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DEFINITION
The principal purposes of a warranty in a Government contract are to delineate the rights and obligations of the contractor and the Government for defective items and services and to foster quality performance. Warranties should provide a contractual right for the correction of defects pertaining to acceptance of the supplies or services by the Government and a stated period of time or use, or the occurrence of a specified event, after acceptance by the Government. The benefits to be derived from a warranty must be commensurate with the cost of the warranty to the Government.
GENERAL INFORMATION/NARRATIVE
Additionally, the warranty should also make provisions for no cost ECPs and for additional spares if the contractor fails to achieve the warranted reliability values or the TAT.
Answering "yes" to this question will add the DFARS Warranty of Data clause to your baseline warranty clause.
Per AR 700-139: "AMC MSC/PM will assure that, when LMI summaries are to be procured by contract and a warranty on such data is determined to be practical and cost effective, the contract shall include the clause at DFARS 52.246.7001 (Warranty of Data) and the remedies included therein are invoked regarding any breach."
Warranty development checklist. If the warranty requires contractor repair:
-Is contractor repair acceptable in view of current service capability and mission-criticality?
-Can the warranty units be easily shipped within the terms of the warranty?
-Can unauthorized maintenance be controlled?
-Can good returns be minimized?
-Is there a control on contractor repair turnaround time?
-Are there reasonable data requirements placed on the contractor to provide repair and failure analysis data?
-Have plans been made to monitor contractor warranty repair performance?
-Have plans been made to track and report contractor warranty repair in compliance with the 50/50 depot repair requirement (Public law 10 USC 2464)?
Answering "yes" to this question will add the DFARS Warranty of Data clause to your baseline warranty clause.
Per AR 700-139: "AMC MSC/PM will assure that, when LMI summaries are to be procured by contract and a warranty on such data is determined to be practical and cost effective, the contract shall include the clause at DFARS 52.246.7001 (Warranty of Data) and the remedies included therein are invoked regarding any breach."
Warranties of data shall be developed and used in accordance with agency regulations. Obtain warranties on technical data when practicable and cost effective. Consider the factors in FAR 46.703 in deciding whether to obtain warranties of technical data. Consider the following in deciding whether to use extended liability provisions:
-The likelihood that correction or replacement of the nonconforming data, or a price adjustment, will not give adequate protection to the Government, and
-The effectiveness of the additional remedy as a deterrent against furnishing nonconforming data.
The principal purposes of a warranty in a Government contract are to delineate the rights and obligations of the contractor and the Government for defective items and services and to foster quality performance. Generally, a warranty should provide a contractual right for the correction of defects notwithstanding any other requirement of the contract pertaining to acceptance of the supplies or services by the Government and a stated period of time or use, or the occurrence of a specified event, after acceptance by the Government to assert a contractual right for the correction of defects. The benefits to be derived from a warranty must be commensurate with the cost of the warranty to the Government.
-Expected Failure Individual Item coverage is similar to the failure free concept except a threshold level is set for failed items. In other words, the contractor is responsible for repairing or replacing only the failed items above a certain level set in the contract by the Government.
The Government must be careful about using expected failure because a higher risk is involved. There must be high degree of confidence in reliability factors and the contractor's performance. This confidence is necessary in order to negotiate cost and set a threshold that is in the best interest of the Government. The administrative burden is lower than with the failure free concept, but is still a major factor in using the expected failure concept.
-Failure Free Individual Item coverage requires the contractor to repair or replace all failed contract items and frequently is cost prohibitive. Failure free warranties do have the advantage of very low risk, since all failures must be fixed under the warranty. A warranty claim action must be filled out for each failed item and, therefore, the associated administrative burden on the field will be higher. If the field cannot handle the administrative burden, then the failure free concept should not be pursued.
-Failure Free Systemic coverage provides protection to the lowest level of impact or expense and requires a contract remedy that may cover all contract deliverables. Systemic coverage provides protection to the lowest level of impact or expense and requires a contract remedy that may cover all contract deliverables. Systemic coverage should be obtained at no (or minimal) cost and administrative burden to the Government.
-The Expected Failure or Threshold Warranty is appropriate when the reliability of the system for a given period after fielding can be estimated. Under this warranty, the contractor is only required to provide the Government with remedies to the failures beyond the expected number. Up to the threshold the Government maintains and supports the weapon system, as it would if there were no warranty.
All failure free warranties are guaranteed and subject to remedies right from the time of delivery of the system. A failure free warranty is appropriate when:
-a system is new,
-the system has not been used in the field and there is relatively little reliability information that can be used in establishing a firm threshold for an expected failure type warranty, or
-the average cost of repair for the contractor is expected to be less than the average cost of repair or replacement activity for the Government. This assumes the Government has the organic support to perform repairs through the depot level or the highest level of repair or replacement activity
The term "warranty costs" encompasses costs related to (1) the warranty aspects of the Inspection of Supplies clause at FAR 52.246-3 and (2) warranty clauses. FAR 46.703(b) states that "Warranty costs arise from the contractor's charge for accepting the deferred liability created by the warranty. . ." The acquisition cost of a warranty may be included as part of an item's price or may be set forth as a separate contract line item (see DFARS 246.703(b)). The warranty clauses specify that a contractor's cost of compliance with the provisions of the warranty will be at the contractor's expense with no increase in contract price.
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