22.1003-6
Repair distinguished from remanufacturing of equipment
Properly distinguishing between repair and remanufacturing is critical, as it determines which labor standards statute applies to your contract.
Overview
FAR 22.1003-6 clarifies the distinction between repair and remanufacturing of equipment for federal contracts, which determines whether the contract is subject to the Service Contract Labor Standards (SCLS) or to 41 U.S.C. chapter 65 (Walsh-Healey Public Contracts Act). If the work is so extensive that it is equivalent to manufacturing—such as a major overhaul or major modification meeting specific criteria—the contract is considered remanufacturing and falls under manufacturing statutes. Routine repairs and maintenance, which do not require complete teardown and rebuilding, remain subject to SCLS.
Key Rules
- Remanufacturing Criteria
- Contracts involving major overhaul or modification that meet detailed criteria (e.g., complete teardown, reworking/replacing most parts, reassembly, use of manufacturing processes, restoration to original life expectancy, and work performed at contractor facilities) are considered remanufacturing.
- Repair and Maintenance
- Contracts for routine repair, maintenance, or servicing (not requiring complete teardown or rebuild) are subject to SCLS, not manufacturing statutes. Examples include vehicle repair, office equipment repair, and furniture reconditioning.
Responsibilities
- Contracting Officers: Must correctly classify contracts as repair or remanufacturing to apply the appropriate labor standards statute.
- Contractors: Must understand the scope of work and ensure compliance with the correct labor standards based on contract classification.
- Agencies: Should provide oversight to ensure proper classification and compliance with applicable statutes.
Practical Implications
- This section exists to prevent misclassification of contracts, which can lead to noncompliance with labor standards and potential legal or financial penalties.
- Accurate classification impacts wage determinations, contract clauses, and compliance obligations.
- Common pitfalls include underestimating the extent of work or misapplying the labor standards statute, especially in contracts involving significant equipment overhaul or modification.