FAR 52.246-16—Responsibility for Supplies.
Plain-English Summary
FAR 52.246-16, Responsibility for Supplies, allocates title and risk of loss for supplies under a federal contract. It explains when title passes to the Government, when the contractor remains responsible for loss or damage, and how those rules change depending on whether transportation is FOB origin or FOB destination. The clause also addresses nonconforming supplies that are subject to rejection, making clear that the contractor keeps the risk until the defect is cured or the Government accepts the items. In addition, it limits contractor liability for loss or damage caused by the negligence of Government personnel acting within the scope of their employment. In practice, this clause matters because it determines who bears the financial consequences if supplies are lost, damaged, or mishandled during shipment, inspection, or delivery, and it helps avoid disputes over ownership and responsibility when something goes wrong.
Key Rules
Title passes on acceptance
Title to supplies furnished under the contract passes to the Government upon formal acceptance, unless the contract expressly provides for an earlier transfer. Physical possession alone does not transfer title if formal acceptance has not occurred.
Risk follows shipment terms
Unless the contract says otherwise, the contractor bears the risk of loss or damage until delivery to the carrier under FOB origin, or until Government acceptance or delivery at the destination under FOB destination, whichever occurs later.
Rejected supplies stay contractor risk
If supplies are so nonconforming that the Government has a right to reject them, the contractor keeps the risk of loss or damage until the contractor cures the defect or the Government accepts the items. After cure or acceptance, the normal risk-allocation rule in paragraph (b) applies.
Government negligence is excluded
The contractor is not liable for loss or damage caused by the negligence of Government officers, agents, or employees acting within the scope of their employment, even when paragraph (b) would otherwise place risk on the contractor.
Contract terms can override default rules
The clause applies unless the contract specifically provides otherwise. Agencies may negotiate or include different title or risk-of-loss provisions, but any deviation must be clear in the contract language.
Responsibilities
Contracting Officer
Ensure the contract includes the clause when required, and clearly state any intended deviation from the default title or risk-of-loss rules. The contracting officer should also coordinate acceptance procedures so the point of title transfer and risk transfer is administratively clear.
Contractor
Protect supplies until the applicable risk-transfer point, package and ship them appropriately, and remain responsible for loss or damage while risk is still on the contractor. The contractor must also cure nonconforming supplies or otherwise address rejected items before risk shifts to the Government.
Government
Formally accept supplies when they meet contract requirements, because acceptance triggers title transfer under paragraph (a). Government personnel must also avoid negligent handling that could cause loss or damage, since such negligence is excluded from contractor liability.
Carrier
Transport supplies in accordance with the shipment terms, especially where FOB origin or FOB destination affects when risk shifts. Although not a party to the clause, the carrier’s custody can be central to determining when loss occurred and who may pursue recovery.
Practical Implications
This clause is often decisive when goods are damaged in transit or before inspection, because title and risk do not always transfer at the same time.
Contractors should not assume that Government possession means the Government has accepted the supplies; formal acceptance is the key title-transfer event unless the contract says otherwise.
FOB origin and FOB destination create different risk points, so shipment documentation and delivery records matter a great deal in any loss claim.
If the Government rejects supplies for nonconformance, the contractor usually remains on the hook until the defect is cured or the items are accepted, which can create added storage, repair, and replacement costs.
When Government personnel mishandle supplies, contractors should document the negligence carefully, because that exception can eliminate contractor liability for the resulting loss or damage.
Official Regulatory Text
As prescribed in 46.316 , insert the following clause: Responsibility for Supplies (Apr 1984) (a) Titleto supplies furnished under this contract shall pass to the Government upon formal acceptance, regardless of when or where the Government takes physical possession, unless the contract specifically provides for earlier passage of title. (b) Unless the contract specifically provides otherwise, risk of loss of or damage to supplies shall remain with the Contractor until, and shall pass to the Government upon- (1) Delivery of the supplies to a carrier, if transportation is f.o.b. origin; or (2) Acceptance by the Government or delivery of the supplies to the Government at the destination specified in the contract, whichever is later, if transportation is f.o.b. destination. (c) Paragraph (b) of this clause shall not apply to supplies that so fail to conform to contract requirements as to give a right of rejection. The risk of loss of or damage to such nonconforming supplies remains with the Contractor until cure or acceptance. After cure or acceptance, paragraph (b) of this clause shall apply. (d) Under paragraph (b) of this clause, the Contractor shall not be liable for loss of or damage to supplies caused by the negligence of officers, agents, or employees of the Government acting within the scope of their employment. (End of clause)