52.246-6
Inspection-Time-and-Material and Labor-Hour
Contractors on time-and-material or labor-hour contracts must maintain robust inspection systems and promptly correct or replace nonconforming work, or risk financial penalties and contract termination.
Overview
FAR 52.246-6, "Inspection—Time-and-Material and Labor-Hour," establishes the inspection and acceptance requirements for contracts using time-and-material (T&M) or labor-hour pricing. The clause defines key terms, mandates that contractors maintain an acceptable inspection system, and outlines the Government’s rights to inspect, test, and accept or reject materials and services. It also details procedures for correction or replacement of nonconforming work, the consequences of failing to remedy defects, and special provisions for fraud or willful misconduct. Alternate I modifies inspection procedures when acceptance occurs at the contractor’s plant.
Key Rules
- Inspection System Requirement
- Contractors must implement and maintain an inspection system acceptable to the Government, keeping complete records available for review.
- Government Inspection Rights
- The Government may inspect and test all materials and services at any time and place, including contractor or subcontractor facilities, without unduly delaying work.
- Correction or Replacement of Defects
- The Government can require correction or replacement of nonconforming work within six months of acceptance, with costs adjusted to exclude profit for corrective labor.
- Remedies for Contractor Failure
- If the contractor fails to act promptly, the Government may perform corrections at the contractor’s expense or terminate for default.
- Special Liability for Fraud or Misconduct
- Contractors must remedy defects at no cost if caused by fraud, lack of good faith, or willful misconduct by managerial personnel.
- Alternate I—Inspection at Contractor’s Plant
- When specified, inspection and acceptance occur at the contractor’s plant, and the contractor must notify the Government when work is ready for inspection.
Responsibilities
- Contracting Officers: Ensure inclusion of the clause, monitor contractor inspection systems, and enforce remedies for nonconformance.
- Contractors: Maintain inspection systems, provide access and assistance for Government inspections, correct or replace nonconforming work, and disclose corrective actions.
- Agencies: Oversee compliance, conduct inspections, and manage disputes or remedies for defective work.
Practical Implications
- This clause ensures quality control and accountability in T&M and labor-hour contracts, protecting the Government’s interests. Contractors must be diligent in inspection, documentation, and timely correction of defects. Failure to comply can result in financial penalties or contract termination. Common pitfalls include inadequate inspection records, delayed corrective actions, and failure to disclose prior defects.