52.246-8
Inspection of Research and Development-Cost-Reimbursement
Contractors on cost-reimbursement R&D contracts must maintain a government-approved inspection system and promptly correct or replace nonconforming work, or risk financial penalties or contract termination.
Overview
FAR 52.246-8 establishes the inspection requirements for research and development (R&D) contracts that are cost-reimbursement and where the primary deliverables are end items (not just designs, drawings, or reports). The clause outlines the contractor’s obligation to maintain an acceptable inspection system, the government’s rights to inspect and test work at any time and place, and the procedures for correcting or replacing nonconforming work. It also addresses the responsibilities of both parties regarding the correction of deficiencies, including timelines, cost allowability, and the consequences of failing to correct work. Alternate I modifies the clause for no-fee contracts.
Key Rules
- Inspection System Requirement
- Contractors must establish and maintain an inspection system acceptable to the government and keep complete inspection records.
- Government Inspection Rights
- The government may inspect and test all work at any time and place, including contractor and subcontractor facilities, and must not unduly delay the work.
- Correction or Replacement of Work
- The government can require correction or replacement of nonconforming work within six months after acceptance, with costs handled per the Allowable Cost and Payment clause.
- Contractor Assistance
- Contractors must provide reasonable facilities and assistance for government inspections.
- Consequences for Noncompliance
- If the contractor fails to correct work promptly, the government may perform corrections at the contractor’s expense, reduce fees, or terminate for default.
- Special Cases for Correction at No Cost
- If nonconformance is due to fraud, bad faith, or willful misconduct by managerial personnel, correction must be at no cost to the government.
- Disclosure of Corrections
- Contractors must disclose prior corrections and corrective actions when resubmitting work.
Responsibilities
- Contracting Officers: Ensure the clause is included in applicable contracts, monitor contractor compliance, and enforce correction or replacement of nonconforming work.
- Contractors: Maintain an inspection system, provide access and assistance for inspections, correct or replace nonconforming work, and disclose corrective actions.
- Agencies: Oversee contract performance, conduct inspections, and enforce remedies for noncompliance.
Practical Implications
- This clause ensures quality control in R&D contracts by requiring robust inspection systems and providing the government with broad inspection and correction rights. Contractors must be diligent in maintaining records and responding to deficiencies. Failure to comply can result in financial penalties or contract termination. Common pitfalls include inadequate inspection systems, poor recordkeeping, and delays in correcting nonconforming work.