FAR 22.1003-6—Repair distinguished from remanufacturing of equipment.
Plain-English Summary
FAR 22.1003-6 explains how to tell the difference between repair work and remanufacturing of equipment, because that distinction determines whether the Service Contract Labor Standards statute applies or whether the work is treated as manufacturing under 41 U.S.C. chapter 65. The section focuses on two detailed remanufacturing tests: major overhaul of degraded or inoperable equipment and major modification of obsolete equipment. It also explains what is not remanufacturing, including ordinary repair, periodic maintenance, preservation, care, adjustment, upkeep, and servicing performed to keep equipment usable and in working order. The rule gives practical examples of repair-type work, such as vehicle repair, office equipment repair, appliance and electronics repair, inspection, testing, calibration, painting, packaging, lubrication, tune-up, replacement of internal parts, and furniture reupholstering or refinishing. In practice, this section matters because the labor standards, wage requirements, and contract administration approach can change significantly depending on whether the work is classified as repair or remanufacturing. Contractors and contracting officers must look beyond labels and examine the actual scope, extent of teardown, rebuilding, parts replacement, facility used, and end result of the work.
Key Rules
Remanufacturing can be manufacturing
If a contract is principally for remanufacturing equipment and the work is so extensive that it is equivalent to manufacturing, the contract is governed by 41 U.S.C. chapter 65 rather than the Service Contract Labor Standards statute. The section sets out two alternative tests that, if met, make remanufacturing legally equivalent to manufacturing.
Major overhaul test
A major overhaul is treated as manufacturing when the equipment is degraded or inoperable and the work requires substantial teardown, reworking or replacement of substantially all parts, reassembly into a totally rebuilt item, use of manufacturing-like processes, commingling of usable parts with inventory, restoration to original or near-original life expectancy, and performance in a contractor-owned or operated facility.
Major modification test
A major modification is treated as manufacturing when the item is wholly or partially obsolete and the work requires substantial teardown, replacement of outmoded parts, rebuilding or reassembly, and delivery of a substantially modified usable and serviceable item, with the work performed in a contractor-owned or operated facility.
Routine repair is not remanufacturing
Repair of damaged or broken equipment that does not require a complete teardown, overhaul, and rebuild is not remanufacturing. The same is true for periodic and routine maintenance, preservation, care, adjustment, upkeep, and servicing performed to keep equipment in usable, serviceable, working order.
Repair contracts are usually hourly
Contracts principally for repair-type work are typically billed on an hourly rate basis, including labor plus materials and parts. That billing pattern is one indicator that the work is service/repair work rather than manufacturing.
Repair examples are broad
The section lists common repair examples, including vehicles, construction equipment, tractors, cranes, aerospace equipment, air conditioning and refrigeration equipment, electric motors, ground-powered industrial or vehicular equipment, typewriters and office equipment, appliances, radios, televisions, calculators, electronic equipment, and furniture reupholstering, reconditioning, repair, and refinishing.
Inspection and upkeep are included
Repair-type work also includes inspecting, testing, calibration, painting, packaging, lubrication, tune-up, and replacement of internal parts for the listed equipment. These activities are treated as service work when they are part of keeping equipment operational rather than rebuilding it.
Responsibilities
Contracting Officer
Determine the principal nature of the work by examining the actual scope, not just the contract title or billing method. Apply the remanufacturing tests when the work involves extensive overhaul or modification, and classify the contract under the correct labor statute.
Contractor
Describe the work accurately in proposals and performance plans, and avoid characterizing repair work as remanufacturing unless the facts satisfy the regulatory tests. Maintain records showing whether the work involves teardown, parts replacement, rebuilding, facility location, and the condition of the end item.
Agency
Structure requirements and solicitations so the labor standard coverage matches the real work being procured. Ensure acquisition personnel understand when a requirement is a manufacturing-type remanufacture versus a service-type repair or maintenance effort.
Wage and labor compliance staff
Review the statement of work and performance facts to support the correct wage determination and labor standards coverage. Flag contracts that may be misclassified because they involve extensive rebuilds, major modifications, or mixed repair and manufacturing elements.
Practical Implications
The key day-to-day issue is classification: the same physical item can be either repaired or remanufactured depending on how extensive the work is and what the end result looks like. Misclassification can lead to the wrong labor statute being applied and create compliance risk.
Contractors should not rely on words like overhaul, rebuild, or refurbishment alone; the regulatory tests focus on teardown, replacement of substantially all parts, use of manufacturing-like processes, commingling of parts, and restored life expectancy.
Hourly labor-plus-parts pricing often points toward repair, but pricing method is not decisive by itself. Contracting officers should look at the actual performance requirements and the extent of rebuilding.
Mixed-scope contracts can be tricky. If a contract includes both repair and more extensive rebuild work, the principal purpose of the contract and the dominant nature of the work will drive coverage.
Examples in the rule are useful benchmarks, especially for vehicles, electronics, office equipment, and furniture. If the work resembles routine maintenance or component replacement rather than a full teardown and rebuild, it is usually repair rather than remanufacturing.
Official Regulatory Text
(a) Contracts principally for remanufacturing of equipment which is so extensive as to be equivalent to manufacturing are subject to 41 U.S.C. chapter 65 , rather than to the Service Contract Labor Standards statute. Remanufacturing shall be deemed to be manufacturing when the criteria in either paragraphs (a)(1) or (a)(2) of this section are met. (1) Major overhaul of an item, piece of equipment, or material which is degraded or inoperable, and under which all of the following conditions exist: (i) The item or equipment is required to be completely or substantially torn down into individual component parts. (ii) Substantially all of the parts are reworked, rehabilitated, altered and/or replaced. (iii) The parts are reassembled so as to furnish a totally rebuilt item or piece of equipment. (iv) Manufacturing processes similar to those which were used in the manufacturing of the item or piece of equipment are utilized. (v) The disassembled components, if usable (except for situations where the number of items or pieces of equipment involved are too few to make it practicable) are commingled with existing inventory and, as such, lose their identification with respect to a particular piece of equipment. (vi) The items or equipment overhauled are restored to original life expectancy, or nearly so. (vii) Such work is performed in a facility owned or operated by the contractor. (2) Major modification of an item, piece of equipment, or material which is wholly or partially obsolete, and under which all of the following conditions exist: (i) The item or equipment is required to be completely or substantially torn down. (ii) Outmoded parts are replaced. (iii) The item or equipment is rebuilt or reassembled. (iv) The contract work results in the furnishing of a substantially modified item in a usable and serviceable condition. (v) The work is performed in a facility owned or operated by the contractor. (b) Remanufacturing does not include the repair of damaged or broken equipment which does not require a complete teardown, overhaul, and rebuild as described in subparagraphs(a)(1) and (a)(2) of this subsection, or the periodic and routine maintenance, preservation, care, adjustment, upkeep, or servicing of equipment to keep it in usable, serviceable, working order. Such contracts typically are billed on an hourly rate (labor plus materials and parts) basis. Any contract principally for this type of work is subject to the Service Contract Labor Standards statute. Examples of such work include the following: (1) Repair of an automobile, truck, or other vehicle, construction equipment, tractor, crane, aerospace, air conditioning and refrigeration equipment, electric motors, and ground powered industrial or vehicular equipment. (2) Repair of typewriters and other office equipment (but see 22.1003-4 (c)(1) and (d)(1)(iv)). (3) Repair of appliances, radios, television sets, calculators, and other electronic equipment. (4) Inspecting, testing, calibration, painting, packaging, lubrication, tune-up, or replacement of internal parts of equipment listed in subparagraphs(b)(1), (b)(2), and (b)(3) of this subsection. (5) Reupholstering, reconditioning, repair, and refinishing of furniture.