exemptions from the requirements of section 1(a) of the Act which have been granted for certain types of contracts as set forth in 41 CFR 50-201.604, special alternate qualifications have been prescribed for hay, grain, feed, or straw; raw cotton; lumber and timber products; machine ti Ols; green coffee, petroleum; agricultural liming materials; tea; raw or unmanufactured cotton linters; certain uranium products and used automated data processing (ADP) equipment in recognition of existing industrial and commercial practices in those industries. These special qualifications may be found in 41 CFR 50-201.101(a)(2) and 41 CFR 50-201.604. Characteristic of these alternative qualifications is the absence of a requirement that the dealer physically maintain a stock.

$ 50-210.0 General enforcement policy.

(a) In order to clarify at this time the practices and policies which will guide the administration and enforcement of the Fair Labor Standards Act of 1938 (52 Stat 1060, as amended, 29 U.S.C. 201-219), and the Walsh-Healey Public Contracts Act (49 Stat. 2036, as amended; 41 U.S.C. 35-45), as affected by the Portal-to-Portal Act of 1947 (Pub. Law 49, 80th Cong.), the following policy is announced effective June 30, 1947:

(b) The investigation, inspection and enforcement activities of all officers and agencies of the Department of Labor as they relate to the Fair Labor Standards Act (52 Stat. 1060, as amended, 29 U.S.C. 201-219) and the Walsh-Healey Public Contracts Act of June 30, 1936 (49 Stat. 2036, as amend

[blocks in formation]
[blocks in formation]

the Walsh-Healey Public Contracts Act of truck drivers employed by oil dealers, by amending section 40(e)(1) of Rulings and Interpretations No. 31 to read as follows:

(1) Where the contractor is a dealer, the act applies to employees at the central distributing plant, including warehousemen, compounders, and chemists testing the lot out of which the Government order is filled, the crews engaged in loading the materials in vessels, tank cars or tank wagons for shipment, and truck drivers engaged in the activities described in section 37(m) above.2 However, the contractor is not required to show that the employees at the bulk stations, including truck drivers, are employed in accordance with the standards of the act. (Bulk stations as the term is used herein are intermediate points of storage between a central distributing plant and service stations.)

(Sec. 4, 49 Stat. 2038; 41 U.S.C. 38) [12 FR 3916, June 17, 1947. Redesignated at 24 FR 10952, Dec. 30, 1959)

NOTE: The text of $ 50-210.0 General enforcement policy is identical to that of $ 775.0 under 29 CFR Chapter V.

$ 50-210.1 Coverage under the Walsh

Healey Public Contracts Act of truck

drivers employed by oil dealers. (a) The Division of Public Contracts returns to the interpretation contained in Rulings and Interpretations No. 21 with respect to coverage under

(Sec. 4, 49 Stat. 2038; 41 U.S.C. 38) (12 FR 2477, Apr. 17, 1947. Redesignated at 24 FR 10952, Dec. 30, 1959)

'Not filed with the Office of the Federal Register.

2 Refers to Rulings and Interpretation No. 3.




Part 51-1 51-2

Page 254

51-3 51-4 51-5 51-6 51-7 51-8

Committee for Purchase from the Blind and

Other Severely Handicapped
Central nonprofit agencies
Workshops ..............
Procurement requirements and procedures
Preparation of environmental statements.
Public availability of agency materials .........
Privacy Act rules

256 258 260 262 266 272 274

« PreviousContinue »