In this paper, we study distributed failure diagnosis under k-bounded communication delay, where each local site transmits its observations to other sites immediately after each observation, and which is received within at most k more event executions of the plant. This work extends our prior work on decentralized failure diagnosis [17] that did not allow any communication among the local sites. A notion of jointiop k diagnosability is introduced so that any failure can be diagnosed within a bounded delay of its occurrence by one of the local sites using its own observations and the k-bounded delayed observations received from other local sites. The local sites communicate among each other using an "immediate observation passing (iop)" protocol, forwarding any observation immediately up on its occurrence. We construct models for k-bounded communication delay, and use them to extend the system and non-fault specification models for capturing the effect of bounded-delay commun...