[Federal Register Volume 72, Number 13 (Monday, January 22, 2007)]
[Rules and Regulations]
[Pages 2633-2637]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-733]
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DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 212, 244, 246, and 252
RIN 0750-AF12
Defense Federal Acquisition Regulation Supplement; Notification
Requirements for Critical Safety Items (DFARS Case 2004-D008)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Final rule.
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SUMMARY: DoD has issued a final rule amending the Defense Federal
Acquisition Regulation Supplement (DFARS) to add policy regarding
notification of potential safety issues under DoD contracts. The rule
contains a contract clause requiring contractors to promptly notify the
Government of any nonconformance or deficiency that could impact item
safety.
DATES: Effective Date: January 22, 2007.
FOR FURTHER INFORMATION CONTACT: Mr. Mark Gomersall, Defense
Acquisition Regulations System, OUSD (AT&L) DPAP (DARS), IMD 3C132,
3062 Defense Pentagon, Washington, DC 20301-3062. Telephone (703) 602-
0302; facsimile (703) 602-0350. Please cite DFARS Case 2004-D008.
SUPPLEMENTARY INFORMATION:
A. Background
This final rule contains a new contract clause requiring
contractors to notify the Government of any nonconformance or
deficiency that could impact the safety of items acquired by or
serviced for the Government. The rule is a result of Section 8143 of
the Fiscal Year 2004 DoD Appropriations Act (Pub. L. 108-87), which
required examination of appropriate standards and procedures to ensure
timely notification to the Government and contractors regarding safety
issues, including defective parts.
DoD published a proposed rule at 70 FR 44077 on August 1, 2005.
Thirteen respondents submitted comments on the proposed rule. A
discussion of the comments is provided below.
1. Comment: One respondent recommended amending the clause
prescription at DFARS 246.371(a)(2) and (3) to change the term
``system'' to ``critical safety system.''
DoD Response: The term ``system'' relates to an assemblage of
subsystems, assemblies, and components that comprise an end item.
Adding ``critical safety'' to the term ``system'' is unnecessary and
would be confusing where major or less-than-major systems are not
described in terms such as ``critical safety.''
2. Comment: Five respondents suggested requiring the use of the
Government-Industry Data Exchange Program (GIDEP) as the method for
notification of safety issues and for reporting all types of technical
data and reliability information.
DoD Response: The primary objective of this DFARS rule is to ensure
that contractors who have delivered defective products with potential
safety implications notify affected contracting offices quickly, using
whatever method
[[Page 2634]]
the contractor determines to be most expeditious. GIDEP may not be the
most efficient or effective notification approach in many situations.
3. Comment: One respondent suggested DoD include integrated
environmental safety and occupational health issues in the coverage.
DoD Response: Environmental safety and occupational health issues
were not included in the mandate that resulted in the issuance of this
DFARS rule (Section 8143 of the Fiscal Year 2004 DoD Appropriations Act
(Pub. L. 108-87)).
4. Comment: One respondent recommended that the DFARS rule include
a timeframe for reaction by the Government after notification.
DoD Response: The intent of the DFARS rule is to ensure timely
notification of potential safety defects. The time required by the
Government to respond to and effectively investigate each incident will
depend upon the circumstances of the situation.
5. Comment: One respondent requested a more specific definition of
``safety'' in the rule.
DoD Response: DoD has reexamined all references to safety in the
DFARS rule and has determined that the term is adequately explained in
its context each time it is used.
6. Comment: Five respondents submitted comments regarding
timeframes for notification of potential safety defects. One respondent
indicated that the requirement for notifying the procuring contracting
officer (PCO) and the administrative contracting officer (ACO) within
72 hours of potential safety issues may cause over-reporting, because
the contractor will have insufficient time to investigate the situation
internally. The respondent requested flexibility regarding notification
but did not provide a proposed timeframe for notification. Another
respondent questioned whether 72 hours would be realistic but provided
no recommended time frame. Other respondents recommended notification
periods of 3 business days; 5 business days; and 10-30 working days.
DoD Response: DoD concurs in lengthening the written notification
period to 5 working days, but does not concur in making the initial
reporting period for a potential safety defect flexible. The initial
notification of 72 hours is intended to ensure that the customer is
aware of potential safety issues in delivered products, has a basic
understanding of the circumstances, and has a point of contact to begin
addressing a mutually acceptable plan of action. Because of the
potential safety implications, the initial notification is a matter of
urgency. The 5-day written notification period is consistent with
similar requirements in the civil sector. The Federal Aviation
Administration regulations at 14 CFR 21.3(e) require reporting of
aviation failures, malfunctions, or defects within 24 hours after it
has been determined that the failure, malfunction, or defect has
occurred. Similarly, federal regulations governing motor vehicles at 49
CFR 573.6(b) require submission of a report not more than 5 working
days after a safety-related defect or noncompliance has been determined
to exist.
7. Comment: One respondent expressed concern that the DFARS rule
does not indicate what information has to be communicated or the
distribution or communication method.
DoD Response: Paragraph (c) of the contract clause specifically
describes the communication and information requirements.
8. Comment: One respondent stated that the definition of
``replenishment part'' in 246.101 is satisfactory, but the phrase
``purchased after provisioning'' in the definition needs to be
clarified or deleted. The phrase, as currently written, can cause
confusion on whether initial provisioning orders are covered.
DoD Response: DoD has amended the rule to remove the references to
provisioning. The rule applies to all repairable and consumable parts
identified as critical safety items.
9. Comment: One respondent recommended limiting notification to
truly significant threats to safety from malfunctioning systems or
subsystems.
DoD Response: Defining ``truly significant threats to safety''
would be difficult and could result in inconsistent application. Also,
``build-to-print'' manufacturers produce many critical safety items and
may not have knowledge of an item's ultimate application or failure
consequences.
10. Comment: One respondent expressed concern that a contracting
officer might not know whether an item was a critical safety item and
might include the notification requirement when it is unnecessary.
DoD Response: The contract clause specifies that the notification
requirement for parts applies to those items identified as critical
safety items. The contracting officer will receive input from
technical/requirements personnel as to which items fall into that
category, and will identify those items in the contract.
11. Comment: One respondent was concerned that the contracting
officer may not know whether a system, subsystem, assembly, or
subassembly is ``integral to a system,'' as stated in DFARS 246.371,
and may unnecessarily impose the notification requirement.
DoD Response: The pertinent aspect of the rule is that notification
be provided when there is a nonconformance or deficiency that may
result in a safety impact for a system or its constituent components. A
contracting officer or contractor involved with systems, subsystems,
assemblies, or subassemblies will know the application of the product
and whether it is integral to a system. The phrase ``integral to a
system'' is used in FAR Part 34 in conjunction with items of supply
that may be replaced during the service life of a system.
12. Comment: One respondent expressed confusion as to whether the
notification requirement applies to repair, maintenance, logistics
support, or overhaul services contracts where a system, subsystem,
assembly, or subassembly is integral to a system and failure or
malfunction poses a safety risk; or only to repairs that are integral
to the overall system regardless of effects on subsystems, assemblies,
and subassemblies.
DoD Response: Within the context of the DFARS rule, ``integral to a
system'' means items of supply within a system that may be replaced
during the service life of a system.
13. Comment: One respondent suggested moving the definition of
``critical safety item'' from the contract clause to 246.101.
DoD Response: The definition is appropriately placed within the
contract clause, where the term is used.
14. Comment: One respondent stated that the notification
requirement in paragraph (b)(2) of the contract clause was more
expansive than the definition in 246.101, because it included the
phrase ``or parts.'' The respondent also questioned whether the
notification requirement applied to parts or software bugs that had no
effect on the safety of the item as a whole.
DoD Response: The final rule excludes the definition of
``replenishment part'' from 246.101, and clarifies, in 246.371(a), that
the contract clause applies to the acquisition of repairable or
consumable parts identified as critical safety items. Paragraph (b) of
the contract clause specifies that the notification requirement applies
to all nonconformances for parts identified as critical safety items;
and all nonconformances or deficiencies that may result in a safety
impact for systems, or subsystems, assemblies, subassemblies, or parts
integral to a system.
[[Page 2635]]
15. Comment: One respondent expressed concern that the DFARS clause
permitted subcontractors to bypass the prime or higher-tier
subcontractor and directly notify the PCO and the ACO. The respondent
was concerned that this did not allow the prime or higher-tier
subcontractor to independently evaluate the information and assess its
credibility, accuracy, or impact.
DoD Response: Paragraph (f)(2)(i) of the contract clause
specifically requires the subcontractor to notify the prime or higher-
tier subcontractor. Paragraph (f)(2)(ii) of the clause requires the
subcontractor to also notify the ACO and the PCO if the subcontractor
is aware of the ACO and the PCO for the contract. Nothing in the clause
precludes the prime contractor or higher-tier subcontractor from
independently evaluating the information provided by the subcontractor.
16. Comment: Two respondents expressed concern regarding the flow-
down requirements of the contract clause. One respondent expressed
concern about flow-down to commercial item subcontractors and to any
subcontractors whose work does not involve critical safety items.
Another respondent recommended that flow-down be limited to only the
acquisition of replacement or replenishment spares.
DoD Response: The final rule clarifies that the clause applies to
contracts and subcontracts for both commercial and non-commercial
items. This includes contracts and subcontracts for parts identified as
critical safety items; systems and subsystems, assemblies and
subassemblies integral to a system; and repair, maintenance, logistics
support, or overhaul services for systems and subsystems, assemblies,
subassemblies, and parts integral to a system.
17. Comment: One respondent stated that the Government should
supply and maintain a comprehensive list of critical safety items that
is accessible to contractors.
DoD Response: The parts that the Government has designated as
critical safety items will be identified in the applicable contracts.
18. Comment: Two respondents recommended clarification of the term
``technical nonconformance''.
DoD Response: DoD agrees that the term ``technical nonconformance''
could cause confusion and, therefore, has replaced this term with
``nonconformance'' in paragraph (b)(1) of the contract clause.
19. Comment: Two respondents stated that the term ``safety impact''
in the contract clause is not tangible or properly defined.
DoD Response: The definition is consistent with MIL-STD-882D,
Standard Practice for System Safety, Appendix A, for critical mishap
severity categorization and mishap risk impact.
20. Comment: One respondent recommended clarification that
contractor notification is required only for parts sold to the
Government and does not include parts scrapped by the contractor.
DoD Response: Paragraph (b) of the contract clause specifies that
the notification requirement applies to items acquired by or serviced
for the Government under the contract.
21. Comment: Three respondents requested clarification of the term
``credible information'' as used in the contract clause.
DoD Response: DoD has added a definition of ``credible
information'' to the contract clause, based upon a recommended
definition provided by one of the respondents.
22. Comment: One respondent recommended that, instead of all
critical safety items being subject to the reporting requirements of
the contract clause, the reporting be limited to those situations
resulting in safety impacts.
DoD Response: A significant percentage of critical safety items
purchased by DoD are provided by small businesses that may not know the
end item application of the components they are supplying, nor the
failure modes and effects of the items. Many of these small businesses
may be unaware of whether a nonconformance would have a safety impact.
Therefore, the recommended change was not adopted.
23. Comment: One respondent stated that the definition of
``critical safety item'' does not indicate the level of damage
sufficient to constitute ``serious'' damage, and that it is unclear
what level of risk of personal injury would be ``unacceptable.'' The
respondent recommended that the language established for ``safety
impact'' be used in the definition of ``critical safety item'' to
preclude ambiguity.
DoD Response: DoD has revised the definition of ``critical safety
item'' in the contract clause to replace the potentially ambiguous
language with a reference to the definition of ``safety impact'' within
the contract clause.
24. Comment: Two respondents expressed concern with the definition
of ``safety impact'' and associated dollar thresholds for property
damage. One respondent stated that ``safety impact'' should focus on
risk of injury or loss of life instead of property damage. The
respondent suggested deleting ``loss of a weapon system; or property
damage exceeding $200,000'' from the definition of ``safety impact''
or, alternatively, replacing ``$200,000'' with ``$1,000,000'' to
reflect realistic thresholds. Another respondent recommended that the
definition of ``safety impact'' be revised for consistency with the
MIL-STD-882 Risk Hazard Matrix, rather than the arbitrary property
damage value of $200,000.
DoD Response: DoD does not agree that notification requirements
should apply only to risk of injury or loss of life situations.
However, the monetary value specified in the rule has been revised to
$1,000,000 for consistency with MIL-STD-882D, Appendix A, Table A-I.
25. Comment: One respondent stated that the assertion in paragraph
(e) of the contract clause, that notification of safety issues will
neither be an admission of responsibility nor a release of liability,
would not adequately protect contractors from potential law suits. The
respondent suggested that the clause include language that would
reimburse the contractor for liabilities and expenses incidental to
such liabilities to third persons not compensated by insurance or
otherwise without regard to and as an exception to any limitation of
cost or the limitation of funds clause in the contract.
DoD Response: DoD cannot establish a clause that grants Government
indemnification for liabilities to third parties arising from
compliance with the clause. Absent express statutory authority, the
Government may not enter into an agreement to hold harmless or
indemnify where the amount of the Government's liability is indefinite,
indeterminable, or potentially unlimited.
26. Comment: One respondent stated that the rule does not
adequately define ``critical safety items'' and suggests that the
probability of failure be incorporated in the definition.
DoD Response: The definition of ``critical safety item'' is based
on public law and existing DoD policies. Further, probability of
failure assumes a part will be manufactured as specified. The DFARS
rule addresses notification when a delivered item is nonconforming or
defective; thus, probability of failure may not be meaningful.
27. Comment: One respondent recommended that the requirement for
notification of safety defects be limited to aviation products.
DoD Response: DoD does not agree that the notification requirement
should be limited to the aviation community. While the initial focus of
critical safety items resulted from Section 802 of the National Defense
Authorization Act for
[[Page 2636]]
Fiscal Year 2004 (Pub. L. 108-136), Section 8143 of the Fiscal Year
2004 DoD Appropriations Act (Public Law 108-87) required DoD to examine
appropriate standards and procedures for timely notification regarding
safety issues, including defective parts. It is essential that the
Government be notified of all potential safety defects, regardless of
product line.
This rule was not subject to Office of Management and Budget review
under Executive Order 12866, dated September 30, 1993.
B. Regulatory Flexibility Act
DoD certifies that this final rule will not 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 applies only in situations where nonconformances or
deficiencies could impact item safety. The occurrence of such
situations is expected to be limited.
C. Paperwork Reduction Act
This final rule contains a new information collection requirement.
The Office of Management and Budget has approved the information
collection for use through December 31, 2009, under Control Number
0704-0441.
List of Subjects in 48 CFR Parts 212, 244, 246, and 252
Government procurement.
Michele P. Peterson,
Editor, Defense Acquisition Regulations System.
0
Therefore, 48 CFR parts 212, 244, 246, and 252 are amended as follows:
0
1. The authority citation for 48 CFR parts 212, 244, 246, and 252
continues to read as follows:
Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.
PART 212--ACQUISITION OF COMMERCIAL ITEMS
0
2. Section 212.301 is amended by adding paragraph (f)(xii) to read as
follows:
212.301 Solicitation provisions and contract clauses for the
acquisition of commercial items.
(f) * * *
(xii) Use the clause at 252.246-7003, Notification of Potential
Safety Issues, as prescribed in 246.371.
PART 244--SUBCONTRACTING POLICIES AND PROCEDURES
0
3. Section 244.403 is revised to read as follows:
244.403 Contract clause.
Use the clause at 252.244-7000, Subcontracts for Commercial Items
and Commercial Components (DoD Contracts), in solicitations and
contracts for supplies or services other than commercial items, that
contain any of the following clauses:
(1) 252.225-7014 Preference for Domestic Specialty Metals,
Alternate I.
(2) 252.246-7003 Notification of Potential Safety Issues.
(3) 252.247-7023 Transportation of Supplies by Sea.
(4) 252.247-7024 Notification of Transportation of Supplies by Sea.
PART 246--QUALITY ASSURANCE
0
4. Section 246.371 is added to read as follows:
246.371 Notification of potential safety issues.
(a) Use the clause at 252.246-7003, Notification of Potential
Safety Issues, in solicitations and contracts for the acquisition of--
(1) Repairable or consumable parts identified as critical safety
items;
(2) Systems and subsystems, assemblies, and subassemblies integral
to a system; or
(3) Repair, maintenance, logistics support, or overhaul services
for systems and subsystems, assemblies, subassemblies, and parts
integral to a system.
(b) Follow the procedures at PGI 246.371 for the handling of
notifications received under the clause at 252.246-7003.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
5. Section 252.244-7000 is revised to read as follows:
252.244-7000 Subcontracts for Commercial Items and Commercial
Components (DoD Contracts).
As prescribed in 244.403, use the following clause:
Subcontracts for Commercial Items and Commercial Components (DOD
Contracts) (JAN 2007)
In addition to the clauses listed in paragraph (c) of the
Subcontracts for Commercial Items clause of this contract (Federal
Acquisition Regulation 52.244-6), the Contractor shall include the
terms of the following clauses, if applicable, in subcontracts for
commercial items or commercial components, awarded at any tier under
this contract:
(a) 252.225-7014 Preference for Domestic Specialty Metals,
Alternate I (10 U.S.C. 2241 note).
(b) 252.246-7003 Notification of Potential Safety Issues.
(c) 252.247-7023 Transportation of Supplies by Sea (10 U.S.C.
2631).
(d) 252.247-7024 Notification of Transportation of Supplies by
Sea (10 U.S.C. 2631).
(End of clause)
0
6. Section 252.246-7003 is added to read as follows:
252.246-7003 Notification of Potential Safety Issues.
As prescribed in 246.371(a), use the following clause:
Notification of Potential Safety Issues (JAN 2007)
(a) Definitions. As used in this clause--
Credible information means information that, considering its
source and the surrounding circumstances, supports a reasonable
belief that an event has occurred or will occur.
Critical safety item means a part, subassembly, assembly,
subsystem, installation equipment, or support equipment for a system
that contains a characteristic, any failure, malfunction, or absence
of which could have a safety impact.
Safety impact means the occurrence of death, permanent total
disability, permanent partial disability, or injury or occupational
illness requiring hospitalization; loss of a weapon system; or
property damage exceeding $1,000,000.
Subcontractor means any supplier, distributor, vendor, or firm
that furnishes supplies or services to or for the Contractor or
another subcontractor under this contract.
(b) The Contractor shall provide notification, in accordance
with paragraph (c) of this clause, of--
(1) All nonconformances for parts identified as critical safety
items acquired by the Government under this contract; and
(2) All nonconformances or deficiencies that may result in a
safety impact for systems, or subsystems, assemblies, subassemblies,
or parts integral to a system, acquired by or serviced for the
Government under this contract.
(c) The Contractor--
(1) Shall notify the Administrative Contracting Officer (ACO)
and the Procuring Contracting Officer (PCO) as soon as practicable,
but not later than 72 hours, after discovering or acquiring credible
information concerning nonconformances and deficiencies described in
paragraph (b) of this clause; and
(2) Shall provide a written notification to the ACO and the PCO
within 5 working days that includes--
(i) A summary of the defect or nonconformance;
(ii) A chronology of pertinent events;
(iii) The identification of potentially affected items to the
extent known at the time of notification;
(iv) A point of contact to coordinate problem analysis and
resolution; and
(v) Any other relevant information.
(d) The Contractor--
(1) Is responsible for the notification of potential safety
issues occurring with regard to an item furnished by any
subcontractor; and
[[Page 2637]]
(2) Shall facilitate direct communication between the Government
and the subcontractor as necessary.
(e) Notification of safety issues under this clause shall be
considered neither an admission of responsibility nor a release of
liability for the defect or its consequences. This clause does not
affect any right of the Government or the Contractor established
elsewhere in this contract.
(f)(1) The Contractor shall include the substance of this
clause, including this paragraph (f), in subcontracts for--
(i) Parts identified as critical safety items;
(ii) Systems and subsystems, assemblies, and subassemblies
integral to a system; or
(iii) Repair, maintenance, logistics support, or overhaul
services for systems and subsystems, assemblies, subassemblies, and
parts integral to a system.
(2) For those subcontracts described in paragraph (f)(1) of this
clause, the Contractor shall require the subcontractor to provide
the notification required by paragraph (c) of this clause to--
(i) The Contractor or higher-tier subcontractor; and
(ii) The ACO and the PCO, if the subcontractor is aware of the
ACO and the PCO for the contract.
(End of clause)
[FR Doc. E7-733 Filed 1-19-07; 8:45 am]
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