Overview
FAR Subpart 46.4 prescribes the policies and procedures for performing Government contract quality assurance (GCQA) to ensure supplies and services conform to contract requirements. It establishes criteria for determining whether inspections should occur at the source or destination and provides a framework for handling nonconforming products, including the assessment of price reductions and the management of subcontractor oversight.
Key Rules
- Location of Inspection: Quality assurance must be performed at times and places necessary to ensure conformance. Once a location (source or destination) is established in the contract, it cannot be changed without Contracting Officer authorization.
- Source vs. Destination:
- Source: Required when inspection elsewhere would require destructive testing, uneconomical disassembly, or if the shipment of defective goods would cause significant loss.
- Destination: Generally used for off-the-shelf items, services performed at the delivery point, or when testing equipment is only available at the destination.
- Nonconforming Items: The Government's primary policy is to reject nonconforming supplies or services. However, they may be accepted if it is in the Government’s interest (e.g., urgency), provided the contract is modified for an equitable price reduction or other consideration.
- Simplified Acquisition Threshold (SAT): For smaller acquisitions, QA is typically limited to "type and kind, quantity, damage, and operability" at the destination, unless the item is "critical."
- Subcontractor Oversight: Government QA at the subcontractor level is permitted only when in the Government’s interest. It does not establish a direct contractual relationship (privity) between the Government and the subcontractor.
- Implied Acceptance: Rejection notices must be prompt. If the Government fails to provide a timely notice of rejection, acceptance may be "implied as a matter of law," stripping the Government of certain remedies.
Responsibilities
- Contracting Officer (CO):
- Authorizes changes to inspection locations.
- Makes the final determination to accept or reject items with major/critical nonconformances.
- Negotiates price reductions or "consideration" when nonconforming items are accepted.
- Provides disposition instructions for counterfeit items.
- Contract Administration Office (CAO):
- Authorized to accept or reject items with minor nonconformances (unless this power is specifically withheld).
- Provides written technical data and recommendations to the CO regarding nonconformance.
- Technical Activity / Health Officials:
- Must provide concurrence and advice to the CO that a nonconforming item is safe to use and fits its intended purpose before acceptance.
- Government Personnel:
- Must perform, direct, or supervise all Government inspections and document them on official receiving reports or shipping documents.
- Prime Contractor:
- Maintains ultimate responsibility for the quality of all supplies/services, including those sourced from subcontractors.
Practical Implications
- The QASP is Critical: Quality Assurance Surveillance Plans (QASP) should be developed simultaneously with the Statement of Work (SOW). Contractors should review these plans during the solicitation phase to understand the "method of surveillance" they will be subjected to.
- Price Reductions for "Good Enough" Work: If a contractor delivers a product that doesn't meet 100% of the specs, but the Government decides to keep it due to an urgent mission need, the contractor should expect a contract modification to decrease the price. The Government is legally required to seek "consideration" for accepting "less" than what was contracted.
- The "No-Privity" Buffer: Even if a Government inspector is stationed at a subcontractor’s plant, the prime contractor cannot blame the Government for failing to catch a defect. The prime remains 100% liable for the subcontractor’s performance.
- Documentation Prevents Disputes: To avoid "implied acceptance," COs must ensure rejection notices are in writing and sent immediately. For contractors, the absence of a timely rejection can sometimes be used as a defense against late-stage quality disputes.
- Counterfeit Vigilance: With the inclusion of specific language for counterfeit items (46.407(h)), contractors should be aware that the Government may seize and retain suspect items for evidence rather than simply returning them for credit.