Defense Federal Acquisition Regulation Supplement: Ground and Flight Risk (DFARS Case 2020-D027), 17346-17354 [2023-05673]

Agencies

• Defense Acquisition Regulations System
• DEPARTMENT OF DEFENSE

[Federal Register Volume 88, Number 55 (Wednesday, March 22, 2023)]
[Rules and Regulations]
[Pages 17346-17354]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-05673]



[[Page 17346]]

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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: Final rule.

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SUMMARY: DoD is issuing a final rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to revise the requirements 
related to the assumption of risk associated with aircraft under DoD 
contracts. Revisions are required due to numerous changes in aircraft 
contract situations and the emergence of contracts for small, unmanned 
aircraft.

DATES: Effective March 22, 2023.

FOR FURTHER INFORMATION CONTACT: David E. Johnson, telephone 202-913-
5764.

SUPPLEMENTARY INFORMATION: 

I. Background

    DoD published a proposed rule in the Federal Register at 86 FR 
67892 on November 30, 2021, to revise the DFARS requirements related to 
the assumption of risk associated with aircraft under DoD contracts. 
Three respondents submitted public comments in response to the proposed 
rule.

II. Discussion and Analysis

    DoD reviewed the public comments in the development of the final 
rule. A discussion of the comments and the changes made to the rule as 
a result of those comments is provided, as follows:

A. Summary of Significant Changes From the Proposed Rule

    The final rule includes, in response to the comments, definitions 
for ``aircraft,'' ``covered aircraft,'' ``crewmember,'' ``flight,'' and 
``workmanship error'' at DFARS 228.370-1 and modified definitions at 
DFARS clause 252.228-7001, Ground and Flight Risk, for ``covered 
aircraft,'' ``flight,'' and ``workmanship error'' A change is made to 
the clause prescription concerning the exception for commercial 
derivative aircraft to clarify that the exception does not apply to 
contracts requiring flights by contractor crewmembers. Paragraph (d)(7) 
is removed from clause 252.228-7001, which provided an exclusion for 
``exposure to unreasonable conditions''.

B. Analysis of Public Comments

1. Ambiguity in Terminology
    Comment: Several respondents express concern about ambiguity. For 
example, one respondent states that the new definition of ``Covered 
aircraft'' in the proposed rule creates confusion regarding 
applicability of the Government's assumption of risk and items 
associated with the aircraft. One respondent requests maintaining the 
existing definition. Another respondent suggests that the terms 
``aircraft'' and ``flight'' be specifically defined for this rule.
    Response: DoD partially concurs with the comments. DoD added a 
definition of ``aircraft'' and amended the terms ``flight'' and 
``covered aircraft'' in the final rule. This rule changes the concept 
of aircraft ``in the open'' to ``covered aircraft'' to help clarify 
that the covered aircraft is under the Government's assumption of risk. 
``Covered aircraft'' describes those aircraft for which the Government 
has assumed the risk of loss.
    Comment: Another respondent states that including an alternate 
meaning of the word ``commercial'' in proposed definitions conflicts 
with existing definitions in regulations and private-insurance industry 
terminology, and the terms appear to originate from different titles of 
the U.S. Code. Similarly, the respondent states that the proposed rule 
``incorporates terms from Title 49 of the U.S. Code, such as 
`commercial,' `noncommercial purposes,' and `public aircraft' that are 
inconsistent and cannot be fully harmonized with the Title 41 
terminology.''
    Response: DoD does not concur with the comment. The final rule 
incorporates terms that are defined in the U.S. Code and that are 
necessary for this rule.
    Comment: A respondent states clause 252.228-7001, as amended by 
this rule, includes a definition of ``crewmember'' that is too narrow.
    Response: DoD does not concur with the comment. The final rule 
contains the flexibility to modify the definition via the contract 
Schedule. The definition provided in this final rule simply removes a 
list of positions included in the definition of ``flight crew member'' 
that was never all inclusive and refers to those positions identified 
in the flight manual.
2. Ambiguity in Clause Prescription
    Comment: Several respondents comment on the prescription for clause 
252.228-7001. One respondent states that the prescription appears to 
unnecessarily narrow the scope of the exception at 228.371(b)(1)(iv), 
relating to work performed by a certified Federal Aviation 
Administration (FAA) repair station.
    Response: DoD partially concurs with the comment. The phrase 
``maintenance (ground operations only) for'' was added at DFARS 
228.371(b)(1)(iv) in the proposed rule to convey that flight operations 
by contractor personnel are not authorized, not to limit the contracts 
to maintenance only. The language in the final rule has been updated to 
clarify that it does not apply to contracts requiring flights by 
contractor crewmembers.
    Comment: Another respondent states that the prescription at 
228.371(b)(1) for clause 252.228-7001 creates ambiguity because ``the 
acquisition, development and production of aircraft would apply only to 
the production of new aircraft, while the modification, maintenance, 
repair, flight, and overhaul would apply to existing Government-owned 
aircraft.''
    Response: DoD does not concur with the comment. This rule applies 
both to production and to existing Government-owned aircraft.
    Comment: Another respondent states that, in the proposed rule, the 
prescription at 228.371(c) appears ambiguous regarding proper selection 
of DFARS 252.228-70XX instead of DFARS 252.228-7001.
    Response: DoD does not concur with the comment. The new clause is 
purposefully limited to certain, rather narrow contractual 
applications, circumstances, or conditions specifically listed. The 
list is inclusive and applies specifically to the actions described 
depending on whether the aircraft is new production aircraft or 
existing aircraft.
3. Unnecessary Language
    Comment: A respondent states that the proposed rule includes 
language at DFARS 228.370-2(d), describing the purpose of clause 
252.228-7001, that is ``unwarranted'' and unnecessary. The respondent 
suggests deleting this language.
    Response: DoD does not concur with the comment. DoD will not delete 
this language but has revised the language in the final rule to 
describe the purpose of clause 252.228-7001.
4. Major Rule
    Comment: Two respondents state that the rule might meet the 
definition of a ``major'' rule, as defined at 5 U.S.C. 804.

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    Response: This rule is not a major rule as defined in 5 U.S.C. 804, 
because it lacks elements of a major rule.
5. Preaward Survey of Aircraft
    Comment: A respondent states that the proposed rule includes an 
``ill-defined and impractical'' requirement at DFARS 228.370-2(a) for a 
preaward survey of potential subcontractors performing ``any aircraft 
work.'' The respondent suggests deleting the entire paragraph.
    Response: DoD does not concur with the comment. This language 
reflects a long-standing policy that is necessary to assist both the 
Government and the prime contractor. This rule does not change this 
long-standing policy, but it does add clarifying language. FAR part 42 
contemplates preaward surveys of a contractor's or subcontractor's 
facility at the discretion of the contracting officer. Finally, the 
preaward survey process only applies to subcontractors working on the 
aircraft itself, not to suppliers of aircraft parts.
6. Inconsistent With Defense Contract Management Agency (DCMA) Guidance
    Comment: A respondent suggests deleting from the rule DFARS 
228.370-2(e)(1), stating that the contracting officer shall make a 
liability determination after damage to Government aircraft has already 
occurred, because this is both possibly unfair to contractors and 
inconsistent with DCMA Instruction 8210-1.
    Response: DoD does not concur with the comment. The final rule 
reflects that such determinations will be made under DFARS 228.370-
2(g), not the combined instruction. This determination is necessarily 
made after an incident but also takes into account the exclusions 
listed at 252.228-7001(d).
7. Compliance With the Combined Regulation/Instruction
    Comment: A respondent states that in accordance with clause 
252.228-7001(b), 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 and is contradictory to requirements for 
creation and approval of the procedures, which require assignment of a 
Government flight representative (GFR) and subsequent approval.
    Response: DoD does not concur with the comment. The applicability 
of the Combined Instruction accrues at time of award of the contract, 
and the contractor is bound by contract terms, which include the 
Combined Instruction throughout contract performance. Coverage under 
the Combined Instruction is not triggered by assignment of a GFR or the 
Government's assumption of the risk of loss. Any claim for Government-
caused delay would be addressed separately.
8. Treatment of Government-Furnished Property
    Comment: A respondent states that the ``carve out'' at clause 
252.228-7001(d)(3) of Government-furnished property from coverage under 
the clause creates an ``undue burden'' on contractors.
    Response: DoD does not concur with the comment. If the contract 
anticipates transportation by common carrier, and the aircraft leaves 
the contractor's facility, then the risk of loss may be determined 
under other applicable terms and conditions of the contract.
9. Allowability of Costs for Insurance Costs and Premiums
    Comment: A respondent states that while FAR part 31 addresses cost 
principles, clause 252.228-7001(d)(4) nonetheless addresses 
allowability of costs for insurance costs and premiums.
    Response: DoD does not concur with the comment. Clause 252.228-
7001(d)(4) relates to insurance generally, and it is an exclusion to 
coverage. Clause 252.228-7001(f) specifically makes the cost of 
insurance premiums for the aircraft expressly unallowable.
10. Exclusion for Exposure to Unreasonable Conditions
    Comment: A respondent states that language at clause 252.228-
7001(d)(7), which provides an exclusion for ``exposure to unreasonable 
conditions,'' is unjustified.
    Response: DoD concurs with the comment. DoD removed the exclusion 
at 252.228-7001(d)(7) from the final rule. However, DFARS 228.370-2(h) 
describes factors for the contracting officer to consider in 
determining whether the contractor has failed to comply with the 
Combined Instruction, including exposure of covered aircraft to 
unreasonable conditions, which may result in revocation of the 
Government's assumption of the risk of loss.
11. Use the Fifteen-Day ``Cure Period''
    Comment: A respondent states that the ``cure period'' reflected in 
clause 252.228-7001(e)(1) should specify a particular timeframe, and it 
suggests retaining the fifteen-day ``cure period.''
    Response: DoD partially concurs with the comment. The rule was 
revised to include the term ``preliminary notice of revocation,'' which 
allows the contracting officer flexibility in specifying an appropriate 
time period. As a result, the contractor has the opportunity to respond 
to the preliminary notice by proposing a timeline for resolution or 
suggesting a solution. If the contracting officer finds that the 
contractor has failed to address the conditions, then the contracting 
officer may issue a formal notice of revocation. This is intended to 
afford the contractor sufficient time to take corrective action.
12. Request for Equitable Adjustment
    Comment: A respondent objects to language in the proposed rule 
stating that the contractor may submit a request for equitable 
adjustment to the contracting officer, noting such language departs 
from existing language that a request for equitable adjustment shall be 
made in connection with clause 252.228-7001.
    Response: DoD concurs with the comment. DoD revised the final rule 
accordingly.
13. Increase to Contractor's Share of Loss
    Comment: A respondent states that the proposed doubling of the 
contractor's share of loss from $100,000 to $200,000, reflected at 
clause 252.228-7001(h), lacks a meaningful basis and represents an 
excessive transfer of risk to the contractor.
    Response: DoD does not concur with the comment. The cost-share 
increase is not intended to track inflation; rather, this is a policy 
decision based on risk of loss and cost sharing and is determined by 
the Government as a fair and reasonable cost-share arrangement.
14. Flowdown Requirement
    Comment: A respondent states that the requirement at clause 
252.228-7001(k) to flow down this clause to commercial subcontractors 
is both inconsistent with acquisition policy and practically 
unworkable.
    Response: DoD does not concur with the comment. The intent of the 
rule is to apply the clause at 252.228-7001 to all contract levels. 
However, there are exceptions provided in paragraph (k) of the clause. 
These exceptions did not exist prior to this rule. Therefore, this rule 
actually narrows the flowdown requirement.

C. Other Changes

    This rule incudes minor changes not associated with public 
comments. First, this rule adds a reference to PGI 228.370-2(e) at 
228.370-2. Second, this rule adds the term ``incorrectly

[[Page 17348]]

performed skill-based'' to the definition of workmanship error and 
reorganizes the definition of ``covered aircraft'' for ease of reading 
at 228.370-1 and 252.228-7001(a). In addition, guidance to contracting 
officers, concerning contracting officer determinations of liability 
and exclusions from the Government's assumption of risk located in the 
DFARS clause 252.228-7001 clause, is extrapolated from the clause and 
also included in the text at 228.370-2(g) along with other similar 
procedural subject matter. The text at 228.370-2(h), Notice of 
revocation of the Government's assumption of risk, and DFARS clause 
252.228-7001, paragraph (e), address the issuance of a preliminary 
notice of revocation. Paragraph (a) is added to 228.370-2 to provide a 
cross reference to procedures on assigning a Government flight 
representative. At DFARS 228.371, the clause prescription in paragraph 
(b)(2) included several factors for contracting officers to consider 
when using the clause at 252.228-7001 under certain circumstances. 
These factors have been relocated in new section 228.370-3, because 
they were not part of the actual clause prescription. Also at DFARS 
228.371, the prescription for 252.228-7007, Public Aircraft and State 
Aircraft Operations--Liability, is moved to the end of the section.
    In the clause at 252.228-7001, the definitions in paragraph (a) are 
arranged in alphabetical order. References to ``commercial items'' are 
replaced with ``commercial products and commercial services'' or 
``commercial products or commercial services'' as appropriate for the 
context.

III. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold (SAT), for Commercial Products, Including Commercially 
Available Off-the-Shelf (COTS) Items, and for Commercial Services

    This rule creates a new clause: DFARS 252.228-7007, Public Aircraft 
and State Aircraft Operations--Liability. The clause DFARS 252.228-7007 
is prescribed for use in solicitations and contracts that do not 
include the clause at 252.228-7001 but involve public aircraft 
operations or state aircraft operations. This rule also revises the 
clause at DFARS 252.228-7001, Ground and Flight Risk. DoD intends to 
apply both clauses to contracts at or below the simplified acquisition 
threshold. Application to contracts at or below the SAT will prevent 
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 services or commercial products, including commercially 
available off-the-shelf items, per DFARS 228.371. However, DFARS clause 
252.228-7001 will apply to subcontracts for commercial products and 
commercial services, 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 products and commercial 
services, provides a mechanism to require subcontractor compliance with 
the combined regulation/instruction, which provide 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 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 252.228-7007, 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 252.228-7007 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. The Office of 
Information and Regulatory Affairs has determined that this rule is not 
a major rule as defined by 5 U.S.C. 804.

VII. Regulatory Flexibility Act

    A final regulatory flexibility analysis (FRFA) has been prepared 
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. 
The FRFA is summarized as follows:
    DoD is amending the Defense Federal Acquisition Regulation 
Supplement (DFARS) to update the ground and flight risk policy and 
associated clause at DFARS 252.228-7001. The language is outdated and 
needs revision to clarify applicability to numerous changes in aircraft 
contract situations and emergence of contracts for small, unmanned 
aircraft.
    DoD received no comments in response to the initial regulatory 
flexibility analysis.
    The 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 businesses.
    This rule does not include any new reporting, recordkeeping, or 
other compliance requirements for small entities.
    There are no known, significant, alternative approaches that would 
accomplish the objectives of the rule.

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VIII. Paperwork Reduction Act

    This rule does not contain any 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).

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 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, 228.370-2, and 
228.370-3 to read as follows:


228.370   Ground and flight risk.


228.370-1  Definitions.

    As used in this section--
    Aircraft means, unless otherwise provided in the contract Schedule, 
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), including emerging technologies that would 
commonly be considered aircraft. New production articles become 
aircraft at a stage of manufacture or production when a wing, portion 
of a wing, or engine is attached to a fuselage. Blended wing/lifting 
bodies become aircraft at a stage of manufacture or production when the 
center portion and a lifting surface become attached.
    Civil aircraft means an aircraft other than a public aircraft or 
state aircraft.
    Contractor 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.
    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) Aircraft furnished by the Government to the contractor under a 
contract while in the contractor's possession, care, custody, or 
control regardless of their location or state of disassembly or 
reassembly;
    (2) Items removed from a Government-furnished aircraft that are--
    (i) Intended for reinstallation on that particular aircraft, which 
retain their status as covered aircraft while awaiting installation; 
and
    (ii) Not intended for reinstallation on that particular aircraft, 
which lose their status as covered aircraft once removal is complete;
    (3) New production aircraft when wholly outside of buildings on the 
contractor's premises or other places described in the contract 
Schedule (e.g., hush houses, run stations, and paint facilities); 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.
    Crewmember means, unless otherwise provided in the contract 
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 
the contract, or flight for the purpose of safeguarding the aircraft. 
All aircraft off the contractor's premises shall be considered to be in 
flight when on the ground or water for reasonable periods of time 
following emergency landings, landings made in performance of the 
contract, or landings approved in writing by the contracting officer.
    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

[[Page 17350]]

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 deemed state aircraft when they are 
operating under a Government contract.
    Workmanship error means damage to the aircraft that is the result 
of an incorrectly performed skill-based task, operation, or action that 
was originally planned or intended.


228.370-2  General.

    (a) Assignment of a Government flight representative. See PGI 
228.370-2(a) for procedures on assigning a Government flight 
representative (GFR) when using the clauses at 252.228-7001 and 
252.228-7007.
    (b) 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.
    (c) 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.
    (d) 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 (d) underlies the 
military service certificate.
    (e) Insurance. The clause at 252.228-7001, Ground and Flight Risk, 
is intended to reduce acquisition costs by eliminating the costs of 
commercial insurance premiums. This clause also is intended to 
encourage the contractor to perform safe and effective operations 
through inclusion of a contractor's share of loss (i.e., a deductible). 
Additionally, the clause requires compliance with the combined 
regulation/instruction entitled ``Contractor's Flight and Ground 
Operations'' (Air Force Instruction 10-220, Army Regulation 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)), which provides procedures to 
mitigate the risk of loss to the Government. For this reason, paragraph 
(e)(4)(ii) of the clause at 252.228-7001 specifies that insurance 
premium costs are unallowable. In addition, paragraph (d)(4) of the 
clause provides that the Government's assumption of risk does not apply 
where the loss or damage is covered by available insurance.
    (f) Damage to Government aircraft. (1) Whenever damage to 
Government aircraft is reported, each incident should be evaluated on 
its own merits. When the cost of repair exceeds the contractor's share 
of loss provisions, the contracting officer shall make a liability 
determination in accordance with paragraph (g) of this section.
    (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(f) for an example of accident or mishap 
damage versus workmanship-error damage.
    (g) Contracting officer determination of liability. (1) When making 
a liability determination, the contracting officer should seek input 
from the GFR and legal counsel, as needed.
    (2) The Government's assumption of risk shall not extend to damage, 
loss, or destruction of covered aircraft that--
    (i) 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;
    (ii) 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'';
    (iii) 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 the contractor's premises, 
and incidental to work performed under the contract as described in the 
Schedule;
    (iv) Is covered by insurance;
    (v) Occurs after the contracting officer has, in writing, revoked 
the Government's assumption of risk; or
    (vi) Is sustained due to workmanship errors.
    (h) Notice of revocation of the Government's assumption of risk. 
The liability provisions of the clause at FAR 52.245-1, Government 
Property, do not apply to the aircraft impacted by a notice of 
revocation.
    (1) Preliminary notice of revocation. (i) When finding that 
contractor managerial personnel have failed to comply with the combined 
regulation/instruction, as required by paragraph (b) of the clause at 
252.228-7001, including finding the covered aircraft are exposed to 
unreasonable conditions, the contracting officer shall issue a 
preliminary notice of revocation of the Government's assumption of risk 
to the contractor and shall require the contractor to comply with 
contract requirements. Factors for the contracting officer to consider 
in determining exposure to unreasonable conditions include, but are not 
limited to, the following:
    (A) Lack of adequate hangar fire suppression or firefighting 
vehicles;
    (B) Failure to provide adequate procedures to the GFR; or
    (C) Systemic failure to comply with approved procedures.
    (ii) The preliminary notice of revocation will state the timeframe 
for the contractor to correct the noncompliance or conditions.
    (2) Notice of revocation. If the contractor fails to correct the 
cited noncompliance or conditions within the specified timeframe, the 
contracting officer shall issue to the contractor a notice of 
revocation of the Government's assumption of risk for any covered 
aircraft.
    (i) Thereafter the contractor assumes 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.

[[Page 17351]]

    (iii) The notice of revocation does not relieve the contractor of 
its obligation to comply with all other provisions of the clause at 
252.228-7001, including the combined regulation/instruction entitled 
``Contractor's Flight and Ground Operations.''
    (iv) Within 3 days of receipt of the contractor's notice of 
correction, the contracting officer shall notify the contractor whether 
the Government will resume risk of loss. The contracting officer shall 
determine that the noncompliance or cited conditions have been 
corrected prior to resuming assumption of risk.
    (v) Any disputes regarding the contracting officer's notice of 
revocation shall be subject to FAR clause 52.233-1, Disputes.
    (i) Procedures in the event of damage, loss, or destruction of 
covered aircraft. (1) In the event of damage, loss, or destruction of 
covered aircraft, except in cases covered by paragraph (j)(2) of this 
section, the contracting officer shall evaluate the contractor's 
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 contracting officer shall 
provide written direction to the contractor to 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 
shall 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 
contracting officer shall provide written direction to the contractor 
that the aircraft shall be--
    (i) Repaired; or
    (ii) Considered beyond economic repair. The contracting officer 
shall decide further actions required under the contract.
    (5) The contracting officer shall make an equitable adjustment for 
expenditures made in performing the obligations under paragraph (h) of 
the clause at 252.228-7001.
    (j) Contracting officer determination of the 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 to 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 covered aircraft, the clause at 252.228-7001 requires the 
contractor 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.
    (k) Reimbursement from a third party. If the contracting officer 
finds or has reason to believe that the contractor has been reimbursed 
or otherwise compensated by a third party for damage, loss, or 
destruction of covered aircraft and has also been compensated by the 
Government, then the contracting officer shall demand an equitable 
reimbursement. If the contracting officer requests that the contractor 
provide reasonable assistance in obtaining recovery, such effort shall 
be an allowable expense of the contractor.


228.370-3  Aircraft not owned by or to be delivered to the Government.

    (a) When a contract involves aircraft not owned by or to be 
delivered to the Government, the contracting officer may use the clause 
at 252.228-7001 only if the contracting officer determines that it is 
in the best interest of the Government.
    (b) Potential factors for the contracting officer to consider when 
deciding which course of action is in the best interest of the 
Government include, but are not limited to, whether--
    (1) The cost of hull insurance exceeds the replacement cost of the 
aircraft;
    (2) Insurance is not available (e.g., high-risk experimental 
flights and operations of aircraft in a war zone); or
    (3) 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).

0
4. Amend newly redesignated section 228.371 by revising paragraph (b) 
and adding paragraph (f) to 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 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. This exception does not apply to contracts requiring 
flights with contractor crewmembers;
    (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

[[Page 17352]]

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. See 228.371-3.
* * * * *
    (f) Use the clause at 252.228-7007, 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, Army 
Regulation 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)). See PGI 
242.302(a)(56).
* * * * *

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
6. Amend section 252.228-7000--
0
a. By revising the section heading; and
0
b. In the introductory text by removing ``228.370(a)'' and adding 
``228.371(a)'' in its place.
    The revision reads as follows:


252.228-7000  Reimbursement for War-Hazard Losses.

* * * * *

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 (Mar 2023)

    (a) Definitions. As used in this clause--
    Aircraft means, unless otherwise provided in the contract 
Schedule, 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), including emerging 
technologies that would commonly be considered aircraft. New 
production articles become aircraft at a stage of manufacture or 
production when a wing, portion of a wing, or engine is attached to 
a fuselage. Blended wing/lifting bodies become aircraft at a stage 
of manufacture or production when the center portion and a lifting 
surface become attached.
    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.
    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) 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 or state of disassembly or 
reassembly;
    (2) Items removed from a Government furnished aircraft that 
are--
    (i) Intended for reinstallation on that particular aircraft, 
which retain their status as covered aircraft while awaiting 
installation; and
    (ii) Not intended for reinstallation on that particular 
aircraft, which lose their status as covered aircraft once removal 
is complete;
    (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); 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.
    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. All aircraft off the Contractor's premises shall be 
considered to be in flight when on the ground or water for 
reasonable periods of time following emergency landings, landings 
made in performance of the contract, or landings approved in writing 
by the contracting officer.
    Workmanship error means damage to the aircraft that is the 
result of an incorrectly performed skill-based task, operation, or 
action that was originally planned or intended.
    (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, 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,

[[Page 17353]]

highways, or waterways, unless the transportation is limited to the 
vicinity of the 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)(3) of this clause; or
    (6) Is sustained due to workmanship errors.
    (e) Revoking the Government's assumption of risk.
    (1) The Contracting Officer, when finding that the Contractor's 
managerial personnel have failed to comply with paragraph (b) of 
this clause, will issue a preliminary notice of revocation requiring 
the Contractor to comply with contract requirements within a 
timeframe specified by the Contracting Officer. In determining 
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.
    (2) Upon receipt of the preliminary 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 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.
    (4) 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.
    (5) The Contractor shall promptly notify the Contracting Officer 
when the 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.
    (6) 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.''
    (7) 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 Contracting Officer will make an 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 products and 
commercial services, except--
    (1) The Contractor shall not include paragraph (f) of this 
clause in subcontracts for commercial products or commercial 
services; 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)

0
8. Amend section 252.228-7003--
0
a. By revising the section heading; and
0
b. In the introductory text by removing ``228.370(c)'' and adding 
``228.371(c)'' in its place.

[[Page 17354]]

    The revision reads as follows:


252.228-7003   Capture and Detention.

* * * * *

0
9. Amend section 252.228-7005--
0
a. By revising the section heading; and
0
b. In the introductory text by removing ``228.370(d)'' and adding 
``228.371(d)'' in its place.
    The revision reads as follows:


252.228-7005   Mishap Reporting and Investigation Involving Aircraft, 
Missiles, and Space Launch Vehicles.

* * * * *

0
10. Amend section 252.228-7006--
0
a. By revising the section heading; and
0
b. In the introductory text by removing ``228.370(e)'' and adding 
``228.371(e)'' in its place.
    The revision reads as follows:


252.228-7006   Compliance with Spanish Laws and Insurance.

* * * * *

0
11. Add section 252.228-7007 to read as follows:


252.228-7007   Public Aircraft and State Aircraft Operations--
Liability.

    As prescribed in 228.371(f), use the following clause:

Public Aircraft and State Aircraft Operations--Liability (Mar 2023)

    (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--
    (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, 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 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, 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. 2023-05673 Filed 3-21-23; 8:45 am]
BILLING CODE 5001-06-P