General Motors (GM) have announced that they will be adopting a new purchasing policy in which GM component suppliers will have to cover costs for safety recalls on parts they supply. The new contract implemented July 15, 2013 holds suppliers responsible even if the components were built to GM specifications. While the language creates a potentially catastrophic financial liability for suppliers, GM says the goal of their new terms is to increase safety for consumers.

GM’s new terms and conditions contract extends the automaker’s rights in several key areas as well. This includes:

• Certain financial information such as income statements and supporting data will be provided to GM whenever they request it.
• The supplier must have an uninterrupted thirty day supply of parts during any foreseeable or anticipated events such as a sub supplier financial crisis or labor disruptions.
• GM will not be obligated to keep supplier data regarding vehicle technology confidential unless the two parties sign a separate agreement.
• A supplier must inform GM of any defects or quality problems that it discovers, including any deficiencies in GM’s component specifications.

None of GM’s supplier’s have signed the contract as of yet. They say they are studying it with groups like Original Equipment Suppliers Association (OESA) and are not in a position to comment on it directly at this time.