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                            46.407 Nonconforming supplies or services.
        
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FAC Number: 2024-03 Effective Date: 02/23/2024
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Subpart46.046.146.246.346.446.546.646.746.8
Section46.40146.40246.40346.40446.40546.40646.40746.408
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46.407 Nonconforming supplies or services.46.407 Nonconforming supplies	or services.       (a) 						            The contracting officer should	reject supplies or services not conforming in all respects to contract	requirements (see  46.102).	In those instances where deviation from this policy is found to	be in the Government’s interest, such supplies or services may be	accepted only as authorized in this section.                                          (b) 						            The contracting	officer ordinarily must give the contractor an opportunity to correct	or replace nonconforming supplies or services when this can be accomplished	within the required delivery schedule. Unless the contract specifies	otherwise (as may be the case in some cost-reimbursement contracts),	correction or replacement must be without additional cost to the	Government. Paragraph (e)(2) of the clause at  52.246-2, Inspection of	Supplies-Fixed-Price, reserves to the Government the right to charge	the contractor the cost of Government reinspection and retests because	of prior rejection.                                          (c)                                                         (1) 								                In	situations not covered by paragraph (b) of this section, the contracting	officer ordinarily must reject supplies or services when the nonconformance	is critical or major or the supplies or services are otherwise incomplete.	However, there may be circumstances (*e.g.,* reasons of economy	or urgency) when the contracting officer determines acceptance or	conditional acceptance of supplies or services is in the best interest	of the Government. The contracting officer must make this determination	based upon-                                                                           (i) 										                    Advice of the technical activity	that the item is safe to use and will perform its intended purpose;                                                                              (ii) 										                    Information	regarding the nature and extent of the nonconformance or otherwise	incomplete supplies or services;                                                                              (iii) 										                    A request	from the contractor for acceptance of the nonconforming or otherwise	incomplete supplies or services (if feasible);                                                                              (iv) 										                    A recommendation	for acceptance, conditional acceptance, or rejection, with supporting	rationale; and                                                                              (v) 										                    The contract	adjustment considered appropriate, including any adjustment offered	by the contractor.                                                                                                           (2) 								                The cognizant	contract administration office, or other Government activity directly	involved, must furnish this data to the contracting officer in writing,	except that in urgent cases it may be furnished orally and later	confirmed in writing. Before making a decision to accept, the contracting	officer must obtain the concurrence of the activity responsible	for the technical requirements of the contract and, where health	factors are involved, of the responsible health official of the	agency concerned.                                                                             (d) 						            If the	nonconformance is minor, the cognizant contract administration office	may make the determination to accept or reject, except where this	authority is withheld by the contracting office of the contracting	activity. To assist in making this determination, the contract administration	office may establish a joint contractor-contract administrative	office review group. Acceptance of supplies and services with critical	or major nonconformances is outside the scope of the review group.                                          (e) 						            The contracting	officer must discourage the repeated tender of nonconforming supplies	or services, including those with only minor nonconformances, by	appropriate action, such as rejection and documenting the contractor’s	performance record.                                          (f) 						            When supplies	or services are accepted with critical or major nonconformances	as authorized in paragraph (c) of this section, the contracting	officer must modify the contract to provide for an equitable price	reduction or other consideration. In the case of conditional acceptance,	amounts withheld from payments generally should be at least sufficient	to cover the estimated cost and related profit to correct deficiencies	and complete unfinished work. The contracting officer must document	in the contract file the basis for the amounts withheld. For services,	the contracting officer can consider identifying the value of the	individual work requirements or tasks (subdivisions) that may be	subject to price or fee reduction. This value may be used to determine	an equitable adjustment for nonconforming services. However, when	supplies or services involving minor nonconformances are accepted,	the contract need not be modified unless it appears that the savings to	the contractor in fabricating the nonconforming supplies or performing	the nonconforming services will exceed the cost to the Government	of processing the modification.                                          (g) 						            Notices	of rejection must include the reasons for rejection and be furnished	promptly to the contractor. Promptness in giving this notice is	essential because, if timely nature of rejection is not furnished,	acceptance may in certain cases be implied as a matter of law. The	notice must be in writing if-                                                         (1) 								                The supplies	or services have been rejected at a place other than the contractor’s	plant;                                                            (2) 								                The contractor	persists in offering nonconforming supplies or services for acceptance;	or                                                            (3) 								                Delivery	or performance was late without excusable cause.                                                                             (h) 						            The contracting	officer shall provide disposition instructions for counterfeit or	suspect counterfeit items in accordance with agency policy. Agency	policy may require the contracting officer to direct the contractor	to retain such items for investigative or evidentiary purposes.    **Parent topic:**  Subpart 46.4 - Government Contract Quality Assurance
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