Proposed Part 145 Could Eliminate Spot Repairs and Increase the Cost of Many Repairs

July 17, 2012 by Leave a comment

There are a number of problems with the FAA’s proposed revisions to the repair station rules.  One of those problems is that it could essentially do away with spot repairs.  As a matter of practice, it could require repair stations to overhaul parts every time they get them.  The reason for this is because of a subtle change in the quality system rules.

The current rule for those performing repairs is that they must ensure that the work performed is done correctly.  See 14 C.F.R. 43.9(a)(4) (signature constitutes approval for return to service only for the work performed).  But if their workscope does not encompass a finding of airworthiness for the entire article, then they do not need to also verify the airworthiness of the entire article.

I once represented a repair station that was asked to perform a simple alteration to a helicopter.  In their due diligence, they discovered that an AD was necessary for the rotorcraft.  When they called the owner, though, the owner said that they already had a contract with another repair station to have the AD work performed.  As a matter of their own due diligence and good record-keeping, they made a note that they had communicated to the owner that additional AD work was necessary before the rotorcraft flew.  An FAA inspector saw this note and brought an enforcement action against the repair station for failing to ensure that the entire rotorcraft was airworthy.  We were able to quickly get the enforcement action dismissed because the approval for return to service was limited only to the work accomplished, and not the work that was not described.  But this illustrates the issue –

Proposed 145.1211(a) would impose a burden on the repair station’s quality system to ensure the airworthiness of each article on which the repair station works.  Although based on existing quality system language, it could preclude spot repairs, and essentially require an overhaul in every component repair situation, in order to be able to ensure the airworthiness of the article.

§ 145.1211 Quality control system.

(a) A certificated repair station must establish and maintain a quality control system acceptable to the FAA that ensures the airworthiness of the articles on which the repair station or any of its contractors performs maintenance, preventive maintenance, or alterations.

Let’s look at this from a practical point of view.  A distributor has an overhauled avionics unit in their inventory.  The OEM issues a software upgrade.  The distributor wants to send the unit to a local avionics repair station for the sole purpose of installing the software upgrade.  The distributor does not want to pay for a complete overhaul of the unit, and a complete overhaul of the unit is not necessary.  But the local repair station performing the software upgrade would not be able to ensure the airworthiness of the component without performing a complete overhaul.  At first glance, this seems foolish, and some people might ask “why can’t the repair station simply rely on the approval for return to service from the earlier overhaul?”  The repair station is responsible for making its own findings.  The repair station is not automatically allowed to rely on the earlier approval for return to service because that sort of reliance would reflect a form of subcontracting (which is not permitted unless the task was approved in their subcontracting task list (14 C.F.R. 217(a)(1)) and the vendor is listed in their approved maintenance subcontracting vendor list (14 C.F.R. 217(a)(2))).

The proposed rule can be found at: http://www.gpo.gov/fdsys/pkg/FR-2012-05-21/pdf/2012-11984.pdf

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Government Contractors Face New Conflict of Interest Rules

May 11, 2011 by Leave a comment

If your company supports government contracts, or if you are considering entering that sector, then it is important that you consider the new rules being developed concerning organizational conflicts of interest.

In recent years, a number of trends in acquisition and industry have led to the increased potential for organizational conflicts of interest, including—

  • • Industry consolidation;
  • • Agencies’ growing reliance on contractors for services, especially where the contractor is tasked with providing advice to the Government; and
  • • The use of multiple-award task- and delivery-order contracts, which permit large amounts of work to be awarded among a limited pool of contractors.

In its 2007 report, the Acquisition Advisory Panel concluded that the Federal Acquisition Regulations do not adequately address “the range of possible conflicts that can arise in modern Government contracting.”  The Panel observed that the Federal Acquisition Regulations provides no detailed guidance to contracting officers regarding how they should detect and mitigate actual and potential organizational conflicts of interest and called for improved guidance, to possibly include a standard organizational conflicts of interest clause or set of clauses in government contracts.

The proposed rule establishes a clearer definition for the term “organizational conflict of interest.”  The proposed definition would be placed in 48 C.F.R. § 2.101 and it would state:

Organizational conflict of interest means a situation in which—

(1) A Government contract requires a contractor to exercise judgment to assist the Government in a matter (such as in drafting specifications or assessing another contractor’s proposal or performance) and the contractor or its affiliates have financial or other interests at stake in the matter, so that a reasonable person might have concern that when performing work under the contract, the contractor may be improperly influenced by its own interests rather than the best interests of the Government; or

(2) A contractor could have an unfair competitive advantage in an acquisition as a result of having performed work on a Government contract, under circumstances such as those described in paragraph (1) of this definition, that put the contractor in a position to influence the acquisition.

The proposed rule also includes substantial procedural standards and contract clauses designed to implement protections against organizational conflicts of interest, as well as standard procedures for obtaining waivers of organizational conflicts of interest.  The proposed rule can be found online at http://edocket.access.gpo.gov/2011/pdf/2011-9415.pdf.  Written comments are due to the government on or before June 27, 2011.

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