Defense Federal Acquisition Regulation Supplement (DFARS) Part 228, Bonds and Insurance, and Related Clauses at 252.228

Defense Federal Acquisition Regulation Supplement
Part 252-Solicitation Provisions and Contract Clauses

(Revised December 15, 1998)
252.228-7000 Reimbursement for War-Hazard Losses.
As prescribed in 228.370(a), use the following clause:
REIMBURSEMENT FOR WAR-HAZARD LOSSES (DEC 1991)
(a) Costs for providing employee war-hazard benefits in accordance with
paragraph (b) of the Workers' Compensation and War-Hazard Insurance clause of
this contract are allowable if the Contractor—
(1) Submits proof of loss files to support payment or denial of each claim;
(2) Subject to Contracting Officer approval, makes lump sum final settlement
of any open claims and obtains necessary release documents within one year of the
expiration or termination of this contract, unless otherwise extended by the
Contracting Officer; and
(3) Provides the Contracting Officer at the time of final settlement of this
contract—
(i) An investigation report and evaluation of any potential claim; and
mature.

(ii) An estimate of the dollar amount involved should the potential claim

(b) The cost of insurance for liabilities reimbursable under this clause is not
allowable.
(c) The Contracting Officer may require the Contractor to assign to the
Government all right, title, and interest to any refund, rebate, or recapture arising
out of any claim settlements.
(d) The Contractor agrees to—
(1) Investigate and promptly notify the Contracting Officer in writing of any
occurrence which may give rise to a claim or potential claim, including the estimated
amount of the claim;
(2) Give the Contracting Officer immediate written notice of any suit or
action filed which may result in a payment under this clause; and
(3) Provide assistance to the Government in connection with any third party
suit or claim relating to this clause which the Government elects to prosecute or
defend in its own behalf.
(End of clause)
252.228-7001 Ground and Flight Risk.
As prescribed in 228.370(b), use the following clause:

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GROUND AND FLIGHT RISK (SEP 1996)
(a) Definitions. As used in this clause—
(1) “Aircraft,” unless otherwise provided in the Schedule, means—
(i) Aircraft to be delivered to the Government under this contract (either
before or after Government acceptance), including complete aircraft and aircraft in
the process of being manufactured, disassembled, or reassembled; provided that an
engine, portion of a wing or a wing is attached to a fuselage of the aircraft; and
(ii) Aircraft, whether in a state of disassembly or reassembly, furnished by
the Government to the Contractor under this contract, including all property
installed, in the process of installation, or temporarily removed; provided that the
aircraft and property are not covered by a separate bailment agreement.
(2) “Contractor's premises” means those premises designated in the Schedule
or in writing by the Contracting Officer, and any other place the aircraft is moved for
safeguarding.
(3) “Flight” means any flight demonstration, flight test, taxi test, or other
flight made in the performance of this contract, or for the purpose of safeguarding the
aircraft, or previously approved in writing by the Contracting Officer.
(i) For land based aircraft, “flight” begins with the taxi roll from a flight
line on the Contractor's premises and continues until the aircraft has completed the
taxi roll in returning to a flight line on the Contractor's premises;
(ii) For seaplanes, “flight” begins with the launching from a ramp on the
Contractor's premises and continues until the aircraft has completed its landing run
and is beached at a ramp on the Contractor's premises;
(iii) For helicopters, “flight” begins upon engagement of the rotors for the
purpose of take-off from the Contractor's premises and continues until the aircraft
has returned to the ground on the Contractor's premises and the rotors are
disengaged; and
(iv) For vertical take-off aircraft, “flight” begins upon disengagement from
any launching platform or device on the Contractor's premises and continues until
the aircraft has been engaged to any launching platform or device on the
Contractor's premises;
(v) 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 this contract, or landings
approved in writing by the Contracting Officer.
(4) “Flight crew member” means the pilot, the co-pilot, and, unless otherwise
provided in the Schedule, the flight engineer, navigator, and bombardier-navigator
when assigned to their respective crew positions for the purpose of conducting any
flight on behalf of the Contractor. If required, a defense systems operator may also
be assigned as a flight crew member.
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(5) “In the open” means located wholly outside of buildings on the
Contractor's premises or other places described in the Schedule as being “in the
open.” Government furnished aircraft shall be considered to be located “in the open”
at all times while in the Contractor's possession, care, custody, or control.
(6) “Operation” means operations and tests of the aircraft and its installed
equipment, accessories, and power plants, while the aircraft is in the open or in
motion. The term does not apply to aircraft on any production line or in flight.
(b) Except as may be specifically provided in the Schedule as an exception to this
clause, the Government assumes the risk of damage to, or loss or destruction of
aircraft “in the open,” during “operation,” and in “flight.” The Contractor shall not be
liable to the Government for such damage, loss, or destruction.
(c) The Government's assumption of risk for aircraft in the open shall continue
unless the Contracting Officer finds that the aircraft is in the open under
unreasonable conditions, and the Contractor fails to take prompt corrective action.
(1) The Contracting Officer, when finding aircraft in the open under
unreasonable conditions, shall notify the Contractor in writing of the unreasonable
conditions and require the Contractor to make corrections within a reasonable time.
(2) Upon receipt of the notice, the Contractor shall promptly correct the cited
conditions, regardless of whether there is agreement that the conditions are
unreasonable. If the Contracting Officer later determines that the cited conditions
were not unreasonable, an equitable adjustment shall be made in the contract price
for any additional costs incurred in correcting the conditions. Any dispute as to the
unreasonableness of the conditions or the equitable adjustment shall be considered a
dispute under the Disputes clause of this contract.
(3) If the Contracting Officer finds that the Contractor failed to act promptly
to correct the cited conditions or failed to correct the conditions within a reasonable
time, the Contracting Officer may terminate the Government's assumption of risk for
any aircraft in the open under the cited conditions. The termination will be effective
at 12:01 a.m. on the fifteenth day following the day the written notice is received by
the Contractor. If the Contracting Officer later determines that the Contractor acted
promptly to correct the cited conditions or that the time taken by the Contractor was
not unreasonable, an equitable adjustment shall be made in the contract price for
any additional costs incurred as a result of termination of the Government's
assumption of risk. Any dispute as to the timeliness of the Contractor's action or the
equitable adjustment shall be considered a dispute under the Disputes clause of this
contract.
(4) If the Government terminates its assumption of risk, the risk of loss for
Government-furnished property shall be determined in accordance with the
Government Property clause of this contract.
(5) The Contractor shall promptly notify the Contracting Officer when
unreasonable conditions have been corrected. If the Government elects to again
assume the risk of loss and relieve the Contractor of liabilities, the Contracting
Officer will notify the Contractor. The Contractor shall be entitled to an equitable
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adjustment in the contract price for any insurance costs extending from the end of
the third working day after the Contractor notice of correction until the Contractor is
notified that the Government will assume the risk of loss. If the Government does not
again assume the risk of loss and conditions have been corrected, the Contractor
shall be entitled to an equitable adjustment for insurance costs, if any, extending
after the third working day.
(d) The Government's assumption of risk shall not extend to damage, loss, or
destruction of aircraft which—
(1) Results from failure of the Contractor, due to willful misconduct or lack of
good faith of any of the Contractor's managerial personnel, to maintain and
administer a program for the protection and preservation of aircraft in the open and
during operation in accordance with sound industrial practice. The term
“Contractor's managerial personnel” means the Contractor's directors, officers, and
any of the Contractor's managers, superintendents, or other equivalent
representatives who supervise or direct all or substantially all of the Contractor's
business; or all or substantially all of the Contractor's operations at any one plant or
separate location at which this contract is performed; or a separate and complete
major industrial operation in connection with the performance of this contract;
(2) Is sustained during flight if the flight crew members have not been
approved in writing by the Government Flight Representative, who has been
authorized in accordance with the combined regulation entitled “Contractor’s Flight
and Ground Operations” (Air Force Regulation 55-22, Army Regulation 95-20,
NAVAIR Instruction 3710.1C, and Defense Logistics Agency Manual 8210.1);
(3) Occurs in the course of transportation by rail, or by conveyance on public
streets, highways, or waterways, except for Government-furnished property;
(4) Is covered by insurance;
(5) Consists of wear and tear; deterioration (including rust and corrosion);
freezing; or mechanical, structural, or electrical breakdown or failure, unless these
are the result of other loss, damage or destruction covered by this clause. (This
exclusion does not apply to Government-furnished property if damage consists of
reasonable wear and tear or deterioration, or results from inherent vice in the
property.); or
(6) Is sustained while the aircraft is being worked on and is a direct result of
the work unless such damage, loss, or destruction would be covered by insurance
which would have been maintained by the Contractor, but for the Government's
assumption of risk.
(e) With the exception of damage, loss, or destruction in flight, the Contractor
assumes the risk and shall be responsible for the first $25,000 of loss or damage to
aircraft in the open or during operation resulting from each separate event, except
for reasonable wear and tear and to the extent the loss or damage is caused by
negligence of Government personnel. If the Government elects to require that the
aircraft be replaced or restored by the Contractor to its condition immediately prior
to the damage, the equitable adjustment in the price authorized by paragraph (i) of
this clause shall not include the dollar amount of the risk assumed by the Contractor.
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In the event the Government does not elect repair or replacement, the Contractor
agrees to credit the contract price or pay the Government $25,000 (or the amount of
the loss, if less) as directed by the Contracting Officer.

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Part 252-Solicitation Provisions and Contract Clauses

(f) A subcontractor shall not be relieved from liability for damage, loss, or
destruction of aircraft while in its possession or control, except to the extent that the
subcontract, with the written approval of the Contracting Officer, provides for relief
from each liability. In the absence of approval, the subcontract shall contain
provisions requiring the return of aircraft in as good condition as when received,
except for reasonable wear and tear or for the utilization of the property in
accordance with the provisions of this contract. Where a subcontractor has not been
relieved from liability, and damage, loss, or destruction occurs, the Contractor shall
enforce liability against the subcontractor for the benefit of the Government.
(g) 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 covering damage, loss, or destruction of aircraft while in the open, during
operation, or in flight when the risk has been assumed by the Government, even if
the assumption may be terminated for aircraft in the open.
(h) In the event of damage, loss, or destruction of aircraft in the open, during
operation, or in flight, the Contractor shall take all reasonable steps to protect the
aircraft from further damage, to separate damaged and undamaged aircraft, to put
all aircraft in the best possible order and further, except in cases covered by
paragraph (e) of this clause, the Contractor shall furnish to the Contracting Officer a
statement of—
(1) The damaged, lost, or destroyed aircraft;
(2) The time and origin of the damage, loss, or destruction;
and

(3) All known interests in commingled property of which aircraft are a part;
(4) The insurance, if any, covering the interest in commingled property.

Except in cases covered by paragraph (e) of this clause, the Contracting Officer will
make an equitable adjustment in the contract price for expenditures made by the
Contractor in performing the obligations under this paragraph.
(i) If prior to delivery and acceptance by the Government, aircraft is damaged,
lost, or destroyed and the Government assumed the risk, the Government shall
either—
(1) Require that the aircraft be replaced or restored by the Contractor to the
condition immediately prior to the damage, in which event the Contracting Officer
will make an equitable adjustment in the contract price and the time for contract
performance; or
(2) Terminate this contract with respect to the aircraft, in which event the
Contractor shall be paid the contract price for the aircraft (or, if applicable, any work
to be performed on the aircraft) less any amount the Contracting Officer
determines—

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(i) It would have cost the Contractor to complete the aircraft (or any work
to be performed on the aircraft) together with anticipated profit on uncompleted work;
and
(ii) Would be the value of the damaged aircraft or any salvage retained
by the Contractor.
The Contracting Officer shall prescribe the manner of disposition of the damaged,
lost, or destroyed aircraft, or any parts of the aircraft. If any additional costs of such
disposition are incurred by the Contractor, a further equitable adjustment will be
made in the amount due the Contractor. Failure of the parties to agree upon
termination costs or an equitable adjustment with respect to any aircraft shall be
considered a dispute under the Disputes clause.
(j) In the event the Contractor is reimbursed or compensated by a third person for
damage, loss, or destruction of 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 of subrogation) in
obtaining recovery.
(k) The Contractor agrees to be bound by the operating procedures contained in
the combined regulation entitled “Contractor’s Flight and Ground Operations” in
effect on the date of contract award.
(End of clause)
252.228-7002 Aircraft Flight Risk.
As prescribed in 228.370(c), use the following clause:
AIRCRAFT FLIGHT RISK (SEP 1996)
(a) Definitions. As used in this clause—
(1) “Aircraft,” unless otherwise provided in the Schedule, means—
(i) Aircraft furnished by the Contractor under this contract (either before
or after Government acceptance); or
(ii) Aircraft furnished by the Government to the Contractor, including all
Government property placed on, installed or attached to the aircraft; provided that
the aircraft and property are not covered by a separate bailment agreement.
(2) “Flight” means any flight demonstration, flight test, taxi test, or other
flight made in the performance of this contract, or for the purpose of safeguarding the
aircraft, or previously approved in writing by the Contracting Officer.
(i) For land-based aircraft, “flight” begins with the taxi roll from a flight
line and continues until the aircraft has completed the taxi roll to a flight line.
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(ii) For seaplanes, “flight” begins with the launching from a ramp and
continues until the aircraft has completed its landing run and is beached at a ramp.
(iii) For helicopters, “flight” begins upon engagement of the rotors for the
purpose of take-off and continues until the aircraft has returned to the ground and
rotors are disengaged.
(iv) For vertical take-off aircraft, “flight” begins upon disengagement from
any launching platform or device and continues until the aircraft has been
reengaged to any launching platform or device.
(3) “Flight crew members” means the pilot, co-pilot, and unless otherwise
provided in the Schedule, the flight engineer, navigator, bombadier-navigator, and
defense systems operator as required, when assigned to their respective crew
positions to conduct any flight on behalf of the Contractor.
(b) This clause takes precedence over any other provision of this contract
(particularly paragraph (g) of the Government Property (Cost-Reimbursement, Timeand-Materials, or Labor-Hour Contracts) clause and paragraph (c) of the Insurance—
Liability to Third Persons clause).
(c) Unless the flight crew members previously have been approved in writing by
the Government Flight Representative, who has been authorized in accordance with
the combined regulation entitled “Contractor’s Flight and Ground Operations” (Air
Force Regulation 55-22, Army Regulation 95-20, NAVAIR Instruction 3710.1C, and
Defense Logistics Agency Manual 8210.1), the Contractor shall not be—
(1) Relieved of liability for damage, loss, or destruction of aircraft sustained
during flight; or
(2) Reimbursed for liabilities to third persons for loss or damage to property
or for death or bodily injury caused by aircraft during flight.
(d)(1) The loss, damage, or destruction of aircraft during flight in an amount
exceeding $100,000 or 20 percent of the estimated cost of this contract, whichever is
less, is subject to an equitable adjustment when the Contractor is not liable under—
(i) The Government Property (Cost-Reimbursement, Time-and-Materials,
or Labor-Hour Contracts) clause, and
(ii) Paragraph (c) of this clause.
(2) The equitable adjustment under this contract for the resulting repair,
restoration, or replacement of aircraft shall be made—
(i) In the estimated cost, the delivery schedule, or both; and
(ii) In the amount of any fee to be paid to the Contractor.

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(3) In determining the amount of equitable adjustment in the fee, the
Contracting Officer will consider any fault of the Contractor, its employees, or any
subcontractor that materially contributed to the damage, loss, or destruction.
(4) Failure to agree on any adjustment shall be a dispute concerning a
question of fact within the meaning of the Disputes clause of this contract.

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(e) The Contractor agrees to be bound by the operating procedures contained in
the combined regulation entitled “Contractor’s Flight and Ground Operations” in
effect on the date of contract award.
(End of clause)
252.228-7003 Capture and Detention.
As prescribed in 228.370(d), use the following clause:
CAPTURE AND DETENTION (DEC 1991)
(a) As used in this clause—
(1) “Captured person” means any employee of the Contractor who is—
(i) Assigned to duty outside the United States for the performance of this
contract; and
(ii) Found to be missing from his or her place of employment under
circumstances that make it appear probable that the absence is due to the action of
the force of any power not allied with the United States in a common military effort;
or
(iii) Known to have been taken prisoner, hostage, or otherwise detained
by the force of such power, whether or not actually engaged in employment at the
time of capture; provided, that at the time of capture or detention, the person was
either—
(A) Engaged in activity directly arising out of and in the course of
employment under this contract; or
this contract.

(B) Captured in an area where required to be only in order to perform

(2) A “period of detention” begins with the day of capture and continues until
the captured person is returned to the place of employment, the United States, or is
able to be returned to the jurisdiction of the United States, or until the person's death
is established or legally presumed to have occurred by evidence satisfactory to the
Contracting Officer, whichever occurs first.
(3) “United States” comprises geographically the 50 states and the District of
Columbia.
(4) “War Hazards Compensation Act” refers to the statute compiled in
Chapter 12 of Title 42, U.S. Code (sections 1701-1717), as amended.
(b) If pursuant to an agreement entered into prior to capture, the Contractor is
obligated to pay and has paid detention benefits to a captured person, or the person's
dependents, the Government will reimburse the Contractor up to an amount equal to
the lesser of—

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(1) Total wage or salary being paid at the time of capture due from the
Contractor to the captured person for the period of detention; or
(2) That amount which would have been payable if the detention had
occurred under circumstances covered by the War Hazards Compensation Act.
(c) The period of detention shall not be considered as time spent in contract
performance, and the Government shall not be obligated to make payment for that
time except as provided in this clause.
(d) The obligation of the Government shall apply to the entire period of detention,
except that it is subject to the availability of funds from which payment can be made.
The rights and obligations of the parties under this clause shall survive prior
expiration, completion, or termination of this contract.
(e) The Contractor shall not be reimbursed under this clause for payments made
if the employees were entitled to compensation for capture and detention under the
War Hazards Compensation Act, as amended.
(End of clause)
252.228-7004 Bonds or Other Security.
As prescribed in 228.170, use the following provision:
BONDS OR OTHER SECURITY (DEC 1991)
(a) Offerors shall furnish a bid guarantee in the amount of $_________ with their
bids. The offeror receiving notice of award shall furnish—
(1) A performance bond in the penal amount of $_________; and
(2) Payment in full of any sum due the Government.
(b) The Contractor shall furnish the performance bond to the Contracting Officer
within _____ days after receipt of the notice of award. The Contracting Officer will
not issue the notice to proceed until receipt of an acceptable performance bond and
payment of any sum due the Government.
(c) Bonds supported by sureties whose names appear on the list contained in
Treasury Department Circular 570 are acceptable. Performance bonds from
individual sureties are acceptable if each person acting as a surety provides a SF 28,
Affidavit of Individual Surety, and a pledge of assets acceptable to the Contracting
Officer.
(End of provision)
252.228-7005 Accident Reporting and Investigation Involving Aircraft,
Missiles, and Space Launch Vehicles.
As prescribed in 228.370(e), use the following clause:
ACCIDENT REPORTING AND INVESTIGATION INVOLVING AIRCRAFT,
MISSILES, AND SPACE LAUNCH VEHICLES (DEC 1991)
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(a) The Contractor shall report promptly to the Administrative Contracting
Officer all pertinent facts relating to each accident involving an aircraft, missile, or
space launch vehicle being manufactured, modified, repaired, or overhauled in
connection with this contract.
(b) If the Government conducts an investigation of the accident, the Contractor
will cooperate and assist the Government's personnel until the investigation is
complete.
(c) The Contractor will include a clause in subcontracts under this contract to
require subcontractor cooperation and assistance in accident investigations.
(End of clause)
252.228-7006 Compliance with Spanish Laws and Insurance.
As prescribed at 228.370(f), use the following clause:
COMPLIANCE WITH SPANISH LAWS AND INSURANCE (DEC 1998)
(a) The requirements of this clause apply only if the Contractor is not a Spanish
concern.
(b) The Contractor shall, without additional expense to the United States
Government, comply with all applicable Spanish Government laws pertaining to
sanitation, traffic, security, employment of labor, and all other laws relevant to the
performance of this contract. The Contractor shall hold the United States
Government harmless and free from any liability resulting from the Contractor’s
failure to comply with such laws.
(c) The Contractor shall, at its own expense, provide and maintain during the
entire performance of this contract, all workmen’s compensation, employees’ liability,
bodily injury insurance, and other required insurance adequate to cover the risk
assumed by the Contractor. The Contractor shall indemnify and hold harmless the
United States Government from liability resulting from all claims for damages as a
result of death or injury to personnel or damage to real or personal property related
to the performance of this contract.
(d) The Contractor agrees to represent in writing to the Contracting Officer, prior
to commencement of work and not later than 15 days after the date of the Notice to
Proceed, that the Contractor has obtained the required types of insurance in the
following minimum amounts. The representation also shall state that the Contractor
will promptly notify the Contracting Officer of any notice of cancellation of insurance
or material change in insurance coverage that could affect the United States
Government’s interests.

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Type of Insurance
Comprehensive General
Liability

Coverage per
Person

Coverage per
Accident

Property
Damage

$300,000

$1,000,000

$100,000

(e) The Contractor shall provide the Contracting Officer with a similar
representation for all subcontracts with non-Spanish concerns that will perform work
in Spain under this contract.

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(f) Insurance policies required herein shall be purchased from Spanish insurance
companies or other insurance companies legally authorized to conduct business in
Spain. Such policies shall conform to Spanish laws and regulations and shall
(1) Contain provisions requiring submission to Spanish law and jurisdiction
of any problem that may arise with regard to the interpretation or application of the
clauses and conditions of the insurance policy;
(2) Contain a provision authorizing the insurance company, as subrogee of
the insured entity, to assume and attend to directly, with respect to any person
damaged, the legal consequences arising from the occurrence of such damages;
(3) Contain a provision worded as follows: “The insurance company waives
any right of subrogation against the United States of America that may arise by
reason of any payment under this policy.”;
(4) Not contain any deductible amount or similar limitation; and
(5) Not contain any provisions requiring submission to any type of
arbitration.
(End of clause)

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