52.246-24
Limitation of Liability-High-Value Items
FAR 52.246-24 limits contractor liability for post-acceptance loss or damage to high-value government property, except in cases of willful misconduct, lack of good faith, or where insurance applies.
Overview
FAR 52.246-24, Limitation of Liability-High-Value Items, establishes the extent of contractor liability for loss or damage to high-value government property after acceptance. The clause generally limits contractor liability for post-acceptance losses due to defects, except in cases of willful misconduct or lack of good faith by managerial personnel. It also addresses situations where the contractor has insurance or self-insurance, and clarifies that the clause does not diminish other contractual obligations for correction or replacement of defective supplies. The clause does not affect rights under other specific government property or warranty clauses. Alternate I applies when only certain line items are designated as high-value items.
Key Rules
- Limitation of Liability
- Contractors are not liable for loss or damage to government property after acceptance, unless exceptions apply.
- Exceptions for Willful Misconduct or Lack of Good Faith
- Liability limitation does not apply if defects result from willful misconduct or lack of good faith by managerial personnel.
- Insurance or Self-Insurance
- If the contractor has insurance or a reserve, liability extends to the amount covered for post-acceptance losses due to defects.
- Obligations for Defective Supplies
- The clause does not reduce obligations to correct, repair, or replace defective supplies as otherwise required by the contract.
- Other Government Rights
- The clause does not limit government rights under other clauses related to technical data warranties, flight risks, or government property.
Responsibilities
- Contracting Officers: Must include this clause in applicable contracts and identify high-value items when Alternate I is used.
- Contractors: Must understand liability limitations, maintain required insurance or reserves, and fulfill correction or replacement obligations for defective supplies.
- Agencies: Ensure proper clause inclusion and monitor compliance with liability and correction requirements.
Practical Implications
- This clause protects contractors from broad liability for post-acceptance losses, encouraging participation in high-value contracts while safeguarding government interests in cases of misconduct or inadequate insurance. Contractors must carefully manage risk, maintain appropriate insurance, and ensure managerial personnel act in good faith. Failure to comply can result in significant financial exposure or contract remedies.