Overview
This subpart establishes the policies and procedures used to limit a contractor’s liability for loss of or damage to Government property occurring after formal acceptance. It specifically focuses on damages resulting from defects or deficiencies in the supplies delivered or services rendered under a contract.
Key Rules
- Post-Acceptance Focus: The limitation of liability applies specifically to incidents occurring after the Government has officially accepted the supplies or services.
- Causation Requirement: The loss or damage must be a direct result of defects or deficiencies in the contracted items or performed services.
- Property Scope: The rules apply to the loss of, or damage to, property belonging to the Government.
- Regulatory Framework: This section serves as the foundational scope for subsequent rules regarding how the Government assumes certain risks instead of requiring contractors to carry private insurance for these specific losses.
Practical Implications
- Risk Allocation: This subpart facilitates the Government's policy of "self-insuring," which helps reduce contract costs by relieving contractors of the need to obtain expensive liability insurance for potential damage to Government property caused by their products after delivery.
- Post-Acceptance Protection: Contractors gain a degree of financial protection against catastrophic claims once the Government takes ownership, provided the damage meets the criteria of resulting from a product/service deficiency.