FAR 52.246-6—Inspection-Time-and-Material and Labor-Hour.
Plain-English Summary
FAR 52.246-6 is the inspection clause used in time-and-materials and labor-hour contracts. It covers the contractor’s duty to maintain an acceptable inspection system, keep inspection records, and provide access to those records; the Government’s right to inspect and test materials, services, plants, and subcontractor facilities; the contractor’s duty to provide facilities and assistance for inspection; rules for acceptance or rejection at the place of delivery and the 60-day deemed-acceptance rule; the Government’s post-acceptance right to require correction or replacement of nonconforming work; the contractor’s obligation to disclose prior corrections when resubmitting work; the Government’s remedies if the contractor does not promptly correct defects, including charging increased costs or terminating for default; the special no-cost correction rule for failures caused by fraud, lack of good faith, willful misconduct, or certain employee conduct tied to managerial negligence; the treatment of corrected or replacement items; the contractor’s limited liability for nonconforming work except as stated in the clause; and the rule that Government-furnished property is handled under the Government property clause unless the contract says otherwise. The clause also defines contractor’s managerial personnel and, when data is not covered by a warranty of data clause, treats data as “materials.” In practice, this clause is important because it allocates inspection and correction risk in a cost-reimbursement-like environment where labor and materials are billed differently than under fixed-price contracts. It gives the Government broad inspection and post-acceptance correction rights, but also limits those rights with timing rules, a 60-day presumption of acceptance, and a reduced labor rate for correction work by excluding profit. Alternate I changes the acceptance process when inspection and acceptance occur at the contractor’s plant and allows the Government to charge the contractor for extra inspection costs when items are not ready when requested. Contractors should use this clause to build strong quality control, document inspections and corrective actions, and manage readiness for Government inspection; contracting officers should use it to ensure inspection rights, acceptance procedures, and correction remedies are clearly administered.
Key Rules
Inspection system required
The contractor must maintain an inspection system acceptable to the Government for the materials, fabrication methods, work, and services under the contract. Complete inspection records must be kept and made available during performance and afterward for the period required by the contract.
Government inspection rights
The Government may inspect and test all materials and services at any practicable time and place, including before acceptance, and may inspect contractor and subcontractor plants. These inspections must be conducted so they do not unduly delay the work.
Contractor support for inspections
If inspection or testing occurs at the contractor’s or subcontractor’s premises, the contractor must provide reasonable facilities and assistance for safe and convenient performance of the Government’s duties.
Acceptance and deemed acceptance
Unless the contract says otherwise, the Government must accept or reject items at the place of delivery as promptly as practicable after delivery. Items are presumed accepted 60 days after delivery unless accepted earlier.
Post-acceptance correction rights
Within 6 months after acceptance of the last delivered item, or another specified period, the Government may require correction or replacement of work that failed to meet contract requirements at delivery. The correction cost is generally priced under the T&M/LH payment clause, but labor hours for correction are paid at a rate excluding profit.
Government remedies for delay
If the contractor does not promptly correct or replace defective work, and the work can still be corrected within the ceiling price, the Government may arrange the correction itself and charge the increased cost to the contractor, deduct the cost from amounts due, or terminate for default.
No-cost correction for serious fault
The Government may require correction or replacement without cost when the defect results from fraud, lack of good faith, or willful misconduct by managerial personnel, or from employees retained despite managerial knowledge that they were habitually careless or unqualified.
Corrected work treated the same
Corrected or replacement materials and services are subject to the same inspection and acceptance rules as the original work. The contractor must disclose that the item was previously rejected or corrected and, when required, explain the corrective action taken.
Limited contractor liability
The contractor generally has no obligation to correct or replace nonconforming work except as provided in this clause or elsewhere in the contract. Government-furnished property is governed by the Government property clause unless the contract states otherwise.
Alternate I plant inspection rule
When Alternate I applies, Government inspection and acceptance occur at the contractor’s plant or approved plants. The contractor must notify the contract administration office or contracting officer when work is ready, and the Government may charge the contractor for extra inspection costs if items are not ready when requested.
Responsibilities
Contractor
Maintain an acceptable inspection system; keep complete inspection records; make records available to the Government; provide reasonable facilities and assistance for Government inspection and testing; present work for inspection when ready; disclose prior correction or replacement when resubmitting items; promptly correct or replace nonconforming work when required; and manage subcontractors so they also support inspection and testing obligations.
Government
Inspect and test materials and services at practicable times and places without unduly delaying performance; accept or reject items promptly after delivery unless the contract provides otherwise; notify the contractor of correction or replacement requirements within the allowed period; and, when the contractor fails to act promptly, use the available remedies such as Government-performed correction, cost recovery, deduction, or default termination.
Contracting Officer
Ensure the clause is properly included when prescribed; administer acceptance timing and any alternate inspection arrangement; specify any different correction period or other deviations allowed by the contract; determine whether the contractor’s inspection system is acceptable; and coordinate remedies, cost charges, and disputes arising from correction or replacement.
Subcontractor
Allow inspection and testing at its plant when engaged in contract performance and furnish reasonable facilities and assistance when Government inspection occurs at its premises, through flowdown or contractor direction as applicable.
Contract Administration Office
Receive readiness notices under Alternate I, coordinate plant inspection and acceptance activities, and support the contracting officer in administering inspection timing and any extra inspection cost charges when items are not ready.
Practical Implications
This clause makes quality control a live contract requirement, not just an internal best practice. Contractors should document inspections, test results, and corrective actions because those records may be needed to defend against rejection or support acceptance.
The 60-day deemed-acceptance rule matters, but it is not a cure-all. Contractors should not assume silence equals final approval if the contract has different terms or if the Government later invokes the correction provisions within the allowed period.
Correction work is not paid like ordinary labor-hour work. The labor rate for correction excludes profit, so contractors should price and track rework separately and avoid assuming full billing rates apply.
Readiness for Government inspection is critical under Alternate I. If items are not ready when the contractor requests inspection, the Government can charge extra inspection costs, which can become a real cost exposure.
The serious-misconduct exception is broad and can create no-cost correction exposure. Contractors should pay attention to managerial oversight, employee qualification, and documentation of hiring, supervision, and corrective action decisions.
Official Regulatory Text
As prescribed in 46.306 , insert the following clause: Inspection-Time-and-Material and Labor-Hour (May 2001) (a) Definitions. As used in this clause- Contractor’s managerial personnel means any of the Contractor’s directors, officers, managers, superintendents, or equivalent representatives who have supervision or direction of- (1) All or substantially all of the Contractor’s business; (2) All or substantially all of the Contractor’s operation at any one plant or separate location where the contract is being performed; or (3) A separate and complete major industrial operation connected with the performance of this contract. Materials includes data when the contract does not include the Warranty of Data clause. (b) The Contractor shall provide and maintain an inspection system acceptable to the Government covering the material, fabricating methods, work, and services under this contract. Complete records of all inspection work performed by the Contractor shall be maintained and made available to the Government during contract performance and for as long afterwards as the contract requires. (c) The Government has the right to inspect and test all materials furnished and services performed under this contract, to the extent practicable at all places and times, including the period of performance, and in any event before acceptance. The Government may also inspect the plant or plants of the Contractor or any subcontractor engaged in contract performance. The Government shall perform inspections and tests in a manner that will not unduly delay the work. (d) If the Government performs inspection or test on the premises of the Contractor or a subcontractor, the Contractor shall furnish and shall require subcontractors to furnish all reasonable facilities and assistance for the safe and convenient performance of these duties. (e) Unless otherwise specified in the contract, the Government shall accept or reject services and materials at the place of delivery as promptly as practicable after delivery, and they shall be presumed accepted 60 days after the date of delivery, unless accepted earlier. (f) At any time during contract performance, but not later than 6 months (or such other time as may be specified in the contract) after acceptance of the services or materials last delivered under this contract, the Government may require the Contractor to replace or correct services or materials that at time of delivery failed to meet contract requirements. Except as otherwise specified in paragraph (h) of this clause, the cost of replacement or correction shall be determined under the Payments Under Time-and-Materials and Labor-Hour Contracts clause, but the "hourly rate" for labor hours incurred in the replacement or correction shall be reduced to exclude that portion of the rate attributable to profit. The Contractor shall not tender for acceptance materials and services required to be replaced or corrected without disclosing the former requirement for replacement or correction, and, when required, shall disclose the corrective action taken. (g) (1) If the Contractor fails to proceed with reasonable promptness to perform required replacement or correction, and if the replacement or correction can be performed within the ceiling price (or the ceiling price as increased by the Government), the Government may- (i) By contract or otherwise, perform the replacement or correction, charge to the Contractor any increased cost, or deduct such increased cost from any amounts paid or due under this contract; or (ii) Terminate this contract for default. (2) Failure to agree to the amount of increased cost to be charged to the Contractor shall be a dispute. (h) Notwithstanding paragraphs (f) and (g) of this clause, the Government may at any time require the Contractor to remedy by correction or replacement, without cost to the Government, any failure by the Contractor to comply with the requirements of this contract, if the failure is due to- (1) Fraud, lack of good faith, or willful misconduct on the part of the Contractor’s managerial personnel; or (2) The conduct of one or more of the Contractor’s employees selected or retained by the Contractor after any of the Contractor’s managerial personnel has reasonable grounds to believe that the employee is habitually careless or unqualified. (i) This clause applies in the same manner and to the same extent to corrected or replacement materials or services as to materials and services originally delivered under this contract. (j) The Contractor has no obligation or liability under this contract to correct or replace materials and services that at time of delivery do not meet contract requirements, except as provided in this clause or as may be otherwise specified in the contract. (k) Unless otherwise specified in the contract, the Contractor’s obligation to correct or replace Government-furnished property shall be governed by the clause pertaining to Government property. (End of clause) Alternate I (Apr 1984) . If Government inspection and acceptance are to be performed at the contractor’s plant, paragraph (e) below may be substituted for paragraph (e) of the basic clause: (e) The Government shall inspect for acceptance all items (other than aircraft to be flown away, if any) to be furnished under this contract at the Contractor’s plant or plants specified in the contract, or at any other plant or plants approved for such purpose in writing by the Contracting Officer. The Contractor shall inform the contract administration office or Contracting Officer when the work is ready for inspection. The Government reserves the right to charge to the Contractor any additional cost of Government inspection and test when items are not ready at the time for which inspection and test is requested by the Contractor.