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There is a debate in my office regarding whether acceptance of services occurs as the contractor performs the services or after the Government has taken some additional action, such as inspecting the services and executing a receiving report. Some individuals believe that because someone allowed (by inaction) a contractor show up to perform the work required by the contract on a daily basis (ongoing support service), that we’ve automatically accepted those services at the end of the day. The underlying issue that created this argument is whether one of our customers without authority, and through no action of their own, accepted a contractor's services while there was a lapse in funding on the contract on an incrementally funded contract.

Our (civilian) agency receives different types of services. Some services occur offsite, where we do not see the services as they are performed, and some occur onsite (e.g., acquisition support services), where contractor employees work side-by-side with government personnel. The onsite contractor employees usually show up for work, much like feds do, and perform the work required by the contract.

On occasion we run into the situation where additional funds were not added quickly enough to an incrementally funded contract and the contractor continued to work at risk. The question then becomes whether someone accepted those services and whether an unauthorized commitment has occurred. I don't believe that there is an unauthorized commitment, but the issue here is whether the services were accepted.

FAR 46.5 discusses acceptance of supplies and services. This part states that acceptance may take place before delivery, at the time of delivery, or after delivery. If performance is given the same treatment as delivery, with the exception of acceptance before performance, I think that this statement applies equally to performance; i.e., acceptance may take place at the time of performance or after performance.

The part states further that Acceptance shall ordinarily be evidenced by execution of an acceptance certificate on an inspection or receiving report form or commercial shipping document/packing list, which seems to imply that in order to denote acceptance, the Government must take some administrative action, such as executing a receiving report.

Lastly, the part states that Supplies or services shall ordinarily not be accepted before completion of Government contract quality assurance actions, which seems to imply that a service cannot be accepted and should not be considered accepted until the Government performs some type of inspection process.

I’d like to know at what point after a contractor has performed its services are the services considered accepted by the agency. Are services considered accepted only after a service has been inspected and accepted by executing a receiving report or through one of the other means specified in 46.5? Or does the fact that the contractor showed up for work and performed a task in accordance with the contract constitute acceptance at the end of the day?

Regarding receiving reports, we provide them only to our payment center to authorize payment of services invoiced by contractors. We do not provide the receiving report to contractors. This isn’t a matter of policy, but simply a matter of practice that no one on either side has questioned. Must the receiving report be provided to the contractor? If not, how does the contractor know we accepted the service?

I do not have access to chapter 9 of Administration of Government Contracts (Inspection, Acceptance and Warranties)

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On occasion we run into the situation where additional funds were not added quickly enough to an incrementally funded contract and the contractor continued to work at risk.

Rios0311, I would recommend that you begin your analysis by focusing on the relevant incremental funding clause.

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Guest Vern Edwards

What an opening post. It makes me sad for several reasons that I won't bother going into. People are sooooo sensitive.

rios0311 asks:

"I’d like to know at what point after a contractor has performed its services are the services considered accepted by the agency."

His presupposition appears to be that there is a universally applicable answer. There isn't.

What is acceptance? See FAR 46.101:

“Acceptance” means the act of an authorized representative of the Government by which the Government, for itself or as agent of another, assumes ownership of existing identified supplies tendered or approves specific services rendered as partial or complete performance of the contract.

So, acceptance is an "act." Services are considered to have been accepted after that act occurs.

FAR 46.501 says:

Acceptance constitutes acknowledgment that the supplies or services conform with applicable contract quality and quantity requirements, except as provided in this subpart and subject to other terms and conditions of the contract. Acceptance may take place before delivery, at the time of delivery, or after delivery, depending on the provisions of the terms and conditions of the contract. Supplies or services shall ordinarily not be accepted before completion of Government contract quality assurance actions (however, see 46.504. Acceptance shall ordinarily be evidenced by execution of an acceptance certificate on an inspection or receiving report form or commercial shipping document/packing list.

Emphasis added. So, ordinarily, acceptance has taken place when the government has "evidenced" the act of acceptance.

FAR 46.502 says that the CO responsible for acceptance. So the act of acceptance must be an act of the CO, although the CO can delegate authority to accept, since FAR does not prohibit such delegation.

FAR 46.503 says that the contract must specify the place of acceptance. I would expect the place of acceptance to be the place of performance, or somewhere thereabouts.

One would also think that the time of acceptance would be after performance and inspection. It is hard to imagine that any CO would accept services before performance is commenced or complete, but nothing would surprise me. As for inspection ("Government contract quality assurance"), see FAR 37.604:

Requirements for quality assurance and quality assurance surveillance plans are in Subpart 46.4. The Government may either prepare the quality assurance surveillance plan or require the offerors to submit a proposed quality assurance surveillance plan for the Government’s consideration in development of the Government’s plan.

The methods and timing of government inspection under a particular contract should be stated in that contract or otherwise communicated to the contractor in order to supplement the applicable inspection clause. See FAR 46.401:

(a) Government contract quality assurance shall be performed at such times (including any stage of manufacture or performance of services) and places (including subcontractors’ plants) as may be necessary to determine that the supplies or services conform to contract requirements. Quality assurance surveillance plans should be prepared in conjunction with the preparation of the statement of work. The plans should specify-

(1) All work requiring surveillance; and

(2) The method of surveillance.

The inspection clause for supply contracts requires the government to accept or reject supplies "as promptly as practicable after delivery," but the inspection of services clause does not contain a similar provision. It is likely that services will have been accepted if paid for. An unreasonable delay in rejecting services might result in "constructive acceptance," but I'm not going to do any case law research or look into any books for rios0311.

What should be apparent from the foregoing is that the sensible response to rios0311's question about when acceptance occurs is: What does your contract say?

If the contract says nothing about the timing and place of inspection and acceptance, or not enough, then the answer is up for grabs, meaning that it's negotiable or disputable. But rios0311 and his/her colleagues ought to ask at least two questions:

1. Did the CO, or someone authorized by the CO, act to accept?

2. Did the CO, or someone authorized by the CO, evidence acceptance in any way?

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The first place I would look would be the contract and what it says about acceptance. If your contract does not say anything about it, then look towards the contract clauses that should be listed by reference. For example, FAR Clause 52.212-4 (a), which is required for every commercial item clause, states that acceptance occurs after delivery unless otherwise stated in the contract. Alternate 1 of that clause states that acceptance is 60 days after work is performed on a time-and-materials contract.

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