Subpart 3046.7—Warranties

Parent topic: PART 3046—QUALITY ASSURANCE

3046.702 [Reserved]

3046.790 Use of warranties in major systems acquisitions by

the USCG (USCG).

3046.790-1 Scope (USCG).

This subpart provides the policy for the USCG to use in obtaining warranties from contractors when

contracting for the acquisition of a major system.

3046.790-2 Definitions (USCG).

As used in this part:

At no additional cost to the Government means without an increase in price for firm-fixed-price

contracts, without an increase in target or ceiling price for fixed-price incentive contracts (see (FAR)

48 CFR 46.707).

Defect means any condition or characteristic in any supplies or services furnished by the contractor

under the contract that is not in compliance with the requirements of the contract.

Design and manufacturing requirement means structural and engineering plans and manufacturing

particulars, including precise measurements, tolerances, materials and finished product tests for the

major system being produced.

Performance requirements means the operating capabilities, maintenance, and reliability

characteristics of a system that are determined to be necessary for it to fulfill the requirement for

which the system is designed.

3046.790-3 Policy (USCG).

(a) Major Systems. The use of warranties by the USCG in the procurement of major systems valued

at $10,000,000 or higher is mandatory, unless waived (see (HSAR) 48 CFR 3046.790–4).

(b) Any warranty on major system acquisitions shall not apply in the case of any system or

component thereof which has been furnished by the Government to a contractor except as indicated

in paragraph (c)(4) of this section.

(c) When drafting warranty provisions/clauses for major systems acquisitions, the contracting officer
shall ensure that the items listed at the Homeland Security Acquisition Manual (HSAM) Chapter

3046 have been considered. The warranty shall also meet the following requirements:

(1) For systems or components that are commercially available, such warranty as is normally

provided by the manufacturer or supplier shall be obtained in accordance with (FAR) 48 CFR

46.703(d) and 46.710(b)(2).

(2) For systems or components provided in accordance with either design and manufacturing or

performance requirements as specified in the contract or any modification to that contract, a

warranty of compliance with the stated requirements shall be obtained.

(3) Any warranty obtained shall specifically exclude coverage for combat damage.

(4) A contractor for a major systems acquisition shall not be required to provide the warranties

specified in this section on any property furnished to that contractor by the Government except for

defects in installation.

3046.790-4 Waiver (USCG).

(a) The Secretary of Homeland Security may waive the requirement for a warranty for USCG major

system acquisitions when the waiver is in the interest of national defense or if the warranty obtained

would not be cost beneficial. A waiver may be granted provided that the Committees on

Appropriations of the Senate and the House of Representatives, the Committee on Commerce,

Science and Transportation of the Senate, and the Committee on Merchant Marine and Fisheries of

the House of Representatives are notified, in writing, of the Secretary's intention to waive the

warranty requirements and the reasons supporting such a determination, prior to granting the

waiver.

The request for Secretarial waiver shall include, as a minimum:

(1) A brief description of the major system and its stage of production (e.g., the number of units

delivered and anticipated to be delivered during the life of the program);

(2) The specific waiver requested, the duration of the waiver if it is to involve more than one

contract, and the rationale for the waiver; and

(3) All documentation supporting the request for waiver, such as a cost-benefit analysis.

(b) The waiver request shall be forwarded to the Secretary, via the CPO. The USCG shall maintain a

written record of each waiver granted and the Congressional notification and report made, together

with supporting documentation.

3046.791-1 Policy (USCG).

The USCG shall include a warranty in all contracts for major systems acquisitions. When drafting

warranty provisions/clauses for major systems acquisitions, the contracting officer shall ensure that

the items listed at (HSAR) 48 CFR 3046.706 have been considered. The warranty shall also meet the

following requirements:
(a) For systems or components which are commercially available, such warranty as is normally

provided by the manufacturer or supplier shall be obtained in accordance with (FAR) 48 CFR

46.703(d) and (FAR) 48 CFR 46.710(b)(2).

(b) For systems or components provided in accordance with either design and manufacturing or

performance requirements as specified in the contract or any modification to that contract, a

warranty of compliance with the stated requirements shall be obtained.

(c) The warranty provided under paragraph (b) of this section shall provide that in the event the

major system or any component thereof fails to meet the terms of the warranty provided, the

contracting officer may:

(1) Require the contractor to promptly take such corrective action as the contracting officer

determines to be necessary at no additional cost to the Government, including repairing or replacing

all parts necessary to achieve the requirements set forth in the contract;

(2) Require the contractor to pay costs reasonably incurred by the United States in taking necessary

corrective action; or

(3) Equitably reduce the contract price.

(d) Any warranty shall specifically exclude coverage of combat damage.

3046.791-2 Tailoring warranty terms and conditions (USCG).

(a) As the objectives and circumstances vary considerably among major systems acquisition

programs, contracting officers shall appropriately tailor the warranty on a case-by-case basis,

including remedies, exclusions, limitations and durations, provided the tailoring is consistent with

the specific requirements of this subpart and (FAR) 48 CFR 46.706.

(b) Contracting officers of major systems acquisitions may exclude from the terms of the warranty

certain defects for specified supplies (exclusions) and may limit the contractor's liability under the

terms of the warranty (limitations), as appropriate, if necessary to derive a cost-effective warranty in

light of the technical risk, contractor financial risk, or other program uncertainties.

(c) Contracting officers are encouraged to structure a broader and more comprehensive warranty

where such is advantageous. Likewise, the contracting officer may narrow the scope of a warranty

when appropriate (e.g., where it would be inequitable to require a warranty of all performance

requirements because a contractor had not designed the system).

(d) Contracting officers shall not include in a warranty clause any terms that require the contractor

to incur liability for loss, damage, or injury to third parties.

3046.791-3 Warranties on Government-furnished property

(USCG).

A contractor for a major systems acquisition shall not be required to provide the warranties specified

in (HSAR) 48 CFR 3046.790–1 on any property furnished to that contractor by the Government
except for:

(a) Defects in installation; and

(b) Installation or modification in such a manner that invalidates a warranty provided by the

manufacturer of the property.

3046.792 Cost benefit analysis (USCG).

If a specific warranty is considered not to be cost beneficial by the contracting officer, a waiver

request shall be initiated in accordance with guidance at (HSAR) 48 CFR 3046.793.

3046.793 Waiver and notification procedures (USCG).

(a) The Secretary of Homeland Security, without delegation, may waive the requirement for a

warranty for USCG major system acquisitions when the waiver is in the interest of national defense

or if the warranty obtained would not be cost beneficial. A waiver may be granted provided that the

Committees on Appropriations of the Senate and the House of Representatives, the Committee on

Commerce, Science and Transportation of the Senate, and the Committee on Merchant Marine and

Fisheries of the House of Representatives are notified, in writing, of the Secretary's intention to

waive the warranty requirements and the reasons supporting such a determination prior to granting

the waiver. The request for Secretarial waiver shall include, as a minimum:

(1) A brief description of the major system and its stage of production (e.g., the number of units

delivered and anticipated to be delivered during the life of the program);

(2) The specific waiver requested, the duration of the waiver if it is to involve more than one

contract, and the rationale for the waiver; and

(3) All documentation supporting the request for waiver, such as a cost-benefit analysis.

(b) The waiver request shall be forwarded to the Secretary, via the CPO. The USCG shall maintain a

written record of each waiver granted and the Congressional notification and report made, together

with supporting documentation.