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Liability Insurance vs Grd Flight Risk Clause


MadamSki

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Background:

RFP contract types are FFP, T and M, and Cost Reimbursable for CAP/CAS and transportation ONLY.

FAR 28.307-2(d) [insurance Under CR Contracts] Aircraft public and passenger liability. When aircraft are used in connection with performing the contract [referring to cost reimbursable] the CO shall require aircraft public and passenger liability insurance.

RFP includes FAR 252.228-7001, Ground and Flight Risk (Jun 2010)

252.228-7001© Government as self-insurer. Subject to the conditions in paragraph (d) of this clause, the Government self-insures and assumes the risk of damage to, or loss or destruction of aircraft “in the open,” during “operation,” and in “flight,” except as may be specifically provided in the Schedule as an exception to this clause. The Contractor shall not be liable to the Government for such damage, loss, or destruction beyond the Contractor’s share of loss amount under the Government’s self-insurance.

The contract effort is manpower augmentation. No contractor tools, or manuals, etc. And rarely is CAP/CAS used. Transportation yes, CAP/CAS no. The government is not at increased risk that would require public and passenger liability. The only reason the liability requirement is included is "FAR said to".

In my brain, these two clauses conflict. Has anyone had any history with this?

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Guest Vern Edwards

FAR 28.307-2(d) addresses injury to the public and passengers. DFARS 252.228-7001 addresses damage to or loss or destruction of government aircraft.

Where's the conflict?

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Background:

RFP contract types are FFP, T and M, and Cost Reimbursable for CAP/CAS and transportation ONLY.

FAR 28.307-2(d) [insurance Under CR Contracts] Aircraft public and passenger liability. When aircraft are used in connection with performing the contract [referring to cost reimbursable] the CO shall require aircraft public and passenger liability insurance.

RFP includes FAR 252.228-7001, Ground and Flight Risk (Jun 2010)

252.228-7001© Government as self-insurer. Subject to the conditions in paragraph (d) of this clause, the Government self-insures and assumes the risk of damage to, or loss or destruction of aircraft “in the open,” during “operation,” and in “flight,” except as may be specifically provided in the Schedule as an exception to this clause. The Contractor shall not be liable to the Government for such damage, loss, or destruction beyond the Contractor’s share of loss amount under the Government’s self-insurance.

The contract effort is manpower augmentation. No contractor tools, or manuals, etc. And rarely is CAP/CAS used. Transportation yes, CAP/CAS no. The government is not at increased risk that would require public and passenger liability. The only reason the liability requirement is included is "FAR said to".

In my brain, these two clauses conflict. Has anyone had any history with this?

Not an expert but I don't see any conflict here. It appears that the government will self-insure the aircraft. Aircraft public and passenger liability insurance is not aircraft insurance.

According to Wikpedia

.

Public liability insurance, "...often referred to as third party liability covers aircraft owners for damage that their aircraft does to third party property, such as houses, cars, crops, airport facilities and other aircraft struck in a collision. It does not provide coverage for damage to the insured aircraft itself or coverage for passengers injured on the insured aircraft. After an accident an insurance company will compensate victims for their losses, but if a settlement can not be reached then the case is usually taken to court to decide liability and the amount of damages. Public liability insurance is mandatory in most countries and is usually purchased in specified total amounts per incident, such as $1,000,000 or $5,000,0005
5Cunningham, Herb: Understanding Aviation Insurance, The COPA Guide to Buying an Aircraft, 34th Edition, pages 74-77. Canadian Owners and Pilots Association, May 2009

According to Wikipedia,

Passenger liability protects passengers riding in the accident aircraft who are injured or killed. In many countries this coverage is mandatory only for commercial or large aircraft. Coverage is often sold on a "per-seat" basis, with a specified limit for each passenger seat.[5]
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You said the contract effort is manpower augmentation. I am not sure what that is, but it does not seem related to "acquisition, development, production, modification, maintenance, repair, flight, or overhaul of aircraft" as stated in DFARS 228.370(B )(1). Are you sure your contract meets the prescription for both these clauses?

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Perhaps "confusion" was a better word than "conflict". My brain is better now.

I think my bandwagon was loaded because the only cost reimbursement (historical) is less than 100,000 annual on parts and the rest is travel. When I weigh the cost of the insurance for an unknown period of time, for an unknown number of missions, for an unknown number of passengers it just didn't make any sense.

I try not to bother you guys until I am so wrapped around the pole I am in circles. And I sincerly thank you for keeping it simple.

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The requirement is for manpower augmentation. Government provides tools, test equipment, etc.

The contract will consist of FFP; fixed labor rates for T and M; and Cost Reimbursable for contractor aquired parts and tdy travel.

Is this what you were asking?

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The requirement is for manpower augmentation. Government provides tools, test equipment, etc.

The contract will consist of FFP; fixed labor rates for T and M; and Cost Reimbursable for contractor aquired parts and tdy travel.

Is this what you were asking?

I think that (we) would like to know if the requirement is for contractor augmentees to modify or repair government aircraft.

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I see said the blind man. YES. They augment organic mechanics in the modification, maintenance and repair of aircraft (and other systems, as well). The clause makes perfect sense if the modification, maintenance and repair were cost reimbursable. But it is FFP. The only cost reimbursable is contractor aquired parts (to use in modification, maintenance and repair) and it isn't used very often.

If I simplify this, as you guys always help me to do (thank you):

The requirment says the clause is needed when:

"When aircraft are used in connection with performing the contract [referring to cost reimbursable]". The word "connection" is bothersome. The parts the contractor orders are for aircraft. Does that qualify as a "connection" do you think?

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I suppose the question would be, what happens if a contractor supplied part or parts failed, causing damage or an accident? I remember an F-106 crash in the Upper Peninsula of Michigan (near Watton, MI.) in October 1972 that the Air Force determined was caused by a broken fuel pump or something like that. I helped recover the engine from a "swamp hole" created from the sudden vertical stop in the woods.I'd hate to have been held responsible for damage, injuries or death on the ground if I had supplied the part. I'm sure that there is still JP-4 fuel contamination out there.

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Yes, I thought of that, too. And a number of others. Which brings us to the next step: getting the insurance. In order to get Public and Passenger Liability Insurance, the insurer needs to know how many flights (missions), length of flights (missions), number of passengers, how long must they be insured, etc. We will never have that information in advance. The contractor cannot possiblly get a reasonable cost (key word reasonable) for this insurance. What experience is out there for a situation where the gov is forcing (by regualtion) requirements that cannot be met?

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