[Code of Federal Regulations]
[Title 48, Volume 1]
[Revised as of October 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR46]

[Page 863]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
                CHAPTER 1--FEDERAL ACQUISITION REGULATION
 
PART 46--QUALITY ASSURANCE--Table of Contents
 
Subpart 46.8--Contractor Liability for Loss of or Damage to Property of 
                             the Government
 
46.803  Policy.

    (a) General. The Government will generally act as a self-insurer by 
relieving contractors, as specified in this subpart, of liability for 
loss of or damage to property of the Government that (1) occurs after 
acceptance of supplies delivered or services performed under a contract 
and (2) results from defects or deficiencies in the supplies or 
services. However, the Government will not relieve the contractor of 
liability for loss of or damage to the contract end item itself, except 
for high-value items.
    (b) High-value items. In contracts requiring delivery of high-value 
items, the Government will relieve contractors of contractual liability 
for loss of or damage to those items. However, this relief shall not 
limit the Government's rights arising under the contract to--
    (1) Have any defective item or its components corrected, repaired, 
or replaced when the defect or deficiency is discovered before the loss 
of or damage to a high-value item occurs; or
    (2) Obtain equitable relief when the defect or deficiency is 
discovered after such loss or damage occurs.
    (c) Exception. The Government will not provide contractual relief 
under paragraphs (a) and (b) above when contractor liability can be 
preserved without increasing the contract price.
    (d) Limitations. Subject to the specific terms of the limitation of 
liability clause included in the contract, the relief provided under 
paragraphs (a) and (b) above does not apply--
    (1) To the extent that contractor liability is expressly provided 
under a contract clause authorized by this regulation;
    (2) When a defect or deficiency in, or the Government's acceptance 
of, the supplies or services results from willful misconduct or lack of 
good faith on the part of the contractor's managerial personnel; or
    (3) To the extent that any contractor insurance, or self-insurance 
reserve, covers liability for loss or damage suffered by the Government 
through purchase or use of the supplies delivered or services performed 
under the contract.