[Federal Register Volume 68, Number 31 (Friday, February 14, 2003)]
[Proposed Rules]
[Page 7491]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-3576]
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DEPARTMENT OF DEFENSE
48 CFR Part 252
[DFARS Case 2002-D016]
Defense Federal Acquisition Regulation Supplement; Liability for
Loss Under Vessel Repair and Alteration Contracts
AGENCY: Department of Defense (DoD).
ACTION: Proposed rule with request for comments.
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SUMMARY: DoD is proposing to amend the Defense Federal Acquisition
Regulation Supplement (DFARS) to increase a contractor's liability for
loss or damage under vessel repair and alteration contracts, from
$5,000 to $50,000 per incident. The increased dollar ceiling is based
on adjustments for inflation and the need to provide a financial
incentive for contractors to minimize loss or damage.
DATES: DoD will consider all comments received by April 15, 2003.
ADDRESSES: Respondents may submit comments directly on the World Wide
Web at http://emissary.acq.osd.mil/dar/dfars.nsf/pubcomm. As an
alternative, respondents may e-mail comments to: [email protected].
Please cite DFARS Case 2002-D016 in the subject line of e-mailed
comments.
Respondents that cannot submit comments using either of the above
methods may submit comments to: Defense Acquisition Regulations
Council, Attn: Ms. Sandra Haberlin, OUSD(AT&L)DPAP(DAR), IMD 3C132,
3062 Defense Pentagon, Washington, DC 20301-3062; facsimile (703) 602-
0350. Please cite DFARS Case 2002-D016.
At the end of the comment period, interested parties may view
public comments on the World Wide Web at http://emissary.acq.osd.mil/dar/dfars.nsf.
FOR FURTHER INFORMATION CONTACT: Ms. Sandra Haberlin, (703) 602-0289.
SUPPLEMENTARY INFORMATION:
A. Background
DoD uses the clause at DFARS 252.217-7012, Liability and Insurance,
in master agreements for repair and alteration of vessels. The clause
holds a contractor liable for loss or damage resulting from defective
contractor workmanship and materials. For any other contractor-incurred
loss or damage, the contractor bears the first $5,000 of loss or damage
from each occurrence or incident.
This rule proposes to increase the contractor's liability ceiling
from $5,000 to $50,000, because--
1. The $5,000 ceiling dates back to 1982. This dollar ceiling is
outdated after considering inflation; and
2. An analysis of contractor-incurred damages for a period of 3
years indicates that 70 percent of the incidents were below $50,000.
DoD anticipates that this increase will incentive contractors to reduce
the number of such incidents. Improved contractor performance will not
only reduce the vessel ``down time'' for maintenance and repair, but
will also make more efficient use of scarce maintenance dollars that
would otherwise be used to pay for the damage between the $5,000 and
the $50,000 ceilings.
This rule was not subject to Office of Management and Budget review
under Executive Order 12866, dated September 30, 1993.
B. Regulatory Flexibility Act
This rule may 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. DoD has prepared an Initial
Regulatory Flexibility Analysis (IRFA), which is summarized as follows:
This rule proposes to increase a contractor's liability from $5,000
to $50,000 for loss or damage to a Government vessel, materials, or
equipment. The rule will apply to small entities that have a master
agreement with DoD for repair and alteration of vessels. There is no
available estimate of the total number of small entities that will be
subject to the rule. However, the Naval Sea Systems Command (NAVSEA),
which is responsible for the maintenance and repair of the majority of
vessels, has collected data indicating that, during the period from May
1997 to October 2002, there were 61 occurrences of contractor-caused
damages. Of those, 13 occurrences (21 percent) were attributed to small
entities. The proposed rule does not impose any reporting,
recordkeeping, or other compliance requirements and does not duplicate,
overlap, or conflict with any other Federal rules. This rule will
impact small entities, since they will need to increase their insurance
coverage from $5,000 to $50,000. DoD considered using a ceiling of less
than $50,000, but believes the $50,000 ceiling to be appropriate
because--
1. This ceiling would capture a majority of claims, since a NAVSEA
study shows that 70 percent of claims incurred during a recent 3-year
period were for amounts less than $50,000; and
2. This increase should incentivize contractors to reduce the
number of such occurrences, thereby reducing vessel ``down-time'' for
maintenance and repair and making more efficient use of scarce
maintenance dollars.
A copy of the IRFA may be obtained from the address specified
herein. DoD invites comments from small businesses and other interested
parties. DoD also will consider comments from small entities concerning
the affected DFARS subparts in accordance with 5 U.S.C. 610. Such
comments should be submitted separately and should cite DFARS Case
2002-D016.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the rule does
not impose any information collection requirements that require the
approval of the Office of Management and Budget under 44 U.S.C. 3501,
et seq.
List of Subjects in 48 CFR Part 252
Government procurement.
Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.
Therefore, DoD proposes to amend 48 CFR Part 252 as follows:
1. The authority citation for 48 CFR Part 252 continues to read as
follows:
Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
252.217-7012 [Amended]
2. Section 252.217-7012 is amended as follows:
a. By revising the clause date to read ``(XXX 2003)''; and
b. In paragraph (b)(6), by removing ``$5,000'' and adding in its
place ``$50,000''.
[FR Doc. 03-3576 Filed 2-13-03; 8:45 am]
BILLING CODE 5001-08-P