Overview
This section outlines the restrictions on the use of warranties in federal contracts, specifically limiting their application in cost-reimbursement environments and ensuring they do not override fundamental government protections against defects or fraud.
Key Rules
- Cost-Reimbursement Restriction: Warranties are generally prohibited in cost-reimbursement contracts, except for those found in specific inspection clauses (52.246-3 and 52.246-8) or as authorized by specific agency regulations.
- Preservation of Core Rights: Warranty clauses cannot be used to limit or waive the government’s rights regarding latent defects, fraud, or gross mistakes that amount to fraud.
- Supremacy Over Acceptance: For non-construction contracts, the warranty must remain valid and enforceable regardless of whether the government has already inspected and accepted the supplies or services.
Practical Implications
- Contracting officers must ensure that warranty terms do not inadvertently dilute the government's statutory protections against "hidden" defects discovered after the point of sale.
- In cost-reimbursement scenarios, the government assumes more risk, and standard commercial-style warranties are avoided to prevent paying twice for the same corrective effort through both the warranty price and the reimbursed costs.