# Property Management Regulations > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A98-9659 ## Record - **Collection:** Federal Register - **Document type:** Rule - **Published:** April 20, 1998 - **Citation:** 63 FR 19614 ## Text SUMMARY: The Department of Energy (DOE) today publishes a final rule to reissue the Department of Energy Property Management Regulation (DOE- PMR) in its entirety. This rule updates the DOE-PMR by deleting obsolete and unnecessary material and incorporating policy and procedure changes issued previously by the Department through Personal Property Letters and DOE-PMR Bulletins. This action provides DOE organizations and DOE contractors an up-to-date, single source for guidance on personal property management matters peculiar to the Department. Specific material that is incorporated, revised, or deleted from the DOE-PMR was summarized in the ``Section-by-Section Analysis'' which appeared in the Notice of Proposed Rulemaking published in the Federal Register on September 11, 1996. Revisions which resulted from comments received on the proposed rulemaking are summarized in Section II ``Comments on the Notice of Proposed Rulemaking.'' EFFECTIVE DATE: This final rule will be effective May 20, 1998. FOR FURTHER INFORMATION CONTACT: Julia A. Harman, Office of Contract and Resource Management (HR-53), Office of Procurement and Assistance Management, Department of Energy, 1000 Independence Avenue, SW., Washington, DC 20585 (202) 586-1435. SUPPLEMENTARY INFORMATION: I. Background II. Comments on the Notice of Proposed Rulemaking III. Procedural Requirements A. Review Under Executive Order 12866 B. Review Under Executive Order 12988 C. Review Under the Regulatory Flexibility Act D. Review Under the Paperwork Reduction Act E. Review Under Executive Order 12612 F. Review Under the National Environmental Policy Act G. Review Under Small Business Regulatory Enforcement Fairness Act of 1996 H. Review Under the Unfunded Mandates Reform Act of 1995 I. Background The DOE-PMR, published at 41 CFR Ch. 109, has not been updated to reflect interim changes in Departmental personal property management policy and procedures since 1984. These interim changes, issued through Personal Property Letters and DOE-PMR Bulletins, were made to comply with Executive Orders, statutory requirements, and commitments made to Congress regarding weaknesses identified in the Department's personal property management practices. The updating of the DOE-PMR completes phase I of the Department's two-phased commitment to bring about significant reform of its personal property management regulations. The phase I objective was to produce an up-to-date baseline document for use in the reform effort. Having done that, the phase II effort will concentrate on (a) significantly reducing and simplifying the personal property regulations in accordance with Executive Order 12988. Phase II is scheduled to be completed in calendar year 1998. II. Comments on the Notice of Proposed Rulemaking A Notice of Proposed Rulemaking was published in the Federal Register on September 11, 1996 (61 FR 48006). Interested parties were invited to participate in this rulemaking by submitting comments. The public comment period closed on November 12, 1996, a period of 60 days. During this period, comments were received from one DOE contractor and one DOE subcontractor employee commenting as a private citizen. The DOE contractor's comments focused on the Math and Science Equipment Gift Program covered in Subpart 109-50.2. The contractor recommended that: 1. The following authorities rest with the Head of the Contracting Activity (HCA), or designee, in lieu of DOE Headquarters: (1) Adding to the list of eligible equipment at Sec. 109-50.203; and (2) making gifts exceeding $25,000 cumulative book value to any one institution at Sec. 109-50.205. We disagree with both recommendations because the Executive Agencies that own the equipment are responsible for defining and regulating which specific equipment is eligible. In order to insure that all aspects of the equipment gift program (including equipment eligibility determinations and gift making authorizations) are applied uniformly throughout the Department, these authorities need to be maintained at the Headquarters level. 2. The limitations in Sec. 109-50.205 be modified to significantly raise or eliminate the requirement to obtain DOE Headquarters authorization to make gifts exceeding $25,000 cumulative book value to any one institution. We disagree with the recommendation for several reasons. First of all, the distribution of equipment should be made to those schools with the greatest needs. The threshold is designed to encourage a fair and equitable distribution of equipment among those schools. Secondly, without such a threshold some schools would tend to benefit greatly at the expense of others. We do not believe that to be the intent of the gift program. Thirdly, since the threshold is based on book or depreciated value, a significant amount of equipment can be distributed under the $25,000 threshold. Finally, feedback on the equipment gift program to date does not indicate that the threshold is an impediment to meeting the program objectives. 3. Equipment in disposal condition codes 2 (unused-fair) and 5 (used-fair) be made eligible under the program. We disagree with the recommendation because equipment must be made available to schools at the lowest possible cost. To that end, the Department should only provide equipment that can be used ``as is'' for an extended period of time. The transfer of equipment in fair (i.e., marginal) condition would burden schools with immediate or near term costs for servicing, repair, and possible disposal of the equipment. While the recommendation is well meaning, we view it as counter to the spirit and intent of the program. 4. Section 109-50.205 be rewritten to remove apparent contradictions and clarify the hierarchy of distribution to and eligibility of potential recipients. We agree with the recommendation and have rewritten the section to clarify the procedure that was originally established in a July 17, 1995 DOE Headquarters memorandum that established the equipment gift program. 5. The requirement to forward a copy of each Equipment Gift Agreement to DOE Headquarters be eliminated or changed to the Head of the Contracting Activity or designee. We disagree with the recommendation because the Equipment Gift Agreements are used by DOE Headquarters (a) to monitor the success of and make adjustments to the program and (b) as source documents for preparing a report provided by the Department to the General Services Administration (GSA). The comments submitted by the DOE subcontractor employee who commented as a private citizen involved financial accounting issues. Although the comments were submitted under the rulemaking, the solutions are outside the scope of the DOE-PMR. The comments were forwarded to the DOE Office of Financial Policy for consideration as [[Page 19615]] proposed changes to DOE accounting directives. DOE field offices were also invited to submit comments, primarily for consideration under phase II of the Department's regulatory reform effort. Among the comments received were several regarding Executive Order 12999, which replaces Executive Order 12821. Executive Order 12999 will be implemented upon approval of the Department's implementation plan. However, a number of the comments were accepted for immediate implementation because they addressed areas affected by Presidential directive, recent Federal Property Management Regulation changes issued by GSA, or minor editorial and technical errors. The revisions made as a result of these comments are as follows: 1. The word ``capital'' in the term ``capital equipment,'' used extensively in part 1 of this regulation and defined in Sec. 109-1.100- 50, is removed to eliminate the confusion created by the use of the same term, with different meaning, by the Department's financial accounting organization. This change was formalized in a Departmental memorandum issued on August 29, 1996. 2. The acronyms CPPSR and HR in Sec. 109-1.100-51 are deleted because neither acronym is used in the text. 3. Deviation requests in Sec. 109-1.110-50 involving aviation related matters are forwarded by the on-site DOE Aviation Management Officer, in lieu of the Organizational Property Management Officer, to the DOE Senior Aviation Management Official. 4. Loans in Sec. 109-1.5102 are approved by the on-site property administrator when the OPMO is not located at the contractor facility. 5. Identification marking of property in Sec. 109-1.5105 is expanded to allow the use of ``U.S. DOE'' as an alternative marking when there is not enough room to mark it as ``U.S. Government Property.'' 6. The applicability of the policy and guidance in subpart 109-1.53 is limited to three categories of high risk personal property because other Departmental systems and procedures already provide the required controls for the remaining six categories. 7. The physical inventory requirement for sensitive items in Sec. 109-1.5109 is modified to reflect changes that were authorized in Personal Property Letter 970-2 issued on February 23, 1996. 8. By a Presidential Memorandum dated February 10, 1993 Agency Heads were instructed to ``refrain from authorizing the use of Government vehicles for * * * deputies for daily home-to-work transportation.'' Accordingly, the authority for the Deputy Secretary contained in Sec. 109-6.403(b) is eliminated. 9. Section 109-27.000-50 is deleted because the information in the section is redundant. 10. The stores inventory turnover ratio in Sec. 109-27.5002 is corrected to show the proper comparative factors. 11. The subpart 27.51 dealing with precious metals management is updated to reflect the establishment of the Business Center for Precious Metals Sales and Recovery. 12. The periodic EHFFP program reviews in Sec. 109-28.5005 are conducted by the on-site property administrator when the OPMO is not located at the contractor facility. 13. Part 109-37 dealing with aviation administration is reserved pending a complete revision of Departmental policies and procedures. 14. Definition of special purpose vehicles in Sec. 109-38.001 is updated to include all terrain vehicles. 15. Section 109-38.106 is deleted as a result of Federal Property Management Regulation changes published in FPMR Amendment G-111, dated October 28, 1996. 16. Section 109-43.307-52(c) is moved to Sec. 109-42.1102-8(a) and updated to include a reference to the Defense Demilitarization Manual because it deals with United States Munitions List items subject to demilitarization. 17. Sections 109-43.4701(a) and 109-44.4701(a) and Secs. 109- 45.1002-2, 109-45.4701, and 109-46.305 are removed as a result of a FPMR change, published as FPMR Amendment H-196, dated June 24, 1997, that eliminated several annual reports required by GSA. 18. Section 109-46.201(c) is updated to reflect a FPMR change, published as FPMR Amendment H-195, dated June 23, 1997, that reduced the number of Federal Supply Classification Groups on the exchange/sale authority exclusion list. 19. Section 109-50.106 is updated to delete references to the use of ADPE tapes and printed catalogs. Both are no longer in use. Aside from these minor editorial and technical error corrections, there were no significant revisions to the rulemaking based on the submitted comments. 20. Subpart 109-50.3 is withdrawn and held in reserve pending resolution of outstanding issues related to economic development. III. Procedural Requirements A. Review Under Executive Order 12866 This regulatory action has been determined not to be a ``significant regulatory action'' under Executive Order 12866, ``Regulatory Planning and Review,'' (58 FR 51735, October 4, 1993). Accordingly, this action was not subject to review, under that Executive Order, by the Office of Information and Regulatory Affairs of the Office of Management and Budget (OMB). B. Review Under Executive Order 12988 With respect to the review of existing regulations and the promulgation of new regulations, section 3(a) of Executive Order 12988, ``Civil Justice Reform,'' 61 FR 4729 (February 7, 1996), imposes on Executive agencies the general duty to adhere to the following requirements: (1) Eliminate drafting errors and ambiguity; (2) write regulations to minimize litigation; and (3) provide a clear legal standard for affected conduct rather than a general standard and promote simplification and burden reduction. With regard to the review required by section 3(a), section 3(b) of Executive Order 12988 specifically requires that Executive agencies make every reasonable effort to ensure that the regulation: (1) Clearly specifies the preemptive effect, if any; (2) clearly specifies any effect on existing Federal law or regulation; (3) provides a clear legal standard for affected conduct while promoting simplification and burden reduction; (4) specifies the retroactive effect, if any; (5) adequately defines key terms; and (6) addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the Attorney General. Section 3(c) of Executive Order 12988 requires Executive agencies to review regulations in light of applicable standards in section 3(a) and section 3(b) to determine whether they are met or it is unreasonable to meet one or more of them. DOE has completed the required review and determined that, to the extent permitted by law, the regulations meet the relevant standards of Executive Order 12988. C. Review Under the Regulatory Flexibility Act The rule was reviewed under the Regulatory Flexibility Act of 1980, Pub. L. 96-354, which requires preparation of an initial regulatory flexibility analysis for any rule that is likely to have a significant economic impact on a substantial number of small entities. In the background section of the rule, DOE noted that the rule was the first [[Page 19616]] phase of a two-phased approach to (1) streamline the personal property management process and (2) reduce constraints, prescriptive requirements, and administrative processes on DOE internal operations and large contractors who manage and operate DOE facilities. Based on this review, DOE certified that this rule will not have a significant economic impact on a substantial number of small entities and, therefore, no regulatory flexibility analysis had been prepared. DOE did not receive any comments on this certification. D. Review Under the Paperwork Reduction Act No new information collection or record keeping requirements are imposed by this rule. Accordingly, no OMB clearance is required under the Paperwork Reduction Act of 1980 (44 U.S.C. 3501, et seq.). E. Review Under Executive Order 12612 Executive Order 12612, entitled ``Federalism,'' 52 FR 41685 (October 30, 1987), requires that regulations, rules, legislation, and any other policy actions be reviewed for any substantial direct effects on States, on the relationship between the Federal Government and the States, or in the distribution of power and responsibilities among various levels of government. If there are sufficient substantial direct effects, then the Executive Order requires preparation of a federalism assessment to be used in all decisions involved in promulgating and implementing a policy action. DOE has determined that this rule will not have a substantial direct effect on the institutional interests or traditional functions of States. F. Review Under the National Environmental Policy Act Pursuant to the Council on Environmental Quality Regulations (40 CFR parts 1500-1508), the Department has established guidelines for its compliance with the provisions of the National Environmental Policy Act (NEPA) of 1969 (42 U.S.C. 4321, et seq.). Pursuant to Appendix A of subpart D of 10 CFR part 1021, National Environmental Policy Act Implementing Procedures (Categorical Exclusion A6), DOE has determined that this rule is categorically excluded from the need to prepare an environmental impact statement or environmental assessment. G. Review Under Small Business Regulatory Enforcement Fairness Act of 1996 As required by 5 U.S.C. 801, DOE will report to Congress promulgation of the rule prior to its effective date. The report will state that it has been determined that the rule is not a ``major rule'' as defined by 5 U.S.C. 804(3). H. Review Under the Unfunded Mandates Reform Act of 1995 The Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) generally requires a Federal agency to perform a detailed assessment of costs and benefits of any rule imposing a Federal mandate with costs to State, local or tribal governments, or to the private sector, of $100 million or more. This rulemaking only affects DOE and private sector entities, and the impact is less than $100 million. List of Subjects in 41 CFR Chapter 109 Government property management. Issued in Washington, DC, on March 31, 1998. Richard H. Hopf, Deputy Assistant Secretary for Procurement and Assistance Management. For the reasons set out in the preamble, Chapter 109 of Title 41 of the Code of Federal Regulations is revised as set forth below: CHAPTER 109--DEPARTMENT OF ENERGY PROPERTY MANAGEMENT REGULATIONS SUBCHAPTER A--GENERAL Part 109-1 Introduction 109-6 Miscellaneous regulations SUBCHAPTER B--[RESERVED] SUBCHAPTER C--[RESERVED] SUBCHAPTER D--[RESERVED] SUBCHAPTER E--SUPPLY AND PROCUREMENT 109-25 General 109-26 Procurement sources and program 109-27 Inventory management 109-28 Storage and distribution 109-30 Federal catalog system SUBCHAPTER F--[RESERVED] SUBCHAPTER G--AVIATION, TRANSPORTATION, AND MOTOR VEHICLES 109-37 [RESERVED] 109-38 Motor equipment management 109-39 Interagency fleet management systems SUBCHAPTER H--UTILIZATION AND DISPOSAL 109-42 Utilization and disposal of hazardous materials and certain categories of property 109-43 Utilization of personal property 109-44 Donation of personal property 109-45 Sale, abandonment, or destruction of personal property 109-46 Utilization and disposal of personal property pursuant to exchange/sale authority 109-48 Utilization, donation, or disposal of abandoned and forfeited personal property 109-50 Special DOE disposal authorities SUBCHAPTER A--GENERAL PART 109-1--INTRODUCTION Subpart 109-1.1--Regulation System Sec. 109-1.100-50 Scope of subpart. 109-1.100-51 Definitions and acronyms. 109-1.101 Federal Property Management Regulations System. 109-1.101-50 DOE-PMR System. 109.1.102 Federal Property Management Regulations. 109-1.102-50 DOE-PMRs. 109-1.103 FPMR temporary regulations. 109-1.103-50 DOE-PMR temporary policies and bulletins. 109-1.104 Publication and distribution of FPMR. 109-1.104-50 Publication and distribution of DOE-PMR. 109-1.106 Applicability of FPMR. 109-1.106-50 Applicability of FPMR and DOE-PMR. 109-1.107 Agency consultation regarding FPMR. 109-1.107-50 Consultation regarding DOE-PMR. 109-1.108 Agency implementation and supplementation of FPMR. 109-1.110-50 Deviation procedures. Subpart 109-1.50--Personal Property Management Program 109-1.5000 Scope of subpart. 109-1.5001 Policy. 109-1.5002 Personal property management program objectives. Subpart 109-1.51--Personal Property Management Standards and Practices 109-1.5100 Scope of subpart. 109-1.5101 Official use of personal property. 109-1.5102 Maximum use of personal property. 109-1.5103 Loan of personal property. 109-1.5104 Borrowing of personal property. 109-1.5105 Identification marking of personal property. 109-1.5106 Segregation of personal property. 109-1.5107 Physical protection of personal property. 109-1.5108 Personal property records requirements. 109-1.5108-1 Equipment. 109-1.5108-2 Sensitive items. 109-1.5108-3 Stores inventories. 109-1.5108-4 Precious metals. 109-1.5108-5 Administratively controlled items. 109-1.5109 Control of sensitive items. 109-1.5110 Physical inventories of personal property. 109-1.5111 Retirement of property. 109-1.5112 Loss, damage, or destruction of personal property in possession of DOE direct operations. 109-1.5113 Loss, damage, or destruction of personal property in possession of designated contractors. [[Page 19617]] 109-1.5114 Use of non-Government-owned property. 109-1.5148 Personal property management reports. Subpart 109-1.52--Personal Property Management Program for Designated Contractors 109-1.5200 Scope of subpart. 109-1.5201 Policy. 109-1.5202 Establishment of a personal property holdings baseline. 109-1.5203 Management of subcontractor-held personal property. 109-1.5204 Review and approval of a designated contractor's personal property management system. 109-1.5205 Personal property management system changes. Subpart 109-1.53--Management of High Risk Personal Property 109-1.5300 Scope of subpart. 109-1.5301 Applicability. 109-1.5302 Policies. 109-1.5303 Procedures. 109-1.5304 Deviations. Authority: Sec. 644, Pub. L. 95-91, 91 Stat. 599 (42 U.S.C. 7254). SUBCHAPTER A--GENERAL PART 109-1--INTRODUCTION Subpart 109-1.1--Regulation System Sec. 109-1.100-50 Scope of subpart. This subpart sets forth the Department of Energy (DOE) Property Management Regulations (DOE-PMR) which establish uniform DOE property management policies, regulations, and procedures that implement and supplement the Federal Property Management Regulations. Property management statutory authorities that are unique to the Department (e.g., section 161g of the Atomic Energy Act of 1954 (42 U.S.C. 2201(g)) and section 3155 of the National Defense Authorization Act for Fiscal Year 1994 (42 U.S.C. 72741)) are not addressed in these regulations. Sec. 109-1.100-51 Definitions and acronyms. (a) Definitions. As used in this chapter, the terms personal property and property are synonymous. In addition, the following definitions apply: Administratively controlled items means personal property controlled at the discretion of individual DOE offices, but for which there is no DOE requirement to maintain formal records. Automatic data processing equipment means, as used in this part and to the extent that such equipment is used to process export controlled information or unclassified controlled nuclear information, any equipment or interconnected system or subsystems of equipment that is used in the automatic acquisition, storage, manipulation, management, movement, control, display, switching, interchange, transmission, or reception of data or information. Designated contractors means those on-site DOE contractors to which the DOE-PMR is made applicable when included as a contractual requirement. The contractors to which these regulations may be made applicable include management and operating (M&O) contractors, environmental restoration and management contractors, and other major prime contractors located at DOE sites. Direct operations means operations conducted by DOE personnel. Disposal means the process of reutilizing, transferring, donating, selling, abandoning, destroying, or other disposition of Government- owned personal property. Dual-Use List means nuclear-related material, equipment, and related technology as described in the International Atomic Energy Agency Information Circular (INFCIRC) 254 Part 2. Equipment means any item of personal property having a unit acquisition cost of $5,000 or more and having the potential for maintaining its integrity (i.e., not expendable due to use) as an item. Especially designed or prepared property means equipment and material designed or prepared especially for use in the nuclear fuel cycle and described in the Nuclear Suppliers Group Trigger List (INFCIRC 254 Part 1). Export controlled information means unclassified U.S. Government information under DOE cognizance that, if proposed for export by the private sector, would require a U.S. Department of Commerce or U.S. Department of State validated license, or a DOE authorization for export, and which, if given uncontrolled release, could reasonably be expected to adversely affect U.S. national security or nuclear nonproliferation objectives. Export controlled property means property the export of which is subject to licensing by the U.S. Department of Commerce, the U.S. Department of State, the U.S. Nuclear Regulatory Commission, or authorized by the U.S. Department of Energy. Hazardous property means any personal property, including scrap or waste but excluding property involving a radiological hazard, that is ignitable, corrosive, reactive, or toxic because of its quantity, concentration, or physical, chemical, or infectious characteristics, or that is deemed a hazardous material, chemical substance or mixture, or hazardous waste under the Hazardous Material Transportation Act, the Resource Conservation and Recovery Act, or the Toxic Substances Control Act. Such property may be in solid, liquid, semi-liquid, or contained gas form and may cause or significantly contribute to an increase in mortality or illness, or pose present or potential hazard to human health or the environment when improperly used, treated, stored, transported, disposed of, or mismanaged. Heads of field organizations means the heads of any Departmental office located outside the Washington, D.C. metropolitan area. In addition, the Federal Energy Regulatory Commission, and the Office of Headquarters Procurement Operations, shall be considered a field organization for purposes of these regulations. High risk personal property means property that, because of its potential impact on public health and safety, the environment, national security interests, or proliferation concerns, must be controlled, and disposed of in other than the routine manner. The categories of high risk property are automatic data processing equipment, especially designed or prepared property, export controlled information, export controlled property, hazardous property, nuclear weapon components or weapon-like components, proliferation sensitive property, radioactive property, special nuclear material, and unclassified controlled nuclear information. Munitions list means articles, services, and related technical data designated as defense articles and defense services by the Arms Export Control Act of 1968, as amended. Nuclear weapon component or weapon-like component means parts of whole war reserve nuclear weapon systems, joint test assemblies, trainers, or test devices, including associated testing, maintenance, and handling equipment; or items that simulate such parts. Personal property means property of any kind, except for real estate and interests therein (such as easements and rights-of-way), and permanent fixtures which are Government-owned, chartered, rented, or leased from commercial sources by and in the custody of DOE or its designated contractors; source, byproduct, special nuclear materials, and atomic weapons as defined in section 11 of the Atomic Energy Act of 1954 (42 U.S.C. 2014), as amended; and petroleum in the Strategic Petroleum Reserve and the Naval Petroleum Reserves. [[Page 19618]] Personal property management means the development, implementation, and administration of policies, standards, programs, practices and procedures for effective and economical acquisition, receipt, storage, issue, use, control, physical protection, care and maintenance, determination of requirements, maintenance of related operating records, and disposal of personal property (exclusive of the property accounting records). Proliferation-sensitive property means nuclear-related or dual-use equipment, material, or technology as described in the Nuclear Suppliers Group Trigger List and Dual-Use List, or equipment, material or technology used in the research, design, development, testing, or production of nuclear or other weapons. Radioactive property means any item or material that is contaminated with radioactivity and which emits ionizing radiation in excess of background radiation as measured by appropriate instrumentation. Sensitive items means those items of personal property which are considered to be susceptible to being appropriated for personal use or which can be readily converted to cash, for example: Firearms, portable photographic equipment, binoculars, portable tape recorders, portable calculators, portable power tools, portable computers, and portable communications equipment. Special nuclear material means plutonium, uranium 233, uranium enriched in the isotope 233 or 235, any other materials which the Nuclear Regulatory Commission pursuant to the Atomic Energy Act of 1954, as amended, determines to be special nuclear material, or any material artificially enriched by any of the foregoing, but does not include source material. Trigger List means nuclear material, equipment, and related technology as described in the INFCIRC 254, Part 1. Unclassified controlled nuclear information means U.S. Government information pertaining to atomic energy defense activities as defined in section 148 of the Atomic Energy Act. Such information can relate to aspects of nuclear weapons design, development, testing, physical security, production, or utilization facilities. (b) Acronyms. As used in this chapter, the following acronyms apply: ADPE: Automatic Data Processing Equipment CFR: Code of Federal Regulations CSC: Customer Supply Center DEAR: Department of Energy Acquisition Regulation DOD: Department of Defense DOE: Department of Energy DOE-PMR: Department of Energy Property Management Regulations DPMO: Departmental Property Management Officer ECCN: Export Control Classification Number ECI: Export Controlled Information EHFFP: Equipment Held For Future Projects EOQ: Economic Order Quantity ERLE: Energy-Related Laboratory Equipment FAR: Federal Acquisition Regulation FPMR: Federal Property Management Regulations FSC: Federal Supply Classification FSCG: Federal Supply Classification Group GAO: General Accounting Office GSA: General Services Administration GVWR: Gross Vehicle Weight Rating INFCIRC: International Atomic Energy Agency Information Circular IFMS: Interagency Fleet Management System M&O: Management and Operating MCTL: Military Critical Technologies List OCRM: Office of Contract and Resource Management OPMO: Organizational Property Management Officer OPSEC: Operations Security PPL: Personal Property Letter REAPS: Reportable Excess Automated Property System SNM: Special Nuclear Material UCNI: Unclassified Controlled Nuclear Information U.S.C.: United States Code Sec. 109-1.101 Federal Property Management Regulations System. Sec. 109-1.101-50 DOE-PMR System. The DOE-PMR system described in this subpart is established to provide uniform personal property management policies, standards, and practices within the Department. Sec. 109-1.102 Federal Property Management Regulations. Sec. 109-1.102-50 DOE-PMRs. The DOE-PMRs (41 CFR Ch. 109) implements and supplements the FPMR (41 CFR Ch. 101) issued by the General Services Administration (GSA), Public Laws, Executive Orders, Office of Management and Budget directives, and other agency issuances affecting the Department's personal property management program. Sec. 109-1.103 FPMR temporary regulations. Sec. 109-1.103-50 DOE-PMR temporary policies and bulletins (a) Subject to applicable procedural requirements in 41 U.S.C. 418b, 42 U.S.C 7191 and 5 U.S.C 553, Personal Property Letters are authorized for publication of temporary policies that should not be codified in the Code of Federal Regulations (CFR). (b) DOE-PMR Bulletins are used to disseminate information concerning personal property management matters not affecting policy or to clarify instructions in actions required by the FPMR or DOE-PMR. Sec. 109-1.104 Publication and distribution of FPMR. Sec. 109-1.104-50 Publication and distribution of DOE-PMR. The DOE-PMR will be published in the Federal Register and will appear in the CFR as Chapter 109 of Title 41, Public Contracts and Property Management. Loose leaf publications of the DOE-PMR will be distributed to DOE offices. Sec. 109-1.106 Applicability of FPMR. Sec. 109-1.106-50 Applicability of FPMR and DOE-PMR. (a) The FPMR and DOE-PMR apply to all direct operations. (b) The DOE-PMR does not apply to facilities and activities conducted under Executive Order 12344 and Pub. L. 98-525. (c) Unless otherwise provided in the appropriate part or subpart, the FPMR and DOE-PMR apply to designated contractors. (d) The Procurement Executive or head of a contracting activity may designate contractors other than designated contractors to which the FPMR and DOE-PMR apply. (e) The FPMR and DOE-PMR shall be used by contracting officers in the administration of applicable contracts, and in the review, approval, or appraisal of such contractor operations. (f) Regulations for the management of Government property in the possession of other DOE contractors are contained in the Federal Acquisition Regulation (FAR), 48 CFR part 45, and in the DOE Acquisition Regulation (DEAR), 48 CFR part 945. (g) Regulations for the management of personal property held by financial assistance recipients are contained in the DOE Financial Assistance Rules (10 CFR part 600) and DOE Order 534.1, Accounting. Sec. 109-1.107 Agency consultation regarding FPMR. Sec. 109-1.107-50 Consultation regarding DOE-PMR. The DOE-PMR shall be fully coordinated with all Departmental elements substantively concerned with the subject matter. Sec. 109-1.108 Agency implementation and supplementation of FPMR. (a) The DOE-PMR includes basic and significant Departmental personal property management policies and standards which implement, supplement, or deviate from the FPMR. [[Page 19619]] In the absence of any DOE-PMR issuance, the basic FPMR material shall govern. (b) The DOE-PMR shall be consistent with the FPMR and shall not duplicate or paraphrase the FPMR material. (c) Implementing procedures, instructions, and guides which are necessary to clarify or to implement the DOE-PMR may be issued by Headquarters or field organizations, provided that the implementing procedures, instructions and guides: (1) Are consistent with the policies and procedures contained in this regulation; (2) To the extent practicable, follow the format, arrangement, and numbering system of this regulation; and (3) Contain no material which duplicates, paraphrases, or is inconsistent with the contents of this regulation. Sec. 109-1.110-50 Deviation procedures. (a) Each request for deviation shall contain the following: (1) A statement of the deviation desired, including identification of the specific paragraph number(s) of the DOE-PMR; (2) The reason why the deviation is considered necessary or would be in the best interest of the Government; (3) If applicable, the name of the contractor and identification of the contractor affected; (4) A statement as to whether the deviation has been requested previously and, if so, circumstances of the previous request; (5) A description of the intended effect of the deviation; (6) A statement of the period of time for which the deviation is needed; and (7) Any pertinent background information which will contribute to a full understanding of the desired deviation. (b)(1) Requests for deviations from applicable portions of the FPMR and DOE-PMR (except aviation related portions) shall be forwarded with supporting documentation by the Organizational Property Management Officer (OPMO) to the Departmental Property Management Officer (DPMO). (2) Requests for deviations from aviation related portions of the FPMR and DOE-PMR concerning aviation operations shall be forwarded by the OPMO or on-site DOE Aviation Management Officer with supporting documentation to the DOE Senior Aviation Management Official. (c) The Deputy Assistant Secretary for Procurement and Assistance Management is authorized to grant deviations to the DOE-PMR. (d) Requests for deviations from the FPMR will be coordinated with GSA by the DPMO. Subpart 109-1.50--Personal Property Management Program Sec. 109-1.5000 Scope of subpart. This subpart supplements the FPMR, states DOE personal property management policy and program objectives, and prescribes authorities and responsibilities for the conduct of an efficient personal property management program in DOE. Sec. 109-1.5001 Policy. It is DOE policy that a program for the management of personal property shall be established and maintained to meet program needs efficiently and in accordance with applicable Federal statutes and regulations. Sec. 109-1.5002 Personal property management program objectives. The objectives of the DOE personal property management program are to provide: (a) A system for efficiently managing personal property in the custody or possession of DOE organizations and designated contractors; and (b) Uniform principles, policies, and standards for efficient management of personal property that are sufficiently broad in scope and flexible in nature to facilitate adaptation to local needs and various kinds of operations. Subpart 109-1.51--Personal Property Management Standards and Practices Sec. 109-1.5100 Scope of subpart. This subpart provides guidance on DOE standards and practices to be applied in the management of personal property. The standards and practices that apply to equipment shall be based on the unit acquisition cost threshold specified in the definition of equipment contained in section Sec. 109-1.100-51 of this part. No other acquisition cost threshold shall apply. Sec. 109-1.5101 Official use of personal property. Personal property shall be used only in the performance of official work of the United States Government, except: (a) In emergencies threatening loss of life or property as authorized by law; (b) As otherwise authorized by law and approved by the Director, Office of Administrative Services; heads of field organizations for their respective organizations; or a contracting officer for contractor-held property. Sec. 109-1.5102 Maximum use of personal property. Personal property management practices shall assure the best possible use of personal property. Supplies and equipment shall be generally limited to those items essential for carrying out the programs of DOE efficiently. Sec. 109-1.5103 Loan of personal property. (a) Personal property which is not excess and would otherwise be out of service for temporary periods may be loaned to other DOE offices and contractors, other Federal agencies, and to others for official purposes. The loan request shall be in writing, stating the purpose of the loan and period of time required. The loan shall be executed on DOE Form 4420.2, Personal Property Loan Agreement or computer generated equivalent when approved in writing by the OPMO or on-site DOE property administrator. When approved, a memorandum transmitting the loan agreement shall be prepared identifying the loan period, delivery time, method of payment and transportation, and point of delivery and return, to ensure proper control and protect DOE's interest. The loan period shall not exceed one year, but may be renewed in one year increments. Second renewals of loan agreements shall be reviewed and justified at a level of management at least two levels above that of the individual making the determination to loan the property. Third renewals shall be approved by the head of the field organization or designee. (b) Requests for loans to foreign Governments and other foreign organizations shall be submitted to the Deputy Assistant Secretary for International Energy Policy, Trade and Investment for approval, with a copy to the cognizant Headquarters program office. Sec. 109-1.5104 Borrowing of personal property. (a) DOE organizations and designated contractors are encouraged to borrow personal property within DOE to further DOE programs. Property classified as Equipment Held For Future Projects (EHFFP) or as In Standby should be reviewed by those receiving availability inquiries for short-term use (one year or less). Borrowing of Government personal property from other Federal agencies is also encouraged when required for short periods of time. Such transactions shall be covered by written agreements which include all terms of the transaction. (b) In determining whether it is practical and economical to borrow personal property, consideration shall [[Page 19620]] be given to suitability, condition, value, extent and nature of use, extent of availability, portability, cost of transportation, and other similar factors. (c) Adequate records and controls shall be established and maintained for borrowed property to ensure its proper control and prompt return to the lender. Sec. 109-1.5105 Identification marking of personal property. (a) Personal property shall be marked ``U.S. Government property'' (if marking space is limited, property may be marked ``U.S. DOE'') subject to the criteria below. The markings shall be securely affixed to the property, legible, and conspicuous. Examples of appropriate marking media are bar code labels, decals, and stamping. (1) Equipment and sensitive items shall be marked ``U.S. Government property'' and numbered for control purposes. (2) Administratively controlled property and other personal property susceptible to unauthorized personal use should be marked ``U.S. Government property'' and numbered for control purposes. (b) Personal property which by its nature cannot be marked, such as stores items, metal stock, etc., is exempted from this requirement. (c) To the extent practicable and economical, markings shall be removed prior to disposal outside of DOE, or, if removal is impractical, additional permanent markings must be added to indicate such disposal. Sec. 109-1.5106 Segregation of personal property. Ordinarily, contractor-owned personal property shall be segregated from Government personal property. Commingling of Government and contractor-owned personal property may be allowed only when: (a) The segregation of the property would materially hinder the progress of the work (i.e., segregation is not feasible for reasons such as small quantities, lack of space, or increased costs); and (b) Control procedures are adequate (i.e., the Government property is specifically marked or otherwise identified as Government property). Sec. 109-1.5107 Physical protection of personal property. Controls such as property pass systems, memorandum records, regular or intermittent gate checks, and/or perimeter fencing shall be established as appropriate to prevent loss, theft, or unauthorized removal of property from the premises on which such personal property is located. Sec. 109-1.5108 Personal property records requirements. The contractor's property control records shall provide the following basic information for every accountable item of Government personal property in the contractor's possession and any other data elements required by specific contract provisions: (a) Contract number or equivalent code designation. (b) Asset type. (c) Description of item (name, serial number, national stock number (if available)). (d) Property control number (Government ownership identity). (e) Unit acquisition cost (including delivery and installation cost, when appropriate, and unit of measure). (f) Acquisition document reference and date. (g) Manufacturer's name, model and serial number. (h) Quantity received, fabricated, issued or on hand. (i) Location (physical area) (j) Custodian name and organization code. (k) Use status (active, storage, excess, etc.) (l) High risk designation. (m) Disposition document reference and date. Sec. 109-1.5108-1 Equipment. An individual property record will be developed and maintained for each item of equipment. Sec. 109-1.5108-2 Sensitive items. Individual item records will be maintained for each sensitive item. Minimum dollar value thresholds for controlling sensitive items, if used, will be determined by the OPMO for each DOE organization in consultation with appropriate management officials. This threshold may be applied organization-wide or by individual contractors or location. Identification of types of property meeting the DOE-PMR definition of sensitive property should be the primary determinant of sensitive category, with dollar thresholds, if any, considered as a guideline only. Sensitive items which are also equipment will be controlled as both sensitive items and equipment. Sec. 109-1.5108-3 Stores inventories. Perpetual inventory records are to be maintained for stores inventory items. Sec. 109-1.5108-4 Precious metals. Perpetual inventory records are to be maintained for precious metals. Sec. 109-1.5108-5 Administratively controlled items. No formal property management records are required to be maintained for this category of personal property, which includes such items as those controlled for calibration or maintenance purposes, contaminated property, tool crib items, and equipment pool items. Various control records can be employed to help safeguard this property against waste and abuse, including purchase vs. use information, tool crib check- outs, loss and theft reports, calibration records, disposal records, and other similar records. Control techniques would include physical security, custodial responsibility, identification/marking, or other locally established control techniques. Sec. 109-1.5109 Control of sensitive items. (a) A list of types of personal property considered to be sensitive shall be developed and maintained by each DOE activity/site, taking into consideration value, costs of administration, need for control, and other factors that management determines should apply. (b) Items of equipment which are also designated as sensitive items will be controlled as sensitive items and as equipment. (c) Written procedures shall be established for control of sensitive items and shall address: (1) Approval of purchase requisitions or issue documents at an appropriate supervisory level; (2) Establishment of controls in the central receiving and warehousing department, such as extraordinary physical protection, handling, and maintenance of a current listing of sensitive items; (3) Establishment and maintenance of appropriate records; (4) Requirement for tagging and identification; (5) Use of memorandum receipts or custody documents at time of assignment or change in custody; (6) Establishment of custodial responsibilities describing: (i) Need for extraordinary physical protection; (ii) Requirement for efficient physical and administrative control of sensitive items assigned for general use within an organizational unit as appropriate to the type of property and the circumstances; (iii) Requirement for prompt reporting and investigation of loss, damage or destruction; and (iv) Requirement for promptly reporting changes in custody. (7) Requirement for periodic physical inventories (see Sec. 109- 1.5110 of this part). [[Page 19621]] (8) Requirement for an employee transfer or termination check-out procedure and examination and adjustment of records; (9) Reminder of prohibition of use for other than official purposes and penalties for misuse; (10) A clear statement of the extent of responsibility for financial accountability depending upon contractor policy; and (11) Other procedures which have demonstrated efficient physical and administrative control over sensitive items. Sec. 109-1.5110 Physical inventories of personal property. (a) Physical inventories of those categories of personal property as specified in paragraph (f) of this section shall be conducted at all DOE and designated contractor locations. (b) Physical inventories shall be performed by the use of personnel other than custodians of the property. Where staffing restraints or other considerations apply, the inventory may be performed by the custodian with verification by a second party. (c) Detailed procedures for the taking of physical inventories shall be developed for each DOE office and designated contractor. The OPMO shall review and approve the DOE office and contractor procedures. (d) The conduct of a physical inventory will be observed, or follow-on audits made, by independent representatives, e.g., finance, audit, or property personnel, to the extent deemed necessary to assure that approved procedures are being followed and results are accurate. These observations or audits shall be documented and the documentation retained in the inventory record file. (e) Procedures that are limited to a check-off of a listing of recorded property without actual verification of the location and existence of such property do not meet the requirements of a physical inventory. (f) The frequency of physical inventories of personal property shall be as follows: (1) Equipment--biennial. (2) Sensitive items--annual (see paragraph 109-1.5110(l) of this section). (3) Stores inventories--annual. (4) Precious metals--annual. (5) Administratively controlled items--There is no formal Department requirement for the performance of physical inventories of this property. However, OPMOs should determine such requirements based on management needs. (g) Physical inventories shall be performed at intervals more frequently than required when experience at any given location or with any given item or items indicates that this action is necessary for effective property accounting, utilization, or control. (h) Physical inventories of equipment may be conducted by the ``inventory by exception'' method. The system and procedures for taking physical inventories by this method must be fully documented and approved in writing by the OPMO. (i) The results of physical inventories shall be reconciled with the property records, and with applicable financial control accounts. (j) The results of physical inventories shall be reported to the OPMO within 30 days after the reconciliation required above. (k) Physical inventories of equipment and stores inventories may be conducted using statistical sampling methods in lieu of the normal wall-to-wall method. The sampling methods employed must be statistically valid and approved in writing by the OPMO. If use of the statistical methods of physical inventory does not produce acceptable results, the wall-to-wall method shall be used to complete the inventories. (l) Physical inventories of sensitive items (excluding arms, ammunition, and military property) having an acquisition cost of $2,000 or less may also be conducted using statistical sampling methods. However if statistical sampling methods are used, a wall-to-wall inventory is required no less frequently than every three years and at contract completion (unless there is a follow-on contract with the same contractor). Sec. 109-1.5111 Retirement of property. When Government property is worn out, lost, stolen, destroyed, abandoned, or damaged beyond economical repair, it shall be listed on a retirement work order. A full explanation shall be supported by an investigation, if necessary, as to the date and circumstances surrounding the wear, loss, theft, destruction, abandonment, or damage. The retirement work order shall be signed by the responsible official initiating the report and reviewed and approved by an official at least one supervisory level above the official initiating the report. Sec. 109-1.5112 Loss, damage, or destruction of personal property in possession of DOE direct operations. DOE offices shall establish procedures to provide for the reporting, documentation, and investigation of instances of loss, damage, or destruction of personal property including: (a) Notification to appropriate DOE organizations and law enforcement offices; (b) Determination of cause or origin; (c) Liability and responsibility for repair or replacement; and (d) Actions taken to prevent further loss, damage, or destruction, and to prevent repetition of similar incidents. Sec. 109-1.5113 Loss, damage, or destruction of personal property in possession of designated contractors. (a) Designated contractors shall report any loss, damage, or destruction of personal property in its possession or control, including property in the possession or control of subcontractors, to the property administrator as soon as it becomes known. (b) When physical inventories, consumption analyses, or other actions disclose consumption of property considered unreasonable by the property administrator; or loss, damage, or destruction of personal property not previously reported by the contractor, the property administrator shall require the contractor to investigate the incidents and submit written reports. (c) Reports of physical inventory results and identified discrepancies shall be submitted to the property administrator within 90 days of completion of physical inventories. An acceptable percentage of shrinkage for stores inventories shall be determined by the property administrator on a location-by-location basis, based on type and cost of materials, historical data, and other site-specific factors. This determination shall be in writing and be supported by appropriate documentation. (d) The contractor's report referenced above shall contain factual data as to the circumstances surrounding the loss, damage, destruction or excessive consumption, including: (1) The contractor's name and contract number; (2) A description of the property; (3) Cost of the property, and cost of repairs in instances of damage (in event actual cost is not known, use reasonable estimate); (4) The date, time (if pertinent), and cause or origin; and (5) Actions taken by the contractor to prevent further loss, damage, destruction, or unreasonable consumption, and to prevent repetition of similar incidents. (e) The property administrator shall ensure that the corrective actions taken by the contractor under paragraph (d)(5) of this section satisfactorily address system weaknesses. (f) The contracting officer shall make a determination of contractor liability [[Page 19622]] with a copy of the determination furnished to the contractor and the property administrator. Costs may be assessed against a contractor for physical inventory discrepancies or other instances of loss of Government property within the terms of the contract. Credit should only be applied if specific items reported as lost can be uniquely identified. General physical inventory write-ons are not to be used as a credit. (g) If part of a designated contractor's personal property management system is found to be unsatisfactory, the property administrator shall increase surveillance of that part to prevent, to the extent possible, any loss, damage, destruction or unreasonable consumption of personal property. The property administrator shall give special attention to reasonably assuring that any loss, damage, destruction or unreasonable consumption occurring during a period when a contractor's personal property management system is not approved is identified before approval or reinstatement of approval. Sec. 109-1.5114 Use of non-Government-owned property. Non-Government-owned personal property shall not be installed in, affixed to, or otherwise made a part of any Government-owned personal property when such action will adversely affect the operation or condition of the Government property. Sec. 109-1.5148 Personal property management reports. Reports to be submitted to the DPMO are listed in Table 1: Table 1 ---------------------------------------------------------------------------------------------------------------- Report title Due at DOE headquarters References Form No. ---------------------------------------------------------------------------------------------------------------- (1) Report of Exempted Motor On request............. FPMR 101-38.204-4, DOE-PMR Letter. Vehicles. 109-38.204-4. (2) Agency Report of Motor Vehicle Oct. 31................ FPMR 101-38.903, DOE-PMR 109- SF 82. Data. 38.903. (3) Excess Personal Property Nov. 15................ FPMR 101-43.4701(c), DOE-PMR Letter. Furnished to Non-Federal Recipients. 109-43.4701(c). (4) Negotiated Sales................ Nov. 15................ FPMR 101-45.4702, DOE-PMR Letter. 109-45.4702. ---------------------------------------------------------------------------------------------------------------- Subpart 109-1.52--Personal Property Management Program for Designated Contractors Sec. 109-1.5200 Scope of subpart. This subpart prescribes policy and responsibilities for the establishment, maintenance, and appraisal of designated contractors' programs for the management of personal property. Sec. 109-1.5201 Policy. (a) Designated contractors shall establish, implement, and maintain a system that provides for an efficient personal property management program. The system shall be consistent with the terms of the contract; prescribed policies, procedures, regulations, statutes, and instructions; and directions from the contracting officer. (b) Designated contractors' personal property management systems shall not be considered acceptable until reviewed and approved in writing by the cognizant DOE contracting office in accordance with Sec. 109-1.5205 of this subpart. (c) Designated contractors shall maintain their personal property management systems in writing. Revisions to the systems shall be approved in writing by the cognizant DOE contracting office in accordance with Sec. 109-1.5205 of this subpart. (d) Designated contractors shall include their personal property management system in their management surveillance or internal review program in order to identify weaknesses and functions requiring corrective action. (e) Designated contractors are responsible and accountable for all Government personal property in the possession of subcontractors, and shall include appropriate provisions in their subcontracts and property management systems to assure that subcontractors establish and maintain efficient systems for the management of Government personal property in their possession in accordance with Sec. 109-1.5204 of this subpart. Sec. 109-1.5202 Establishment of a personal property holdings baseline. (a) If the contractor is a new designated contractor, the contractor may accept the previous contractor's personal property records as a baseline or may perform a complete physical inventory of all personal property. This physical inventory is to be performed within the time period specified by the contracting officer or the contract, but no later than one year after the execution date of the contract. If the physical inventory is not accomplished within the allotted time frame, the previous contractor's records will be considered as the baseline. (b) If any required physical inventories have not been accomplished within the time periods prescribed in Sec. 109-1.5110(f) of this part, the new contractor shall either perform such physical inventories within 120 days of contract renegotiation, or accept the existing property records as the baseline. Sec. 109-1.5203 Management of subcontractor-held personal property. Designated contractors shall require those subcontractors provided Government-owned personal property to establish and maintain a system for the management of such property. As a minimum, a subcontractor's personal property management system shall provide for the following: (a) Adequate records. (b) Controls over acquisitions. (c) Identification as Government-owned personal property. (d) Physical inventories. (e) Proper care, maintenance, and protection. (f) Controls over personal property requiring special handling (i.e., nuclear-related, proliferation-sensitive, hazardous, or contaminated property). (g) Reporting, redistribution, and disposal of excess and surplus personal property. (h) Accounting for personal property that is lost, damaged, destroyed, stolen, abandoned, or worn out. (i) Periodic reports, including physical inventory results and total acquisition cost of Government property. (j) An internal surveillance program, including periodic reviews, to ensure that personal property is being managed in accordance with established procedures. Sec. 109-1.5204 Review and approval of a designated contractor's personal property management system. (a) An initial review of a designated contractor's personal property management system shall be performed [[Page 19623]] by the property administrator within one year after the execution date of the contract, except for contract extensions or renewals or when an existing contractor has been awarded a follow-on contract. The purpose of the review is to determine whether the contractor's system provides adequate protection, maintenance, utilization, and disposition of personal property, and reasonable assurance that the Department's personal property is safeguarded against waste, loss, unauthorized use, or misappropriation, in accordance with applicable statutes, regulations, contract terms and conditions, programmatic needs, and good business practices. If circumstances preclude completion of the initial review within the ``within one year'' initial review requirement, the property administrator shall request a deviation from the requirement in accordance with the provisions of Sec. 109-1.110-50 of this part. (b) If a designated contractor is the successor to a previous designated contractor and the contract award was based in part on the contractor's proposal to overhaul the existing personal property management system(s), the ``within one year'' initial review requirement may be extended based on: (1) The scope of the overhaul; and (2) An analysis of the cost to implement the overhaul within a year versus a proposed extended period. (c) When an existing contract has been extended or renewed, or the designated contractor has been awarded a follow-on contract, an initial review of the contractor's personal property management system is not required. In such cases, the established appraisal schedule will continue to be followed as prescribed in paragraph (d) of this section. (d) At a minimum of every three years after the date of approval of a designated contractor's property management system, the OPMO shall make an appraisal of the personal property management operation of the contractor. The purpose of the appraisal is to determine if the contractor is managing personal property in accordance with its previously approved system and procedures, and to establish whether such procedures are efficient. The appraisal may be based on a formal comprehensive appraisal or a series of formal appraisals of the functional segments of the contractor's operation. (e) A designated contractor's property management system shall be approved, conditionally approved, or disapproved in writing by the head of the field organization with advice of the contracting officer, property administrator, OPMO, legal counsel, DPMO, and appropriate program officials. Approval authority may be redelegated to the contracting officer or contracting officer's designee. Conditional approval and disapproval authority cannot be redelegated. When a system is conditionally approved or disapproved, the property administrator or contracting officer shall advise the contractor, in writing, of deficiencies that need to be corrected, and a time schedule established for completion of corrective actions. (f) Appropriate follow-up will be made by the property administrator to ensure that corrective actions have been initiated and completed. (g) When a determination has been made by the property administrator that all major system deficiencies identified in the review or appraisal have been corrected, the head of the field organization shall withdraw the conditional approval or disapproval, and approve the system with the concurrence of the OPMO. The approval shall be in writing and addressed to appropriate contractor management. (h) The property administrator shall maintain a copy of all designated contractor personal property management system appraisals and approvals in such manner as to be readily available to investigative and external review teams. Sec. 109-1.5205 Personal property management system changes. Any proposed significant change to a designated contractor's approved personal property management system shall be reviewed by the property administrator at the earliest possible time. Such changes should then be approved in writing on an interim basis, or disapproved in writing, by the property administrator as appropriate. Subpart 109-1.53--Management of High Risk Personal Property Sec. 109-1.5300 Scope of subpart. (a) This subpart provides identification, accounting, control, and disposal policy guidance for the following categories of high risk personal property: especially designed or prepared property, export controlled property, nuclear weapon components or weapon-like components, and proliferation sensitive property. The guidance is intended to ensure that the disposition of these categories of high risk personal property does not adversely affect the national security or nuclear nonproliferation objectives of the United States. (b) The other categories of high risk personal property are controlled by other life cycle management programs and procedures monitored by other Departmental elements. Sec. 109-1.5301 Applicability. This subpart is applicable to all DOE organizations which purchase, manage or dispose of Government personal property, or contract for the management of Government facilities, programs, or related services, which may directly or indirectly require the purchase, management, or disposal of Government-owned personal property. Using the high risk personal property control requirements in this subpart as guidance, heads of field organizations or OPMOs shall assure that designated contractors and financial assistance recipients are responsible for developing a cost effective high risk property management system, covering all operational responsibilities enumerated in this subpart. Sec. 109-1.5302 Policies. (a) It is the responsibility of DOE organizations and designated contractors to manage and control Government-owned high risk personal property in an efficient manner. High risk personal property will be managed throughout its life cycle so as to protect public and DOE personnel safety and to advance the national security and the nuclear nonproliferation objectives of the U.S. Government. (b) The disposition of high risk property is subject to special considerations. Items of high risk property may present significant risks to the national security and nuclear nonproliferation objectives of the Government which must be evaluated. Organizations will identify high risk property and control its disposition to eliminate or mitigate such risks. In no case shall property be transferred or disposed unless it receives a high risk assessment and is handled accordingly. Sec. 109-1.5303 Procedures. (a) Identification, marking and control. To ensure the appropriate treatment of property at its disposal and to prevent inadvertent, uncontrolled release of high risk property, property should be assessed and evaluated as high risk property as early in its life cycle as practical. (1) Newly acquired high risk personal property shall be identified and tracked during the acquisition process and marked upon receipt. (2) All personal property shall be reviewed for high risk identification, marking, and database entry during [[Page 19624]] regularly scheduled physical inventories, unless access to the property is difficult or impractical because the property is a component of a larger assembly, a complex operating system, or an older facility. The review of this property will be completed, prior to disposition, when replacing components or when operating systems and facilities are decommissioned and dismantling. (3) High risk personal property which by its nature cannot be marked, such as stores items and metal stock, is exempt from this requirement. However, personal property management programs should contain documentation on the characterization of this property as high risk. (b) Disposition of high risk property. (1) Prior to disposition, all personal property, materials or data will be assessed to determine: (i) Whether it should be characterized as high risk and (ii) What actions are necessary to ensure compliance with applicable national security or nonproliferation controls. (2) The DOE or designated contractor property management organization may not process high risk personal property into a reutilization/disposal program without performing the reviews prescribed by the local high risk property management system. The reviews must be properly documented, and all appropriate certifications and clearances received, in accordance with the approved site or facility personal property management program. (3) The disposition (including demilitarization of items on the Munitions List) and handling of high risk personal property are subject to applicable provisions of Subchapter H of the FPMR, subchapter H of this chapter, and the DOE Guidelines on Export Control and Nonproliferation. (4) Documentation. All applicable documentation, including records concerning the property's categorization as high risk, shall be included as part of the property transfer. The documentation shall be included with all transfers within, or external to, DOE. (5) Unless an alternative disposition option appears to be in the best interest of the Government, surplus Trigger List components, equipment, and materials and nuclear weapon components shall either be sold for scrap after being rendered useless for their originally intended purpose or destroyed, with the destruction verified and documented. Requests for approval of an alternative disposition may be made through the cognizant Assistant Secretary to the Director of the Office of Nonproliferation and National Security. (6) Export Restriction Notice. The following Export Restriction Notice, or approved equivalent notice, shall be included in all transfers, sales, or other offerings: Export Restriction Notice The use, disposition, export and reexport of this property are subject to all applicable U.S. laws and regulations, including the Atomic Energy Act of 1954, as amended; the Arms Export Control Act (22 U.S.C. 2751 et seq.); the Export Administration Act of 1979 (560 U.S.C. Append 2401 et seq.); Assistance to Foreign Atomic Energy Activities (10 CFR part 810); Export and Import of Nuclear Equipment and Material (10 CFR part 110); International Traffic in Arms Regulations (22 CFR parts 120 et seq.); Export Administration Regulations (15 CFR part 730 et seq.); Foreign Assets Control Regulations (31 CFR parts 500 et seq.); and the Espionage Act (37 U.S.C. 791 et seq.) which among other things, prohibit: a. The making of false statements and concealment of any material information regarding the use or disposition, export or reexport of the property; and b. Any use or disposition, export or reexport of the property which is not authorized in accordance with the provisions of this agreement. Sec. 109-1.5304 Deviations. (a) Life cycle control determinations. When the HFO approves a contractor program containing controls, other than life cycle control consistent with this subpart, the decision shall be justified in writing and a copy sent to the Deputy Assistant Secretary for Procurement and Assistance Management. A HFO's decision not to provide life-cycle control should take into account: (1) The nature and extent of high risk property typically purchased or otherwise brought to a DOE or designated contractor facility or site; (2) The projected stability of DOE and designated contractor operations; and (3) The degree of confidence in the property control measures available at disposition. (b) Certain transfers, sales, or other offerings of high risk personal property may require special conditions or specific restrictions as determined necessary by the property custodian or cognizant program office. (c) Requests for deviations from the requirements of this subpart may be made through the cognizant HFO to the Deputy Assistant Secretary for Procurement and Assistance Management. PART 109-6--MISCELLANEOUS REGULATIONS Subpart 109-6.4--Official Use of Government Passenger Carriers Between Residence and Place of Employment Sec. 109-6.400 Scope and applicability. 109-6.400-50 Instructions to DOE passenger carrier operators. 109-6.402 Policy. 109-6.450 Statutory provisions. Authority: Sec. 205(c), 63 Stat. 390 (40 U.S.C. 486(c); 31 U.S.C. 1344(e)(1). Subpart 109-6.4--Official Use of Government Passenger Carriers Between Residence and Place of Employment Sec. 109-6.400 Scope and applicability. (a) With the exception of Sec. 109-6.400-50, the provisions of this subpart and 41 CFR 101-6.4 do not apply to designated contractors. Official use provisions applicable to these contractors are contained in Sec. 109-38.3 of this chapter. (b) When an employee on temporary duty is authorized to travel by Government motor vehicle, and in the interest of the Government, is scheduled to depart before the beginning of regular working hours, or if there will be a significant savings in time, a Government motor vehicle may be issued at the close of the preceding working day. Similarly, when scheduled to return after the close of working hours, the motor vehicle may be returned the next regular working day. This use of a Government motor vehicle is not regarded as prohibited by 31 U.S.C. 1344 (25 Comp. Gen. 844). Sec. 109-6.400-50 Instructions to DOE passenger carrier operators. DOE offices shall ensure that DOE employees operating Government motor vehicles are informed concerning: (a) The statutory requirement that Government motor vehicles shall be used only for official purposes; (b) Personal responsibility for safe driving and operation of Government motor vehicles, and for compliance with Federal, state, and local laws and regulations, and all accident reporting requirements; (c) The need to possess a valid state, District of Columbia, or commonwealth operator's license or permit for the type of vehicle to be operated and some form of agency identification; (d) The penalties for unauthorized use of Government motor vehicles; (e) The prohibition against providing transportation to strangers or hitchhikers; (f) The proper care, control and use of Government credit cards; [[Page 19625]] (g) Mandatory use of seat belts by each employee operating or riding in a Government motor vehicle; (h) The prohibition against the use of tobacco products in GSA- Interagency Fleet Management System (IFMS) motor vehicles; (i) Any other duties and responsibilities assigned to operators with regard to the use, care, operation, and maintenance of Government motor vehicles; (j) The potential income tax liability when they use a Government motor vehicle for transportation between residence and place of employment; and (k) Protection for DOE employees under the Federal Tort Claims Act when acting within the scope of their employment. Sec. 109-6.402 Policy. (a) It is DOE policy that Government motor vehicles operated by DOE employees are to be used only for official Government purposes or for incidental purposes as prescribed in this section. Official use does not include use of vehicles between residence and place of employment unless provided for in accordance with paragraph (b) of this section. The Director, Office of Administrative Services and heads of field organizations for their respective organizations shall establish appropriate controls to ensure that the use of a Government motor vehicle for transportation between an employee's residence and place of employment is in accordance with the provisions of 41 CFR 101-6.4 and this subpart. (b) The use of Government motor vehicles between an employee's residence and place of employment (home-to-work) is limited to: (1) The Secretary of Energy; and (2) Those persons engaged in field work as determined by the Secretary of Energy in accordance with 41 CFR 101-6.403(b). (c) It is DOE policy that space in a Government motor vehicle used for home-to-work transportation may be shared with a spouse, relative, or friend in accordance with the restrictions contained in 41 CFR 101- 6.402(f). (d) A Departmental official who is authorized home-to-work transportation is permitted to use Government-owned or leased motor vehicles for non-official purposes incidental to the official use of the vehicle, provided that the incremental cost (e.g., driver time and mileage) of such use is de minimis or such costs are outweighed by other considerations, such as the efficient use of the official's time. Sec. 109-6.450 Statutory provisions. (a) In accordance with 31 U.S.C. 1349(b), any officer or employee of the Government who willfully uses or authorizes the use of a Government passenger motor vehicle for other than official purposes shall be suspended from duty by the head of the department concerned, without compensation, for not less than one month and shall be suspended for a longer period or summarily removed from office if circumstances warrant. (b) Under the provisions of 18 U.S.C. 641, any person who knowingly misuses any Government property (including Government motor vehicles) may be subject to criminal prosecution and, upon conviction, to fines or imprisonment. SUBCHAPTER E--SUPPLY AND PROCUREMENT PART 109-25--GENERAL Subpart 109-25.1--General Policies Sec. 109-25.100 Use of Government personal property and nonpersonal services. 109-25.103 Promotional materials, trading stamps, or bonus goods. 109-25.103-1 General. 109-25.104 Acquisition of office furniture and office machines. 109-25-109 Laboratory and research equipment. 109-25-109-1 Identification of idle equipment. 109-25-109-2 Equipment pools. Subpart 109-25.3--Use Standards 109-25.302 Office furniture, furnishings, and equipment. 109-25.350 Furnishing of Government clothing and individual equipment. Subpart 109-25.4--Replacement Standards 109-25.401 General. 109-25.401-50 Replacement approvals. Authority: Sec. 644, Pub. L. 95-91, 91 Stat. 599 (42 U.S.C. 7254). Subpart 109-25.1--General Policies Sec. 109-25.100 Use of Government personal property and nonpersonal services. The Director, Office of Administrative Services and heads of field organizations shall ensure to restrict the use of Government property/ services to officially designated activities. Sec. 109-25.103 Promotional materials, trading stamps, or bonus goods. Sec. 109-25.103-1 General. DOE offices and designated contractors shall establish procedures for the receipt and disposition of promotional materials, trading stamps, or bonus goods consistent with the provisions of 41 CFR 101- 25.103. Sec. 109-25.104 Acquisition of office furniture and office machines. DOE offices and designated contractors shall make the determination as to whether requirements can be met through the utilization of DOE owned furniture and office machines. Sec. 109-25.109 Laboratory and research equipment. The provisions of 41 CFR 101-25.109 and this section apply to laboratory and research equipment in the possession of DOE field organizations and designated contractors. Sec. 109-25.109-1 Identification of idle equipment. (a) At a minimum, management walk-throughs shall be conducted to provide for coverage of all operating and storage areas at least once every two years to identify idle and unneeded personal property. The submission to the head of the laboratory or facility of a report of walk-throughs conducted shall be at the discretion of the laboratory or facility management. However, DOE field organizations may require designated contractors to submit a report of walk-throughs to the OPMOs. Equipment identified as idle and unneeded shall be redeployed, reassigned, placed in equipment pools, or excessed, as appropriate. All walk-throughs shall be documented to include, at a minimum, the identity of the participants, areas covered, findings, recommendations, corrective action plans, and results achieved. The documentation shall be made available for review by appropriate contractor management, DOE offices, and audit teams. (b) Members of management walk-through inspection teams should be coordinated with the property administrator and the OPMO. (c) OPMOs shall periodically review walk-through procedures and practices of DOE offices and designated contractors to determine their effectiveness. Sec. 109-25.109-2 Equipment pools. (a)-(c) [Reserved] (d) The report on the use and effectiveness of equipment pools shall be submitted to the head of the DOE office at the discretion of that official. However, documentation of evaluations of pools shall be maintained and made available for review by appropriate contractor management, DOE offices, and audit teams. (e) Heads of field organizations shall require periodic independent reviews of equipment pool operations. [[Page 19626]] Subpart 109-25.3--Use Standards Sec. 109-25.302 Office furniture, furnishings, and equipment. The Director, Office of Administrative Services, heads of field organizations, and designated contractors shall establish criteria for the use of office furniture, furnishings, and equipment. Sec. 109-25.350 Furnishing of Government clothing and individual equipment. (a) Government-owned clothing and individual equipment may be furnished to employees: (1) For protection from physical injury or occupational disease; or (2) When employees could not reasonably be required to furnish them as a part of the personal clothing and equipment needed to perform the regular duties of the position to which they are assigned or for which services were engaged. (b) This section does not apply to uniforms or uniform allowances under the Federal Employees Uniform Allowance Act of 1954, as amended. Subpart 109-25.4--Replacement Standards Sec. 109-25.401 General. Sec. 109-25.401-50 Replacement approvals. The Director, Office of Administrative Services and heads of field organizations are authorized to approve replacement of office machines, furniture, and materials handling equipment. PART 109-26--PROCUREMENT SOURCES AND PROGRAM Subpart 109-26.2--Federal Requisitioning System Sec. 109-26.203 Activity address codes. Subpart 109-26.5--GSA Procurement Programs 109-26.501 Purchase of new motor vehicles. 109-26.501-1 General. 109-26.501-4 Submission of orders. 109-26.501-50 Authority and allocations for the acquisition of passenger motor vehicles. 109-26.501-51 Used vehicles. 109-26.501-52 Justification for purchase. 109-26.501-53 Acquisitions by transfer. 109-26.501-54 Communications equipment. Authority: Sec. 644, Pub. L. 95-91, 91 Stat. 599 (42 U.S.C. 7254). Subpart 109-26.2--Federal Requisitioning System Sec. 109-26.203 Activity address codes. (a) DOE field organizations designated by OCMA are responsible for processing routine activity code related transactions for specified groupings of field organizations. Each field organization in a specified grouping will forward their activity address code related transactions to the grouping's lead organization for processing. Each lead organization shall designate a point of contact who will: (1) Verify the need, purpose, and validity of each transaction; and (2) Be the specified grouping's authorized point of contact for dealing directly with GSA. (b) OCMA is responsible for: (1) All policy matters related to the issuance and control of activity address codes within DOE; and (2) Furnishing the identity of the lead field organization points of contact to GSA. Subpart 109-26.5--GSA Procurement Programs Sec. 109-26.501 Purchase of new motor vehicles. Sec. 109-26.501-1 General. (a) [Reserved]. (b) Motor vehicles may be purchased directly rather than through GSA when a waiver has been granted by GSA. The waiver request should be submitted directly to GSA and a copy forwarded to the DPMO. However, where GSA refuses to grant a waiver and it is believed that procurement through GSA would adversely affect or otherwise impair a program, the DPMO may, upon written request of the head of the DOE field organization, grant the authority for direct purchase of general purpose motor vehicles. Upon receipt of written authorization from the DPMO, the head of the field organization may authorize direct purchase of special purpose vehicles. The purchase price for passenger motor vehicles shall not exceed any statutory limitation in effect at the time the purchase is made. Sec. 109-26.501-4 Submission of orders. An original and two copies of requisitions for passenger motor vehicles and law enforcement motor vehicles shall be forwarded with justification for purchase to the DPMO, for approval and submission to GSA. Requisitions for all other types of motor vehicles shall be submitted directly to GSA. Sec. 109-26.501-50 Authority and allocations for the acquisition of passenger motor vehicles. (a) Authority for the acquisition of passenger motor vehicles is contained in the Department's annual appropriation act. (b) DOE offices shall include in their budget submissions the number of passenger motor vehicles to be purchased during the fiscal year. The procurements will be identified as either additions to the motor vehicle fleet or replacement vehicles. A copy of the motor vehicle portion of the submission should be submitted to the DPMO. (c) To assure that DOE does not exceed the number of passenger motor vehicles authorized to be acquired in any fiscal year, the Deputy Assistant Secretary for Procurement and Assistance Management or designee shall allocate to and inform the field organizations in writing of the number of passenger motor vehicles which may be acquired under each appropriation. These allocations and the statutory cost limitations imposed on these motor vehicles shall not be exceeded. (d) The motor vehicle fleet manager shall provide written certification to the OPMO that disposition action has been taken on replaced passenger motor vehicles. Such certification shall be provided no later than 30 days after the disposition of the vehicle. Replaced passenger motor vehicles shall not be retained in service after receipt of the replacement vehicle. Sec. 109-26.501-51 Used vehicles. Normally, DOE does not purchase or authorize contractors to purchase used motor vehicles. However, the Director, Office of Administrative Services and heads of field organizations may authorize the purchase of used motor vehicles where justified by special circumstances, e.g., when new motor vehicles are in short supply; motor vehicles are to be used for experimental or test purposes; or motor vehicles are acquired from exchange/sale. The statutory passenger motor vehicle allocation requirements shall apply to any purchase of used passenger motor vehicles except in the case of motor vehicles to be used exclusively for experimental or test purposes. Sec. 109-26.501-52 Justification for purchase. (a) Requisitions for additions to the passenger motor vehicle fleet must contain adequate written justification of need. Such justifications shall be prepared by the motor vehicle fleet manager and approved by the OPMO, and should include: (1) A statement as to why the present fleet size is inadequate to support requirements; (2) Efforts made to achieve maximum use of on-hand motor vehicles through [[Page 19627]] pool arrangements, shuttle buses, and taxicabs; (3) The programmatic requirement for the motor vehicles and the impact on the program/project if the requisitions are not filled; (4) The established DOE or local utilization objectives used to evaluate the utilization of passenger motor vehicles and whether the objectives have been approved by the OPMO; and (5) The date of the last utilization review and the number of passenger motor vehicles which did not meet the established utilization objectives and the anticipated mileage to be achieved by the new motor vehicles. (b) Requisitions for replacement passenger motor vehicles should include a statement that utilization, pools, shuttle buses and taxicabs have been considered by the motor vehicle fleet manager and the OPMO. Specific information on the identification, age and mileage of the motor vehicles should be included. When a passenger motor vehicle being replaced does not meet Federal replacement standards, a description of the condition of the vehicle should also be provided. Sec. 109-26.501-53 Acquisitions by transfer. (a) The acquisition of passenger motor vehicles by transfer from another Government agency or DOE organization shall be within the allocations prescribed in Sec. 109-26.501-50 of this subpart. (b) Passenger motor vehicles may be acquired by transfer provided they are: (1) Considered as an addition to the motor vehicle fleet of the receiving office; (2) Acquired for replacement purposes and an equal number of replaced motor vehicles are reported for disposal within 30 days; (3) For temporary emergency needs exceeding three months and approved in writing by the DPMO; or (4) For temporary emergency needs of three months or less in lieu of commercial rentals. These transfers will not count toward the allocation. Sec. 109-26.501-54 Communications equipment. Communications equipment considered to be essential for the accomplishment of security and safety responsibilities is exempt from the requirements of 41 CFR 101-26.501. The Fleet Manager shall approve the installation of communications equipment in motor vehicles. PART 109-27--INVENTORY MANAGEMENT Sec. 109-27.000-50 Definitions. Subpart 109-27.1--Stock Replenishment 109-27.102 Economic order quantity principle. 109-27.102-1 Applicability. 109-27.102-50 Systems contracting. 109-27.102-51 Policy. 109-27.102-52 Implementation. Subpart 109-27.2--Management of Shelf-Life Materials 109-27.202 Applicability. Subpart 109-27.3--Maximizing Use of Inventories 109-27.302 Applicability. Subpart 109-27.4--Elimination of Items from Inventory 109-27.402 Applicability. Subpart 109-27.50--Inventory Management Policies, Procedures, and Guidelines 109-27.5001 Objectives. 109-27.5002 Stores inventory turnover ratio. 109-27.5003 Stock control. 109-27.5004 Sub-stores. 109-27.5005 Shop, bench, cupboard or site stock. 109-27.5006 Stores catalogs. 109-27.5007 Physical inventories. 109-27.5007-1 Procedures. 109-27.5007-2 Inventory adjustments. 109-27.5008 Control of drug substances and potable alcohol. 109-27.5009 Control of hypodermic needles and syringes. 109-27.5010 Containers returnable to vendors. 109-27.5011 Identification marking of metals and metal products. 109-27.5011-1 General. 109-27.5011-2 Exception. Subpart 109-27.51--Management of Precious Metals 109-27.5100 Scope of subpart. 109-27.5101 Definition. 109-27.5102 Policy. 109-27.5103 Precious Metals Control Officer. 109-27.5104 Practices and procedures. 109-27.5104-1 Acquisitions. 109-27.5104-2 Physical protection and storage. 109-27.5104-3 Perpetual inventory records. 109-27.5104-4 Physical inventories. 109-27.5104-5 Control and issue of stock. 109-27.5104-6 Control by using organization. 109-27.5105 Management reviews and audits. 109-27.5106 Precious metals pool. 109-27.5106-1 Purpose. 109-27.5106-2 Withdrawals. 109-27.5106-3 Returns. 109-27.5106-4 Withdrawals/returns forecasts. 109-27.5106-5 Assistance. 109-27.5107 Recovery of silver from used hypo solution and scrap film. Authority: Sec. 644, Pub. L. 95-91, 91 Stat. 599 (42 U.S.C. 7254). PART 109-27--INVENTORY MANAGEMENT Sec. 109-27.000-50 Definitions. As used in this part the following definitions apply: Inventories mean stocks of stores, construction, supplies, and parts used in support of DOE programs. Inventory management means the efficient use of methods, procedures and techniques for recording, analyzing, and adjusting inventories in accordance with established policy. The following related functions are included: (1) Providing adequate protection against misuse, theft, and misappropriation. (2) Providing accurate analyses of quantities to determine requirements so that only minimal obsolescence losses will be encountered, while ensuring adequate inventory levels to meet program schedules. (3) Providing adequate and accessible storage facilities and services based upon analyses of program requirements so that a minimum and economical amount of time is required to service the program. Stock record means a device for collecting, storing, and providing historical data on recurring transactions for each line item of inventory. Sub-store means a geographically removed part of the main store's operation conducted as a subordinate element of it and subject to the same management policies and inventory controls. Systems contracting means a materials management purchasing technique for the purchase of general, common-use, and repetitive supply items in a particular product family. An example is office supplies, purchased from a commercial vendor, that are needed for immediate use instead of purchasing in bulk for future use, storing in warehouses, and issuing to customers by use of a requisitioning system. Systems contracting and just-in-time contracting are synonymous. Subpart 109-27.1--Stock Replenishment Sec. 109-27.102 Economic order quantity principle. Sec. 109-27.102-1 Applicability. Replenishment of inventories of stock items having recurring demands will be by use of the economic order quantity (EOQ) principle. However, when considered more suitable, designated contractors may use other generally accepted approaches to EOQ. [[Page 19628]] Sec. 109-27.102-50 Systems contracting. Systems contracting may be used instead of or along with EOQ once a determination is made that such a system is feasible and cost effective, and that adequate controls are in place to ensure proper use. Sec. 109-27.102-51 Policy. Systems contracting for supply operations is a proven cost- effective approach to meeting procurement needs and may be implemented in DOE offices and designated contractors wherever significant cost savings to the Government will result. Impacts on local suppliers and small and disadvantaged business concerns should be considered in the overall business strategy. Sec. 109-27.102-52 Implementation. (a) DOE OPMOs shall establish required property management controls relative to the implementation of systems contracting. (b) DOE offices and designated contractors operating a materials management function who have not performed an initial feasibility study for the implementation of systems contracting shall perform such a study for selected commodity groups. The study may be accomplished over a period of time, until all commodity groups have been considered. The study should address functional requirements, activity levels of commodity groups and individual items, and potential impacts on local suppliers and small and disadvantaged businesses. An industrial relations analysis on existing labor relations and union contracts may also be necessary. (c) As required in the DEAR, DOE offices and designated contractors are required to consider the use of GSA supply sources when economically advantageous to the Government. These sources must be considered in the conduct of the feasibility study. (d) DOE contracting offices shall evaluate the initial cost benefit studies performed by contractors to verify the savings and other benefits of systems contracting, and shall approve its implementation. In those instances where a cost benefit study has previously been performed, the DOE contracting office shall ensure that those studies have been evaluated and the approval to proceed with systems contracting has been provided to the contractor in writing. (e) DOE offices shall periodically reevaluate systems contracting operations conducted by their office and designated contractors to ensure that required property management controls are being followed. Subpart 109-27.2--Management of Shelf-Life Materials Sec. 109-27.202 Applicability. When considered more suitable, designated contractors may use other generally accepted approaches to the management of shelf-life materials. Subpart 109-27.3--Maximizing Use of Inventories Sec. 109-27.302 Applicability. When considered more suitable, designated contractors may use other generally accepted approaches to maximizing use of inventories. Subpart 109-27.4--Elimination of Items From Inventory Sec. 109- 27.402 Applicability When considered more suitable, designated contractors may use other generally accepted approaches to determine which items should be eliminated from inventory. Subpart 109-27.50--Inventory Management Policies, Procedures, and Guidelines Sec. 109-27.5001 Objectives. Necessary inventories shall be established and maintained at reasonable levels, consistent with DOE requirements, applicable laws and regulations, and the following objectives: (a) The maintenance of adequate stock levels through accurate analyses of quantities to determine requirements and stock replenishments so that only minimal obsolescence losses will be encountered while ensuring adequate inventory levels to meet program schedules; (b) The protection of materials against misuse, theft, and misappropriation; (c) The maintenance of an efficient operation; and (d) The standardization of inventories to the greatest extent practicable. Sec. 109-27.5002 Stores inventory turnover ratio. Comparison of investment in stores inventories to annual issues shall be made to assure that minimum inventories are maintained for the support of programs. This comparison may be expressed either as a turnover ratio (dollar value of issues divided by dollar value of inventory) or in the average number of month's supply on hand. Turnover or number of month's supply is calculated only on current-use inventory. Performance goals, i.e., a six months investment or a turnover ratio of 2.0, shall be established for each stores using activity. It is recognized, however, that extenuating operating circumstances may preclude the achievement of such objectives. Sec. 109-27.5003 Stock control. (a) Stock control shall be maintained on the basis of stock record accounts of inventories on hand, on order, received, issued, and disposed of, and supported by proper documents in evidence of these transactions. Stock record accounts shall be available for review and inspection. (b) Personal property under stock control for greater than 90 days shall be maintained in stock record accounts. Sec. 109-27.5004 Sub-stores. (a) Sub-stores shall be established when necessary to expedite delivery of materials and supplies to the users, serve emergencies, provide economy in transportation, reduce shop and site stocks, and enable stores personnel to provide assistance in obtaining materials and supplies as needed. (b) Items stored for issue in the sub-stores shall be treated as inventory items for control and reporting purposes. Stock records shall be integrated with central stock records so that the total amount on hand of any item at all locations is known. Sec. 109-27.5005 Shop, bench, cupboard or site stock. Shop, bench, cupboard or site stocks are an accumulation of small inventories of fast-moving materials at the point of use. Normally, these inventories are expensed at time of issue from controlled stores. However, when stocks of such inventories are not consumed or do not turn over in a reasonable period of time, which normally should not exceed 90 days, these items should be subject to the required physical controls and recorded in the proper inventory account. Sec. 109-27.5006 Stores catalogs. A stores catalog for customer use that lists items available from stock shall be established for each stores operation. Exceptions to this requirement are authorized where establishment of a catalog is impracticable or uneconomical because of small total value or number of items involved, or temporary need for the facility. Sec. 109-27.5007 Physical inventories. Sec. 109-27.5007-1 Procedures. The following procedures shall be established for taking physical inventory of stocks subjected to quantity [[Page 19629]] controls as well as those under financial control: (a) Completion of a physical inventory not less frequently than every twelve months. (b) Reconciliation of inventory quantities with the stock records. (c) Preparation of a report of the physical inventory results. Sec. 109-27.5007-2 Inventory adjustments. Discrepancies between physical inventories and stock records shall be adjusted and the supporting adjustment records shall be reviewed and approved by a responsible official at least one supervisory level above the supervisor in charge of the warehouse or storage facility. Items on an adjustment report which are not within reasonable tolerances for particular items shall be thoroughly investigated before report approval. Adjustment reports shall be retained on file for inspection and review. Sec. 109-27.5008 Control of drug substances and potable alcohol. Effective procedures and practices shall provide for the management and physical security of controlled substances and potable alcohol from receipt to the point of use. Such procedures shall, as a minimum, provide for safeguarding, proper use, adequate records, and compliance with applicable laws and regulations. Controls and records of potable alcohol shall be maintained on quantities of one quart and above. Sec. 109-27.5009 Control of hypodermic needles and syringes. Effective procedures and practices shall provide for the management and physical security of hypodermic needles and syringes to prevent illegal use. Controls shall include supervisory approval for issue, storage in locked repositories, and the rendering of the items useless prior to disposal. Sec. 109-27.5010 Containers returnable to vendors. Containers furnished by vendors shall be administratively and physically controlled before and after issuance. Prompt action shall be taken to return such containers to vendors for credit after they have served their intended use. Sec. 109-27.5011 Identification marking of metals and metal products. Sec. 109-27.5011-1 General. Metals and metal products shall be identified and marked in accordance with applicable Federal standards. This requirement applies to direct charges as well as to items procured for store, shop or floor stock, or for use on construction projects. Additional markings not covered by Federal standards should be used to show special properties, corrosion data, or test data as required. The preferred process is for the marking to be done in the manufacturing process, but it may be applied by suppliers when circumstances warrant. Sec. 109-27.5011-2 Exception. Exceptions to the marking requirement may be made when: (a) It is necessary to procure small quantities from suppliers not equipped to do the marking; (b) It would delay delivery of emergency orders; or (c) Procurement is from DOE or other Federal agency excess. Subpart 109-27.51--Management of Precious Metals Sec. 109-27.5100 Scope of subpart. This subpart provides policies, principles, and guidelines to be used in the management of purchased and recovered precious metals used to meet research, development, production, and other programmatic needs. Sec. 109-27.5101 Definition. Precious metals means uncommon and highly valuable metals characterized by their superior resistance to corrosion and oxidation. Included are gold, silver, and the platinum group metals--platinum, palladium, rhodium, iridium, ruthenium and osmium. Sec. 109-27.5102 Policy. DOE organizations and contractors shall establish effective procedures and practices for the administrative and physical control of precious metals in accordance with the provisions of this subpart. Sec. 109-27.5103 Precious Metals Control Officer. Each DOE organization and contractor holding precious metals shall designate in writing a Precious Metals Control Officer. This individual shall be the organization's primary point of contact concerning precious metals control and management, and shall be responsible for the following: (a) Assuring that the organization's precious metals activities are conducted in accordance with Departmental requirements. (b) Maintaining of an accurate list of the names of precious metals custodians. (c) Providing instructions and training to precious metals custodians and/or users as necessary to assure compliance with regulatory responsibilities. (d) Insuring that physical inventories are performed as required by, and in accordance with, these regulations. (e) Witnessing physical inventories. (f) Performing periodic unannounced inspections of a custodian's precious metals inventory and records. (g) Conducting an annual review of precious metals holdings to determine excess quantities. (h) Preparing and submitting to the Business Center for Precious Metals Sales and Recovery the annual forecast of anticipated withdrawals from, and returns to, the DOE precious metals pool. (i) Conducting a program for the recovery of silver from used hypo solution and scrap film in accordance with 41 CFR 101-45.10 and Sec. 109-45.10 of this chapter. (j) Preparing and submitting of the annual report on recovery of silver from used hypo solution and scrap film as required by Sec. 109- 45.1002-2 of this chapter. (k) Developing and issuing current authorization lists of persons authorized by management to withdraw precious metals from stockrooms. Sec. 109-27.5104 Practices and procedures. Sec. 109-27.5104-1 Acquisitions. DOE organizations and contractors shall contact the Business Center for Precious Metals Sales and Recovery to determine the availability of precious metals prior to acquisition on the open market. Sec. 109-27.5104-2 Physical protection and storage. Precious metals shall be afforded exceptional physical protection from time of receipt until disposition. Precious metals not in use shall be stored in a noncombustible combination locked repository with access limited to the designated custodian and an alternate. When there is a change in custodian or alternate having access to the repository, the combination shall be changed immediately. Sec. 109-27.5104-3 Perpetual inventory records. Perpetual inventory records shall be maintained as specified in Chapter V of DOE Order 534.1, Accounting. Sec. 109-27.5104-4 Physical inventories. (a) Physical inventories shall be conducted annually by custodians, and witnessed by the Precious Metals Control Officer or his designee. (b) Precious metals not in use shall be inspected and weighed on calibrated [[Page 19630]] scales. The inventoried weight and form shall be recorded on the physical inventory sheets by metal content and percent of metal. Metals in use in an experimental process or contaminated metals, neither of which can be weighed, shall be listed on the physical inventory sheet as observed and/or not observed as applicable. (c) Any obviously idle or damaged metals should be recorded during the physical inventory. Justification for further retention of idle metals shall be required from the custodian and approved one level above the custodian, or disposed of in accordance with established procedures. (d) The dollar value of physical inventory results shall be reconciled with the financial records. All adjustments shall be supported by appropriate adjustment reports, and approved by a responsible official. Sec. 109-27.5104-5 Control and issue of stock. Precious metals in stock are metals held in a central location and later issued to individuals when authorized requests are received. The following control procedures shall be followed for such metals: (a) Stocks shall be held to a minimum consistent with efficient support to programs. (b) The name and organization number of each individual authorized to withdraw precious metals, and the type and kind of metals, shall be prominently maintained in the stockroom. This authorization shall be issued by the Precious Metals Control Officer or his designee and updated annually. Issues of metals will be made only to authorized persons. (c) Accurate records of all receipts, issues, returns, and disposals shall be maintained in the stockroom. (d) Receipts for metal issues and returns to stock shall be provided to users. Such receipts, signed by the authorized requesting individual and the stockroom clerk, shall list the requesting organization, type and form of metal, quantity, and date of transaction. Sec. 109-27.5104-6 Control by using organization. (a) After receipt, the using organization shall provide necessary controls for precious metals. Materials shall be stored in a non- combustible, combination locked repository at all times except for quantities at the actual point of use. (b) Each using organization shall maintain a log showing the individual user, type and form of metal, and the time, place, and purpose of each use. The log shall be kept in a locked repository when not in use. (c) The logs and secured locked storage facilities are subject to review by the Precious Metals Control Officer and other audit or review staffs as required. (d) Cognizant Departmental managers are responsible for assuring that minimum quantities of precious metals are withdrawn consistent with work requirements and that quantities excess to requirements are promptly returned to the stockroom. (e) Employee termination and transfer procedures shall include clearance for precious metals possession. Sec. 109-27.5105 Management reviews and audits. (a) Unannounced inspections of custodian's precious metals inventory and records may be conducted between scheduled inventories. (b) DOE organizations and contractors holding precious metals shall annually review the quantity of precious metals on hand to determine if the quantity is in excess of program requirements. Precious metals which are not needed for current or foreseeable requirements shall be promptly reported to the DOE precious metals pool. The results of this annual review are to be documented and entered into the precious metals inventory records. Sec. 109-27.5106 Precious metals pool. Sec. 109-27.5106-1 Purpose. The purpose of the precious metals pool is to recycle, at a minimum cost to pool participants, DOE-owned precious metals within the Department and to dispose of DOE-owned precious metals that are excess to DOE needs. However, if the pool is unable to accept any potential precious metal return, the using activity will dispose of the precious metals through the disposal process specified in subchapter H of the FPMR and this regulation. Sec. 109-27.5106-2 Withdrawals. Pure metals, parts, fabricated products, catalysts, or solutions, are generally available and the Business Center for Precious Metals Sales and Recovery can provide assistance in supplying such requirements. Metals can be shipped to any facility to fulfill fabrication requirements. Sec. 109-27.5106-3 Returns. All excess precious metals must be returned to the precious metals pool except as noted in Sec. 109-27.5106-1 of this subpart. The pool is entirely dependent on metal returns; therefore, metal inventories should be maintained on an as-needed basis, and any excess metals must be returned to the pool for recycling. With the exception of silver, this includes precious metals in any form, including shapes, scrap, or radioactively contaminated. Only high grade nonradioactively contaminated silver should be included. Procedures have been developed by the precious metals pool contractor for metal returns, including storing, packaging, shipping, and security. Sec. 109-27.5106-4 Withdrawals/returns forecasts. The Business Center for Precious Metals Sales and Recovery will request annually from each DOE field organization its long-range forecast of anticipated withdrawals from the pool and returns to the pool. Sec. 109-27.5106-5 Assistance. The Business Center for Precious Metals Sales and Recovery operates the precious metals pool. DOE organizations and contractors may obtain specific information regarding the operation of the precious metals pool (operating contractor's name, address, and telephone number; processing charges; etc.) by contacting the Chief, Property Management Branch, Oak Ridge Operations Office. Sec. 109-27.5107 Recovery of silver from used hypo solution and scrap film. The requirements for the recovery of silver from used hypo solution and scrap film are contained in Sec. 109-45.1003 of this chapter. PART 109-28--STORAGE AND DISTRIBUTION Sec. 109-28.000-50 Policy. 109-28.000-51 Storage guidelines. Subpart 109-28.3--Customer Supply Centers 109-28.306 Customer supply center (CSC) accounts and related controls. 109-28.306-3 Limitations on use. 109-28.306-5 Safeguards. Subpart 109-28.50--Management of Equipment Held for Future Projects 109-28.5000 Scope of subpart. 109-28.5001 Definition. 109-28.5002 Objective. 109-28.5003 Records. 109-28.5004 Justification and review procedures. 109-28.5005 EHFFP program review. 109-28.5006 Utilization. Subpart 109-28.51--Management of Spare Equipment 109-28.5100 Scope of subpart. 109-28.5101 Definition. 109-28.5102 Exclusions. 109-28.5103 Management policy. [[Page 19631]] Authority: 42 U.S.C. 7254. Sec. 109-28.000-50 Policy. DOE offices and designated contractors shall: (a) Establish storage space and warehousing services for the receipt, storage, issue, safekeeping and protection of Government property; (b) Provide storage space and warehousing services in the most efficient manner consistent with program requirements; and (c) Operate warehouses in accordance with generally accepted industrial management practices and principles. Sec. 109-28.000-51 Storage guidelines. (a) Indoor storage areas should be arranged to obtain proper stock protection and maximum utilization of space within established floor load capacities. (b) Storage yards for items not requiring covered protection shall be protected by locked fenced enclosures to the extent necessary to protect the Government's interest. (c) Storage areas shall be prominently posted to clearly indicate that the property stored therein is U.S. Government property, with entrance to such areas restricted to authorized personnel only. (d) Property in storage must be protected from fire, theft, deterioration, or destruction. In addition certain items require protection from dampness, heat, freezing, or extreme temperature changes. Other items must be stored away from light and odors, protected from vermin infestation, or stored separately because of their hazardous characteristics. (e) Hazardous or contaminated property, including property having a history of use in an area where exposure to contaminated property may have occurred, shall not be commingled with non-contaminated property, but stored separately in accordance with instructions from the environmental, safety, and health officials. (f) Unless inappropriate or impractical until declared excess, nuclear-related and proliferation-sensitive property shall be identified as such by use of a certification tag signed by an authorized program official (designated in writing with signature cards on file in the personal property management office). Such personal property shall not be commingled with other personal property, but stored separately in accordance with instructions from the cognizant program office. Subpart 109-28.3--Customer Supply Centers Sec. 109-28.306 Customer supply center (CSC) accounts and related controls. Sec. 109-28.306-3 Limitations on use. DOE offices and designated contractors shall establish internal controls for ensuring that the use of CSC accounts is limited to the purchase of items for official Government use. Sec. 109-28.306-5 Safeguards. DOE offices and designated contractors shall establish internal controls for ensuring that the customer access codes assigned for their accounts are properly protected. Subpart 109-28.50--Management of Equipment Held for Future Projects Sec. 109-28.5000 Scope of subpart. This subpart provides policies, principles, and guidelines to be used in the management of equipment held for future projects (EHFFP). Sec. 109-28.5001 Definition. Equipment held for future projects means items being retained, based on approved justifications, for a known future use, or for a potential use in planned projects. Sec. 109-28.5002 Objective. The objective of the EHFFP program is to enable DOE offices and contractors to retain equipment not in use in current programs but which has a known or potential use in future DOE programs, while providing visibility on the types and amounts of equipment so retained through review and reporting procedures. It is intended that equipment be retained where economically justifiable for retention, considering cost of maintenance, replacement, obsolescence, storage, deterioration, or future availability; made available for use by others; and promptly excessed when no longer needed. Sec. 109-28.5003 Records. Records of all EHFFP shall be maintained by the holding organization, including a listing of items with original date of classification as EHFFP; initial justifications for retaining EHFFP; rejustifications for retention; and documentation of reviews made by higher levels of management. Sec. 109-28.5004 Justification and review procedures. Procedures shall provide for the following: (a) The original decision to classify and retain equipment as EHFFP shall be justified in writing, providing sufficient detail to support the need for retention of the equipment. This justification will cite the project for which retained, the potential use to be made of the equipment, or other reasons for retention. (b) The validity of the initial classification EHFFP shall be reviewed by management at a level above that of the individual making the initial determination. (c) Retention of equipment as EHFFP must be rejustified annually to ensure that original justifications remain valid. The rejustifications will contain sufficient detail to support retention. (d) When equipment is retained as EHFFP for longer than one year, the annual rejustification shall be reviewed at a level of management at least two levels above that of the individual making the determination to retain the EHFFP. Equipment retained as EHFFP for longer than three years should be approved by the head of the DOE field organization. Sec. 109-28.5005 EHFFP program review. OPMOs or on-site DOE property administrators shall conduct periodic reviews to ensure that the EHFFP program is being conducted in accordance with established procedures and this subpart. Included in the review will be proper determinations of property as EHFFP, the validity of justifications for retaining EHFFP, and the inclusion of EHFFP in management walk-throughs as prescribed in Sec. 109-25.109-1 of this chapter. Sec. 109-28.5006 Utilization. It is DOE policy that, where practicable and consistent with program needs, EHFFP be considered as a source of supply to avoid or postpone acquisition. Subpart 109-28.51--Management of Spare Equipment Sec. 109-28.5100 Scope of subpart. This subpart provides policy guidance to be used in the management of spare equipment. Sec. 109-28.5101 Definition. Spare equipment means items held as replacement spares for equipment in current use in DOE programs. Sec. 109-28.5102 Exclusions. The following categories of equipment will not be considered spare equipment: (a) Equipment installed for emergency backup, e.g., an emergency power facility, or an electric motor or a pump, any of which is in place and electrically connected. [[Page 19632]] (b) Equipment items properly classified as stores inventory. Sec. 109-28.5103 Management policy. (a) Procedures shall require the maintenance of records for spare equipment, cross-referenced to the location in the facility and the engineering drawing number. The purpose for retention shall be in the records. (b) Rev [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A98-9659. Public record. Not legal advice.