If a defect in a non-commercial deliverable on a fixed-price contract was discoverable upon reasonable inspection, who bears the cost of correction?

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The situation described involves a non-commercial deliverable under a fixed-price contract where a defect was discoverable upon a reasonable inspection. In this scenario, the government typically bears the cost of correction. This is largely due to the nature of fixed-price contracts, which stipulate that contractors deliver specified goods or services at a set price regardless of changes in cost incurred during the production. If a defect is found that could have been identified through reasonable inspection, it means that the responsibility for identifying such issues lies mainly with the government during the inspection phase.

In a fixed-price environment, the contractor is usually held accountable for delivering a product that meets the specifications outlined in the contract. However, once the government has accepted the deliverable (often after an inspection process), they generally assume the risk for any issues that are discoverable and not flagged during inspection. Therefore, if a defect is found that could have been reasonably identified before acceptance, it indicates that the government's oversight in their inspection process led to the defect being overlooked, resulting in them assuming the cost of correction.

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