FAR 8.406-3—Remedies for nonconformance.
Plain-English Summary
FAR 8.406-3 explains what an ordering activity may do when a contractor’s delivered supplies or services do not meet the order’s requirements, or when the contractor fails to perform or correct the problem. It ties the remedy process to the contract’s inspection and acceptance clause, as supplemented by the individual order, so the government uses the same acceptance/rejection framework that governs the underlying schedule contract and order terms. The section also addresses two main remedies for more serious nonperformance: terminating the order for cause or modifying the order to set a new delivery date, with consideration obtained as appropriate. In practice, this provision tells contracting personnel how to respond to defective performance under a Federal Supply Schedule or similar ordering context, and it makes clear that termination for cause must follow the procedures in FAR 8.406-4. The section is important because it preserves the government’s ability to enforce order requirements while also allowing a practical path to cure, schedule adjustment, or formal termination when the contractor does not perform.
Key Rules
Use inspection and acceptance terms
If delivered supplies or services do not conform to the order requirements, the ordering activity must act under the contract’s inspection and acceptance clause, as supplemented by the order. The remedy depends on the specific acceptance, rejection, and correction rights already built into the contract and order.
Nonconforming delivery triggers action
A contractor’s delivery of nonconforming supplies or services is not treated as a harmless defect; the ordering activity must take appropriate corrective action. That may include rejection, requiring correction, or other remedies allowed by the applicable inspection and acceptance terms.
Failure to perform allows stronger remedies
If the contractor fails to perform an order, or fails to take appropriate corrective action, the ordering activity may escalate to termination for cause or to a modified delivery schedule. This gives the government leverage when the contractor does not cure the problem or otherwise meet the order’s requirements.
New delivery date may require consideration
When the ordering activity modifies the order to establish a new delivery date, it must obtain consideration as appropriate. In practice, this means the government should not extend performance time for free if the contractor is receiving a benefit from the change.
Follow termination procedures
If the ordering activity terminates an order for cause, it must follow the procedures in FAR 8.406-4. The termination decision is therefore not just a contract administration step; it must comply with the specific procedural requirements governing cause terminations under the schedule ordering rules.
Responsibilities
Ordering Activity
Assess whether delivered supplies or services conform to the order, and take appropriate action under the inspection and acceptance clause as supplemented by the order. If the contractor fails to perform or correct the problem, decide whether to terminate for cause or modify the order to set a new delivery date, and follow FAR 8.406-4 before terminating for cause.
Contractor
Deliver supplies or services that conform to the order requirements, and take appropriate corrective action when notified of nonconformance. If the contractor cannot perform as required, it may face termination for cause or a modified delivery schedule with possible consideration.
Contracting Officer / Ordering Contracting Officer
Apply the contract and order remedies correctly, document the nonconformance and the chosen response, and ensure any schedule change is supported by appropriate consideration when required. If termination for cause is pursued, follow the required procedures in FAR 8.406-4.
Agency / Government Customer
Support timely identification of nonconformance and coordinate with the ordering activity on the operational impact of defective performance. Ensure the remedy chosen protects the government’s interests while staying within the contract and order framework.
Practical Implications
This section is the government’s playbook for dealing with defective performance under an order: first look to the inspection and acceptance clause, then escalate if the contractor does not cure the problem.
A common pitfall is skipping the contract/order remedy structure and jumping straight to termination without following the required procedures or without confirming the nonconformance is covered by the applicable acceptance terms.
Another frequent issue is extending the delivery date without obtaining consideration when the contractor is getting additional time to perform; that can weaken the government’s position and create avoidable disputes.
Contractors should treat notices of nonconformance seriously and respond quickly with a cure plan, replacement delivery, or other corrective action, because failure to act can lead to termination for cause.
Ordering personnel should document the defect, the contractor’s response, the basis for any modification, and the reason consideration was or was not obtained, since these records matter if the action is later challenged.
Official Regulatory Text
(a) If a contractor delivers a supply or service, but it does not conform to the order requirements, the ordering activity shall take appropriate action in accordance with the inspection and acceptance clause of the contract, as supplemented by the order. (b) If the contractor fails to perform an order, or take appropriate corrective action, the ordering activity may terminate the order for cause or modify the order to establish a new delivery date (after obtaining consideration, as appropriate). Ordering activities shall follow the procedures at 8.406-4 when terminating an order for cause.