CHAPTER 2
Acceptance of Products,
Services, or Data
Acceptance of products, services, or data is defined as receipt of products, services, or data that comply with the contract requirements, either in writing or orally—commonly referred to as an express act—or by implied conduct. An implied contract is one that is agreed by non-verbal conduct, rather than by explicit words. The following example typifies standard language of an acceptance of products, services, or data provision found in many contracts:
The contract work, including any documents, materials, equipment, and facilities, shall at all times be available for inspection and testing by buyer. Buyer’s inspection or failure to inspect shall not relieve seller of any obligations or liability under this contract, nor shall it constitute acceptance of the contract work. Seller shall repair, re-perform, or replace any nonconforming contract work at seller’s expense within ten working days of buyer’s written notice of nonconformance. If seller has not repaired, re-performed, or replaced such nonconforming contract work within the ten-day period, buyer may repair, re-perform, or replace such nonconforming contract work at seller’s expense. The contract work shall be accepted when buyer determines to its satisfaction that the product conforms to this contract, and such acceptance shall be conclusive of conformance except for latent defects, fraud, or gross negligence.
RISK
In the absence of clearly defined acceptance criteria, such as a well-established, pre-existing documentation process like an Acceptance Test Procedure (ATP) for products or a signed certificate of completion for services rendered, acceptance of products and/or services is at the discretion of buyer. For instance, vague language such as “work shall be accepted when buyer determines to their satisfaction that the product conforms to this contract” leaves the acceptance criteria completely up to buyer’s judgment, thereby potentially postponing acceptance of and payment for the product.
Other typical, damaging language buyer may flow-down—i.e., copying language from buyer’s contract with government into buyer’s contract with seller—in their contract with seller is reserving the right to repair, re-perform, or replace such nonconforming contract work at seller’s expense. Without the word reasonable before the term repair, buyer may opt to pay another subcontractor or supplier an unreasonable amount of money to perform the work, then charge seller for the services rendered.
RESPONSE
Depending on the item being sold, seller may consider one of the following responses when countering risky language incorporated into buyer’s contract:
1) If the product is manufactured utilizing a well established design and pre-existing documentation process, seller must ensure that the configuration baseline—i.e., the process of managing change in hardware, software, firmware, documentation, measurements, etc.—is clearly defined. Particular care must be taken to specify any performance requirements in your documentation.
2) In the event that the detailed configuration baseline is not available, seller should negotiate clearly defined requirements that the product must meet to ensure that the parties have a clear understanding of those requirements.
3) Clearly define the scope of work.
4) State the specific document buyer will use to accept the product, service, or data. Include the date and relevant revision level when applicable, e.g., cite the appropriate drawing number and revision level for production items.
5) In the event that a specific acceptance document does not exist, propose that a basic agreement be followed by an acceptance document containing clear measurements that concur with the contract requirements.
6) Acceptance provisions for services and data may be handled by buyer, certifying that the services are complete by signing a certificate of acceptance.
7) Ensure that acceptance criteria are measured or judged by a third party. Additionally, omit any vague language such as successful or satisfactory.
8) Omit acceptance based on future events that fall outside seller’s control.