FAR 46.705—Limitations.
Plain-English Summary
FAR 46.705 addresses when warranty clauses may be used in federal contracts and how they must be written so they do not conflict with the Government’s inspection rights. It covers three main subjects: the general prohibition on warranties in cost-reimbursement contracts, the limited exceptions for the inspection clauses at 52.246-3 and 52.246-8, the rule that warranty language cannot cut back the Government’s rights for latent defects, fraud, or gross mistakes amounting to fraud, and the requirement that most warranty clauses state they apply even after inspection, acceptance, or other contract terms. In practice, this section is about preserving the balance between warranty protection and the Government’s ability to inspect, accept, and later pursue remedies when defects are hidden or misconduct is involved. It also tells contracting officers when they need agency-specific authorization before adding a warranty to a cost-reimbursement contract. For contractors, it signals that a warranty may still be enforceable even after acceptance and that warranty language cannot be used to eliminate core Government remedies. For construction contracts, the section recognizes a special treatment for warranty clauses, which are not subject to the same “notwithstanding acceptance” wording requirement as other warranties.
Key Rules
No warranties in cost-reimbursement
As a general rule, contracting officers may not include warranties in cost-reimbursement contracts. The only express exceptions in this section are the warranty provisions in 52.246-3 and 52.246-8, and any other warranty requires authorization under agency regulations.
Agency authorization required
If a warranty is to be used in a cost-reimbursement contract outside the stated exceptions, the contracting officer must have authority under applicable agency regulations, including any procedures referenced in FAR 46.708. This is not a discretionary add-on; it requires regulatory permission.
Inspection rights remain intact
Warranty clauses cannot limit the Government’s rights under an inspection clause with respect to latent defects, fraud, or gross mistakes amounting to fraud. In other words, a warranty cannot be drafted to waive or narrow these fundamental remedies.
Warranty survives acceptance
Except for warranty clauses in construction contracts, the warranty must state that it applies despite inspection, acceptance, or other contract clauses or terms. Acceptance does not erase the warranty obligation unless the contract is in the construction exception.
Construction contracts treated differently
Warranty clauses in construction contracts are carved out from the requirement that the warranty expressly apply notwithstanding inspection and acceptance. This means construction warranty language may be structured differently, but it still cannot override the Government’s rights for latent defects, fraud, or gross mistakes amounting to fraud.
Responsibilities
Contracting Officer
Must avoid inserting warranties into cost-reimbursement contracts unless the warranty is one of the stated exceptions or is otherwise authorized by agency regulations. Must ensure warranty language does not restrict the Government’s inspection rights and, for non-construction contracts, must include language making the warranty effective despite inspection, acceptance, or other contract terms.
Agency
Must establish any regulatory authorization or procedures that permit warranties in cost-reimbursement contracts beyond the limited exceptions identified in this section. Agencies must ensure their regulations are consistent with FAR limitations.
Contractor
Must understand that warranty obligations may continue after inspection and acceptance, except as specifically treated in construction contracts. Must not assume that acceptance eliminates warranty exposure, and must recognize that warranties cannot defeat Government remedies for latent defects, fraud, or gross mistakes amounting to fraud.
Government inspectors / quality assurance personnel
Must continue to perform inspection and acceptance functions without assuming that a warranty replaces those rights. Must identify latent defects or other issues that may support post-acceptance remedies under the inspection clause.
Practical Implications
Contracting officers should be cautious about adding warranties to cost-reimbursement contracts; doing so without authority can create a noncompliant solicitation or contract clause.
Contract language matters: if a warranty is used in a non-construction contract, it should clearly say it survives inspection and acceptance so there is no argument that acceptance ended the warranty.
Contractors should not rely on acceptance as a complete defense to warranty claims, especially where defects were hidden or where fraud or gross mistakes are alleged.
This section protects the Government’s ability to pursue remedies for latent defects and misconduct, so warranty drafting cannot be used to waive those rights.
For construction contracts, the special treatment means officers should check the applicable warranty clause carefully rather than assuming the standard non-construction wording applies.
Official Regulatory Text
(a) Except for the warranties in the clauses at 52.246-3 , Inspection of Supplies-Cost-Reimbursement, and 52.246-8 , Inspection of Research and Development-Cost-Reimbursement, the contracting officer shall not include warranties in cost-reimbursement contracts, unless authorized in accordance with agency regulations (see 46.708 ). (b) Warranty clauses shall not limit the Government’s rights under an inspection clause (see subpart 46.3 ) in relation to latent defects, fraud, or gross mistakes that amount to fraud. (c) Except for warranty clauses in construction contracts, warranty clauses shall provide that the warranty applies notwithstanding inspection and acceptance or other clauses or terms of the contract.