FAR 46.302—Fixed-price supply contracts.
Plain-English Summary
FAR 46.302 tells contracting officers when to include the standard inspection clause for fixed-price supply contracts, and when to use the clause’s alternates. It covers solicitations and contracts for supplies, as well as services that involve furnishing supplies, when a fixed-price contract is contemplated. The section distinguishes between contracts expected to exceed the simplified acquisition threshold and those at or below it, making the clause mandatory in the former case and discretionary in the latter if inclusion is in the Government’s interest. It also directs the contracting officer to use Alternate I for fixed-price incentive contracts and Alternate II for fixed-ceiling-price contracts with retroactive price redetermination. In practice, this section ensures the Government preserves its inspection rights and uses the correct inspection language for the specific pricing arrangement, which affects acceptance, rejection, correction of defects, and risk allocation.
Key Rules
Use clause for fixed-price supplies
When a fixed-price contract is contemplated for supplies, or for services that include furnishing supplies, the contracting officer must insert FAR 52.246-2, Inspection of Supplies-Fixed-Price, in the solicitation and contract if the expected contract amount exceeds the simplified acquisition threshold.
Optional below threshold
If the expected contract amount is at or below the simplified acquisition threshold, the contracting officer may still include the clause, but only when doing so is in the Government’s interest. This makes the clause discretionary rather than mandatory for lower-dollar acquisitions.
Alternate I for incentive pricing
If the procurement contemplates a fixed-price incentive contract, the contracting officer must use 52.246-2 with Alternate I. The alternate tailors the inspection clause to the incentive pricing structure.
Alternate II for retroactive redetermination
If the procurement contemplates a fixed-ceiling-price contract with retroactive price redetermination, the contracting officer must use 52.246-2 with Alternate II. This alternate aligns the inspection terms with the special pricing and adjustment mechanism.
Applies to supply-related services
The rule is not limited to pure supply contracts; it also applies to services contracts when the contractor is furnishing supplies. The key trigger is the presence of furnished supplies under a fixed-price arrangement.
Responsibilities
Contracting Officer
Determine whether the acquisition is for supplies or services involving supplies, identify whether a fixed-price contract is contemplated, assess whether the expected amount is above or at/below the simplified acquisition threshold, and insert the correct version of FAR 52.246-2 or its required alternate.
Contractor
Review the solicitation and contract to understand the applicable inspection clause, comply with inspection and acceptance requirements, and be prepared to correct, replace, or otherwise address nonconforming supplies under the clause terms.
Agency
Support acquisition planning and clause selection by ensuring the contract type and dollar threshold are properly identified and that the Government’s interest is considered when deciding whether to include the clause below the simplified acquisition threshold.
Practical Implications
This section is a clause-selection rule, so the main day-to-day task is making sure the right inspection language is in the solicitation before award. Missing the clause or using the wrong alternate can create disputes over inspection rights, acceptance, and remedies for defective supplies.
Contracting officers should verify both the contract type and the pricing structure early in acquisition planning; the required alternate depends on whether the contract is fixed-price incentive or fixed-ceiling-price with retroactive price redetermination.
A common pitfall is focusing only on the dollar threshold and overlooking that the rule also applies to services that involve furnishing supplies. If supplies are part of the performance, the clause may still be required.
Below the simplified acquisition threshold, inclusion is discretionary but should be deliberate. If the Government expects meaningful inspection risk, quality concerns, or supply acceptance issues, the clause may still be in the Government’s interest.
Using the wrong alternate can undermine the contract’s pricing and inspection framework, so the solicitation and final contract should be checked carefully against the contemplated contract type before release and award.
Official Regulatory Text
The contracting officer shall insert the clause at 52.246-2 , Inspection of Supplies-Fixed-Price, in solicitations and contracts for supplies, or services that involve the furnishing of supplies, when a fixed-price contract is contemplated and the contract amount is expected to exceed the simplified acquisition threshold. The contracting officer may insert the clause in such solicitations and contracts when the contract amount is expected to be at or below the simplified acquisition threshold and inclusion of the clause is in the Government’s interest. If a fixed-price incentive contract is contemplated, the contracting officer shall use the clause with its AlternateI. If a fixed-ceiling-price contract with retroactive price redetermination is contemplated, the contracting officer shall use the clause with its AlternateII.