52.246-6 Inspection-Time-and-Material and Labor-Hour
Source: FAR 52.246-6 on acquisition.gov
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.
As prescribed in 46.306 , insert the following clause:
Inspection-Time-and-Material and Labor-Hour (May 2001)
(a) Definitions. As used in this clause-
Contractor’s managerial personnel means any of the Contractor’s directors, officers, managers, superintendents, or equivalent representatives who have supervision or direction of-
(1) All or substantially all of the Contractor’s business;
(2) All or substantially all of the Contractor’s operation at any one plant or separate location where the contract is being performed; or
(3) A separate and complete major industrial operation connected with the performance of this contract.
Materials includes data when the contract does not include the Warranty of Data clause.
(b) The Contractor shall provide and maintain an inspection system acceptable to the Government covering the material, fabricating methods, work, and 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 materials furnished and services performed under this contract, to the extent practicable at all places and times, including the period of performance, and in any event before acceptance. The Government may also inspect the plant or plants of the Contractor or any subcontractor engaged in contract performance. The Government shall perform inspections and tests in a manner that will not unduly delay the work.
(d) If the Government performs inspection or test on the premises of the Contractor or a subcontractor, the Contractor shall furnish and shall require subcontractors to furnish all reasonable facilities and assistance for the safe and convenient performance of these duties.
(e) Unless otherwise specified in the contract, the Government shall accept or reject services and materials at the place of delivery as promptly as practicable after delivery, and they shall be presumed accepted 60 days after the date of delivery, unless accepted earlier.
(f) At any time during contract performance, but not later than 6 months (or such other time as may be specified in the contract) after acceptance of the services or materials last delivered under this contract, the Government may require the Contractor to replace or correct services or materials that at time of delivery failed to meet contract requirements. Except as otherwise specified in paragraph (h) of this clause, the cost of replacement or correction shall be determined under the Payments Under Time-and-Materials and Labor-Hour Contracts clause, but the "hourly rate" for labor hours incurred in the replacement or correction shall be reduced to exclude that portion of the rate attributable to profit. The Contractor shall not tender for acceptance materials and services required to be replaced or corrected without disclosing the former requirement for replacement or correction, and, when required, shall disclose the corrective action taken.
(g)
(1) If the Contractor fails to proceed with reasonable promptness to perform required replacement or correction, and if the replacement or correction can be performed within the ceiling price (or the ceiling price as increased by the Government), the Government may-
(i) By contract or otherwise, perform the replacement or correction, charge to the Contractor any increased cost, or deduct such increased cost from any amounts paid or due under this contract; or
(ii) Terminate this contract for default.
(2) Failure to agree to the amount of increased cost to be charged to the Contractor shall be a dispute.
(h) Notwithstanding paragraphs (f) and (g) of this clause, the Government may at any time require the Contractor to remedy by correction or replacement, without cost to the Government, any failure by the Contractor to comply with the requirements of this contract, if the failure is due to-
(1) Fraud, lack of good faith, or willful misconduct on the part of the Contractor’s managerial personnel; or
(2) The conduct of one or more of the Contractor’s employees selected or retained by the Contractor after any of the Contractor’s managerial personnel has reasonable grounds to believe that the employee is habitually careless or unqualified.
(i) This clause applies in the same manner and to the same extent to corrected or replacement materials or services as to materials and services originally delivered under this contract.
(j) The Contractor has no obligation or liability under this contract to correct or replace materials and services that at time of delivery do not meet contract requirements, except as provided in this clause or as may be otherwise specified in the contract.
(k) Unless otherwise specified in the contract, the Contractor’s obligation to correct or replace Government-furnished property shall be governed by the clause pertaining to Government property.
(End of clause)
Alternate I (Apr 1984). If Government inspection and acceptance are to be performed at the contractor’s plant, paragraph (e) below may be substituted for paragraph (e) of the basic clause:
(e) The Government shall inspect for acceptance all items (other than aircraft to be flown away, if any) to be furnished under this contract at the Contractor’s plant or plants specified in the contract, or at any other plant or plants approved for such purpose in writing by the Contracting Officer. The Contractor shall inform the contract administration office or Contracting Officer when the work is ready for inspection. The Government reserves the right to charge to the Contractor any additional cost of Government inspection and test when items are not ready at the time for which inspection and test is requested by the Contractor.