Service Contract Act
Title 29, Code of Federal Regulations, Part 4
Labor Standards for Federal Service Contracts

29 CFR 4.117 - Work subject to requirements of Walsh-Healey Act.

(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 mo