FAR 46.8—Subpart 46.8

Scope of subpart.

FAR 46.800 is the scope statement for Subpart 46.8, which addresses when and how the Government may limit a contractor’s liability for loss of or damage to Government property caused by defective or deficient supplies or services. It focuses on two specific conditions: the damage must occur after Government acceptance, and it must result from defects or deficiencies in the supplies delivered or services performed. In practice, this subpart is about allocating risk after acceptance and determining whether the contractor remains responsible for later harm to Government property when the underlying cause is a product or performance defect. It matters because acceptance normally shifts certain risks to the Government, but this subpart preserves a basis for contractor liability when the accepted item or service was defective. For contracting officers, it frames when contract clauses and remedies should be used to limit or define liability; for contractors, it signals that acceptance does not necessarily end all exposure if latent defects later damage Government property. The section is narrow in scope, but it is important because it ties together acceptance, defects, damage to Government property, and liability limitations in one place.

Applicability.

FAR 46.801 explains where the quality assurance and inspection policies in FAR Subpart 46.8 do and do not apply. It excludes commercial products and commercial services entirely, and it also excludes several major noncommercial contract categories: information technology, including telecommunications; construction; architect-engineer services; and maintenance and rehabilitation of real property. In practice, this means contracting officers and contractors must first determine whether the acquisition falls inside or outside this subpart before applying its inspection, acceptance, and quality assurance concepts. The section also points readers to FAR Subpart 46.7 on warranties for issues involving contractor liability caused by nonconforming technical data, signaling that some quality-related remedies are handled elsewhere. The practical significance is that this provision prevents misapplication of Subpart 46.8 to contract types that are governed by different statutory, regulatory, or industry-specific quality regimes.

Definition.

FAR 46.802 defines the term "high-value item" for use in the quality assurance subpart. The definition has two parts: the item must be a contract end item with a high unit cost, normally exceeding $100,000 per unit, and it must also be specifically designated by the contracting officer as a high-value item. The section gives examples of items that commonly fit the concept, including aircraft, aircraft engines, communication systems, computer systems, missiles, and ships. In practice, this definition matters because it identifies which end items may warrant heightened attention in inspection, acceptance, quality assurance, and related contract administration activities. It also makes clear that high unit cost alone is not enough; the contracting officer must make the designation for the item to fall within this subpart’s meaning. For contractors and contracting officers, the rule helps focus oversight on expensive, mission-critical deliverables where defects or failures can have significant operational and financial consequences.

Policy.

FAR 46.803 states the Government’s basic policy on who bears the risk of loss or damage when accepted supplies or services later cause harm to Government property because of defects or deficiencies. It explains the Government’s general approach as a self-insurer after acceptance, the special rule for the contract end item, and the separate treatment for high-value items. It also identifies when the Government will not grant this contractual relief, including when contractor liability can be preserved without increasing price, when liability is otherwise preserved by another authorized clause, when the loss stems from willful misconduct or lack of good faith by managerial personnel, and when contractor insurance or self-insurance already covers the loss. In practice, this section tells contracting officers when they may shift or limit post-acceptance risk and tells contractors when they may still be exposed to liability despite the general policy of Government relief. It is a risk-allocation rule that affects contract drafting, pricing, claims handling, and the interpretation of limitation-of-liability provisions.

[Reserved]

Contract clauses.

FAR 46.805 tells contracting officers which contract clauses to include when the government is buying items or services that are subject to the quality assurance and liability framework in FAR Subpart 46.8. It covers solicitations and contracts above the simplified acquisition threshold, and it distinguishes among contracts for non-high-value end items, high-value items, both types of end items, services, and mixed contracts that include both services and end items. The section also explains how to handle line-item identification for high-value items in the contract schedule so the liability rules apply clearly to the right deliverables. For acquisitions at or below the simplified acquisition threshold, the clauses are generally not required, but the contracting officer may still include certain clauses if the contractor specifically asks and the government can negotiate an appropriate price reduction. In practice, this section is about making sure the right limitation-of-liability clause is inserted up front, matched to the type of supply or service being acquired, so both parties know how defects, failures, or other liability issues will be handled.