52.246-5 Inspection of Services-Cost-Reimbursement
Source: FAR 52.246-5 on acquisition.gov
Contractors under cost-reimbursement service contracts must maintain a Government-approved inspection system and promptly correct any deficiencies to avoid fee reductions or contract termination.
Overview
FAR 52.246-5, "Inspection of Services-Cost-Reimbursement," establishes the requirements for inspection and acceptance of services under cost-reimbursement contracts. The clause mandates that contractors implement and maintain an inspection system acceptable to the Government, keep thorough records of all inspections, and make these records available for review. The Government retains the right to inspect and test services at any time and place during contract performance, ensuring compliance with contract requirements. If services do not meet contract standards, the Government can require reperformance at no additional cost, demand corrective actions for future performance, or reduce the contractor's fee. Persistent nonconformance may result in the Government performing the services at the contractor's expense or terminating the contract for default.
Key Rules
- Inspection System Requirement
- Contractors must establish and maintain an inspection system that meets Government approval and keep detailed inspection records.
- Government Inspection Rights
- The Government may inspect and test services at any time or place during contract performance without causing undue delays.
- Nonconforming Services
- If services do not meet contract requirements, the contractor must reperform them at no extra cost, or the Government may reduce the contract fee or require corrective action.
- Failure to Correct Deficiencies
- If the contractor fails to correct issues, the Government may perform the services itself (at the contractor's expense) or terminate the contract for default.
Responsibilities
- Contracting Officers: Ensure the clause is included in applicable contracts, monitor contractor compliance, and enforce remedies for nonconformance.
- Contractors: Maintain an acceptable inspection system, keep and provide inspection records, promptly correct deficiencies, and comply with all inspection-related requirements.
- Agencies: Oversee contract performance, conduct inspections, and take corrective action as needed.
Practical Implications
This clause ensures quality assurance in cost-reimbursement service contracts by requiring robust contractor inspection systems and providing the Government with broad inspection and enforcement rights. Contractors must be diligent in maintaining records and addressing deficiencies to avoid fee reductions or contract termination. Common pitfalls include inadequate inspection systems, poor recordkeeping, and delayed corrective actions.
As prescribed in 46.305 , insert the following clause in solicitations and contracts for services, or supplies that involve the furnishing of services, when a cost-reimbursement contract is contemplated:
Inspection of Services-Cost-Reimbursement (Apr 1984)
(a) Definition."Services," as used in this clause, includes services performed, workmanship, and material furnished or used in performing services.
(b) The Contractor shall provide and maintain an inspection system acceptable to the Government covering the services under this contract. Complete records of all inspection work performed by the Contractor shall be maintained and made available to the Government during contract performance and for as long afterwards as the contract requires.
(c) The Government has the right to inspect and test all services called for by the contract, to the extent practicable at all places and times during the term of the contract. The Government shall perform inspections and tests in a manner that will not unduly delay the work.
(d) If any of the services performed do not conform with contract requirements, the Government may require the Contractor to perform the services again in conformity with contract requirements, for no additional fee. When the defects in services cannot be corrected by reperformance, the Government may-
(1) Require the Contractor to take necessary action to ensure that future performance conforms to contract requirements; and
(2) Reduce any fee payable under the contract to reflect the reduced value of the services performed.
(e) If the Contractor fails to promptly perform the services again or take the action necessary to ensure future performance in conformity with contract requirements, the Government may-
(1) By contract or otherwise, perform the services and reduce any fee payable by an amount that is equitable under the circumstances; or
(2) Terminate the contract for default.
(End of clause)