Replacement of Personal Property Pursuant to the Exchange/Sale Authority

GENERAL SERVICES ADMINISTRATION

41 CFR Part 101-46

[FPMR Amendment H-197]

RIN 3090-AG50

Replacement of Personal Property Pursuant to the Exchange/Sale

Authority

AGENCY: Office of Governmentwide Policy, GSA.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: 41 CFR 101-46 is revised to enhance executive agencies'

understanding of the exchange/sale authority and to provide those

agencies with greater flexibility and opportunity to use that

authority.

EFFECTIVE DATE: February 5, 1998.

FOR FURTHER INFORMATION CONTACT: Martha Caswell, Director, Personal

Property Management Policy Division (202-501-3828).

SUPPLEMENTARY INFORMATION:

A. Background

The following questions and answers have been developed to explain

the purpose and intended use of the exchange/sale authority, and to

explain the changes to the exchange/sale regulations promulgated by

this final rule:

What is the exchange/sale authority?

An authority provided by Section 201(c) of the Federal Property and

Administrative Services Act of 1949, as amended, under which executive

agencies ``may exchange or sell similar items and may apply the

exchange allowance or proceeds of sale in such cases in whole or in

part payment for the property acquired''.

When should executive agencies use the exchange/sale authority?

When replacing personal property. An example would be the need of

an executive agency to replace outdated scientific equipment. Why

should executive agencies use the exchange/sale authority?

To reduce the agencies' need for additional funding for the

acquisition of replacement personal property. If an agency has personal

property that needs to be replaced, it can exchange or sell that

property and apply the exchange

[[Page 5893]]

allowance or sales proceeds to the acquisition of similar replacement

property. Using the exchange/sale authority also enables agencies to

avoid the costs (e.g., administrative and storage) associated with

holding the property and processing it through the normal disposal

cycle, i.e., reutilization by other Federal agencies, donation to

eligible non-Federal public or non-profit organizations, sale to the

public, or abandonment or destruction. By contrast, if the holding

agency does not use the exchange/sale authority but instead reports the

property to be replaced as excess, any sales proceeds are forwarded to

the miscellaneous receipts account at the United States Treasury and

are not available to the agency disposing of the property.

What effect will these changes have on other Federal personal

property disposal programs?

This is unknown. The effect will depend on the extent to which

executive agencies increase their use of the exchange/sale authority.

Why have changes been made to the exchange/sale regulations?

The regulations have not been subjected to a comprehensive review

and revision for over thirty years. The regulations are now being

updated to reflect shrinking agency budgets and to increase their

usefulness and effectiveness.

Who recommended the changes?

An interagency team led by GSA. In the course of its work, the team

consulted with various customers and stakeholders, including

representatives from the Office of Management and Budget, the House of

Representatives Committee on Government Reform and Oversight, and the

National Association of State Agencies for Surplus Property.

What changes have been made?

Changes have been made to incorporate plain language principles,

reduce restrictions and limitations on use of the authority, streamline

the narrative, define key terms, update organizational references,

delete outdated regulatory references, and specify minimal

documentation requirements.

B. The General Services Administration (GSA) has determined that

this rule is not a significant regulatory action for the purposes of

Executive Order 12866 of September 30, 1993.

C. Regulatory Flexibility Act

This rule is not required to be published in the Federal Register

for public comment. Therefore, the Regulatory Flexibility Act does not

apply.

D. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the proposed

revisions do not impose recordkeeping or information collection

requirements, or the collection of information from offerors,

contractors, or members of the public which require the approval of OMB

under 44 U.S.C. 3501-3520. This rule also is exempt from Congressional

review prescribed under 5 U.S.C. 801 since it relates solely to agency

management and personnel. This rule is written in a ``plain language''

style.

What is the ``plain language'' style of regulation writing?

The ``plain language'' style of regulation writing is a new,

simpler to read and understand, question and answer regulatory format.

How does the plain language style of regulation writing affect

employees?

A question and its answer combine to establish a rule. The employee

and the agency must follow the language contained in both the question

and its answer.

List of Subjects in 41 CFR Part 101-46

Government property management.

Therefore, 41 CFR part 101-46 is revised as set forth below:

PART 101-46--REPLACEMENT OF PERSONAL PROPERTY PURSUANT TO THE

EXCHANGE/SALE AUTHORITY

Sec.

101-46.000 Why should executive agencies use the exchange/sale

authority?

101-46.001 What is prescribed by this part?

101-46.002 What are the definitions of some of the key terms used

in this part?

101-46.002-1 Acquire.

101-46.002-2 Combat material.

101-46.002-3 Exchange.

101-46.002-4 Exchange/sale.

101-46.002-5 Executive agency.

101-46.002-6 Federal agency.

101-46.002-7 Historic item.

101-46.002-8 Replacement.

101-46.002-9 Similar.

101-46.003 How do you request deviations from this part, and who

can approve them?

Subpart 101-46.1--[Reserved]

Subpart 101-46.2--Exchange or Sale Determination

101-46.200 How do you determine whether to do an exchange or a

sale?

101-46.201 When must you make a reimbursable transfer to another

Federal agency?

101-46.202 To what other organizations may you make a reimbursable

transfer?

101-46.203 What are the conditions for a reimbursable transfer?

101-46.204 What prohibitions and necessary conditions apply to the

exchange/sale of personal property?

101-46.205 What special exceptions apply to the exchange/sale

authority?

Subpart 101-46.3--Exchange/Sale Methods

101-46.300 What are the exchange methods?

101-46.301 What are the sales methods?

101-46.302 What are the accounting requirements for the proceeds of

sale?

Authority: Sec. 205(c), 63 Stat. 390 (40 U.S.C. 486(c)).

Sec. 101-46.000 Why should executive agencies use the exchange/sale

authority?

To reduce the agencies' need for additional funding for the

acquisition of replacement personal property. If an agency has personal

property that needs to be replaced, it can exchange or sell that

property and apply the exchange allowance or sales proceeds to the

acquisition of similar replacement property. Using the exchange/sale

authority also enables agencies to avoid the costs (e.g.,

administrative and storage) associated with holding the property and

processing it through the normal disposal cycle, i.e., reutilization by

other Federal agencies, donation to eligible non-Federal public or non-

profit organizations, sale to the public, or abandonment or

destruction. By contrast, if the holding agency does not use the

exchange/sale authority but instead reports the property to be replaced

as excess, any sales proceeds are forwarded to the miscellaneous

receipts account at the United States Treasury and are not available to

the agency disposing of the property.

Sec. 101-46.001 What is prescribed by this part?

Provisions for use by you (an executive agency) when using the

exchange/sale authority of section 201(c) of the Federal Property and

Administrative Services Act of 1949, 63 Stat. 384, as amended (40

U.S.C. 481(c)). This part applies to all personal property owned by

executive agencies worldwide. For the exchange/sale of aircraft parts

and hazardous materials, you must meet the requirements in this part

and in parts 101-37 and 101-42 of this chapter, respectively.

Sec. 101-46.002 What are the definitions of some of the key terms used

in this part?

Sec. 101-46.002-1 Acquire.

To procure or otherwise obtain personal property, including by

lease.

Sec. 101-46.002-2 Combat material.

Arms, ammunition, and implements of war listed in the U.S.

munitions list (22 CFR part 121).

[[Page 5894]]

Sec. 101-46.002-3 Exchange.

To replace personal property by trade or trade-in with the supplier

of the replacement property.

Sec. 101-46.002-4 Exchange/sale.

To exchange or sell non-excess, non-surplus personal property and

apply the exchange allowance or proceeds of sale in whole or in part

payment for the acquisition of similar property.

Sec. 101-46.002-5 Executive agency.

Any executive department or independent establishment in the

executive branch of the Government, including any wholly owned

Government corporation.

Sec. 101-46.002-6 Federal agency.

Any executive agency or any establishment in the legislative or

judicial branch of the Government (except the Senate, the House of

Representatives, and the Architect of the Capitol and any activities

under his/her direction).

Sec. 101-46.002-7 Historic item.

Property having added value for display purposes because its

historical significance is greater than its fair market value for

continued use. Items that are commonly available and remain in use for

their intended purpose, such as military aircraft still in use by

active or reserve units, are not historic items.

Sec. 101-46.002-8 Replacement.

The process of acquiring property to be used in place of property

which is still needed but will no longer adequately perform all the

tasks for which it is used.

Sec. 101-46.002-9 Similar.

Where the acquired item and replaced item:

(a) Are identical; or

(b) Are designed and constructed for the same purpose; or

(c) Both constitute parts or containers for identical or similar

end items; or

(d) Both fall within a single Federal Supply Classification (FSC)

group of property that is eligible for handling under the exchange/sale

authority.

Sec. 101-46.003 How do you request deviations from this part, and who

can approve them?

(a) General provisions for deviations from the Federal Property

Management Regulations are found in Sec. 101-1.110 of this chapter.

Provisions for deviations from the regulations in this part are

presented in this section.

(b) To request deviations from this part, you must submit a

complete written justification to the General Services Administration

(GSA), Office of Governmentwide Policy, Office of Transportation and

Personal Property (MT), Washington, DC 20405. Only the Administrator of

General Services (or designee) may grant deviations. Although the

Administrator can approve deviations from most of the provisions in

this part, he/she cannot approve deviations from provisions that are

mandated by statute, i.e., the requirement at 101-46.204(b)(1) that the

property exchanged or sold is similar to the property acquired, and the

requirement at 101-46.204(b)(2) that the property exchanged or sold is

not excess or surplus.

Subpart 101-46.1--[Reserved]

Subpart 101-46.2--Exchange or Sale Determination

Sec. 101-46.200 How do you determine whether to do an exchange or a

sale?

(a) You must determine which method--exchange or sale--will provide

the greater return for the Government. When estimating the return under

each method, consider all administrative and overhead costs.

(b) If the exchange allowance or estimated sales proceeds for

property would be unreasonably low, you should process the property

according to the regulations in Part 101-43 (Utilization of Personal

Property) or Subpart 101-45.9 (Abandonment or Destruction of Personal

Property) of this subchapter, as applicable.

Sec. 101-46.201 When must you make a reimbursable transfer to another

Federal agency?

If you have property to replace which is eligible for exchange/

sale, you should, to the maximum extent practicable, first solicit

Federal agencies known to use or distribute such property and, if an

agency wants it, arrange for a reimbursable transfer. Property that

meets the replacement standards prescribed in subpart 101-25.4 of this

chapter is not subject to this requirement.

Sec. 101-46.202 To what other organizations may you make a

reimbursable transfer?

The Senate, the House of Representatives, the Architect of the

Capitol and any activities under the Architect's direction, the

District of Columbia, and mixed-ownership Government corporations.

Sec. 101-46.203 What are the conditions for a reimbursable transfer?

When transferring property, you must:

(a) Do so under terms mutually agreeable to you and the recipient;

and

(b) Not require reimbursement of an amount greater than the

estimated fair market value of the transferred property; and

(c) Apply the transfer proceeds in whole or part payment for

property acquired to replace the transferred property.

Sec. 101-46.204 What prohibitions and necessary conditions apply to

the exchange/sale of personal property?

(a) You must not use the exchange/sale authority for:

(1) The following FSC groups of personal property:

10 Weapons.

11 Nuclear ordnance.

12 Fire control equipment.

14 Guided missiles.

15 Aircraft and airframe structural components, except FSC class

1560 Airframe Structural Components.

42 Firefighting, rescue, and safety equipment.

44 Nuclear reactors (FSC class 4472 only).

51 Hand tools.

54 Prefabricated structure and scaffolding.

68 Chemicals and chemical products, except medicinal chemicals.

71 Furniture.

84 Clothing, individual equipment, and insignia.

(2) Materials in the National Defense Stockpile (50 U.S.C. 98-98h)

or the Defense Production Act inventory (50 U.S.C. App. 2093).

(3) Nuclear Regulatory Commission-controlled materials unless you

meet the requirements of Sec. 101-42.1102-4 of this subchapter.

(4) Controlled substances, unless you meet the requirements of

Sec. 101-42.1102-3 of this subchapter.

(5) Scrap materials, except in the case of scrap gold for fine

gold.

(6) Property which was originally acquired as excess or forfeited

property or from another source other than new procurement, unless such

property has been in official use by the acquiring agency for at least

1 year. You may exchange or sell forfeited property in official use for

less than 1 year if the head of your agency determines that a

continuing valid requirement exists, but the specific item in use no

longer meets that requirement, and that exchange or sale meets all

other requirements of this part.

(7) Property that is dangerous to public health or safety without

first rendering such property innocuous or providing for adequate

safeguards as part of the exchange/sale.

(8) Combat material without demilitarizing it in accordance with

applicable regulations.

(9) Flight Safety Critical Aircraft Parts unless you meet the

provisions of Sec. 101-37.610 of this chapter.

[[Page 5895]]

(10) Acquisition of unauthorized replacement property.

(11) Acquisition of replacement property which violates:

(i) Any restriction on procurement of a commodity or commodities;

or

(ii) Any replacement policy or standard prescribed by the

President, the Congress, or the Administrator of General Services; or

(iii) Any contractual obligation.

(b) You may use the exchange/sale authority only if you meet all of

the following conditions:

(1) The property exchanged or sold is similar to the property

acquired; and

(2) The property exchanged or sold is not excess or surplus, and

the property acquired is needed for approved programs; and

(3) The number of items acquired must equal the number of items

exchanged or sold unless:

(i) The item(s) acquired perform all or substantially all of the

tasks for which the item(s) exchanged or sold would otherwise be used;

or

(ii) The item(s) acquired and the item(s) exchanged or sold meet

the test for similarity specified at Sec. 101-46.002-9(iii) in that

they are a part(s) or container(s) for identical or similar end items;

and

(4) The property exchanged or sold was not acquired for the

principal purpose of exchange or sale; and

(5) You document at the time of exchange or sale (or at the time of

acquisition if it precedes the sale):

(i) That the exchange allowance or sale proceeds will be applied to

the acquisition of replacement property; and

(ii) For any property exchanged or sold under this part, the

pertinent Federal Supply Classification (FSC) Group, the number of

items, the original acquisition cost, the exchange allowance or sales

proceeds (as applicable), and the source from which the property was

originally acquired i.e., new procurement, excess, forfeiture, or

another source other than new procurement. These data, aggregated at

the agency level, may be requested by GSA to evaluate use of the

exchange/sale authority.

Sec. 101-46.205 What special exceptions apply to the exchange/sale

authority?

(a) You may exchange books and periodicals in your libraries for

other books and periodicals, without monetary appraisal or detailed

listing or reporting.

(b) In acquiring items for historical preservation or display at

Federal museums, you may exchange historic items in the museum property

account without regard to the FSC group or the requirement in Sec. 101-

46.204(b)(3), provided the exchange transaction is documented and

certified by the head of your agency to be in the best interests of the

Government and all other provisions of this part are met. The

documentation must contain a determination that the item exchanged and

the item acquired are historic items.

Subpart 101-46.3--Exchange/Sale Methods

Sec. 101-46.300 What are the exchange methods?

Exchange of property may be accomplished by either of the following

two methods:

(a) The supplier (e.g., a Government agency, commercial or private

organization, or an individual) delivers the replacement property to

one of your organizational units and removes the property being

replaced from that same organizational unit. This is the normal manner

of exchange.

(b) The supplier delivers the replacement property to one of your

organizational units and removes the property being replaced from a

different organizational unit.

Sec. 101-46.301 What are the sales methods?

(a) You must use the methods, terms, and conditions of sale, and

the forms prescribed in Sec. 101-45.304 of this subchapter in the sale

of property being replaced, except that the provisions of Sec. 101-

45.304-2(a) of this subchapter regarding negotiated sales are not

applicable. Section 3709, Revised Statutes (41 U.S.C. 5), specifies the

following conditions under which property being replaced can be sold by

negotiation, subject to obtaining such competition as is feasible:

(1) The reasonable value involved in the contract does not exceed

$500, or

(2) Otherwise authorized by law.

(b) You may sell property being replaced by negotiation at fixed

prices in accordance with the provisions of Sec. 101-45.304-2(b) of

this subchapter.

Sec. 101-46.302 What are the accounting requirements for the proceeds

of sale?

Except as otherwise authorized by law, you must account for

proceeds from sales of personal property disposed of under this part in

accordance with the General Accounting Office Policy and Procedures

Manual for Guidance of Federal Agencies, Title 7, Fiscal Procedures,

Section 5.5D.

Dated: January 27, 1998.

David J. Barram,

Administrator of General Services.

[FR Doc. 98-2583 Filed 2-4-98; 8:45 am]

BILLING CODE 6820-24-P