970.5245-1 Property.

As prescribed in 970.4501-1(a), insert the following clause:

Property (AUG 2016)

(a) Furnishing of Government property. The Government reserves the right to furnish any property

or services required for the performance of the work under this contract.

(b) Title to property. Except as otherwise provided by the Contracting Officer, title to all materials,

equipment, supplies, and tangible personal property of every kind and description purchased by the

Contractor, for the cost of which the Contractor is entitled to be reimbursed as a direct item of cost

under this contract, shall pass directly from the vendor to the Government. The Government

reserves the right to inspect, and to accept or reject, any item of such property. The Contractor shall

make such disposition of rejected items as the Contracting Officer shall direct. 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

(1) issuance for use of such property in the performance of this contract, or (2) commencement of

processing or use of such property in the performance of this contract, or (3) reimbursement of the

cost thereof by the Government, whichever first occurs. Property furnished by the Government and

property purchased or furnished by the Contractor, title to which vests in the Government, under

this paragraph are hereinafter referred to as Government property. Title to Government property

shall not be affected by the incorporation of the property into or the attachment of it to any property

not owned by the Government, nor shall such Government property or any part thereof, be or

become a fixture or lose its identity as personality by reason of affixation to any realty.

(c) Identification. To the extent directed by the Contracting Officer, the Contractor shall identify

Government property coming into the Contractor's possession or custody, by marking and

segregating in such a way, satisfactory to the Contracting Officer, as shall indicate its ownership by

the Government.

(d) Disposition. The Contractor shall make such disposition of Government property which has come

into the possession or custody of the Contractor under this contract as the Contracting Officer may

direct during the progress of the work or upon completion or termination of this contract. The

Contractor may, upon such terms and conditions as the Contracting Officer may approve, sell, or

exchange such property, or acquire such property at a price agreed upon by the Contracting Officer

and the Contractor as the fair value thereof. The amount received by the Contractor as the result of

any disposition, or the agreed fair value of any such property acquired by the Contractor, shall be

applied in reduction of costs allowable under this contract or shall be otherwise credited to account

to the Government, as the Contracting Officer may direct. Upon completion of the work or the

termination of this contract, the Contractor shall render an accounting, as prescribed by the

Contracting Officer, of all government property which had come into the possession or custody of

the Contractor under this contract.

(e) Protection of government property - management of high-risk property and classified materials.

(1) The Contractor shall take all reasonable precautions, and such other actions as may be directed

by the Contracting Officer, or in the absence of such direction, in accordance with sound business

practice, to safeguard and protect government property in the Contractor's possession or custody.
(2) In addition, the Contractor shall ensure that adequate safeguards are in place, and adhered to,

for the handling, control and disposition of high-risk property and classified materials throughout

the life cycle of the property and materials consistent with the policies, practices and procedures for

property management contained in the Federal Property Management Regulations (41 CFR chapter

101), the Department of Energy (DOE) Property Management Regulations (41 CFR chapter 109),

and other applicable Regulations.

(3) High-risk property is property, the loss, destruction, damage to, or the unintended or premature

transfer of which could pose risks to the public, the environment, or the national security interests of

the United States. High-risk property includes proliferation sensitive, nuclear related dual use,

export controlled, chemically or radioactively contaminated, hazardous, and specially designed and

prepared property, including property on the militarily critical technologies list.

(f) Risk of loss of Government property. (1)(i) The Contractor shall not be liable for the loss or

destruction of, or damage to, Government property unless such loss, destruction, or damage was

caused by any of the following -

(A) Willful misconduct or lack of good faith on the part of the Contractor's managerial personnel;

(B) Failure of the Contractor's managerial personnel to take all reasonable steps to comply with any

appropriate written direction of the Contracting Officer to safeguard such property under paragraph

(e) of this clause; or

(C) Failure of contractor managerial personnel to establish, administer, or properly maintain an

approved property management system in accordance with paragraph (i)

(1) of this clause.

(ii) If, after an initial review of the facts, the Contracting Officer informs the Contractor that there is

reason to believe that the loss, destruction of, or damage to the government property results from

conduct falling within one of the categories set forth above, the burden of proof shall be upon the

Contractor to show that the Contractor should not be required to compensate the government for

the loss, destruction, or damage.

(2) In the event that the Contractor is determined liable for the loss, destruction or damage to

Government property in accordance with (f)(1) of this clause, the Contractor's compensation to the

Government shall be determined as follows:

(i) For damaged property, the compensation shall be the cost of repairing such damaged property,

plus any costs incurred for temporary replacement of the damaged property. However, the value of

repair costs shall not exceed the fair market value of the damaged property. If a fair market value of

the property does not exist, the Contracting Officer shall determine the value of such property,

consistent with all relevant facts and circumstances.

(ii) For destroyed or lost property, the compensation shall be the fair market value of such property

at the time of such loss or destruction, plus any costs incurred for temporary replacement and costs

associated with the disposition of destroyed property. If a fair market value of the property does not

exist, the Contracting Officer shall determine the value of such property, consistent with all relevant

facts and circumstances.

(3) The portion of the cost of insurance obtained by the Contractor that is allocable to coverage of

risks of loss referred to in paragraph (f)(1) of this clause is not allowable.
(g) Steps to be taken in event of loss. In the event of any damage, destruction, or loss to Government

property in the possession or custody of the Contractor with a value above the threshold set out in

the Contractor's approved property management system, the Contractor -

(1) Shall immediately inform the Contracting Officer of the occasion and extent thereof,

(2) Shall take all reasonable steps to protect the property remaining, and

(3) Shall repair or replace the damaged, destroyed, or lost property in accordance with the written

direction of the Contracting Officer. The Contractor shall take no action prejudicial to the right of

the Government to recover therefore, and shall furnish to the Government, on request, all

reasonable assistance in obtaining recovery.

(h) Government property for Government use only. Government property shall be used only for the

performance of this contract.

(i) Property Management - (1) Property Management System.

(i) The Contractor shall establish, administer, and properly maintain an approved property

management system of accounting for and control, utilization, maintenance, repair, protection,

preservation, and disposition of Government property in its possession under the contract. The

Contractor's property management system shall be submitted to the Contracting Officer for approval

and shall be maintained and administered in accordance with sound business practice, applicable

Federal Property Management Regulations and Department of Energy Property Management

Regulations, and such directives or instructions which the Contracting Officer may from time to time

prescribe.

(ii) In order for a property management system to be approved, it must provide for -

(A) Comprehensive coverage of property from the requirement identification, through its life cycle,

to final disposition;

(B) [Reserved]

(C) Full integration with the Contractor's other administrative and financial systems; and

(D) A method for continuously improving property management practices through the identification

of best practices established by “best in class” performers.

(iii) Approval of the Contractor's property management system shall be contingent upon the

completion of the baseline inventory as provided in subparagraph (i)(2) of this clause.

(2) Property Inventory. (i) Unless otherwise directed by the Contracting Officer, the Contractor shall

within six months after execution of the contract provide a baseline inventory covering all items of

Government property.

(ii) If the Contractor is succeeding another contractor in the performance of this contract, the

Contractor shall conduct a joint reconciliation of the property inventory with the predecessor

contractor. The Contractor agrees to participate in a joint reconciliation of the property inventory at

the completion of this contract. This information will be used to provide a baseline for the

succeeding contract as well as information for closeout of the predecessor contract.
(j) The term “contractor's managerial personnel” as used in this clause means the Contractor's

directors, officers and any of its managers, superintendents, or other equivalent representatives who

have supervision or direction of -

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

(2) All or substantially all of the Contractor's operations at any one facility or separate location to

which this contract is being performed; or

(3) A separate and complete major industrial operation in connection with the performance of this

contract; or

(4) A separate and complete major construction, alteration, or repair operation in connection with

performance of this contract; or

(5) A separate and discrete major task or operation in connection with the performance of this

contract.

(k) The Contractor shall include this clause in all cost reimbursable subcontracts.

(End of clause)

Alternate I (AUG 2016).As prescribed in 970.4501-1(b), when the award is to a nonprofit contractor,

replace paragraph (j) of the basic clause with the following paragraph (j):

(j) The term “contractor's managerial personnel” as used in this clause means the Contractor's

directors, officers and any of its managers, superintendents, or other equivalent representatives who

have supervision or direction of all or substantially all of -

(1) The Contractor's business; or

(2) The Contractor's operations at any one facility or separate location at which this contract is being

performed; or

(3) The Contractor's Government property system and/or a Major System Project as defined in DOE

Order 413.3B, or successor version (Version in effect on effective date of contract).

Parent topic: Subpart 970.52 - Solicitation Provisions and Contract Clauses for Management and

Operating Contracts