Overview
This section defines the fundamental purposes of warranties in federal contracting, emphasizing their role in establishing post-acceptance rights and incentivizing contractor quality. It establishes the requirement that any warranty must provide a value to the Government that is proportional to its cost.
Key Rules
- Dual Purpose: Warranties serve to clearly define the legal rights and obligations regarding defective performance and to motivate the contractor to maintain high-quality standards.
- Post-Acceptance Remedy: A warranty must provide the Government the right to demand the correction of defects even after the supplies or services have been formally accepted.
- Defined Duration: Warranties must specify a clear timeframe, a limit of use, or a specific triggering event during which the Government can exercise its rights.
- Cost-Benefit Requirement: Agencies are prohibited from procuring warranties unless the expected benefits (e.g., reduced life-cycle costs or improved reliability) justify the additional cost charged by the contractor.
Practical Implications
- Overriding Acceptance: In standard contracting, "acceptance" often limits the Government's recourse for non-latent defects; however, this section ensures a warranty functions as a specific contractual exception that extends contractor liability.
- Value Engineering: Contracting Officers must perform a business case analysis to ensure they are not paying for "commercial-style" warranties that offer little practical benefit in a specific government operational context.