FAR 46.306—Time-and-material and labor-hour contracts.
Plain-English Summary
FAR 46.306 is a narrow but important prescription rule for inspection clauses in time-and-material (T&M) and labor-hour contracts. It tells the contracting officer when to include the standard inspection clause at FAR 52.246-6, Inspection—Time-and-Material and Labor-Hour, in solicitations and contracts, and when to use Alternate I to that clause. The section exists to make sure the contract contains the right inspection and acceptance language for these labor-based contract types, where the Government is buying hours of labor and related materials rather than a fixed deliverable at a fixed price. In practice, this matters because inspection and acceptance terms affect how performance is evaluated, when work is considered acceptable, and how disputes over quality or completion are handled. The rule is especially significant when Government inspection and acceptance will occur at the contractor’s plant, because that location triggers use of the alternate clause language. For contracting officers, this is a drafting requirement that must be applied correctly at solicitation and award; for contractors, it signals the inspection framework that will govern performance and acceptance under the contract.
Key Rules
Use the prescribed clause
When a time-and-material or labor-hour contract is contemplated, the contracting officer must insert FAR 52.246-6, Inspection—Time-and-Material and Labor-Hour, in both the solicitation and the contract. This is a mandatory clause prescription, not a discretionary one.
Apply the alternate for plant inspection
If Government inspection and acceptance will take place at the contractor’s plant, the contracting officer must use FAR 52.246-6 with Alternate I. The alternate is required specifically to fit the inspection/acceptance arrangement at the contractor’s facility.
Covers both T&M and labor-hour contracts
The rule applies equally to time-and-material contracts and labor-hour contracts. The contracting officer should not treat these as separate clause-selection situations for purposes of this section.
Inspection and acceptance framework
The section is about the contract’s inspection and acceptance terms, not about pricing, payment, or surveillance procedures. Its purpose is to ensure the contract states how the Government will inspect work and accept it under these contract types.
Responsibilities
Contracting Officer
Determine whether the contemplated contract is a time-and-material or labor-hour contract, insert FAR 52.246-6 in the solicitation and contract, and use Alternate I when Government inspection and acceptance will occur at the contractor’s plant.
Agency
Support correct acquisition planning and contract drafting so the solicitation and award documents include the proper inspection clause for the selected contract type and inspection location.
Contractor
Review the solicitation and contract to understand the applicable inspection and acceptance terms, especially whether the standard clause or Alternate I applies when performance will be inspected at the contractor’s plant.
Practical Implications
This is a clause-selection requirement that should be checked during solicitation drafting and again before award; missing the clause can create contract administration problems.
The key trigger is not just the contract type, but also where Government inspection and acceptance will occur. If that is at the contractor’s plant, Alternate I must be used.
Contractors should confirm the inspection language early because it affects how deliverables or labor performance will be reviewed and accepted.
A common pitfall is assuming the standard inspection clause is always enough for T&M and labor-hour contracts; FAR 46.306 requires the alternate in the plant-inspection scenario.
Because the rule is mandatory, contracting officers should treat it as a compliance item in the acquisition checklist rather than a negotiable term.
Official Regulatory Text
The contracting officer shall insert the clause at 52.246-6 , Inspection-Time-and-Material and Labor-Hour, in solicitations and contracts when a time-and-material contract or a labor-hour contract is contemplated. If Government inspection and acceptance are to be performed at the contractor’s plant, the contracting officer shall use the clause with its AlternateI.