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Examples of the application of this rule of coyerage may be found in Re Weeka-Amlin Pord, Inc., Decision of Administrator, No. PC903, March 24, 1964, 16 WH Cases 489, and in opinions in BNA WageHour Manual supra, at pp. 99:206; 99:2391; 99:2393; 99:2394 and 2403; 99: 2425. As noted in some of these opinions, by regulation promulgated in 41 CFR 90-201.102' employee coverage by the WalshHealey Act has, however, been restricted to employees whose work is directly, rather than indirectly, related to the manufacture or furnishing of the tangible items called for by the contract. It is, accordingly, only such work on a contract covered by this Act which is required to be done in accordance with its provisions, within the meaning of section 7(2) of the Service Contract Act. The Service Contract Act regulations, in 29 CFR 4.122, which so state, accord with the pro-Service Contract Act interpretations by the Department of Labor of substantially identical language exempting such work from the application of labor standards in the Contract Work Hours and Safety Standards Act. See section 103(b) of CWHSSA (40 U.S.C. 329(b) and Administrator's opinion, May 27, 1963, BNA Wage-Hour Manual, supra, 99:199 at 99: 202-203.

It follows from the foregoing that a determination of whether the contract at issue in the instant case is covered by the Service Contract Act cannot rest on any determination of whether the Walsh-Healey Act applies to the contract, because Walsh-Healey coverage may exist irrespective of the principal purpose of the contract and is thus irrelevant to the issue of whether the contract meets the statutory criterion for Service Contract Act coverage as one "the principal purpose of which is to furnish services in the United States through the use of service employees."


The legislative intent to protect under the Act those contract workers performing services of the character performed "in-house" by Federally employed "blue-collar" workers has been made plain in the Labor Department's regulations. 29 CFR 4.113(b).

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When the facts with respect to the instant procurement are reviewed in the light of the foregoing principles, the conclusion is inescapable that this contract is one within the intended coverage of the Service Contract Act. That the Government is most concerned with the services being performed is evidenced by the vast variety of technical orders containing directives and specifications, acceptable tolerances, and acceptable materials which govern the manner and method of the contractor's performance. Contracting agency representatives are always on hand to answer questions and oversee that these guidelines are adhered to down to the smallest detail. That is to say, the Government is concerned and involved with what is being done at the contractor's facility with each engine from the time it arrives until the

time it leayes the facility. The nature of this contract thus differs radically and essentially from what may be termed the "pure" Walsh-Healey manufacturing contract, such as one to manu facture, and furnish desks to the Government, and pursuant to which the request for proposals, resultant contract and Government involvement are concerned essentially with the acceptability of the end product and not at all with the details of how the work is to be done. Like considerations mark the difference between the instant contract and contracts for the production of recapped or rebuilt tires, which have been held to be covered by the Walsh-Healey Act but not by the Service Contract Act. all such cases, unlike the present one, the Government may be said to be primarily concerned with the end product rather than the services involved in its production.



Also very significant in the instant procurement is the fact that of the 20 categories of employees listed on the attachment to the SF-98 submitted to reflect the classes of employees who will perform for the contractor, all categories would, if Federally employed, be covered by the Civil Service Commission's Handbook of Blue Collar Occupational Families and Series. Six of these categories, comprising 168 employees out of the total of 543 employees estimated to be employed, are within the Aircraft Engine Overhaul Family: Additionally, 63 employees' classifications are within the Fluid Systems Job Family which covers repair and related work on aircraft engines, and 43 employees are workers whose job series includes work in engine repair shops. Thus, a total of more than one-half of the 543 employees would be engaged in categories of service employee work clearly related to aircraft engine repair, contracts for which have since 1966 been considered so typical of covered contracts that they were used as examples in connection with the instructions in items 3(d) and 4 of the SF-98.

From the foregoing it is apparent that this contract is one that is required to be performed through the use of service employees and that it is their services, essential to the operations specified in such intricate detail for the rehabilitation of the Government's jet engines, that it is the overriding purpose of the Air Force to obtain. It is further evident from the facts submitted that in the instant procurement it is the cost of these services, rather than of materials, that is of major significance in arriving at the contract price. The contract is, accordingly, covered by the Service Contract Act as one the principal purpose of which is the furnishing of services through the use of service employees. Since such is its principal purpose, any application of the Walsh-Healey Act to the contract must be concurrent rather than exclusive, for the reasons hereinbefore stated.

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As explained earlier, the exemption of work required to be done in accordance with the proyisions of the Walsh-Healey Act constitutes a statutory recognition of the fact that a contract calling for services resulting in a manufactured end product may nevertħeless fall within the coverage of the Service Contract Act as a contract having as its principal purpose the furnishing of the services resulting in the manufactured product rather than the furnishing merely of such product. The services which it is the principal purpose of the contract to procure may include those of service employees engaged in such manufacture. This seems clear from the fact that the Federally employed "blue collar" workers in the Civil Service Commission Handbook's "Aircraft Engine Overhaul Family" (classification 8600)-- the counterparts of service employees engaged in such work performed by contractors--include those in positions having duties "concerned primarily with the manufacture * * * of aircraft engines * * *. Accordingly, in the instant case our conclusion that the principal purpose of the contract brings it within the coverage of the Service Contract Act would not be negated by any acceptance of the contentions that the services involved constitute manufacturing or result in a manufactured end product.

A determination that a particular contract has as its principal purpose the furnishing of services bringing it within the coverage of the Service Contract Act is not precluded merely because such services result in an "end product desired by the Government. This is evident when it is seen that certain other types of contracts over which there has never been any dispute concerning Service Contract Act coverage also involve such end products. For example, the laundry and dry cleaning contracts referred to in the legislative history of the act result in the furnishing of clean linens and garments; likewise the food service contracts have as a purpose the furnishing of edibles, and packing and crating contracts provide the containers in which goods are kept and shipped. (CF. 32 CFR 22.101(a).)

When this is appreciated, the exception provided in section 7(2) of the Service Contract Act becomes meaningful. The exemption is clear on its face that "[t]his Act shall not apply to * * * any work required to be done in accordance with the provisions of the Walsh-Healey Public Contracts Act." By this it is implied that a contract principally for services may, at the same time, involve employees in work activities which by their nature are properly within the scope of the Walsh-Healey Act.


Our conclusion that the Walsh-Healey Act is also applicable to this contract is based on the facts showing that a significant (although not the principal) purpose of the contract is the procurement, through the contemplated services, of rebuilt jet engines capable of as satisfactory performance as new ones, as

well as on the eyidence that the replacement parts and materials used in the performance of the contract are substantial in amount. The significance of this latter factor as a basis for Walsh-Healey coverage of a contract has been stressed in opinions of the Department of Labor for many years.

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The fact that materials for the contract work are furnished by the Government has never been considered to negate Walsh-Healey coverage, however, where the contractor uses them to produce the end-product which the Government wishes to procure as the result of the work. (See, e.g., Powell v. 0. S. Cartridge Co., 339 U. S. 497.) And the Department of Labor has often made it clear that the production of a desired end product through the services called for by a contract which is principally for services can bring the contract within the coverage of the Walsh-Healey Act as well as the Service Contract Act. (See, e.g., Administrator's opinion of January 17, 1968, BNA Wage-Hour Manual, p. 99:2410.)

To determine what work under this contract is required to be done in accordance with the provisions of the Walsh-Healey Act, the work specifications and descriptions of the contract work submitted by the parties have been considered in the light of the governing regulation, 41 CFR 50-201.102.


All parties agree that parts from the disassembled engines which, with or without "rework", meet specified tolerances are assembled with any necessary new parts into the "rebuilt" engines to be delivered to the Government at the conclusion of the contract work. This assembly, together with the testing and handling and shipment to the Government of the reassembled engines, is plainly work within the purview of 41 CFR 50-201.102 which is required to be done in accordance with the provisions of the Walsh-Healey Act. It is equally clear that none of the disassembly work can be said to come within the language of the regulation or be excluded from the application of the Service Contract Act as work required to be done in accordance with the Walsh-Healey Act. And while there may be more question as to whether the work on the disassembled parts which is necessary to make them acceptable for use in the "rebuilt" engines is work required to be done in accordance with Walsh-Healey provisions, it is evident from Mr. Montgomery's affidavit that such work, like the disassembly which precedes it, ultimately provides no more than a stock of parts which are acceptable for use in rebuilding the engines, and none of such work is directed or related specifically to the fabrication of any particular engine to be delivered to the Government.

These facts, together with the applicable rule that exemptions from the coverage of a remedial statute such as the Seryice Contract Act are to be narrowly construed, lead us to conclude that none of the work in performing this contract which is done prior to the selection of the parts for assembly into particular engines is work required to be done in accordance with the provisions of The Walsh-Healey Act, within the meaning of section (2) of the Service Contract Act AIT the work not within such exemption is, as previously stated, subject to the Service Contract Act and the wage determinations made thereunder.

In reaching our conclusions, we have given careful consideration to prior opinions of the Department of Labor and to the arguments of the parties made in reliance thereon. Taking into consideration differences in facts submitted for such opinions and in the provisions of the statutes and regulations pertinent at the particular times involved, we believe our conclusions here are in accord with the principles we have followed in the past and do no violence to any of our precedents. The Department's regulations in 29 CFR Part 4, Subpart C, $4.101 state:

This subpart supersedes all prior rulings and interpretations issued under the Act to the extent, if any, that they may be

inconsistent with rules herein stated. Opinions issued prior to July 10, 1968 concerning the applicability of Service Contract Act and Walsh-Healey Act provisions to a contract must be evaluated in the light of the above statement. Also, in view of the remedial purposes of the Service Contract Act, settled rules of statutory construction require since its enactment that its coverage provisions be construed liberally to provide the maximum of protection to the service employees for whom its benefits were intended, and that exemptions provided from such coverage be strictly construed. Where the principal purpose of a contract is to obtain services rather than supplies, due weight must be given to the fact that it is in the Service Contract Act rather than in the Walsh-Healey Act that the Congress has specified the compensation provisions which it deemed appropriate for employment of service employees under such a contract. Only work "required" to be done in accordance with the provisions of the Walsh-Healey Act can be considered subject to the labor standards of such Act where both Acts apply to the contract.

In response to the SF-98 submitted by the Air Force pursuant to the order of the Court in this case, a' wage determination will accordi gly be prepared containing the minimum wages and fringe benefits to be paid the various classes of service employees engaged in covered work under the contract in question. Pursuant to section 2(a) and 4 (c) of the Act, this wage determination will reflect the applicable rates paid and fringe benefits provided by Curtiss-Wright Corporation under its collective bargaining agreement in effect when LRFP No. F34601-73-R-6000 was issued on or about November 22, 1972.

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