46.805 Contract clauses
Source: FAR 46.805 on acquisition.gov
FAR 46.805 mandates the use of specific Limitation of Liability clauses in contracts exceeding the simplified acquisition threshold, tailored to the contract’s deliverables and value, to clearly define contractor liability for government property.
Overview
FAR 46.805 prescribes the use of specific contract clauses related to contractor liability for loss or damage to government property. It directs contracting officers to include certain Limitation of Liability clauses in solicitations and contracts exceeding the simplified acquisition threshold, depending on whether the contract involves end items, high-value items, services, or a combination. For contracts at or below the simplified acquisition threshold, these clauses are generally not required but may be included upon contractor request, potentially with an appropriate price reduction. The section ensures that liability terms are clearly defined and tailored to the contract’s scope and value, protecting both government and contractor interests.
Key Rules
- Contracts Exceeding the Simplified Acquisition Threshold
- Contracting officers must insert the appropriate Limitation of Liability clause(s) based on the type of deliverables (end items, high-value items, services, or combinations).
- Contracts at or Below the Simplified Acquisition Threshold
- Clauses are not required but may be included if requested by the contractor, with possible price adjustments.
Responsibilities
- Contracting Officers: Must select and insert the correct Limitation of Liability clauses based on contract type and value, and clearly identify high-value items in the contract schedule.
- Contractors: Should review and understand the liability clauses included in their contracts, and may request inclusion of such clauses for contracts at or below the threshold.
- Agencies: Ensure oversight of clause inclusion and proper identification of high-value items.
Practical Implications
- This section clarifies when and which Limitation of Liability clauses must be used, reducing ambiguity and risk for both parties.
- Proper clause selection and clear identification of high-value items are critical to compliance and risk management.
- Failure to include the correct clauses or to identify high-value items can lead to disputes or increased liability exposure.
(a) Contracts that exceed the simplified acquisition threshold. The contracting officer shall insert the appropriate clause or combination of clauses specified in paragraphs (a)(1) through (a)(5) of this section in solicitations and contracts when the contract amount is expected to be in excess of the simplified acquisition threshold and the contract is subject to the requirements of this subpart as indicated in 46.801:
(1) In contracts requiring delivery of end items that are not high-value items, insert the clause at 52.246-23, Limitation of Liability.
(2) In contracts requiring delivery of high-value items, insert the clause at 52.246-24, Limitation of Liability-High Value Items.
(3) In contracts requiring delivery of both high-value items and other end items, insert both clauses prescribed in (a)(1) and (a)(2) of this section, AlternateI of the clause at 52.246-24, and identify clearly in the contract schedule the line items designated as high-value items.
(4) In contracts requiring the performance of services, insert the clause at 52.246-25, Limitation of Liability-Services.
(5) In contracts requiring both the performance of services and the delivery of end items, insert the clause prescribed in paragraph (a)(4) of this section and the appropriate clause or clauses prescribed in paragraph (a)(1), (2), or (3) of this section, and identify clearly in the contract schedule any high-value line items.
(b) Acquisitions at or below the simplified acquisition threshold. The clauses prescribed by paragraph (a) of this section are not required for contracts at or below the simplified acquisition threshold. However, in response to a contractor’s specific request, the contracting officer may insert the clauses prescribed in paragraph (a)(1) or (a)(4) of this section in a contract at or below the simplified acquisition threshold and may obtain any price reduction that is appropriate.