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When Does the Warranty Start and Responsibilities for GFP


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Hi,

Two issues.

Here is the situation. Our contract states "The Contractor’s warranties under this clause shall apply only to those defects discovered by either the Government or the Contractor “within two (2) years of delivery."

The deliverables are being accepted and delivered to the depot (on site) and other storage space until the government is ready to field them.

Question No. 1: Does shipping to the Depot or other storage space constitute "delivery" and start of the warranty?

Question No. 2: After acceptance and delivery to storage, the property is government owned being stored at the contractor's facility. I see nothing in the government property clause in the contract (52.245-1 Government Property Jun/2007) that addresses this situation. What, if any, are the contractor's responsibilities for this government property?

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Guest Vern Edwards

Shipping is not delivery. Delivery is delivery. Presumably you get a receipt for delivery. The date that receipt is signed by the government representative is probably the delivery date.

As for your responsibilities for the property, I'm not sure that FAR Part 45 applies if all you are doing is storing the stuff, not using it in the performance of a contract. You should have a storage contract or a term in the production contract regarding storage. Generally, you would be responsible for taking reasonable good care of the stuff.

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Response to Don Acquisition -

Correct except the depot is not a government depot. The contract we are discussing requires development and production of hardware on a FFP basis. The contract also includes a requirement to set up and maintain a depot (on a T&M basis). Once the hardware is fielded, this depot is in place for replacement/repair of the fielded hardware. The depot is not a government depot. Rather, the government is not ready to field the hardware which is being stored at the contractor's facility (the T&M depot and other storage locations at the contractor's facility).

Response to Vern Edwards -

FOB is source for these items. So, would "delivery" be when the items are placed on the source of transportation provided by the government?

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Guest Vern Edwards

F.O.B. could be at any of a number of places. See FAR 47.302 and the descriptions in FAR 47.303 and its subsections 47.303-1 through -16. Reading your other posts, it seems like F.O.B. would be "Destination", which is the storage depot that you must set up. Right? In that case, the date of delivery should be the date when the item arrives at the storage depot and the government representative signs for its receipt. If delivery is F.O.B. Origin, I assume that the place of delivery would be your factory and the date would be when the government representative signs for receipt at the factory.

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Response to Don Acquisition: Yes, the government accepts the items by way of Material Inspection and Receiving Report and then the items go into storage.

Response to Vern Edwards: F.O.B. for these items is source and the government provides transportation to destination. However, the government does not have its fielding plan completed hence they are accepted and then go to the storage depot. See sample below.

FOB POINT: Origin

SHIP TO:

(Y00000) SHIPPING INSTRUCTIONS FOR CONSIGNEE

(SHIP-TO) WILL BE FURNISHED PRIOR

TO THE SCHEDULED DELIVERY DATE FOR

ITEMS REQUIRED UNDER THIS

REQUISITION.

To both Don and Vern: The government accepts the items by way of a MIRR and we invoice in WAWF. Would the fact that the MIRR is for Inspection and Receiving suffice as the government having "recieved" the items. I am still thinking we may need something stronger to document "delivery". Thoughts?

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Guest Vern Edwards

"Would the fact that the MIRR is for Inspection and Receiving suffice as the government having 'recieved' the items[?]"

Yes, the DD 250 will suffice. After all, it's a "Material Inspection and Receiving Report" Assuming that it was properly prepared and has been signed by the government's representative, you should be good to go. See DFARS Appendix F. "Material Inspection and Receiving Report. See also DCMA, "DD Form 250 Guidance for the Contractor", available at:

http://guidebook.dcma.mil/77/dc05-244DD%20Form%20250%20Guidance%20for%20the%20Contractor.htm.

Now, go forth and do good.

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I would be interested to know how your finance people are handling this situation. When the government finally deploys the equipment and the item at that time is found to be defective and/or not working (dead on arrival) will you 1) insist that the Government work through the warranty process to repair the item or will you 2) replace the item with a working one outside of the warranty process – perhaps take a new one from the depot that is not yet scheduled for deployment and put the defective unit back in the depot and have it repaired in the depot before it needs to be later deployed. Would this violate a prohibition of providing only new equipment? Are your finance people recognizing revenue upon delivery to the depot or are they setting up some kind of reserve for DOAs?

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