I just love when people only read half of something!
UNSATISFACTORY DEMONSTRATIONS. The severity and basic cause of the deficiency must be considered. Minor deficiencies usually can be resolved by responsible company personnel without having to declare the demonstration unsatisfactory.
A. A demonstration is unsatisfactory if the operator fails to meet the specified time limit.
B. Crewmember ineffectiveness or equipment malfunctions may be grounds for declaring a demonstration to be unsatisfactory.
C. If a relatively severe deficiency occurs due to improper company training, procedures, or maintenance, the demonstration should be declared unsatisfactory.
The key phrase here are equipment malfunctions may be grounds for declaring a demonstration to be unsatisfactory. maybe or it may not be depending on the severity of the issue in the FAA's eyes.