FAR 46.402—Government contract quality assurance at source.
Plain-English Summary
FAR 46.402 explains when the Government should perform contract quality assurance, including inspection, at the contractor’s source rather than somewhere else. The section identifies the main situations that justify source inspection: when off-site inspection would require uneconomical disassembly or destructive testing, when shipping or delaying correction of defective supplies would cause significant loss, when special instruments, gauges, or facilities exist only at the source, when off-site inspection would damage or require replacement of costly special packing or packaging, when Government inspection during performance is essential, and when source inspection is otherwise in the Government’s interest. In practice, this provision gives contracting personnel a basis for deciding where quality assurance should occur so the Government can verify compliance efficiently and avoid avoidable cost, damage, delay, or risk. It is a planning and oversight rule, not a contractor performance standard by itself, but it directly affects how inspection is organized, where acceptance-related checks occur, and how much access the Government needs during production or service performance. For contractors, it means some contracts will require more on-site Government presence and more coordination around production schedules, test points, and access to facilities and equipment.
Key Rules
Source inspection is discretionary
The agency shall perform quality assurance at source only when one or more of the listed conditions exist. This means source inspection is not automatic; it must be justified by the circumstances of the acquisition and the Government’s interest.
Avoid destructive off-site testing
If inspection elsewhere would require uneconomical disassembly or destructive testing, the Government may inspect at the source. The rule recognizes that some items can only be properly evaluated during manufacture or before they are assembled or altered.
Prevent loss from defective shipments
Source inspection is appropriate when shipping unacceptable supplies, or waiting to correct defects later, would cause considerable loss. This includes cost, schedule, mission, or operational impacts that would be worsened by discovering defects after shipment.
Use source-only tools and facilities
If special instruments, gauges, or facilities needed for inspection are available only at the source, the Government should inspect there. This ensures the Government can verify quality using the same specialized resources used in production or testing.
Protect special packing and packaging
When off-site inspection would destroy or require replacement of costly special packing or packaging, source inspection is justified. The rule prevents unnecessary damage and added cost from opening or moving items before inspection is complete.
Inspect during performance when essential
If Government inspection during contract performance is essential, the agency may inspect at source. This covers situations where in-process oversight, hold points, or real-time verification are necessary to ensure compliance.
Source inspection for Government interest
The Government may choose source inspection for other reasons when it is in the Government’s interest. This catch-all gives agencies flexibility to address unique acquisition risks, quality concerns, or mission needs not specifically listed in the rule.
Responsibilities
Agency
Determine whether the circumstances justify contract quality assurance at source and arrange for inspection at the contractor’s source when one of the listed conditions exists or when source inspection is otherwise in the Government’s interest.
Contracting Officer
Plan the contract’s quality assurance approach, coordinate inspection requirements with the acquisition strategy and contract terms, and ensure the Government’s inspection rights and access needs are properly addressed.
Quality Assurance Personnel / Inspectors
Perform inspection and other quality assurance activities at the source when assigned, using the appropriate technical criteria, test methods, and timing needed to verify compliance.
Contractor
Provide reasonable access to the source, production areas, instruments, gauges, facilities, and relevant work in process so Government inspection can occur as required by the contract and inspection plan.
Practical Implications
Source inspection is often used for high-risk, complex, or hard-to-reinspect items, so contractors should expect more coordination, documentation, and possible hold points during production.
A common pitfall is waiting until after shipment to discover defects that could have been caught only at the source; that can lead to rework, rejection, delay, and added transportation or replacement costs.
Another issue is assuming off-site inspection is always cheaper; for items requiring destructive testing, special gauges, or delicate packaging, source inspection may actually be the most economical option.
Contracting officers should document why source inspection is needed, especially when relying on the broad “Government’s interest” basis, to support the acquisition file and avoid inconsistent application.
Contractors should plan for Government access, test schedules, and packaging requirements early, because source inspection can affect production flow, delivery timing, and acceptance planning.
Official Regulatory Text
Agencies shall perform contract quality assurance, including inspection, at source if- (a) Performance at any other place would require uneconomical disassembly or destructive testing; (b) Considerable loss would result from the manufacture and shipment of unacceptable supplies, or from the delay in making necessary corrections; (c) Special required instruments, gauges, or facilities are available only at source; (d) Performance at any other place would destroy or require the replacement of costly special packing and packaging; (e) Government inspection during contract performance is essential; or (f) It is determined for other reasons to be in the Government’s interest.