GOVERNMENT PROPERTY (COST‑REIMBURSEMENT, TIME—AND--MATERIAL, OR LABOR--HOUR CONTRACTS) (52.245-5) (MAY 2004) (DEVIATION)(PIC 99-15) (SEP 1999)

    (a) Government‑furnished property.  (1) The term "Contractor's managerial personnel," as used in paragraph (g) of this clause, means any of the Contractor's directors, officers, managers, superintendents, or equivalent representatives who have supervision or direction of--

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

    		(ii) All or substantially all of the Contractor's operation at any one plant, or separate location at which the contract is being performed; or

    		(iii) A separate and complete major industrial operation connected with performing this contract.

    	(2) The Government shall deliver to the Contractor, for use in connection with and under the terms of this contract, the Government‑furnished property described in the Schedule or specifications, together with such related data and information as the Contractor may request and as may be reasonably required for the intended use of the property (hereinafter referred to as "Government‑furnished property").

    	(3) The delivery or performance dates for this contract are based upon the expectation that Government‑furnished property suitable for use 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.

    	(4) If Government‑furnished property is received by the Contractor in a condition not suitable for the intended use, the Contractor shall, upon receipt, notify the Contracting Officer, detailing the facts, and, as directed by the Contracting Officer and at Government expense, either effect repairs or modification or return or otherwise dispose of the property.  After completing the directed action and upon written request of the Contractor, the Contracting Officer shall make an equitable adjustment as provided in paragraph (h) of this clause.

    	(5) If Government‑furnished property is not delivered to the Contractor by the required time or times, the Contracting Officer shall, upon the Contractor's timely written request, make a determination of the delay, if any, caused the Contractor and shall make an equitable adjustment in accordance with paragraph (h) of this clause.

    (b) Changes in Government--furnished property.  (1) The Contracting Officer may, by written notice, (1) decrease the Government‑furnished property provided or to be provided under this contract or (ii) substitute other Government‑furnished property 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 Contracting Officer may direct regarding the removal, shipment, or disposal of the property covered by this notice.

    	(2) Upon the Contractor's written request, the Contracting Officer shall 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 such 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 property, if provided under any other contract or lease.

    (c) Title.  (1) The Government shall retain title to all Government‑furnished property.

    	(2) 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.

    	(3) Title to all other property, the cost of which is reimbursable to the Contractor, shall pass to and vest in the Government upon‑‑

    		(i) Issuance of the property for use in contract performance;

    		(ii) Commencement of processing of the property or use in contract performance; or

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

    	(4) 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 shall Government property become a fixture or lose its identity as personal property by being attached to any real property.

    (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 responsible and accountable for all Government property provided under the contract and shall comply with Federal Acquisition Regulation (FAR) Subpart 45.5, as in effect on the date of this contract.

    	(2) The Contractor shall establish and maintain a program for the use, maintenance, repair, protection, and preservation of Government property in accordance with sound business practice and the applicable provisions of FAR Subpart 45.5.

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

    (f) Access.  The Government 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) Limited risk of loss.  (1) The Contractor shall not be liable for loss or destruction of, or damage to, the Government property provided under this contract or for expenses incidental to  such loss, destruction, or damage, except as provided in subparagraphs (2) and (3) below.

    	(2) 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 paragraph (e) of this clause.

    	(3) (i) If the Contractor fails to act as provided by subdivision (g)(2)(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 managerial personnel.

    		(ii) 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‑‑

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

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

    	(4) 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 shall 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.

    	(5) Deviation.  The contractor shall notify the contracting officer upon loss or destruction of, or damage to, Government property provided under this contract, with the exception of low value property for which loss, damage, or destruction is reported at contract termination, completion, or when needed for continued performance.  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.

    	(6) 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)(6) in accordance with paragraph (h) of this clause.  However, the Government may directly reimburse the loss and salvage organization for any of their charges.  The Contracting Officer shall give due regard to the Contractor's liability under this paragraph (g) when making any such equitable adjustment.

    	(7) 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 such insurance under another provision of this contract.

    	(8) 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.

    	(9) 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 the 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.

    (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 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 property;

    	(2) Delivery of Government‑furnished property in a condition not suitable for its intended use;

    	(3) A decrease in or substitution of Government‑ furnished property; or

    	(4) Failure to repair or replace Government property for which the Government is responsible.

    (i) Government property disposal. Except as provided in paragraphs (i)(1)(i), (i)(2), and (i)(8)(i) of this clause, the Contractor shall not dispose of Government property until authorized to do so by the Plant Clearance Officer.

    	(1) Scrap.

    		(i) Contractor with an approved scrap procedure.

    			(A) The Contractor may dispose of scrap resulting from production or testing under this contract without Government approval.  However, if the scrap requires demilitarization or is sensitive property, the Contractor shall submit the scrap on an inventory disposal schedule.

    			(B) For scrap from other than production or testing the Contractor may prepare scrap lists in lieu of inventory disposal schedules (provided such lists are consistent with the approved scrap procedures), except that inventory disposal schedules shall be submitted for scrap aircraft or aircraft parts and scrap that--

    				(1) Requires demilitarization;

    				(2) Is a classified item;

    				(3) Is generated from classified items;

    				(4) Contains hazardous materials or hazardous wastes;

    				(5) Contains precious metals; or

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

    		(ii) Contractor without an approved scrap procedure.  The Contractor shall submit an inventory disposal schedule for all scrap.

    	(2) Pre-disposal requirements. When the Contractor determines that a property item acquired or produced by the Contractor, to which the Government has obtained title under paragraph (c) of this clause, is no longer needed for performance of this contract, the Contractor, in the following order of priority:

    		(i) May purchase the property at the acquisition cost.

    		(ii) Shall make reasonable efforts to return unused property to the appropriate supplier at fair market value (less, if applicable, a reasonable restocking fee that is consistent with the supplier's customary practices).

    		(iii) Shall list, on Standard Form 1428, Inventory Disposal Schedule, property that was not purchased under paragraph (i)(2)(i) of this clause, could not be returned to a supplier, or could not be used in the performance of other Government contracts.

    	(3) Inventory disposal schedules.

    		(i) The Contractor shall use Standard Form 1428, Inventory Disposal Schedule, to identify--

    			(A) Government-furnished property that is no longer required for performance of this contract, provided the terms of another Government contract do not require the Government to furnish that property for performance of that contract; and

    			(B) Property acquired or produced by the Contractor, to which the Government has obtained title under paragraph (c) of this clause, that is no longer required for performance of that contract.

    		(ii) The Contractor may annotate inventory disposal schedules to identify property the Contractor wishes to purchase from the Government.

    		(iii) Unless the Plant Clearance Officer has agreed otherwise, or the contract requires electronic submission of inventory disposal schedules, the Contractor shall prepare separate inventory disposal schedules for--

    			(A) Special test equipment with commercial components;

    			(B) Special test equipment without commercial components;

    			(C) Printing equipment;

    			(D) Computers, components thereof, peripheral equipment, and related equipment;

    			(E) Precious Metals;

    			(F) Nonnuclear hazardous materials or hazardous wastes; or

    			(G) Nuclear materials or nuclear wastes.

    		(iv) Property with the same description, condition code, and reporting location may be grouped in a single line item.  The Contractor shall describe special test equipment in sufficient detail to permit an understanding of the special test equipment's intended use.

    	(4) Submission requirements. The Contractor shall submit 

    inventory disposal schedules to the Plant Clearance Officer no later than--

    		(i) Thirty days following the Contractor's determination that a Government property item is no longer required for performance of the contract;

    		(ii) Sixty days, or such longer period as may be approved by the Plant Clearance Officer, following completion of contract deliveries or performance; or

    		(iii) One hundred twenty days, or such longer period as may be approved by the Plant Clearance Officer, following contract termination in whole or in part.

    	(5) Corrections. The Plant Clearance Officer may require the Contractor to correct an inventory disposal schedule or may reject a schedule if the property identified on the schedule is not accountable under this contract or is not in the quantity or 

    condition indicated.

    	(6) Postsubmission adjustments. The Contractor shall provide the Plant Clearance Officer at least 10 working days advance written notice of its intent to remove a property item from an approved inventory disposal schedule. Unless the Plant Clearance Officer objects to the intended schedule adjustment within the notice period, the Contractor may make the adjustment upon expiration of the notice period.

    	(7) Storage.

    		(i) The Contractor shall store the property identified on an inventory disposal schedule pending receipt of disposal instructions. The Government's failure to provide disposal instructions within 120 days following acceptance of an inventory disposal schedule might entitle the Contractor to an equitable adjustment for costs incurred to store such property on or after the 121st day.

    		(ii) The Contractor shall obtain the Plant Clearance Officer's approval to remove Government property from the premises at which the property is currently located prior to receipt of final disposition instructions.  If approval is granted, any costs incurred by the Contractor to transport or store the property shall not increase the price or fee of any Government contract.  The storage facility shall be appropriate for assuring the property's physical safety and suitability for use. Approval does not relieve the Contractor of any liability under this contract for such property.

    	(8) Disposition instructions.

    		(i) If the Government does not provide disposition instructions to the Contractor within 45 days following acceptance of a scrap list, the Contractor may dispose of the listed scrap in accordance with the Contractor's approved scrap procedures.

    		(ii) The Contractor shall prepare for shipment, deliver f.o.b. origin, or dispose of Government property as directed by the Plant Clearance Officer. The Contractor shall remove and destroy any markings identifying the property as Government property prior to disposing of the property.

    		(iii) The Contracting Officer may require the Contractor to demilitarize the property prior to shipment or disposal.  Any 

    equitable adjustment incident to the Contracting Officer's direction to demilitarize Government property shall be made in accordance with paragraph (h) of this clause.

    	(9) Disposal proceeds.  The Contractor shall credit the net proceeds from the disposal of Government property to the price or cost of work covered by this contract, or to the Government as directed by the Contracting Officer.

    	(10) Subcontractor inventory disposal schedules.  The Contractor shall require a subcontractor that is using property accountable under this contract at a subcontractor-managed site to submit inventory disposal schedules to the Contractor in sufficient time for the Contractor to comply with the requirements of paragraph (i)(4) of this clause.

    (j) Abandonment of Government property.

    	(1) The Government will not abandon sensitive Government property without the Contractor's written consent.

    	(2) The Government, upon notice to the Contractor, may abandon any nonsensitive Government property in place at which time all obligations of the Government regarding such abandoned property shall cease.

    	(3) The Government has no obligation to restore or rehabilitate the Contractor's premises under any circumstances; however, if Government-furnished property 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) If this contract is to be performed outside the United States and its outlying areas, 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)