**FAA Acquisition Management System Clauses**

**Change 8 - December 11, 1997**

This document transmits revisions, additions, and deletions to FAA
Acquisition Management System clauses and provisions. Unless otherwise
specified, these changes are effective December 11, 1997 and apply to
all screening information requests and contracts issued after December
11, 1997.

Revised or added clauses and provisions are denoted by December 1997 in
the title of the clause or provision.

**A. [CLAUSES REVISED]{.underline}**

The following clauses are revised:

1\. [3.10.3-1, Definitions,]{.underline} is revised to make minor
editorial changes.

2\. [3.10.3-2, Government Property - Basic Clause,]{.underline} is
revised to decrease some of the authority of the property administrator.

[Alternate I,]{.underline} is revised to make minor editorial changes.

[Alternate II,]{.underline} is revised to make minor editorial changes.

3\. [3.10.3-3, Government Property Consolidated Facilities,]{.underline}
is revised to change title requirements for contractor property attached
to Government real property and to delete references to tort liability.

4\. 3[.10.3-4, Liability for the Facilities,]{.underline} is revised to
make minor editorial changes.

5\. [3.10.3-5, Use and Charges,]{.underline} is revised to make minor
editorial changes.

6\. [3.10.3-6, Government Property (Facilities
Acquisition),]{.underline} is revised to delete reference to tort
liability.

7\. [3.10.3-7, Government Property - Facilities Use,]{.underline} is
revised to make minor editorial changes.

[Alternate I]{.underline} is revised to make minor editorial changes.

8\. [3.10.3-8, Special Tooling,]{.underline} is revised to. make minor
editorial changes and to address property tagging.

9\. [3.10.3-9, Special Test Equipment,]{.underline} is revised to make
minor editorial changes.

10\. [3.10.3-10, Management of Government Property in Contractor's
Possession]{.underline} is revised to modify requirements for mandatory
written property control system and to make other minor changes.

11\. [3.10.3-11, Contractor's Maintenance Program,]{.underline} is
revised to make minor editorial changes.

12\. [3.10.3-12, Identification of Government Property,]{.underline} is
revised to make minor editorial changes.

13\. [3.10.3-13, Segregation of Government Property,]{.underline} is
revised to make minor editorial change.

14\. [3.10.3-14, Inventories,]{.underline} is revised to make minor
editorial changes.

15\. [3.10.3-15, Disposition of Government Property,]{.underline} is
revised to make minor editorial changes.

**B. [CLAUSES ADDED]{.underline}**

None.

**C. [CLAUSES REMOVED]{.underline}**

None.

**D. [PRESCRIPTIONS CHANGED]{.underline}**

None.

**E. [DISPOSITION OF THIS CHANGE]{.underline}**

The following clauses are deleted in their entirety and the attached
revised or added clauses are substituted:

**Delete** **Replace with**

[Clause]{.underline} [Dated]{.underline} [Clause]{.underline}
[Dated]{.underline}

3.10.3-1 May 1997 3.10.3-1 December 1997

3.10.3-2 May 1997 3.10.3-2 December 1997

Alternate I May 1997 Alternate I December 1997

Alternate II May 1997 Alternate II December 1997

3.10.3-3 May 1997 3.10.3-3 December 1997

3.10.3-4 May 1997 3.10.3-4 December 1997

3.10.3-5 May 1997 3.10.3-5 December 1997

3.10.3-6 May 1997 3.10.3-6 December 1997

3.10.3-7 May 1997 3.10.3-7 December 1997

Alternate I May 1997 Alternate I December 1997

3.10.3-8 May 1997 3.10.3-8 December 1997

3.10.3-9 May 1997 3.10.3-9 December 1997

3.10.3-10 May 1997 3.10.3-10 December 1997

3.10.3-11 May 1997 3.10.3-11 December 1997

3.10.3-12 May 1997 3.10.3-12 December 1997

3.10.3-13 May 1997 3.10.3-13 December 1997

3.10.3-14 May 1997 3.10.3-14 December 1997

3.10.3-15 May 1997 3.10.3-15 December 1997

**D. [ATTACHMENT]{.underline}**

The added clauses are attached to this change.

**Attachment**

**[Added Clauses]{.underline}**

3.10.3-1, Definitions

3.10.3-2, Government Property - Basic Clause

Alternate I

Alternate II

3.10.3-3, Government Property Consolidated Facilities

3.10.3-4, Liability for the Facilities

3.10.3-5, Use and Charges

3.10.3-6, Government Property (Facilities Acquisition)

3.10.3-7, Government Property - Facilities Use

Alternate I

3.10.3-8, Special Tooling

3.10.3-9, Special Test Equipment

3.10.3-10, Management of Government Property in Contractor's Possession

3.10.3-11, Contractor's Maintenance Program

3.10.3-12, Identification of Government Property

3.10.3-13, Segregation of Government Property

3.10.3-14, Inventories

3.10.3-15, Disposition of Government Property

3.10.3-1 Definitions

DEFINITIONS (DECEMBER 1997)

\(a\) Accessory item - an item that facilitates or enhances the
operation of plant equipment but which is not essential for its
operation.

\(b\) Agency-peculiar property - Government-owned personal property that
is peculiar to the mission of an agency (e.g., military or space
property). It excludes Government material, special test equipment,
special tooling, and facilities.

\(c\) Auxiliary item - an item without which the basic unit of plant
equipment cannot operate.

\(d\) Common item - material that is common to the applicable Government
contract and the Contractor\'s other work.

\(e\) Contractor-acquired property (CAP) - property acquired or
otherwise provided by the Contractor for performing a contract and to
which the Government has title.

\(f\) Contractor inventory -

\(1\) Any property acquired by and in the possession of a Contractor or
subcontractor under a contract for which title is vested in the
Government and which exceeds the amounts needed to complete full
performance under the entire contract;

\(2\) Any property that the Government is obligated or has the option to
take over under any type of contract as a result either of any changes
in the specifications or plans thereunder or of the termination of the
contract (or subcontract thereunder), before completion of the work, for
the convenience or at the option of the Government; and

\(3\) Government-furnished property that exceeds the amounts needed to
complete full performance under the entire contract.

\(g\) Custodial records - written memoranda of any kind, such as
requisitions, issue hand receipts, tool checks, and stock record books,
used to control items issued from tool cribs, tool rooms, and
stockrooms.

\(h\) Discrepancies incident to shipment - all deficiencies incident to
shipment of Government property to or from a Contractor\'s facility
whereby differences exist between the property purported to have been
shipped and property actually received. Such deficiencies include loss,
damage, destruction, improper status and condition coding, errors in
identity or classification, and improper consignment.

\(i\) Facilities - when used in other than a facilities contract, means
property used for production, maintenance, research, development, or
testing. It includes plant equipment and real property. It does not
include material, special test equipment, special tooling, or
agency-peculiar property.

\(j\) Facilities contract - a contract under which Government facilities
are provided to a Contractor or subcontractor by the Government for use
in connection with performing one or more related contracts for supplies
or services. A "related contract" as used in this clause, means a
Government contract or subcontract for supplies or services under which
the use of the facilities is or may be authorized. It is used
occasionally to provide special tooling or special test equipment.
Facilities contracts may take any of the following forms:

\(1\) Facilities acquisition contract providing for the acquisition,
construction , and installation of facilities.

\(2\) Facilities use contract providing for the use, maintenance,
accountability, and disposition of facilities.

\(3\) A consolidated facilities contract, which is a combination of
facilities acquisition and a facilities use contract.

\(k\) Government-furnished property (GFP) - property in the possession
of, or directly acquired by, the Government and subsequently made
available to the Contractor.

\(l\) Government production and research property - Government-owned
facilities, Government owned special test equipment, and special Blank
Sidetooling to which the Government has title or the right to acquire
title.

\(m\) Government property - all property owned by or leased to the
Government or acquired by the Government under the terms of the
contract. It includes both Government-furnished property and
Contractor-acquired property as defined in this section.

\(n\) Individual item record - a separate card, form, document or
specific line(s) of computer data used to account for one item of
property.

\(o\) Line item - a single line entry on a reporting form that indicates
a quantity of property having the same description and condition code
from any one contract at any one reporting location.

\(p\) Material - property that may be incorporated into or attached to a
deliverable end item or that may be consumed or expended in performing a
contract. It includes assemblies, components, parts, raw and processed
materials, and small tools and supplies that may be consumed in normal
use in performing a contract.

\(q\) Nonprofit organization - any corporation, foundation, trust, or
institution operated for scientific, educational, or medical purposes,
not organized for profit, and no part of the net earnings of which
inures to the benefit of any private shareholder or individual.

\(r\) Nonseverable - when related to Government production and research
property, means property that cannot be removed after erection or
installation without substantial loss of value or damage to the property
or to the premises where installed.

\(s\) Personal property - property of any kind or interest in it, except
real property, records of the Federal Government, and naval vessels of
the following categories: battleships, cruisers, aircraft carriers,
destroyers, and submarines.

\(t\) Plant clearance - all actions relating to the screening,
redistribution, and disposal of Contractor inventory from a
Contractor\'s plant or work site. The term \'Contractor\'s plant\'
includes a Contractor-operated Government facility.

\(u\) Plant clearance officer - an authorized representative of the
Contracting Officer assigned responsibility for plant clearance.

\(v\) Plant clearance period - the period beginning on the effective
date of contract completion or termination and ending 90 days (or such
longer period as may be agreed to) after receipt by the Contracting
Officer of acceptable inventory schedules for each property
classification. The final phase of the plant clearance period means that
period after receipt of acceptable inventory schedules.

\(w\) Plant equipment - personal property of a capital nature (including
equipment, machine tools, test equipment, furniture, vehicles, and
accessory and auxiliary items) for use in manufacturing supplies, in
performing services, or for any administrative or general plant purpose.
It does not include special tooling or special test equipment.

\(x\) Precious metals - uncommon and highly valuable metals
characterized by their superior resistance to corrosion and oxidation.
Included are silver, gold, and the platinum group metals-platinum,
palladium, iridium, osmium, rhodium, and ruthenium.

\(y\) Property - all property, both real and personal. It includes
facilities, material, special tooling, special test equipment, and
agency-peculiar property.

\(z\) Property Administrator (PA) - an authorized representative of
Contracting Officer assigned to administer the contract requirements and
obligations relating to Government property.

(aa) Public body - any State, Territory, or possession of the United
States, any political subdivision thereof, the District of Columbia, the
Commonwealth of Puerto Rico, any agency or instrumentality of any of the
foregoing, any Indian tribe, or any agency of the Federal Government.

(bb) Real property - 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 plant equipment.

\(cc\) Reportable property - Contractor inventory that must be reported
for screening in accordance with this subpart before disposition as
surplus, to a separate contract or to a special contract requirement
governing their use or disposition.

(dd) Reporting activity - the Government activity that initiates the
Standard Form 120, Report of Excess Personal Property (or when
acceptable to GSA, by data processing output).

(ee) Salvage - property that because of its worn, damaged, deteriorated,
or incomplete condition or specialized nature, has no reasonable
prospect of sale or use as serviceable property without major repairs,
but has some value in excess of its scrap value.

(ff) Scrap - personal property that has no value except for its basic
material content.

(gg) Screening completion date - the date on which all screening
required by this subpart is to be completed. It includes screening
within the Government and the donation screening period.

(hh) Serviceable or usable property - property that has a reasonable
prospect of use or sale either in its existing form or after minor
repairs or alterations.

\(ii\) Special test equipment - either single or multipurpose integrated
test units engineered, designed, fabricated, or modified to accomplish
special purpose testing in performing a contract. It consists of items
or assemblies of equipment including standard or general purpose items
or components that are interconnected and interdependent so as to become
a new functional entity for special testing purposes. It does not
include material, special tooling, facilities (except foundations and
similar improvements necessary for installing special test equipment),
and plant equipment items used for general plant testing purposes.

(jj) Special tooling - jigs, dies, fixtures, molds, patterns, taps,
gauges, other equipment and manufacturing aids, all components of these
items, and replacement of these items, which are of such a specialized
nature that without substantial modification or alteration their use is
limited to the development or production of particular supplies or parts
thereof or to the performance of particular services. It does not
include material, special test equipment, facilities (except foundations
and similar improvements necessary for installing special tooling),
general or special machine tools, or similar capital items.

(kk) Stock record - perpetual inventory record which shows by
nomenclature the quantities of each item received and issued and the
balance on hand.

(ll) Summary Record - a separate card, form, document or specific
line(s) of computer data used to account for multiple quantities of a
line item of special tooling, special test equipment, or plant equipment
costing less than \$5,000 per unit.

\(mm\) Surplus property - Contractor inventory not required by any
Federal agency.

(nn) Surplus release date (SRD) - the date on which screening of
personal property for Federal use is completed and the property is not
needed for any Federal use. On that date, property becomes surplus and
is eligible for donation.

(oo) Termination inventory - any property purchased, supplied,
manufactured, furnished, or otherwise acquired for the performance of a
contract subsequently terminated and properly allocable to the
terminated portion of the contract. It includes Government-furnished
property. It does not include any facilities, material, special test
equipment, or special tooling that are subject to a separate contract or
to a special contract requirement governing their use or disposition.

(pp) Utility distribution system - includes distribution and
transmission lines, substations, or installed equipment forming an
integral part of the system by which gas, water, steam, electricity,
sewerage, or other utility services are transmitted between the outside
building or structure in which the services are used and the point of
origin, disposal, or connection with some other system. It does not
include communication services.

(qq) Work-in-process - material that has been released to manufacturing,
engineering, design or other services under the contract and includes
undelivered manufactured parts, assemblies, and products, either
complete or incomplete.

*(End of clause)*

3.10.3-2 Government Property - Basic Clause

GOVERNMENT PROPERTY - BASIC CLAUSE (DECEMBER 1997)

Government property is **all** property owned by or leased to the
Government/FAA or acquired by the Government/FAA under the terms of the
contract. It includes both Government-furnished property and
Contractor-acquired property. Government and FAA are synonymous
throughout this document.

\(a\) Government-Furnished Property.

\(1\) The FAA should deliver to the Contractor, for use in connection
with and under the terms of this contract, the Government-furnished
property (GFP) also referred to as Federal Aviation Administration (FAA)
Furnished Property, collectively known as Government property described
in the Schedule or specifications together with any related data and
information that the Contractor may request and is reasonably required
for the intended use of the GFP.

\(2\) The delivery or performance dates for this contract are based upon
the expectation that GFP suitable for use (except for GFP "as is") will
be delivered to the Contractor at the times stated in the Schedule or,
if not so stated, in sufficient time to enable the Contractor to meet
the contract\'s delivery or performance dates.

\(3\) If GFP is received by the Contractor in a condition not suitable
for the intended use, the Contractor shall, upon receipt, notify the
Property Administrator (PA), detailing the facts, and, as directed by
the Property Administrator and at FAA expense, either repair, modify,
return, or otherwise dispose of the property. After completing the
directed action and upon written request of the Contractor, the
Contracting Officer may make an equitable adjustment as provided in
paragraph (h) of this clause.

\(4\) If GFP is not delivered to the Contractor by the required time,
the Contracting Officer will, upon the Contractor\'s timely written
request, make a determination of the delay, if any, caused the
Contractorand shall make an equitable adjustment in accordance with
paragraph (h) of this clause.

\(b\) Changes in Government-furnished property.

\(1\) The Contracting Officer (CO) may, by written notice, (i) decrease
GFP provided or to be provided under this contract, or (ii) substitute
other GFP for the property to be provided by the Government, or to be
acquired by the Contractor for the Government, under this contract. The
Contractor shall promptly take such action as the Property Administrator
may direct regarding the removal, shipment, or disposal of the GFP
covered by such notice.

\(2\) Upon the Contractor's written request, the Contracting Officer,
will make an equitable adjustment to the contract in accordance with
paragraph (h) of this clause, if the Government has agreed in the
Schedule to make the property available for performing this contract and
there is any-

\(i\) Decrease or substitution in this property pursuant to subparagraph
(b)(1) above; or

\(ii\) Withdrawal of authority to use this property, if provided under
any other contract or lease.

\(c\) Title in Government property.

\(1\) The Government shall retain title to all GFP and
Contractor-acquired property (CAP) (collectively referred to as
"Government property").

> \(2\) Reserved.

\(d\) Use of Government property. The Government property shall be used
only for performing this contract unless otherwise provided in this
contract or approved by the Contracting Officer.

\(e\) Property administration.

\(1\) The Contractor shall be directly responsible and accountable for
all Government property provided under this contract, including GFP and
CAP in the possession or control of a subcontractor and should comply
with associated Federal Aviation Administration (FAA) property clauses
and contract requirements.

\(2\) The Contractor shall establish and maintain a program for the use,
maintenance, repair, protection, and preservation of Government property
in accordance with the provisions of FAA Acquisition Management System
(AMS) Clauses Section 3.10.3 Government Property in effect on the date
of this contract. The provisions of the AMS Clauses Section 3.10.3 are
hereby incorporated by reference and made a part of this contract.

\(f\) Access. The FAA and all its designees shall have access at all
reasonable times to the premises in which any Government property is
located for the purpose of inspecting the Government property.

\(g\) Risk of loss or damage to GFP.

\(1\) Unless otherwise provided in this contract, the Contractor assumes
the risk of, and shall be responsible for, any loss or destruction of,
or damage to, Government property upon its delivery to the Contractor or
upon passage of title to the Government under paragraph (c) of this
clause. However, the Contractor is not responsible for reasonable wear
and tear to Government property or for Government property properly
consumed in performing this contract.

\(2\) If damage occurs to Government property, the risk of which has
been assumed by the FAA under this contract, the FAA will replace the
items or the Contractor shall make such repairs as the FAA directs.
However, if the Contractor cannot effect such repairs within the time
required, the Contractor shall dispose of the property as directed by
the Property Administrator. When any property for which the FAA is
responsible is replaced or repaired, the Contracting Officer will make
an equitable adjustment to GFP records in accordance with paragraph (h)
of this clause.

\(h\) Equitable adjustment. When this clause specifies an equitable
adjustment, it shall be made to any affected contract provision in
accordance with the procedures of the Changes clause. When appropriate,
the Contracting Officer may initiate an equitable adjustment in favor of
the FAA. The right to an equitable adjustment shall be the contractor\'s
exclusive remedy. The FAA will not be liable to suit for breach of
contract for:

> \(1\) Any delay in delivery of Government-furnished property;
>
> \(2\) Delivery of GFP in a condition not suitable for its intended
> use;
>
> \(3\) A decrease in or substitution of GFP; or
>
> \(4\) Failure to repair or replace GFP for which the FAA is
> responsible.

\(i\) Final accounting and disposition of Government property. Upon
completing this contract, or at such earlier dates as may be determined
by the Contracting Officer, the Contractor shall submit, in a form
acceptable to the Property Administrator, inventory schedules covering
all items of Government property (including any resulting scrap) not
consumed in performing this contract or delivered to the FAA. The
Contractor shall prepare for shipment, deliver f.o.b. origin/f.o.b.
destination, or dispose of the Government property as directed by the
Contracting Officer. The net proceeds of any such disposal shall be
credited to the contract price or shall be paid to the FAA as directed
by the Contracting Officer.

\(j\) Abandonment and restoration of Contractor\'s premises. Unless
otherwise provided herein, the FAA:

\(1\) May abandon any Government property in place, at which time all
obligations of the FAA regarding such abandoned Government property
shall cease; and

\(2\) Has no obligation to restore or rehabilitate the Contractor\'s
premises under any circumstances (e.g., abandonment, disposition upon
completion of need, or upon contract completion). However, if the GFP
(listed in the Schedule or specifications) is withdrawn or is unsuitable
for the intended use, or if other Government property is substituted,
then the equitable adjustment under paragraph (h) of this clause may
properly include restoration or rehabilitation costs.

\(k\) Communications. All communications under this clause shall be in
writing.

\(l\) Overseas Contracts. If this contract is to be performed outside of
the United States of America, its territories, or possessions, the words
"Government" and "Government-furnished" (wherever they appear in this
clause) shall be construed as "United States Government" and "United
States Government-furnished," respectively.

*(End of clause)*

ALTERNATE I

\(c\) Title in Government property.

> \(2\) Fixed price contracts.

\(i\) Title to Government property shall not be affected by its
incorporation into or attachment to any property not owned by the
Government, nor shall Government property become a fixture or lose its
identity as personal property by being attached to any real property.

\(ii\) Title to each item of facilities and special test equipment
acquired by the Contractor for the Government under this contract shall
pass to and vest in the Government when its use in performing this
contract commences or when the Government has paid for it, which ever is
earlier, whether or not title previously vested in the Government.

\(iii\) If this contract contains a provision directing the Contractor
to purchase material for which the Government will reimburse the
Contractor as a direct item of cost under this contract\--

\(A\) Title to material purchased from a vendor shall pass to and vest
in the Government upon the vendor's delivery of such material; and

\(B\) Title to all other material shall pass to and vest in the
Government upon:

\(a\) Issuance of the material for use in contract performance;

\(b\) Commencement of processing of the material or its use in contract
performance; or

\(c\) Reimbursement of the cost of the material by the Government,
whichever occurs first.

\(g\) Risk of loss or damage to GFP.

\(3\) Fixed price. The Contractor assumes the risk of, and shall be
responsible for, any loss or destruction of, or damage to, Government
property upon its delivery to the Contractor (or upon passage of title
to the Government under paragraph (c) of this clause). However, the
Contractor is not responsible for reasonable wear and tear to Government
property or for Government property properly consumed in performing this
contract.

*(End of clause)*

ALTERNATE II

\(c\) Title in Government property.

> \(2\) Cost, labor hour, time and materials contracts.

\(i\) Title to all property purchased by the Contractor for which the
Contractor is entitled to be reimbursed as a direct item of cost under
this contract shall pass to and vest in the Government upon the vendor's
delivery of such property.

\(ii\) Title to all other property, the cost of which is reimbursable to
the Contractor, shall pass to and vest in the Government:

> \(A\) Issuance of the property for use in contract performance;

\(B\) Commencement of processing of the property for use in contract
performance; or

\(C\) Reimbursement of the cost of the property by the Government,
whichever occurs first.

\(iii\) All Government-furnished property and all property acquired by
the Contractor, title to which vests in the Government under this
paragraph (collectively referred to as "Government property"), are
subject to the provisions of this clause. Title to Government property
shall not be affected by its incorporation into or attachment to any
property not owned by the Government, nor should Government property
become a fixture or lose its identity as personal property by being
attached to any real property.

\(g\) Risk of loss or damage to GFP.

\(3\) Cost, labor hour or time and materials contracts - [limited risk
of loss]{.underline}. The Contractor shall not be liable for loss or
destruction of, or damage to, the Government property provided under
this contract (or, if an educational or nonprofit organization, for
expenses incidental to such loss, destruction, or damage), except as
provided in subparagraph (4) below.

\(4\) The Contractor shall be responsible for loss or destruction of, or
damage to, the Government property provided under this contract
(including expenses incidental to such loss, destruction, or damage)-

\(i\) That results from 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;

\(ii\) That results from 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;

\(iii\) For which the Contractor is otherwise responsible under the
express terms of this contract;

\(iv\) That results from willful misconduct or lack of good faith on the
part of the Contractor's managerial personnel; or

\(v\) That results from a failure on the part of the Contractor, due to
willful misconduct or lack of good faith on the part of the Contractor's
managerial personnel, to establish and administer a program or system
for the control, use, protection, preservation, maintenance, and repair
of Government property as required by this clause.

\(5\) If the Contractor fails to act as provided by subdivision
(g)(4)(v) above, after being notified (by certified mail addressed to
one of the Contractor's managerial personnel) of the Government's
disapproval, withdrawal of approval, or nonacceptance of the system or
program, it shall be conclusively presumed that such failure was due to
willful misconduct or lack of good faith on the part of the Contractor's
personnel. In such event, any loss or destruction of, or damage to, the
Government property shall be presumed to have resulted from such failure
unless the Contractor can establish by clear and convincing evidence
that such loss, destruction, or damage:

\(i\) Did not result from the Contractor's failure to maintain an
approved program or system; or

\(ii\) Occurred while an approved program or system was maintained by
the Contractor.

\(6\) If the Contractor transfers Government property to the possession
and control of a subcontractor, the transfer shall not affect the
liability of the Contractor for loss or destruction of, or damage to,
the property as set forth above. However, the Contractor shall require
the subcontractor to assume the risk of, and be responsible for, any
loss or destruction of, or damage to, the property while in the
subcontractor's possession or control, except to the extent that the
subcontract, with the advance approval of the Contracting Officer,
relieves the subcontractor from such liability. In the absence of such
approval, the subcontract should contain appropriate provisions
requiring the return of all Government property in as good condition as
when received, except for reasonable wear and tear or for its use in
accordance with the provisions of the prime contract.

\(7\) Upon loss or destruction of, or damage to, Government property
provided under this contract, the Contractor shall so notify the
Contracting Officer and shall communicate with the loss and salvage
organization, if any, designated by the Contacting Officer. With the
assistance of any such organization, the Contractor shall take all
reasonable action to protect the Government property from further
damage, separate the damaged and undamaged Government property, put all
the affected Government property in the best possible order, and furnish
to the Contracting Officer a statement of:

> \(i\) The lost, destroyed, or damaged Government property;
>
> \(ii\) The time and origin of the loss, destruction, or damage;

\(iii\) All known interests in commingled property of which the
Government property is a part; and

\(iv\) The insurance, if any, covering any part of or interest in such
commingled property.

\(8\) The Contractor shall repair, renovate, and take such other action
with respect to damaged Government property as the Contracting Officer
directs. If the Government property is destroyed or damaged beyond
practical repair, or is damaged and so commingled or combined with
property of others (including the Contractor's) that separation is
impractical, the Contractor may, with the approval of and subject to any
conditions imposed by the Contracting Officer, sell such property for
the account of the Government. Such sales may be made in order to
minimize the loss to the Government, to permit the resumption of
business, or to accomplish a similar purpose. The Contractor shall be
entitled to an equitable adjustment in the contract price for the
expenditures made in performing the obligations under this subparagraph
(g)(8) in accordance with this clause. However, the Government may
directly reimburse the loss and salvage organization for any of their
charges. The Contracting Officer should give due regard to the
Contractor's liability under this paragraph (g) when making any such
equitable adjustment.

\(9\) The Contractor represents that it is not including in the price,
and agrees it will not hereafter include in any price to the Government,
any charge or reserve for insurance (including any self-insurance fund
or reserve) covering loss or destruction of, or damage to, Government
property, except to the extent that the Government may have expressly
required the Contractor to carry such insurance under another provision
of this contract.

\(10\) The Contractor shall not be reimbursed for, and shall not include
as an item of overhead, the cost of insurance or of any reserve covering
risk of loss or destruction of, or damage to, Government property,
except to the extent that the Government may have expressly required the
Contractor to carry insurance under another provision of this contract.

\(11\) In the event the Contractor is reimbursed or otherwise
compensated for any loss or destruction of, or damage to, Government
property, the Contractor shall use the proceeds to repair, renovate, or
replace the lost, destroyed, or damaged Government property or shall
otherwise credit the proceeds to, or equitably reimburse the Government,
as directed by the Contracting Officer.

\(12\) The Contractor shall do nothing to prejudice the Government's
rights to recover against third parties for any loss or destruction of,
or damage to, Government property. Upon the request of the Contracting
Officer, the Contractor shall, at the Government's expense, furnish to
the Government all reasonable assistance and cooperation (including the
prosecution of suit and execution of instruments of assignment in favor
of the Government) in obtaining recovery. In addition, where a
subcontractor has not been relieved from liability for any loss or
destruction of, or damage to, Government property, the Contractor shall
enforce for the benefit of the Government the liability of the
subcontractor for such loss, destruction, or damage.

The foregoing provisions shall apply to scrap from Government property;
provided, however, that the Contracting Officer may authorize or direct
the Contractor to omit from such inventory schedules any scrap
consisting of faulty castings or forgings or of cutting and processing
waste, such as chips, cuttings, borings, turnings, short ends, circles,
trimmings, clippings, and remnants, and to dispose of such scrap in
accordance with the Contractor's normal practice and account for it as a
part of general overhead or other reimbursable costs in accordance with
the Contractor's established accounting procedures.

*(End of clause)*.

3.10.3-3 Government Property Consolidated Facilities Clause

GOVERNMENT PROPERTY CONSOLIDATED FACILITIES CLAUSE (DECEMBER 1997)

\(a\) Facilities to be provided.

\(1\) The Contractor, at Government expense and subject to the
provisions of this contract, shall acquire, construct, or install the
facilities and perform the related work as described in the Schedule.

\(2\) The Government, subject to the provisions of the Schedule as
Government-furnished facilities. The Contractor, at Government expense,
shall perform the work with respect to those facilities as is described
in the Schedule.

\(3\) All shipments of the facilities shall be made on Government bills
of lading, unless otherwise authorized by the Contracting Officer. The
required number of such Government bills of lading will be furnished to
the Contractor by, and the Contractor shall be accountable therefor to,
the transportation activity designated by the Contracting Officer.

\(b\) Period of this contract. If not otherwise specified in the
contract and if not previously terminated under paragraph (m), the use
of the facilities authorized under this contract shall terminate 5 years
after its effective date. Thereafter, if continued use of the facilities
by the Contractor is mutually desired, the parties shall enter into a
new contract that shall incorporate such provisions as may then be
required by applicable laws and regulations. The parties may, by written
agreement, extend the use of the facilities under this contract beyond
this 5-year period to permit the completion of any then-existing related
contracts and subcontracts.

\(c\) Title in the facilities.

> \(1\) The FAA shall retain title to all Government-furnished property.

\(2\) Title to all facilities and components shall pass to and vest in
the Government upon delivery by the vendor of all such items purchased
by the Contractor for which it is entitled to be reimbursed as a direct
item of cost under this contract.

\(3\) Title to replacement parts furnished by the Contractor in carrying
out its normal maintenance obligations under paragraph (h) shall pass to
and vest in the Government upon completion of their installation in the
facilities.

\(4\) Title to other property, the cost of which is reimbursable to the
Contractor under this contract, shall pass to and vest in the Government
upon:

> \(i\) Issuance of the property for use in performing this contract;

\(ii\) Commencement of processing or use of the property in performing
this contract; or

\(iii\) Reimbursement of the cost of the property by the Government,
whichever occurs first.

\(5\) Title to the facilities shall not be affected by their
incorporation into or attachment to any property not owned by the
Government, nor shall any item of the facilities become a fixture or
lose its identity as personal property by being attached to any real
property. The Contractor shall keep the facilities free and clear of all
liens and encumbrances and, except as otherwise authorized by this
contract or by the Contracting Officer, shall not remove or otherwise
part with possession of, or permit the use by others of, any of the
facilities.

\(6\) The Contractor may, with the written approval of the Contracting
Officer, install, arrange, or rearrange, on Government-furnished
premises, readily movable machinery, equipment, and other items
belonging to the Contractor. Title to any such item shall remain in the
Contractor even though it may be attached to real property owned by the
Government, unless the Contracting Officer determines that it is so
permanently attached that removal would cause substantial injury to
Government property.

\(7\) The Contractor shall not construct or install, at its own expense,
any fixed improvement or structural alterations in Government buildings
or other real property without advance written approval of the
Contracting Officer. Fixed improvement or structural alterations, as
used herein, means any alteration or improvement in the nature of the
building or other real property, that, after completion, cannot be
removed without substantial loss of value or damage to the premises. The
term does not include foundations for production equipment.

\(d\) Transfer of title to the facilities.

\(1\) The Contracting Officer may, at any time during the term of this
contract, transfer title to equipment to the Contractor upon mutually
agreeable terms and conditions. This clause takes precedence over the
title paragraph of the Government property clause of this contract.
However, every agreement to transfer title to equipment shall provide
that the Contractor will not include in the contract price or charge the
Government in any manner for depreciation, amortization, or use of such
equipment.

\(2\) Vesting title under paragraph (1) above is subject to rights
legislation, 42 U.S.C. 2000d. Before title is vested and by signing this
contract, the Contractor accepts and agrees that---"No person in the
United States shall, on the ground of race, color, or national origin,
be excluded from participation in, be denied the benefits of, or be
otherwise subjected to discrimination under this contemplated financial
assistance (title to equipment)."

\(e\) Location of the facilities. The Contractor may use the facilities
at any of the locations specified in the Schedule and, with the prior
written approval of the Contracting Officer, at any other location. In
granting this approval, the Contracting Officer may prescribe such terms
and conditions as may be deemed necessary for protecting the FAA\'s
interest in the facilities involved. Those terms and conditions shall
take precedence over any conflicting provisions of this contract.

\(f\) Notice of use of the facilities. The Contractor shall notify the
Contracting Officer in writing:

\(1\) Whenever use of all facilities for Government work in any
quarterly period averages less than 75 percent of the total use of the
facilities; or

\(2\) Whenever any item of the facilities is no longer needed or usable
for performing existing related contracts that authorize such use.

\(g\) Property control. The Contractor shall maintain property control
procedures and records and a system of identification of the facilities.

\(h\) Maintenance.

\(1\) Except as otherwise provided in the Schedule, the Contractor shall
perform normal maintenance of the facilities in accordance with sound
industrial practice, including protection, preservation, and repair of
the facilities and normal parts replacement for equipment.

\(2\) As soon as practicable after the execution of this contract the
Contractor shall submit to the Contracting Officer a written proposed
maintenance program, including a maintenance records system, in
sufficient detail to show its adequacy. If the Contracting Officer
agrees to the proposed program, it shall become the normal maintenance
obligation of the Contractor. The Contractor\'s performance according to
the approved program shall satisfy the Contractor\'s obligations under
subparagraphs (h)(1) and (h)(5) of this clause.

\(3\) The Contracting Officer may at any time direct the Contractor in
writing to reduce the work required by the normal maintenance program.
If such order reduces the cost of performing the maintenance, an
appropriate equitable adjustment may be made in any affected related
contract that so provides.

\(4\) The Contractor shall perform any maintenance work directed by the
Contracting Officer in writing. Work in excess of the maintenance
required under subparagraphs (h)(1) through (h)(3) of this clause should
be at Government expense. The Contractor shall notify the Contracting
Officer in writing when sound industrial practice requires maintenance
in excess of the normal maintenance program.

\(5\) The Contractor shall keep records of all work done on the
facilities and shall give the Government reasonable opportunity to
inspect these records. When facilities are disposed of under this
contract, the Contractor shall deliver the related records to the
Government or, if the Contracting Officer directs, to third persons.

\(6\) The Contractor\'s obligation under this clause for each item of
facilities shall continue until the item is removed, abandoned, or
disposed of, until the expiration of the 120-day period stated in
subparagraph (n)(4) of this clause; and until the Contractor has
discharged its other obligations under this contract with respect to
such items.

\(i\) Access. The Government and any persons designated by it shall, at
all reasonable times, have access to the premises where any of the
facilities are located.

\(j\) Indemnification of the Government. The Contractor shall indemnify
the Government and hold it harmless against claims for injury to persons
or damage to property of the Contractor or others arising from the
Contractor\'s possession or use of the facilities, except as specified
in AMS clause 3.4.1-11, Insurance\--Liability to Third Persons. However,
the provisions of the Contractor\'s related contracts shall govern any
assumption of liability by the Government for claims arising under those
contracts.

\(k\) Late delivery, diversion, and substitution.

\(1\) The Government should not be liable for breach of contract for any
delay in delivery or nondelivery of facilities to be furnished under
this contract.

\(2\) The Government has the right, at its expense, to divert the
facilities under this contract by directing the Contractor to:

\(i\) Deliver any of the facilities to locations other than those
specified in the Schedule; or

\(ii\) Assign purchase orders or subcontracts for any of the facilities
to the Government or third parties.

\(3\) The Government may furnish any facilities instead of having the
Contractor acquire or construct them. In such event, the Contractor is
entitled to reimbursement for the cost related to the acquisition or
construction of the facilities, including the cost of terminating
purchase orders and subcontracts.

\(4\) Appropriate equitable adjustment may be made in any related
contract that so provides and that is affected by any nondelivery,
delay, diversion, or substitution under this paragraph (k).

\(l\) Representations and warranties.

\(1\) The Government makes no warranty, express or implied, regarding
the condition or fitness for use of any facilities. To the extent
practical, the Contractor shall be allowed to inspect all the facilities
to be furnished by the Government before their shipment.

\(2\) If the Contractor receives facilities in a condition not suitable
for the intended use, the Contractor shall, within 30 days after receipt
and installation thereof, so notify the Contracting Officer, detailing
the facts and, as directed by the Contracting Officer and at Government
expense, either (i) return such item or otherwise dispose of it or (ii)
effect repairs or modifications. An appropriate equitable adjustment may
be made in any related contract that so provides and that is affected by
the return, disposition, repair, or modification of any facilities.

\(m\) Termination of the use of the facilities.

> \(1\) The Contractor may at any time, upon written notice to the
> Contracting Officer, terminate its authority to use any or all of the
> facilities. Termination under this paragraph (m) shall not relieve the
> Contractor of any of its obligations or liabilities under any related
> contract or subcontract affected by the termination.
>
> \(2\) The Contracting Officer may at any time, upon written notice,
> terminate or limit the contractor\'s authority to use any of the
> facilities. Except as otherwise provided in the Failure to Perform
> clause of this contract, an equitable adjustment may be made in any
> related contract of the Contractor that so provides and that is
> affected by such notice.

\(n\) Disposition of the facilities.

\(1\) The provisions of this paragraph (n) shall apply to facilities for
which use has been terminated by either the Contracting Officer or the
Contractor under paragraph (m), except as provided in subparagraph
(n)(2).

\(2\) Unless otherwise directed by the Contracting Officer, this
paragraph shall not apply to facilities terminated by the Contractor
if\--

\(i\) The facilities terminated do not comprise all of the facilities in
the possession of the Contractor; and

\(ii\) The Contracting Officer determines that continued retention of
the facilities will not interfere with the Contractor\'s operations.

\(3\) Within 60 days after the effective date of any notice of
termination given under paragraph (m), or within such longer period as
the Contracting Officer may approve in writing, the Contractor shall
submit to the Contracting Officer, in a form satisfactory to the
Contracting Officer, an accounting for all the facilities covered by the
notice.

\(4\) Within 120 days after the Contractor accounts for any facilities
under subparagraph (n)(3), the Contracting Officer should give written
notice to the Contractor as to the disposition of the facilities, except
as otherwise provided in subparagraph (n)(6). In its disposition of the
facilities, the Government may either:

\(i\) Abandon the facilities in place, in which case all obligations of
the Government regarding such abandoned facilities and the restoration
or rehabilitation of the premises in and on which they are located shall
immediately cease; or

\(ii\) Require the Contractor to comply, at Government expense, with
such directions as the Contracting Officer may give with respect to:

\(A\) The preparation, protection, removal, or shipment of the affected
facilities;

\(B\) The retention or storage of the affected facilities; provided,
that the Contracting Officer should not direct the Contractor to retain
or store any items of facilities in or on real property not owned by the
Government if such retention or storage will interfere with the
contractor\'s operations;

\(C\) The restoration of Government-owned property incident to the
removal of the facilities from such property; and

\(D\) The sale of any affected facilities in such manner, at such times,
and at such price as may be approved by the Government, except that the
Contractor shall not be required to extend credit to any purchaser.

\(5\) If the Contracting Officer fails to give the written notice
required by subparagraph (n)(4) within the prescribed 120-day period,
the Contractor may, upon not less than 30 days\' written notice to the
Government and at Government risk and expense, (i) retain the facilities
in place or (ii) remove any of the affected severable facilities located
in Contractor-owned property and store them at the Contractor\'s plant
or in a public insured warehouse, in accordance with sound practice and
in a manner compatible with their security classification. Except as
provided in this subparagraph, the Government shall not be liable to the
Contractor for failure to give the written notice required by
subparagraph (n)(4).

\(6\) Nonseverable items of the facilities or items of the facilities
subject to patent or proprietary rights shall be disposed of in such
manner as the parties may have agreed to in writing.

\(7\) The Government, either directly or by third persons engaged by it,
may remove or otherwise dispose of any facilities for which the
Contractor\'s authority to use has been terminated, other than those for
which specific provision is made in subparagraph (n)(6).

\(8\) The Contractor shall, within a reasonable time after the
expiration of the 120-day period specified in subparagraph (n)(4),
remove all of its property from the Government property and take such
action as the Contracting Officer may direct in writing with respect to
restoring that Government property (to the extent that it is affected by
the installation of the Contractor\'s property) to its condition before
such installation.

\(9\) Unless otherwise specifically provided in this contract, the
Government shall not be obligated to the Contractor to restore or
rehabilitate any property at the Contractor\'s plant, except for
restoration or rehabilitation costs caused by removal of the facilities
under subdivision (n)(4)(ii). The Contractor agrees to indemnity the
Government against all suits or claims for damages arising out of the
Government\'s failure to restore or rehabilitate any property at the
Contractor\'s plant or property of its subcontractors, except any damage
as may be caused by the negligence of the Government, its agents, or
independent Contractors.

> *(End of clause)*

3.10.3-4 Liability For The Facilities

LIABILITY FOR THE FACILITIES (DECEMBER 1997)

\(a\) The term "Contractor\'s managerial personnel," as used in this
clause, means any of the Contractor\'s directors, officers, managers,
superintendents, or equivalent representatives who have supervision or
direction of:

\(1\) All or substantially all of the Contractor\'s business;

\(2\) All or substantially all of the Contractor\'s operations at any
one plant or separate location in which the facilities are installed or
located; or

\(3\) A separate and complete major industrial operation in connection
with which the facilities are used.

\(b\) The Contractor shall not be liable for any loss or destruction of,
or damage to, the facilities or for expenses incidental to such loss,
destruction, or damage, except as provided in this clause.

\(c\) The Contractor shall be liable for loss or destruction of, or
damage to, the facilities, and for expenses incidental to such loss,
destruction, or damage:

\(1\) That results from 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;

\(2\) That results from 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;

\(3\) For which the Contractor is otherwise responsible under the
express terms of this contract;

\(4\) That results from willful misconduct or lack of good faith on the
part of the Contractor\'s managerial personnel; or

\(5\) That results from a failure, due to willful misconduct or lack of
good faith on the part of the Contractor\'s managerial personnel:

\(i\) To establish, maintain, and administer a system for control of the
facilities in accordance with AMS Clause 3.10.3-2 (e) Property
Administration, or

\(ii\) To maintain and administer a program for maintenance, repair,
protection, and preservation of the facilities, in accordance with AMS
Clause 3.10.3-2 (e) Property Administration, or to take reasonable steps
to comply with any appropriate written direction that the Contracting
Officer may prescribe as reasonably necessary for the protection of the
facilities. If the Government Property clause does not include the
"Property Administration" paragraph, then the Contractor shall exercise
sound industrial practice in complying with the requirements of this
subdivision (c)(5)(ii).

\(d\) If the Contractor fails to act as provided by subparagraph (c)(5)
above, after being notified (by certified mail addressed to one of the
Contractor\'s managerial personnel) of the Government\'s disapproval,
withdrawal of approval, or nonacceptance of the system or program, it
shall be conclusively presumed that such failure was due to willful
misconduct or lack of good faith on the part of the Contractor\'s
managerial personnel. Furthermore, any loss or destruction of, or damage
to, the Government property shall be presumed to have resulted from such
failure unless the Contractor can establish by clear and convincing
evidence that such loss, destruction, or damage:

> \(1\) Did not result from the Contractor\'s failure to maintain an
> approved program or system; or
>
> \(2\) Occurred while an approved program or system was maintained by
> the Contractor.

\(e\) If the Contractor transfers facilities to the possession and
control of a subcontractor, the transfer shall not affect the liability
of the Contractor for loss or destruction of, or damage to, the
facilities. However, the Contractor shall require the subcontractor to
assume the risk of, and be responsible for, any loss or destruction of,
or damage to, the facilities while in the subcontractor\'s possession or
control, except to the extent that the subcontract, with the advance
approval of the Contracting Officer, relieves the subcontractor from
such liability. In the absence of such approval, the subcontract should
contain appropriate provisions requiring the return of all the
facilities in as good condition as when received, except for reasonable
wear and tear or for their utilization in accordance with the provisions
of the prime contract.

\(f\) Unless expressly directed in writing by the Contracting Officer,
the Contractor shall not include in the price or cost under any contract
with the Government the cost of insurance (including self-insurance)
against any form of loss, destruction, or damage to the facilities. Any
insurance required under this clause shall be in such form, in such
amounts, for such periods of time, and with such insurers (including the
Contractor as self-insurer in appropriate circumstances) as the
Contracting Officer shall require or approve. Such insurance shall
provide for 30 days advance notice to the Contracting Officer, in the
event of cancellation or material change in the policy coverage on the
part of the insurer. A certificate of insurance or a certified copy of
such insurance shall be deposited promptly with the Contracting Officer.
The Contractor shall, not less than 30 days before the expiration of
such insurance, deliver to the Contracting Officer a certificate of
insurance or a certified copy of each renewal policy. The insurance
shall be in the name of the United States of America (Agency Name), the
Contractor, and such other interested parties as the Contracting Officer
should approve, and should contain a loss payable clause reading
substantially as follows:

> "Any loss under this policy shall be adjusted with (Contractor) and
> the proceeds, at the direction of the Government, shall be paid to
> (Contractor). Proceeds not paid to (Contractor) shall be paid to the
> office designated by the Contracting Officer."

\(g\) When there is any loss or destruction of, or damage to, the
facilities:

\(1\) The Contractor shall promptly notify the Contracting Officer and,
with the assistance of the Contracting Officer, shall take all
reasonable steps to protect the facilities from further damage, separate
the damaged and undamaged facilities, put all the facilities in the best
possible order, and promptly furnish to the Contracting Officer (and in
any event within 30 days) a statement of:

> \(i\) The facilities lost or damaged;
>
> \(ii\) The time and origin of the loss or damage;

\(iii\) All known interests in commingled property of which the
facilities are a part; and

> \(iv\) Any insurance covering any part of or interest in such
> commingled property;

\(2\) The Contractor shall make such repairs, replacements and
renovations of the lost, destroyed, or damaged facilities, or take such
other action as the Contracting Officer may direct in writing; and
paragraph (g) at Government expense, except to the terms of this clause,
and except as any damage, destruction, or loss is compensated by
insurance.

\(h\) The Government is not obliged to replace or repair the facilities
that have been lost, destroyed, or damaged. If the Government does not
replace or repair the facilities, price, or both, and in any other
contractual condition of the related contracts affected shall be
governed by the terms and conditions of those contracts.

\(i\) Except to the extent of any loss or destruction of, or damage to,
the facilities for which the Contractor is relieved of liability, the
facilities shall be returned to the Government or otherwise disposed of
under the terms of this contract (1) in as good condition as when
received by the Contractor, (2) improved, or (3) as required under the
terms of this contract, less ordinary wear and tear.

\(j\) If the Contractor is in any way compensated (excepting proceeds
from use and occupancy insurance, the cost of which is not borne
directly or indirectly by the Government) for any loss or destruction
of, or damage to, the facilities, the Contractor, as directed by the
Contracting Officer, shall:

> \(1\) Use the proceeds to repair, renovate, or replace the facilities
> involved; or
>
> \(2\) Pay such proceeds to the Government.

\(k\) The Contractor shall do nothing to prejudice the Government\'s
right to recover against third parties for any loss or destruction of,
or damage to, the facilities. Upon the request of the Contracting
Officer, the Contractor shall furnish to the Government, at Government
expense, all reasonable assistance and cooperation (including the
prosecution of suit and the execution of instruments of assignment in
favor of the Government) in obtaining recovery.

*(End of clause)*

3.10.3-5 Use and Charges

USE AND CHARGES (DECEMBER 1997)

\(a\) The Contractor may use the facilities without charge in the
performance of:

> \(1\) Contracts with the Government that specifically authorize such
> use without charge;

\(2\) Subcontracts of any tier under Government prime contracts if the
Contracting Officer having cognizance of the prime contract (i) approves
a subcontract specifically authorizing such use or (ii) otherwise
authorizes such use in writing; and

\(3\) Other work, if the Contracting Officer specifically authorizes in
writing use without charge for such work.

\(b\) If granted written permission by the Contracting Officer, or if it
is specifically provided for in the Schedule, the Contractor may use the
facilities for a rental fee for work other than that provided in
paragraph (a) above. Authorizing such use of the facilities does not
waive any rights of the Government to terminate the Contractor\'s right
to use the facilities. The rental fee shall be determined in accordance
with the following paragraphs.

\(c\) The following bases are or shall be established in writing for the
rental computation prescribed in paragraphs (d) and (e) below in advance
of any use of the facilities on a rental basis:

> \(1\) The rental rates shall be those set forth in Table I.

\(2\) The acquisition cost of the facilities shall be the total cost to
the Government, as determined by the Contracting Officer, and includes
the cost of transportation and installation, if borne by the Government.

\(i\) When Government-owned special tooling or accessories are rented
with any of the facilities, the acquisition cost of the facilities shall
be increased by the total cost to the Government of such tooling or
accessories, as determined by the Contracting Officer.

\(ii\) When any of the facilities are substantially improved at
Government expense, the acquisition cost of the facilities shall be
increased by the increase in value that the improvement represents, as
determined by the Contracting Officer.

\(iii\) The determinations of the Contracting Officer under this
subparagraph (c)(2) shall be final.

\(3\) For the purpose of determining the amount of rental due under
paragraph (d), the rental period shall be not less than 1 month nor more
than 6 months, as approved by the Contracting Officer.

\(4\) For the purpose of computing any credit under paragraph (e), the
unit in determining the amount of use of the facilities shall be direct
labor hours, sales, hours of use, or any other unit of measure that will
result in an equitable apportionment of the rental charge, as approved
by the Contracting Officer.

\(d\) The Contractor shall compute the amount of rentals to be paid for
each rental period by applying the appropriate rental rates to the
acquisition cost of such facilities as may have been authorized for use
in advance for the rental period.

\(e\) The full rental charge for each period shall be reduced by a
credit. The credit equals the rental amount that would otherwise be
properly allocable to the work for which the facilities were used
without charge under paragraph (a). The credit shall be computed by
multiplying the full rental for the rental period by a fraction in which
the numerator is the amount of use of the facilities by the Contractor
without charge during the period, and the denominator is the total
amount of use of the facilities by the Contractor during the period.

\(f\) Within 90 days after the close of each rental period, the
Contractor shall submit to the Contracting Officer a written statement
of the use made of the facilities by the Contractor and the rental due
the Government. At the same time, the Contractor shall make available
such records and data as are determined by the Contracting Officer to be
necessary to verify the information contained in the statement.

\(g\) If the Contractor fails to submit the information as required in
paragraph (f) above, the Contractor shall be liable for the full rental
for the period. However, if the Contractor\'s failure to submit was not
the fault of the Contractor, the Contracting Officer should grant to the
Contractor in writing a reasonable extension of time to submit.

\(h\) Unless otherwise directed in writing by the Contracting Officer,
the Contractor shall give priority in the use of the facilities to
performing contracts and subcontracts of the Contracting Officer having
cognizance of the facilities and shall not undertake any work involving
the use of the facilities that would interfere with performing existing
Government contracts or subcontracts.

\(i\) Concurrently with the submission of the written statement
prescribed by paragraph (f) of this clause, the Contractor shall pay the
rental due the Government under this clause. Payment shall be by check
made payable to the office designated for contract administration and
mailed or delivered to the Contracting Officer. Receipt and acceptance
by the Government of the Contractor\'s check pursuant to this paragraph
shall constitute an accord and satisfaction of the final amount due the
Government hereunder, unless the Contractor is notified in writing
within 180 days following receipt that the amount received is not
regarded by the Government as the final amount due.

\(j\) If the Contractor uses any item of the facilities without
authorization, the Contractor shall be liable for the full monthly
rental, without credit, for such item for each month or part of a month
in which such unauthorized use occurs; provided, however, that the
agency head concerned may, in writing, waive the Contractor\'s liability
for such unauthorized use if the agency head determines that without
such a waiver gross inequity would result. The acceptance of any rental
by the Government under this clause shall not be construed as a waiver
or relinquishment of any rights it may have against the Contractor
growing out of the Contractor\'s unauthorized use of the facilities or
any other failure to perform this contract according to its terms.

**TABLE I - Rental Rates**

\(i\) For real property and associated fixtures, a fair and reasonable
rental shall be established, based on sound commercial practice.

\(ii\) For plant equipment of the types covered in Federal Supply
classes 3405, 3408, 3410, and 3411 through 3419, machine tools; and in
3441 through 3449, secondary metal forming and cutting machines, the
following monthly rates shall apply:

> Age of Equipment Monthly
>
> Rental Rate
>
> Under 2 years old \...\...\...\...\...\...\...\...\...\... 3.0 percent
>
> Over 2 to 3 years old \...\...\...\...\...\...\...\.... 2.0 percent
>
> Over 3 to 6 years old \...\...\...\...\...\...\...\.... 1.5 percent
>
> Over 6 to 10 years old \...\...\...\...\...\...\..... 1.0 percent
>
> Over 10 years old \...\...\...\...\...\...\...\...\...\... 0.75
> percent

The age of each item of the equipment shall be based on the year in
which it was manufactured, with a birthday on January 1 of each year
thereafter. For example, an item of equipment manufactured on July 15,
1978, will be considered to be \'over 1 year old\' on and after January
1, 1979, and \'over 2 years old\' on and after January 1, 1980.

\(iii\) For personal property and equipment not covered in (i) or (ii)
above, a rental shall be established at not less than the prevailing
commercial rate, if any, or, in the absence of such rate, not less than
2 percent per month for electronic test equipment and automotive
equipment and not less than 1 percent per month for all other property
and equipment.

*(End of clause)*

3.10.3-6 Government Property (Facilities Acquisition)

GOVERNMENT PROPERTY (FACILITIES ACQUISITION) (DECEMBER 1997)

\(a\) Facilities to be provided.

\(1\) The Contractor, at Government expense and subject to the
provisions of this contract, shall acquire, construct, or install the
facilities and perform the related work as described in the Schedule.

\(2\) The Government, subject to the provisions of this contract, shall
furnish to the Contractor the facilities identified in the Schedule as
Government-furnished facilities. The Contractor, at Government expense,
shall perform the work with respect to those Government-furnished
facilities as is described in the Schedule.

\(b\) Title in the facilities.

> \(1\) The Government shall retain title to all Government-furnished
> property.

\(2\) Title to all facilities and components shall pass to and vest in
the Government upon delivery by the vendor of all such items purchased
by the Contractor for which it is entitled to be reimbursed as a direct
item of cost under this contract.

\(3\) Title to other property, the cost of which is reimbursable to the
Contractor under this contract, shall pass to and vest in the Government
upon:

> \(i\) Issuance of the property for use in performing this contract;
>
> \(ii\) Commencement of processing or use of the property in performing
> this contract; or

\(iii\) Reimbursement of the cost of the property by the Government,
whichever occurs first.

\(4\) Title to the facilities shall not be affected by their
incorporation into, or attachment to, any property not owned by the
Government, nor shall any item of the facilities become a fixture or
lose its identity as personal property by being attached to any real
property. The Contractor shall keep the facilities free and clear of all
liens and encumbrances and, except as otherwise authorized by this
contract or by the Contracting Officer, shall not remove or otherwise
part with possession of, or permit the use by others of, any of the
facilities.

\(5\) The Contractor may, with the written approval of the Contracting
Officer, install, arrange, or rearrange, on Government-furnished
premises, readily movable machinery, equipment, and other items
belonging to the Contractor. Title to any such item shall remain in the
Contractor even though it may be attached to real property owned by the
Government, unless the Contracting Officer determines that it is so
permanently attached that removal would cause substantial injury to
Government property.

\(6\) The Contractor shall not construct or install, at its own expense,
any fixed improvement or structural alterations in Government buildings
or other real property without advance written approval of the
Contracting Officer. Fixed improvement, or structural alterations, as
used herein, means any alteration or improvement in the nature of the
building or other real property, that, after completion, cannot be
removed without substantial loss of value or damage to the premises. The
term does not include foundations for production equipment.

\(c\) Property control. The Contractor shall maintain property control
procedures and records and a system of identification of the facilities
in accordance with the provisions of FAA Acquisition Management System
(AMS) Clauses Section 3.10.3 Government Property in effect on the date
of this contract. The provisions of the AMS Clauses Section 3.10.3, as
specified in the contract, are hereby incorporated by reference and made
a part of this contract.

\(d\) Access. The Government and any persons designated by it shall, at
all reasonable times, have access to the premises where any of the
facilities are located.

\(e\) Indemnification of the Government. The Contractor shall indemnify
the Government and hold it harmless against claims for injury to persons
or damage to property of the Contractor or others arising from the
Contractor\'s possession or use of the facilities, except as specified
in clause 3.4.1-11, Insurance\--Liability to Third Persons. However, the
provisions of the Contractor\'s related contracts shall govern any
assumption of liability by the Government for claims arising under such
related contracts.

\(f\) Late delivery, diversion, and substitution.

\(1\) The Government shall not be liable for breach of contract for any
delay in delivery or non delivery of facilities to be furnished under
this contract,

\(2\) The Government has the right, at its expense, to divert the
facilities under this contract by directing the Contractor to:

\(i\) Deliver any of the facilities to locations other than those
specified in the Schedule; or

\(ii\) Assign purchase orders or subcontracts for any of the facilities
to the Government or third parties.

\(3\) The Government may furnish any facilities instead of having the
Contractor acquire or construct them. In such event, the Contractor is
entitled to reimbursement for the cost related to the acquisition or
construction of the facilities, including the cost of terminating
purchase orders and subcontracts.

\(4\) Appropriate equitable adjustment may be made in any related
contract that so provides and that is affected by nondelivery, delay,
diversion, or substitution under this paragraph (f).

\(g\) Representations and warranties.

\(1\) The Government makes no warranty, express or implied, regarding
the condition or fitness for use of any facilities. To the extent
practical, the Contractor shall be allowed to inspect all the facilities
to be furnished by the Government before their shipment.

\(2\) If the Contractor receives facilities in a condition not suitable
for the intended use, the Contractor shall, within 30 days after receipt
and installation thereof, so notify the Contracting Officer, detailing
the facts, and, as directed by the Contracting Officer and at Government
expense, either (i) return such item or otherwise dispose of it or (ii)
effect repairs or modifications. An appropriate equitable adjustment may
be made in any related contract that so provides and that is affected by
the return, disposition, repair, or modification of any facilities.

\(h\) Supersedure. Upon acquisition, construction, or installation of
the facilities called for by this contract, or any usable increment of
the facilities, and acceptance by the Government, the facilities shall
then be subject to the provisions of the facilities contract that
authorizes the use of the items.

*(End of clause)*

3.10.3-7 Government Property (Facilities Use)

GOVERNMENT PROPERTY - FACILITIES USE (DECEMBER 1997)

\(a\) Period of this contract. If not otherwise specified in this
contract and if not previously terminated under paragraph (j) of this
clause, the use of the facilities authorized under this contract shall
terminate 5 years after its effective date. Thereafter, if continued use
of the facilities by the Contractor is mutually desired, the parties
shall enter into a new contract that shall incorporate such provisions
as may then be required by applicable laws and regulations. The parties
may, by written agreement, extend the use of the facilities under this
contract beyond this 5-year period to permit the completion of any
then-existing related contracts and subcontracts.

\(b\) Title in the facilities.

\(1\) Title to the facilities shall remain in the Government. Title to
parts replaced by the Contractor in carrying out its normal maintenance
obligations under paragraph (f) shall pass to and vest in the Government
upon completion of their installation in the facilities.

\(2\) Title to the facilities shall not be affected by their
incorporation into or attachment to any property not owned by the
Government, nor shall any item of the facilities become a fixture or
lose its identity as personal property by being attached to any real
property. The Contractor shall keep the facilities free and clear of all
liens and encumbrances and, except as otherwise authorized by this
contract or by the Contracting Officer, shall not remove or otherwise
part with possession of, or permit the use by others of, any of the
facilities.

\(3\) The Contractor may, with the written approval of the Contracting
Officer, install, arrange, or rearrange, on Government-furnished
premises, readily movable machinery, equipment, and other items
belonging to the Contractor. Title to any such item shall remain in the
Contractor even though it may be attached to real property owned by the
Government, unless the Contracting Officer determines that it is so
permanently attached that removal would cause substantial injury to
Government property.

\(4\) The Contractor shall not construct or install, at its own expense,
any fixed improvement or structural alterations in Government buildings
or other real property without advance written approval of the
Contracting Officer. Fixed improvement or structural alterations, as
used herein, means any alteration or improvement in the nature of the
building or other real property that, after completion, cannot be
removed without substantial loss of value or damage to the premises. The
term does not include foundations for production equipment.

\(c\) Location of the facilities. The Contractor may use the facilities
at any of the locations specified in the Schedule and, with the prior
written approval of the Contracting Officer, at any other location. In
granting this approval, the Contracting Officer may prescribe such terms
and conditions as may be deemed necessary for protecting the
Government\'s interest in the facilities involved. Those terms and
conditions shall take precedence over any conflicting provisions of this
contract.

\(d\) Notice of use of the facilities. The Contractor shall notify the
Contracting Officer in writing:

\(1\) Whenever use of all facilities for Government work in any
quarterly period averages less than 75 percent of the total use of the
facilities; or

\(2\) Whenever any item of the facilities is no longer needed or usable
for performing existing related contracts that authorize such use.

\(e\) Property control. The Contractor shall maintain property control
procedures and records, and a system of identification of the
facilities, in accordance with the provisions of FAA Acquisition
Management System (AMS) Clauses Section 3.10.3 Government Property in
effect on the date of this contract. The provisions of FAA AMS Clauses
Section 3.10.3, as specified in the contract, are hereby incorporated by
reference and made a part of this contract.

\(f\) Maintenance.

\(1\) Except as otherwise provided in the Schedule, the Contractor shall
protect, preserve, maintain (including normal parts replacement), and
repair the facilities in accordance with sound industrial practice.

\(2\) As soon as practicable after the execution of this contract, the
Contractor shall submit to the Contracting Officer a written proposed
maintenance program, including a maintenance records system, in
sufficient detail to show the adequacy of the proposed program. If the
Contracting Officer agrees to the proposed program, it shall become the
normal maintenance obligation of the Contractor. The Contractor\'s
performance according to the approved program shall satisfy the
contractor\'s obligations under subparagraphs (f)(1) and (f)(5) of this
clause.

\(3\) The Contracting Officer may at any time direct the Contractor in
writing to reduce the work required by the normal maintenance program.
If such order reduces the cost of performing the maintenance, an
appropriate equitable adjustment may be made in any affected related
contract that so provides.

\(4\) The Contractor shall perform any maintenance work directed by the
Contracting Officer in writing. Work in excess of the maintenance
required under subparagraphs (f)(1) through (f)(3) of this clause shall
be at Government expense. The Contractor shall notify the Contracting
Officer in writing when sound industrial practice requires maintenance
in excess of the normal maintenance program.

\(5\) The Contractor shall keep records of all work done on the
facilities and shall give the Government reasonable opportunity to
inspect such records. When facilities are disposed of under this
contract the Contractor shall deliver the related records to the
Government or, if directed by the Contracting Officer, to third persons.

\(6\) The Contractor\'s obligation under this clause for each item of
facilities shall continue until the item is removed, abandoned, or
disposed of at the expiration of the 120-day period stated in
subparagraph (k)(4) of this clause and when the Contractor has
discharged its other obligations under this contract with respect to
such items.

\(g\) Access. The Government and any persons designated by it shall, at
all reasonable times, have access to the premises where any of the
facilities are located.

\(h\) Indemnification of the Government. The Contractor shall indemnify
the Government and hold it harmless against claims for injury to persons
or damage to property of the Contractor or others arising from the
Contractor\'s possession or use of the facilities under this contract.
However, the provisions of the Contractor\'s related contracts shall
govern any assumption of liability by the Government for claims arising
under those contracts.

\(i\) Representations and warranties.

\(1\) The Government makes no warranty, express or implied, regarding
the condition or fitness for use of any facilities. To the extent
practical, the Contractor shall be allowed to inspect all the facilities
to be furnished by the Government before their shipment.

\(2\) If the Contractor receives facilities in a condition not suitable
for the intended use, the Contractor shall, within 30 days after receipt
and installation thereof, so notify the Contracting Officer, detailing
the facts, and, as directed by the Contracting Officer and at Government
expense, either (i) return such item or otherwise dispose of it or (ii)
effect repairs or modifications. An appropriate equitable adjustment may
be made in any related contract that so provides and that is affected by
the return, disposition, repair, or modification of any facilities.

\(j\) Termination of use of the facilities.

\(1\) The Contractor may at any time, upon written notice to the
Contracting Officer, terminate its authority to use any or all of the
facilities. Termination under this paragraph (j) shall not relieve the
Contractor of any of its obligations or liabilities under any related
contract or subcontract affected by the termination.

\(2\) The Contracting Officer may at any time, upon written notice,
terminate or limit the Contractor\'s authority to use any of the
facilities. Except as otherwise provided in the Failure to Perform
clause of this contract, an equitable adjustment may be made in any
related contract of the Contractor that so provides and that is affected
by such notice.

\(k\) Disposition of the facilities.

\(1\) The provisions of this paragraph (k) shall apply to facilities
whose use has been terminated by either the Contracting Officer or the
Contractor under paragraph (j), except as provided in subparagraph
(k)(2).

\(2\) Unless otherwise directed by the Contracting Officer, this
paragraph (k) shall not apply to facilities terminated by the Contractor
if:

\(i\) The facilities terminated do not comprise all of the facilities in
the possession of the Contractor; and

\(ii\) The Contracting Officer determines that continued retention of
the facilities will not interfere with the Contractor\'s operations.

\(3\) Within 60 days after the effective date of any notice of
termination given under paragraph (j) or within such longer period as
the Contracting Officer may approve in writing, the Contractor shall
submit to the Contracting Officer an accounting for all the facilities
covered by such notice. The submission of the Contractor shall be in a
form satisfactory to the Contracting Officer.

\(4\) Within 120 days after the Contractor accounts for any facilities
under subparagraph (k)(3), the Contracting Officer shall give written
notice to the Contractor as to the disposition of the facilities, except
as otherwise provided in subparagraph (k)(6). In its disposition of the
facilities, the Government may either:

\(i\) Abandon the facilities in place, in which case all obligations of
the Government regarding such abandoned facilities and the
rehabilitation of the premises in and on which they are located shall
immediately cease; or

\(ii\) Require the Contractor to comply, at Government expense, with
such directions as the Contracting Officer may give with respect to:

\(A\) The preparation, protection, removal, or shipment of the affected
facilities;

\(B\) The retention or storage of the affected facilities; provided,
that the Contracting Officer shall not direct the Contractor to retain
or store any items of facilities in or on real property not owned by the
Government if such retention or storage will interfere with the
Contractor\'s operations;

\(C\) The restoration of Government-owned property incident to the
removal of the facilities from such property; and

\(D\) The sale of any affected facilities in such manner, at such times,
and at such price as may be approved by the Government, except that the
Contractor shall not be required to extend credit to any purchaser.

\(5\) If the Contracting Officer fails to give the written notice
required by subparagraph (k)(4) of this clause within the prescribed
120-day period, the Contractor may, upon not less than 30 days\' written
notice to the Government, and at Government risk and expense, (i) retain
the facilities in place or (ii) remove any of the affected severable
facilities located in Contractor-owned property and store them at the
Contractor\'s plant or in a public insured warehouse. Such removal and
storage shall be in accordance with sound practice and in a manner
compatible with the security classification of the facilities. Except as
provided in this subparagraph (k)(5), the Government shall not be liable
to the Contractor for failure to give the written notice required by
subparagraph (k)(4).

\(6\) Nonseverable items of the facilities or items of the facilities
subject to patent or proprietary rights shall be disposed of in such
manner as the parties may have agreed to in writing.

\(7\) The Government, either directly or by third persons engaged by it,
may remove or otherwise dispose of any facilities for which the
Contractor\'s authority to use has been terminated, other than those for
which specific provision is made in subparagraph (k)(6).

\(8\) The Contractor shall, within a reasonable time after the
expiration of the 120-day period specified in subparagraph (k)(4),
remove all of its property from the Government property and take such
action as the Contracting Officer may direct in writing with respect to
restoring such Government property, to the extent that it is affected by
the installation of the Contractor\'s property, to its condition before
such installation.

\(9\) Unless otherwise specifically provided in this contract, the
Government shall not be obligated to the Contractor to restore or
rehabilitate any property at the Contractor\'s plant, except for
restoration or rehabilitation costs caused by removal of the facilities
under subdivision (k)(4)(ii). The Contractor agrees to indemnify the
Government against all suits or claims for damages arising out of the
Government\'s failure to restore or rehabilitate any property at the
Contractor\'s plant or property of its subcontractors, except any damage
as may be caused by the negligence of the Government, its agents, or
independent Contractors.

\(l\) Supersedure.

\(1\) Facilities previously provided to the Contractor under the
contracts specified in the Schedule of this contract shall become
subject to this contract upon its effective date. The terms of those
contracts by which such facilities were previously provided to the
Contractor are hereby superseded with respect to such facilities, except
for rights and obligations that may have accrued under such other
contract before the effective date of this contract.

\(2\) Facilities subsequently provided the Contractor under any contract
shall, if that contract so specifies, be subject to this contract upon
the completion of their construction, acquisition, and installation or
upon their availability for use, whichever occurs first, except as
otherwise provided in the contract or other document by which such
facilities are provided to the Contractor.

*(End of clause)*

ALTERNATE I

\(b\) Title to equipment.

\(1\) Title to equipment (and other tangible personal property) having a
unit acquisition cost of less than \$5,000 purchased with funds
available for research shall vest in the Contractor upon acquisition or
as soon thereafter as feasible, provided that the Contractor received
the Contracting Officer\'s approval before acquiring the equipment.
Title to other equipment purchased with Government funds shall vest in
the Government. The Government may at any time during the term of this
contract or upon its completion or termination transfer to the
Contractor the title to any equipment purchased with funds available for
research. Any such transfer shall be upon terms and conditions agreed to
by the parties. The Contractor agrees that it shall not charge under any
Government contract or subcontract any depreciation, amortization, or
use of the equipment purchased or transferred under this paragraph. When
title to equipment is vested in the Contractor or is transferred under
this paragraph to the Contractor, the equipment ceases to be Government
property. Within 10 days after the end of the calendar quarter in which
such acquisition or transfer of title occurs, the Contractor shall
furnish the Contracting Officer a list of all equipment, title to which
is vested in the Contractor.

> \(2\) The Government shall retain title to all Government-furnished
> property.

\(i\) Except as set forth in paragraph (b) of this clause, title to all
property shall pass to and vest in the Government upon delivery by the
vendor of all such items purchased by the Contractor for which it is
entitled to be reimbursed as a direct item of cost under this or a
related contract.

\(ii\) Title to replacement parts furnished by the Contractor in
performing its normal obligations under paragraph (f) of this clause
shall pass to and vest in the Government upon completion of their
installation in the facilities.

\(iii\) Title to other property, the cost of which is reimbursable to
the Contractor under this contract or a related contract, shall pass to
and vest in the Government upon:

> \(A\) Issuance of the property for use in performing this contract;

\(B\) Commencement of processing or use of the property in performing
this contract; or

\(C\) Reimbursement of the cost of the property by the Government,
whichever occurs first.

\(3\) Title to the facilities shall not be affected by their
incorporation into or attachment to any property not owned by the
Government, nor shall any item of the facilities become a fixture or
lose its identity as personal property by being attached to any real
property. The Contractor shall keep the facilities free and clear of all
liens and encumbrances and, except as otherwise authorized by this
contract or by the Contracting Officer, shall not remove or otherwise
part with possession of, or permit the use by others of, any of the
facilities.

\(4\) The Contractor may, with the written approval of the Contracting
Officer, install, arrange, or rearrange, on Government-furnished
premises, readily movable machinery, equipment, and other items
belonging to the Contractor. Title to any such items shall remain in the
Contractor even though it may be attached to real property owned by the
Government, unless the Contracting Officer determines that it is so
permanently attached that removal would cause substantial injury to
Government property.

\(5\) The Contractor shall not construct or install, at its own expense,
any fixed improvement or structural alterations in Government buildings
or other real property without advance written approval of the
Contracting Officer. Fixed improvement, as used herein, means any
alteration or improvement in the nature of the building or other real
property that, after completion, cannot be removed without substantial
loss of value or damage to the premises. The term does not include
foundations for production equipment.

\(6\) Vesting title under this paragraph (b) is subject to civil rights
legislation, 42 U.S.C. 2000d. Before title is vested and by signing this
contract, the Contractor accepts and agrees that\--

> "No person in the United States shall, on the ground of race, color,
> or national origin, be excluded from participation in, be denied the
> benefits of, or be otherwise subjected to discrimination under this
> contemplated financial assistance (title to equipment)."

*(End of clause)*

3.10.3-8 Special Tooling

SPECIAL TOOLING (DECEMBER 1997)

\(a\) Title. The Government retains title to Government-owned special
tooling and option to take title to all special tooling subject to this
clause until such time as title or option to take title is relinquished
by the Contracting Officer as provided for in subparagraphs (i)(2) and
(i)(3) of this clause.

\(b\) Risk of loss. Except to the extent that the Government shall have
otherwise assumed the risk of loss to special tooling applicable to this
clause, in the event of the loss, theft or destruction of or damage to
any such property, the repair or replacement shall be accomplished by
the Contractor at its own expense.

\(c\) Special tooling furnished by the Government.

\(1\) Except as otherwise provided in this contract, all
Government-furnished special tooling is provided "as is". The Government
makes no warranty whatsoever with respect to special tooling furnished
"as is," except that the property is in the same condition when placed
at the f.o.b. point specified in the solicitation as when last available
for inspection by the Contractor under the solicitation.

\(2\) The Contractor may repair any special tooling made available on an
"as is" basis. Such repair will be at the Contractor\'s expense, except
as otherwise provided in this clause. Such property may be modified as
necessary for use under this contract at the contractor\'s expense,
except as otherwise directed by the Contracting Officer. Any repair or
modification of property furnished "as is" shall not affect the title of
the Government.

\(3\) If there is any change in the condition of special tooling
furnished "as is" from the time inspected or last available for
inspection under the solicitation to the time placed on board at the
location specified in the solicitation or the Government directs a
change in the quantity of special tooling furnished or to be furnished,
and such change will adversely affect the Contractor, the Contractor
shall, upon receipt of the property, notify the Contracting Officer
detailing the facts, and, as directed by the Contracting Officer, either
(i) return such items at the Government\'s expense or otherwise dispose
of the property, or (ii) effect repair to return the property to its
condition when inspected under the solicitation or, if not inspected,
last available for inspection under the solicitation. After completing
the directed action and upon written request of the Contractor, the
Contracting Officer shall equitably adjust any contractual provisions
affected by the return, disposition, or repair in accordance with
procedures provided for in the Changes clause of this contract. The
foregoing provisions for adjustment are the exclusive remedy available
to the Contractor, and the Government shall not be otherwise liable for
any delivery of special tooling in a condition or in quantities other
than that when originally offered.

\(d\) Use of special tooling. The Contractor may use special tooling
subject to this clause on other Government effort when specifically
approved in writing by the Contracting Officer for this contract and the
Contracting Officer for the contract under which the special tooling
will be used. Any other use of the special tooling should be subject to
advance written approval of the Contracting Officer. In the event the
Government elects to remove any special tooling that is required for
continued contract performance, the contract shall be equitably adjusted
in accordance with paragraph (l) of this clause.

\(e\) Property control.

\(1\) Records. The Contractor\'s special tooling records shall provide
the following minimum information regarding each item of special tooling
subject to this clause and shall be made available for Government
inspection at all reasonable times:

\(i\) Number or code of the contract to which the tooling is accountable
and the number or code of the contract for which the tooling was
originally acquired or fabricated.

> \(ii\) Retention codes as defined below:

\(A\) Primary Code. Assign one of the following to each item of special
tooling:

> *Code A*. Spares Tooling. Required to produce a provisioned spare

part or assembly.

> *Code B.* Judgment (Insurance) Tooling. Fabrication tools for parts
> that are not provisioned spares but which in the judgment of the
> Contractor will be required at some time for logistic support of the
> end item.
>
> *Code C.* Rate Tooling. Necessary to economically produce increased
> rates (e.g., for mobilization or surge) but not essential for parts
> fabrication at low production rates.
>
> *Code D.* Assembly Tooling. Required for manufacture of the end
> product but not required for production of spare parts. Those items
> having no postproduction need except for potential modification or
> resumed production programs.

\(B\) Secondary Code. Assign one or more of the following codes, as
applicable, to each item of special tooling:

> *Code 1.* Repair Tooling. Items which are capable of being used for
> repair of provisioned parts or assemblies.
>
> *Code 2.* Replaceable Tooling. Spares or judgment tooling (primary
> retention codes A or B) which, in the opinion of the Contractor, can
> be effectively and economically replaced by "soft" tooling on an "as
> required" basis in lieu of retention of the "hard" production tooling
> for supporting postproduction requirements.
>
> *Code 3.* Maintenance Tooling. Items which are capable of being used
> for depot level maintenance of the applicable end item or components
> thereof.
>
> *Code 4.* Crash Damage Tooling. Items which apply to provisioned or
> nonprovisioned parts or assemblies which are designated as or have the
> potential of being required for crash damage repairs.
>
> \(iii\) Nomenclature, function, or comparable code.
>
> \(iv\) Tool part number or code.

\(v\) Tool identification number, or quantity of each tool part number
or code, if tool identification number is not assigned.

> \(vi\) Part number(s) of item(s) on which used (complete hierarchy of
> part numbers).
>
> \(vii\) Unit price. (Estimates are acceptable.)
>
> \(viii\) Storage method code. Assign one of the following:
>
> *Code J.* Inside storage.
>
> *Code K*. Outside storage.
>
> *Code L*. Other.
>
> \(ix\) Estimated weight of tool, if over 25 pounds.
>
> \(x\) Estimated volume of tool, if over 3 cubic feet.

\(xi\) Location of Contractor, subcontractor, vendor for each item. Use
Federal Supply Code for Manufacturers (FSCM), or name and address if
code is not available.

\(xii\) All operation sheets or other data as are necessary to show the
manufacturing operation or processes for which such items were used,
designed, or modified.

\(2\) Identification or tagging. To the extent practicable, the
Contractor shall identify all special tooling subject to this clause in
accordance with the Contractor's identification procedures.

\(f\) Maintenance. The Contractor shall maintain special tooling in
accordance with sound industrial practice. These requirements do not
apply to those items designated by the Contracting Officer for disposal
as scrap or identified as of no further interest to the Government under
paragraph (i)

of this clause.

\(g\) Identification of excess special tooling. The Contractor shall
promptly identify and report all special tooling in excess of the
amounts needed to complete full performance under this contract (see
subdivision (h)(2)(i) of this clause).

\(h\) Lists of special tooling. The Contractor shall periodically
prepare and distribute lists of special tooling as described below:

\(1\) Special tooling list. The list shall be furnished within 60 days
after delivery of the first production end item under this contract or
completion of the initial provisioning process, whichever is later, and
shall include all special tooling subject to this clause as of the
reporting date. However, if this contract represents the final
production contract, the Contractor shall provide this list of all tools
not later than 180 days prior to scheduled delivery of the last
production end item. If this is a contract for storage of special
tooling, the list shall be provided within 60 days of contract
implementation.

> \(2\) Excess special tooling list.

\(i\) Excess special tooling. Except for items subject to subdivision
(h)(2)(ii) of this clause, lists of special tooling excess to this
contract shall be furnished within 60 days of the date that the item is
determined to be excess. The Contractor shall include in this list the
information prescribed in Format of lists, subparagraph (h)(3) of this
clause, as well as the applicable excess code as follows:

> *Code V*. Excess to contract requirements with no follow-on
> requirements.
>
> *Code W*. Excess to contract requirements but can be used to support
> actual or anticipated follow-on requirements.
>
> *Code X.* Excess due to changes in design or specification of the end
> items.
>
> *Code Y*. Excess due to nonserviceable or nonrepairable condition.
>
> *Code Z.* Other.

\(ii\) Termination inventory. The Contractor shall submit these items on
SF 1432 Inventory Schedule D (Special Tooling and Special Test
Equipment) and SF 1433 Inventory Schedule D (Continuation Sheet). The
Contractor may use computer generated inventory schedules provided no
change is made in the name, content, or sequence of the data elements.
All essential elements of data must be included and the form must be
signed. Format and content of this submission will be as prescribed by
subparagraph (h)(3) Format of lists, of this clause. When subcontractor
termination inventory is involved, the subcontractor shall execute the
certificate (SF 1432/SF 1433).

\(3\) Format of lists. Lists furnished by the Contractor shall state the
type of list and shall include all information from subparagraph (e)(1),
Records, of this clause, items (i) through (xii). All lists will be
grouped by primary retention code as prescribed in subdivision
(e)(1)(ii)(A) of this clause and further listed in tool part number
sequence.

\(4\) Distribution of lists. The Contractor shall submit two copies of
lists to each of the following recipients unless otherwise directed:

> \(i\) The Contracting Officer.
>
> \(ii\) The Administrative Contracting Officer.
>
> \(iii\) The inventory control point designated by the contracting
> office.

\(i\) Disposition instructions. The Contracting Officer shall provide
the Contractor with written disposition instructions within 180 days of
receipt of the list as prescribed by subparagraph (h)(1) of this clause
and within 90 days of the receipt of excess special tooling lists
reported in accordance with subparagraph (h)(2) of this clause. The
Contracting Officer may direct disposition by any of the methods listed
in subparagraphs (i)(1) through (i)(3) of this clause, or a combination
of such methods. The Contractor shall comply with such disposition
instructions.

\(1\) The Contracting Officer may identify specific items of special
tooling to be retained or give the Contractor a list specifying the
products, parts, or services including follow-on requirements for which
the Government may require special tooling and request the Contractor to
identify all usable items of special tooling on hand that were designed
for or used in the production or performance of such products, parts, or
services. Once items of usable special tooling required by the
Government are identified, the Contracting Officer may:

\(i\) Direct the Contractor to transfer specified items of special
tooling to follow-on contracts requiring their use. Those items shall be
furnished for use on the contract(s) as specified by the Contracting
Officer and shall be subject to the provisions of the gaining
contract(s); or

\(ii\) Request the Contractor to enter into an appropriate storage
contract for special tooling specified to be retained by the Contractor
for the Government. Tooling to be stored shall be stored pursuant to a
storage contract between the Government and the Contractor; or

\(iii\) Direct the Contractor to transfer title to the Government (to
the extent not previously transferred) and deliver to the Government
those items of special tooling which are specified for removal from the
Contractor\'s plant.

\(2\) The Contracting Officer may direct the Contractor to sell, or
dispose of as scrap, for the account of the Government, any special
tooling not specified by the Government pursuant to subparagraph (i)(1)
of this clause. To the extent that the Contractor incurs any costs
occasioned by compliance with such direction, for which it is not
otherwise compensated, the contract price shall be equitably adjusted in
accordance with the Changes clause of this contract. The net proceeds of
all sales shall either be credited to the cost of contract performance
or shall be otherwise paid to the Government as directed by the
Contracting Officer. Sale of special tooling to the prime Contractor or
any of its subcontractors is subject to the prior written approval of
the Contracting Officer.

\(3\) The Contracting Officer may furnish the Contractor with a
statement disclaiming further Government interest or right in specified
special tooling.

\(4\) Restoration of Contractor\'s premises. Unless otherwise provided
in this contract, the Government has no obligation to restore or
rehabilitate the Contractor\'s premises under any circumstances (e.g.,
abandonment, disposition upon completion of need, or upon contract
completion). However, if special tooling is withdrawn or if other
special tooling is substituted, then the equitable adjustment under
paragraph (l) of this clause may properly include restoration or
rehabilitation costs.

\(j\) Access to special tooling. The Contractor shall provide access to
special tooling subject to this clause at all reasonable times to all
individuals designated by the Contracting Officer.

\(k\) Storage or shipment. The Contractor shall promptly arrange for
either the shipment or the storage of special tooling specified in
accordance with the final disposition instructions in subdivisions
(i)(1)(ii) or (i)(1)(iii) of this clause. Tooling to be shipped shall be
properly packaged, packed, and marked in accordance with the directions
of the Contracting Officer. All operation sheets or other appropriate
data necessary to show the manufacturing operations or processes for
which the items were used or designed shall accompany special tooling to
be shipped or stored or shall otherwise be provided to the Government as
directed by the Contracting Officer. To the extent that the Contractor
incurs costs for storage, shipment, packing, crating, or handling under
this paragraph and not otherwise compensated for, the contract price
shall be equitably adjusted in accordance with the Changes clause of
this contract.

\(l\) Equitable adjustment. When this clause specifies an equitable
adjustment, it shall be made to any affected contract provision in
accordance with the procedures of the Changes clause. When appropriate,
the Contracting Officer may initiate an equitable adjustment in favor of
the Government. The right to an equitable adjustment shall be the
contractor\'s exclusive remedy. The Government shall not be liable to
suit for breach of contract for:

> \(1\) Any delay in delivery of Government-furnished special tooling;

\(2\) Delivery of Government-furnished special tooling in a condition
not suitable for its intended use;

> \(3\) A decrease in or substitution of specified tooling; or

\(4\) Failure to repair or replace Government-furnished special tooling
for which the Government is responsible.

\(m\) Subcontract provisions. In order to perform this contract, the
Contractor may place subcontracts (including purchase orders) involving
the use of special tooling. If the full cost of the tooling is charged
to those subcontracts, the Contractor agrees to include in the
subcontract appropriate provisions to obtain Government rights and data
comparable to the rights of the Government under this clause (unless the
Contractor and Contracting Officer agree in writing that such rights are
not of interest to the Government). The Contractor agrees to exercise
such rights for the benefit of the Government as directed by the
Contracting Officer.

*(End of clause)*

3.10.3-9 Special Test Equipment

SPECIAL TEST EQUIPMENT (DECEMBER 1997)

\(a\) "Special test equipment," as used in this clause, means either
single or multipurpose integrated test units engineered, designed,
fabricated, or modified to accomplish special purpose testing in
performing a contract. It consists of items or assemblies of equipment,
including standard or general purpose items or components, that are
interconnected and interdependent so as to become a new functional
entity for special testing purposes. It does not include material,
special tooling, facilities (except foundations and similar improvements
necessary for installing special test equipment), and plant equipment
items used for general plant testing purposes.

\(b\) The Contractor may either acquire or fabricate special test
equipment at FAA expense when the equipment is not otherwise itemized in
this contract and the prior approval of the Contracting Officer has been
obtained. The Contractor shall provide the Contracting Officer with a
written notice, at least 30 days in advance, of the Contractor\'s
intention to acquire or fabricate the special test equipment. As a
minimum, the notice shall also include an estimated aggregate cost of
all items and components of the equipment the individual cost of which
is less than \$5,000, and the following information on each item or
component of equipment costing \$5,000 or more:

\(1\) The end use application and function of each proposed special test
unit, identifying special characteristics and the reasons for the
classification of the test unit as special test equipment.

\(2\) A complete description identifying the items to be acquired and
the items to be fabricated by the Contractor.

> \(3\) The estimated cost of the item of special test equipment or
> component.
>
> \(4\) A statement that intra-plant screening of Contractor and
> FAA-owned special test equipment and components has been accomplished
> and that none are available for use in performing this contract.

\(c\) The FAA may furnish any special test equipment or components
rather than approve their acquisition or fabrication by the Contractor.
Such FAA-furnished items shall be subject to the Government property
clause, except that the FAA should not be obligated to deliver such
items any sooner than the Contractor could have acquired or fabricated
them after expiration of the 30-day notice period in paragraph (b) of
this clause. However, unless the FAA notifies the Contractor of its
decision to furnish the items within the 30-day notice period, the
Contractor may proceed to acquire or fabricate the equipment or
components subject to any other applicable provisions of this contract.

\(d\) The Contractor shall, in any subcontract that provides that
special test equipment or components may be acquired or fabricated for
the FAA, insert provisions that conform substantially to the language of
this clause, including this paragraph (d). The Contractor shall furnish
the names of such subcontractors to the Contracting Officer.

\(e\) If an engineering change requires either the acquisition or
fabrication of new special test equipment or substantial modification of
existing special test equipment the Contractor shall comply with
paragraph (b) above. In so complying, the Contractor shall identify the
change order which requires the proposed acquisition, fabrication, or
modification.

*(End of clause)*

3.10.3-10 Management of Government Property in Contractor's Possession

MANAGEMENT OF GOVERNMENT PROPERTY IN CONTRACTOR'S POSSESSION (DECEMBER
1997)

\(a\) Contractor responsibility. The Contractor shall establish and
maintain a property control system (PCS) to control, protect, preserve,
use, maintain, and repair all Government property in accordance with
sound industrial and business practices and the requirements of this
contract. The PCS shall be in writing unless the Property Administrator
determines that maintaining a written system is unnecessary. The PCS
shall be reviewed and, if satisfactory, approved in writing by the
Property Administrator. The system shall be sufficient for the following
use:

\(1\) To assure that Government property will be used only for those
purposes authorized in the contract and that any required approval will
be obtained; and

> \(2\) To provide a basis for determining and allocating rental
> charges.

\(3\) With respect to plant equipment with an acquisition value of
\$5,000 or more, the PCS, as a minimum, shall:

\(i\) Establish a minimum level of use below which an analysis of need
will be made and retention justified, except for inactive plants and
equipment retained for mobilization (the use level may be established
for individual items or families of items, depending upon circumstances
of use);

\(ii\) Provide for recording authorized and actual use consistent with
the established use levels;

\(iii\) Require periodic analyses of production needs for plant
equipment utilization based upon known requirements; and

\(iv\) Provide for prompt reporting to the Property Administrator of all
plant equipment for which retention is not justified.

\(4\) With regard to subcontractors, the PCS shall include procedures
for the Contractor to maintain oversight of the GFP provided to
subcontractors and require subcontractors to comply with contract
requirements by flowing down all contract property requirements to
subcontractors. The Contractor shall require its subcontractors
possessing or controlling GFP to adequately safeguard and maintain GFP
and that it is used only as authorized by the contract.

\(5\) The PCS shall include procedures to ensure property disposition is
in accordance with the instructions of the Contracting Officer or
designated representative, including any return to the supplier for
appropriate credit whenever feasible.

\(b\) Audit of property control system. The FAA may audit the
Contractor's PCS as frequently as conditions warrant. These audits may
take place at any time during contract performance, upon contract
completion or termination, or at any time thereafter during the period
the Contractor is required to retain such records. The Contractor shall
make all such records and related correspondence available to the
auditors.

\(c\) Receipts for Government property. The Contractor shall provide
written receipts for all Contractor-acquired property before submitting
its request for payment for the property. For FAA-furnished property,
the Contractor shall provide the required receipt immediately upon
receipt of the property. All receipts shall be provided to the Property
Administrator.

\(d\) Discrepancies incident to shipment.

\(1\) Government-furnished property. If overages, shortages, or damages
are discovered upon receipt of GFP, the Contractor shall provide a
statement of the condition and apparent causes to the Property
Administrator. Official records shall reflect the quantity actually
received.

\(2\) Contractor-acquired property. The Contractor shall remedy
overages, shortages, or damages in shipment of Contractor-acquired
property from a vendor or supplier. However, when the shipment has moved
by Government Bill of Lading (GBL) and carrier liability is indicated,
the Contractor shall report the discrepancy in accordance with paragraph
(1) above.

\(e\) Records and Reports of FAA Property.

\(1\) The Contractor's property control records shall constitute the
FAA's official property records unless the Contracting Officer indicates
otherwise. The Contractor shall establish and maintain adequate control
records for all Government property, including property provided to and
in the possession or control of a subcontractor. When a subcontractor
has an approved property control system for Government property provided
under its own prime contracts, the Contractor may use the records
created and maintained under that system.

\(2\) The Contractor\'s property control system shall provide financial
accounts for Government-owned property in the Contractor\'s possession
or control until relieved of that responsibility.

\(3\) The Contractor's property control records shall identify all
Government property and provide a complete, current, auditable record of
all transactions. Records shall be accessible to authorized FAA
personnel and safeguarded against destruction and tampering.

\(4\) The Contractor shall keep separate property records for each
contract unless otherwise authorized by the Property Administrator.

\(5\) Special tooling and special test equipment fabricated from
materials that are the property of the Government shall be recorded as
Government-owned immediately upon fabrication. Special tooling and
special test equipment fabricated from materials that are the property
of the Contractor shall be recorded as Government property at the time
title passes to the Government.

\(6\) The Contractor shall establish property records for serviceable
components permanently removed from items of Government property as a
result of modification as the type established for components acquired
separately.

\(7\) The Contractor\'s property control system shall contain a system
or technique to locate any item of Government property within a
reasonable period of time.

\(f\) Basic information.

\(1\) Unless summary records are used as authorized under subparagraph
(f)(2) of this clause, the Contractor\'s property control records shall
provide the following basic information for every item of Government
property in the Contractor\'s possession, regardless of value:

\(i\) The name, description, and National Stock Number (if furnished by
the FAA or available in the property control system).

> \(ii\) Quantity received (or fabricated), issued, and on hand.
>
> \(iii\) Unit price (and unit of measure).
>
> \(iv\) Contract number or equivalent code designation.
>
> \(v\) Location.
>
> \(vi\) Disposition.
>
> \(vii\) Posting reference and date of transaction.

\(2\) Summary records are normally adequate for special tooling, special
test equipment, and plant equipment costing less than \$5,000 per unit,
except where the Property Administrator specifies that individual item
records are necessary for effective control, calibration, or
maintenance. Summary records shall provide the information listed in
paragraphs (1)(i) through (1)(vii) above, but may reference a general
location, provided the Contractor can locate the property within a
reasonable period of time.

\(g\) Records of pricing information.

> \(1\) Requirement for unit prices.

\(i\) The Contractor\'s property control system shall contain the unit
price for each item of Government property except as provided in (ii)
below. When a Contractor records the unit price of property on other
than the quantitative inventory records, those supplementary records
shall become part of the official Government property records.

\(ii\) (Note: This subparagraph (ii) does not apply to nonprofit
organizations.) The requirement that unit prices be contained in the
official Government property records does not apply to those separate
property records located at a Contractor\'s secondary sites and
subcontractor plants; provided, that:

\(A\) Records maintained by the prime Contractor at its primary site
include unit prices; and

\(B\) The prime Contractor agrees to furnish actual or estimated unit
prices to the secondary site or subcontractor as the need arises.

\(iii\) When definite information as to unit price cannot be obtained,
reasonable estimates shall be used.

> \(2\) Determining unit price.

\(i\) Contractor-acquired and Contractor-fabricated property. Except for
items fabricated by nonprofit organizations for research and development
purposes, the unit price of Contractor-acquired and
Contractor-fabricated property shall be determined in accordance with
the system established by the Contractor in conformance with
consistently applied sound accounting principles. The Contractor shall
apply separate unit prices to items of special tooling and special test
equipment fabricated or acquired by the Contractor unless the Property
Administrator approves group pricing for special tooling, special test
equipment, and work-in-process in accordance with the Contractor\'s
acceptable cost accounting system. All processed material, fabricated
parts, components, and assemblies charged to the Contractor\'s
work-in-process inventory, including items in temporary storage while
awaiting processing, may be considered as work-in-process for this
purpose.

\(ii\) Government-furnished property. The FAA shall determine and
furnish to the Contractor the unit price of Government-furnished
property. Transportation and installation costs shall not generally be
considered as part of the unit price for this purpose. Normally, the
unit price of Government-furnished property will be provided on the
document covering shipment of the property to the Contractor. In the
event the unit price is not provided on the document, the Contractor
shall take action to obtain the information.

\(h\) Records of material.

\(1\) General. The Contractor shall record, in accordance with contract
requirements and the Contractor\'s property control system, the
following:

> \(i\) all Government material furnished to the Contractor,

\(ii\) all material to which title has passed to the FAA by reason of
allocation from Contractor-owned stores,

> \(iii\) all material acquired by the Contractor for direct charge to
> an FAA contract..

\(2\) Consolidated stock record. The Contractor shall not use
consolidated stock records without the prior consent of the Property
Administrator.

\(3\) Custodial records. The Contractor shall maintain custodial records
for tool crib items, guard force items, protective clothing, and other
items issued to individuals for use in their work.

\(4\) Use of receipt and issue documents. (Note: This paragraph (4) is
not applicable to nonprofit organizations.) The Property Administrator
may authorize the Contractor to maintain, in lieu of stock records, a
file of appropriately cross-referenced documents evidencing receipt,
issue, and use of Government-provided material that is issued for
immediate consumption and is not entered in the inventory record. This
method of control may be authorized for:

> \(i\) Material charged through overhead;
>
> \(ii\) Material under research and development contracts;
>
> \(iii\) Subcontracted or outside production items;
>
> \(iv\) Nonstock or special items;

\(v\) Items that are produced for direct charge to a contract, or are
acquired and issued for installation upon receipt, and involve no
spoilage; and

\(vi\) Items issued from Contractor-owned inventory direct to production
or maintenance, etc.

\(5\) Material issued directly upon receipt. (Note: This paragraph (5)
applies only to nonprofit organizations.)

\(i\) Under fixed-price contracts, the Contractor\'s documents
evidencing receipt and issue will be accepted as property control
records for Government-furnished material issued directly by the
Contractor upon receipt so as to be considered consumed under the
contract.

\(ii\) Under cost-reimbursement contracts, FAA invoices, Contractor\'s
purchase documents, or other evidence of acquisition and issue will be
accepted as adequate property records for material furnished to or
acquired by the Contractor and issued directly so as to be considered
consumed under the contract.

\(6\) Multicontract cost and material control. (Note: This paragraph (6)
does not apply to nonprofit organizations.)

\(i\) Description and scope. A multicontract cost and material control
system substitutes a system of financial accounting for the requirements
for physical identification of FAA material. The Contractor shall not
use multicontract cost and material control without the prior consent of
the Contracting Officer. (See (ii)(C)(d) below.) The system operates as
follows:

\(A\) The Contractor may acquire, requisition, receive, store, and issue
like items of material for the total requirements of all contracts
involved in the system without identifying the material to each
contract.

\(B\) The Contractor may commingle, during any stage of contract
performance, Government-owned and Contractor-owned material and
work-in-process that was furnished, acquired, or produced for all FAA
contracts covered by the system, without physical segregation or
identification to the individual contracts.

\(C\) In lieu of physical segregation and identification to individual
contracts, periodic calculation of requirements and distribution of
costs to all contracts permits the allocation of costs of material to
products delivered. This system, by reflecting the material expended to
perform each contract at any stage in production, permits usage analysis
to determine the reasonableness of consumption and expenditure of
Government material.

\(D\) The system may include all FAA contracts of any type that involve
common repetitive operations.

\(E\) The system does not require commingling of all common materials
under all contracts. For example, items of Government-furnished material
of high value or in short supply may be excluded from commingling and
reserved for use in performing the contract under which furnished.

\(F\) The Contractor shall take physical inventories of material in
stores included in the systems (other than work-in-process) at least
annually, extend and reconcile prices to the quantitative balance for
each item, and record adjustments in the stock record and financial
inventory control accounts. Such physical inventories and adjustments,
as well as equitable distribution to cost accounts of any inventory
losses, shall be reviewed by and are subject to the approval of the
Property Administrator.

\(ii\) Criteria. Contractors shall demonstrate the following in order to
be considered for a multicontract cost and material control system:

\(A\) The system would result in savings or improved operations or that
it will otherwise be in the Government's interest;

\(B\) The system is applied to existing FAA contracts only and excludes
materials acquired or costs incurred for non-FAA work or in anticipation
of future FAA work; and

> \(C\) The Contractor\'s accounting system is adequate to:

(aa) Provide on a complete and timely basis a clear \'audit trail\' from
costs of materials acquired for each contract to materials used or
disposed of on each contract;

(bb) Reflect separately for Government-furnished and Contractor-acquired
material in stores (except work-in-process) the inventory balances as
affected by receipts, issues, adjustments, and other dispositions;

> \(cc\) Determine unit costs for each identifiable part, component,
> subassembly, assembly, end item, and contract item;

(dd) Calculate amounts for cost reimbursements and progress payments
during the life of the contract by applying or allocating such unit
costs developed through each stage of work-in-process to contract items
for the requirements of each contract; and

(ee) Assure that when Government material furnished for use under one
contract is authorized for use on another contract, the initial contract
receives credit.

\(iii\) Authorization. The Contracting Officer may authorize a
Contractor who is performing or will perform more than one Government
contract to use the multicontract cost and material control system. .
The Property Administrator shall approve whatever detailed operating
procedures are necessary for each system authorized.

\(iv\) Requirement. Whenever a multicontract cost and material control
system is authorized, the Contractor\'s financial accounts shall include
all material in the system acquired or furnished for FAA work and shall
satisfy the requirements of this clause.

\(i\) Records of special tooling and special test equipment. (This
sub-section does not apply to nonprofit organizations except for
paragraph (3).)

\(1\) Unless the Property Administrator has authorized summary records,
the Contractor\'s property control system shall provide the basic
information listed above (f)(1) regarding each item of Government-owned
special tooling and special test equipment, including any general
purpose test equipment incorporated as components in such a manner that
removal and reuse may be feasible and economical.

\(2\) If the Contractor uses group pricing of special tooling or special
test equipment, as recognized above in (g)(2)**,** unit prices shall be
computed when required.

\(3\) In the case of special tooling acquired or fabricated by nonprofit
organizations or furnished by the FAA to nonprofit organizations for
research and development, the Contractor may use invoices, Contractor\'s
purchase document or other documents that evidence acquisition or issue
may be accepted as adequate property control records.

\(4\) Records identifying special tooling and special test equipment
shall include the identification number and item on which used.

\(5\) The Contractor shall, when specified by the contract, identify and
report special tooling and special test equipment by retention category
(e.g., assembly tooling or critical tooling for spares or replacements).

\(j\) Records of plant equipment.

\(1\) Unless the Property Administrator authorizes summary records, the
Contractor shall maintain individual item records for each item of plant
equipment.

\(2\) In addition to information required in paragraph (f) of this
clause, the Contractor\'s records of Government-owned plant equipment,
regardless of value, shall include:

\(i\) Federal Supply Code for the manufacturer (as listed in Cataloging
Handbook H4-1 and H4-2) (available from the Superintendent of Documents,
Government Printing Office (GPO), Washington, DC 20402);

\(ii\) Federal Supply Classification (Cataloging Handbooks H2-1, H2-2,
and H2-3) (available from GPO); and

> \(iii\) The original manufacturer\'s model or part number.

\(3\) Unless otherwise authorized by the Property Administrator, the
Contractor shall also include the following for each item of
Government-owned plant equipment having a unit cost of \$5,000 or more:

> \(i\) Serial number and year built (when available);
>
> \(ii\) Government identification/tag number; and
>
> \(iii\) Acquisition and disposition document references and dates.

\(4\) The Property Administrator may determine that the information in
(3)(i) and (3)(ii) above shall be recorded in the property records for
plant equipment costing less than \$5,000.

\(5\) The Contractor shall record accessory and auxiliary equipment on
the record of the associated item of plant equipment. If the accessory
or auxiliary item is not attached to, a part of, or acquired for use
with a specific item of plant equipment, it shall be recorded either in
an individual item record or in a summary stock record. When accessory
and auxiliary items are permanently separated from the basic item of
plant equipment, the unit price of the basic item shall be appropriately
reduced.

\(k\) Records of real property.

\(1\) The Contractor shall maintain an itemized record of the
description, location, acquisition cost, and disposition of all
Government real property (including unimproved real property); all
alterations, all construction work, and sites connected with such
alteration and construction, acquired by purchase, lease, or otherwise.
These records, including maps, drawings, plans, specifications, and
supplementary data where necessary, shall:

> \(i\) be complete,

\(ii\) show the original cost of the property and improvements and the
cost of any changes and additions, and

> \(iii\) be appropriately indexed.

\(2\) Costs incurred by the Contractor or the FAA for new construction,
including erection, installation, or assembly of Government real
property in possession of the Contractor, shall be capitalized in the
official Government real property records and financial accounts
maintained by the Contractor for the FAA.

\(3\) Costs incurred for additions, expansions, extensions, conversions,
alterations, and improvements, including applicable portions of capital
maintenance, that increase the value, life, utility, capability, or
serviceability of Government real property shall be capitalized.

\(4\) Costs incurred for portable buildings or facilities specifically
constructed for tests that involve destruction of the facility shall not
be capitalized in the Government real property records or financial
accounts.

\(5\) Costs incurred for maintenance, repair, or rearrangement to
maintain the Government real property in good physical condition,
utility, capacity, or serviceability shall be charged to expense, and
the real property records shall not be affected.

\(6\) When Government-owned real property is sold , transferred,
donated, destroyed by fire or other cause, abandoned-in-place, or
condemned, the financial accounts shall be reduced by the presently
recorded costs and the real property records annotated with a supporting
statement, including pertinent facts.

\(l\) Records of scrap or salvage.

\(1\) The Contractor shall maintain records of all scrap or salvage
generated, except as provided (k). These records shall conform to the
Contractor\'s established system of scrap and salvage control approved
by the Property Administrator.

> \(2\) The Contractor\'s property control system shall provide the
> following information:
>
> \(i\) Contract number, if practical, or equivalent code designation
> from which the scrap or salvage derived.
>
> \(ii\) Nomenclature or description of salvable items or classification
> (material content) of scrap.
>
> \(iii\) Quantity on hand.
>
> \(iv\) Posting reference and date of transaction.
>
> \(v\) Disposition.

\(m\) Records of related data and information. The Contractor shall
maintain property control and accountability, in accordance with sound
business practice, of manufacturing or assembly drawings; installation,
operation, repair, or maintenance instructions; and other similar
information furnished to the Contractor by the FAA or generated or
acquired by the Contractor under the contract and for which title vests
in the FAA. The requirements of this subpart do not otherwise apply to
such property.

\(n\) Records of completed products. The Contractor shall maintain a
record of all completed products produced under a contract as follows:

\(1\) When there is no time lapse between FAA inspection and acceptance
of the completed products and shipment from the plant site, the records
shall, as a minimum, consist of a summary of quantities accepted and
shipped. When end items are accepted by the FAA and stored with the
Contractor awaiting, shipment, the record shall identify quantities
stored, location, and disposition action.

\(2\) On contracts that provide for the Contractor to retain completed
products for further use under the contract or other contracts, such
items shall be considered \'Government-furnished property\' upon
acceptance and shall be recorded as required by this contract.

\(3\) When completed products are returned to a Contractor under the
terms of a warranty clause, the Contractor shall maintain, by contract,
a record containing a description of the items involved, quantities
received and returned to the FAA, and other pertinent data necessary to
determine that a proper accounting for all property has been made.

\(o\) Records of transportation and installation costs of plant
equipment. (Note: This subsection does not apply to nonprofit
organizations.)

\(1\) Transportation costs.

\(a\) The Contractor shall record within the property control system the
transportation and installation costs directly borne by the FAA for each
item of Government-owned plant equipment with an acquisition cost of
\$5,000 or more. The Property Administrator may require the Contractor
to provide such recorded costs for use in computing rental charges.

\(b\) If transportation costs are not included in the price of equipment
delivered, the Contractor shall contact the Property Administrator for
instructions for obtaining applicable freight data.

\(2\) Installation costs.

\(a\) When the Contractor performs installation, the cost shall be
computed in accordance with the Contractor\'s accounting system (if the
system is acceptable for other contract cost determination purposes) and
recorded in the property record.

\(b\) When installation is subcontracted, the Contractor shall record
the cost paid to the subcontractor in the property record.

\(c\) When installation costs are included in the price of equipment
delivered to the using location, the Contractor shall annotate the
property records accordingly.

\(p\) Records of misdirected shipments. The Contractor\'s property
control system shall provide the following information regarding each
misdirected shipment of Government property received:

\(1\) Identity of shipment, such as shipping document or bill of lading.

\(2\) Origin of shipment.

\(3\) Content (items in the shipment) per shipping documents, if
available.

\(4\) Location.

\(5\) Disposition.

\(q\) Records of property returned for rework.

\(1\) The Contractor shall maintain quantitative records of property
returned for processing to assure control from time of receipt through
return of the items to the FAA. The Contractor shall establish item
records under its property control system and shall include the
information required in (f) above.

\(2\) The records shall specify the quantity of units returned to the
FAA and the quantity otherwise disposed of with proper authority.

\(r\) Reports of FAA property.

\(1\) The Contractor\'s property control system shall provide annually
the total acquisition cost of Government property for which the
Contractor is accountable under each contract with the FAA, including
Government property at subcontractor plants and alternate locations. The
following classifications (property classifications may be varied to
meet individual agency needs) shall be reported:

> \(i\) Land and rights therein.

\(ii\) Other real property, including utility distribution systems,
buildings, structures, and improvements thereto.

> \(iii\) Plant equipment.
>
> \(iv\) Special tooling.
>
> \(v\) Special test equipment.
>
> \(vi\) Material.
>
> \(vii\) Agency peculiar property.

\(2\) The Contractor shall report the information under paragraph (1) as
directed by the Property Administrator.

\(3\) The Contractor shall maintain and provide the following reports to
the Property Administrator when appropriate:

\(i\) Receipt of Property. The Contractor's written notice of receipt of
Government property and any discrepancies, if required, must precede
request for payment.

\(ii\) Lost, Damaged, Destroyed Property. The Contractor's written
report to the Property Administrator of cases of loss, damage, or
destruction of Government property in the Contractor's possession or
control. The Contractor shall also require its subcontractors possession
or controlling Government property accountable under the contract to
investigate and report all instances of loss, damage, or destruction of
such property.

\(iii\) Annual Financial and Inventory Reports. A copy of the
Contractor's annual financial and inventory reports of Government
property. The Contractor shall account for all Government property until
relieved of responsibility.

*(End of clause)*

3.10.3-11 Contractor's Maintenance Program

CONTRACTOR\'S MAINTENANCE PROGRAM (DECEMBER 1997)

The Contractor shall be responsible for the proper care, maintenance,
and use of Government property in its possession or control from the
time of receipt until properly relieved of responsibility, in accordance
with sound industrial practice and the terms of the contract. The
removal of Government property to storage, or its contemplated transfer,
does not relieve the Contractor of these responsibilities.

\(a\) Consistent with the terms of the contract, the Contractor\'s
maintenance program shall provide for:

> \(1\) Disclosure of need for and the performance of preventive
> maintenance;
>
> \(2\) Disclosure and reporting of need for capital rehabilitation; and
>
> \(3\) Recording of work accomplished under the program.

\(b\) Preventive maintenance is maintenance performed on a regularly
scheduled basis to prevent the occurrence of defects and to detect and
correct minor defects before they result in serious consequences. An
effective preventive maintenance program shall include at least:

\(1\) Inspection of buildings at periodic intervals to assure detection
of deterioration and the need for repairs;

\(2\) Inspection of plant equipment at periodic intervals to assure
detection of maladjustment, wear, or impending breakdown;

\(3\) Regular lubrication of bearings and moving parts in accordance
with a lubrication plan;

\(4\) Adjustments for wear, repair, or replacement of worn or damaged
parts and the elimination of causes of deterioration;

\(5\) Removal of sludge, chips, and cutting oils from equipment that
will not be used for a period of time;

\(6\) Taking necessary precautions to prevent deterioration caused by
contamination, corrosion, and other substances; and

\(7\) Proper storage and preservation of accessories and special tools
furnished with an item of plant equipment but not regularly used with
it.

\(c\) The Contractor\'s maintenance program shall provide for disclosing
and reporting the need for major repair, replacement, and other capital
rehabilitation work for Government property in its possession or
control.

\(d\) The Contractor shall keep records of maintenance actions performed
and any deficiencies in the Government property discovered as a result
of inspections.

*(End of clause)*

3.10.3-12 Identification of Government Property

IDENTIFICATION OF GOVERNMENT PROPERTY (DECEMBER 1997)

\(a\) Upon receipt of Government property , the Contractor shall
promptly:

> \(1\) Identify the property in accordance with agency regulations;
>
> \(2\) Mark the property in accordance with this section; and
>
> \(3\) Record the property in its property control records.

(b)(1) Except for the following, the Contractor shall mark all
Government property with an identifier of FAA ownership:

\(i\) Items issued to individuals for use in their work (e.g.,
protective clothing or tool crib tools) where adequate physical control
is maintained over the items.

\(ii\) Property of a bulk type, or where its general nature of packing
or handling precludes adequate marking.

\(iii\) Where the Property Administrator agrees that marking is
impractical.

> \(2\) Exempted items shall be entered and described on the accountable
> property records.

(c)(1) In addition to marking with an indication of Government
ownership, the following property shall be marked with a serial number
in accordance with procedures approved by the Property Administrator:

> \(i\) Special tooling.
>
> \(ii\) Special test equipment.

\(iii\) Components of special test equipment that have an acquisition
cost of \$5,000 or more and are incorporated in a manner that makes
removal and reutilization feasible and economical.

\(iv\) Plant equipment.

\(v\) Accessory or auxiliary equipment associated with a specific item
of plant equipment that is recorded on the property records, if
necessary to assure return with the associated basic item.

\(2\) The Contractor shall record assigned numbers on all applicable
documents pertaining to the property control system.

\(3\) If the property is included in a standard agency registration
system, the Contractor may use the property\'s registration number as
the serial number. The Contractor shall obtain the registration number
through the Property Administrator from the owning agency.

\(d\) The markings in paragraphs (b) and (c) of this section shall be:

> \(1\) securely affixed to the property,
>
> \(2\) legible, and
>
> \(3\) conspicuous.

Examples of appropriate markings are bar coding, decals, and stamping.
If marking will damage the property or is otherwise impractical, the
Contractor shall promptly notify the Property Administrator and ask for
the item to be exempted (see paragraph (b) of this clause). Markings
shall be removed or obliterated when Government property is sold,
scrapped, or donated.

*(End of clause)*

3.10.3-13 Segregation of Government Property

SEGREGATION OF GOVERNMENT PROPERTY (DECEMBER 1997)

The Contractor shall physically separate Government property from
Contractor-owned property. However, when advantageous to the FAA and
consistent with the Contractor\'s authority to use such property, the
property may be commingled:

\(a\) When the Government property is special tooling, special test
equipment, or plant equipment clearly identified and recorded as
Government property;

\(b\) When approved by the Property Administrator in connection with
research and development contracts;

\(c\) When material is included in a multicontract cost and material
control system;

\(d\) When scrap of a uniform nature is produced from both
Government-owned and Contractor-owned material and physical segregation
is impracticable;

\(e\) When scrap produced from FAA-owned material is insignificant in
consideration of the cost of segregation and control;

\(f\) When FAA contracts involved are fixed-price and provide for the
retention of the scrap by the Contractor; or

\(g\) When otherwise approved by the Property Administrator.

*(End of clause)*

3.10.3-14 Inventories

INVENTORIES (DECEMBER 1997)

\(a\) Monthly Inventories

\(1\) The Contractor shall provide to the FAA's Property Administrator a
monthly listing of all Government property in their possession (this
includes GFP and CAP). This property shall be reported on Inventory
Schedule form FAA 1426 Alternate I and II provided by the property
office.

\(2\) The Contractor may electronically reproduce standard inventory
schedule forms provided no change is made to the name, content or
sequence of the data elements. All essential elements of data must be
included and the form must be signed.

\(3\) The Contractor shall use inventory schedule to report all
transaction of Government property in Contractor's possession or control
and shall cause subcontractors to do likewise.

\(b\) Physical Inventories.

The Contractor shall periodically physically inventory all Government
property (except materials issued from stock for manufacturing,
research, design, or other services required by the contract) in its
possession or control and shall cause subcontractors to do likewise. The
Contractor, with the approval of the Property Administrator, shall
establish the type, frequency, and procedures. These may include
electronic reading, recording and reporting or other means of reporting
the existence and location of the property and reconciling the records.
Type and frequency of inventory shall be based on the Contractor\'s
established practices, the type and use of the Government property
involved, or the amount of Government property involved and its monetary
value, and the reliability of the Contractor\'s property control system.
Type and frequency of physical inventories normally shall not vary
between contracts being performed by the Contractor, but may vary with
the type of properly being controlled. Personnel who perform the
physical inventory should not be the same individuals who maintain the
property records or have custody of the property unless the
Contractor\'s operation is too small to do otherwise.

\(c\) Inventories upon termination or completion.

\(1\) General. Immediately upon termination or completion of a contract,
the Contractor shall perform and cause each subcontractor to perform a
physical inventory, adequate for disposal purposes, of all Government
property applicable to the contract, unless the requirement is waived as
provided in paragraph (2) below.

\(2\) Exception. The requirement for physical inventory at the
completion of a contract may be waived by the Property Administrator
when the property is authorized for use on a follow-on contract;
provided, that:

\(i\) Experience has established the adequacy of property controls and
an acceptable degree of inventory discrepancies; and

\(ii\) The Contractor provides a statement indicating that record
balances have been transferred in lieu of preparing a formal inventory
list and that the Contractor accepts responsibility and accountability
for those balances under the terms of the follow-on contract.

\(3\) Listings for disposal purposes. (Note: This paragraph (3) applies
only to nonprofit organizations.)

\(i\) Standard items that have been modified may be described on
listings for disposal purposes as standard items with a general
description of the modification.

\(ii\) Items that have been fabricated, such as test equipment, shall be
described in sufficient detail to permit a potential user to determine
whether they are of sufficient interest to warrant further inspection.

\(d\) Reporting results of inventories. The Contractor shall, as a
minimum, submit the following to the Property Administrator promptly
after completing the physical inventory:

> \(1\) A listing that identifies all discrepancies disclosed by a
> physical inventory.
>
> \(2\) A signed statement that physical inventory of all or certain
> classes of Government property was completed on a given date and that
> the official property records were found to be in agreement except for
> discrepancies reported.

\(e\) Quantitative and monetary control. When requested by the Property
Administrator, the Contractor\'s reports of results of physical
inventory shall be prepared on a quantitative and monetary basis and
segregated by categories of property.

*(End of clause)*

3.10.3-15 Disposition of Government Property

DISPOSITION OF GOVERNMENT PROPERTY (DECEMBER 1997)

\(a\) Submission of inventory schedules.

\(1\) When property is no longer needed to perform the contract, the
Contractor shall prepare inventory schedules in accordance with the
contract and instructions from the plant clearance officer or Property
Administrator and shall promptly submit the schedules to the delegated
Property Administrator. Inventory schedules may also be used for
screening with other Federal agencies.

\(2\) The certificate on the inventory schedule must be executed when
Contractor inventory is reported. The prime Contractor shall execute
this certificate, except that for subcontractor termination inventory
the subcontractor shall execute the certificate.

\(3\) The Contractor\'s inventory schedules shall not include any items
that the Contractor can reasonably use on other Government work without
financial loss. However, the schedules shall include common items
specified by the Contracting Officer for delivery to the Government or
which are Government-furnished property.

\(4\) The contract may authorize the Contractor to electronically
reproduce inventory schedules provided no change is made in the name,
content or sequence of the data elements. All essential elements of data
must be included and the form must be signed. (Reference AMS Guidance
T3.10.3A.9 for list of forms)

\(b\) Acceptance. Within 15 days after receipt of inventory schedules,
the plant clearance officer or Property Administrator should review
them, determine their acceptability, and request the Contractor to
correct any inadequate listings. Inventory schedules should not be
rejected if the information is adequate for disposal purposes, even if
complete cost data on work-in-process are not available. Rejection
should be limited, when possible, to specific items and should not
necessarily render the entire schedule unacceptable. If substantial
errors are discovered that were not apparent on termination inventory
schedules previously found acceptable, the final phase of a plant
clearance period should not begin until corrected schedules have been
submitted, unless the plant clearance officer or Property Administrator
determines otherwise.

\(c\) Excess inventories.

\(1\) Contractors shall report Contractor inventory promptly after
determining it to be excess, unless a later date is authorized by the
Contracting Officer or Property Administrator.

\(2\) Unless contract provisions or agency regulations prescribe
otherwise, 12 copies of inventory schedules listing serviceable or
salvable items and 6 copies of inventory schedules listing scrap items
shall be presented to the Property Administrator.

\(3\) The Contractor shall not submit partial schedules unless
authorized by the FAA Property Administrator. The first page of each
schedule submitted shall be identified as partial or final in the title
block of the schedule.

*(End of clause)*

**END OF CHANGE 8 - DECEMBER 11, 1997**