1. (a) Contracts requiring “services”, as defined in the Arkansas Procurement Law, Arkansas Code § 19-11-201 et seq., and this part, are to be presented to the Legislative Council or, if the General Assembly is in session, to the Joint Budget Committee, before the execution of the contract if the contract amount is fifty thousand dollars ($50,000) or more in any one (1) year of the contract’s term, or if the total projected contract amount, including any amendments or possible extensions, is three hundred fifty thousand dollars ($350,000) or more unless they are contracts for critical emergency procurements or are otherwise exempted from the submission requirements of Arkansas Code § 19-11-265.

2. (b)

   1. (1) Labor, time, or effort included in or incident to a contractor’s production or sale of a commodity or commodities are not considered “services” for purposes of determining whether a contract is a “contract requiring services” within the meaning of Arkansas Code § 19-11-265.
   2. (2) Consequently, a contract for the procurement of a commodity or commodities is not a “contract requiring services” for purposes of Arkansas Code § 19-11-265 if it only calls for labor, time, or effort included in or incident to the procurement of the commodity or commodities.

3. (c)

   1. (1) Where a tangible commodity exists and is identifiable at the time of the commodity’s procurement, any labor, time, or effort expended in its production are not considered “services” if no separate consideration is paid beyond the purchase price of the commodity for the labor, time, and effort expended in producing the commodity.

   2. (2) Even where a present purchase order is for a tangible commodity yet to be produced, the future labor, time, or effort to be expended in the production of the commodity will not be considered “services” if:

      1. (A) The only consideration to be paid is the purchase price of the commodity after its receipt, and incidentals, such as taxes, delivery fees, etc.; and
      2. (B) No separate consideration is paid for the labor, time, or effort expended in the production of the commodity.
   3. (3) However, where a contract requires a contractor to furnish labor, time, or effort to produce a commodity not yet in existence, such as a computer program, and the contract calls for consideration to be paid to the contractor based on the labor, time, or effort furnished in the production of the commodity rather than based on the finished commodity, such labor, time, or effort are considered “services”.
4. (d) If a contract will require procurement of a combination of commodities and services, as those terms are defined in the Arkansas Procurement Law and this part, then it should be submitted for review under Arkansas Code § 19-11-265 if the services component of the contract is fifty thousand dollars ($50,000) or more in any one (1) contract year, or if the total projected contract amount, including any amendments or possible extensions, is three hundred fifty thousand dollars ($350,000) or more.

Codification Notes: This section was promulgated as R1:19-11-265 of the Procurement Rules prior to codification into the Code of Arkansas Rules.