The warranty guaranty clause: an analysis of its use on the Spruance class (DD-963) shipbuilding contract and identification of lessons learned

Abstract

The extension of contractor liability beyond delivery is an essential element in contracting when complex weapons systems are involved. Warranty/Guaranty clauses are currently being included in shipbuilding contracts as a means of incentivizing contractors to provide quality workmanship and materials. The authors have investigated the results of one Warranty/Guaranty effort, the U.S. Navy's Spruance Class Shipbuilding Program, and constructed a Cost-Effectiveness Model to evaluate actual performance on three ships of that Class. Lessons learned are identified and presented which could be incorporated into future Warranty/Guaranty policy decisions.