Overview
FAR 46.407 establishes the policy and procedures for handling supplies or services that fail to meet contract specifications, emphasizing the Government's right to reject nonconforming items while providing a framework for acceptance when it is in the Government’s best interest.
Key Rules
- Default Policy of Rejection: The Contracting Officer (CO) should generally reject nonconforming supplies or services unless acceptance is specifically authorized as being in the Government's interest.
- Opportunity to Correct: Contractors must ordinarily be given a chance to correct or replace nonconforming items at no additional cost if it can be done within the required delivery schedule.
- Critical vs. Major Nonconformance: For significant defects, the CO may only accept items based on technical advice regarding safety and performance, and must obtain an equitable price reduction or other consideration.
- Minor Nonconformance: The Contract Administration Office (CAO) generally has the authority to accept or reject items with minor defects, and a formal contract modification is not required unless the contractor’s cost savings exceed the Government’s administrative processing costs.
- Documentation and Concurrence: Acceptance of major nonconformances requires written supporting rationale and concurrence from the technical activity responsible for the requirements (and health officials if applicable).
- Notice of Rejection: Rejection notices must be prompt and include specific reasons; failure to provide timely notice may result in "implied acceptance" as a matter of law.
- Counterfeit Items: The CO must provide specific disposition instructions for counterfeit or suspect items, which may include retention for investigative purposes.
Practical Implications
- Risk of Implied Acceptance: Government personnel must act quickly when identifying defects, as delays in issuing a formal rejection notice can legally obligate the Government to accept and pay for nonconforming work.
- Requirement for Consideration: When the Government chooses to accept "substantial" nonconforming work (Major/Critical) to meet urgent deadlines, the CO is regulatory bound to negotiate a price hardware/service reduction to ensure the Government does not pay full price for diminished value.