Can contracts be held open for warranty items if the CLINs for the no-fault found/test and teardown are expired? I was unable to find anything in the FAR or DFAR that specifically stated contrats cannot be held open for warranty items.
Do you have any recommendations to resolve this issue?
The guidance I have received from our agency is that as long as there is not a CLIN or money attached for the extended warranty, the contract should not be held open. Per the PCO, there is funding that does not expire that covers the no-fault found/test and teardown. Thanks for your help!
Response Summary: As long as there is not a CLIN or money attached for extended warranty, the contract should not be held open just for warranty.
Open full Question Details
1. From the DCMA Contract Closeout Guidebook, September 2011, in the "Warranty" section:
"The FAR contains a number of warranty clauses suitable for use in different acquisition situations. Some of the warranty clauses can extend well beyond the physical completion of the contract. As long as there is not a CLIN or money attached for extended warranty, the contract should not be held open just for warranty. The contractor should have a process on how to handle a warranty item and if necessary; the contract can always be reopened through the CCDB. Just because a contract is closed in MOCAS does not relieve the contractor of his contractual responsibility to perform under the warranty clause. Contract containing provisions for extended testing periods after shipment and before final notice of acceptance where final payment is withheld from contractor should be moved to MOCAS section 3 and coded "GUA".
2. The DCMA Contract Closeout Guidebook also provides guidance on how to code the contract with respect to closeout. See the "R2 Overage Codes," Code U, which states there are open warranty provisions or claims, until a certain date..
3. Finally, with respect to the DD 1547 (the contract closeout checklist), Block "W", which is entitled "Other," recommend including remarks to indicate how long the warranty provisions are in effect (date), and perhaps a list of items covered by the warranty. In addition, it may be beneficial to ensure your activity's closeout process ensures contracts can be closed with respect to payment purposes, but the actual contract file is held in the buying office
until warranty provisions have expired. Some units also include:
- a memo in the contract file after it has been closed out, to include information regarding the process and timeframes for warranty claims;
- a memo for logging all warranty actions.