Contract Funds Withheld for Non-Conforming Deliveries

There’s a contract clause included in all firm-fixed price research and development contracts that allows the Government to reject non-conforming work and make an equitable price reduction if its not fixed. FAR 52.246-7, Inspection of Research and Development – Fixed Price requires, among other things, that contractors implement and maintain an inspection system acceptable to the Government and maintain complete records of such inspections and make those records available to the Government during contract performance and for as long afterwards as the contract requires. This clause also give the Government the right to perform its own inspections.

Source: PNWC’s Government Contracting Update: Contract Funds Withheld for Non-Conforming Deliveries