§2403. Major weapon systems: contractor guarantees

(a) In this section:

(1) The term "weapon system" means items that can be used directly by the armed forces to carry out combat missions and that cost more than $100,000 or for which the eventual total procurement cost is more than $10,000,000. Such term does not include commercial items sold in substantial quantities to the general public.

(2) The term "prime contractor" means a party that enters into an agreement directly with the United States to furnish part or all of a weapon system.

(3) The term "design and manufacturing requirements" means structural and engineering plans and manufacturing particulars, including precise measurements, tolerances, materials, and finished product tests for the weapon system being produced.

(4) The term "essential performance requirements", with respect to a weapon system, means the operating capabilities or maintenance and reliability characteristics of the system that are determined by the Secretary of Defense to be necessary for the system to fulfill the military requirement for which the system is designed.

(5) The term "component" means any constituent element of a weapon system.

(6) The term "mature full-scale production" means the manufacture of all units of a weapon system after the manufacture of the first one-tenth of the eventual total production or the initial production quantity of such system, whichever is less.

(7) The term "initial production quantity" means the number of units of a weapon system contracted for in the first year of full-scale production.

(8) The term "head of an agency" has the meaning given that term in section 2302 of this title.

(b) Except as otherwise provided in this section, the head of an agency may not after January 1, 1985, enter into a contract for the production of a weapon system unless each prime contractor for the system provides the United States with written guarantees that-

(1) the item provided under the contract will conform to the design and manufacturing requirements specifically delineated in the production contract (or in any amendment to that contract);

(2) the item provided under the contract, at the time it is delivered to the United States, will be free from all defects in materials and workmanship;

(3) the item provided under the contract will conform to the essential performance requirements of the item as specifically delineated in the production contract (or in any amendment to that contract); and

(4) if the item provided under the contract fails to meet the guarantee specified in clause (1), (2), or (3), the contractor will at the election of the Secretary of Defense or as otherwise provided in the contract-

(A) promptly take such corrective action as may be necessary to correct the failure at no additional cost to the United States; or

(B) pay costs reasonably incurred by the United States in taking such corrective action.

(c) The head of the agency concerned may not require guarantees under subsection (b) from a prime contractor for a weapon system, or for a component of a weapon system, that is furnished by the United States to the contractor.

(d) Subject to subsection (e)(1), the Secretary of Defense may waive part or all of subsection (b) in the case of a weapon system, or component of a weapon system, if the Secretary determines-

(1) that the waiver is necessary in the interest of national defense; or

(2) that a guarantee under that subsection would not be cost-effective.

The Secretary may not delegate authority under this subsection to any person who holds a position below the level of Assistant Secretary of Defense or Assistant Secretary of a military department.

(e) Before making a waiver under subsection (d) with respect to a weapon system that is a major defense acquisition program for the purpose of section 2432 of this title, the Secretary of Defense shall notify the Committees on Armed Services and on Appropriations of the Senate and House of Representatives in writing of his intention to waive any or all of the requirements of subsection (b) with respect to that system and shall include in the notice an explanation of the reasons for the waiver.

(f) The requirement for a guarantee under subsection (b)(3) applies only in the case of a contract for a weapon system that is in mature full-scale production. However, nothing in this section prohibits the head of the agency concerned from negotiating a guarantee similar to the guarantee described in that subsection for a weapon system not yet in mature full-scale production. When a contract for a weapon system not yet in mature full-scale production is not to include the full guarantee described in subsection (b)(3), the Secretary shall comply with the notice requirements of subsection (e).

(g) Nothing in this section prohibits the head of the agency concerned from-

(1) negotiating the specific details of a guarantee, including reasonable exclusions, limitations and time duration, so long as the negotiated guarantee is consistent with the general requirements of this section;

(2) requiring that components of a weapon system furnished by the United States to a contractor be properly installed so as not to invalidate any warranty or guarantee provided by the manufacturer of such component to the United States;

(3) reducing the price of any contract for a weapon system or other defense equipment to take account of any payment due from a contractor pursuant to subclause (B) of subsection (b)(4);

(4) in the case of a dual source procurement, exempting from the requirements of subsection (b)(3) an amount of production by the second source contractor equivalent to the first one-tenth of the eventual total production by the second source contractor; and

(5) using written guarantees to a greater extent than required by this section, including guarantees that exceed those in clauses (1), (2), and (3) of subsection (b) and guarantees that provide more comprehensive remedies than the remedies specified under clause (4) of that subsection.

(h)(1) The Secretary of Defense shall prescribe such regulations as may be necessary to carry out this section.

(2) The regulations shall include the following:

(A) Guidelines for negotiating contractor guarantees that are reasonable and cost effective, as determined on the basis of the likelihood of defects and the estimated cost of correcting such defects.

(B) Procedures for administering contractor guarantees.

(C) Guidelines for determining the cases in which it may be appropriate to waive the requirements of this section.

(3) This section does not apply to the Coast Guard or to the National Aeronautics and Space Administration.

(Added Pub. L. 98–525, title XII, §1234(a), Oct. 19, 1984, 98 Stat. 2601 ; amended Pub. L. 99–433, title I, §110(g)(5), Oct. 1, 1986, 100 Stat. 1004 ; Pub. L. 100–26, §7(k)(2), Apr. 21, 1987, 101 Stat. 284 ; Pub. L. 103–355, title II, §2402, Oct. 13, 1994, 108 Stat. 3324 .)

Prior Provisions

Provisions similar to those comprising this section were contained in Pub. L. 98–212, title VII, §794, Dec. 8, 1983, 97 Stat. 1454 , which was set out as a note under section 2304 of this title, prior to repeal by Pub. L. 98–525, §1234(b), eff. Jan. 1, 1985.

Amendments

1994-Subsec. (e). Pub. L. 103–355, §2402(a), struck out par. (1) designation and par. (2) which read as follows: "Not later than February 1 of each year, the Secretary of Defense shall submit to the committees specified in paragraph (1) a report identifying each waiver made under subsection (d) during the preceding calendar year for a weapon system that is not a major defense acquisition program for the purpose of section 2432 of this title and shall include in the report an explanation of the reasons for the waivers."

Subsec. (h)(2), (3). Pub. L. 103–355, §2402(b), added par. (2) and redesignated former par. (2) as (3).

1987-Subsec. (a). Pub. L. 100–26 inserted "The term" after each par. designation and struck out uppercase letter of first word after first quotation marks in each par. and substituted lowercase letter.

1986-Subsec. (e). Pub. L. 99–433 substituted "section 2432" for "section 139a" in pars. (1) and (2).

Change of Name

Committee on Armed Services of House of Representatives changed to Committee on National Security of House of Representatives by House Resolution No. 6, One Hundred Fourth Congress, Jan. 4, 1995.

Effective Date of 1994 Amendment

For effective date and applicability of amendment by Pub. L. 103–355, see section 10001 of Pub. L. 103–355, set out as a note under section 251 of Title 41, Public Contracts.

Written Warranties in Prime Contracts for Major Systems Acquisitions for Coast Guard

Pub. L. 102–143, title I, Oct. 28, 1991, 105 Stat. 920 , which directed Secretary of Transportation to issue regulations requiring written warranties to be included in all contracts with prime contractors for major systems acquisitions of the Coast Guard, with certain exceptions, was from the Department of Transportation and Related Agencies Appropriations Act, 1992, and was not repeated in subsequent appropriation acts.

Similar provisions were contained in the following prior appropriations acts:

Pub. L. 101–516, title I, Nov. 5, 1990, 104 Stat. 2158 .

Pub. L. 101–164, title I, Nov. 21, 1989, 103 Stat. 1072 .

Pub. L. 100–457, title I, Sept. 30, 1988, 102 Stat. 2127 .

Pub. L. 100–202, §101(l) [title I], Dec. 22, 1987, 101 Stat. 1329–358 , 1329-360.

Pub. L. 99–500, §101(l) [H.R. 5205, title I], Oct. 18, 1986, 100 Stat. 1783–308 , and Pub. L. 99–591, §101(l), Oct. 30, 1986, 100 Stat. 3341–308 .

Pub. L. 99–190, §101(e) [title I], Dec. 19, 1985, 99 Stat. 1267 , 1269.

Pub. L. 98–473, title I, §101(i) [title I], Oct. 12, 1984, 98 Stat. 1944 , 1946.