FAR 52.246-8—Inspection of Research and Development-Cost-Reimbursement.
Plain-English Summary
FAR 52.246-8, Inspection of Research and Development—Cost-Reimbursement, sets the inspection and acceptance framework for cost-reimbursement R&D contracts where the main deliverable is an end item rather than designs, drawings, or reports. It covers the clause’s applicability, key definitions such as “Contractor’s managerial personnel” and “work,” the contractor’s duty to maintain an acceptable inspection system and records, the Government’s right to inspect and test work and facilities, the contractor’s duty to support Government inspections, acceptance timing and deemed acceptance after 90 days, post-acceptance correction or replacement rights and time limits, the Government’s remedies if the contractor does not act promptly, special Government rights in cases of fraud, lack of good faith, or willful misconduct, the treatment of corrected or replacement items, the contractor’s limited liability for nonconforming items at delivery, and the handling of Government-furnished property. In practice, this clause is important because it balances the Government’s need to verify technical performance in R&D work with the realities of cost-reimbursement contracting, where work may be iterative and acceptance may occur before all issues are fully known. It also creates a structured process for post-acceptance fixes, including who pays, when the Government can demand corrections at no cost, and when disputes arise. For contractors, the clause drives quality control, documentation, and disclosure obligations; for contracting officers, it provides a tool to manage technical risk, acceptance, and remedies without turning every defect into a default issue. The clause is used only when the primary objective is delivery of end items other than designs, drawings, or reports and a cost-reimbursement contract is contemplated, unless another inspection clause is more appropriate or use is impractical.
Key Rules
Applies to R&D end items
This clause is prescribed for research and development contracts when the primary objective is delivery of end items other than designs, drawings, or reports, and the contract is cost-reimbursement. It is not the default for all R&D work, and the contracting officer should use the alternate clause when that is more appropriate or when the basic clause is impractical.
Inspection system required
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 later period required by the contract.
Government inspection rights
The Government may inspect and test all work, to the extent practicable, at all places and times, including during performance and before acceptance. It may also inspect the contractor’s and subcontractors’ plants, and it must conduct inspections in a way that does not unduly delay the work.
Contractor support for inspections
If Government 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. This duty flows down to subcontractors as well.
Acceptance and deemed acceptance
Unless the contract says otherwise, the Government must accept work as promptly as practicable after delivery, and work is deemed accepted 90 days after delivery if not accepted earlier. This creates a practical outer limit on open acceptance status for delivered work.
Post-acceptance correction period
After acceptance of all deliverable end items, the Government may require correction or replacement of nonconforming work for up to 6 months, or another period stated in the contract. Time spent correcting or replacing work does not count against that period.
Cost and fee consequences
For post-acceptance corrections or replacements, the cost is generally handled under the Allowable Cost and Payment clause, but no additional fee is paid unless the contract says otherwise. If the contractor does not act promptly, the Government may perform the work itself, charge increased costs, reduce fixed fee, require delivery of undelivered articles, or terminate for default.
Fraud and misconduct exception
The Government may require correction or replacement without cost at any time if the failure results from fraud, lack of good faith, or willful misconduct by managerial personnel, or from retaining employees known to be habitually careless or unqualified. This is a stronger remedy than the normal post-acceptance correction rule.
Corrected items treated the same
A corrected or replacement end item or component is subject to the same clause requirements as the original work. The contractor must also disclose when an item previously required correction or replacement is tendered again, and disclose corrective action when required.
Limited liability at delivery
The contractor generally has no obligation to correct or replace items that met contract requirements at the time of delivery, except as provided in this clause or elsewhere in the contract. This limits post-delivery liability unless a specific contractual basis exists.
Government property governed separately
Unless the contract says otherwise, obligations to correct or replace Government-furnished property are governed by the Government property clause, not this inspection clause. That means GFP issues must be analyzed under the property clause framework.
Responsibilities
Contracting Officer
Select and insert this clause only when the contract fits the prescription for R&D cost-reimbursement end-item delivery. Set any contract-specific acceptance or correction periods, decide whether the alternate clause is more appropriate, and enforce the clause’s remedies, dispute handling, and any special provisions for Government-furnished property.
Government Technical/Inspection Personnel
Inspect and test work as authorized, do so without unduly delaying performance, and coordinate with the contractor on safe, practical access to facilities, records, and test conditions. Document acceptance decisions and any identified nonconformance that may trigger correction or replacement rights.
Contractor
Maintain an acceptable inspection system, keep complete inspection records, support Government inspections and testing, deliver work for acceptance, and correct or replace nonconforming work when required within the applicable time limits. The contractor must also disclose prior correction/replacement history when retendering work and must flow inspection-related support obligations to subcontractors.
Subcontractors
Allow inspections and testing at their facilities when work is performed there and provide reasonable facilities and assistance as required through the prime contractor’s flowdown obligations. They must support the prime contractor’s compliance with the inspection system and recordkeeping requirements as applicable.
Government-Furnished Property Custodian/Property Administrator
Handle correction or replacement obligations for Government-furnished property under the Government property clause rather than this inspection clause, unless the contract states otherwise. Coordinate property-related remedies and records separately from end-item inspection and acceptance.
Practical Implications
Contractors should treat this clause as both a quality-control requirement and a liability-management clause: weak inspection records or an informal inspection system can make it harder to defend against correction demands or cost disallowances.
The 90-day deemed acceptance rule matters operationally, but it does not eliminate the Government’s later correction rights within the post-acceptance period, so acceptance is not the same as final closure.
The 6-month correction window is a common trap: contractors may assume acceptance ends the matter, but the Government can still require fixes for nonconforming end items within the stated period, and the clock pauses while corrections are being made.
If the Government alleges fraud, lack of good faith, or willful misconduct by managerial personnel, the contractor faces much harsher consequences, including correction at no cost at any time; contractors should therefore document decision-making, supervision, and employee qualification issues carefully.
Disputes often arise over whether a defect existed at delivery, whether the item was actually accepted, whether the correction request is timely, and whether the cost should be allowable under the cost-reimbursement rules or charged back as an increased cost or fee reduction.
Official Regulatory Text
As prescribed in 46.308 , insert the following clause in solicitations and contracts for research and development when (a) the primary objective is the delivery of end items other than designs, drawings, or reports; and (b) cost-reimbursement contract is contemplated; unless use of the clause is impractical and the clause prescribed in 46.309 is considered to be more appropriate: Inspection of Research and Development—Cost-Reimbursement (May 2001) (a) Definitions.As used in this clause— Contractor's managerial personnel means 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 performing this contract."Work" 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 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. (c) 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 plant or plants of the Contractor or its subcontractors engaged in the contract performance. The Government shall perform inspections and tests in a manner that will not unduly delay the work. (d) 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 all reasonable facilities and assistance for the safe and convenient performance of these duties. (e) Unless otherwise provided in the contract, the Government shall accept work as promptly as practicable after delivery, and work shall be deemed accepted 90 days after delivery, unless accepted earlier. (f) At any time during contract performance, but no later than 6 months (or such other time as may be specified in the contract) after acceptance of all of the end items (other than designs, drawings, or reports) to be delivered under the contract, the Government may require the Contractor to replace or correct work not meeting contract requirements. Time devoted to the replacement or correction of such work shall not be included in the computation of the above time period. Except as otherwise provided in paragraph (h) of this clause, the cost of replacement or correction shall be determined as specified in the Allowable Cost and Payment clause, but no additional fee shall be paid. The Contractor shall not tender for acceptance work 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, the Government may— (i) By contract or otherwise, perform the replacement or correction, charge to the Contractor any increased cost, or make an equitable reduction in any fixed fee paid or payable under the contract; (ii) Require delivery of any undelivered articles and shall have the right to make an equitable reduction in any fixed fee paid or payable under the contract; or (iii) Terminate the contract for default. (2) Failure to agree on the amount of increased cost to be charged the Contractor or to the reduction in fixed fee 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 shall apply in the same manner to a corrected or replacement end item or components as to work originally delivered. (j) The Contractor has no obligation or liability under the contract to correct or replace articles not meeting contract requirements at time of delivery, except as provided in this clause or as may otherwise be specified in the contract. (k) Unless otherwise provided in the contract, the Contractor’s obligations 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 it is contemplated that the contract will be on a no-fee basis, substitute paragraphs (f) and (g) below for paragraphs (f) and (g) of the basic clause. (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 all of the end items (other than designs, drawings, or reports) to be delivered under the contract, the Government may require the Contractor to correct or replace work not meeting contract requirements. Time devoted to the correction or replacement of such work shall not be included in the computation of the above time period. Except as otherwise provided in paragraph (g) of this clause, the allowability of the cost of any such replacement or correction shall be determined as specified in the Allowable Cost and Payment clause. The Contractor shall not tender for acceptance corrected work without disclosing the former requirement for correction, and, when required, shall disclose the corrective action taken. (g) If the Contractor fails to proceed with reasonable promptness to perform required replacement or correction, the Government may- (1) By contract or otherwise, perform the replacement or correction and charge to the Contractor any increased cost; (2) Require delivery of any undelivered articles; or (3) Terminate the contract for default. Failure to agree on the amount of increased cost to be charged to the Contractor shall be a dispute.