52.246-3 Inspection of Supplies-CostReimbursement.

As prescribed in 46.303 , insert the following clause in solicitations and contracts for supplies, or

services that involve the furnishing of supplies, when a cost-reimbursement contract is

contemplated:

Inspection of Supplies-Cost-Reimbursement (May 2001)

(a) Definitions. As used in this clauseContractor’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 a plant or separate location where the

contract is being performed; or

(3) A separate and complete major industrial operation connected with performing this contract.

Supplies includes but is not limited to raw materials, components, intermediate assemblies, end

products, lots of supplies, and, when the contract does not include the Warranty of Data clause,

data.

(b) The Contractor shall provide and maintain an inspection system acceptable to the Government

covering the supplies, fabricating methods, and special tooling 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 the contract supplies, to the extent practicable

at all places and times, including the period of manufacture, and in any event before acceptance.

The Government may also inspect the plant or plants of the Contractor or any subcontractor

engaged in the 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 supplies as promptly as

practicable after delivery, and supplies shall be deemed accepted 60 days after delivery, unless

accepted earlier.

(f) At any time during contract performance, but no later than 6 months (or such other time as may

be specified in the contract) after acceptance of the supplies to be delivered under the contract, the

Government may require the Contractor to replace or correct any supplies that are nonconforming

at time of delivery. Supplies are nonconforming when they are defective in material or workmanship

or are otherwise not in conformity with contract requirements. Except as otherwise provided in

paragraph (h) of this clause, the cost of replacement or correction shall be included in allowable
cost, determined as provided in the Allowable Cost and Payment clause, but no additional fee shall

be paid. The Contractor shall not tender for acceptance supplies 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, the Government may-

(i) By contract or otherwise, perform the replacement or correction and charge to the Contractor

any increased cost or make an equitable reduction in any fixed fee paid or payable under the

contract;

(ii) Require delivery of undelivered supplies at an equitable reduction in any fixed fee paid or

payable under the contract; or

(iii) Terminate the contract for default.

(2) Failure to agree on the amount of increased cost to be charged to the Contractor or to the

reduction in the fixed fee shall be a dispute.

(h) Notwithstanding paragraphs (f) and (g) of this clause, the Government may at any time require

the Contractor to correct or replace, without cost to the Government, nonconforming supplies, if the

nonconformances are 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 to corrected or replacement supplies as to supplies

originally delivered.

(j) The Contractor shall have no obligation or liability under this contract to replace supplies that

were nonconforming at the time of delivery, except as provided in this clause or as may be otherwise

provided in the contract.

(k) Except as 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)

Parent topic: 52.246 [Reserved]