Opinion ID: 454348
Heading Depth: 2
Heading Rank: 1

Heading: Service Contract Construed

Text: 8 The Service Contract Act establishes standards for minimum compensation and safety and health protection of employees performing work for contractors and subcontractors on service contracts entered into with the Federal Government.... 29 C.F.R. Sec. 4.102. Appellants have contractually undertaken not only to administer payroll, but also to set the rates of compensation for their employees. Accordingly, they plainly appear to fall within the ambit of the Act. 9 Service contract is not defined in the Act. Appellants contend that the term contemplates discrete, task-oriented undertakings distinguishable from those involved here. In support of this construction, appellants cite the enumeration of representative services in both the legislative history and regulations. 6 The regulations point out, however, that the Act does not define, or limit, the types of 'services' which may be contracted for, 29 C.F.R. Sec. 4.111(b): the list of services is illustrative, not exhaustive. Id. at Sec. 4.130. Furthermore, both drafting and electronic equipment maintenance and operation are expressly listed, id. at Sec. 4.130(14) & (15), and appellants do not contest the government's assertion that those services are the sort of work their referrals performed. Indeed, appellants concede that under appropriate circumstances, the provision of drafting or engineering services would fall under the Service Contract Act. 10 Nevertheless, appellants seek to distinguish their situation by suggesting that the Act clearly contemplates that a service contractor will have control over the working conditions under which a service contract is performed, control which the district court found lacking. The plain meaning of the statutory provision relied upon by appellants, however, is not that a contractor must be in control of working conditions before being subject to the Act, but rather that when the contractor does exercise such control, it must satisfy certain health and safety requirements. 7 11 Appellants argue that a service contractor must exercise control not only over working conditions, but also over the work force. Appellants assert that Menlo has neither the requisite responsibility for nor interest in any work performed by its nominal employees. Even if these assertions are true, however, such responsibility and interest are not conditions of statutory coverage. See 29 C.F.R. Sec. 4.111(b). Furthermore, Menlo is paid for each hour worked by its referrals, and has a contractual obligation to replace those found by the Laboratory to be unfit. The purchase orders also expressly provide that Menlo's personnel shall begin work on the first working day following ratification by the University that work is to begin and continue as long as needed to fulfill the requirements of the University. Therefore, Menlo has an obvious contractual interest in each hour worked by its referrals. 12 Appellants correctly note that the principal purpose of a contract must be the provision of services in order for the agreement to be a service contract. 41 U.S.C. Sec. 351(a). There is no merit, however, to appellants' contention that the only arguable service provided the Laboratory by Menlo was the occasional referral of an individual, and the preparation of payroll.... This argument proceeds from the false premise that the services performed by Menlo's referred workers are distinct from Menlo's contractual undertaking with the Laboratory. In fact, the services performed by these workers were the raison d'etre of the agreements. As noted, Menlo was contractually required not only to furnish and pay workers, but also to provide almost immediate replacements (i.e., within 24 hours of the Laboratory's request) should any of its workers prove unfit. Furthermore, while appellants seek to characterize their role in procuring personnel and preparing payroll as secondary to the primary purpose of the contracts, Menlo did not receive a set fee for each worker referred or paycheck prepared; rather, it was paid for each hour of service rendered the Laboratory by Menlo's employees. 8 13 Finally, our statutory construction must be guided not only by the general stricture that remedial labor statutes like the Service Contract Act are to be liberally construed, see Midwest Maintenance & Const. Co. v. Vela, 621 F.2d 1046, 1050 (10th Cir.1980), but also by the legislative intent that service contract be construed broadly. In passing the Act, Congress clearly intended to close a gap in the otherwise comprehensive net of federal contract legislation. 9 Construed in light of that purpose, the Act is plainly applicable to Menlo's agreements with the Laboratory.