[Federal Register Volume 86, Number 227 (Tuesday, November 30, 2021)]
[Proposed Rules]
[Pages 67892-67898]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-25734]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 228, 242, and 252
[Docket DARS-2021-0024]
RIN 0750-AL13
Defense Federal Acquisition Regulation Supplement: Ground and
Flight Risk (DFARS Case 2020-D027)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: DoD is proposing to amend the Defense Federal Acquisition
Regulation Supplement (DFARS) to revise the requirements related to the
assumption of risk associated with aircraft under DoD contracts. The
current requirements are outdated and in need of revision to clarify
applicability due to numerous changes in aircraft contract situations
and the emergence of contracts for small, unmanned aircraft.
DATES: Comments on the proposed rule should be submitted in writing to
the address shown below on or before January 31, 2022, to be considered
in the formation of a final rule.
ADDRESSES: Submit comments identified by DFARS Case 2020-D027, using
any of the following methods:
[cir] Federal eRulemaking Portal: https://www.regulations.gov.
Search for ``DFARS Case 2020-D027''; select ``Comment'' and follow the
instructions to submit a comment. Please include ``DFARS Case 2020-
D027'' on any attached document.
[cir] Email: [email protected]. Include DFARS Case 2020-D027 in
the subject line of the message.
Comments received generally will be posted without change to
https://www.regulations.gov, including any personal information
provided. To confirm receipt of your comment(s), please check https://www.regulations.gov, approximately two to three days after submission
to verify posting.
FOR FURTHER INFORMATION CONTACT: Mr. David E. Johnson, telephone 571-
372-6115.
SUPPLEMENTARY INFORMATION:
I. Background
The contract clause at DFARS 252.228-7001, Ground and Flight Risk,
was established to reduce DoD acquisition costs by relieving
contractors from the responsibility to obtain (and bill the Government
for) commercial insurance to cover the loss of aircraft or damage to
Government-owned aircraft in excess of the first $100,000 of loss or
damage. The current clause requires the contractor to be responsible
for the first $100,000 of loss or damage; and, when in excess of
$100,000, the Government assumes the risk of loss of or damage to its
aircraft. The clause is included (with rare exceptions) in
solicitations and contracts for the acquisition, development,
production, modification, maintenance, repair, flight, or overhaul of
aircraft as prescribed in DFARS 228.370.
Through the clause, contractors are bound by the operating
procedures contained in the combined regulation/instruction entitled
``Contractor's Flight and Ground Operations'' (Air Force Instruction
10-220_IP, Army Regulation
[[Page 67893]]
95-20, Naval Air Systems Command (NAVAIR) Instruction 3710.1 (Series),
Coast Guard Instruction M13020.3 (Series), and Defense Contract
Management Agency Instruction 8210.1 (Series)) in effect on the date of
contract award. The combined regulation/instruction is used to mitigate
the risk assumed by the Government through the clause, which was last
updated in June 2010.
II. Discussion and Analysis
This proposed rule incorporates language in DFARS subpart 228.3 to
update circumstances in which the contract clause at DFARS 252.228-7001
is to be used. The current text at DFARS 228.370 does not adequately
address contractor-owned aircraft and exceptions to the use of the
clause. The proposed text at 228.3 does not require use of the clause
in solicitations and contracts for which a non-DoD customer allows the
use of commercial insurance or other self-insurance, under which the
aircraft are classified as certain unmanned aircraft systems, or under
which the aircraft will be dismantled and removed from inventory. The
proposed change at DFARS 242.302 provides guidance on the DoD policy
for maintaining surveillance of aircraft flight and ground operations.
The changes proposed to DFARS clause 252.228-7001 remove confusing
language and definitions and reflect changes in costs associated with
evolving technology, such as relatively inexpensive drones. For
example, the term ``in the open'' is replaced with the more common
insurance term ``covered aircraft.'' The proposed language clarifies
the difference between ``workmanship errors'' and ``damage.'' The
update also clarifies the applicability of liability coverage for
subcontracts, including those for commercial items.
Additionally, due to the wide range that has developed in aircraft
unit prices and the range of overall contract cost based on the variety
of services contractors may perform, the proposed rule adds reasonable
alternatives for calculating the contractor's cost share in the event
of a mishap to a covered aircraft. Specifically, except for loss or
damage caused by negligence of Government personnel, the contractor
will be responsible only for the least of the following 3 alternatives:
(1) $200,000; (2) 20 percent of the price or estimated acquisition cost
of affected aircraft; or (3) 20 percent of the price or estimated cost
of the contract, task order, or delivery order. In other words, if 20
percent of the cost of an inexpensive aircraft (e.g., a drone) or 20
percent of the price or estimated cost of a relatively inexpensive
contract is less than $200,000, the contractor will pay a lesser cost
share.
The proposed rule includes a new contract clause at DFARS 252.228-
70XX, Public Aircraft and State Aircraft Operations--Liability, which
is to be used when contracted aircraft perform public or state aircraft
operations and the contract does not include DFARS clause 252.228-7001.
The new clause provides definitions for terms related to public and
state aircraft operations, requires compliance with the combined
regulation/instruction for flight operations, and defines contractor
liability for operations for contract performance conducted as public
or state aircraft operations.
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold and for Commercial Items, Including Commercially Available
Off-the-Shelf Items
This rule proposes to revise the clause at DFARS 252.228-7001,
Ground and Flight Risk, and to create one new clause at DFARS 252.228-
70XX, Public Aircraft and State Aircraft Operations--Liability, for use
in situations where contracted aircraft perform public aircraft
operations or state aircraft operations and the clause at DFARS
252.228-7001 is not used. DoD intends to apply both clauses to
contracts below the simplified acquisition threshold; doing so allows
for the inclusion of lower value items in affected contracts, while
preventing contractors who have contracts valued below $200,000 from
being liable for the entirety of the loss or damages. This burden on
these smaller purchases is not commensurate with those of the larger
dollar value contracts and, therefore, discourages the contractors with
lower value contracts from working with the Government.
DoD does not intend to apply either clause to prime contracts for
commercial items including commercially available off-the-shelf items
per DFARS 228.371. However, DFARS clause 252.228-7001 will apply to
subcontracts for commercial items, with an exception for work
subcontracted to a Federal Aviation Administration (FAA) Part 145
repair station performing work pursuant to their FAA license. DFARS
clause 252.228-7001 provides for self-insurance to avoid reliance on
commercial insurance for military aircraft. Application of DFARS
252.228-7001 to subcontracts, including those for commercial items,
provides a mechanism to require subcontractor compliance with the
combined regulation/instruction, which provides the terms and
conditions for the Government's self-insurance.
IV. Expected Impact of the Rule
This rule is not expected to have a significant impact on the
Government or industry. The rule updates and expands procedures and
guidelines on use of DFARS clause 252.228-7001. The change in the
calculation of the contractor's share of loss is viewed as a positive
incentive in reducing the magnitude of the risk of loss for
contractors. Although the dollar amount for contractor liability is
increased from $100,000 to $200,000 in this proposed rule, the addition
of reasonable alternatives that recognize the low cost of aircraft,
such as drones, will mean that a contractor's share of loss may be much
lower. The rule also provides a new clause 252.228-70XX, Public
Aircraft and State Aircraft Operations--Liability, to use when
conditions for use of 252.228-7001 are not met, but the acquisition
involves public aircraft operations or state aircraft operations. It is
expected that contract clause 252.228-70XX will be used very
infrequently, fewer than 10 times annually.
V. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). E.O.
13563 emphasizes the importance of quantifying both costs and benefits,
of reducing costs, of harmonizing rules, and of promoting flexibility.
This is not a significant regulatory action and, therefore, was not
subject to review under section 6(b) of E.O. 12866, Regulatory Planning
and Review, dated September 30, 1993.
VI. Congressional Review Act
As required by the Congressional Review Act (5 U.S.C. 801-808)
before an interim or final rule takes effect, DoD will submit a copy of
the interim or final rule with the form, Submission of Federal Rules
under the Congressional Review Act, to the U.S. Senate, the U.S. House
of Representatives, and the Comptroller General of the United States. A
major rule under the Congressional Review Act cannot take effect until
60 days after it is published in the Federal Register. This rule is not
anticipated to be a major rule under 5 U.S.C. 804.
[[Page 67894]]
VII. Regulatory Flexibility Act
DoD does not expect this proposed rule to have a significant
economic impact on a substantial number of small entities within the
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.,
because the rule primarily provides updates and clarifications. As
noted in Section IV of this preamble, the change in the calculation of
the contractor's share of loss, increased from $100,000 to $200,000 in
this clause, is viewed as a positive incentive in reducing the
magnitude of the risk of loss for contractors. However, an initial
regulatory flexibility analysis has been prepared and is summarized as
follows:
DoD is proposing to amend the Defense Federal Acquisition
Regulation Supplement (DFARS) to update the ground and flight risk
policy and associated contract clause at DFARS 252.228-7001, Ground and
Flight Risk. The language is outdated and needs revision to clarify
applicability due to numerous changes in aircraft contract situations
and the emergence of contracts for small, unmanned aircraft. These
updates also apply to contracts involving contractor-owned and operated
aircraft. The proposed changes include the following: (1) Revising the
clause prescription to clarify when use of the clause at DFARS 252.228-
7001 is mandatory; (2) updating the clause to reflect the evolution of
aircraft technology; (3) creating a new clause to apply to contractor-
owned aircraft operated as public aircraft or in state aircraft status;
and (4) clarifying how DoD will maintain surveillance of aircraft
flight and ground operations during contract performance.
The objective of the rule is to update the ground and flight risk
policy and associated clause. The legal basis for the rule is 41 U.S.C.
1707.
The proposed rule will apply to all small entities that will be
awarded contracts for the acquisition, development, production,
modification, maintenance, repair, flight, or overhaul of aircraft.
According to data from the Federal Procurement Data System for fiscal
years 2017 through 2019, DoD made approximately 6,287 awards per year
on average for these types of acquisitions for a total of 18,861
awards. Approximately 7,757 of these awards were made to 2,185 unique
small entities over the 3 fiscal years.
This proposed rule does not include any new reporting,
recordkeeping, or other compliance requirements for small entities.
The rule does not duplicate, overlap, or conflict with any other
Federal rules.
There are no known, significant, alternative approaches to the
proposed rule that would meet the objectives.
DoD invites comments from small business concerns and other
interested parties on the expected impact of this rule on small
entities.
DoD will also consider comments from small entities concerning the
existing regulations in subparts affected by this rule in accordance
with 5 U.S.C. 610. Interested parties must submit such comments
separately and should cite 5 U.S.C 610 (DFARS Case 2020-D027), in
correspondence.
VIII. Paperwork Reduction Act
The rule does not contain any new information collection
requirements that require the approval of the Office of Management and
Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35) or
impact any existing information collection requirements.
List of Subjects in 48 CFR Parts 228, 242, and 252
Government procurement.
Jennifer D. Johnson,
Editor/Publisher, Defense Acquisition Regulations System.
Therefore, 48 CFR parts 228, 242, and 252 are proposed to be
amended as follows:
0
1. The authority citation for 48 CFR parts 228, 242, and 252 continues
to read as follows:
Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.
PART 228--BONDS AND INSURANCE
228.370 [Redesignated as 228.371]
0
2. Redesignate section 228.370 as section 228.371.
0
3. Add new section 228.370 and sections 228.370-1 and 228.370-2 to read
as follows:
228.370 Ground and flight risk.
228.370-1 Definitions.
As used in this section--
Civil aircraft means an aircraft other than a public aircraft or
state aircraft.
Public aircraft means an aircraft that meets the definition in 49
U.S.C. 40102(a)(41) and the qualifications in 49 U.S.C. 40125.
Specifically, a public aircraft means any of the following:
(1) An aircraft used only for the Government, except as provided in
paragraphs (5) and (7) of this definition.
(2) An aircraft owned by the Government and operated by any person
for purposes related to crew training, equipment development, or
demonstration, except as provided in paragraph (7) of this definition.
(3) An aircraft owned and operated by the government of a State,
the District of Columbia, or a territory or possession of the United
States or a political subdivision of one of these governments, except
as provided in paragraph (7) of this definition.
(4) An aircraft exclusively leased for at least 90 continuous days
by the government of a State, the District of Columbia, or a territory
or possession of the United States or a political subdivision of one of
these governments, except as provided in paragraph (7) of this
definition.
(5) An aircraft owned or operated by the armed forces or chartered
to provide transportation or other commercial air service to the armed
forces under the conditions specified by 49 U.S.C. 40125(c). In the
preceding sentence, the term other commercial air service means an
aircraft operation that--
(i) Is within the United States territorial airspace;
(ii) The Administrator of the Federal Aviation Administration
determines is available for compensation or hire to the public; and
(iii) Must comply with all applicable civil aircraft rules under
title 14, Code of Federal Regulations.
(6) An unmanned aircraft that is owned and operated by, or
exclusively leased for at least 90 continuous days by, an Indian Tribal
government, as defined in section 102 of the Robert T. Stafford
Disaster Relief and Emergency Assistance Act (42 U.S.C. 5122), except
as provided in paragraph (7) of this definition.
(7) As described in 49 U.S.C.40125(b), an aircraft described in
paragraph (1), (2), (3), or (4) of this definition does not qualify as
a public aircraft in situations where the aircraft is used for
commercial purposes or to carry an individual other than a crewmember
or a qualified non-crewmember.
Public aircraft operation means operation of an aircraft that meets
the legal definition of public aircraft established in 49 U.S.C.
40102(a)(41) and the legal qualifications for public aircraft status
outlined in 49 U.S.C. 40125.
State aircraft means an aircraft operated by the Government for
sovereign, noncommercial purposes such as military, customs, and police
services. Military aircraft are afforded status as state aircraft. In
very rare circumstances, DoD-contracted aircraft may be designated, in
writing, by a responsible Government official pursuant to DoD Directive
4500.54E, DoD Foreign Clearance Program, to be operated in state
aircraft status, and States may choose to treat them as
[[Page 67895]]
deemed state aircraft when they are operating under a Government
contract.
228.370-2 General.
(a) Preaward survey. Before awarding any contract using the clause
at 252.228-7001, Ground and Flight Risk, the contracting officer should
obtain a preaward survey of the offeror's proposed aircraft flight and
ground operations facility. If the offeror proposed subcontracting any
aircraft work, the preaward survey should include a review of the
subcontractor's facility. For acquisitions falling under the exceptions
at 228.371(b)(1)(iii), (iv), and (vi), the contracting officer shall
review the documentation the offeror submitted with the proposal in
response to the DD Form 1423, Contract Data Requirements List, to
ensure the offeror's commercial insurance provides the appropriate
coverage required by the clause at 252.228-7001.
(b) Foreign military sales. The exception for foreign military
sales (FMS) contracts at 228.371(b)(1)(iii) only applies to FMS cases
where the FMS customer has explicitly refused assumption of risk of
loss. If the FMS customer has accepted the standard Letter of Offer and
Acceptance Standard Terms and Conditions, as described in DoD 5105.38-
M, Security Assistance Management Manual, they have assumed risk of
loss.
(c) Commercial derivative aircraft. The exception at
228.371(b)(1)(iv) for commercial derivative aircraft only applies if
the contractor is a licensed and certified Federal Aviation
Administration (FAA) repair station for the specific model of aircraft
under contract, when work is being performed pursuant to the FAA
license under 14 CFR part 145. The FAA's repair station search tool is
available at https://av-info.faa.gov/repairstation.asp. All aircraft
flying public aircraft operations operate under airworthiness
certificates maintained by the military services. The FAA airworthiness
certificate in the exception in this paragraph (c) underlies the
military service certificate.
(d) Insurance. The clause at 252.228-7001, Ground and Flight Risk,
reduces acquisition costs by eliminating the costs of insurance to
incentivize the contractor to perform safe and effective operations.
For this reason, 252.228-7001(f) specifies that insurance premium costs
are unallowable. Additionally, 252.228-7001(d)(4) provides that the
Government's assumption of risk does not apply where the loss or damage
is covered by available insurance.
(e) Damage to Government aircraft. (1) Whenever damage to
Government aircraft is reported, particularly when the cost of repair
exceeds the contractor's share of loss provisions, the contracting
officer shall make a liability determination in accordance with the
applicable version of the combined regulation/instruction entitled
``Contractor's Flight and Ground Operations'' (Air Force Instruction
10-220_IP, Army Regulation 95-20, NAVAIR Instruction 3710.1 (Series),
Coast Guard Instruction M13020.3 (Series), and Defense Contract
Management Agency Instruction 8210.1 (Series)). Each incident should be
evaluated on its own merits. The contracting officer should seek input
from the Government flight representative (see 252.228-7001) and legal
counsel, as needed.
(2) Contracting officers should consult with the requiring activity
and the assigned contract administration office on replacement, repair,
or beyond economic repair decisions.
(3) See PGI 228.370-2(e) for an example of workmanship error or
damage.
0
4. Amend newly redesignated section 228.371 by--
0
a. Revising paragraph (b);
0
b. Redesignating paragraphs (c), (d), and (e) as paragraphs (d), (e),
and (f); and
0
c. Adding a new paragraph (c).
The revision and addition read as follows:
228.371 Additional clauses.
* * * * *
(b) Use the clause at 252.228-7001, Ground and Flight Risk, in
solicitations and contracts--
(1) For the acquisition, development, production, modification,
maintenance, repair, flight, or overhaul of aircraft owned by or to be
delivered to the Government, except those solicitations and contracts--
(i) That are strictly for activities incidental to the normal
operations of the aircraft (e.g., refueling operations, minor non-
structural actions not requiring towing such as replacing aircraft
tires due to wear and tear);
(ii) That are awarded for purchase under FAR part 12 procedures;
(iii) For which a non-DoD customer (including an FMS customer per
225.7305) has decided to allow the use of commercial insurance or other
self-insurance;
(iv) For maintenance (ground operations only) of commercial
derivative aircraft with an FAA certificate of airworthiness maintained
to FAA standards. Performance under the exception in this paragraph
(b)(1)(iv) must be at a licensed and certified FAA repair station rated
for the type of aircraft and work to be maintained;
(v) Under which the aircraft are to be dismantled and removed from
the inventory; or
(vi) Under which the aircraft are classified as Group 1 or 2
unmanned aircraft systems per DoD Instruction (DoDI) 6055.07, Mishap
Notification, Investigation, Reporting, and Record Keeping, and the
purchase price of the air vehicle, including installed Government-
furnished equipment, is below the cost threshold for a Class C mishap
per DoDI 6055.07; or
(2) Involving aircraft not owned by or to be delivered to the
Government, only if the contracting officer decides that it is in the
best interest of the Government. Potential factors for contracting
officers to consider when deciding which course of action is in the
best interest of the Government include, but are not limited to,
whether--
(i) The cost of hull insurance exceeds the replacement cost of the
aircraft;
(ii) Insurance is not available (e.g., high-risk experimental
flights and operations of aircraft in a war zone); or
(iii) Ground or flight activities that involve contractor-owned and
contractor-operated aircraft may pose risk to Government aircraft
(e.g., due to close proximity in flight).
(c) Use the clause at 252.228-70XX, Public Aircraft and State
Aircraft Operations--Liability, in solicitations and contracts that do
not include the clause at 252.228-7001 but involve public aircraft
operations or state aircraft operations.
* * * * *
PART 242--CONTRACT ADMINISTRATION AND AUDIT SERVICES
0
5. Amend section 242.302 by adding paragraph (a)(56) to read as
follows:
242.302 Contract administration functions.
(a) * * *
(56) Within DoD, maintaining surveillance of aircraft flight and
ground operations is accomplished by incorporating into the contract,
task order, or delivery order the requirements of the applicable
version of the combined regulation/instruction entitled ``Contractor's
Flight and Ground Operations'' (Air Force Instruction 10-220_IP, Army
Regulation 95-20, NAVAIR Instruction 3710.1 (Series), Coast Guard
Instruction M13020.3 (Series), and Defense Contract Management Agency
Instruction 8210.1 (Series)). See PGI 242.302(a)(56).
* * * * *
[[Page 67896]]
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
252.228-7000 [Amended]
0
6. Amend section 252.228-7000 introductory text by removing
``228.370(a)'' and adding ``228.371(a)'' in its place.
0
7. Revise section 252.228-7001 to read as follows:
252.228-7001 Ground and Flight Risk.
As prescribed in 228.371(b), use the following clause:
GROUND AND FLIGHT RISK (DATE)
(a) Definitions. As used in this clause--
Covered aircraft means an aircraft owned by or to be delivered
to the Government and, when determined by the contracting officer
and specifically identified as such in the contract Schedule, may
include contractor-furnished aircraft that are not intended for
induction into the DoD inventory, including--
(1) Any item, other than a rocket or missile, intended for
flight (e.g., fixed-winged aircraft, blended wing/lifting bodies,
helicopters, vertical take-off or landing aircraft, lighter-than-air
airships, and unmanned aerial vehicles);
(2) Aircraft furnished by the Government to the Contractor under
this contract while in the Contractor's possession, care, custody,
or control regardless of their location, state of disassembly or
reassembly; items removed from--
(i) A particular aircraft already in the Government inventory
retain their status as covered aircraft, provided they are intended
for reinstallation on that particular aircraft; and
(ii) An aircraft that are not intended for reinstallation on
that aircraft lose their status as covered aircraft;
(3) New production aircraft when wholly outside of buildings on
the Contractor's premises or other places described in the Schedule
(e.g., hush houses, run stations, and paint facilities).
(i) New production aircraft become covered aircraft at a stage
of manufacture or production (similar to the point of manufacture in
a conventional aircraft) when a wing, portion of a wing, or engine
is attached to a fuselage.
(ii) Blended wing/lifting bodies become covered aircraft at a
stage of manufacture or production when the center portion and a
lifting surface become attached; and
(4) Commercial aircraft, to include commercially available off-
the-shelf aircraft, become covered aircraft when the commercial
aircraft arrives at the Contractor's place of performance for
modification under the terms of the contract.
Contractor's managerial personnel means the Contractor's
directors, officers, managers, superintendents, or equivalent
representatives who have supervision or direction of--
(1) All, or substantially all, of the Contractor's business;
(2) All, or substantially all, of the Contractor's operation at
any one plant or separate location; or
(3) A separate and complete major industrial operation.
Contractor's premises means those premises, including
subcontractors' premises, designated in the Schedule or in writing
by the Contracting Officer, and any other place the aircraft is
moved for safeguarding.
Crewmember means, unless otherwise provided in the Schedule,
personnel required in the flight manual, assigned for the purpose of
conducting any flight on behalf of the Contractor. It also includes
any operator of an unmanned aerial vehicle.
Flight means any flight approved in writing by the Government
flight representative, to include taxi test made in the performance
of this contract, or flight for the purpose of safeguarding the
aircraft.
Workmanship errors mean damage to the aircraft that is the
result of a task, operation, or action that was originally planned
or intended, the end result of which is a noncompliance with
contract specifications.
(b) Combined regulation/instruction. The Contractor shall be
bound by the operating procedures contained in the combined
regulation/instruction entitled ``Contractor's Flight and Ground
Operations'' (Air Force Instruction 10-220_IP, Army Regulation 95-
20, NAVAIR Instruction 3710.1 (Series), Coast Guard Instruction
M13020.3 (Series), and Defense Contract Management Agency
Instruction 8210.1 (Series)) in effect on the date of contract
award. Compliance with the combined regulation/instruction is
required from the time of contract award throughout the period of
performance of the contract, regardless of the Government's
assumption of risk under the contract.
(c) Government as self-insurer. The Government self-insures and
assumes the risk of damage to, or loss or destruction of, covered
aircraft subject to the following conditions:
(1) The Contractor's liability to the Government for damage,
loss, or destruction of covered aircraft is limited to the
Contractor's share of loss as defined at paragraph (h) of this
clause, except when one of the exclusions at paragraph (d) applies.
(2) The liability provisions of this clause take precedence over
the liability provisions of Federal Acquisition Regulation (FAR)
clause 52.245-1, Government Property, with respect to covered
aircraft.
(3) The Contractor is not liable for loss, damage, or
destruction of covered aircraft as the result of normal wear and
tear, or intentional damage or destruction as required in the
Schedule.
(4) Conditions for Government assumption of risk in flight are
as follows:
(i) The Contractor's crewmembers are approved in writing by the
Government flight representative (GFR).
(ii) The flight is approved in writing by the GFR.
(d) Exclusions from the Government's assumption of risk. The
Government's assumption of risk under this clause shall not extend
to damage, loss, or destruction of covered aircraft which--
(1) Is the result of willful misconduct or lack of good faith on
the part of the Contractor's managerial personnel, including the
Contractor's oversight of subcontractors;
(2) Is sustained during flight if either the flight or the
crewmembers have not been approved in advance and in writing by the
GFR, who has been authorized in accordance with the combined
regulation/instruction entitled ``Contractor's Flight and Ground
Operations'';
(3) Occurs in the course of transportation by rail, or by
conveyance on public streets, highways, or waterways, unless the
transportation is limited to the vicinity of Contractor's premises,
and incidental to work performed under the contract as described in
the Schedule;
(4) Is covered by insurance;
(5) Occurs after the Contracting Officer has, in writing,
revoked the Government's assumption of risk in accordance with
paragraph (e)(1) of this clause;
(6) Is sustained due to workmanship errors; or
(7) Is found by the Contracting Officer to be the result of
exposure to unreasonable conditions. The Contracting Officer will
consider factors including but not limited to the following: Lack of
adequate hangar fire suppression or firefighting vehicles, failure
to provide adequate procedures to the GFR, or systemic failure to
comply with approved procedures.
(e) Revoking the Government's assumption of risk.
(1) The Contracting Officer, when finding that Contractor
managerial personnel have failed to comply with paragraph (b) of
this clause, or finding the covered aircraft are exposed to
unreasonable conditions, will notify the Contractor in writing and
will require the Contractor to comply with contract requirements.
This notice will state the timeframe to correct the noncompliance or
conditions. If the Contracting Officer finds that the Contractor
failed to correct the cited noncompliance or conditions within the
specified timeframe, the Contracting Officer will issue a Notice of
Revocation of the Government's assumption of risk for any covered
aircraft.
(2) Upon receipt of the Notice of Revocation, the Contractor
shall promptly correct the noncompliance or cited conditions,
regardless of whether there is agreement that the conditions are
unreasonable.
(3) If the Contracting Officer issues a Notice of Revocation
pursuant to the terms of this clause--
(i) The Contractor shall thereafter assume the entire risk for
damage, loss, or destruction of the previously covered aircraft;
(ii) Any costs incurred by the Contractor (including the costs
of the Contractor's self-insurance, insurance premiums paid to
insure the Contractor's assumption of risk, deductibles associated
with such purchased insurance, etc.) to mitigate its risk are
unallowable costs; and
(iii) The liability provisions of the clause at FAR 52.245-1,
Government Property, are not applicable to the aircraft impacted by
the Notice of Revocation.
(4) The Contractor shall promptly notify the Contracting Officer
when the
[[Page 67897]]
noncompliance or cited conditions have been corrected. Within 3 days
of receipt of the Contractor's Notice of Correction, the Contracting
Officer will notify the Contractor whether the Government will
resume risk of loss. The Contracting Officer will determine that the
noncompliance or cited conditions have been corrected prior to
resuming assumption of risk.
(5) The Notice of Revocation does not relieve the Contractor of
its obligation to comply with all other provisions of this clause,
including the combined regulation/instruction entitled
``Contractor's Flight and Ground Operations.''
(6) Any disputes regarding the Contracting Officer's Notice of
Revocation shall be subject to FAR clause 52.233-1, Disputes.
(f) Contractor's exclusion of insurance costs. The Contractor
warrants that the contract price does not and will not include,
except as may be authorized in this clause, any charge or
contingency reserve for insurance (including the Contractor's share
of loss) covering damage, loss, or destruction of covered aircraft
when the risk has been assumed by the Government, even if the
assumption may be terminated for covered aircraft.
(g) Procedures in the event of damage, loss, or destruction.
(1) In the event of damage, loss, or destruction of covered
aircraft, the Contractor shall take all reasonable steps to protect
the aircraft from further damage, to separate damaged and undamaged
aircraft, and to put all aircraft in the best possible order. Except
in cases covered by paragraph (h)(2) of this clause, the Contractor
shall furnish to the Contracting Officer a statement of--
(i) The damaged, lost, or destroyed aircraft;
(ii) The time and origin of the damage, loss, or destruction;
(iii) All known interests in commingled property of which
aircraft are a part; and
(iv) The insurance, if any, covering the interest in commingled
property.
(2) If a new production aircraft is damaged, lost, or destroyed
before it has become a covered aircraft, the Government bears no
responsibility for risk of loss.
(3) If a new production aircraft is damaged, lost, or destroyed
after it has become a covered aircraft, the Contractor shall take
action in accordance with the Contracting Officer's written
direction that the aircraft shall be--
(i) Replaced;
(ii) Repaired to the condition immediately prior to the damage;
or
(iii) Considered beyond economic repair. The Contracting Officer
will decide whether further actions are required under the contract.
(4) If a covered aircraft that has been furnished by the
Government to the Contractor is damaged, lost, or destroyed while
covered, the Contractor shall take action in accordance with the
Contracting Officer's written direction that the aircraft shall be--
(i) Repaired; or
(ii) Considered beyond economic repair. The Contracting Officer
will decide further actions required under the contract.
(5) The Contractor may submit a request for equitable adjustment
for expenditures made in performing the obligations under this
paragraph (g).
(h) Contractor's share of loss.
(1) The Contractor's share of loss or damage to covered aircraft
(except for loss or damage caused by negligence of Government
personnel) is the least of--
(i) $200,000;
(ii) 20 percent of the price or estimated acquisition cost of
affected aircraft; or
(iii) 20 percent of the price or estimated cost of the contract,
task order, or delivery order.
(2) If the Government requires covered aircraft be replaced or
repaired by the Contractor, any resulting equitable adjustment shall
not include reimbursement of the Contractor's share of loss.
(3) In the event the Government does not decide to replace or
repair, the Contractor agrees to credit the contract price or pay
the Government, as directed by the Contracting Officer, the least
of--
(i) $200,000;
(ii) 20 percent of the price or estimated acquisition cost of
affected aircraft; or
(iii) 20 percent of the price or estimated cost of the contract,
task order, or delivery order.
(4) The costs incurred by the Contractor for its share of the
loss and for insuring against that loss are unallowable costs,
including but not limited to--
(i) The Contractor's share of loss under the Government's self-
insurance;
(ii) The costs of the Contractor's self-insurance;
(iii) The deductible for any Contractor-purchased insurance;
(iv) Insurance premiums paid for Contractor-purchased insurance;
and
(v) Costs associated with determining, litigating, and defending
against the Contractor's liability.
(i) Reimbursement from a third party. In the event the
Contractor is reimbursed or compensated by a third party for damage,
loss, or destruction of covered aircraft and has also been
compensated by the Government, the Contractor shall equitably
reimburse the Government. The Contractor shall do nothing to
prejudice the Government's right to recover against third parties
for damage, loss, or destruction. Upon the request of the
Contracting Officer or authorized representative, the Contractor
shall at Government expense furnish to the Government all reasonable
assistance and cooperation (including the prosecution of suit and
the execution of instruments of assignment or subrogation) in
obtaining recovery.
(j) Liability to third parties. Unless the flight and
crewmembers have been approved in writing by the GFR, the Contractor
shall not be reimbursed for liability to third parties for loss or
damage to property or for death or bodily injury caused by covered
aircraft during flight, even if the Government has accepted such
liability under any other provisions of the contract.
(k) Subcontracts. The Contractor shall incorporate the
requirements of this clause, including this paragraph (k), in
subcontracts to include subcontracts for commercial items, except--
(1) The Contractor shall not include paragraph (f) in
subcontracts for commercial items; and
(2) The Contractor shall not incorporate the requirements of
this clause in subcontracts with Federal Aviation Administration
(FAA) Part 145 repair stations performing work pursuant to their FAA
license.
(End of clause)
252.228-7003 [Amended]
0
7. Amend section 252.228-7003 introductory text by removing
``228.370(c)'' and adding ``228.371(d)'' in its place.
252.228-7005 [Amended]
0
8. Amend section 252.228-7005 introductory text by removing
``228.370(d)'' and adding ``228.371(e)'' in its place.
252.228-7006 [Amended]
0
9. Amend section 252.228-7006 introductory text by removing
``228.370(e)'' and adding ``228.371(f)'' in its place.
0
10. Add section 252.228-70XX to read as follows:
252.228-70XX Public Aircraft and State Aircraft Operations--
Liability.
As prescribed in 228.371(c), use the following clause:
Public Aircraft and State Aircraft Operations--Liability (Date)
(a) Definitions. As used in this clause--
Civil aircraft means an aircraft other than a public aircraft or
state aircraft.
Public aircraft means an aircraft that meets the definition in
49 U.S.C. 40102(a)(41) and the qualifications in 49 U.S.C. 40125.
Specifically, a public aircraft means any of the following:
(1) An aircraft used only for the Government, except as provided
in paragraphs (5) and (7) of this definition.
(2) An aircraft owned by the Government and operated by any
person for purposes related to crew training, equipment development,
or demonstration, except as provided in paragraph (7) of this
definition.
(3) An aircraft owned and operated by the government of a State,
the District of Columbia, or a territory or possession of the United
States or a political subdivision of one of these governments,
except as provided in paragraph (7) of this definition.
(4) An aircraft exclusively leased for at least 90 continuous
days by the government of a State, the District of Columbia, or a
territory or possession of the United States or a political
subdivision of one of these governments, except as provided in
paragraph (7) of this definition.
(5) An aircraft owned or operated by the armed forces or
chartered to provide transportation or other commercial air service
to the armed forces under the conditions specified by 49 U.S.C.
40125(c). In the preceding sentence, the term ``other commercial air
service'' means an aircraft operation that--
[[Page 67898]]
(i) Is within the United States territorial airspace;
(ii) The Administrator of the Federal Aviation Administration
determines is available for compensation or hire to the public; and
(iii) Must comply with all applicable civil aircraft rules under
title 14, Code of Federal Regulations.
(6) An unmanned aircraft that is owned and operated by, or
exclusively leased for at least 90 continuous days by, an Indian
Tribal government, as defined in section 102 of the Robert T.
Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C.
5122), except as provided in paragraph (7) of this definition.
(7) As described in 49 U.S.C. 40125(b), an aircraft described in
paragraphs (1), (2), (3), or (4) of this definition does not qualify
as a public aircraft when the aircraft is used for commercial
purposes or to carry an individual other than a crewmember or a
qualified non-crewmember.
Public aircraft operation means operation of an aircraft that
meets the legal definition of public aircraft established in 49
U.S.C. 40102(a)(41) and the legal qualifications for public aircraft
status outlined in 49 U.S.C. 40125.
State aircraft means an aircraft operated by the Government for
sovereign, noncommercial purposes such as military, customs, and
police services. Military aircraft are afforded status as state
aircraft. In very rare circumstances, DoD-contracted aircraft may be
designated, in writing, by a responsible Government official
pursuant to DoD Directive 4500.54E, DoD Foreign Clearance Program,
to be operated in state aircraft status, and such status cannot be
deemed without a written designation by an authorized Government
official.
(b) Combined regulation/instruction. Upon award, for contract
performance to be conducted as a public aircraft operation, the
Contractor shall be bound by the operating procedures contained in
the combined regulation/instruction entitled ``Contractor's Flight
and Ground Operations'' (Air Force Instruction 10-220_IP, Army
Regulation 95-20, NAVAIR Instruction 3710.1 (Series), Coast Guard
Instruction M13020.3 (Series), and Defense Contract Management
Agency Instruction 8210.1 (Series)) in effect on the date of
contract award.
(c) Contractor liability for operations for contract performance
conducted as public aircraft operations or state aircraft
operations.
(1) The Contractor assumes responsibility for all damage or
injury to persons or property, including the Contractor's employees
and property and Government personnel and property, occasioned
through the use, maintenance, and operation of the Contractor's
aircraft or other equipment by, or the action of, the Contractor or
the Contractor's employees and agents.
(2) The Contractor, at the Contractor's expense, shall maintain
adequate public liability and property damage insurance, including
hull insurance for the Contractor's aircraft, during the duration of
this contract, insuring the Contractor against all claims for injury
or damage.
(3) The Contractor shall maintain workers' compensation and
other legally required insurance with respect to the Contractor's
own employees and agents.
(4) The Government will in no event be liable or responsible for
damage or injury to any person or property occasioned through the
use, maintenance, or operation of any aircraft or other equipment
by, or the action of, the Contractor or the Contractor's employees
and agents in performing under this contract, and the Government
shall be indemnified and saved harmless against claims for damage or
injury in such cases.
(End of clause)
[FR Doc. 2021-25734 Filed 11-29-21; 8:45 am]
BILLING CODE 5001-06-P