Defense Federal Acquisition Regulation Supplement; Title to Government Property

DEPARTMENT OF DEFENSE

48 CFR Parts 216, 245, and 252

[DFARS Case 97-D027]

Defense Federal Acquisition Regulation Supplement; Title to

Government Property

AGENCY: Department of Defense (DoD).

ACTION: Proposed rule with request for comments.

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

SUMMARY: The Under Secretary of Defense, Acquisition and Technology,

has requested the Director, Defense Procurement, to obtain public

comment on Government property management policy changes intended to

reduce the amount of Government-owned tooling and equipment in the

possession of DoD contractors. This proposed rule solicits those

comments and is structured as a deviation from the Federal Acquisition

Regulation (FAR) Part 45 proposed rule on Government property (FAR Case

95-013) that was published in the Federal Register on June 2, 1997 (62

FR 30186). This proposed DFARS rule will be amended at a later date to

incorporate changes resulting from public comments on the FAR Part 45

proposed rule.

DATES: Comments on the proposed rule should be submitted in writing to

the address shown below on or before December 16, 1997 to be considered

in the formulation of the final rule.

ADDRESSES: Interested parties should submit written comments to:

Director, Defense Procurement, Deputy Director, Major Policy

Initiatives, Attention: Ms. Angelena Moy, Room 3C128, 3060 Defense

Pentagon, Washington, DC 20301-3060. Please cite DFARS Case 97-D027 in

all correspondence related to this proposed rule. Address E-mail

(Internet) comments to M[email protected].

FOR FURTHER INFORMATION CONTACT:

Ms. Angelena Moy by phone at (703) 695-1097/8, by fax at (703) 695-

7569, or at the E-mail address provided above. Please cite DFARS Case

97-D027.

SUPPLEMENTARY INFORMATION:

A. Background

gon, Washington, DC 20301-3060. Please cite DFARS Case 97-D027 in

all correspondence related to this proposed rule. Address E-mail

(Internet) comments to M[email protected].

FOR FURTHER INFORMATION CONTACT:

Ms. Angelena Moy by phone at (703) 695-1097/8, by fax at (703) 695-

7569, or at the E-mail address provided above. Please cite DFARS Case

97-D027.

SUPPLEMENTARY INFORMATION:

A. Background

The value of Government-owned equipment and tooling in the

possession of DoD contractors increased substantially during the past

decade although long-standing acquisition policy generally requires

contractors to furnish the property needed to perform Government

contracts. An Integrated Process Team, led by the Office of the Under

Secretary of Defense, Industrial Affairs and Installations, has made

recommendations intended to reverse this trend and reduce the amount of

Government property in the possession of DoD contractors. These

recommendations are:

1. Under cost-reimbursement contracts, DoD should cease taking

title automatically to contractor acquired or fabricated equipment and

tooling. DoD should have the right to take title to all special tooling

and special test equipment for which costs are allocated to DoD

contracts as direct costs, and items of equipment having an acquisition

cost in excess of the DoD internal property accountability threshold

(currently $2,500), the costs of which are allocated as direct costs to

DoD contracts. This recommendation will reduce contract performance

costs by removing low value equipment items from the property control,

management, and disposal requirements in FAR Part 45. To implement this

recommendation, language creating a deviation to the proposed FAR Part

45 rule appears in this proposed DFARS rule at 252.216-7002(c) and

252.245-7002(b)(2).

2

ted as direct costs to

DoD contracts. This recommendation will reduce contract performance

costs by removing low value equipment items from the property control,

management, and disposal requirements in FAR Part 45. To implement this

recommendation, language creating a deviation to the proposed FAR Part

45 rule appears in this proposed DFARS rule at 252.216-7002(c) and

252.245-7002(b)(2).

2. When a contractor that acquired or fabricated equipment, special

tooling, or special test equipment to which DoD has taken title needs

that equipment, special tooling, or special test equipment to perform

follow-on contracts for the same items, DoD should furnish the

equipment, special tooling, or special test equipment items to the

contractor on an ``as is'' basis. To implement this recommendation,

language creating a deviation to the proposed FAR Part 45 rule appears

in this proposed DFARS rule at 252.245-7001(d)(2).

3. Property no longer needed for performance of a particular

contract should be disposed of immediately if not needed for future

procurements and placed under funded storage contracts if the future

need is not within 60 days following the date the contractor identifies

the property as no longer needed. This recommendation is intended to

expedite property disposal and assure that contractors are paid for

storing Government property. To implement this recommendation, language

creating a deviation to the proposed FAR Part 45 rule appears in this

proposed DFARS rule at 245.101-71.

B. Regulatory Flexibility Act

days following the date the contractor identifies

the property as no longer needed. This recommendation is intended to

expedite property disposal and assure that contractors are paid for

storing Government property. To implement this recommendation, language

creating a deviation to the proposed FAR Part 45 rule appears in this

proposed DFARS rule at 245.101-71.

B. Regulatory Flexibility Act

This proposed rule is not expected to have a significant economic

impact on a substantial number of small entities within the meaning of

the Regulatory Flexibility Act 5 U.S.C. 601, et seq., because the rule

further reduces the economic impact on small entities from the

estimated impact contained in the proposed rule under FAR Case 95-013,

FAR Part 45, Government Property Rewrite, by reducing the

administrative burden on contractors through reduction of the amount of

Government property in the possession of contractors. The impact is not

considered significant because the rule applies only to those small

entities that request Government property to perform a contract or

create Government property during contract performance, and contract

prices compensate such contractors for their Government property

management activities. An initial regulatory flexibility analysis has,

therefore, has not been performed. Comments are invited from small

businesses and other interested parties. Comments from small entities

concerning the affected DFARS subparts also will be considered in

accordance with 5 U.S.C. 610. Such comments should be submitted

separately and should cite DFARS Case 97-D027 in correspondence.

C. Paperwork Reduction Act

This proposed rule reduces the amount of property that will become

Government property under cost-reimbursement contracts. Therefore, the

paperwork burden approved under Office of Management and Budget

Clearance No. 9000-0151 for the proposed FAR rule published at 62 FR

30186 on June 2, 1997, is expected to be reduced.

List of Subjects in 48 CFR Parts 216, 245, and 252

perwork Reduction Act

This proposed rule reduces the amount of property that will become

Government property under cost-reimbursement contracts. Therefore, the

paperwork burden approved under Office of Management and Budget

Clearance No. 9000-0151 for the proposed FAR rule published at 62 FR

30186 on June 2, 1997, is expected to be reduced.

List of Subjects in 48 CFR Parts 216, 245, and 252

Government procurement.

Michele P. Peterson,

Executive Editor, Defense Acquisition Regulations Council.

There, 48 CFR Parts 216, 245, and 252 are proposed to be amended as

follows:

1. The authority citation for 48 CFR Parts 216, 245, and 252

continues to read as follows:

Auhority: 41 U.S.C. 421 and 48 CFR Chapter 1.

PART 216--TYPES OF CONTRACTS

2. Section 216.307 is added to read as follows:

216.307 Contract clauses.

(a)(1) Use the clause at 252.216-7002, allowable Cost and Payment,

instead of the clause at FAR 52.216--7, Allowable Cost and Payment, in

all cost-reimbursement contracts.

(2) Use the clause at 252.216-7002 with its Alternate I if the

contract is a construction contract that contains the clause at FAR

52.232-27, Prompt Payment for Construction Contracts.

PART 245--GOVERNMENT PROPERTY

3. Section 245.101, 245.101-70, and 245.101-71 are added to read as

follows:

245.101 Policy.

(d) Contractors are expected to have the means to perform DoD

contracts. Furnish property to contractors only under the circumstances

described in FAR 45.201 and only for performance of a specific contract

or contracts.

245.101-70 Equipment, special tooling, and special test equipment.

T PROPERTY

3. Section 245.101, 245.101-70, and 245.101-71 are added to read as

follows:

245.101 Policy.

(d) Contractors are expected to have the means to perform DoD

contracts. Furnish property to contractors only under the circumstances

described in FAR 45.201 and only for performance of a specific contract

or contracts.

245.101-70 Equipment, special tooling, and special test equipment.

Items of equipment, special tooling, or special test equipment that

otherwise may be furnished to contractors under FAR 45.201 shall be

furnished on an ``as is'' basis to the contractor that acquired or

fabricated the items when that contractor needs the items for

performance of follow-on contracts and the Government took title to the

items under 252.245-7002, Right to Title--Equipment, Special Tooling,

and Special Test Equipment.

245.101-71 Disposal and storage.

Immediately dispose of Government furnished property that a

contractor has identified as no longer needed for contract performance

except when there is a contractual requirement to furnish that property

as Government furnished property under a follow-on contract. Contract

for the property's storage when the property owner has a known future

need for the property, a follow-on contract(s) has not been awarded,

and the property will not be used within 60 days of the date upon which

the contractor identified the property as no longer needed for contract

performance.

4. Section 245.102 is added to read as follows:

245.102 Contract clauses.

(a)(1) Use the clause at 252.245-7001, Government Furnished

Property, instead of the clause at FAR 52.245-1, Government Furnished

Property (Fixed-Price and Labor-Hour Contracts), in all solicitations

and contracts for supplies, services, or research and development if

the Government anticipates furnishing property for performance of the

contract.

(2) Use the clause at 252.245-7001 with its Alternate I in fixed-

price competitive contracts or competitive labor-hour contracts.

clause at FAR 52.245-1, Government Furnished

Property (Fixed-Price and Labor-Hour Contracts), in all solicitations

and contracts for supplies, services, or research and development if

the Government anticipates furnishing property for performance of the

contract.

(2) Use the clause at 252.245-7001 with its Alternate I in fixed-

price competitive contracts or competitive labor-hour contracts.

(b)(i) Use the clause at 252.245-7002, Right to Title--Equipment,

special Tooling, and Special Test Equipment, instead of the clause at

FAR 52.245-2, Special Tooling and Special Test Equipment--Right to

Title (Fixed-Price Contracts), in all solications and contracts.

(ii) Use the clause at 252.245-7002 with its Alternate I in cost-

reimbursement or time-and-materials solicitations and contracts for

basic or a applied research to be conducted by nonprofit organizations

whose primary purpose is the conduct of scientific research on

nonprofit in stitutions of higher education (see FAR 35.014).

(c)(i) Use the clause at 252.245-7003, Government Property Control,

instead of the clause at FAR 52.245-3, Government Property Control, in

all solicitations and contracts that include the clause at 252.245-

7001.

(ii) Use the clause at 252.245-7003 with its Alternate I when the

Government will maintain the Government's official property records

(see FAR 45.302(b)).

(d) Use the clause at 252.245-7001, Government Furnished Property,

instead of the clause at FAR 52.245-4, Government Property (Cost-

Reimbursement and Time-and-Material Contracts), in all solicitations

and contracts for supplies, services, or research and development if

the Government anticipates furnishing property for performance of the

contract.

245.505-14 [Removed]

5. Section 245.505-14 is removed.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

6. Section 252.216-7002 is added to read as follows:

252.216-7002 Allowable Cost and Payment.

As prescribed in 216.307(a)(1), used the following clause:

lies, services, or research and development if

the Government anticipates furnishing property for performance of the

contract.

245.505-14 [Removed]

5. Section 245.505-14 is removed.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

6. Section 252.216-7002 is added to read as follows:

252.216-7002 Allowable Cost and Payment.

As prescribed in 216.307(a)(1), used the following clause:

Allowable Cost and Payment (XXX 19XX)

(a) Invoicing. The Government shall make payments to the

Contractor when requested as work progresses, but (except for small

business concerns) not more often than once every 2 weeks, in

amounts determined to be allowable by the Contracting Officer in

accordance with Subpart 31.2 of the Federal Acquisition Regulation

(FAR) in effect on the date of this contract and the terms of this

contract. The Contractor may submit to an authorized representative

of the Contracting Officer, in such form and reasonable detail as

the representative may require, an invoice or voucher supported by a

statement of the claimed allowable cost for performing this

contract.

(b) Reimbursing costs.

(1) For the purpose of reimbursing allowable costs (except as

provided in paragraph (b)(2) of this clause, with respect to

pension, deferred profit sharing, and employee stock ownership plan

contributions), the term ``costs'' includes only--

(i) Those recorded costs that, at the time of the request for

reimbursement, the Contractor has paid by cash, check, or other form

of actual payment for items or services purchased directly for the

contract;

pt as

provided in paragraph (b)(2) of this clause, with respect to

pension, deferred profit sharing, and employee stock ownership plan

contributions), the term ``costs'' includes only--

(i) Those recorded costs that, at the time of the request for

reimbursement, the Contractor has paid by cash, check, or other form

of actual payment for items or services purchased directly for the

contract;

(ii) When the Contractor is not delinquent in paying costs of

contract performance in the ordinary course of business, costs

incurred, but not necessarily paid, for--

(A) Materials issued from the Contractor's inventory and placed

in the production process for use on the contract;

(B) Direct labor;

(C) Direct travel;

(D) Other direct in-house costs; and

(E) Properly allocable and allowable indirect costs, as shown in

the records maintained by the Contractor for purposes of obtaining

reimbursement under Government contracts; and

(iii) The amount of progress and other payments that have been

paid by cash, check, or other form of payment to the Contractor's

subcontractors under similar cost standards.

(2) Contractor contributions to any pension or other post-

retirement benefit, profit-sharing, or employee stock ownership plan

funds that are paid quarterly or more often may be included in

indirect costs for payment purposes; provided, that the Contractor

pays the contribution to the fund within 30 days after the close of

the period covered. Payments made 30 days or more after the close of

a period shall not be included until the Contractor actually makes

the payment. Accrued costs for such contributions that are paid less

often than quarterly shall be excluded from indirect costs for

payment purposes until the Contractor actually makes the payment.

he contribution to the fund within 30 days after the close of

the period covered. Payments made 30 days or more after the close of

a period shall not be included until the Contractor actually makes

the payment. Accrued costs for such contributions that are paid less

often than quarterly shall be excluded from indirect costs for

payment purposes until the Contractor actually makes the payment.

(3) Notwithstanding the audit and adjustment of invoices or

vouchers under paragraph (h) of this clause, allowable indirect

costs under this contract shall be obtained by applying indirect

cost rates established in accordance with paragraph (e) of this

clause.

(4) Any statements in specifications or other documents

incorporated in this contract by reference designating performance

of services or furnishing of materials at the Contractor's expense

or at no cost to the Government shall be disregarded for purposes of

cost reimbursement under this clause.

(c) Title.

(1) Title to property acquired or fabricated by the Contractor

for performance of this

contract, the costs of which are allocable to this contract as

direct costs, shall vest in the Government. For property acquired or

produced prior to execution of this contract, vestiture occurs upon

execution of the contract. Otherwise, vestiture occurs when the

property is or should have been allocable or properly chargeable to

this contract under sound and generally accepted accounting

principles and practices. Except as provided in the Right to Title--

Equipment, Special Tooling, and Special Test Equipment clause of the

contract, upon completion of deliveries under a contract for

supplies or upon completion of effort required under a contract for

services, the Contractor shall have title to all property acquired

or fabricated for this contract that is not required to be delivered

to the Government.

(2) Property to which the Government has obtained title under

this clause is not ``Government furnished property.''

act, upon completion of deliveries under a contract for

supplies or upon completion of effort required under a contract for

services, the Contractor shall have title to all property acquired

or fabricated for this contract that is not required to be delivered

to the Government.

(2) Property to which the Government has obtained title under

this clause is not ``Government furnished property.''

(d) Small business concerns. A small business concern may be

paid more often than every 2 weeks and may invoice and be paid for

recorded costs for items or services purchased directly for the

contract, even though the concern has not yet paid for those items

or services.

(e) Final indirect cost rates.

(1) Final annual indirect cost rates and the appropriate bases

shall be established in accordance with Subpart 42.7 of the FAR in

effect for the period covered by the indirect cost rate proposal.

(2) The Contractor shall, within 90 days after the expiration of

each of its fiscal years, or by a later date approved by the

Contracting Officer, submit to the cognizant Contracting Officer

responsible for negotiating its final indirect cost rates and, if

required by agency procedures, to the cognizant audit activity,

proposed final indirect cost rates for that period and supporting

cost data specifying the contract and/or subcontract to which the

rates apply. The proposed rates shall be based on the Contractor's

actual cost experience for that period. The appropriate Government

representative and the Contractor shall establish the final indirect

cost rates as promptly as practical after receipt of the

Contractor's proposal.

ect cost rates for that period and supporting

cost data specifying the contract and/or subcontract to which the

rates apply. The proposed rates shall be based on the Contractor's

actual cost experience for that period. The appropriate Government

representative and the Contractor shall establish the final indirect

cost rates as promptly as practical after receipt of the

Contractor's proposal.

(3) The Contractor and the appropriate Government representative

shall execute a written understanding setting forth the final

indirect cost rates. The understanding shall specify (i) the agreed-

upon final annual indirect cost rates, (ii) the bases to which the

rates apply, (iii) the periods for which the rates apply, (iv) any

specific indirect cost items treated as direct costs in the

settlement, and (v) the affected contract and/or subcontract,

identifying any with advance agreements or special terms and the

applicable rates. The understanding shall not change any monetary

ceiling, contract obligation, or specific cost allowance or

disallowance provided for in this contract. The understanding is

incorporated into this contract upon execution.

(4) Within 120 days after settlement of the final indirect cost

rates covering the year in which this contract is physically

complete (or longer, if approved in writing by the Contracting

Officer), the Contractor shall submit a completion invoice or

voucher to reflect the settled amounts and rates.

(5) Failure by the parties to agree on a final annual indirect

cost rate shall be a dispute within the meaning of the Disputes

clause of this contract.

cost

rates covering the year in which this contract is physically

complete (or longer, if approved in writing by the Contracting

Officer), the Contractor shall submit a completion invoice or

voucher to reflect the settled amounts and rates.

(5) Failure by the parties to agree on a final annual indirect

cost rate shall be a dispute within the meaning of the Disputes

clause of this contract.

(f) Billing rates. Until final annual indirect cost rates are

established for any period, the Government shall reimburse the

Contractor at billing rates established by the Contracting Officer

or by an authorized representative (the cognizant auditor), subject

to adjustment when the final rates are established. These billing

rates--(1) Shall be the anticipated final rates; and (2) May be

prospectively or retroactively revised by mutual agreement, at

either party's request, to prevent substantial overpayment or

underpayment.

(g) Quick-closeout procedures. Quick-closeout procedures are

applicable when the conditions in FAR 42.708(a) are satisfied.

(h) Audit. At any time or times before final payment, the

Contracting Officer may have the Contractor's invoices or vouchers

and statements of cost audited. Any payment may be reduced by

amounts found by the Contracting Officer not to constitute allowable

costs or adjusted for prior overpayments or underpayments.

(i) Final payment.

(1) Upon approval of a completion invoice or voucher submitted

by the Contractor in accordance with paragraph (e)(4) of this

clause, and upon the Contractor's compliance with all terms of this

contract, the Government shall promptly pay any balance of allowable

costs and that part of the fee (if any) not previously paid.

or adjusted for prior overpayments or underpayments.

(i) Final payment.

(1) Upon approval of a completion invoice or voucher submitted

by the Contractor in accordance with paragraph (e)(4) of this

clause, and upon the Contractor's compliance with all terms of this

contract, the Government shall promptly pay any balance of allowable

costs and that part of the fee (if any) not previously paid.

(2) The Contractor shall pay to the Government any refunds,

rebates, credits, or other amounts (including interest, if any)

accruing to or received by the Contractor or any assignee under this

contract, to the extent that those amounts are properly allocable to

costs for which the Contractor has been reimbursed by the

Government. Reasonable expenses incurred by the Contractor for

securing refunds, rebates, credits, or other amounts shall be

allowable costs if approved by the Contracting Officer. Before final

payment under this contract, the Contractor and each assignee whose

assignment is in effect at the time of final payment shall execute

and deliver--

(i) An assignment to the Government, in form and substance

satisfactory to the Contracting Officer, of refunds, rebates,

credits, or other amounts (including interest, if any) properly

allocable to costs for which the Contractor has been reimbursed by

the Government under this contract; and

(ii) A release discharging the Government, its officers, agents,

and employees from all liabilities, obligations, and claims arising

out of or under this contract, except--

(A) Specified claims stated in exact amounts, or in estimated

amounts when the exact amounts are not known;

(B) Claims (including reasonable incidental expenses) based upon

liabilities of the Contractor to third parties arising out of the

performance of this contract; provided, that the claims are not

known to the Contractor on the date of the execution of the release,

and that the Contractor gives notice of the claims in writing to the

Contracting Officer within 6 years following the re

ot known;

(B) Claims (including reasonable incidental expenses) based upon

liabilities of the Contractor to third parties arising out of the

performance of this contract; provided, that the claims are not

known to the Contractor on the date of the execution of the release,

and that the Contractor gives notice of the claims in writing to the

Contracting Officer within 6 years following the release date or

notice of final payment date, whichever is earlier; and

(C) Claims for reimbursement of costs, including reasonable

incidental expenses, incurred by the Contractor under the patent

clauses of this contract, excluding, however, any expenses arising

from the Contractor's indemnification of the Government against

patent liability.

(End of clause)

ALTERNATE I (XXX 19XX). As prescribed in 216.307(a)(2),

substitute the following paragraph (b)(1)(iii) for paragraph

(b)(1)(iii) of the basic clause:

(iii) The amount of progress and other payments to the

Contractor's subcontractors that either have been paid, or that the

Contractor is required to pay pursuant to the Prompt Payment for

Construction Contracts clause of this contract. Payments shall be

made by cash, check, or other form of payment to the Contractor's

subcontractors under similar cost standards.

7. Section 252.245-7001 is revised to read as follows:

252.245-7001 Government Furnished Property.

As prescribed in 245.102(a) (1) and (d), use the following clause:

Government Furnished Property (XXX 19XX)

(a) Definitions.

The terms defined in the Right to Title--Equipment, Special

Tooling, and Special Test Equipment clause of this contract have the

same meaning in this clause.

ndards.

7. Section 252.245-7001 is revised to read as follows:

252.245-7001 Government Furnished Property.

As prescribed in 245.102(a) (1) and (d), use the following clause:

Government Furnished Property (XXX 19XX)

(a) Definitions.

The terms defined in the Right to Title--Equipment, Special

Tooling, and Special Test Equipment clause of this contract have the

same meaning in this clause.

(b) Property furnished for performance of this contract.

(1) The Government furnished property identified in this

contract may be used for performance of the contract on a rent-free

basis. The Contractor shall not use such property on any other

Government contracts or for commercial purposes without the

Contracting Officer's prior approval. Unless otherwise permitted by

law, commercial use shall be on a rental basis. The terms and

conditions of the Rental Charges for Commercial Use clause of this

contract shall apply to each rental.

(2) The Contractor shall not improve or make structural

alterations to real property owned or leased by the Government and

made available for performance of this contract unless expressly

authorized to do so in writing by the Contracting Officer. Title to

such improvements or alterations shall vest in the Government if the

property is accountable under this contract or will be determined by

the terms of the contract under which the real property is

accountable.

(3) The Government retains title to Government furnished

property including Government furnished property that is

incorporated into or attached to any property it does not own.

Government furnished property does not become a fixture or lose its

identity as personal property by being attached to real property.

(4) The Government shall, when requested by the Contractor,

provide information reasonably required for the property's intended

use to the extent the Government has the right to release or

disclose the information.

or attached to any property it does not own.

Government furnished property does not become a fixture or lose its

identity as personal property by being attached to real property.

(4) The Government shall, when requested by the Contractor,

provide information reasonably required for the property's intended

use to the extent the Government has the right to release or

disclose the information.

(5) If the Contractor commingles Contractor acquired or

fabricated material with

Government furnished material, the provisions of paragraph (c) of

this clause regarding suitability for intended use shall not apply

to the commingled Government furnished material. Notwithstanding any

other provision of this contract, the Contractor shall be

responsible for any failure to comply with contract requirements

attributable to material that was commingled.

(c) Suitability for intended use.

The contract delivery or performance dates are based upon the

expectation that Government furnished property will be suitable for

its intended use, except property furnished ``as is'' (see paragraph

(d) of this clause), and delivered to the Contractor at the times

stated in the contract or, if not so stated, in sufficient time to

enable the Contractor to meet the contract's delivery or performance

dates.

(1) The Contractor shall notify the Contracting Officer promptly

following receipt of Government furnished property that is not

suitable for its intended use and take corrective action or dispose

of the property as directed by the Contracting Officer. The contract

shall be equitably adjusted in accordance with paragraph (g) of this

clause.

(2) The Contractor may request an equitable adjustment when

Government furnished property is not delivered to the Contractor by

the required time and such untimely delivery has affected contract

performance. Any equitable adjustment shall be made in accordance

with paragraph (g) of this clause.

fficer. The contract

shall be equitably adjusted in accordance with paragraph (g) of this

clause.

(2) The Contractor may request an equitable adjustment when

Government furnished property is not delivered to the Contractor by

the required time and such untimely delivery has affected contract

performance. Any equitable adjustment shall be made in accordance

with paragraph (g) of this clause.

(d) Property furnished as is.

(1) Offerors and the Contractor are responsible for assuring

that Government property made available on an ``as is'' basis is

suitable for the offerors' or Contractor's purposes. Such property

is furnished f.o.b. at the location specified in the solicitation or

contract. Any cost incurred by the Contractor to transport, install,

modify, repair, or otherwise make such property suitable for the

Contractor's intended use shall not result in an increase in price

or fee. Modifications to property furnished ``as is'' require the

Contracting Officer's prior written approval.

(2) Equipment, special tooling, or special test equipment is

furnished ``as is'' for performance of this contract if the

Contractor acquired or fabricated, and the Government took title to,

such items under this or a prior contract.

(3) The Government makes no warranty whatsoever with respect to

property furnished ``as is'' except that the property will be in the

same condition when placed at the specified f.o.b. location as when

inspected by the Contractor or, if not inspected by the Contractor,

as of the last date identified in the solicitation or contract for

Contractor inspection. The Contractor is responsible for verifying

that the property's condition has not changed during that period. If

the Contractor determines the property's condition has changed and

such change will adversely affect the Contractor, the Contractor

shall immediately notify the Contracting Officer and identify the

changed condition

tified in the solicitation or contract for

Contractor inspection. The Contractor is responsible for verifying

that the property's condition has not changed during that period. If

the Contractor determines the property's condition has changed and

such change will adversely affect the Contractor, the Contractor

shall immediately notify the Contracting Officer and identify the

changed condition. If the Contracting Officer concurs that the

property's condition has changed, the Contracting Officer may

restore the property or substitute other Government property at no

change in price or fee; permit the Contractor to restore the

property subject to an equitable adjustment; or decline to furnish

the property subject to an equitable adjustment. The foregoing

provisions for adjustment are the exclusive remedies available to

the Contractor. The Government has no liability for changes in the

property's condition discovered after removal from the specified

f.o.b. location.

(4) Repairs to or modifications of property furnished ``as is''

do not affect the Government's title to such property.

(e) Changes in Government furnished property.

(1) The Contracting Officer may increase, decrease, or

substitute other Government property for the property furnished or

to be furnished for performance of this contract or require use of

Government furnished property in lieu of Contractor property.

(2) Except as provided in paragraph (e)(4) of this clause, any

increase in the amount of property furnished for performance of this

contract shall result in an equitable reduction in price or fee, and

an appropriate adjustment of the contract delivery or performance

dates.

rnished for performance of this contract or require use of

Government furnished property in lieu of Contractor property.

(2) Except as provided in paragraph (e)(4) of this clause, any

increase in the amount of property furnished for performance of this

contract shall result in an equitable reduction in price or fee, and

an appropriate adjustment of the contract delivery or performance

dates.

(3) The Contractor may request an equitable adjustment in

accordance with paragraph (g) of this clause for a decrease in or

substitution for the property identified in the contract or

withdrawal of authority to use property accountable under another

contract in performance of this contract, provided such decrease,

substitution, or withdrawal increases the costs of contract

performance.

(4) If the Contracting Officer directs the Contractor to use

Government furnished property in lieu of Contractor property in

performance of this contract, any adjustment to the contract shall

be made in accordance with the Changes clause of this contract.

(f) Limited risk of loss.

(1) The Contractor's liability for loss, theft, or destruction

of, or damage to, Government furnished property accountable under

this contract shall be limited if the Contractor maintains a

property control system that satisfies the requirements of the

Government Property Control clause of this contract (hereinafter

referred to as an approved system).

(2) When the Contractor maintains an approved system, the

Contractor shall not be liable for loss, theft, or destruction of,

or damage to, Government property accountable under this contract

except loss, theft, destruction, or damage for which the Contractor

is expressly responsible under the terms of this contract or loss,

theft, destruction, or damage that results from--

approved system).

(2) When the Contractor maintains an approved system, the

Contractor shall not be liable for loss, theft, or destruction of,

or damage to, Government property accountable under this contract

except loss, theft, destruction, or damage for which the Contractor

is expressly responsible under the terms of this contract or loss,

theft, destruction, or damage that results from--

(i) A risk expressly required to be insured under this contract

but only to the extent of the insurance required to be purchased and

maintained, or to the extent of insurance actually purchased and

maintained, whichever is greater;

(ii) A risk that is in fact covered by insurance or for which

the Contractor is otherwise reimbursed, but only to the extent of

such insurance or reimbursement; or

(iii) Willful misconduct or lack of good faith on the part of

the Contractor's managerial personnel.

(3) Following notice from the Government's property

administrator to one of the Contractor's managerial personnel that

the Contractor's or a subcontractor's property control system is not

in compliance with the requirements of the Government Property

Control clause of this contract, the Contractor's failure to correct

its system or to have a subcontractor's system corrected within the

dates specified by the Government's property administrator, or such

other mutually agreed dates, shall be considered willful misconduct

or lack of good faith on the part of the Contractor's managerial

personnel. The Contractor shall be liable for any loss, theft, or

destruction of, or damage to, the Government furnished property

accountable under this contract except such loss, theft,

destruction, or damage that the Contractor can establish by clear

and convincing evidence--

reed dates, shall be considered willful misconduct

or lack of good faith on the part of the Contractor's managerial

personnel. The Contractor shall be liable for any loss, theft, or

destruction of, or damage to, the Government furnished property

accountable under this contract except such loss, theft,

destruction, or damage that the Contractor can establish by clear

and convincing evidence--

(i) Did not result from the Contractor's failure to maintain an

approved system; or

(ii) Occurred while an approved system was maintained by the

Contractor.

(4) Except as provided in paragraphs (f)(3) (i) and (ii) of this

clause, the Contractor shall be liable for loss, theft, or

destruction of, or damage to, Government furnished property

accountable under this contract immediately upon notice by certified

mail that the Government has withdrawn approval of the Contractor's

property control system.

(5) The Contractor is not liable for Government furnished

property properly consumed in performing this contract. The

Contractor shall have no liability for loss, theft, or destruction

of, or damage to, Government property furnished for performance of

services entirely on real property owned or leased by the Government

when the Contractor does not control the use of, or access to, such

property.

(6) The Contractor's transfer of Government furnished property

to the possession and control of a subcontractor, does not affect

the Contractor's liability for loss, theft, or destruction of, or

damage to, that property.

(7) Except as provided in paragraph (f)(8) of this clause, the

Contractor shall notify the Government's property administrator in

writing promptly following the loss, theft, or destruction of, or

damage to, Government furnished property. Such notice shall

identify--

that the

Contractor does not need for continued performance of this contract

until contract

completion or termination. Such notice shall include the information

required by paragraph (f)(7) of this clause.

(9) The Contractor shall take all reasonable action to protect

damaged Government furnished property from further damage and to

physically separate such property from all other property.

(10) The Contractor shall repair, renovate, or take such other

action with respect to lost, stolen, damaged, or destroyed

Government furnished property as the Contracting Officer directs and

adjust the property records accordingly. When such repair,

renovation, or action is not the Contractor's responsibility under

this contract, the Contractor shall be entitled to an equitable

adjustment in accordance with paragraph (g) of this clause.

Contractor-responsible repairs to, or replacement of, Government

furnished property shall be accomplished at no change price or fee.

(11) The Contractor shall not include in the price or fee of

this contract any charge or reserve for insurance (including any

self-insurance fund or reserve) covering loss, theft, or destruction

of, or damage to, Government furnished property except to the extent

the Government might have expressly required the Contractor to carry

such insurance under another provision of this contract.

(12) If the Contractor is reimbursed or otherwise compensated

for any loss, theft, or destruction of, or damage to, Government

furnished property, the Contractor shall use the proceeds to repair,

renovate, or replace such property or equitably reimburse the

Government, as directed by the Contracting Officer, and adjust the

property records accordingly.

der another provision of this contract.

(12) If the Contractor is reimbursed or otherwise compensated

for any loss, theft, or destruction of, or damage to, Government

furnished property, the Contractor shall use the proceeds to repair,

renovate, or replace such property or equitably reimburse the

Government, as directed by the Contracting Officer, and adjust the

property records accordingly.

(13) The Contractor shall do nothing to prejudice the

Government's rights to recover against third parties for any loss,

theft, or destruction of, or damage to, Government furnished

property. When requested by the Contracting Officer, the Contractor

shall, at Government expense, furnish to the Government all

reasonable assistance and cooperation (including the prosecution of

suit and the execution of instruments of assignment in favor of the

Government) in obtaining recovery.

(g) Equitable adjustments. (1) Equitable adjustments shall be

the Contractor's exclusive remedy for Government actions under this

clause and shall be made in accordance with the procedures of the

Changes clause of this contract. The Government shall not be liable

to suit for breach of contract for--

(i) Any delay in delivery of Government furnished property;

(ii) Delivery of Government furnished property in a condition

not suitable for its intended use;

(iii) An increase or decrease in, or substitution of, Government

furnished property; or

(iv) Failure to repair or replace Government furnished property

when the Government is responsible for repair or replacement.

(2) An equitable adjustment for Government furnished property

that is not in a condition suitable for intended use or the

withdrawal or substitution of Government furnished property may

include an amount for the restoration and rehabilitation of the

Contractor's premises caused by such condition, withdrawal, or

substitution.

erty

when the Government is responsible for repair or replacement.

(2) An equitable adjustment for Government furnished property

that is not in a condition suitable for intended use or the

withdrawal or substitution of Government furnished property may

include an amount for the restoration and rehabilitation of the

Contractor's premises caused by such condition, withdrawal, or

substitution.

(h) Maintenance responsibilities. (1) The Contractor is

responsible for the maintenance of Government furnished property

accountable under this contract, including such property stored at a

Contractor managed site. The Contractor shall perform all

maintenance, including preventive maintenance, necessary to assure

that Government furnished property remains suitable for its intended

use unless the Contracting Officer specifically relieves the

Contractor of its maintenance responsibility for a particular item

or class of items. If routine and preventive maintenance are not

sufficient to sustain a property item's suitability for intended

use, the Contractor shall notify the Contracting Officer promptly

and request direction regarding repair or replacement.

(2) The Contractor shall notify promptly the Government's

property administrator of the need for any replacement of, or major

repair or rehabilitation to, Government furnished property

discovered during its maintenance activities and shall not effect

such repair, replacement, or rehabilitation unless authorized to do

so by the Contracting Officer.

t direction regarding repair or replacement.

(2) The Contractor shall notify promptly the Government's

property administrator of the need for any replacement of, or major

repair or rehabilitation to, Government furnished property

discovered during its maintenance activities and shall not effect

such repair, replacement, or rehabilitation unless authorized to do

so by the Contracting Officer.

(i) Return of Government furnished property. If this contract

requires Government furnished property to be returned directly to

the Government and not entered into the property disposal process--

(1) The Contractor shall notify the Contract Administration

Office of its intent to return such property at least 10 working

days prior to return. Notices shall identify the contracts under

which the items are accountable and provide each item's name,

description, and national stock number, if known, or part number or

identification number.

(2) The property shall be returned to the Government in a

condition suitable for its intended use except--

(i) Lost, stolen, or destroyed property that the Government has

determined will not be replaced;

(ii) Damaged property that the Government has determined will

not be repaired;

(iii) Property consumed in performance of this contract;

(iv) Property attached to, incorporated into, or delivered with,

a deliverable end item; or

(v) Property furnished ``as is'' shall be returned in equal or

better condition than when furnished to the Contractor.

vernment has

determined will not be replaced;

(ii) Damaged property that the Government has determined will

not be repaired;

(iii) Property consumed in performance of this contract;

(iv) Property attached to, incorporated into, or delivered with,

a deliverable end item; or

(v) Property furnished ``as is'' shall be returned in equal or

better condition than when furnished to the Contractor.

(j) Disposal of Government furnished property.--(1) Inventory

disposal schedules. Except as provided in paragraph (i) or (j)(2) of

this clause, the Contractor shall identify Government furnished

property no longer required for performance of this contract using

Standard Form 1428, Inventory Disposal Schedule. Unless the plant

clearance officer has agreed to a different submission basis, or the

contract requires inventory disposal schedules to be submitted

electronically, the Contractor shall prepare separate inventory

disposal schedules for: special test equipment with general purpose

components; special test equipment that does not contain general

purpose components; printing equipment; automatic data processing

equipment; nonnuclear hazardous materials; and nuclear materials.

Property with the same description, condition code, and reporting

location may be grouped in a single line item. Special test

equipment shall be described in sufficient detail to permit an

understanding of the special test equipment's intended use. The

Contractor may annotate the schedule to identify test equipment the

Contractor wishes to purchase from the Government or general purpose

components thereof the Contractor wishes to purchase or use in the

performance of other Government contracts.

(2) Scrap Lists. Contractors that have Government approved scrap

procedures may prepare scrap lists (provided such lists are

consistent with the approved scrap procedures) in lieu of inventory

disposal schedules except for scrap that--

purchase from the Government or general purpose

components thereof the Contractor wishes to purchase or use in the

performance of other Government contracts.

(2) Scrap Lists. Contractors that have Government approved scrap

procedures may prepare scrap lists (provided such lists are

consistent with the approved scrap procedures) in lieu of inventory

disposal schedules except for scrap that--

(i) Requires demilitarization;

(ii) Is a classified item;

(iii) Is generated from classified items;

(iv) Contains hazardous materials; or

(v) Is dangerous to the public health, safety, or welfare.

(3) Corrections. If the plant clearance officer finds that

property identified on an inventory disposal schedule or scrap list

is not accountable under this contract or is not in the quantity or

condition indicated on the inventory disposal schedule or scrap

list, the plant clearance officer may require the Contractor to

correct the inventory disposal schedule or scrap list, may reject

such schedules or lists at any time, or may require submission of an

inventory control schedule in lieu of a scrap list.

(4) Submission requirements. Inventory disposal schedules or

scrap lists shall be submitted to the plant clearance officer for

approval no later than--

(i) 30 days following the Contractor's determination that a

Government furnished property item is no longer required for

performance of the contract;

(ii) 60 days following completion of contract deliveries or

performance or such longer period as may be approved by the plant

clearance officer; or

(iii) 120 days following contract termination in whole or in

part or such longer period as may be approved by the Contracting

Officer.

etermination that a

Government furnished property item is no longer required for

performance of the contract;

(ii) 60 days following completion of contract deliveries or

performance or such longer period as may be approved by the plant

clearance officer; or

(iii) 120 days following contract termination in whole or in

part or such longer period as may be approved by the Contracting

Officer.

(5) Inventory schedule adjustments. The Contractor shall provide

the plant clearance officer at least 10 working days advance written

notice of its intent to remove a Government furnished property item,

including an item identified as scrap, from an approved inventory

disposal schedule. Unless the plant clearance officer objects to the

intended schedule adjustment within the notice period, the

Contractor may make the adjustment upon expiration of the notice

period.

(6) Storage. The Contractor shall store the Government furnished

property identified in an inventory disposal schedule pending

receipt of disposal instructions. If the Government fails to provide

disposal instructions within 120 days following receipt of an

acceptable inventory disposal schedule, the Contractor might be

entitled to

an equitable adjustment for costs incurred to store such property on

or after the 121st day following receipt of an acceptable schedule.

(7) Disposal. Except as provided in paragraph (j)(7)(i) of this

clause, Government furnished property shall not be disposed of until

the Contractor has been authorized to do so by the plant clearance

officer.

l schedule, the Contractor might be

entitled to

an equitable adjustment for costs incurred to store such property on

or after the 121st day following receipt of an acceptable schedule.

(7) Disposal. Except as provided in paragraph (j)(7)(i) of this

clause, Government furnished property shall not be disposed of until

the Contractor has been authorized to do so by the plant clearance

officer.

(i) If the Government does not provide disposition instructions

to the Contractor within 60 days following receipt of an acceptable

scrap list, the Contractor may dispose of the listed scrap.

(ii) The Contractor shall prepare for shipment, deliver f.o.b.

origin, or dispose of Government furnished property as directed by

the plant clearance officer. The Contractor shall remove and destroy

any markings identifying the property as Government property when

the plant clearance officer directs disposal by sale or donation,

notifies the Contractor that the Government has abandoned the

property, or directs the Contractor to scrap the property.

(iii) The net proceeds from a disposal action of scrapped

Government furnished property shall be credited to the contract

under which the Government furnished property was accountable or,

when scrapped Government furnished property cannot be segregated

from other scrap, to an appropriate overhead account. The Contractor

shall credit the net proceeds or other disposal actions in

accordance with instructions provided by the plant clearance

officer.

(iv) The Contracting Officer may require the Contractor to

demilitarize the property prior to shipment or disposal. Any

adjustment in contract price incident to the Contracting Officer's

direction to demilitarize Government furnished property shall be

made in accordance with paragraph (g) of this clause.

sposal actions in

accordance with instructions provided by the plant clearance

officer.

(iv) The Contracting Officer may require the Contractor to

demilitarize the property prior to shipment or disposal. Any

adjustment in contract price incident to the Contracting Officer's

direction to demilitarize Government furnished property shall be

made in accordance with paragraph (g) of this clause.

(8) Contractor removal of property. The Contractor must obtain

the plant clearance officer's approval to remove Government

furnished property from its premises prior to receipt of final

disposition instructions. If approval is granted, the Contractor

shall transport and store the property at no change in price or fee.

The storage facility must be appropriate for assuring the property's

physical safety and suitability for use. Approval does not relieve

the Contractor of liability for loss, theft, or destruction of, or

damage to, such property.

(9) Subcontractor inventory disposal schedules. When the

Contractor permits a subcontractor or supplier to use, at a

subcontractor or supplier managed site, Government property

furnished to the Contractor for performance of this contract, the

Contractor shall require the subcontractor or supplier to submit

inventory disposal schedules or scrap lists to the Contractor in

sufficient time for the Contractor to comply with the requirements

of paragraph (j)(4) of this clause.

contractor or supplier to use, at a

subcontractor or supplier managed site, Government property

furnished to the Contractor for performance of this contract, the

Contractor shall require the subcontractor or supplier to submit

inventory disposal schedules or scrap lists to the Contractor in

sufficient time for the Contractor to comply with the requirements

of paragraph (j)(4) of this clause.

(k) Abandonment and restoration of Contractor's premises. (1)

The Government shall not abandon Government furnished property that

is or contains a hazardous material at a Contractor-owned location

without the Contractor's written concurrence. The Contractor may

request an equitable adjustment incident to such agreement.

(2) The Government, upon notice to the Contractor, may abandon

any nonhazardous Government property in place at which time all

obligations of the Government regarding such abandoned property

shall cease. The Government has no obligation to restore or

rehabilitate the Contractor's premises under any circumstances and,

except as provided in paragraphs (g)(2) and (k)(1) of this clause,

has no liability for such restoration or rehabilitation.

(l) Overseas contracts. In a contract performed outside the

United States, its territories, or possessions, the words

``Government'' and ``Government furnished,'' as used in this clause,

mean ``United States Government'' and ``United States Government

furnished,'' respectively.

(End of clause)

Alternate I (XXX 19XX). As prescribed in 245.102(a)(2),

substitute the following paragraph (f) for paragraph (f) of the

basic clause:

(f) Risk of loss.

(1) Except as provided in paragraph (f)(3) of this clause, the

Contractor is liable for any loss, theft, or destruction of, or

damage to, Government furnished property accountable under this

contract.

(2) Contractor-responsible repairs to, or replacements of,

Government furnished property shall be accomplished at no change in

price or fee.

(3) The Contractor is not liable for--

sk of loss.

(1) Except as provided in paragraph (f)(3) of this clause, the

Contractor is liable for any loss, theft, or destruction of, or

damage to, Government furnished property accountable under this

contract.

(2) Contractor-responsible repairs to, or replacements of,

Government furnished property shall be accomplished at no change in

price or fee.

(3) The Contractor is not liable for--

(i) Government furnished property properly consumed in

performing this contract; or

(ii) Loss, theft, or destruction of, or damage to, Government

furnished property when the Contractor is providing services

performed entirely on real property owned or leased by the

Government and the Contractor does not control the use of, or access

to, the Government furnished property.

(4) Except as provided in paragraph (f)(5) of this clause, the

Contractor shall notify the Government's property administrator in

writing promptly following the loss, theft, or destruction of, or

damage to, Government furnished property. Such notice shall

identify--

(i) Lost, stolen, destroyed, or damaged Government property by

description, contract number, national stock number (if known), and

either part number or identification number;

(ii) The date a loss or theft was discovered or damage or

destruction occurred and, if known, the circumstances;

(iii) Each property item's acquisition cost;

(iv) The contracts affected;

(v) All known interests in commingled property of which the

Government property is a part; and

(vi) The insurance, if any, covering any part of or interest in

such commingled property.

entification number;

(ii) The date a loss or theft was discovered or damage or

destruction occurred and, if known, the circumstances;

(iii) Each property item's acquisition cost;

(iv) The contracts affected;

(v) All known interests in commingled property of which the

Government property is a part; and

(vi) The insurance, if any, covering any part of or interest in

such commingled property.

(5) The Contractor is not required to provide notice of loss,

theft, or destruction of, or damage to, low value property that the

Contractor does not need for continued performance of this contract

until contract completion or termination. Such notice shall include

the contract number and each such property item's acquisition cost,

description, national stock number (if known), and either its part

number or identification number.

(6) The Contractor shall take all reasonable action to protect

damaged Government furnished property from further damage and to

physically separate such property from all other property.

(7) The Contracting Officer may replace, direct the Contractor

to repair or replace, or direct the Contractor to take other

appropriate action regarding lost, stolen, damaged, or destroyed

Government furnished property for which the Government has

specifically assumed such risks in this contract. When lost,

damaged, stolen, or destroyed Government furnished property is

replaced by the Government or the Contractor, the replacement

property shall be entered into the property control system as a

Government furnished property item. Any equitable adjustment

incident to such direction shall be determined in accordance with

paragraph (g) of this clause.

8. Section 252.245-7002 is added to read as follows:

252.245-7002 Right to Title--Equipment, Special Tooling, and Special

Test Equipment.

As prescribed in 245.102(b)(i), use the following clause:

Right to Title--Equipment, Special Tooling, and Special Test Equipment

(XXX 19XX)

table adjustment

incident to such direction shall be determined in accordance with

paragraph (g) of this clause.

8. Section 252.245-7002 is added to read as follows:

252.245-7002 Right to Title--Equipment, Special Tooling, and Special

Test Equipment.

As prescribed in 245.102(b)(i), use the following clause:

Right to Title--Equipment, Special Tooling, and Special Test Equipment

(XXX 19XX)

(a) Definitions.

As used in this clause--

``Contractor's managerial personnel'' means the Contractor's

directors, officers, and any of the Contractor's managers,

superintendents, or equivalent representatives who have supervision

or direction of all or substantially all of the Contractor's

business; or operations at a site connected with performance of this

contract.

``Equipment'' means items whose use is not limited to, or with

only minor modification would be limited to, the development,

production, or maintenance of a particular item or the performance

of a particular service. The term includes, but is not limited to,

automatic data processing equipment, office equipment, construction

equipment, hand tools, machine tools (other than special tooling),

test equipment (other than special test equipment or components

thereof), furniture, and vehicles.

``Government property'' means property the Government owns or

leases.

``Government furnished property'' means property provided by the

Government to a contractor for performance of a contract.

``Low value property'' means equipment, special tooling, or

special test equipment that has an acquisition cost of $2,500 or

less and is not sensitive property.

``Material'' means property to be consumed or expended to

perform a service or produce a deliverable end item and property

incorporated into or attached to an end item. The term includes

assemblies, components, parts, raw and processed materials, and

supplies that may be consumed in normal use in performing a

contract

has an acquisition cost of $2,500 or

less and is not sensitive property.

``Material'' means property to be consumed or expended to

perform a service or produce a deliverable end item and property

incorporated into or attached to an end item. The term includes

assemblies, components, parts, raw and processed materials, and

supplies that may be consumed in normal use in performing a

contract. It does not include equipment, real property, special test

equipment, special tooling, or unique Federal property.

``Nonprofit organization'' means a business entity organized and

operated exclusively for

charitable, scientific, or educational purposes, the net earnings of

which do not inure to the benefit of any private shareholder or

individual, that is exempt from Federal income taxation under

section 501 of the Internal Revenue Code and does not conduct a

substantial portion of its activities carrying on propaganda or

otherwise attempting to influence legislation or participating in

any political campaign on behalf of any candidate for public office.

``Personal property'' means property of any kind or interest in

it except real property, battleships, cruisers, aircraft carriers,

destroyers, submarines, and records of the Government.

``Plant clearance officer'' means a person appointed to perform

plant clearance functions.

``Precious metals'' means silver, gold, platinum, palladium,

iridium, osmium, rhodium, and ruthenium.

``Preventive maintenance'' means regularly scheduled maintenance

performed to sustain suitability for intended use and detect and

correct minor deficiencies before they result in serious

consequences.

``Property'' means real and personal property.

``Property administrator'' means a person appointed to perform

Government property administration.

``Real property'' means land and rights in land, ground

improvements, utility distribution systems, and buildings and other

structures

tability for intended use and detect and

correct minor deficiencies before they result in serious

consequences.

``Property'' means real and personal property.

``Property administrator'' means a person appointed to perform

Government property administration.

``Real property'' means land and rights in land, ground

improvements, utility distribution systems, and buildings and other

structures. It does not include foundations and other work necessary

for installing special tooling, special test equipment, or

equipment.

``Scrap'' means personal property that has no value except its

basic metallic, mineral, or organic content.

``Sensitive property'' means property potentially dangerous to

the public safety or security if stolen, lost, or misplaced, or that

must be subject to exceptional physical security, protection,

control, and accountability such as classified property, weapons,

ammunition, explosives, controlled substances, radioactive

materials, hazardous materials or wastes, or precious metals.

``Special test equipment'' means a test unit or units designed,

fabricated, or modified to accomplish special purpose testing,

groupings of such items, that are interconnected and interdependent

so as to become a new functional entity.,

``Special tooling'' means items, such as jigs, dies, fixtures,

molds, patterns, taps, gauges, or other equipment and manufacturing

aids, that are of such a specialized nature that without substantial

modification or alteration their use is limited to the development,

production, repair, or maintenance of particular supplies or

components thereof, or to the performance of particular services.

``Unique Federal property'' means Government owned personal

property, or components thereof, that is specially designed to

perform or support the mission of one or more Federal agencies and

is not available to the public

ation their use is limited to the development,

production, repair, or maintenance of particular supplies or

components thereof, or to the performance of particular services.

``Unique Federal property'' means Government owned personal

property, or components thereof, that is specially designed to

perform or support the mission of one or more Federal agencies and

is not available to the public.

``Work in process'' means bench stock materials, complete or

incomplete fabricated parts, subassemblies, assemblies, and similar

items that are created during production of deliverable end items or

are required to construct special tooling or special test equipment

needed to produce deliverable end items.

(b) Right to title.--(1) Fixed-price contracts. The Government

has the right, at no change in contract price, to take title to each

special tooling or special test equipment item acquired or

fabricated by the Contractor that is not required to be delivered

under this contract if the item's cost is allocable to this contract

as a direct cost.

(2) Cost-reimbursement contracts. The Government has the right,

at no change in cost or fee, to take title to each--

(i) Special tooling or special test equipment item acquired or

fabricated by the Contractor that is not required to be delivered

under this contract if the item's cost is allocable to this contract

as a direct cost.

(ii) Item of equipment acquired or fabricated by the Contractor

that is not required to be delivered under this contract if the

item's cost is greater than $2,500 and is allocable to this contract

as a direct cost.

(3) Expiration. The Government's rights in paragraphs (b)(1) and

(b)(2) of this clause end upon expiration of the time period in

paragraph (e) of this clause.

(c) Reports. (1) The Contractor shall submit to the Contracting

Officer a report identifying right to title items as soon as

practicable during contract performance but not later than the

earlier of--

this contract

as a direct cost.

(3) Expiration. The Government's rights in paragraphs (b)(1) and

(b)(2) of this clause end upon expiration of the time period in

paragraph (e) of this clause.

(c) Reports. (1) The Contractor shall submit to the Contracting

Officer a report identifying right to title items as soon as

practicable during contract performance but not later than the

earlier of--

(i) 90 days prior to completion of scheduled deliveries (other

than technical data) under this contract; or

(ii) 30 days following the Contractor's determination that a

right to title item is no longer required for contract performance.

For each right to title item or groups of identical items, the

reports shall identify the item's or group's--

(i) Nomenclature;

(ii) Quantity;

(iii) Acquisition cost;

(iv) Contract number;

(v) Part number(s) made or tested; and

(vi) Identification number.

(d) Storage. The Contractor shall store each right to title item

identified in a report required by paragraph (c) of this clause at

no increase in fee or price. The Contractor's storage obligations

for a right to title item end when the Government notifies the

Contractor that it has taken title to that item or upon expiration

of the Government notice period. Items shall be stored in a manner

sufficient to preserve capability and provide protection from

damage. If the Government requires items to be stored subsequent to

the Government's assumption of title, the Contractor might be

entitled to an equitable adjustment as provided in paragraph (g) of

this clause.

hat it has taken title to that item or upon expiration

of the Government notice period. Items shall be stored in a manner

sufficient to preserve capability and provide protection from

damage. If the Government requires items to be stored subsequent to

the Government's assumption of title, the Contractor might be

entitled to an equitable adjustment as provided in paragraph (g) of

this clause.

(e) Assumption of title. (1) The Government must notify the

Contractor that it is taking title to an item or items within 120

days, or such other period mutually agreed upon, following receipt

of a report required by paragraph (c) of this clause or other

written notice from the Contractor identifying the item or items as

no longer required for performance of this contract.

(2) The Government's notice shall be in writing, shall identify

the item(s), and may, in any combination--

(i) Provide packing, packaging, marking, and shipping

instructions;

(ii) Direct the Contractor to prepare the property for storage

at the Contractor's facility or a Government facility; or

(iii) Provide instructions when accountability is to be

transferred to another contract.

(3) The Contractor's storage obligations are not diminished if

the Government notice period, or any extension thereof, extends

beyond the date contract deliveries are completed.

(f) Marking. The Contractor shall legibly and conspicuously mark

property to which the Government has taken title under this contract

with the phrase ``U.S. Government Property'' (or a similar phrase

that conveys Government ownership), as soon as practicable following

the Government's assumption of title.

d, or any extension thereof, extends

beyond the date contract deliveries are completed.

(f) Marking. The Contractor shall legibly and conspicuously mark

property to which the Government has taken title under this contract

with the phrase ``U.S. Government Property'' (or a similar phrase

that conveys Government ownership), as soon as practicable following

the Government's assumption of title.

(g) Price adjustment. The cost and fee of a cost-reimbursement

contract or the price of a fixed-price contract may be equitably

adjusted for costs incurred by the Contractor to store, prepare for

storage, package, pack, or mark for shipment, the equipment, special

tooling, or special test equipment to which the Government has taken

title. Any adjustment shall be made in accordance with the

procedures of the Changes clause of this contract and only to the

extent the Contracting Officer's actions under paragraph (e) of this

clause required the Contractor to incur costs that it would not have

incurred under customary commercial practices.

(h) Risk of loss. The Contractor is responsible for any loss,

theft, or destruction of, or damage to, right to title items during

the period commencing upon the Government's delivery of the notice

required by paragraph (e) of this clause and ending upon placement

aboard a carrier's conveyance (f.o.b. origin) or delivery at the

specified f.o.b. destination point.

(i) Flow down. The Contractor shall insert this or a

substantially similar clause in all contracts and similar

instruments with its first-tier subcontractors or suppliers, other

than subcontractors or suppliers of commercial items, that will

fabricate or acquire equipment, special tooling, or special test

equipment for performance of this contract.

(End of clause)

ALTERNATE I (XXX 19XX). As prescribed in 245.102(b)(ii),

substitute the following paragraph (b) for paragraph (b) of the

basic clause:

instruments with its first-tier subcontractors or suppliers, other

than subcontractors or suppliers of commercial items, that will

fabricate or acquire equipment, special tooling, or special test

equipment for performance of this contract.

(End of clause)

ALTERNATE I (XXX 19XX). As prescribed in 245.102(b)(ii),

substitute the following paragraph (b) for paragraph (b) of the

basic clause:

(b) Right to title--(1) General. The Government has the right,

at no change in cost or fee, to take title to each--

(i) Special tooling or special test equipment item acquired or

fabricated by the Contractor that is not required to be delivered

under this contract if the item's cost is allocable to this contract

as a direct cost.

(ii) Item of equipment acquired or fabricated by the Contractor

that is not required to be delivered under this contract if the

item's cost is greater than $2,500 and is allocable to this contract

as a direct cost.

(2) Expiration. Except as provided in paragraph (b)(3) of this

clause, the

Government's rights in paragraphs (b)(1)(i) and (b)(1)(ii) of this

clause end upon expiration of the time period in paragraph (e) of

this clause.

(3) Relinquishment of rights. Prior to purchasing equipment,

special tooling, or special test equipment with Government funds

provided for the conduct of basic or applied research, nonprofit

organizations whose primary purpose is the conduct of scientific

research or nonprofit institutions of higher education (see FAR

35.014) may request the Contracting Officer to relinquish the

Government's right to take title of such items. If the Contracting

Officer agrees, prior to purchase, the Contractor shall have title

to each such item having an acquisition cost less than $5,000. The

Contractor shall furnish the Contracting Officer a list of all

purchased property to which the Government has relinquished right to

title within 10 days following the end of the calendar quarter

during which the Contractor receives the property

the Contracting

Officer agrees, prior to purchase, the Contractor shall have title

to each such item having an acquisition cost less than $5,000. The

Contractor shall furnish the Contracting Officer a list of all

purchased property to which the Government has relinquished right to

title within 10 days following the end of the calendar quarter

during which the Contractor receives the property. The Contractor

agrees that it will not allocate depreciation or amortization costs

for such property to any existing or future Government contract and

such property may be used by the Government or its subcontractors

without charge in performance of any Government contract or

subcontract thereunder. As a condition for the Government's

relinquishing its rights to title under this clause, the Contractor,

by signing this contract, agrees that--

No person in the United States shall, on the ground of race,

color, or national origin, be excluded from participation in, be

denied the benefits of, or be otherwise subjected to discrimination

(42 U.S.C. 2000d) under this contemplated financial assistance

(title to equipment, special tooling or special test equipment).

9. Section 252.245-7003 is added to read as follows:

252.245-7003 Government Property Control.

As prescribed in 245.102(c)(i), use the following clause:

Government Property Control (XXX 19XX)

(a) Definitions. The terms defined in the Right to Title--

Equipment, Special Tooling, and Special Test Equipment clause of

this contract have the same meaning in this clause.

pecial test equipment).

9. Section 252.245-7003 is added to read as follows:

252.245-7003 Government Property Control.

As prescribed in 245.102(c)(i), use the following clause:

Government Property Control (XXX 19XX)

(a) Definitions. The terms defined in the Right to Title--

Equipment, Special Tooling, and Special Test Equipment clause of

this contract have the same meaning in this clause.

(b) General. (1) This clause is applicable to Government

furnished property and Government property stored by the Contractor

at the Government's direction including property to which the

Government has taken title under the Right to Title--Equipment,

Special Tooling, and Special Test Equipment clause of this contract.

It does not apply to property in which title is vested in the

Government solely as a result of the financing provisions of this

contract.

(2) The Contractor is responsible for the maintenance,

protection, and preservation of Government property in its or its

subcontractors' possession. The Contractor shall account for such

property as required by this contract.

(3) If the Contractor does not have a property control system

that is approved by the Government's property administrator, it

shall establish a system that satisfies the requirements of this

clause within 90 days following contract award (or such other

mutually agreeable period). Notwithstanding any other provision of

this contract regarding liability for loss, theft, or destruction

of, or damage to, Government property in the Contractor's or its

subcontractors' possession, the Contractor shall be liable for such

loss, theft, destruction, or damage until its system is approved by

the Government's property administrator. The Contractor shall

maintain its system during the period Government property is in its

or its subcontractors' possession.

(4) The Contractor should use its existing property control

system or a modification thereof when the existing or modified

system satisfies the requirements of this clause.

, destruction, or damage until its system is approved by

the Government's property administrator. The Contractor shall

maintain its system during the period Government property is in its

or its subcontractors' possession.

(4) The Contractor should use its existing property control

system or a modification thereof when the existing or modified

system satisfies the requirements of this clause.

(c) Control system requirements. The property control system

shall include written processes for--

(1) Assessing the system's efficiency and effectiveness,

recommending corrective action or general improvements, and

implementing appropriate changes;

(2) Obtaining approval of property actions from the responsible

Government representative no later than the time specified in this

contract (when such approval is required by this contract) and

appropriately documenting such approval;

(3) Inspecting property acquired by the Contractor or furnished

by the Government for performance of this contract upon receipt;

(4) Identifying Government property received by the Contractor

that was intended for other persons or discrepancies between the

type, quantity, or condition of Government furnished property

shipped to and actually received by the Contractor and initiating

corrective action;

(5) Promptly entering all Government property into the property

control system;

(6) Ensuring that Government property is properly classified

(see paragraph (f)(2)(viii) of this clause);

(7) Ensuring that Government property's used only as authorized

by the Contracting Officer;

(8) Controlling the distribution and return of pilferable

property;

(9) Scheduling and monitoring Government property maintenance to

ensure timely performance and recording of all maintenance actions;

(10) Accurately recording by type and quantity Government

furnished material consumed during contract performance;

(11) Performing, reporting, and recording all inventories

required by this contract;

trolling the distribution and return of pilferable

property;

(9) Scheduling and monitoring Government property maintenance to

ensure timely performance and recording of all maintenance actions;

(10) Accurately recording by type and quantity Government

furnished material consumed during contract performance;

(11) Performing, reporting, and recording all inventories

required by this contract;

(12) Identifying and reporting lost, damaged, or destroyed

Government property and generating corrective action

recommendations;

(13) Maintaining special security for classified or sensitive

property commensurate with the property's security classification,

special handling requirements, or both;

(14) Accurately preparing and timely submitting the records and

reports required by this contract;

(15) Ensuring the subcontractors have adequate procedures for

the control and protection of Government property;

(16) Justifying the continued need for Government property to

perform this contract;

(17) Moving and storing Government property in a manner

commensurate with the property's handling and storage requirements;

and

(18) Disposing of Government property in accordance with the

requirements of this contract.

(d) Access. The Government shall have access, at all reasonable

times, to the premises at which any Government property is located

and to the Contractor's Government property records and supporting

information.

(e) Property control system submission, review, and approval.

(1) Except as provided in paragraph (e)(2) of this clause, offerors

shall submit their written property control systems and processes

with their offer if--

ve access, at all reasonable

times, to the premises at which any Government property is located

and to the Contractor's Government property records and supporting

information.

(e) Property control system submission, review, and approval.

(1) Except as provided in paragraph (e)(2) of this clause, offerors

shall submit their written property control systems and processes

with their offer if--

(i) The offeror does not have an existing property control

system or its existing system has not been approved by a Government

property administrator;

(ii) The offeror's property control system last was approved, or

approval validated, more than 2 years prior to the date of its

offer;

(iii) A Government property administrator has requested

corrections to the offeror's system or procedures and such

corrections have not been made; or

(iv) Approval of the system has been withdrawn.

(2) The submission requirements in paragraph (e)(1) of this

clause do not apply to offerors that have a Government property

system that has been approved or validated by the Government no more

than 2 years prior to the time for submission offers. Such offerors

are required only to submit to the Government's property

administrator, within 90 days following contract award, changes

required to conform the system with requirements in this contract.

The submission date may be extended by the Government's property

administrator if the property administrator determines that an

extension is warranted.

(3) The Government's property administrator shall review the

Contractor's system for conformance with contract requirements and

approve or require corrections to the system and its implementing

procedures. The Contractor shall accomplish the required corrections

at no change in price or fee.

nt's property

administrator if the property administrator determines that an

extension is warranted.

(3) The Government's property administrator shall review the

Contractor's system for conformance with contract requirements and

approve or require corrections to the system and its implementing

procedures. The Contractor shall accomplish the required corrections

at no change in price or fee.

(4) The Government may review the Contractor's previously

approved system or require the Contractor to review a

subcontractor's system to assure compliance with contract

requirements. The Government's property administrator may validate

approval of, require corrections to, or with the Administrative

Contracting Officer's concurrence, withdraw approval of the

Contractor's system or require the Contractor to have a

subcontractor's system corrected. The Contractor shall implement

corrections required by the Government's property administrator by

the date specified by the property administrator or such other date

agreed upon at no change in price or fee. The Contractor's failure

to implement corrections in a timely manner might result in the

system's approval being withdrawn.

(5) The Contractor shall make available to the Government's

property administrator all records and related information

reasonably required to verify that the Contractor's or a

subcontractor's property control system conforms to contract

requirements. Any disagreement as to the amount or type of

information required for such verification shall be referred to the

Administrative Contracting Officer for resolution.

(f) Property records and supporting information--(1) General.

all records and related information

reasonably required to verify that the Contractor's or a

subcontractor's property control system conforms to contract

requirements. Any disagreement as to the amount or type of

information required for such verification shall be referred to the

Administrative Contracting Officer for resolution.

(f) Property records and supporting information--(1) General.

(i) The Contractor shall establish or maintain a property record

that is current and complete for each Government property item in

its or its subcontractors' possession. Identical items may be

consolidated in a single property record if the consolidated record

provides the information required by this clause. The Contractor

shall identify useable components permanently removed from

Government property as Governmental property items, enter such items

into its property control system, and establish and maintain

appropriate property records. Property records created by a

subcontractor that has an approved property system may be used in

lieu of creating new records.

(ii) If the Contractor has an approved property control system,

its documents evidencing receipt and issue shall be the property

control records for Government material issued for immediate

consumption.

(iii) When the Government is responsible for the replacement of

a property item under this contract and has elected--

(A) To replace or have the Contractor replace the item, the

Contractor shall annotate appropriately the property record for the

item being replaced, close that record, and create a new property

record for the replacement item; or

(B) Not to replace or have the Contractor replace the item, the

Contractor shall close the property record for that item.

item under this contract and has elected--

(A) To replace or have the Contractor replace the item, the

Contractor shall annotate appropriately the property record for the

item being replaced, close that record, and create a new property

record for the replacement item; or

(B) Not to replace or have the Contractor replace the item, the

Contractor shall close the property record for that item.

(iv) The Government shall provide the acquisition cost for

Government furnished property within 30 days following delivery of

the property to the Contractor. The Contractor shall notify the

Government's property administrator promptly if the acquisition cost

information is not received within the period.

(v) Property records are not required for work in process.

(2) Standard information. Each property control record shall

contain the following information.

(i) The item's name, description, and national stock number (if

the item has a national stock number). The national stock number for

property controlled by documents evidencing that receipt and issue

is not required until property disposal.

(ii) Contract number or equivalent code designation.

(iii) Quantity received, issued, and on hand.

(iv) The date of the most recent physical inventory or other

posting reference.

(v) Acquisition cost.

(vi) Current location (for low value property, identify the

initial location only).

(vii) The most recent transaction date.

(viii) The property's classification. (Use only one of the

following for each property item: Land, Buildings, Other Real

Property, Equipment, Special Test Equipment, Special Tooling, Unique

Federal Property, or Material.)

(3) Additional information--(i) Special test equipment records.

The Contractor shall provide the information required by paragraph

(vii) The most recent transaction date.

(viii) The property's classification. (Use only one of the

following for each property item: Land, Buildings, Other Real

Property, Equipment, Special Test Equipment, Special Tooling, Unique

Federal Property, or Material.)

(3) Additional information--(i) Special test equipment records.

The Contractor shall provide the information required by paragraph

(f)(2) of this clause for each general purpose test equipment item

that is a removable or reusable component or Government owned

special test equipment it removal and reuse is economically

feasible.

(ii) Equipment records. Each record shall include the

manufacturer's name, Commercial and Government Entity (CAGE) code or

equivalent information, serial number, and model or part number.

(iii) Real property records. (A) Records are not required for

portable buildings or facilities specifically acquired or

constructed for tests that will result in the destruction of such

buildings or facilities.

(B) Real property records must be itemized, indexed, and contain

a description of the property, its location, original acquisition

cost, a description of property alterations made or construction

work performed by the Contractor including an identification of the

construction sites supporting such alterations or construction, and

separately identify the cost of such alterations or construction.

Supporting documentation shall include maps, drawings, plans,

specifications, and, if necessary, supplementary data needed to

completely describe and value the property.

(C) Costs incurred by the Government or the Contractor, to

acquire, construct, alter, or improve Government owned or leased

real property, including additions, expansions, extensions,

conversions, shall be added to the property's acquisition cost if

they increase the value, life, utility, capability, or

serviceability of the property

ata needed to

completely describe and value the property.

(C) Costs incurred by the Government or the Contractor, to

acquire, construct, alter, or improve Government owned or leased

real property, including additions, expansions, extensions,

conversions, shall be added to the property's acquisition cost if

they increase the value, life, utility, capability, or

serviceability of the property.

(D) The real property records shall be modified and annotated

with a statement of the pertinent facts when property is sold,

transferred, donated, destroyed, abandoned by the Government in

place, or condemned.

(iv) Records of maintenance actions. The property records for

items requiring maintenance shall contain the maintenance schedule,

the dates maintenance actions were performed, and identify and

deficiencies discovered.

(v) Scrap records. (A) The scrap records shall provide the--

(1) Contract number or equivalent code designation from which

the scrap was derived;

(2) Scrap classification by material content; and

(3) Disposition and disposition dates.

(B) When Contractor and Government owned property of the same

stock or classification are used to produce an item or any component

thereof and property scrapped during such production cannot be

identified as Contractor or Government owned property, the

Government property scrap records shall reflect a proportional,

equitable share of such scrap.

(vi) Property returned under warranty. The Contractor shall

establish a separate property record for each item returned for

correction under a warranty and maintain the records on a contract-

by-contract basis. The records shall identify the date received, the

contract number under which the item was returned, the corrective

action performed, and the date the item is returned to the

Government. Once a property record has been established, identical

items received for corrective action shall be added to the

established record and the information required by this paragraph

maintained for each item

s. The records shall identify the date received, the

contract number under which the item was returned, the corrective

action performed, and the date the item is returned to the

Government. Once a property record has been established, identical

items received for corrective action shall be added to the

established record and the information required by this paragraph

maintained for each item.

(vii) Sensitive property. Property records shall legibly and

conspicuously identify sensitive property.

(g) Reports--(1) Government property. The Contractor shall

report all Government property accountable under this contract that

is in its or its subcontractors' possession as of September 30 of

each calendar year or upon completion of all property disposal

actions under this contract, whichever is sooner. The report shall

be prepared using Standard Form 1422, U.S. Government Property in

the Custody of Contractors (or an agency equivalent furnished by the

Contracting Officer), and submitted to the Government's property

administrator no later than October 31 of each calendar year.

(2) Misdirected Government property. The Contractor shall submit

a written report to the Government's property administrator

immediately following receipt of Government property intended for

another person or Government property not required for performance

of a Government contract and request disposition instructions. To

the extent practical, the report shall identify the shipment's

content, the intended recipient, the carrier that made delivery, the

Government activity from which the shipment originated, and the

shipment's current location.

of Government property intended for

another person or Government property not required for performance

of a Government contract and request disposition instructions. To

the extent practical, the report shall identify the shipment's

content, the intended recipient, the carrier that made delivery, the

Government activity from which the shipment originated, and the

shipment's current location.

(3) Late Government furnished property. The Contractor shall

report to the Contracting Officer, with a concurrent copy to the

Government's property administrator, a failure to receive Government

furnished property at the time stated in the contract or, when a

time is not stated, in sufficient time to enable the Contractor to

meet the contract's delivery or performance dates. Each report shall

forward the Contractor's estimate of the extent to which such

failure has affected or might affect contract performance.

(h) Physical inventories.--(1) Periodic. Except for low value

property and work in process, the Contractor shall periodically

physically inventory all Government property in its possession. The

Contractor, with the approval of the property administrator, shall

establish the method, frequency, and procedures for such inventories

to ensure that the existence and location of such property are

accurately established and the records and reports required by this

clause are complete and accurate. For purposes of this clause,

electronic, optical, electro-magnetic, or similar inventory systems

approved by the Government's property administrator satisfy the

requirement for physical inventories.

rocedures for such inventories

to ensure that the existence and location of such property are

accurately established and the records and reports required by this

clause are complete and accurate. For purposes of this clause,

electronic, optical, electro-magnetic, or similar inventory systems

approved by the Government's property administrator satisfy the

requirement for physical inventories.

(2) Contract termination or completion inventories. The

Contractor shall inventory all property furnished by the Government

and all property to which the Government has taken title under this

contract immediately following a notice of

termination or partial termination of this contract or upon

completion of deliveries or performance under the contract except

property that is authorized for use on a follow-on or other

Government contract. Such property does not have to be inventoried

if the Contractor has notified the property administrator that

record balances have been transferred to the receiving contract.

(3) Restriction. The Contractor personnel who perform physical

inventories shall not be the same individuals who maintain the

property records required by this contract or have custody of the

property unless authorized to do so by the property administrator.

(i) Markings. Promptly following receipt of Government furnished

property, the Contractor shall determine whether the property bears

a Government ownership marking, legibly and conspicuously mark

unmarked property with the phrase ``U.S. Government Property'' (or a

similar phrase that conveys Government ownership), and replace any

control numbers affixed by others with the Contractor's control

number.

ngs. Promptly following receipt of Government furnished

property, the Contractor shall determine whether the property bears

a Government ownership marking, legibly and conspicuously mark

unmarked property with the phrase ``U.S. Government Property'' (or a

similar phrase that conveys Government ownership), and replace any

control numbers affixed by others with the Contractor's control

number.

(j) Overseas contracts. In a contract performed outside the

United States, its territories, or possessions, the words

``Government'' and ``Government furnished,'' as used in this clause,

mean ``United States Government'' and ``United States Government

furnished,'' respectively.

(End of clause)

ALTERNATE I (XXX 19XX) As prescribed in 245.102(c)(ii),

substitute the following paragraphs (f) and (g) for paragraphs (f)

and (g) of the basic clause:

(f) Property records. The Contractor shall establish a separate

property record for each Government property item returned for

correction under a warranty and maintain the records on a contract-

by-contract basis. The records shall identify the item's name,

description, property classification, and national stock number (if

the item has a national stock number), the date received, the

contract number under which the item was returned, the corrective

action performed, and the date the item is returned to the

Government. Once a property record has been established, identical

items received for corrective action shall be added to the

established record and the information required by this paragraph

maintained for each item.

as a national stock number), the date received, the

contract number under which the item was returned, the corrective

action performed, and the date the item is returned to the

Government. Once a property record has been established, identical

items received for corrective action shall be added to the

established record and the information required by this paragraph

maintained for each item.

(g) Reports.--(1) Misdirected Government property. The

Contractor shall submit a written report to the Government's

property administrator immediately following receipt of Government

property intended for another person or Government property not

required for performance of a Government contract and request

disposition instructions. To the extent practical, the report shall

identify the shipment's content, the intended recipient, the carrier

that made delivery, the Government activity from which the shipment

originated, and the shipment's current location.

(2) Late Government furnished property. The Contractor shall

report to the Contracting Officer, with a concurrent copy to the

Government's property administrator, a failure to receive Government

furnished property at the time stated in the contract or, when a

time is not stated, in sufficient time to enable the Contractor to

meet the contract's delivery or performance dates. Each report shall

forward the Contractor's estimate of the extent to which such

failure has affected or might affect contract performance.

[FR Doc. 97-27438 Filed 10-16-97; 8:45 am]

BILLING CODE 5000-04-M