52.246-6
Inspection-Time-and-Material and Labor-Hour
On T&M and labor-hour contracts, contractors must maintain a Government-acceptable inspection system and promptly correct nonconforming work—or risk cost recovery, loss of profit on rework, or default termination.
Overview
- FAR 52.246-6 establishes the inspection, acceptance, and correction framework for time-and-materials (T&M) and labor-hour contracts. It requires contractors to maintain an acceptable inspection system and gives the Government broad rights to inspect materials and services before acceptance.
- The clause is designed to ensure that supplies, data, and services delivered under these contract types conform to contract requirements, while defining when the contractor must correct or replace nonconforming work.
Key Rules
- Contractor Inspection System
- The contractor must provide and maintain a Government-acceptable inspection system covering materials, fabrication methods, work, and services, and keep complete inspection records available during performance and afterward as required by the contract.
- Government Inspection and Acceptance Rights
- The Government may inspect and test at all practicable places and times, including at contractor and subcontractor plants, and before acceptance. Unless otherwise specified, acceptance or rejection occurs at delivery and is presumed after 60 days if not acted on earlier.
- Correction and Replacement of Nonconforming Work
- Up to 6 months after acceptance of the last delivered services or materials, the Government may require correction or replacement of items that failed to meet requirements at delivery. Labor-hour reimbursement for corrective work excludes profit.
- Failure to Correct / No-Cost Remedies
- If the contractor does not act promptly, the Government may perform the correction and charge increased costs or terminate for default. If nonconformance results from fraud, bad faith, willful misconduct, or knowingly retaining habitually careless or unqualified employees, correction or replacement must be made at no cost to the Government.
Responsibilities
- Contracting Officers: ensure the clause is used in applicable T&M and labor-hour contracts, manage inspection/acceptance timing, and enforce correction, cost recovery, or default remedies when necessary.
- Contractors: maintain inspection controls, support Government inspections, disclose prior rejection/correction issues when retendering, and promptly correct nonconforming work.
- Agencies: conduct inspections without unduly delaying performance and document acceptance, rejection, and any post-acceptance corrective actions.
Practical Implications
- This clause protects the Government from paying profit on rework and preserves post-acceptance remedies for latent or later-discovered nonconformance.
- Contractors should expect scrutiny of quality systems, subcontractor support, and readiness for inspection.
- Common pitfalls include poor inspection records, requesting inspection before work is ready, failing to disclose prior corrective actions, and assuming acceptance eliminates all correction liability.