(a) The Act, in paragraph (2) of section 7, exempts from its
provisions ``any work required to be done in accordance with the
provision of the Walsh-Healey Public Contracts Act'' (49 Stat. 2036, 41
U.S.C. 35 et seq.). It will be noted that like the similar provision in
the Contract Work Hours and Safety Standards Act (40 U.S.C. 329(b)),
this is an exemption for ``work'', i.e., specifications or requirements,
rather than for ``contracts'' subject to the Walsh-Healey Act. The
purpose of the exemption was to eliminate possible overlapping of the
differing labor standards of the two Acts, which otherwise might be
applied to employees performing work on a contract covered by the
Service Contract Act if such contract and their work under it should
also be deemed to be covered by the Walsh-Healey Act. The Walsh-Healey
Act applies to contracts in excess of $10,000 for the manufacture or
furnishing of materials, supplies, articles or equipment. Thus, there is
no overlap if the principal purpose of the contract is the manufacture
or furnishing of such materials etc., rather than the furnishing of
services of the character referred to in the Service Contract Act, for
such a contract is not within the general coverage of the Service
Contract Act. In such cases the exemption in section 7(2) is not
pertinent. See, for example, the discussion in Secs. 4.131 and 4.132.
(b) Further, contracts principally for remanufacturing of equipment
which is so extensive as to be equivalent to manufacturing are subject
to the Walsh-Healey Act. Remanufacturing shall be deemed to be
manufacturing when the criteria in paragraph (b)(1) or (2) of this
section are met.
(1) Major overhaul of an item, piece of equipment, or materiel 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 components parts; and
(ii) Substantially all of the parts are reworked, rehabilitated,
altered and/or replaced; and
(iii) The parts are reassembled so as to furnish a totally rebuilt
item or piece of equipment; and
(iv) Manufacturing processes similar to those which were used in the
manufacturing of the item or piece of equipment are utilized; and
(v) The disassembled componets, 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; and
(vi) The items or equipment overhauled are restored to original life
expectancy, or nearly so; and
(vii) Such work is performed in a facility owned or operated by the
contractor.
(2) Major modification of an item, piece of equipment, or materiel
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; and
(ii) Outmoded parts are replaced; and
(iii) The item or equipment is rebuilt or reassembled; and
(iv) The contract work results in the furnishing of a substantially
modified item in a usable and serviceable condition; and
(v) The work is performed in a facility owned or operated by the
contractor.
(3) Remanufacturing does not include the repair of damaged or broken
equipment which does not require a complete teardown, overhaul, and
rebuild as described in paragraphs (b)(1) and (2) of this section, 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 the
work described in this paragraph (b)(3) is subject to the Service
Contract Act. Examples of such work include:
(i) 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;
(ii) Repair of typewriters and other office equipment (see
Sec. 4.123(e));
(iii) Repair of appliances, radios television, calculators, and
other electronic equipment;
(iv) Inspecting, testing, calibration, painting, packaging,
lubrication, tune-up, or replacement of internal parts of equipment
listed in paragraphs (b)(3)(i), (ii), and (iii) of this section; and
(v) Reupholstering, reconditioning, repair, and refinishing of
furniture.
(4) Application of the Service Contract Act or the Walsh-Healey Act
to any similar type of contract not decided above will be decided on a
case-by-case basis by the Administrator.
