Federal Acquisition Regulation; Government Property
Federal RegisterJan 10, 2000
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council (Councils) are proposing to amend the
Federal Acquisition Regulation (FAR) to simplify procedures, reduce
recordkeeping, and eliminate requirements related to the management and
disposition of Government property in the possession of contractors. In
addition, this proposed rule provides contractors the option of
managing Government property under a standard process based system or
managing Government property using the same business practices the
contractors use to manage their own property. Contractors may use
either system at a particular site (primary location at which a
contract will be performed) but must use only one system at that site.
Contractors that elect to use their property management practices to
manage the Government's property in lieu of the standard processes must
accept increased liability for property losses.
Based on the significant changes made to this rule from an earlier
proposed rule, the Councils have agreed to republish the rule as a
proposed rule and provide an opportunity for the public to comment on
the changes.
DATES: Interested parties should submit comments in writing on or
before March 10, 2000 to be considered in the formulation of a final
rule.
ADDRESSES: Interested parties should submit written comments to:
General Services Administration, FAR Secretariat (MVRS), 1800 F Street,
NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405. Address e-
mail comments submitted via the Internet to: [email protected].
Please submit comments only and cite FAR case 1995-013 in all
correspondence related to this case.
FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS
Building, Washington, DC, 20405, at (202) 501-4755 for information
pertaining to status or publication schedules. For clarification of
content, Ms. Angelena Moy at (703) 695-1097/1098 (e-mail:
[email protected]), or Ms. Linda Klein, at (202) 501-3775. Please cite
FAR case 1995-013.
SUPPLEMENTARY INFORMATION:
A. Background
On June 2, 1997, the Civilian Agency Acquisition Council and the
Defense Acquisition Regulations Council (Councils) published a proposed
rule to simplify the management and disposition of Government property
in the possession of contractors (see 62 FR 30186). As a result of
public comments received on that rule and comments received during and
in response to public meetings conducted on February 18, 1998, and May
18, 1999, the Councils have revised and restructured the rule.
An interagency team (Department of Defense, Environmental
Protection Agency, General Services Administration, and the National
Aeronautics and Space Administration) analyzed each comment received in
response to the June 2, 1997, proposed rule and the public meetings
conducted on February 18, 1998, and May 18, 1999. Because this proposed
rule significantly changes the June 1997 proposed rule, a summary of
the comments received and recommended disposition is not included with
this rule.
Based upon comments received in response to this proposed rule, and
other information that might become available during the public comment
period, the final rule might contain only the standard Government
property and Government property administration clauses and related
material discussed in this proposed rule, only the alternate Government
property and Government property administration clauses and related
material discussed in this rule, or both the standard and alternate
Government property and Government property administration clauses and
related material. The Councils are particularly interested in public
comment on whether the final rule should contain only the standard
Government property and Government property administrative clauses and
related material discussed in this proposed rule, only the alternate
Government property and Government property administration clauses and
related material discussed in this proposed rule, or both the standard
and alternate Government property and Government property
administration clauses and related material.
This rule was not subject to Office of Management and Budget review
under Section 6(b) of Executive Order 12866, Regulatory Planning and
Review, dated September 30, 1993. This rule is not a major rule under 5
U.S.C. 804 because it continues the re-engineering of the Government
property management processes and procedures and is not expected to
affect significantly the profitability of contractors who have
Government property in their possession.
B. Regulatory Flexibility Act
The Initial Regulatory Flexibility Analysis (IRFA) submitted to the
Chief Counsel for Advocacy of the Small Business Administration is
applicable to this revised proposed rule. A summary of the analysis was
published in the Federal Register on June 2, 1997.
C. Paperwork Reduction Act
The Paperwork Reduction Act (Pub. L. 104-13) applies because the
proposed rule contains information collection requirements. The Office
of Management and Budget (OMB) approved the information collection
requirements contained in the proposed rule dated June 2, 1997, under
OMB Clearance Number 9000-0151. In response to public comments on the
proposed rule, this revised proposed rule eliminates one additional
notification requirement, replaces three of the reports identified in
the proposed rule with notices, and simplifies the information
collection requirements for the annual report of Government property in
the possession of contractors. These changes slightly reduce the
proposed rule's estimated information collection hours. The Councils
will recalculate the paperwork burden using the latest labor and
overhead rates when this proposed rule is finalized. It is estimated
that this rule, when final, will reduce the public paperwork associated
with Government property management by approximately 3,147,000 hours
per year.
List of Subjects in 48 CFR Parts 1, 2, 4, 7, 8, 15, 16, 17, 22, 27,
28, 31, 32, 35, 37, 42, 43, 44, 45, 49, 51, 52, and 53
Government procurement.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.
Therefore, DoD, GSA, and NASA propose that 48 CFR parts 1, 2, 4, 7,
8,
[[Page 1439]]
15, 16, 17, 22, 27, 28, 31, 32, 35, 37, 42, 43, 44, 45, 49, 51, 52, and
53 be amended as set forth below:
1. The authority citation for 48 CFR parts 1, 2, 4, 7, 8, 15, 16,
17, 22, 27, 28, 31, 32, 35, 37, 42, 43, 44, 45, 49, 51, 52, and 53
continues to read as follows:
Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
PART 1--FEDERAL ACQUISITION REGULATIONS SYSTEM
2. Amend section 1.106 in the table following the introductory
paragraph by--
a. Revising the OMB Control Number at entries for FAR segments 45,
SF 1428, and SF 1429 to read ``9000-0151'';
b. Removing the FAR segment entries and their corresponding OMB
Control Numbers at 52.216-13, 52.232-21, 52.245-2, 52.245-3, 52.245-5,
52.245-7, 52.245-8, 52.245-9, 52.245-10, 52.245-11, 52.245-16, 52.245-
17, 52.245-18, SF 1423, SF 1424, SF 1426, SF 1427, SF 1430, SF 1432,
and SF 1434; and
c. Adding entries to read as follows:
1.106 OMB approval under the Paperwork Reduction Act.
* * * * *
------------------------------------------------------------------------
OMB control
FAR segment No.
------------------------------------------------------------------------
* * * * *
52.245-1................................................... 9000-0151
52.245-2................................................... 9000-0151
52.245-3................................................... 9000-0151
52.245-4................................................... 9000-0151
52.245-5................................................... 9000-0151
52.245-6................................................... 9000-0151
52.245-7................................................... 9000-0151
52.245-8................................................... 9000-0151
* * * * *
SF 1450.................................................... 9000-0151
* * * * *
------------------------------------------------------------------------
PART 2--DEFINITIONS OF WORDS AND TERMS
3. Amend section 2.101 by revising the definition ``Supplies''; and
by adding, in alphabetical order, the definitions ``Property'', ``Real
property'', and ``Personal property'' to read as follows:
2.101 Definitions.
* * * * *
Personal property means property of any kind or interest in it
except real property, battleships, cruisers, aircraft carriers,
destroyers, submarines, and records of the Federal Government.
* * * * *
Property means real and personal property.
Real property means land and rights in land, ground improvements,
utility distribution systems, and buildings and other structures. It
does not include foundations and other work necessary for installing
special tooling, special test equipment, or equipment.
Supplies means all property except land or interest in land. It
includes (but is not limited to) public works and buildings; ships,
floating equipment, and vessels of every character, type, and
description, together with parts and accessories; aircraft and aircraft
parts, accessories, and equipment; machine tools; and the alteration or
installation of any of the foregoing.
* * * * *
PART 4--ADMINISTRATIVE MATTERS
4. Amend section 4.703 by revising the first sentence of paragraph
(b)(3) to read as follows:
4.703 Policy.
* * * * *
(b) * * *
(3) The contractor does not meet the original due date for
submission of final indirect cost rate proposals specified in paragraph
(e)(2) of the clause at 52.216-7, Allowable Cost and Payment. * * *
* * * * *
5. Amend section 4.804-4 by revising paragraph (b) to read as
follows:
4.804-4 Physically completed contracts.
* * * * *
(b) Rental, use, and storage agreements are considered physically
complete when the performance period stipulated in the agreement
expires.
PART 7--ACQUISITION PLANNING
6. Amend section 7.105 by revising paragraph (b)(14) to read as
follows:
7.105 Contents of written acquisition plans.
* * * * *
(b) * * *
(14) Government-furnished property. Identify any property to be
furnished to contractors and discuss any associated considerations,
such as the property's availability and compliance with the
requirements at 45.201.
* * * * *
7.501 [Amended]
7. Amend section 7.501 in the second sentence of paragraph (b) by
removing ``facilities operations and maintenance,'' and adding
``property management,'' in its place.
PART 8--REQUIRED SOURCES OF SUPPLIES AND SERVICES
8. Revise section 8.101 to read as follows:
8.101 Definition.
Excess personal property means any personal property (see 2.101)
under the control of a Federal agency that the agency head or a
designee determines is not required for its needs or for the discharge
of its responsibilities.
PART 15--CONTRACTING BY NEGOTIATION
9. Amend section 15.305 by redesignating paragraphs ``(a)(3)'' and
``(a)(4)'' as ``(a)(4)'' and ``(a)(5)'', respectively, and by adding a
new paragraph (a)(3) to read as follows:
15.305 Proposal evaluation.
* * * * *
(a) * * *
(3) Government property adjustment. Offerors who will use
Government property to perform a contract usually have a price
advantage relative to competitors who will use their own property or
will acquire or fabricate property to perform that contract. When
evaluating offers, that advantage must be eliminated to the extent
practicable.
(i) Contracting officers must adjust offers by applying a rental
adjustment determined, to the extent practicable, using the rental
guidelines in the clause at 52.245-6, Rental Charges for Commercial
Use.
(ii) It is not necessary to calculate a Government property
adjustment when--
(A) The solicitation requires the offerors to use specific
Government-furnished property items during contract performance; or
(B) It is apparent that the difference between the offer or offers
most advantageous to the Government and competing offers is so great
that a rental adjustment will not affect source selection.
* * * * *
PART 16--TYPES OF CONTRACTS
16.307 [Amended]
10. Amend section 16.307--
a. In the first sentence of paragraph (a)(1) by removing the
parenthetical ``(other than a facilities contract)'';
b. In paragraph (b) by removing from the parenthetical the words
``a facilities contract or'';
c. In paragraph (d) by removing ``(other than a facilities
contract)'';
d. In paragraph (e)(1) by removing ``or a facilities contract'';
[[Page 1440]]
e. In paragraph (f)(1) by removing ``(other than a facilities
contract)'';
f. By removing paragraphs (g) and (h); and
g. By redesignating paragraph ``(i)'' as paragraph ``(g)'', and
amending it by removing the last sentence.
PART 17--SPECIAL CONTRACTING METHODS
11. Amend section 17.603 by revising paragraph (a)(5) to read as
follows:
17.603 Limitations.
(a) * * *
(5) Functions that can more properly be accomplished in accordance
with subpart 45.2, Furnishing Government Property.
* * * * *
PART 22--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS
22.400 [Amended]
12. Amend section 22.400 by removing the parenthetical ``(See
definition of Construction in section 22.401.)''.
22.405 [Amended]
13. Amend section 22.405, in the first sentence, by removing
``Facilities Contracts'' and adding ``Government-Furnished Real
Property'' in its place.
14. Amend section 22.407 by revising paragraph (d) to read as
follows:
22.407 Contract clauses.
* * * * *
(d) The contracting officer shall insert the clause at 52.222-17,
Labor Standards for Construction Work--Government-Furnished Real
Property, when the Government will furnish real property for
performance of a contract and the Government is not certain at the time
of contract award that it may require covered construction work (see
22.402(b)) to be performed in the United States.
PART 27--PATENTS, DATA, AND COPYRIGHTS
27.409 [Amended]
15. Amend section 27.409 in the first sentence of paragraph (e) by
removing the word ``facilities'' and adding ``property'' in its place.
PART 28--BONDS AND INSURANCE
16. Revise section 28.303 to read as follows:
28.303 Insurance against loss of or damage to Government property.
When the Government requires or approves insurance to cover loss,
theft, or destruction of or damage to Government property, it may be
provided by specific insurance policies or by inclusion of the risks in
the contractor's existing policies. The policies shall disclose the
Government's interest in the property.
PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES
31.106 [Removed and Reserved]
17. Remove and reserve sections 31.106 through 31.106-3.
31.205-40 [Amended]
18. Amend section 31.205-40 in paragraph (a) by removing the
citation ``45.101'' and inserting ``45.001'' in its place.
PART 32--CONTRACT FINANCING
32.403 [Amended]
19. Amend section 32.403 by removing and reserving paragraph (c).
32.407 [Amended]
20. Amend section 32.407 by removing and reserving paragraph (c).
32.503-15 [Removed and Reserved]
21. Remove and reserve section 32.503-15.
32.704 [Amended]
22. Amend section 32.704 in the introductory text of paragraph
(a)(1) by removing ``52.232-21, Limitation of Cost (Facilities);''.
23. Amend section 32.705-2 by revising paragraph (a); by removing
paragraph (b); and by redesignating paragraph (c) as paragraph (b). The
revised text reads as follows:
32.705-2 Clauses for limitation of cost or funds.
(a) The contracting officer shall insert the clause at 52.232-20,
Limitation of Cost, in solicitations and contracts if a fully funded
cost-reimbursement contract is contemplated whether or not the contract
provides for payment of a fee.
* * * * *
PART 35--RESEARCH AND DEVELOPMENT CONTRACTING
24. Revise the section heading and text of 35.014 to read as
follows:
35.014 Title to tangible personal property.
The provisions of 31 U.S.C. 6306 for vesting title to equipment and
other tangible property in nonprofit organizations whose primary
purpose is the conduct of scientific research or nonprofit institutions
of higher education are implemented through Alternate II to the clause
at 52.245-2, Government Property, and Alternate II to the clause at
52.245-7, Government Property--Alternate Procedures. It is generally in
the Government's interests to vest title with such contractors unless
an agency head has provided otherwise or the property can be used for
follow-on contracts to be performed on real property owned or leased by
the Government.
PART 37--SERVICE CONTRACTING
25. Amend section 37.101 by revising paragraph (e) of the
definition ``Service contract'' to read as follows:
37.101 Definitions.
* * * * *
Service Contract * * *
* * * * *
(e) Operation of Government-owned equipment, real property, and
systems.
* * * * *
PART 42--CONTRACT ADMINISTRATION AND AUDIT SERVICES
26. Amend section 42.302 by revising paragraphs (a)(26), (a)(27),
and (a)(28), and by removing and reserving (a)(30) to read as follows:
42.302 Contract administration functions.
(a) * * *
(26) Perform property administration (see part 45), including
review and approval of contractor property management systems,
assessment of contractor processes for the acquisition or fabrication
of property under cost-reimbursement contracts, and the management and
disposal of Government property.
(27) Determine reasonable rentals for noninterference use of
Government property for commercial purposes (see 52.245-2, 52.245-6,
and 52.245-7).
(28) Perform necessary screening, redistribution, and disposal of
Government property.
* * * * *
(30) [Reserved]
* * * * *
42.705-1 [Amended]
27. Amend section 42.705-1 in the first sentence of paragraph
(b)(1) by removing ``or 52.216-13''.
42.708 [Amended]
28. Amend section 42.708 in paragraph (b) by removing ``or 52.216-
13''.
[[Page 1441]]
42.709-6 [Amended]
29. Amend section 42.709-6 by removing ``52.216-13,''.
PART 43--CONTRACT MODIFICATIONS
43.205 [Amended]
30. Amend section 43.205 by removing paragraph (b)(5); by
redesignating paragraph ``(b)(6)'' as ``(b)(5)'', and amending it by
removing ``Alternate V'' and adding ``Alternate IV'' in its place.
PART 44--SUBCONTRACTING POLICIES AND PROCEDURES
44.101 [Amended]
31. Amend section 44.101 by removing the definition ``Facilities''.
32. Amend section 44.202-2 by revising paragraph (a)(2); by
removing paragraph (a)(10); and by redesignating paragraphs (a)(11)
through (a)(13) as (a)(10) through (a)(12), respectively. The revised
text reads as follows:
44.202-2 Considerations.
(a) * * *
(2) Is the subcontract for property identified in the solicitation
as property the Government will furnish for contract performance?
* * * * *
33. Revise part 45 to read as follows:
PART 45--GOVERNMENT PROPERTY IN THE POSSESSION OF CONTRACTORS
Sec.
45.000 Scope of part.
45.001 Definitions.
Subpart 45.1--General
45.101 Property management procedures.
45.102 Policy.
Subpart 45.2--Furnishing Government Property
45.201 Furnishing property for performance of a Government
contract.
45.201-1 Criteria for furnishing Government property.
45.201-2 Restrictions on furnishing Government property.
45.201-3 Documentation and approval requirements.
45.202 Competitive advantage.
45.203 Solicitation and contract requirements.
45.204 Postaward requests for Government property.
45.205 Repair or replacement of Government-furnished property.
45.205-1 Maintenance.
45.205-2 Property losses.
45.206 Government-furnished property to be returned to a Government
activity.
45.207 Solicitation provision and contract clauses.
45.207-1 Solicitation provision.
45.207-2 Contract clauses.
Subpart 45.3--Contractor-Acquired or Produced Property
45.301 General.
45.302 Fixed-price and labor-hour contracts.
45.303 Cost-reimbursement and time-and-materials contracts.
45.304 Contract clause.
Subpart 45.4--Liability for Property Losses
45.400 General.
45.401 Liability for property losses--contracts that include the
clause at 52.245-2, Government Property.
45.401-1 Government liability.
45.401-2 Contractor liability.
45.402 Liability for property losses--contracts that include the
clause at 52.245-7, Government Property--Alternate Procedures.
45.402-1 Government liability.
45.402-2 Contractor liability.
45.403 Post delivery considerations.
45.404 Contract clause.
Subpart 45.5--Government Property Management
45.501 Preaward considerations.
45.502 Standard and alternate property management systems.
45.502-1 Property management under the clause at 52.245-5,
Government Property Administration.
45.502-2 Property management under the clause at 52.245-8,
Government Property Administration--Alternate Procedures.
45.503 Government property records and reports.
45.504 Property accountability.
45.504-1 Accountability.
45.504-2 Transferring accountability to other contracts.
45.505 Reutilization, transfer, and donation of Government
property.
45.505-1 Contractor actions.
45.505-2 Inventory disposal schedules.
45.505-3 Reutilization priorities.
45.505-4 Screening.
45.505-5 Waiver of screening requirements.
45.505-6 Interagency property transfer costs.
45.506 Abandonment, destruction, or donation of excess agency
property.
45.507 Disposal of scrap.
45.507-1 Production scrap.
45.507-2 Other scrap.
45.508 Disposal of surplus Government property.
45.508-1 Abandonment, destruction, or donation of surplus property
in lieu of sale.
45.508-2 Sale of surplus property.
45.508-3 Proceeds from sales.
45.509 Inventory Disposal Reports.
45.510 Contract clause.
Subpart 45.6--Authorizing the Use of Government Property for Commercial
Purposes
45.601 Policy.
45.602 Contract clause.
45.000 Scope of part.
This part prescribes policies for furnishing Government property to
contractors, contractors' use and management of Government property,
and, except for real property, the disposal of Government property. It
does not apply to--
(a) Property leased under the provisions of 10 U.S.C. 2667, Leases:
nonexcess property; or
(b) Property to which the Government has obtained title, a lien, or
other security interest solely as a result of financing arrangements
under fixed-price contracts.
45.001 Definitions.
As used in this part--
Commercial purpose means any purpose other than performance of a
U.S. Government contract or subcontract thereunder.
Contractor's managerial personnel means the contractor's directors,
officers, and any of the contractor's managers, superintendents, or
equivalent representatives who have supervision or direction of all or
substantially all of the contractor's business or operations at a site
connected with performance of a Government contract.
Demilitarization means rendering a product unusable for, and not
restorable to, the purpose for which it was designed or is customarily
used.
Equipment means nonexpendable, tangible personal property. The term
does not include property that satisfies the definition in this part of
material, unique Federal property, special tooling, or special test
equipment.
Expendable property means property that is customarily consumed
during design, manufacture, or testing of a product or performance of a
service.
General purpose equipment means items that can be used, or with
only minor modification could be used, to develop, produce, test, or
maintain more than one type of item or perform more than one type of
service.
Government-furnished property means Government property that a
contracting officer authorizes a contractor to use for performance of a
Government contract.
Government property means property the Government owns or leases.
Low value property means equipment, special tooling, or special
test equipment that has an acquisition cost less than $5,000 and is not
sensitive property.
Material means expendable property and property incorporated into
or attached to an item deliverable under a contract.
Natural disaster means a sudden and unusual natural occurrence
causing catastrophic damage, including floods, hurricanes, tornadoes,
cyclones,
[[Page 1442]]
atmospheric electrical storms, tidal waves, avalanches, mudslides,
landslides, volcanic eruptions, earthquakes, and other similar perils.
The term does not include fire or explosion, unless directly or
indirectly caused by a covered peril.
Nonprofit organization means a business entity organized and
operated exclusively for charitable, scientific, or educational
purposes, the net earnings of which do not inure to the benefit of any
private shareholder or individual, that is exempt from Federal income
taxation under section 501 of the Internal Revenue Code and does not
conduct a substantial portion of its activities carrying on propaganda
or otherwise attempting to influence legislation or participating in
any political campaign on behalf of any candidate for public office.
Personal property (see 2.101).
Plant clearance officer means a person appointed to disposition
property accountable under Government contracts.
Precious metals means silver, gold, platinum, palladium, iridium,
osmium, rhodium, and ruthenium.
Property (see 2.101).
Property administrator means a person appointed to perform property
administration for the Government.
Real property (see 2.101).
Rental period means the calendar period during which Government
property is made available for commercial purposes.
Rental time means the number of hours, to the nearest whole hour,
rented property is actually used for commercial purposes. It includes
time to set up the property for such purposes, perform required
maintenance, and restore the property to its condition prior to rental
(less normal wear and tear).
Scrap means personal property that has no value except its basic
metallic, mineral, or organic content.
Sensitive property means property potentially dangerous to the
public safety or security if stolen, lost, or misplaced, or that must
be subject to exceptional physical security, protection, control, and
accountability such as classified property, weapons, ammunition,
explosives, controlled substances, radioactive materials, hazardous
materials or wastes, or precious metals.
Special test equipment means--
(1) Test equipment designed specifically to conduct testing
required by a Government contract provided such equipment cannot be
used for other purposes;
(2) General purpose test equipment or modifications thereof that
are interconnected and interdependent to form a new functional entity
that can only be used to perform testing required by a contract while
so interconnected and interdependent; or
(3) Any combination of specifically designed, general purpose, or
modified general purpose test equipment that are so interconnected and
interdependent to form a new functional entity that can only be used to
perform special purpose testing required by a contract while so
interconnected and interdependent.
Special tooling means items, such as jigs, dies, fixtures, molds,
patterns, taps, gauges, or other equipment and manufacturing aids, that
are of such a specialized nature that without substantial modification
or alteration their use is limited to the development, production,
repair, or maintenance of particular supplies or components thereof, or
to the performance of particular services.
Unique Federal property means Government-owned personal property,
or components thereof, that is specially designed to perform or support
the mission of one or more Federal agencies and is not available to the
public. The term does not include property that is incorporated into or
attached to an item deliverable under a contract.
Work in process means bench stock materials, complete or incomplete
fabricated parts, subassemblies, assemblies, and similar items that are
created during production of deliverable end items, or are required to
construct special tooling or special test equipment needed to produce
deliverable end items, or are otherwise needed for design or testing
required by a contract.
Subpart 45.1--General
45.101 Property management procedures.
(a) The Government permits offerors to elect to manage Government
property under a standard, process based system or, alternatively, to
manage Government property using the same business practices the
contractors use to manage their own property. The solicitation
provision at 52.245-1, Government Property Availability and Information
Required from Offerors, is used for the election. See the clause at
52.245-5, Government Property Administration, for the standard, process
based system, and the clause at 52.245-8, Government Property
Administration--Alternate Procedures, if the election is to use the
contractor's own business practices. Subparts 45.4 and 45.5 provide
guidance regarding contractors' property liability and property
management responsibilities.
(b) It is in the Government's interest to have a contractor use a
single property management system at each location at which the
contractor will perform Government contracts. Therefore, contracting
officers should not question a contractor's election to use the
alternate property management procedures if the contractor's election
is consistent with the contractor's practices at a particular location.
If the contractor's election is not consistent, the contracting officer
should advise the contractor of the inconsistency and request the
contractor to withdraw the election or agree to include the elective
procedures in all contracts being performed at that location at no
increase in the price or fee of such contracts.
45.102 Policy.
(a) Agencies must not--
(1) Furnish Government property to contractors except as provided
in subpart 45.2;
(2) Specify, direct, or require for contract performance the use of
specific (e.g., brand name, brand name or equal, part number, or
similar identifier) commercial items that will become Government
property under a contract unless the contract's stated purpose is the
acquisition of such items;
(3) Acquire commercial items or general purpose equipment for the
sole purpose of subsequently furnishing such items as Government-
furnished property to any contractor unless the commercial items are
components of deliverable items; or
(4) Authorize contractors to acquire for the Government--
(i) Property not required for performance of a contract or
subcontract thereunder;
(ii) Real property, alterations thereof, or improvements thereto,
unless the contract's primary purpose is the maintenance of an
essential industry capability or the contract requires the performance
of alterations or improvements to real property; or
(iii) General purpose equipment, unless the contract's stated
purpose is the acquisition of the equipment (see paragraph (b) of this
section for nonprofit organizations).
(b) Under contracts for basic or applied scientific research,
contracting officers may authorize nonprofit organizations whose
primary purpose is the conduct of scientific research, or nonprofit
institutions of higher education, to acquire tangible personal property
for the Government, including commercial items.
[[Page 1443]]
Subpart 45.2--Furnishing Government Property
45.201 Furnishing property for performance of a Government contract.
Government property may be furnished for performance of a
Government contract, subject to the restrictions in 45.201-2, only when
at least one of the criteria in 45.201-1 and the corresponding
documentation and approval requirements in 45.201-3 are satisfied.
45.201-1 Criteria for furnishing Government property.
The criteria for furnishing Government property are:
(a) The Government is the sole source of property required to
perform a contract.
(b) The property will be incorporated into or attached to a
deliverable end item.
(c) The property's use will result in substantial measurable cost
savings to the Government when compared to estimated costs of contract
performance without such property (consider the Government's costs to
activate property or maintain property in an active status of ownership
when determining cost savings).
(d) The Government must furnish the property to assure that items
delivered under a contract are compatible with other Government items.
(e) The property must be furnished to accomplish repairs to, or
maintenance or reconditioning of, Government-furnished property or
items to be delivered under a contract and such repair, maintenance, or
reconditioning is not the contractor's responsibility under the
contract.
(f) The property must be furnished to respond to an unusual and
compelling urgency for supplies or services (see 6.302-2) or to support
contingency contracting.
(g) The property will be used on a contract for scientific research
conducted by an institution of higher education or a nonprofit
organization.
(h) Government-furnished equipment or real property is needed for
the retention or operation of an essential Government-owned capability.
45.201-2 Restrictions on furnishing Government property.
The restrictions on furnishing Government property are:
(a) Government-owned material may be furnished to contractors only
under the criteria in 45.201-1(a), (b), (c), (f), or (g). The quantity
furnished may include reasonable amounts for repairs or corrections to
work in process, scrap, or spoilage.
(b) Government-owned equipment may be furnished to contractors only
under the criteria in 45.201-1 (c), (f), (g), or (h).
(c) Contracting officers may furnish commercial computer software
or commercial computer software documentation to contractors only when
the Government has a license in the software or documentation that
permits release or disclosure to and use by third parties and the
software or documentation is required to operate, maintain, or install
other Government property furnished for performance of a Government
contract.
(d) Contracting officers must not furnish noncommercial computer
software or noncommercial computer software documentation (software or
documentation that does not satisfy the requirements in 2.101 for
commercial items) to contractors unless the Government is the software
or documentation licensor or, prior to furnishing the software or
documentation, the Government obtains a license in the software or
documentation that permits release or disclosure to, or use by, third
parties and the intended recipient has completed any use and
nondisclosure agreement required by part 27 or an agency supplement.
45.201-3 Documentation and approval requirements.
Decisions to furnish property to contractors must be documented in
the contract file. Contracting officers may make decisions based upon
the criteria in 45.201-1(b) and (d) through (g). Unless otherwise
designated in agency regulations, approval is required by--
(a) The contracting officer's first level supervisor when using the
criterion in 45.201-1(c);
(b) The contracting officer's second level supervisor when using
the criterion in 45.201-1(a); or
(c) The head of the contracting activity when using the criterion
in 45.201-1(h).
45.202 Competitive advantage.
Offerors who will use Government property to perform a contract
usually have a price advantage relative to competitors who will
acquire, fabricate, or use their own property to perform that contract.
When evaluating offers, that advantage must be eliminated to the extent
practicable (see 15.305(a)(3)).
45.203 Solicitation and contract requirements.
When the Government will make property available for contract
performance--
(a) Competitive solicitations must--
(1) List the available property by item name, national stock number
(if the item has a national stock number), or other appropriate
nomenclature; identify the quantity available; and, when known,
identify the date the property was acquired;
(2) Include, or offer to provide, real property maps, drawings,
plans, or similar information in sufficient detail to enable an offeror
to prepare its offer;
(3) Separately identify property available on an ``as is'' basis;
(4) Separately identify property the Government will reactivate,
rehabilitate, or convert;
(5) Identify the adjustment that will be applied to the cost or
price of offers that contemplate use of Government-furnished property.
The adjustment may be specified as a dollar amount, a formula, or any
combination thereof; and
(6) Identify any special requirements for security, maintenance,
liability, or property administration.
(b) Contracts must--
(1) List and identify (nomenclature, quantity, serial number or
other appropriate identifier, or, for real property, maps, drawings,
plans, or similar information) the Government property furnished for
performance of the contract;
(2) Separately identify property furnished ``as is'';
(3) Provide that costs incurred by the contractor to transport ``as
is'' property to its place of business or to modify or otherwise make
such property suitable for the contractor's use must not result in an
increase in contract price or fee;
(4) Identify any constraints on the period for, or amount of, use;
(5) Identify any special requirements for security, maintenance,
liability, or property control applicable to a particular Government-
furnished item;
(6) Identify any Government-furnished property that is to be
returned directly to a Government activity in lieu of initiating
disposal action and specify the method and point of return;
(7) For fixed-price construction contracts that contemplate
furnishing property f.o.b. railroad cars or f.o.b. truck, specify the
point of delivery and include appropriate terms and conditions if the
Government or another person will install, prepare, or test the
property; and
(8) To the extent known, identify the Government-furnished
property's acquisition cost and acquisition date.
45.204 Postaward requests for Government property.
(a) Contracting officers must not furnish Government property to
[[Page 1444]]
contractors subsequent to contract award unless adequate consideration
is received. If a contractor requests the use of property that is
accountable under another contract, the contracting officer for the
contract under which the property is accountable must authorize the
proposed use, and the contracting officer responsible for the contract
under which the property's use has been requested must agree with such
use. Modify each contract for which use is authorized to identify the
conditions for use and the applicable consideration.
(b)(1) The clause at 52.245-2, Government Property, authorizes a
contractor to use Government property accountable under a contract in
performance of all Government contracts at the same location if--
(i) The Contracting officer has agreed to such use; or
(ii) The contractor requests the use of the property and the
contracting officer does not object within 30 days following receipt of
the contractor's request.
(2) Generally, the contracting officer should not object unless--
(i) The program manager for the contract under which the property
is accountable, or his designee, advises that the requested use of the
property will have an adverse affect on the property's capability to
perform that contract or on program budgets; or
(ii) A contracting officer responsible for a contract on which use
has been requested (an affected contracting officer) advises that the
pricing structure of that contract would be affected or the property is
not suitable for use under that contract.
(3) If the program manager (or designee) or an affected contracting
officer objects to the requested use, the contracting officer must
advise the contractor of the Government's objection within 30 days
following receipt of the contractor's request.
(4) The contracting officer may negotiate with the contractor to
remove the Government's objections by rescoping the contractor's
proposal or obtaining other consideration acceptable to the program
manager (or designee) and the affected contracting officers.
45.205 Repair or replacement of Government-furnished property.
45.205-1 Maintenance.
Contractors are required to maintain Government property in a
condition suitable for intended use. The Government property clauses at
52.245-2, Government Property, and 52.245-7, Government Property--
Alternate Procedures, require contractors to notify the Government when
the maintenance actions required by those clauses do not sustain the
property's suitability for use and request direction regarding repair,
rehabilitation, or replacement of the property.
(a) Contracting officers may elect to--
(1) Repair or replace the property;
(2) Substitute other property for the property requiring additional
maintenance;
(3) Authorize the contractor to repair, rehabilitate, or replace
the property;
(4) Authorize the contractor to dispose of the property; or
(5) Negotiate an equitable adjustment.
(b) Contracting officers should not authorize the repair,
rehabilitation, or replacement of Government-furnished property,
including property furnished ``as is'', or make a repair,
rehabilitation, or replacement unless--
(1) The property is required for continued performance of the
contract under which the property is accountable;
(2) The Government is obligated contractually to provide the
property for performance of another contract; or
(3) The property is needed for work to be performed by the
Government at a Government installation.
(c) Contracting officers must consult with appropriate technical,
logistics, program office, and property specialists to determine
whether the Government-furnished property should be replaced, the
appropriate method and type of replacement, or if the contractor should
repair or rehabilitate the property. If the Government does not elect
to repair or replace Government-furnished property that is needed for
continued contract performance, the contractor might be entitled to an
equitable adjustment.
45.205-2 Property losses.
(a) Property losses for which the Government is liable. Generally,
the Government is responsible for property losses under contracts that
include the Government property clause at 52.245-2. The Government is
also liable for certain property losses under contracts that contain
the Government property clause at 52.245-7. Follow the guidance in
45.205-1(a) and (b) to remedy a property loss for which the Government
is liable.
(b) Property losses for which the contractor is liable. When a
contractor is liable for a property loss under the Government property
clauses at 52.245-2 or 52.245-7, the contracting officer may authorize
the contractor to repair or replace the property at no change in
contract price or fee if the property is needed for continued
performance of the contract or negotiate an equitable reduction in
contract price or fee if the property is not needed for continued
contract performance.
45.206 Government-furnished property to be returned to a Government
activity.
When a contract requires the contractor to return Government-
furnished property directly to a Government activity (in lieu of
entering the property into the disposal process), the property
administrator should determine the property's condition as near to the
return date as practicable and must promptly notify the contracting
officer if the property is not suitable for its intended use. The
contracting officer promptly must direct the contractor to take any
necessary corrective action or negotiate an equitable adjustment
incident to the contractor's failure to sustain the property's
suitability for intended use. When corrective action is not practical,
the contracting officer must direct the contractor to dispose of the
property (see 45.505-3) and promptly advise the property administrator
of the action directed.
45.207 Solicitation provision and contract clauses.
45.207-1 Solicitation provision.
(a) Insert the provision at 52.245-1, Government Property
Availability and Information Required from Offerors, when soliciting
offers from more than one source, regardless of contract type, and the
Government contemplates furnishing property for performance of the
resulting contract.
45.207-2 Contract clauses.
(a) Except as provided in 45.207-2(d), insert the clause at 52.245-
2, Government Property, in--
(1) All cost-reimbursement and time-and-materials solicitations and
contracts for supplies, services, or research and development;
(2) Fixed-price or labor-hour solicitations and contracts for
supplies, services, or research and development under which the
Government will furnish property for performance of the contract;
(3) Contract modifications or orders for property repair under
fixed-price or labor-hour contracts that do not include that clause
when--(i) The aggregate acquisition cost of the property to be repaired
exceeds or is reasonably anticipated to exceed $100,000; or
(ii) The Government will furnish property for performance of the
repairs.
(b) Insert the clause with its Alternate I in solicitations and
contracts that contemplate fixed-price awards based upon adequate price
competition or
[[Page 1445]]
when the contract price is set by law or regulation.
(c) Insert the clause with its Alternate II in cost-reimbursement
or time-and-materials solicitations and contracts for basic or applied
scientific research to be conducted by nonprofit organizations whose
primary purpose is the conduct of scientific research or by nonprofit
institutions of higher education (see 35.014).
(d) Insert the clause at 52.245-7, Government Property--Alternate
Procedures, when an offeror has elected to use that clause in the
solicitation provision at 52.245-1, Government Property Availability
and Information required from Offerors.
(1) Insert the clause with its Alternate I in contracts for
services to be performed primarily on real property owned or leased by
the Government and the contractor will not control access to or use of
the property furnished for performance of the contract.
(2) Insert the clause with its Alternate II in cost-reimbursement
or time-and-materials solicitations and contracts for basic or applied
scientific research to be conducted by nonprofit organizations whose
primary purpose is the conduct of scientific research or by nonprofit
institutions of higher education (see 35.014).
Subpart 45.3--Contractor-Acquired or Produced Property
45.301 General.
A contractor's contention that property was acquired to perform a
specific contract and is not needed for any other purpose does not
alter the fact that the property might not qualify for treatment as a
direct cost under the contractor's cost accounting practices and
31.202.
45.302 Fixed-price and labor-hour contracts.
(a) Property acquired or produced by the contractor for performance
of a fixed-price or labor-hour contract is not Government-furnished
property and is not subject to the clause at 52.245-5, Government
Property Administration, or the clause at 52.245-8, Government Property
Administration--Alternate Procedures, except--
(1) Delivered property accepted by the Government that the
Government has directed the contractor to store; or
(2) Special tooling and special test equipment the contractor is
required to store during the Government notice period under the clause
at 52.245-3, Delivery--Special Tooling and Special Test Equipment
(Fixed-Price Contracts) (see paragraphs (b) and (d) of this section).
(b)(1) The clause at 52.245-3, Delivery--Special Tooling and
Special Test Equipment (Fixed-Price Contracts), requires a contractor
to notify the Government if the contractor has acquired or produced
special tooling or special test equipment that is not required to be
delivered under the contract. The contractor's notice is required not
later than the earlier of--
(i) 30 days following the contractor's determination that such
special tooling or special test equipment is no longer required for
contract performance; or
(ii) 120 days prior to completion of scheduled deliveries (other
than technical data) under the contract.
(2) The Government has 120 days following receipt of the
contractor's notice (or such other period mutually agreed upon) to
notify the contractor that the Government requires delivery of any of
the items identified in the contractor's notice. The Government's
notice must identify the special tooling or special test equipment
item(s) to be delivered, and must--
(i) Provide packing, packaging, marking, and shipping instructions;
(ii) Direct the contractor to prepare the property for storage at
the contractor's facility or a Government facility; or
(iii) Provide instructions when accountability is to be transferred
to another contract.
(c) The contractor is obligated to store the property during the
notice period at no change in price. Storage subsequent to the
Government's delivery notice might entitle the contractor to an
equitable adjustment.
(d) Prior to furnishing any property delivered to the Government
under the clause at 52.245-3 to a contractor for performance of a
Government contract, including the contract under which delivery
occurred, the contracting officer responsible for the receiving
contract must modify that contract to identify the property as
Government-furnished property. If the receiving contract does not
contain either the clause at 52.245-2 or the clause at 52.245-7, the
modification must add whichever of those clauses is appropriate for the
location at which the receiving contract is performed and other clauses
prescribed for use with the added clause. Notwithstanding any other
provision of the receiving contract, the modification must specify that
the property is furnished in accordance with the terms of the added
clauses.
(e) Contracting officers must not exercise the Government's right
to require delivery of special tooling or special test equipment items
unless the items are needed for follow-on competitive procurements,
component breakout, mobilization, or to establish a Government repair
or maintenance capability.
45.303 Cost-reimbursement and time-and-materials contracts.
(a) Property acquired or produced by a contractor for performance
of a cost-reimbursement and time-and-materials contract is subject to
the clause at 52.245-5, Government Property Administration, or the
clause at 52.245-8, Government Property Administration--Alternate
Procedures, at the time the property's costs are properly allocable to
a contract as direct costs except--
(1) Special tooling items, or special test equipment items to which
the contractor has title under the clause at 52.216-7, Allowable Cost
and Payment; and
(2) Property to which title has been vested in the contractor under
Alternate II to the clause at 52.245-2, Government Property, or
Alternate I to the clause at 52.245-7, Government Property--Alternate
Procedures (See 35.014).
(b) If a person responsible for establishing requirements has
determined that the Government requires delivery of certain low value
(less than $5,000 acquisition cost) special tooling items or low value
special test equipment items that do not contain general purpose test
units, such items must be identified as deliverable items under the
contract.
(c) Property acquired or produced under a cost-reimbursement
contract is not property furnished for the performance of that
contract. If the contracting officer elects to furnish that property to
the contractor for performance of the contract under which the property
was acquired or produced, or to a contractor for performance of another
Government contract, the contracting officer must modify the receiving
contract to identify the property as Government-furnished property and,
if necessary, include the appropriate contract clauses. The
modification must specify that the property is furnished in accordance
with the terms of the clauses added.
(d) To avoid unnecessary maintenance and storage costs, contractors
are required to enter into the disposal process property no longer
required for contract performance. Contracting officers must not
authorize the repair, rehabilitation, or replacement of property no
longer needed for performance of a cost-reimbursement or time-and-
materials contract, except special tooling or special test equipment
[[Page 1446]]
items described in 45.303(b) that diligent exercise of the contractor's
contractual maintenance responsibilities cannot sustain in a condition
suitable for intended use.
45.304 Contract clause.
Insert the clause at 52.245-3, Delivery--Special Tooling and
Special Test Equipment (Fixed-Price Contracts), in fixed-price
solicitations and contracts for supplies, services, or research and
development where the effort to be performed will require the
contractor to acquire or produce special tooling or special test
equipment.
Subpart 45.4--Liability for Property Losses
45.400 General.
(a) As used in this subpart, the terms loss and losses include the
physical loss of, the theft of, or the destruction of Government
property, and damage to Government property.
(b) The clauses at 52.245-2, Government Property, and 52.245-7,
Government Property--Alternate Procedures, identify the conditions
under which either the Government or the contractor is liable for a
property loss. See 45.401 for guidance on contracts that include the
clause at 52.245-2 and 45.402 for contracts that include the clause at
52.245-7.
45.401 Liability for property losses--contracts that include the
clause at 52.245-2, Government Property.
45.401-1 Government liability.
(a) The Government is liable for property losses that occur while
the contractor is maintaining a property management system that
satisfies contract requirements, except losses or any portion thereof--
(1) For which the contractor expressly is liable under the terms of
a contract; or
(2) Are identified in 45.401-2.
(b) The Government's liability for a property loss is reduced by
the amount of any reimbursement the contractor receives from a third
party. Contracting officers may direct the contractor to use the
reimbursement proceeds to repair, rehabilitate, or replace the property
or may equitably adjust the contract. Repair, rehabilitation, or
replacement should be considered only when the property is needed for
continued performance of the contract, there is a known need for the
property at a Government repair activity, or the Government is
contractually obligated to furnish the property for performance of
another contract.
45.401-2 Contractor liability.
(a) The contractor is liable for losses that--
(1) Occur at a time when the contractor has not established a
property management system that satisfies the requirements of this
contract;
(2) Occur on or after the date of a written or electronic notice
from the property administrator that the Government has withdrawn
approval of the contractor's property management system, unless the
contractor can establish by clear and convincing evidence that a loss
did not result from the contractor's failure to maintain an approved
system;
(3) Occur on or after the first calendar day following the
contractor's failure to correct a property system deficiency within the
time specified by the property administrator or such other mutually
agreed upon time for correction;
(4) Result from the contractor's failure to take reasonable and
prudent steps to avoid losses resulting from acts of war, civil
insurrection, or natural disasters; or (5) Result from the willful
misconduct or lack of good faith on the part of the contractor's
managerial personnel.
(b) The contractor's liability for a loss that results from a risk
expressly required to be insured under this contract is limited to the
extent of the insurance required to be purchased and maintained, or to
the extent of the insurance actually purchased and maintained,
whichever is greater.
(c) The contractor's transfer of Government property to the
possession and control of a subcontractor does not affect the
contractor's liability for property losses.
45.402 Liability for property losses--contracts that include the
clause at 52.245-7, Government Property-- Alternate Procedures.
45.402-1 Government liability.
(a) The Government is liable for losses to Government property--
(1) Caused by acts of war, civil insurrection, or natural
disasters, regardless of property value, except a loss or portion
thereof caused by or attributable to the contractor's or a
subcontractor's failure to take reasonable and prudent steps to avoid
or reduce such losses; and (2) Losses to Government property items that
have an acquisition cost greater than $1,000,000 per item, except a
loss or portion thereof caused by willful misconduct or lack of good
faith on the part of the contractor's or a subcontractor's managerial
personnel.
(b) The Government's liability for a property loss is reduced by
the amount of any reimbursement the contractor receives from a third
party. Contracting officers may direct the contractor to use the
reimbursement proceeds to repair, rehabilitate, or replace the property
or may equitably adjust the contract. Repair, rehabilitation, or
replacement should be considered only when the property is needed for
continued performance of the contract, there is a known need for the
property at a Government repair activity, or the Government is
contractually obligated to furnish the property for performance of
another contract.
45.402-2 Contractor liability.
The contractor is liable for all losses of property accountable
under the contract, except losses for which the Government is liable
under 45.402-1. The contractor's transfer of Government property to the
possession and control of a subcontractor does not affect the
contractor's liability for property losses.
45.403 Post delivery considerations.
Contractors are liable for losses to property delivered to or
accepted by the Government at a contractor or subcontractor managed
location until the property is placed on board a carrier's conveyance
(see appropriate f.o.b. clauses at 52.247-29 through 52.247-33).
45.404 Contract clause.
Insert the clause at 52.245-4, Liability for Government Property--
Demolition Services Contracts, in addition to the clauses prescribed at
37.304, in solicitations and contracts for dismantling, demolition, or
removal of improvements.
Subpart 45.5--Government Property Management
45.501 Preaward considerations.
(a) Contracting officers should consider whether an offeror's
property management capabilities might affect source selection and must
structure appropriate evaluation criteria.
(b) When property management capabilities will be evaluated, the
official responsible for source selection should obtain and consider
the cognizant property administrator's advice regarding the adequacy of
offerors' plans to establish acceptable property management systems
under contracts that contain the clause at 52.245-5, Government
Property Administration, or the adequacy of offerors' plans to
establish acceptable systems of property management practices under the
clause at 52.245-8,
[[Page 1447]]
Government Property Administration--Alternate Procedures.
45.502 Standard and alternate property management systems.
Contractors are required to have a property management system that
performs the processes identified in the clause at 52.245-5, Government
Property Administration, unless they have elected to use the clause at
52.245-8, Government Property Administration--Alternate Procedures. See
45.502-1 for guidance regarding property management under contracts
that include the clause at 52.245-2, Government Property, or 45.502-2
for guidance regarding the clause at 52.245-8, Government Property
Administration--Alternate Procedures.
45.502-1 Property management under the clause at 52.245-5, Government
Property Administration.
(a) General. (1) A contractor's property management system and
processes must provide for the control of property in the possession of
its subcontractors.
(2) The periods for establishing a new system or submitting changes
to an existing system should be extended only when the contractor
demonstrates a reasonable need for an extension. When authorizing an
extension, the property administrator must specify the new
establishment or submission date(s).
(b) Property management system reviews and approvals--(1) New
systems or systems not previously reviewed by the Government. Property
administrators must--
(i) Review new property management systems or existing systems that
have not been reviewed by a property administrator as soon as
practicable;
(ii) Approve a system if the system's processes are sufficient to
assure compliance with contract requirements;
(iii) Require contractors to correct systems that do not include
all processes identified in 52.245-5(c) or that include processes that
are not sufficient to assure compliance with contract requirements.
Notify the contractor of the corrections required and specify the
date(s) by which the corrections must be made; and
(iv) Promptly refer to the contracting officer a contractor's
failure to establish a property control system that satisfies the
requirements in the clause at 52.245-5.
(2) Changes to previously approved systems. Contractors that have a
Government-approved property management system are required to submit
to the cognizant property administrator within 90 days following
contract award any changes to that system that are required to conform
the system to the contract's requirements. Property administrators
must--
(i) Review the proposed changes within 90 days following receipt;
(ii) Validate the system's approval if the contractor-proposed
changes are sufficient to assure contract compliance;
(iii) Require the contractor to make changes only to the extent
necessary for contract compliance;
(iv) Notify the contractor of the corrections required and specify
the date(s) by which the corrections must be made. The notice must
advise the contractor that the contractor's failure to correct its
system within the time specified might result in the contractor's
assumption of liability for property losses that the Government might
otherwise be liable for under the contract's Government Property
clause; and
(v) Notify the contracting officer immediately following issuance
of a notice under paragraph (b)(2)(iv) of this section.
(3) Corrections following property control system reviews. Property
administrators must provide a correction notice to a contractor
promptly following a control system review that discloses a previously
approved system no longer satisfies one or more requirements for an
approved system. The notice must specify the corrections required to
make the system compliant and the date for completing corrective
action. The notice must advise the contractor that the contractor's
failure to correct its system within the time specified might result in
the contractor's assumption of liability for property losses that the
Government otherwise would be liable for under those clauses.
(c) Withdrawing system approval. The administrative contracting
officer's concurrence is required prior to withdrawing approval of an
approved property management system. Generally, approval should be
withdrawn only when a contractor fails to maintain a Government
property control system that satisfies contract requirements.
45.502-2 Property management under the clause at 52.245-8, Government
Property Administration-- Alternate Procedures.
(a) The Government will rely upon a contractor's use of sound
business practices to maintain, protect, preserve, control, and account
for Government property.
(b) The property administrator must notify the contracting officer
responsible for contract administration promptly if experience under a
contract indicates that the contractor's property management practices
are not sufficient to maintain, protect, preserve, or control the
Government's property as required by the contract.
(c) The contracting officer responsible for contract administration
may require the contractor to correct the property system deficiencies,
may negotiate an equitable reduction in contract price in lieu of
correction, or may negotiate other appropriate corrective action. The
procuring contracting officer should be consulted prior to implementing
any corrective action.
45.503 Government property records and reports.
(a) Generally, it is in the Government's interests to have a
contractor generate records and reports of Government property using
the same practices the contractor uses for its own property. The
property records maintained by a contractor are the Government's
official property records. A contracting office may elect to establish
and maintain the Government's property records and generate required
property reports when the contracting office retains contract
administration functions and the contracting officer considers
Government recordkeeping and reports generation to be in the
Government's interests. The circumstances under which Government
recordkeeping and reporting might be warranted are--
(1) Contract performance periods less than 6 months; or
(2) When Government property will be furnished for a contract for
services to be performed entirely at real property owned or leased by
the Government such as the management or operation of installations,
bases, or portions thereof, warehouses, libraries, stock rooms,
mailrooms, or computer centers.
(b) The contracting office responsible for contract administration
must process property reports in accordance with agency procedures.
45.504 Property accountability.
45.504-1 Accountability.
(a) Government-furnished property is accountable under the contract
for which it was furnished.
(b) Property acquired or produced by a contractor to which the
Government has title is accountable under the contract for which the
property was acquired or produced until the contracting officer directs
a transfer of accountability, the property is placed aboard a carrier's
conveyance (f.o.b. origin), or is delivered at the specified f.o.b.
destination point.
[[Page 1448]]
45.504-2 Transferring accountability to other contracts.
(a) Contract modification. Accountability transfers should be made
only when the property is currently needed for the performance of
another Government contract or is needed to preserve or maintain an
essential industrial capability. All transfers must be reflected in a
contract modification.
(b) Special consideration for special tooling or special test
equipment. Accountability for a special tooling or special test
equipment item acquired or produced by a contractor to which the
Government has title, may be transferred to another contract with that
contractor provided the property is identified as property furnished
``as is,'' the receiving contract's price or estimated cost and fee is
adjusted in accordance with paragraph (c) of this subsection, and
property records are adjusted in accordance with paragraph (d) of this
subsection. Accountability instructions should be included in the
notice required by paragraph (d) of the clause at 52.245-3, Delivery--
Special Tooling and Special Test Equipment (Fixed-Price Contracts).
(c) Price adjustment. When a property item's accountability is
transferred to another contract, the price or estimated cost and fee of
the receiving contract should be equitably reduced if the receiving
contract's current price or estimated cost and fee was established
without a requirement for the Government to furnish the item for that
contract.
(d) Property records. All property accountability transfers must be
reflected in the property control records for the contract from which
accountability is transferred (the losing contract) and the contract to
which accountability is transferred (the gaining contract). When a
Government-furnished property item's accountability is transferred, the
respective contracting officers must modify the list of Government-
furnished property items contained in the losing and gaining contracts.
45.505 Reutilization, transfer, and donation of Government property.
This section is applicable to the reutilization, transfer, and
donation of Government property that is not required for continued
performance of a Government contract. It does not apply to scrap (see
45.507).
45.505-1 Contractor actions.
Contractors are required to--
(a) Make reasonable efforts to return Government property that was
acquired or produced by the contractor and is no longer needed for
contract performance to the appropriate supplier or to use the property
in performance of other contracts; and
(b) List property that could not be returned to a supplier or used
in the performance of other Government contracts on Standard Form 1428,
Inventory Disposal Schedule.
45.505-2 Inventory disposal schedules.
(a) Plant clearance officers should review and accept, or return
for correction, inventory disposal schedules or scrap lists within 10
days following receipt. Schedules or lists that are completed in
accordance with the instructions for Standard Form 1428 should be
accepted.
(b) Plant clearance officers must--
(1) Use Standard Form 1423 to verify accepted schedules within 20
days following acceptance.
(2) Require a contractor to correct any discrepancies found during
verification or a contractor's failure to complete the actions
described in subsection 45.505-1.
(3) Provide the contractor disposition instructions for property
identified on an acceptable inventory disposal schedule within 120 days
following receipt of the schedule. A failure to provide timely
disposition instructions might entitle the contractor to an equitable
adjustment.
(c) Contractors must obtain the plant clearance officer's approval
to remove a Government property item from an inventory disposal
schedule. Removal should be approved when the contractor has found a
buyer for a contractor-acquired or produced item at full acquisition
cost, the Government has authorized the contractor to use the property
on another Government contract, or the contractor has justified
continued use of a Government-furnished property item. Plant clearance
officers must consult with appropriate program and technical personnel
to determine whether the contractor's rationale for retaining a
Government-furnished property item is valid. If the screening process
(see 45.505-4, 45.505-5, and 45.505-6) has not begun, the plant
clearance officer must adjust the schedule or return the schedule to
the contractor for correction. If screening has begun, the plant
clearance officer must promptly notify the activity performing the
screening and must identify the items that should be removed from the
screening process.
45.505-3 Reutilization priorities.
Plant clearance officers must initiate reutilization actions using
the highest priority method appropriate for the property. Authorized
methods, listed in descending order from highest to lowest priority,
are--
(a) Reuse within the agency (see 45.506 for circumstances under
which excess agency property may be abandoned, destroyed, or donated);
(b) Transfer of educationally useful equipment to schools and
nonprofit organizations for educational and research activities
(provided no other Federal agency has expressed a need for the property
prior to screening by other Federal agencies) or report such property
to the General Services Administration (see Executive Order 12999);
(c) Reuse within the Government; and
(d) Donation to an eligible donee designated by the GSA.
45.505-4 Screening.
The screening periods begin upon the plant clearance officer's
acceptance of an inventory disposal schedule. The plant clearance
officer must determine whether standard or special screening is
appropriate and initiate screening actions.
(a) Standard screening. The standard screening period is 56 days.
(1) 1st through 20th day--screening by the contracting agency. The
contracting agency has 20 days to screen excess property for other use
within the agency. Plant clearance officers must delete from an
inventory disposal schedule any items for which other intra-agency use
is identified, prepare revised schedules, and, no later than the 21st
day, submit four copies of the revised schedules and Standard Form (SF)
120, Report of Excess Personal Property, or an electronic equivalent to
GSA (see 41 CFR 101-43.4901-120-1, Instructions for Preparing SF 120).
Enter the date of the 42nd day as the automatic surplus release date
and the date of the 56th day as the screening completion date.
(2) 21st through 41st day--screening by other Federal agencies. GSA
will normally honor requests for transfers of property on a first-come-
first-served basis through the 41st day. When a request is honored, the
GSA regional office must promptly transmit to the plant clearance
officer an approved transfer order that includes shipping instructions.
(3) 42nd through 56th day--GSA screening for possible donation.
During this period, GSA must screen property that has not been
transferred to schools or nonprofit organizations or has not been
identified for Federal reutilization for possible donation to eligible
donees.
(4) Screening period transfer request. If an agency receives an
intra-agency
[[Page 1449]]
transfer request during the screening periods described in paragraphs
(a)(2) or (a)(3) of this subsection, the plant clearance officer must
request GSA approval to withdraw the item from the inventory disposal
schedule.
(b) Special screening requirements--(1) Special tooling. Agencies
must follow the procedures at 45.505-4(a). Special tooling owned by the
Department of Defense (DoD) or the National Aeronautics and Space
Administration (NASA) may be screened for reutilization within the
agency only.
(2) Special test equipment. (i) Agencies must complete the
screening required by 45.505-4(a). If an agency has no further need for
the property and the contractor has not expressed an interest in using
or acquiring the property by annotating the inventory disposal
schedule, the plant clearance officer must forward the inventory
disposal schedule to the GSA regional office that serves the region in
which the property is located.
(ii) If the contractor has expressed an interest in using the
property on another Government contract, the plant clearance officer
must contact the contracting officer for that contract. If the
contracting officer concurs with the proposed use, the contracting
officer for the contract under which the property is accountable must
transfer the property's accountability to that contract. If the
contracting officer does not concur with the proposed use, the plant
clearance officer must deny the contractor's request and must resume
the screening process.
(iii) If the contractor has expressed an interest in acquiring the
property, and no other party expresses an interest during agency or GSA
screening, the property may be sold to the contractor.
(3) Printing equipment. Agencies must report all excess printing
equipment to the Public Printer, Government Printing Office, North
Capitol and H Streets, NW, Washington, DC 20401, after screening within
the agency (see 44 U.S.C. 312). If the Public Printer does not express
a need for the equipment within 21 days, the agency must submit the
report to GSA for further use and donation screening.
(4) Nonnuclear hazardous materials, hazardous wastes, and
classified items. These items must be screened in accordance with
agency procedures.
(5) Nuclear materials. The possession, use, and transfer of certain
nuclear materials are subject to the regulatory controls of the Nuclear
Regulatory Commission (NRC). Contracting activities must screen excess
nuclear materials in the following categories:
(i) By-product material. Any radioactive material (except special
nuclear material) yielded in or made radioactive by exposure to the
radiation incident to producing or using special nuclear material.
(ii) Source material. Uranium or thorium, or any combination
thereof, in any physical or chemical form; or ores that contain by
weight one-twentieth of 1 percent (0.05 percent) or more of uranium,
thorium, or any combination thereof. Source material does not include
special nuclear material.
(iii) Special nuclear material. Plutonium, Uranium 233, Uranium
enriched in the isotope 233 or in the isotope 235, and any other
material that the NRC determines to be special nuclear material (but
not including source material); or any material artificially enriched
by any nuclear material.
45.505-5 Waiver of screening requirements.
Agency heads may waive agency screening requirements when it is
clearly in the Government's interests to do so. When circumstances
suggest a waiver of GSA screening requirements would be in the
Government's interests, the agency must submit the justification for
the waiver to the General Services Administration, Office of
Governmentwide Policy, Office of Transportation and Personal Property
(MT), 1800 F Street NW, Washington, DC 20405, at least 10 days prior to
implementing the waiver. The waiver will be effective unless GSA takes
exception within 10 days of receipt. The agency must notify the
contract administration office when implementing a waiver.
45.505-6 Interagency property transfer costs.
Agencies whose property is transferred to other agencies must not
be reimbursed for the property in any manner unless the circumstances
of 41 CFR 101-43.309-3 apply. The agency receiving the property must
pay any transportation costs that are not the contractor's
responsibility and any costs to pack, crate, or otherwise prepare the
property for shipment. The contract administration office must process
appropriate contract modifications. To accelerate plant clearance, the
receiving agency must promptly furnish funding data, and transfer or
shipping documents to the contract administration office.
45.506 Abandonment, destruction, or donation of excess agency
property.
(a) Agencies may abandon, destroy, or donate to public bodies
excess property that does not contain precious metals, hazardous
materials or wastes, is not sensitive or classified property, and does
not require demilitarization if the plant clearance officer determines
in writing that--
(1) The property has no residual monetary value; or
(2) The estimated cost to sell the property, including advertising,
storage and other costs associated with making the sale, is greater
than the probable sale proceeds.
(b) Plant clearance officers must assure that the Government does
not bear any of the costs incident to a donation.
(c) Property that contains hazardous materials or wastes, sensitive
property, and property that requires demilitarization may be abandoned
at a contractor's premises if the contractor consents.
45.507 Disposal of scrap.
45.507-1 Production scrap.
Contractors may dispose of scrap left over from the normal
production process that has only remelting or reprocessing value (such
as textile and metal clippings, borings, and faulty castings or
forgings) without Government approval, provided the scrap does not
contain precious metals, hazardous materials or wastes, nuclear
materials, or classified materials; or does not require
demilitarization.
45.507-2 Other scrap.
(a) Except as provided in 45.507-2(b), contractors must list scrap
that is not production scrap on inventory disposal schedules and submit
the schedules to the plant clearance officer. The plant clearance
officer must process the schedules as described in 45.505-2.
(b) Under contracts that contain the clause at 52.245-2, Government
Property, contractor's that have Government approved scrap procedures
may submit scrap lists in lieu of inventory disposal schedules.
(1) The plant clearance officer must review scrap lists within 10
days following receipt. Generally, the plant clearance officer should
accept scrap lists that are consistent with a contractor's Government
approved scrap procedures, correctly identify the contracts under which
the property is accountable, and correctly identify the property's
quantity and condition. The plant clearance officers must provide
disposition instructions to the contractor within 60 days following
receipt of an acceptable scrap list. If disposition instructions are
not provided within that period, the clause
[[Page 1450]]
at 52.245-2 permits a contractor to dispose of scrap identified on a
scrap list without further Government approval.
(2) The plant clearance officer must reject or require correction
of scrap lists that contain property that must be demilitarized prior
to disposal, classified items, scrap generated from classified items,
scrap that contains hazardous materials or hazardous wastes, precious
metals, or items that are dangerous to the public health, safety, or
welfare and require contractors to submit inventory disposal schedules
for such items.
(c) Under contracts that contain the clause at 52.245-7, Government
Property--Alternate Procedures, the plant clearance officer should
consider favorably a contractor request to negotiate expedited
nonproduction scrap disposal procedures when the contractor's
experience under other Government contracts or the contractor's
business practices indicate that the contractor will adequately protect
the Government's interests.
45.508 Disposal of surplus Government property.
(a) Applicability. This section addresses the disposal of
Government property in the possession of contractors that, after
applicable screening, has not been reutilized or transferred (hereafter
referred to as surplus property). It does not apply to the abandonment,
destruction, or donation of excess agency property (see 45.506) or to
the disposal of production scrap (see 45.507-1).
(b) Disposal priorities. Except as provided in paragraphs (c) and
(d) of this section, surplus property must be sold in accordance with
45.508-2 or abandoned, destroyed or donated to public bodies in
accordance with 45.508-1.
(c) Disposal using agency procedures. The surplus property
identified in this paragraph must be disposed of in accordance with
agency procedures:
(1) Classified items.
(2) Nonnuclear hazardous materials or hazardous wastes.
(3) Property that contains precious metals or requires
demilitarization.
(4) Government property physically located outside the United
States or its possessions (see 40 U.S.C. 511-514).
(d) Disposal of Nuclear materials. Nuclear materials (see 45.505-
4(b)(5)) must be disposed of in accordance with NRC or applicable state
licenses, applicable Federal regulations, and agency regulations.
45.508-1 Abandonment, destruction, or donation of surplus property in
lieu of sale.
(a) Except as provided in paragraph (c) of this subsection,
agencies may abandon, destroy, or donate surplus property, if the plant
clearance officer determines in writing that the property does not
constitute a danger to public health, safety, or welfare and--
(1) The property has no residual monetary value; or
(2) The estimated cost to sell the property, including advertising,
storage and other costs associated with making the sale, is greater
than the probable sale proceeds.
(b) All costs incident to a donation must be borne by the donee.
(c) Property that contains hazardous materials or wastes, sensitive
property, or property that requires demilitarization, may be abandoned
at a contractor's premises if the contractor consents.
45.508-2 Sale of surplus property.
Policy for the sale of surplus property is contained in the Federal
Property Management Regulations, 41 CFR part 101-45. Agencies may
specify implementing procedures.
45.508-3 Proceeds from sales.
Except for contracts that authorize proceeds from sales to be
credited to the price or cost of the work (40 U.S.C. 485(a) and (e)),
all sale proceeds are to be credited to the Treasury of the United
States as miscellaneous receipts.
45.509 Inventory Disposal Reports.
Promptly following disposition of the property identified on an
inventory disposal schedule and the crediting of any related proceeds,
the plant clearance officer must prepare an SF 1424, Inventory Disposal
Report, to account for the property. The report must identify any lost,
stolen, damaged, destroyed, or otherwise unaccounted for property and
any changes in quantity or value of the property made by the contractor
after submission of the initial inventory disposal schedule. The report
must be addressed to the administrative contracting officer or, for
termination inventory, to the termination contracting officer, with a
copy to the property administrator.
45.510 Contract clauses.
(a) Insert the clause 52.245-5, Government Property Administration,
in solicitations and contracts that include the clause at 52.245-2,
Government Property. If required for agency financial management or
reporting purposes, agencies may modify paragraphs (f)(1)(vi) and
(f)(2)(i) of the clause at 52.245-5 to specify different dollar
thresholds.
(b) Insert the clause at 52.245-5 with its Alternate I when the
Government will maintain the Government's official property records.
(c) The clause at 52.245-5 and its Alternate I may be modified to
delete references to low-value property when contracting for services
to be performed entirely on property owned or leased by the Government
and the contracting officer determines in writing that it is in the
Government's interests to have a contractor inventory all property and
immediately notify the Government of a property loss regardless of the
property's value.
(d) Insert the clause at 52.245-8, Government Property
Administration--Alternate Procedures, in solicitations and contracts
that include the clause at 52.245-7, Government Property--Alternate
Procedures.
(e) Insert the clause at 52.245-8 with its Alternate I when the
Government will maintain the Government's official property records.
(f) The clause at 52.245-8 and its Alternate I may be modified to
delete references to low-value property when contracting for services
to be performed entirely on property owned or leased by the Government
and the contracting officer determines in writing that it is in the
Government's interests to have a contractor inventory all property and
immediately notify the Government of a property loss regardless of the
property's value.
Subpart 45.6--Authorizing the Use of Government Property for
Commercial Purposes
45.601 Policy.
(a) Unless prohibited by law, contracting officers may authorize
the contractor performing a contract under which Government property is
accountable to use that property for commercial purposes on a
noninterference basis if the Government receives an equitable rental
for such use.
(b) An authorization for use for commercial purposes must be
reflected in a contract modification and must specify--
(1) The property is available ``as is'' without any representation
as to suitability for intended use;
(2) The rental time and rental period during which the property may
be used;
(3) Any restrictions on, or conditions of, use; and
(4) The rent or estimated rent the Government will receive.
(c) Contracting officers must require contractors to assume the
liability for
[[Page 1451]]
property losses that occur while the property is being used for
commercial purposes and to indemnify the Government against claims for
injury to persons or damage to the contractor's or a third party's
property that arise from the contractor's use or possession of the
Government property for commercial purposes.
(d) If damaged, lost, stolen, or destroyed property is required for
continued performance of a Government contract and cannot be repaired
or replaced by the contractor without affecting scheduled deliveries,
an equitable adjustment should be negotiated that includes schedule
adjustments at no cost to the Government. Negotiate an equitable
reduction in price or fee in lieu of repair or replacement when the
property is not required for continued performance of a Government
contract.
(e) The contracting officer must not revoke an authorization to use
Government property for commercial purposes unless the contractor fails
to comply with the terms and conditions governing such use or the
Government has a compelling need that precludes continued availability
for commercial purposes.
45.602 Contract clause.
Insert the clause at 52.245-6, Rental Charges for Commercial Use,
in solicitations and contracts that include the clause at 52.245-2,
Government Property, or the clause at 52.245-7, Government Property--
Alternate Procedures. The contracting officer must also insert the
clause at 52.245-6 when the clause at 52.245-2 or 52.245-7 is inserted
in a contract subsequent to contract award.
PART 49--TERMINATION OF CONTRACTS
35. Amend section 49.001 by revising the definition ``Termination
inventory'' to read as follows:
49.001 Definitions.
* * * * *
Termination inventory includes parts, work in process, completed
work, supplies, other material produced or acquired for the work
terminated, completed or partially completed plans, drawings, or
information, property that would have been delivered to the Government
if the contract had been completed, and Government-furnished property.
* * * * *
49.105 [Amended]
36. Amend section 49.105 in the introductory text of paragraph
(b)(4) by removing ``(see subpart 45.6)''.
37. Amend section 49.108-3 by revising paragraph (b)(1) to read as
follows:
49.108-3 Settlement procedure.
* * * * *
(b) * * *
(1) All subcontractor termination inventory be disposed of and
accounted for in accordance with the procedures contained in paragraph
(g) of the clause at 52.245-2, Government Property; and
* * * * *
38. Amend section 49.108-4 by revising paragraphs (a)(1)(ii) and
(b) to read as follows:
49.108-4 Authorization for subcontract settlements without approval or
ratification.
(a)(1) * * *
(ii) Any termination inventory included in determining the amount
of the settlement will be disposed of as directed by the prime
contractor, except that the disposition of the inventory shall not be
subject to--
(A) Review by the TCO under 49.108-3(c); or
(B) The screening requirements in 45.504; and
* * * * *
(b) Section 45.504 shall apply to disposal of completed end items
allocable to the terminated subcontract. However, these items may be
disposed of without review by the TCO under 49.108-3 and without
screening under 45.504, if the items do not require demilitarization
and the total amount (at the subcontract price) when added to the
amount of the settlement does not exceed the amount authorized under
this subsection.
* * * * *
49.202 [Amended]
39. Amend section 49.202 in paragraph (b)(3)(iii) by removing
``materials, facilities,'' and adding ``property'' in its place.
49.204 [Amended]
40. Amend section 49.204 in paragraph (a) by removing the words
``materials sold that have'' and adding ``property sold that has'' in
its place.
41. Revise the section heading and text of 49.206-3 to read as
follows:
49.206-3 Submission of inventory disposal schedules.
Subject to the terms of the termination clause, and whenever
termination inventory is involved, the contractor shall submit complete
inventory disposal schedules to the TCO reflecting inventory that is
allocable to the terminated portion of the contract. The inventory
disposal schedules shall be submitted within 120 days from the
effective date of termination unless otherwise extended by the TCO
based on a written justification to support the extension. The
inventory schedules shall be prepared on SF 1428.
42. Revise the section heading and text of 49.303-2 to read as
follows:
49.303-2 Submission of inventory disposal schedules.
Subject to the terms of the termination clause, and whenever
termination inventory is involved, the contractor shall submit complete
inventory disposal schedules to the TCO reflecting inventory that is
allocable to the terminated portion of the contract. The inventory
disposal schedules shall be submitted within 120 days from the
effective date of termination unless otherwise extended by the TCO
based on a written justification to support the extension. The
inventory disposal schedules shall be prepared on SF 1428.
49.505 [Amended]
43. Amend section 49.505 by removing paragraphs (a) and (c); and by
redesignating paragraphs ``(b)'', ``(d)'', and ``(e)'' as ``(a)'',
``(b)'', and ``(c)'', respectively.
44. Revise the section heading and text of 49.602-2 to read as
follows:
49.602-2 Inventory forms.
Standard Form (SF) 1428, Inventory Disposal Schedule, and SF 1429,
Inventory Disposal Schedule--Continuation Sheet, must be used to
support settlement proposals submitted on the forms specified in
49.602-1(a), (b), and (c).
PART 51--USE OF GOVERNMENT SOURCES BY CONTRACTORS
45. Revise section 51.106 to read as follows:
51.106 Title.
Title to all property acquired by the contractor under the
contracting officer's authorization shall vest in the parties as
provided in the contract.
46. Revise section 51.107 to read as follows:
51.107 Contract clause.
Insert the clause at 52.251-1, Government Supply Sources, in
solicitations and contracts when the contracting officer may authorize
the contractor to acquire supplies or services from a Government supply
source.
[[Page 1452]]
51.200 [Amended]
47. Amend section 51.200 at the end of the second sentence by
removing ``(see 45.304)''.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
48. Amend section 52.216-7 by revising the date of the clause; in
paragraph (b)(3) by removing ``paragraph (g)'' and ``paragraph (d)''
and adding in their places ``paragraph (h)'' and ``paragraph (e)'',
respectively; by redesignating paragraphs (c) through (h) as (d)
through (i), respectively, and adding a new paragraph (c); and in newly
designated paragraph (i)(1) by revising ``paragraph (d)(4)'' to read
``paragraph (e)(4)''. The new paragraph (c) reads as follows:
52.216-7 Allowable Cost and Payment.
* * * * *
ALLOWABLE COST AND PAYMENT (DATE)
* * * * *
(c) Title--(1) Government title. Except as provided in paragraph
(c)(3) of this clause, title to all property acquired or produced by
the Contractor for performance of this contract, the costs of which
are allocable to this contract as direct costs, shall vest in the
Government when the cost of the property is or should have been
allocable or properly chargeable to this contract under sound and
generally accepted accounting principles and practices.
(2) Relationship to Government-furnished property. Property to
which the Government has obtained title solely under this clause is
not ``Government-furnished property.''
(3) Contractor title. The Contractor shall have title to special
test equipment items that do not contain general purpose test
equipment and special tooling items, provided such items--
(i) Were acquired or produced for this contract;
(ii) Have an acquisition cost less than $5,000 that was
allocated to this contract as direct cost; and
(iii) Are not identified in the contract as deliverable items.
(4) Lien. By execution of this contract, the Contractor grants
to the Government a security lien paramount to any other on the
property to which the Contractor has title under paragraph (c)(3) of
this clause. During performance of this contract, the Contractor
shall not offer or provide such property as collateral for any
purpose and shall not encumber in any manner title to that property.
* * * * *
52.216-11 [Amended]
49. Amend section 52.216-11 in the first sentence of the
introductory paragraph by removing ``or a facilities contract''.
52.216-12 [Amended]
50. Amend section 52.216-12 in the first sentence of the
introductory paragraph by removing the parenthetical ``(other than a
facilities contract)''.
52.216-13 and 52.216-14 [Removed and Reserved]
51. Remove and reserve sections 52.216-13 and 52.216-14.
52.222-17 Labor Standards for Construction Work--Government-Furnished
Real Property.
52. Revise the section heading of 52.222-17 and the clause heading
to read as follows:
* * * * *
LABOR STANDARDS FOR CONSTRUCTION WORK--GOVERNMENT-FURNISHED REAL
PROPERTY (FEB 1988)
* * * * *
53. Amend section 52.232-16 by revising the date of the clause and
paragraphs (d), (e), and (h) of the clause to read as follows:
52.232-16 Progress Payments.
* * * * *
PROGRESS PAYMENTS (DATE)
* * * * *
(d) Title. (1) Title to all property acquired or produced by the
Contractor for performance of this contract, the costs of which are
allocable to this contract, shall vest in the Government when the
property is or should have been allocable or properly chargeable to
this contract under sound and generally accepted accounting
principles and practices. Upon liquidation of all progress payments,
the Contractor shall have title to property acquired or produced for
this contract that is not required to be delivered to the
Government.
(2) Property to which the Government has obtained title solely
under this clause is not ``Government-furnished property.''
(3) The procedures for the disposal of Government-furnished
property that is scrap are contained in the Government Property
clause, 52.245-2, Government Property, of this contract. The
Contractor may sell all other scrap resulting from production or
testing under this contract without Government approval if the scrap
does not contain precious metals, hazardous materials or wastes,
nuclear materials, classified materials, or does not require
demilitarization. The proceeds shall be credited against the costs
of performance.
(4) The Contractor shall not use property to which title is
vested in the Government under this clause to perform other
contracts, transfer the property to another contract or dispose of
the property unless authorized to do so by the Contracting Officer
or paragraph (d)(3) of this clause. When transfer or disposal is
authorized, the Contractor shall--
(i) Exclude the allocable costs of the property from the costs
of contract performance; and
(ii) Repay to the Government any amount of unliquidated progress
payments allocable to the property.
(e) Liability. The Contractor is liable for loss, theft, or
destruction of, or damage to, property acquired or produced for
performance of this contract unless the Government has expressly
assumed such risks or accepted the property. The Contractor shall
repay the Government an amount equal to the unliquidated progress
payments that are based on costs allocable to property that is
damaged, lost, stolen, or destroyed.
* * * * *
(h) Special terms regarding default. If this contract is
terminated under the Default clause of this contract--
(1) The Contractor shall, on demand, repay to the Government the
amount of unliquidated progress payments.
(2) Upon full liquidation of progress payments, the Contractor
shall have title to all property acquired or produced for
performance of this contract, except such property required to be
delivered to the Government under the Default clause of this
contract or the clause at 52.245-3, Delivery--Special Tooling and
Special Test Equipment (Fixed-Price Contracts), if applicable and
included in the contract.
* * * * *
52.232-21 [Removed and Reserved]
54. Remove and reserve section 52.232-21.
55. Amend section 52.232-32 by revising the date of the clause and
paragraphs (f), (g), and (j) to read as follows:
52.232-32 Performance-Based Payments.
* * * * *
PERFORMANCE-BASED PAYMENTS (DATE)
* * * * *
(f) Title. (1) Title to all property acquired or produced by the
Contractor for performance of this contract, the costs of which are
allocable to this contract, shall vest in the Government when the
property is or should have been allocable or properly chargeable to
this contract under sound and generally accepted accounting
principles and practices. Except as provided in the clause at
52.245-3, Delivery--Special Tooling and Special Test Equipment
(Fixed-Price Contracts), upon liquidation of all performance-based
payments, the Contractor shall have title to property acquired or
produced for this contract that is not required to be delivered to
the Government.
(2) Property to which the Government has obtained title solely
under this clause is not ``Government-furnished property.''
(3) The procedures for the disposal of Government-furnished
property that is scrap are contained in the clause 52.245-2,
Government Property, of this contract. The Contractor may sell all
other scrap resulting from production or testing under this contract
without Government approval provided that--
(i) Any significant reduction in the value of the property to
which the Government has
[[Page 1453]]
title under this clause is reported to the Contracting Officer; and
(ii) The scrap does not contain precious metals, hazardous
materials or wastes, nuclear materials, classified materials, or
does not require demilitarization. The proceeds shall be credited
against the costs of performance.
(4) The Contractor shall not use property to which title is
vested in the Government under this clause to perform other
contacts, transfer the property to another contract, or dispose of
the property unless authorized to do so by the Contracting Officer
or paragraph (d)(3) of this clause.
(g) Liability. The Contractor is liable for loss, theft, or
destruction of, or damage to, property acquired or produced for
performance of this contract unless the Government has expressly
assumed such risks or accepted the property.
* * * * *
(j) Special terms regarding default. If this contract is
terminated under the Default clause--
(1) The Contractor shall, on demand, repay to the Government the
amount of unliquidated performance-based payments; and
(2) Upon full liquidation of performance-based payments, the
Contractor shall have title to all property acquired or produced for
performance of this contract except such property required to be
delivered to the Government under the Default clause or the clause
at 52.245-3.
* * * * *
52.243-2 [Amended]
56. Amend section 52.243-2 by removing Alternate IV and
redesignating ``Alternate V'' as ``Alternate IV'' of the clause.
57. Amend section 52.243-4 by revising the date of the clause and
paragraph (a)(3) of the clause to read as follows:
52.243-4 Changes.
* * * * *
CHANGES (DATE)
(a) * * *
(3) In the Government property or services furnished for
contract performance; or
* * * * *
58. Revise sections 52.245-1 through 52.245-8 to read as follows:
52.245-1 Government Property Availability and Information required
from Offerors.
As prescribed in 45.207-1(a), insert the following solicitation
provision:
GOVERNMENT PROPERTY AVAILABILITY AND INFORMATION REQUIRED FROM OFFERORS
(DATE)
(a) Definitions.
Government-furnished property means Government property that a
Contracting Officer authorizes a Contractor to use for performance
of a Government contract.
Government property means property the Government owns or
leases.
Personal property means property of any kind or interest in it
except real property, battleships, cruisers, aircraft carriers,
destroyers, submarines, and records of the Federal Government.
Property means real and personal property.
Property administrator means a person appointed to perform
property administration for the Government.
Real property means land and rights in land, ground
improvements, utility distribution systems, and buildings and other
structures. It does not include foundations and other work necessary
for installing special tooling, special test equipment, or
equipment.
Special test equipment means--
(1) Test equipment designed specifically to conduct testing
required by a Government contract provided such equipment cannot be
used for other purposes;
(2) General purpose test equipment or modifications thereof that
are interconnected and interdependent to form a new functional
entity that can only be used to perform testing required by a
contract while so interconnected and interdependent; or
(3) Any combination of specifically designed, general purpose,
or modified general purpose test equipment that is so interconnected
and interdependent to form a new functional entity that can only be
used to perform special purpose testing required by a contract while
so interconnected and interdependent.
Special tooling means items such as jigs, dies, fixtures, molds,
patterns, taps, gauges, or other equipment and manufacturing aids,
that are of such a specialized nature that without substantial
modification or alteration their use is limited to the development,
production, repair, or maintenance of particular supplies or
components thereof, or to the performance of particular services.
(b) Property available for contract performance. (1) The
property listed below, or in an attachment to this provision, is
available for performance of the contract contemplated by this
solicitation and is in a condition suitable for use.
(2) The property listed below, or in an attachment to this
provision, is available for use on an ``as is'' basis.
(i) Offerors are responsible for assuring that Government
property made available on an ``as is'' basis is suitable for the
offerors' purposes. Such property will be furnished f.o.b. at the
location specified in the solicitation or contract. Costs incurred
to transport, install, modify, or otherwise make such property
suitable for the successful offeror's intended use and any cost
incurred to return such property to the Government shall not
increase the price or fee of any Government contract. Amendments to
property furnished ``as is'' require the Contracting Officer's prior
written approval.
(ii) The Government makes no warranty whatsoever with respect to
property furnished ``as is'' except that the property will be in the
same condition when placed at the specified f.o.b. location as when
inspected by the offeror or, if not inspected by the offeror, as of
the last date for inspection specified in the solicitation. The
offeror is responsible for verifying that the property's condition
has not changed during that period and shall notify the Contracting
Officer promptly identifying any changed condition that will
adversely affect the offeror. If the Contracting Officer concurs
that the property's condition has changed, the Contracting Officer
may restore the property, substitute other Government property, or
withdraw the property's availability. A substitution or withdrawal
shall be reflected in a modification to the solicitation. The
Government has no liability for changes in the property's condition
discovered after removal from the specified f.o.b. location.
(iii) Special tooling or special test equipment will be
furnished ``as is'' if the successful offeror acquired or produced
the tooling and test equipment and the Government obtained title to
the tooling or test equipment under a Government contract.
(c) Government title. The Government retains title to any
property furnished for performance of the contract contemplated by
this solicitation. Contractor repairs to or modifications of that
property do not affect the Government's title to the property.
(d) Property administration considerations. The successful
offeror will be responsible for the care, maintenance, and
preservation of Government property accountable under a contract
resulting from this solicitation, including property the successful
offeror permits a subcontractor to use for performance of that
contract.
(1) The clauses at 52.245-2, Government Property, and 52.245-5,
Government Property Administration, will be included in a contract
resulting from this solicitation unless a successful offeror elects
to use, by inserting the offeror's name on the line provided in
paragraph (d)(3) of this provision, the clauses at 52.245-7,
Government Property--Alternate Procedures, and 52.245-8, Government
Property Administration--Alternate Procedures. Generally, under the
Government Property clause at 52-245-2, the Government is liable for
loss, theft, or destruction of, or damage to, the Government
property accountable under the contract (hereinafter referred to as
property losses), and the Contractor must maintain a Government
property management system that includes the processes specified in
the Government Property Administration clause at 52.245-5. The
clause at 52.245-7 generally makes a successful offeror responsible
for property losses and the clause at 52.245-8 generally permits a
successful offeror(s) to manage Government property using the same
procedures that are used to manage the offeror's property.
(2) An offeror should make the election in paragraph (d)(3) of
this provision only if the election is consistent with the offeror's
property management practices under other Government contracts
performed or to be performed at the location at which the contract
resulting from this solicitation will be performed.
(3) Alternate Clause Election. The offeror,
____________________, elects to have the clauses at 52.245-7,
Government Property--Alternate Procedures, and 52.245-8, Government
Property Administration--Alternate Procedures, included in a
contract
[[Page 1454]]
resulting from this solicitation in lieu of the corresponding
clauses at 52.245-2 and 52.245-5.
(e) Information required from all offerors. Offers shall--
(1) List or describe all Government property the offeror or its
potential subcontractors propose to use on a rent-free basis,
including--
(i) Property offered for use in this solicitation; and
(ii) Property already in possession of the offeror or its
prospective subcontractors under other contracts.
(2) Identify the contracts or other instruments under which the
property listed or described in paragraph (d)(1) is accountable; and
(3) Identify the estimated period during which the property will
be used, the estimated hours of use within that period, and the
offeror's estimated costs to acquire, produce, lease, or rent the
property if it is not furnished by the Government.
(f) Additional information required from offerors that do not
make the election available in paragraph (d)(3) of this provision.
(1) The offeror shall state--
(i) Whether the offeror has an approved property management
system;
(ii) The date the system was last reviewed; and
(iii) The name and address of the Property Administrator who
performed the last review.
(2) Offers shall include a proposed Government property
management system if--
(i) The offeror does not have a property system that has been
approved by a Property Administrator;
(ii) The offeror's property system was last approved or
validated by a Property Administrator more than 2 years prior to the
date of this offer;
(iii) A Property Administrator has requested corrections to the
offeror's system and such corrections have not been made; or
(iv) Approval of the offeror's system has been withdrawn.
(3) Offerors should propose and use an existing property
management system or a modification thereof when the existing or
modified system satisfies the requirements of the Government
Property and Government Property Administration clauses identified
in this solicitation.
(4) A successful offeror whose property system has been approved
or validated by the Government no more than 2 years prior to the
date of its offer is required only to submit to the Property
Administrator, within 90 days following contract award, the changes
required to conform the system to the requirements of the successful
offeror's contract.
(5) As provided in the clause at 52.245-5, Government Property
Administration, the Property Administrator might require a
successful offeror to make changes to a proposed or previously
approved system if deemed necessary for contract compliance.
(g) Liability for loss, theft, damage, or destruction. (Not
applicable when the election in paragraph (d)(3) of this provision
is made.) Notwithstanding any other provision of this solicitation
regarding liability for loss, theft, or destruction of, or damage to
Government property, the successful offeror shall be liable for such
loss, theft, destruction, or damage until its Government property
system is approved by the Property Administrator.
(h) Overseas contracts. In a contract to be performed outside
the United States, its territories, or possessions, the words
``Government'' and ``Government-furnished'', as used in this
provision, mean ``United States Government'' and ``United States
Government-furnished,'' respectively.
(End of provision)
Alternate I (Date). As prescribed in 45.207-1(b), replace
paragraphs (b) through (g) of the basic clause with the following
paragraphs (b) through (d) and renumber paragraph (h) of the basic
clause as paragraph (e).
(b) Property administration considerations. The successful
offeror will be responsible for the care, maintenance, and
preservation of Government property accountable under a contract
resulting from this solicitation, including property the successful
offeror permits a subcontractor to use for performance of that
contract.
(1) The clauses at 52.245-2, Government Property, and 52.245-5,
Government Property Administration, will be included in a contract
resulting from this solicitation unless a successful offeror elects
to use, by inserting the offeror's name on the line provided in
paragraph (b)(3) of this provision, the clauses at 52.245-7,
Government Property--Alternate Procedures, and 52.245-8, Government
Property Administration--Alternate Procedures. Generally, under the
Government Property clause at 52-245-2, the Government is liable for
loss, theft, or destruction of, or damage to, the Government
property accountable under the contract (hereinafter referred to as
property losses), and the Contractor must maintain a Government
property management system that includes the processes specified in
the Government Property Administration clause at 52.245-5. The
clause at 52.245-7 generally makes a successful offeror responsible
for property losses and the clause at 52.245-8 generally permits a
successful offeror to manage Government property using the same
procedures that are used to manage the offeror's property.
(2) An offeror should make the election in paragraph (b)(3) of
this provision only if the election is consistent with the offeror's
property management practices under other Government contracts
performed or to be performed at the location at which the contract
resulting from this solicitation will be performed.
(3) Alternate Clause Election The offeror, ____________________,
elects to have the clauses at 52.245-7, Government Property--
Alternate Procedures and 52.245-8, Government Property
Administration-- Alternate Procedures, included in a contract
resulting from this solicitation in lieu of the corresponding
clauses at 52.245-2 and 52.245-5.
(c) Information required from offerors that do not make the
election available in paragraph (b)(3) of this provision. (1) The
offeror shall state whether the offeror has an approved property
management system, the date the system was last reviewed, and the
name and address of the Property Administrator who performed the
last review.
(2) Offers shall include a proposed Government property
management system if--
(i) The offeror does not have a property system that has been
approved by a Property Administrator;
(ii) The offeror's property system was last approved or
validated by a Property Administrator more than 2 years prior to the
date of this offer;
(iii) A Property Administrator has requested corrections to the
offeror's system and such corrections have not been made; or
(iv) Approval of the offeror's system has been withdrawn.
(3) Offerors should propose and use an existing property
management system or a modification thereof when the existing or
modified system satisfies the requirements of the Government
Property and Government Property Administration clauses identified
in this solicitation.
(4) A successful offeror whose property system has been approved
or validated by the Government no more than 2 years prior to the
date of its offer is required only to submit to the Property
Administrator, within 90 days following contract award, the changes
required to conform the system to the requirements of the successful
offeror's contract.
(5) As provided in the clause at 52.245-5, Government Property
Administration, the Property Administrator might require a
successful offeror to make changes to a proposed or previously
approved system if deemed necessary for contract compliance.
(d) Liability for loss, theft, damage, or destruction. (Not
applicable when the election in paragraph (b)(3) of this provision
is made.) Notwithstanding any other provision of this solicitation
regarding liability for loss, theft, or destruction of, or damage to
Government property, the successful offeror shall be liable for such
loss, theft, destruction, or damage until its Government property
system is approved by the Property Administrator.
52.245-2 Government Property.
As prescribed in 45.207-2, insert the following clause:
GOVERNMENT PROPERTY (DATE)
(a) Definitions. As used in this clause--
Commercial purpose means any purpose other than performance of a
U.S. Government contract or subcontract thereunder.
Contractor's managerial personnel means the Contractor's
directors, officers, and any of the Contractor's managers,
superintendents, or equivalent representatives who have supervision
or direction of all or substantially all of the Contractor's
business or the Contractor's operations at a site connected with
performance of a Government contract.
Demilitarization means rendering a product unusable for, and not
restorable to, the purpose for which it was designed or is
customarily used.
[[Page 1455]]
Equipment means nonexpendable, tangible personal property. The
term does not include property that satisfies the definition in this
clause of material, unique Federal property, special tooling, or
special test equipment.
Expendable property means property that is customarily consumed
during design, manufacture, or testing of a product or performance
of a service.
General purpose equipment means equipment items that can be
used, or with only minor modification could be used, to develop,
produce, test, or maintain more than one type of item or perform
more than one type of service.
Government-furnished property means Government property that a
Contracting Officer authorizes a Contractor to use for performance
of a Government contract.
Government property means property the Government owns or
leases.
Low value property means equipment, special tooling, or special
test equipment that has an acquisition cost less than $5,000 and is
not sensitive property.
Material means expendable property and property incorporated
into or attached to an end item.
Natural disaster means a sudden and unusual natural occurrence
causing catastrophic damage, including floods, hurricanes,
tornadoes, cyclones, atmospheric electrical storms, tidal waves,
avalanches, mudslides, landslides, volcanic eruptions, earthquakes,
and other similar perils. The term does not include fire or
explosion, unless directly or indirectly caused by a covered peril.
Nonprofit organization means a business entity organized and
operated exclusively for charitable, scientific, or educational
purposes, the net earnings of which do not inure to the benefit of
any private shareholder or individual, that is exempt from Federal
income taxation under section 501 of the Internal Revenue Code and
does not conduct a substantial portion of its activities carrying on
propaganda or otherwise attempting to influence legislation or
participating in any political campaign on behalf of any candidate
for public office.
Personal property means property of any kind or interest in it
except real property, battleships, cruisers, aircraft carriers,
destroyers, submarines, and records of the Government.
Plant clearance officer means a person appointed to disposition
property accountable under Government contracts.
Precious metals means silver, gold, platinum, palladium,
iridium, osmium, rhodium, and ruthenium.
Property means real and personal property.
Property administrator means a person appointed to perform
property administration for the Government.
Real property means land and rights in land, ground
improvements, utility distribution systems, and buildings and other
structures. It does not include foundations and other work necessary
for installing special tooling, special test equipment, or
equipment.
Rental period means the calendar period during which Government
property is made available for commercial purposes.
Rental time means the number of hours, to the nearest whole
hour, rented property is actually used for commercial purposes. It
includes time to set up the property for such purposes, perform
required maintenance, and restore the property to its condition
prior to rental (less normal wear and tear).
Scrap means personal property that has no value except its basic
metallic, mineral, or organic content.
Sensitive property means property potentially dangerous to the
public safety or security if stolen, lost, or misplaced, or that
must be subject to exceptional physical security, protection,
control, and accountability such as classified property, weapons,
ammunition, explosives, controlled substances, radioactive
materials, hazardous materials or wastes, or precious metals.
Special test equipment means--
(1) Test equipment designed specifically to conduct testing
required by a Government contract, provided such equipment cannot be
used for other purposes;
(2) General purpose test equipment, or modifications thereof,
that are interconnected and interdependent to form a new functional
entity that can only be used to perform testing required by a
contract while so interconnected and interdependent; or
(3) Any combination of specifically designed, general purpose,
or modified general purpose test equipment that is so interconnected
and interdependent to form a new functional entity that can only be
used to perform special purpose testing required by a contract while
so interconnected and interdependent.
Special tooling means items such as jigs, dies, fixtures, molds,
patterns, taps, gauges, or other equipment and manufacturing aids,
that are of such a specialized nature that without substantial
modification or alteration their use is limited to the development,
production, repair, or maintenance of particular supplies or
components thereof, or to the performance of particular services.
Unique Federal property means Government-owned personal
property, or components thereof, that is specially designed to
perform or support the mission of one or more Federal agencies and
is not available to the public. The term does not include property
that is incorporated into or attached to an item deliverable under a
contract.
Work in process means bench stock materials, complete or
incomplete fabricated parts, subassemblies, assemblies, and similar
items that are created during production of deliverable end items,
or are required to construct special tooling or special test
equipment needed to produce deliverable end items, or are otherwise
needed for design or testing required by a contract.
(b) General. (1) This clause is applicable to Government-
furnished property; Government property stored by the Contractor at
the Government's direction; items accepted by the Government at
origin that are in the Contractor's possession; and under cost-
reimbursement or time-and-materials contracts, property acquired or
produced by a Contractor to which the Government has title under the
Allowable Cost and Payment clause of this contract. For purposes of
this clause, such property and items are collectively referred to as
``Government property.'' The clause does not apply to property to
which the Government has obtained title, a lien, or other security
interest solely as a result of financing arrangements under fixed-
price contracts.
(2) Except as provided in paragraph (c) of this clause, the
Contractor shall use its own property to perform this contract.
(3) The Contractor is responsible for the maintenance,
protection, and preservation of Government property accountable
under this contract, including property in the possession of a
subcontractor, and shall account for such property as required by
this contract.
(4) The Contractor shall not--
(i) Use Government property for commercial purposes without the
Contracting Officer's prior approval. Unless otherwise permitted by
law, commercial use shall be on a rental basis. The terms and
conditions of the Rental Charges for Commercial Use clause of this
contract shall apply to each rental; or
(ii) Permit a subcontractor or supplier to use property
furnished for the performance of this contract unless the Contractor
has verified that the subcontractor or supplier has a property
management system that has been approved by the cognizant Property
Administrator.
(5) If this contract is a cost-reimbursement or time-and-
materials contract, the Contractor shall not acquire general purpose
equipment to which the Government will have title under the clause
at 52.216-7, Allowable Cost and Payment, or real property for
performance of this contract unless the general purpose equipment or
real property is specified as a deliverable end item.
(6) If this contract is a fixed-price or labor-hour contract,
property acquired or produced by the Contractor for performance of
the contract is not Government-furnished property. Property
identified as a deliverable item becomes Government property upon
acceptance by the Government.
(c) Government-furnished property. The property identified in
this contract as Government-furnished property is furnished to the
Contractor on a rent-free basis for performance of this contract.
(1) Title. The Government retains title to Government-furnished
property, including Government-furnished property that is
incorporated into or attached to any property owned by the
Contractor. Government-furnished property does not become a fixture
or lose its identity as personal property by being attached to real
property.
(2) Suitability for intended use. (i) Government-furnished
property, other than property furnished ``as is'', shall be in a
condition suitable for the property's intended use at the time the
property is furnished to the Contractor. The Government shall, when
requested by the Contractor, provide information reasonably required
for the intended use of such property to the extent the Government
has the right to release or disclose the information.
(ii) The contract delivery or performance dates are based upon
the expectation that Government-furnished property, except
[[Page 1456]]
property furnished ``as is'', will be suitable for its intended use
and delivered to the Contractor at the times stated in the contract.
If a time is not stated, the property shall be furnished in
sufficient time to enable the Contractor to meet the contract's
delivery or performance dates.
(iii) If Government-furnished property is received in a
condition not suitable for its intended use, the Contractor shall
notify the Contracting Officer as soon as the unsuitability is known
and shall take corrective action or dispose of the property as
directed by the Contracting Officer. The contract shall be equitably
adjusted in accordance with paragraph (c)(7) of this clause.
(iv) The Contractor may request an equitable adjustment when
Government-furnished property is not delivered to the Contractor by
the required time and such untimely delivery has affected contract
performance.
(v) If the Contractor commingles Contractor-acquired or produced
material with Government-furnished material, the provisions of this
clause regarding suitability for intended use shall not apply to the
commingled Government-furnished material. Notwithstanding any other
provision of this contract, the Contractor shall be responsible for
any failure to comply with contract requirements attributable to
material that was commingled.
(3) Authorized use. The Contractor may request, in writing, the
Contracting Officer to authorize use of the property furnished for
performance of this contract to perform other Government contracts
at the same location. Rent-free use is authorized if the Contracting
Officer does not object to such use, either in whole or in part,
within 30 days following confirmed receipt of the Contractor's
request. Costs incurred by the Contractor to relocate, modify, or
adapt the property for performance of other Government contracts or
to restore the property to a condition suitable for intended use
under this contract shall not increase the price or fee of any
Government contract.
(4) Real property restrictions. The Contractor shall not improve
or make structural alterations to real property furnished for
performance of this contract unless the contract specifically
identifies the alterations or improvements as work to be performed
under the contract or unless expressly authorized to do so in
writing by the Contracting Officer. Title to improvements or
alterations to Government-furnished real property shall vest in the
Government.
(5) Property furnished ``as is''. (i) The Contractor is
responsible for assuring that Government property furnished on an
``as is'' basis is suitable for the Contractor's purposes. Such
property is furnished f.o.b. at the location specified in the
solicitation or contract. Costs incurred by the Contractor to
transport, install, modify, or otherwise make such property suitable
for the Contractor's intended use and any cost incurred to return
such property to the Government shall not increase the price or fee
of any Government contract. Modifications to property furnished ``as
is'' require the Contracting Officer's prior written approval.
(ii) Special tooling or special test equipment is furnished ``as
is'' for performance of this contract if the Contractor-acquired or
produced, and the Government obtained title to, such tooling or test
equipment under this or another Government contract.
(iii) The Government makes no warranty whatsoever with respect
to property furnished ``as is'' except that the property will be in
the same condition when placed at the specified f.o.b. location as
when inspected by the Contractor or, if not inspected by the
Contractor, as of the last date identified in the solicitation or
contract for Contractor inspection. The Contractor is responsible
for verifying that the property's condition has not changed during
that period. If the Contractor determines the property's condition
has changed and such change will adversely affect the Contractor,
the Contractor shall notify the Contracting Officer promptly and
identify the changed condition. If the Contracting Officer concurs
that the property's condition has changed, the Contracting Officer
may restore the property or substitute other Government property at
no change in the contract's price or fee; permit the Contractor to
restore the property subject to an equitable adjustment; or decline
to provide the property subject to an equitable adjustment. The
foregoing provisions for adjustment are the exclusive remedies
available to the Contractor. The Government has no liability for
changes in the property's condition discovered after removal from
the specified f.o.b. location.
(iv) Repairs to or modifications of property furnished ``as is''
do not affect the Government's title to such property.
(6) Changes in Government-furnished property. (i) The
Contracting Officer may increase, decrease, or substitute other
Government property for the property furnished or to be furnished
for performance of this contract or require use of Government-
furnished property in lieu of Contractor property.
(ii) Any increase in the amount of property furnished for
performance of this contract shall result in an equitable reduction
in contract price or fee and appropriate adjustment of the contract
delivery or performance dates.
(iii) The Contractor may request an equitable adjustment for a
decrease in or substitution for the property identified in the
contract or withdrawal of authority to use property accountable
under another contract in performance of this contract provided such
decrease, substitution, or withdrawal increases contract costs or
schedule.
(iv) If the Contracting Officer directs the Contractor to use
Government-furnished property in lieu of Contractor property in
performance of this contract, any adjustment to the contract shall
be made in accordance with paragraph (c)(7) of this clause.
(7) Equitable adjustments. Equitable adjustments shall be the
Contractor's exclusive remedy for Government actions under this
clause and shall be made in accordance with the procedures of the
Changes clause of this contract.
(i) Equitable adjustments may include an amount for the
restoration and rehabilitation of the Contractor's premises caused
by Government-furnished property that is not in a condition suitable
for intended use, the withdrawal or substitution of Government-
furnished property, or the Government's abandonment of hazardous
property (see paragraph (h)(1) of this clause).
(ii) The Government shall not be liable for breach of contract
for--
(A) Any delay in delivery of Government-furnished property;
(B) Delivery of Government-furnished property in a condition not
suitable for its intended use;
(C) An increase or decrease in, or substitution of, Government-
furnished property; or
(D) Failure to repair or replace Government-furnished property.
(8) Return of Government-furnished property. If this contract
requires Government-furnished property to be returned directly to a
Government activity--
(i) The property, including property furnished ``as is'', shall
be returned to the Government in the same condition, less normal
wear and tear, or better condition than when furnished to the
Contractor except--
(A) Lost, stolen, or destroyed property that the Government has
determined will not be replaced; and
(B) Damaged property that the Government has elected not to have
repaired or replaced.
(ii) The Contractor shall notify the contract administration
office of its intent to return Government-furnished property at
least 10 working days prior to return. Notices shall identify the
contracts under which the items are accountable and shall provide
each item's name, description, national stock number (if known), and
part number or identification number.
(d) Property loss liability. As used in this clause, the terms
loss and losses include, either individually or in any combination,
the physical misplacement of, the theft of, the destruction of, or
damage to, Government property accountable under this contract.
(1) Limited liability. (i) The Contractor is not liable for
property losses that occur while the Contractor is maintaining a
property management system that satisfies the requirements of this
contract, except losses for which the Contractor expressly is liable
under the terms of this contract.
(ii) The Contractor's liability for a loss that results from a
risk expressly required to be insured under this contract is limited
to the extent of the insurance required to be purchased and
maintained, or to the extent of the insurance actually purchased and
maintained, whichever is greater.
(2) Full liability. The Contractor is liable for all property
losses that--
(i) Occur at a time when the Contractor has not established a
property management system that satisfies the requirements of this
contract;
(ii) Occur on or after the date of a written or electronic
notice from the Property Administrator that the Government has
withdrawn approval of the Contractor's property management system,
unless the Contractor can establish by clear and convincing evidence
that a loss did not result
[[Page 1457]]
from the Contractor's failure to maintain an approved system;
(iii) Occur on or after the first calendar day following the
Contractor's failure to correct a property system deficiency by the
date specified by the Property Administrator for such correction or
such other mutually agreed upon date for correction;
(iv) Result from the Contractor's failure to take reasonable and
prudent steps to avoid losses resulting from acts of war, civil
insurrection, or natural disasters; or (v) Result from the willful
misconduct or lack of good faith on the part of the Contractor's
managerial personnel.
(3) Property in the possession of subcontractors or suppliers.
The Contractor's transfer of Government property to a subcontractor
or supplier does not affect the Contractor's liability for property
losses.
(4) Contractor required actions following a property loss. The
Contractor shall--
(i) Take all reasonable action to protect damaged Government
property from further damage and to physically separate such
property from all other property;
(ii) Notify the Contracting Officer as required by the
Government Property Administration clause of this contract (52.245-
5(f)(4));
(iii) Not repair, replace, or substitute other property, for the
property suffering a loss unless authorized to do so by the
Contracting Officer; and
(iv) Do nothing to prejudice the Government's rights to recover
against third parties for any property loss. When requested by the
Contracting Officer, furnish to the Government at Government expense
all reasonable assistance and cooperation (including the prosecution
of suit and the execution of instruments of assignment in favor of
the Government) in obtaining recovery.
(5) Insurance charges or reserves. The Contractor shall not
include in the contract price or fee, or any adjustment thereof, any
charge or reserve for insurance (including any self-insurance fund
or reserve) covering Government property losses, except to the
extent this contract expressly requires the Contractor to carry such
insurance.
(e) Property loss remedies. (1) Following receipt of a property
loss notification from the Contractor, the Contracting Officer may--
(i) Replace or substitute other property for the Government
property suffering a loss;
(ii) Authorize the Contractor to repair, or replace the property
or take other appropriate action; or
(iii) Negotiate an equitable adjustment in lieu of repair or
replacement when the Government is liable for the property loss.
(2) The Contracting Officer's authorization to remedy a loss for
which the Contractor is liable under this clause shall not increase
the contract price or fee.
(3) The Contractor may request an equitable adjustment to remedy
a loss for which the Government is liable under this clause.
(4) The extent of the Government's liability for a property loss
shall be reduced by the amount of any reimbursement the Contractor
receives for that loss from a source other than the Government. The
Contractor shall use any reimbursement for a property loss from a
source other than the Government to repair, rehabilitate, or replace
the property that suffered a loss, or equitably reimburse the
Government, as directed by the Contracting Officer.
(f) Government property maintenance. The contract price or fee
includes an amount for performance of the maintenance actions
required by paragraphs (f)(1) and (f)(2) of this clause. If
maintenance of stored items is required, the Contractor might be
entitled to an equitable adjustment.
(1) Government-furnished property. The Contractor shall maintain
Government-furnished property in a condition suitable for its
intended use. The Contractor shall--
(i) Maintain real property, special tooling, and special test
equipment in accordance with the specific maintenance instructions
contained in this contract. If maintenance instructions are not
specified, the Contractor shall use sound business practices to
maintain that property.
(ii) Maintain unique Federal property as specified in this
contract, or if not specified, agency instructions for the
maintenance of such property.
(iii) Preserve, protect, and care for material and general
purpose equipment in accordance with the property manufacturer's
standards of care for such items, or when the manufacturer has not
released standards of care, the Contractor's standard business
practices for comparable Contractor-owned material and equipment.
(iv) Promptly notify the contract administration office when the
maintenance actions required by paragraphs (f)(1)(i) through
(f)(1)(iii) are not sufficient to sustain a Government-furnished
property item's suitability for its intended use and request
direction regarding repair, rehabilitation, or replacement. The
Contractor shall not repair, rehabilitate, or replace such items
unless authorized to do so by the Contracting Officer.
(2) Property to which the Government obtains title under a cost-
reimbursement or time-and-materials contract. The Contractor shall
maintain property to which the Government obtains title under a
cost-reimbursement or time-and-materials contract in a condition
suitable for the property's intended use until the Contractor
determines the property is no longer needed for continued
performance of this contract. Promptly following that determination,
the Contractor shall enter the items into the property disposal
process.
(3) Additional maintenance actions. When the Contractor's
diligent performance of the maintenance actions required by
paragraphs (f)(1) and (f)(2) of this clause is not sufficient to
sustain a Government-furnished property item's suitability for its
intended use, the Contracting Officer may--
(i) Replace or substitute other property for such property;
(ii) Direct the Contractor to repair, rehabilitate, or replace
the property;
(iii) Direct the Contractor to take other appropriate action; or
(iv) Negotiate an equitable adjustment in lieu of repair,
replacement, or other action.
(4) Equitable adjustment. The Contractor may request an
equitable adjustment for performance of a property repair,
rehabilitation, or replacement directed by the Contracting Officer
pursuant to paragraph (f)(3) of this clause.
(5) Stored Government property. The Contractor shall store
Government property only if specifically directed to do so by the
Contracting Officer. Stored property shall be maintained in
accordance with instructions provided by the Contracting Officer.
Except as provided in the clause 52.245-3, Delivery--Special Tooling
and Special Test Equipment, of this contract, and paragraph (g)(7)
of this clause, the price or fee of the contract does not include an
amount for such maintenance.
(g) Government property disposal. Except as provided in
paragraphs (c)(8), (g)(2), and (g)(8) of this clause, the Contractor
shall not dispose of Government property until authorized to do so
by the Plant Clearance Officer.
(1) Scrap--(i) Production Scrap. Contractors may dispose of
scrap resulting from production or testing under this contract
without Government approval if the scrap does not require
demilitarization or does not contain precious metals, hazardous
materials or wastes, nuclear materials or classified materials.
(ii) Scrap lists. Contractors that have Government-approved
scrap procedures may prepare scrap lists in lieu of inventory
disposal schedules (provided such lists are consistent with the
approved scrap procedures) except for scrap that--
(A) Requires demilitarization;
(B) Is a classified item;
(C) Is generated from classified items;
(D) Contains hazardous materials or hazardous wastes;
(E) Contains precious metals; or
(F) Is dangerous to the public health, safety, or welfare.
(iii) Other scrap. The Contractor shall use an inventory
disposal schedule to identify scrap that is not production scrap or
is not reportable on a scrap list.
[[Page 1458]]
(2) Pre-disposal requirements. When the Contractor determines
that a property item acquired or produced by the Contractor is no
longer needed for performance of this contract, the Contractor
shall--
(i) Make reasonable efforts to return unused property to the
appropriate supplier at fair market value (less, if applicable, a
reasonable restocking fee that is consistent with the supplier's
customary practices) and credit the price or estimated cost of this
contract with the proceeds of such returns; and
(ii) List property that could not be returned to a supplier or
used in the performance of other Government contracts on Standard
Form 1428, Inventory Disposal Schedule.
(3) Inventory disposal schedules. (i) The Contractor shall use
Standard Form 1428, Inventory Disposal Schedule, to identify--
(A) Government-furnished property that is no longer required for
performance of this contract, provided the terms of another
Government contract do not require the Government to furnish that
property for performance of that contract; and
(B) Property acquired or produced by the Contractor, to which
the Government has obtained title under a cost-reimbursement or
time-and-materials contract, that is no longer required for
performance of that contract.
(ii) The Contractor may annotate inventory disposal schedules to
identify property the Contractor wishes to purchase from the
Government.
(iii) Unless the Plant Clearance Officer has agreed otherwise,
or the contract requires electronic submission of inventory disposal
schedules, the Contractor shall prepare separate inventory disposal
schedules for--
(A) Special test equipment with general purpose components;
(B) Special test equipment that does not contain general purpose
components;
(C) Printing equipment;
(D) Computers, components thereof, peripheral equipment, and
related equipment;
(E) Precious Metals;
(F) Nonnuclear hazardous materials or hazardous wastes; or
(G) Nuclear materials or nuclear wastes.
(iv) Property with the same description, condition code, and
reporting location may be grouped in a single line item. Special
test equipment shall be described in sufficient detail to permit an
understanding of the special test equipment's intended use.
(4) Submission requirements. Inventory disposal schedules shall
be submitted to the Plant Clearance Officer no later than--
(i) Thirty days following the Contractor's determination that a
Government property item is no longer required for performance of
the contract;
(ii) Sixty days, or such longer period as may be approved by the
Plant Clearance Officer, following completion of contract deliveries
or performance; or
(iii) One hundred twenty days, or such longer period as may be
approved by the Plant Clearance Officer, following contract
termination in whole or in part.
(5) Corrections. The Plant Clearance Officer may require the
Contractor to correct an inventory disposal schedule or may reject a
schedule if the property identified on the schedule is not
accountable under this contract or is not in the quantity or
condition indicated.
(6) Postsubmission adjustments. The Contractor shall provide the
Plant Clearance Officer at least 10 working days advance written
notice of its intent to remove a property item from an approved
inventory disposal schedule. Unless the Plant Clearance Officer
objects to the intended schedule adjustment within the notice
period, the Contractor may make the adjustment upon expiration of
the notice period.
(7) Storage. (i) The Contractor shall store the property
identified on an inventory disposal schedule pending receipt of
disposal instructions. The Government's failure to provide disposal
instructions within 120 days following receipt of an acceptable
inventory disposal schedule, might entitle the Contractor to an
equitable adjustment for costs incurred to store such property on or
after the 121st day following receipt of an acceptable schedule.
(ii) The Contractor must obtain the Plant Clearance Officer's
approval to remove Government property from the premises at which
the property is currently located prior to receipt of final
disposition instructions. If approval is granted, any costs incurred
by the Contractor to transport or store the property shall not
increase the price or fee of any Government contract. The storage
facility must be appropriate for assuring the property's physical
safety and suitability for use. Approval does not relieve the
Contractor of any liability under this contract for such property.
(8) Disposition instructions. (i) If the Government does not
provide disposition instructions to the Contractor within 60 days
following receipt of an acceptable scrap list, the Contractor may
dispose of the listed scrap in accordance with the Contractor's
Government-approved scrap procedures.
(ii) The Contractor shall prepare for shipment, deliver f.o.b.
origin, or dispose of Government property as directed by the Plant
Clearance Officer. The Contractor shall remove and destroy any
markings identifying the property as Government property prior to
disposing of the property.
(iii) The Contracting Officer may require the Contractor to
demilitarize the property prior to shipment or disposal. Any
equitable adjustment incident to the Contracting Officer's direction
to demilitarize Government property shall be made in accordance with
paragraph (c)(7) of this clause.
(9) Disposal proceeds. The Contractor shall credit the net
proceeds from the disposal of Government property in accordance with
instructions received from the Plant Clearance Officer.
(10) Subcontractor inventory disposal schedules. The Contractor
shall require a subcontractor that is using property accountable
under this contract at a subcontractor-managed site to submit
inventory disposal schedules to the Contractor in sufficient time
for the Contractor to comply with the requirements of paragraph
(g)(4) of this clause.
(h) Abandonment of Government property at a Contractor-owned
location. (1) The Government shall not abandon at a Contractor-owned
location Government property that is or contains a hazardous
material without the Contractor's written concurrence. The
Contractor may request an equitable adjustment incident to such
agreement.
(2) The Government, upon notice to the Contractor, may abandon
any nonhazardous Government-furnished property in place at which
time all obligations of the Government regarding such abandoned
property shall cease. Except as provided in paragraph (c)(7)(i) of
this clause, the Government has no obligation to restore or
rehabilitate the Contractor's premises under any circumstances.
(i) Overseas contracts. In a contract performed outside the
United States, its territories, or possessions, the words
``Government'' and ``Government-furnished'' (wherever they appear in
this clause) shall be construed as ``United States Government'' and
``United States Government-furnished,'' respectively.
(End of clause)
Alternate I (Date). As prescribed in 45.207-2(b), replace
paragraph (d)(1) of the basic clause with the following paragraph
(d)(1), remove paragraph (d)(2), renumber paragraphs (d)(3), (d)(4),
and (d)(5) as (d)(2), (d)(3), and (d)(4), respectively, and modify
the references to ``Government property'' in the renumbered
paragraphs (d)(2), (d)(3), and (d)(4) to read ``Government-furnished
property'':
(d)(1) The Contractor is liable for Government-furnished
property losses, except losses resulting from acts of war, civil
insurrection, or natural disasters, provided the Contractor has
taken reasonable and prudent steps to avoid or mitigate such losses.
Alternate II (Date). As prescribed in 45.207-2(c), replace
paragraph (b) of the basic clause with the following paragraph (b)
and add the following paragraph (j) to the basic clause:
(b) General. (1) Except as provided in paragraph (c) of this
clause, the Contractor shall use its own property to perform this
contract.
(2) The Contractor is responsible for the maintenance,
protection, and preservation of Government property accountable
under this contract that is in the Contractor's or its
subcontractors' possession and shall account for such property as
required by this contract.
(3) Property acquired or produced by the Contractor for
performance of this contract that the Government obtains title to
under the clause at 52.216-7, Allowable Cost and Payment, is
Government property accountable under this contract.
(j) Title to Contractor-acquired or produced property, nonprofit
organizations or nonprofit institutions. (1) Notwithstanding any
other provision of this contract regarding title to property
acquired or produced by a Contractor, the Contractor shall have
title to equipment and other tangible property purchased with
Government funds provided for the conduct of basic or applied
research under this contract, if--
[[Page 1459]]
(i) The Contracting officer has agreed, prior to the
Contractor's purchase of such property, that the Contractor shall
have title to that property; and
(ii) The Contractor has agreed that depreciation or amortization
costs for such property shall not be allocated to any existing or
future Government contract and that such property may be used by the
Government or its subcontractors without charge in performance of
any Government contract or subcontract thereunder.
(2) As a condition for obtaining title to property under this
clause, the Contractor, by signing this contract, agrees that no
person in the United States shall, on the ground of race, color, or
national origin, be excluded from participation in, be denied the
benefits of, or be otherwise subjected to discrimination under this
contemplated financial assistance (title to equipment or other
tangible personal property) (41 U.S.C. 2000d).
52.245-3 Delivery--Special Tooling and Special Test Equipment (Fixed-
Price Contracts)
As prescribed in 45.305, insert the following clause:
DELIVERY--SPECIAL TOOLING AND SPECIAL TEST EQUIPMENT (FIXED-PRICE
CONTRACTS) (DATE)
(a) Definitions. When a term defined in the clause at 52.245-2,
Government Property, is used in this clause, the term has the same
meaning as when used in 52.245-2.
(b) Contractor notice. (1) The Contractor shall notify the
Contracting Officer of special tooling or special test equipment
acquired or produced by the Contractor for performance of this
contract that is not scheduled for delivery under the contract, as
soon as practicable during contract performance but not later than
the earlier of--
(i) One hundred twenty days prior to completion of scheduled
deliveries (other than technical data) under this contract; or
(ii) Thirty days following the Contractor's determination that
such special tooling or special test equipment is no longer required
for contract performance.
(2) For each special tooling or special test equipment item, or
groups of identical items, the Contractor's notice shall identify
the item's or group's--
(i) Nomenclature;
(ii) Quantity;
(iii) Acquisition cost (by item);
(iv) Part number(s) with which the special tooling or special
test equipment is used; and
(v) Identification number.
(c) Storage. The Contractor shall store the special tooling or
special test equipment identified in the Contractor's notice at no
change in contract price (or target price and ceiling amount) until
expiration of the Government notice period or until the Government
notifies the Contractor that delivery of a special tooling or test
equipment item or items is required, whichever occurs first. Items
shall be stored in a manner sufficient to preserve capability and
provide protection from damage. If the Government requires items to
be stored subsequent to the Government's delivery notice, the
Contractor might be entitled to an equitable adjustment as provided
in paragraph (f) of this clause.
(d) Government notice. (1) The Government must notify the
Contractor in writing within 120 days, or such other period mutually
agreed upon, following receipt of the notice required by paragraph
(b) of this clause that delivery of a special tooling or special
test equipment item or items is required.
(2) The Government's notice shall identify the special tooling
or special test equipment item(s), and shall--
(i) Provide packing, packaging, marking, and shipping
instructions;
(ii) Direct the Contractor to prepare the property for storage
at the Contractor's facility or a Government facility; or
(iii) Provide instructions when accountability is to be
transferred to another contract.
(3) The Contractor's storage obligations are not diminished if
the Government notice period, or any extension thereof, extends
beyond the date contract deliveries are completed.
(e) Repair or rehabilitation. The Contracting Officer may
require the Contractor to repair or rehabilitate the special tooling
or special test equipment identified in the Government's notice to
the extent necessary to return an item to a condition suitable for
its intended use at no change in price.
(f) Equitable adjustment. The contract may be equitably adjusted
for costs incurred by the Contractor to prepare the tooling or test
equipment for storage or shipment. Equitable adjustments shall be
made in accordance with the procedures of the Changes clause of this
contract and only to the extent the Contracting Officer's actions
under paragraph (d) of this clause required the Contractor to incur
costs that it would not have incurred under customary commercial
practices.
(g) Liability. The Contractor is liable for any loss, theft, or
destruction of, or damage to
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