FAR 52.246-7—Inspection of Research and Development-Fixed-Price.
Plain-English Summary
FAR 52.246-7, Inspection of Research and Development—Fixed-Price, sets the quality assurance and acceptance framework for fixed-price R&D contracts. It covers the contractor’s duty to maintain an acceptable inspection system and keep inspection records; the Government’s right to inspect and test work, including at the contractor’s or subcontractor’s premises and before acceptance; the contractor’s duty to provide facilities and assistance for on-site Government inspections; the timing and effect of Government acceptance or rejection; the definition of nonconforming work; the Government’s right to reject or accept nonconforming work with an equitable price reduction; and the limits of inspection and acceptance, including latent defects, fraud, gross mistakes amounting to fraud, and other contract-specific exceptions. It also addresses remedies when work is defective, including correction or replacement at no increase in price, price reduction, or repayment, and allocates transportation costs when work is returned. In practice, this clause is important because it preserves Government oversight without shifting day-to-day quality control away from the contractor, while also making clear that inspection does not equal acceptance and acceptance is usually final only after the work meets contract requirements. For contractors, the clause drives documentation, internal controls, and readiness for Government review; for contracting officers, it provides the tools to inspect, reject, negotiate price reductions, and enforce remedies when R&D work does not conform.
Key Rules
Maintain acceptable inspection system
The contractor must provide and maintain an inspection system acceptable to the Government for all work under the contract. The contractor must also keep complete inspection records and make them available during performance and for any longer period required by the contract.
Government may inspect and test
The Government may inspect and test all work called for by the contract, to the extent practicable, at any place and time, including during performance and before acceptance. It may also inspect the contractor’s or subcontractor’s premises, but must do so without unduly delaying the work.
Provide facilities and assistance
If Government inspection or testing occurs on the contractor’s or subcontractor’s premises, the contractor must provide, at no increase in contract price, all reasonable facilities and assistance needed for safe and convenient performance. If the Government inspects elsewhere, the Government generally bears the expense unless the contract says otherwise.
Prompt acceptance or rejection
The Government must accept or reject work as promptly as practicable after delivery unless the contract states otherwise. Failure to inspect, accept, or reject does not excuse the contractor from responsibility for nonconforming work or create Government liability for that work.
Right to reject nonconforming work
The Government may reject work that is defective in material or workmanship or otherwise not in conformity with contract requirements. If the contractor cannot correct or replace the work within the delivery schedule, the contracting officer may accept it and make an equitable price reduction; disagreement over the reduction is a dispute.
Inspection does not waive defects
Government inspection and test do not relieve the contractor of responsibility for defects or other failures discovered before acceptance. Acceptance is generally conclusive, except for latent defects, fraud, gross mistakes amounting to fraud, or other contract-specified exceptions.
Post-acceptance remedies
If acceptance is not conclusive because of an exception, the Government may require correction or replacement at no increase in price, or may seek repayment of an equitable portion of the contract price if it elects not to require correction. If work is returned, the contractor bears transportation costs from the original delivery point to its plant and back when applicable.
Responsibilities
Contractor
Establish and maintain an inspection system acceptable to the Government; inspect and test work as required; keep complete inspection records; provide reasonable facilities and assistance for Government inspections on its or its subcontractors’ premises; correct or replace nonconforming work when required; and bear specified transportation costs when returned work must be corrected or replaced.
Subcontractor
Support inspection and testing on its premises when engaged in contract performance; furnish reasonable facilities and assistance for safe and convenient Government inspection or testing when required through the prime contractor.
Government
Inspect and test work to the extent practicable before acceptance; inspect contractor or subcontractor premises when appropriate; perform inspections without undue delay; accept or reject work promptly after delivery; and, when warranted, reject nonconforming work, negotiate or impose an equitable price reduction, or require correction, replacement, or repayment under the clause’s remedies.
Contracting Officer
Authorize any later correction or replacement schedule; decide whether to accept nonconforming work with an equitable price reduction; determine whether to require correction, replacement, or repayment when acceptance is not conclusive; and resolve or refer disputes over price reductions or related remedies.
Practical Implications
This clause makes quality control a contractor responsibility, not just a Government function, so weak inspection records or an informal inspection process can become a contract performance problem.
Government inspection before acceptance is a right, but it does not shift liability for defects away from the contractor; contractors should not assume that passing a Government review means the work is finally accepted.
If nonconforming work is discovered, the contractor may face rework, replacement, schedule pressure, or a price reduction, so it is important to track corrective actions and document any agreed schedule changes.
Acceptance is usually final, but not for latent defects, fraud, or gross mistakes amounting to fraud, so contractors should understand that hidden problems can still trigger remedies after acceptance.
For R&D work, where deliverables may be technical reports, prototypes, data, or other nontraditional outputs, the inspection system and acceptance criteria should be carefully aligned with the contract to avoid disputes over what constitutes conformity.
Official Regulatory Text
As prescribed in 46.307 (a) , insert the following clause: Inspection of Research and Development-Fixed-Price (Aug 1996) (a) The Contractor shall provide and maintain an inspection system acceptable to the Government covering the work 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. (b) The Government has the right to inspect and test all work called for by the 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 premises 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. (c) If the Government performs any inspection or test on the premises of the Contractor or a subcontractor, the Contractor shall furnish and shall require subcontractors to furnish, at no increase in contract price, all reasonable facilities and assistance for the safe and convenient performance of these duties. Except as otherwise provided in the contract, the Government shall bear the expense of Government inspections or tests made at other than the Contractor’s or subcontractor’s premises. (d) The Government shall accept or reject the work as promptly as practicable after delivery, unless otherwise specified in the contract. Government failure to inspect and accept or reject the work shall not relieve the Contractor from responsibility, nor impose liability on the Government, for nonconforming work. Work is nonconforming when it is defective in material or workmanship or is otherwise not in conformity with contract requirements. (e) The Government has the right to reject nonconforming work. If the Contractor fails or is unable to correct or to replace nonconforming work within the delivery schedule (or such later time as the Contracting Officer may authorize), the Contracting Officer may accept the work and make an equitable price reduction. Failure to agree on a price reduction shall be a dispute. (f) Inspection and test by the Government does not relieve the Contractor from responsibility for defects or other failures to meet the contract requirements that may be discovered before acceptance. Acceptance shall be conclusive, except for latent defects, fraud, gross mistakes amounting to fraud, or as otherwise specified in the contract. If acceptance is not conclusive for any of these causes, the Government, in addition to any other rights and remedies provided by law, or under other provisions of this contract, shall have the right to require the Contractor- (1) At no increase in contract price, to correct or replace the defective or nonconforming supplies (work) at the original point of delivery or at the Contractor’s plant at the Contracting Officer’s election, and in accordance with a reasonable delivery schedule as may be agreed upon between the Contractor and the Contracting Officer; provided, the Contracting Officer may require a reduction in contract price if the Contractor fails to meet such delivery schedule; or (2) Within a reasonable time after the Contractor’s receipt of notice of defects or nonconformance, to repayment of such portion of the contract price as is equitable under the circumstances if the Government elects not to require correction or replacement. When supplies (work) are (is) returned to the Contractor, the Contractor shall bear transportation costs from the original point of delivery to the Contractor’s plant and return to the original point of delivery when that point is not the Contractor’s plant. (End of clause)