PowerPoint Presentation

A team of trusted professionals delivering value to our Warfighters throughout the acquisition lifecycle

Presented By:

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Mike Fludovich

DCMA-AO

April 2023

2023 GFRC Training

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A team of trusted professionals delivering value to our Warfighters throughout the acquisition lifecycle

Objectives

• Big Picture

• Cover changes to DFARS 228.370 and associated PGI

• Cover changes to DFARS 252.228-7001

• Introduce new clause at DFARS 252.228-7007

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Big Picture

• The Ground and Flight Risk clause (GFRC) updated with intent to fix-

‒ Outdated Language

‒ Eliminate the assumption of risk flowdown to subcontractor operations confusion

‒ Re-order the sections to a more logical flow

‒ Added a new clause for COCO PAO – DFARS 252.228-7007

• The bulk of the changes occur with DFARS 228.370 & 228.371 (new)

‒ The original 228.370 is now 228.371

‒ The new 228.370 now has 2 parts

‒ Added new exceptions in 228.371

‒ Major shift in how these clauses are written

 Instructions to Contracting Officers (KO) are now in 228.370

 Created need to repeat a significant amount of information found in the GFRC

 Associated Procedures, Guidance, and Information (PGI) updated

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A team of trusted professionals delivering value to our Warfighters throughout the acquisition lifecycle

Presented By:

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Mike Fludovich

DCMA-AO

DFARS 228.370

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DFARS 228.370-1

Definitions

• Adds definitions used in 228.370 from both 252.228-7001 and

252.228-7007 – covered in more detail within the clauses

‒ Aircraft

‒ Civil Aircraft

‒ Covered Aircraft (old ‘In-the-Open’)

‒ Crewmember, new term as it replaces flight crew to align with 8210-1

‒ Flight, simplified

‒ Public Aircraft

‒ Public Aircraft Operation

‒ State Aircraft

‒ Workmanship Error (new)

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DFARS 228.370-2

General

• This new section pulls a large quantity of information intended for KOs from

within the clauses

• FAR 52 & DFARS 252 provide the requirements the contractor is expected to

comply with in the performance of the contract. FAR Part 228.370-2

provides:

• (a) Direction to KO to see PGI for how to assign a GFR

• (b) Preaward Survey – Encourages the KO to request a preaward and to

review the contractor’s insurance for adequacy if GFRC is not on contract

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DFARS 228.370-2

• (c) Adds additional explanation about FMS exceptions in DFARS 228.371

• (d) Commercial Derivative Aircraft – clarifies the Part 145 exception

intent

• (e) Insurance – clarifies the intent of the GFRC and why insurance costs

are unallowable

• (f) Damage to Government Aircraft – clearly states the KO responsibility

to make liability determinations

• (g) KO Determination of Liability – repeats the GFRC exclusions for the KO

• (h) Notice of Revocation – procedure for KO to revoke the Government’s

assumption of risk

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DFARS 228.370-2

• (i) Procedures in event of damage – restated from the clause

• (j) KO Determination of Contractor’s Share of Loss – the least of:

‒ $200,000, or

‒ 20% of the acquisition cost of affected aircraft, or

‒ 20% of the cost of the contract, task order, or delivery order

• (k) Reimbursement from a Third Party – no change, just repeated from

clause

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PGI 228.370-2

General

• (a) Provides KO with process to request assignment of a GFR/G-GFR

• (c) FMS – provides KO with additional information about insurance

without the GFRC

• (f) Damage to Government Aircraft – expands on difference between

‒ Accident/Mishap Damage – covered

‒ Workmanship Error Damage – not covered

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DFARS 228.370-3

Aircraft not owned by or to be delivered to the Government

• (a) Directs KO to only use the GFRC if determined to be in the best

interest of the Government

• (b) Provides a list (not limited to) of factors to consider-

‒ Cost of hull insurance exceeds cost of aircraft

‒ Insurance is not available (War zone, high-risk experimental, etc.)

‒ Ground or Flight operations of COCO aircraft may place Government aircraft at

risk

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Questions

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A team of trusted professionals delivering value to our Warfighters throughout the acquisition lifecycle

Presented By:

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Mike Fludovich

DCMA-AO

DFARS 228.371

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DFARS 228.371

Additional Clauses (old 228.370)

• (a) No change from 2019 DFARS

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DFARS 228.371 (con’t)

• (b) Directs usage of the GFRC for-

‒ (1) For…aircraft owned by or to be delivered to the Government, except

(new focus)

(i) No Change, incidental operations only (e.g., FBO)

(ii) Simplified but restricted to purchasing aircraft, not services (e.g., modification)

(iii) Simplified and removed double negative

(iv) Added that this exception cannot be used if flights involve contractor

crewmembers

(v) Aircraft are dismantled and removed from inventory (new)

(vi) Group 1 or 2 UAS…if…cost is less than Class C threshold ($60,000) (new)

‒ (2) Involving aircraft not owned by or to be delivered to the

Government…only if the KO Determines it is in the best interest of the

Government (new)

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DFARS 228.371

Additional Clauses (old 228.370)

• (c) No Change from 2019 DFARS

• (d) No Change from 2019 DFARS

• (e) No Change from 2019 DFARS

• (f) Use clause at 252.228-7007, Public Aircraft and State Aircraft

Operations – Liability, in solicitations and contracts that- (new)

• Do not include 252.228-7001

• But involve public aircraft operations or state aircraft operations

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DFARS 242.302

Before moving on…a line was added to DFARS 242.302(a)

• FAR 42.302(a)(56) states “maintain surveillance of flight operations”

• DFARS 242.302(a) was silent on (56), but now clarifies that with the

DoD, maintaining surveillance of flight and ground operations is

accomplished through the Combined Instruction

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Questions

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A team of trusted professionals delivering value to our Warfighters throughout the acquisition lifecycle

Presented By:

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Mike Fludovich

DFARS 252.228-7001

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DFARS 252.228-7001

Background on re-write-

• The clause at DFARS 252.228-7001, Ground and Flight Risk (GFRC), has been

patch-worked with updates since the 1950’s

• Prior to 2010, there were two clauses that led to confusion, 252.228-7001 &

252.228-7002, Aircraft Flight Risk

• In 2010, the -7002 was incorporated into the GFRC, but without major update

to language or flow

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DFARS 252.228-7001

Background on re-write-

• Since release in June 2010, the acquisition of UASs and contracted

contractor-owned, contractor-operated (COCO) aircraft services has exploded

causing some conflicts-

‒ Most of the conflicts were in the prescribing clause DFARS 228.370

Did not clearly state whether or not to use the GFRC on aircraft that the

Government did not own

Did not address contracts to de-militarize aircraft to remove from the inventory

‒ Directions to KOs were only included in the GFRC itself unlike all other

FAR/DFARS

• No mechanism existed to have a KO place the Combined Instruction on a

contract without the GFRC

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Definitions

(a) Definitions – ‘operations’ was removed

• Aircraft – simplified to defining what an aircraft is…other paragraphs

incorporated into ‘covered aircraft’

• Contractor’s Managerial Personnel – No Change

• Contractor’s Premises – No Change

• Covered Aircraft – replaces ‘in-the-open’

• Crewmember – replaces ‘flight crew member’, simplified

• Flight – simplified, removed specifics for land-based, seaplanes, helicopters

• Workmanship Error – New definition

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Covered Aircraft

• 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

‒ 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

‒ Items removed from a Government furnished aircraft that are—

 Intended for reinstallation on that particular aircraft, which retain their status as covered aircraft

while awaiting installation; and

 Not intended for reinstallation on that particular aircraft, which lose their status as covered aircraft

once removal is complete;

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Covered Aircraft

• Covered aircraft (con’t)

‒ 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

‒ 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. (new)

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Workmanship Error

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.

• PGI provides KOs (and GFRs) general rules to follow to determine if the incident was an

accident/mishap or workmanship error

‒ An accident or mishap is the result of a task, operation, or action that was not originally

planned or intended.

‒ A workmanship error consists of damage that is the result of an incorrectly performed

skill-based task, operation, or action that was originally planned or intended, but the

end result was not within allowable limits.

‒ Missing a step in a procedure or checklist item is not considered a skill-based error and

therefore is not considered workmanship error damage.

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GFRC Structure

The GFRC was re-organized to a more logical flow with many paragraphs simply

moved around

• (b) Combined Instruction

• (c) Government as self-insurer

• (d) Exclusions from the Government’s assumption of risk

• (e) Revoking the Government’s assumption of risk

• (f) Contractor’s exclusion of insurance costs

• (g) Procedures in event of loss

• (h) Contractor’s share of loss

• (i) Reimbursement from a third party

• (j) Liability to third parties

• (k) Subcontracts

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How to remove coverage

Cost savings aspect

How the insurance is ‘activated and paid’

Requirements flowdown

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Combined Instruction

(b) Combined regulation/instruction – only change was adding one sentence to

the end

• 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.

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Government Self-Insurance

risk of damage to, or loss or destruction of, covered aircraft subject to the

following conditions:

• Combines and clarifies old (c) & (d)

• Clearer statement on GFRC vs Property Clause

• Moves ‘normal wear & tear’ from exclusions

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Exclusions

(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) Willful misconduct simplified

• (2) No change to unapproved flights/crewmembers

• (3) Transportation – removed confusing ‘government property’ and added the old 228.370

exception

• (4) Covered by insurance – no change

• (5) Replaced with occurrence after the KO has revoked the Government's assumption of

risk

• (6) Simplified to ‘sustained due to workmanship errors’

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Revoking Assumption of Risk

(e) Revoking the Government's assumption of risk – Mostly structured

from the old (d) with some important tweaks

• Replaces the ’15-day Letter’ with a 2-step process

‒ Issuance of a preliminary notice of revocation (timeframe specified)

‒ If not corrected, issuance of the official notice of revocation (immediate impact)

• Provides more guidance on factors for KO to consider, ties to 228.370-2

• Adds direction for addressing disputes

(f) Contractor's exclusion of insurance costs – No change to old (h)

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Procedures for a Loss

(g) Procedures in the event of damage, loss, or destruction

• Basically the old (i)

• Clarified process for new production vs Government-furnished

(h) Contractor's share of loss – Revised with additional situation in the

least of –

• $200,000; or

• 20% of acquisition cost of the affected aircraft; or

• 20% of cost of the contract, task order, or delivery order

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Third Parties & Subcontracts

(i) Reimbursement from a third party – No change from old (k)

(j) Liability to third parties – Revised and retitled

(k) Subcontracts

• Expanded old (m)

• Incorporate requirements in subcontracts to include-

‒ Commercial Products

‒ Commercial Services

• Except-

‒ Do not include paragraph (f) – which is the exclusion of insurance costs, meaning

subcontractors are allowed to charge the prime for costs

‒ Shall not include in subcontracts for FAA Part 145 licensed repair stations performing

work pursuant to FAA

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Questions

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A team of trusted professionals delivering value to our Warfighters throughout the acquisition lifecycle

Presented By:

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Mike Fludovich

DCMA-AO

DFARS 252.228-7007

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DFARS 252.228-7007

Background on why a new clause-

• Under the 2010 GFRC, there was no distinction between Government-owned

& contractor-owned aircraft

• If the GFRC is not included for contracts where we do not own (or will not

own) the aircraft, there is no mechanism to direct the KOs to place the

Combined Instruction on the contract – usually through the statement of work

• To solve this, direction for the KOs was added in DFARS 228-371 to use the

clause at DFARS 252.228-7007 for those contracts that involve public or state

aircraft operations with aircraft not owned by or to be delivered to the

Government

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DFARS 252.228-7007

Public Aircraft and State Aircraft Operations – Liability

(a) Definitions

• Civil Aircraft

• Public Aircraft – as defined in Title 49 U.S.C. sections 40102 & 40125

• Public Aircraft Operations

• State Aircraft

(b) Combined Instruction – almost the same as the GFRC

• 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”

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Liability

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.

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Liability (con’t)

conducted as public aircraft operations or state aircraft operations.

• (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.

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Key Takeaways

• Unlike DCMA 8210-1, contractors will not ‘upgrade’ to the new GFRC

• There will be a long period of time where CMO’s will have a mix of 2010 &

2023 GFRC contracts

‒ From a requirements perspective, no change…still required to adhere to the 8210-1

‒ From a damage perspective, significant changes…so it is important to know the contract

to which the aircraft belongs

• Removing Government’s Assumption of Risk

‒ If only for one contract, follow appropriate GFRC process (unusual case)

‒ If for all contracts at facility, recommend following the 2023 GFRC process tweaked with

 Ensuring the Preliminary Notice of Revocation specified time-frame is 15 days to match the 2010

15-day Letter process

 Including a statement in the Preliminary Notice that this doubles as the 15-Day Letter for those

contracts under the 2010 GFRC

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Questions

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