8. Procedures. The following direct and indirect costs will apply to determine repair cost estimates when deficiencies are
found during technical inspections.
a. Direct Costs.
(1) Direct labor. Direct labor is that labor (civilian or military) which can be specifically identified to the repair/
overhaul job to be performed. Direct labor involves only personnel in direct productive contact with the item or service
(a) To estimate-direct labor costs, determine/estimate the direct labor hours to be applied and apply the
appropriate computed direct labor hourly rate to these hours.
(b) The determination of the direct labor hours to be applied will be based on working hour requirements
for maintenance tasks listed in applicable equipment publications; commercial flat rate manuals, when appropriate; similar
work performed previously; or individual experience. The direct labor hours will be periodically reviewed and updated, if
(c) The cost of civilian labor will be based on a labor rate for the work center which will perform the work.
Procedures described in AR 37-110 will be used to convert working years to average productive working hours when
civilian labor pay scales are stated in terms of annual salaries. Labor rates, whether determined from annual salaries or
hourly wage rates, will be computed (to include provisions for the cost of annual, sick, and other leave, and government
contributed fringe benefits) in accordance with AR 37-110.
(d) Labor rates used for military personnel will be the average military wage rate for the work center
performing the work, based on standard rates published in AR 37-108.
(e) Major Army command ers and heads of agencies may establish and use standard hourly rates for
direct labor (including indirect or overhead) so long as such rates are consistent with AR 37-55 and AR 37-110. When
such standard rates are established, separate rates will be established for each category of supportable items or weapons
systems (e.g., aircraft, automotive equipment, combat vehicles, construction equipment, electronics and communications
equipment, missile systems, ships, munitions armament, weapons armament, rail equipment, general equipment, and
commodity groups of equipment; depot maintenance and direct/general support maintenance; and each major
geographical area where wage levels vary significantly.
(f) When considered necessary for determining the proper depot maintenance labor rate, assistance
may be requested as authorized by AR 700-4.
(2) Materials. The cost to repair will include all materials directly applied to and identifiable with the particular
equipment undergoing repair.