FAR 46.407: How the Government Handles Defective Work
When trade contractors and estimators prepare proposals for federal projects, understanding quality control and delivery expectations is vital. Under federal procurement rules, defective or nonconforming deliverables are governed by specific administrative procedures. Here is a practical breakdown of how contracting officers evaluate, reject, or conditionally accept work that fails to meet specifications.
What Is the Government's Baseline Policy on Nonconforming Work?
Under FAR 46.407(a), the general policy is straightforward: a contracting officer should reject supplies or services that do not conform in all respects to contract requirements, referencing FAR 46.102. The government expects strict compliance with specifications. Deviating from this rejection policy is only permitted when acceptance is found to be in the government's interest, and any such acceptance must follow the specific authorization outlined in the regulation.
When Must the Contracting Officer Allow You to Fix Deficiencies?
If work falls short, does a contractor get an opportunity to correct it? Under FAR 46.407(b), the contracting officer ordinarily must give the contractor an opportunity to correct or replace nonconforming supplies or services, provided this can be completed within the required delivery schedule.
Several operational rules govern this opportunity:
- The correction or replacement must be completed without additional cost to the government, unless the contract terms specify otherwise (which may occur under certain cost-reimbursement contracts).
- If fixed-price supplies are involved, paragraph (e)(2) of FAR 52.246-2 reserves the government's right to charge the contractor for the government's costs of reinspection and retesting resulting from a prior rejection.
- Repeated tender of nonconforming deliverablesāeven those with only minor nonconformancesāmust be discouraged by the contracting officer through actions like rejection and documenting the contractor's performance record.
Can the Government Ever Accept Work With Major or Critical Flaws?
When correction within the delivery schedule is not possible, the contracting officer ordinarily must reject supplies or services if the nonconformance is critical or major, or if the work is otherwise incomplete. However, under FAR 46.407(c), circumstances such as economy or urgency may lead the contracting officer to determine that acceptance or conditional acceptance serves the best interest of the government.
To make this formal determination, the contracting officer must base the decision upon five specific written inputs:
- Advice from the technical activity confirming the item is safe to use and will perform its intended purpose;
- Information detailing the nature and extent of the nonconformance or incomplete deliverables;
- A request from the contractor asking for acceptance of the nonconforming or incomplete item, when feasible;
- A recommendation for acceptance, conditional acceptance, or rejection, complete with supporting rationale; and
- The contract adjustment considered appropriate, including any adjustment offered by the contractor.
The contract administration office or directly involved government activity must furnish these data points in writing (or orally in urgent cases, followed by written confirmation). In addition, the contracting officer must obtain concurrence from the technical activity responsible for contract requirements and, where health factors are involved, from the agency's responsible health official.
How Are Minor Nonconformances and Review Groups Handled?
When issues are classified as minor nonconformances, FAR 46.407(d) provides an alternative administrative pathway. The cognizant contract administration office may make the determination to accept or reject the items, unless that specific authority is withheld by the contracting office of the contracting activity.
To assist in reaching that determination, the contract administration office is permitted to establish a joint contractor-contract administrative office review group. However, FAR 46.407 explicitly limits the authority of this group: accepting supplies or services that have critical or major nonconformances is strictly outside the scope of the review group.
What Price Adjustments and Withholdings Apply When Defective Work Is Accepted?
Accepting nonconforming work does not mean the government pays full price. Under FAR 46.407(f), clear financial consequences apply:
- Critical or major nonconformances: The contracting officer must modify the contract to provide for an equitable price reduction or other consideration.
- Conditional acceptance: Amounts withheld from contractor payments generally should be at least sufficient to cover the estimated cost and related profit to correct deficiencies and complete unfinished work. The contracting officer must document the basis for the withholdings in the contract file.
- Service contracts: The contracting officer can consider identifying the value of individual work requirements or tasks (subdivisions) subject to reduction, which may then be used to determine an equitable adjustment.
- Minor nonconformances: When supplies or services involving minor nonconformances are accepted, the contract does not need to be modified unless the contractor's savings in fabricating the nonconforming supplies or performing the nonconforming services exceed the government's cost to process the modification.
Why Are Prompt Written Rejection Notices Legally Critical?
When the government rejects work, timing and formal documentation are legally essential under FAR 46.407(g). Notices of rejection must state the reasons for rejection and be furnished promptly to the contractor. Promptness is critical because if timely notice of the nature of rejection is not provided, acceptance may in certain cases be implied as a matter of law.
Furthermore, the rejection notice must be issued in writing if:
- The supplies or services have been rejected at a place other than the contractor's plant;
- The contractor persists in offering nonconforming supplies or services for acceptance; or
- Delivery or performance was late without excusable cause.
Additionally, under FAR 46.407(h), the contracting officer must provide disposition instructions for counterfeit or suspect counterfeit items in accordance with agency policy, which may include directing the contractor to retain the items for investigative or evidentiary purposes. Understanding these quality rules helps contractors comply with related clauses such as FAR 52.246-12.
Sources
Published October 31, 2026. No affiliate links on this page. Facts come from the sources linked above; check them for updates.