Government Contracts Government Failed to Revoke Acceptance
Wednesday, August 12, 2020

Government Failed to Revoke Acceptance

By Government Contracts Editorial Staff

The contractor’s motion for summary judgment was granted in part by the Armed Services Board of Contract Appeals because the government failed to establish that it timely revoked acceptance of items due to latent defects. The government claimed the contractor breached a contract to deliver thermal sight systems, which are mounted on light armored vehicles and used to target weapons. After it made its first delivery, the contractor encountered technical difficulties and made several requests for schedule extensions for undelivered sights. The government inspected and accepted the last of the required sights more than two months after the original delivery date. The government claimed the sights suffered from quality issues and the contractor delivered them after the contract’s deadlines without consent. The contractor argued the government inspected and accepted the sights, did not revoke its acceptance due to latent defects, and declined to include a warranty in the contract.

Inspected and Accepted. The board applied the contract’s Inspection of Supplies clause (FAR 52.246-2) and determined the government’s acceptance of the sights was conclusive. Under FAR 52.246-2, the government has the right to reject or require correction of nonconforming supplies. The contracting officer stated in a declaration the government revoked acceptance by documenting latent defects after discovery and shipping the sights back to the contractor. However, the CO did not possess first-hand knowledge of the pertinent facts, and the CO’s assertion that return of the sights to the contractor constituted revocation was merely conclusory. The government returned the sights under the Product Quality Deficiency Report process, which is not dependent upon a latent defect and does not constitute revocation of acceptance. The government presented no other evidence that it communicated to the contractor that it revoked acceptance due to latent defects, and the CO’s final decision did not allege the government revoked acceptance. (Raytheon Co., ASBCA, ¶96,063)

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