Contract clauses
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.