Uninsurable risk on certain contracts

(a) Consideration of risk of loss The Secretary of Defense shall ensure that due consideration is given to a contractor for equitable adjustments resulting from the loss of work in process on a covered contract. (b) Limitations Considerations limiting the contractor’s assumption of the risk of loss in subsection (a) shall not apply to loss caused by the willful misconduct or lack of good faith on the part of any of the contractor’s directors or officers, managers, superintendents, or other equivalent representatives. (c) Definitions In this section: (1) Covered contract The term covered contract means any classified, fixed-price type contract, entered into with the Department of Defense on or after the date of the enactment of this section where, due to the classified nature of the underlying program— (A) the contractor cannot get a third-party commercial insurance provider to insure the work in process; or (B) the third-party commercial insurance provider cannot process the contractor’s claim. (2) Lack of good faith The term lack of good faith has the meaning given the term in section 252.228–7001 of the Department of Defense Supplement to the Federal Acquisition Regulation, or any successor regulation. (3) Willful misconduct The term willful misconduct has the meaning given the term in section 252.228–7001 of the Department of Defense Supplement to the Federal Acquisition Regulation, or any successor regulation. (4) Work in process The term work in process — (A) means an item at any stage of production or manufacture at any time from the initiation of contract performance until delivery to and acceptance by the government; and (B) specifically includes a covered aircraft as that term is defined in section 252.228–7001 of the Department of Defense Supplement to the Federal Acquisition Regulation, or any successor regulation. (d) Conforming regulations Not later than 120 days after the date of the enactment of this Act, the Secretary of Defense shall revise the Department of Defense Supplement to the Federal Acquisition Regulation to conform with the changes made by this section.