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    In some of the smaller contracts, the contractor is willing to waive entitlement to payment. Are the parts still considered Government property and is the contractor still liable even though they didn't receive compensation? On the larger contracts the contractor is demanding reimbursement for the excess quantities. Can the Government keep the parts without reimbursement?


    Answer

    1.  For your first question, on some cost-reimbursement contract when the amount remaining on the contract is small, the contractor waives payment – possibly the amount on the contract is less than the amount of effort required to bill.  If the contractor has fulfilled all the contractual requirements (made required deliveries or completed required services), the contractor would submit their final voucher even if it for zero dollars.  In addition, there should be a release of claims in which the contractor will not receive any additional compensation and the government will not receive any additional goods and services. The contractor would sign the release the claim stating they release and discharge the US Government from all liabilities, demands, obligations, and claims arising under the contract.  Consideration is one of the elements of a contract and even though the contractor has not received full payment (they officially waived payment) the contract requirements are still valid.  After delivery and acceptance, the Government has taken title to the parts delivered under the contract. The inspection clauses at FAR 52.246-2 and 52.246-3 which cover the Government's rights relative to defects of goods still apply.


    2.  On your second question where the contractor delivered excess parts, and the Government QA inspected and accepted them.  You stated also the FAR 52.211-17, Delivery of Excess Quantities is not incorporated in the contract. Sometimes the FAR requires that a clause be included in a government contract, but that clause is omitted, case law may provide that the missing clause is deemed to be included.  But FAR 52.211-17 is not one of these clauses so since the contracting officer did not include this clause in the contract, it does not apply.
    Since the supplies have been provided to and accepted by the Government, this action would likely result in a ratification action since the acceptance is an unauthorized action.  The QAR has exceeded their authority under the contract by accepting the “out of scope” units. The Government is liable to pay for these excess quantity shipped, inspected and accepted by the Government


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