Overview
FAR 46.805 prescribes the specific limitation of liability clauses that Contracting Officers must include in solicitations and contracts to define the contractor's liability for loss or damage to property after acceptance. These rules apply primarily to contracts exceeding the simplified acquisition threshold and vary based on whether the contract involves services, standard end items, or high-value items.
Key Rules
- Threshold Applicability: The clauses are mandatory for contracts exceeding the simplified acquisition threshold (SAT) that are subject to FAR Subpart 46.8.
- Standard End Items: Contracts for non-high-value end items must include FAR 52.246-23, Limitation of Liability.
- High-Value Items: Contracts for high-value items must include FAR 52.246-24, Limitation of Liability-High Value Items. If a contract contains both standard and high-value items, Alternate I of this clause must be used.
- Services: Contracts for the performance of services must include FAR 52.246-25, Limitation of Liability-Services.
- Mixed Requirements: Contracts involving both services and supplies must include the services clause plus the applicable supply clause(s), with high-value line items clearly identified in the schedule.
- Acquisitions at or below the SAT: These clauses are not required but may be added at the contractor's request, typically in exchange for an appropriate price reduction.
Practical Implications
- Administrative Precision: Contracting Officers must meticulously identify and label "high-value items" in the contract schedule to ensure the correct legal protections apply to specific line items.
- Risk Management for Small Businesses: Contractors performing work below the SAT can proactively request these clauses to limit their liability exposure, though they should be prepared to offer a price credit to the government in return.