1438 Federal Register / Vol. 65, No. 6 / Monday, January 10, 2000 / Proposed Rules

DEPARTMENT OF DEFENSE

GENERAL SERVICES

ADMINISTRATION

NATIONAL AERONAUTICS AND

SPACE ADMINISTRATION

48 CFR Parts 1, 2, 4, 7, 8, 15, 16, 17,

22, 27, 28, 31, 32, 35, 37, 42, 43, 44, 45,

49, 51, 52, and 53

[FAR Case 1995–013]

RIN 9000–AH60

Federal Acquisition Regulation;

Government Property

AGENCIES: Department of Defense (DoD),

General Services Administration (GSA),

and National Aeronautics and Space

Administration (NASA).

ACTION: Proposed rule.

SUMMARY: The Civilian Agency

Acquisition Council and the Defense

Acquisition Regulations Council

(Councils) are proposing to amend the

Federal Acquisition Regulation (FAR) to

simplify procedures, reduce

recordkeeping, and eliminate

requirements related to the management

and disposition of Government property

in the possession of contractors. In

addition, this proposed rule provides

contractors the option of managing

Government property under a standard

process based system or managing

Government property using the same

business practices the contractors use to

manage their own property. Contractors

may use either system at a particular

site (primary location at which a

contract will be performed) but must

use only one system at that site.

Contractors that elect to use their

property management practices to

manage the Government’s property in

lieu of the standard processes must

accept increased liability for property

losses.

Based on the significant changes

made to this rule from an earlier

proposed rule, the Councils have agreed

to republish the rule as a proposed rule

and provide an opportunity for the

public to comment on the changes.

DATES: Interested parties should submit

comments in writing on or before March

10, 2000 to be considered in the

formulation of a final rule.

ADDRESSES: Interested parties should

submit written comments to: General

Services Administration, FAR

Secretariat (MVRS), 1800 F Street, NW,

Room 4035, ATTN: Laurie Duarte,

Washington, DC 20405. Address e-mail

comments submitted via the Internet to:

farcase.1995–013@gsa.gov.

Please submit comments only and cite

FAR case 1995–013 in all

correspondence related to this case.

FOR FURTHER INFORMATION CONTACT: The

FAR Secretariat, Room 4035, GS

Building, Washington, DC, 20405, at

(202) 501–4755 for information

pertaining to status or publication

schedules. For clarification of content,

Ms. Angelena Moy at (703) 695–1097/

1098 (e-mail: moyac@acq.osd.mil), or

Ms. Linda Klein, at (202) 501–3775.

Please cite FAR case 1995–013.

SUPPLEMENTARY INFORMATION:

A. Background

On June 2, 1997, the Civilian Agency

Acquisition Council and the Defense

Acquisition Regulations Council

(Councils) published a proposed rule to

simplify the management and

disposition of Government property in

the possession of contractors (see 62 FR

30186). As a result of public comments

received on that rule and comments

received during and in response to

public meetings conducted on February

18, 1998, and May 18, 1999, the

Councils have revised and restructured

the rule.

An interagency team (Department of

Defense, Environmental Protection

Agency, General Services

Administration, and the National

Aeronautics and Space Administration)

analyzed each comment received in

response to the June 2, 1997, proposed

rule and the public meetings conducted

on February 18, 1998, and May 18,

1999. Because this proposed rule

significantly changes the June 1997

proposed rule, a summary of the

comments received and recommended

disposition is not included with this

rule.

Based upon comments received in

response to this proposed rule, and

other information that might become

available during the public comment

period, the final rule might contain only

the standard Government property and

Government property administration

clauses and related material discussed

in this proposed rule, only the alternate

Government property and Government

property administration clauses and

related material discussed in this rule,

or both the standard and alternate

Government property and Government

property administration clauses and

related material. The Councils are

particularly interested in public

comment on whether the final rule

should contain only the standard

Government property and Government

property administrative clauses and

related material discussed in this

proposed rule, only the alternate

Government property and Government

property administration clauses and

related material discussed in this

proposed rule, or both the standard and

alternate Government property and

Government property administration

clauses and related material.

This rule was not subject to Office of

Management and Budget review under

Section 6(b) of Executive Order 12866,

Regulatory Planning and Review, dated

September 30, 1993. This rule is not a

major rule under 5 U.S.C. 804 because

it continues the re-engineering of the

Government property management

processes and procedures and is not

expected to affect significantly the

profitability of contractors who have

Government property in their

possession.

B. Regulatory Flexibility Act

The Initial Regulatory Flexibility

Analysis (IRFA) submitted to the Chief

Counsel for Advocacy of the Small

Business Administration is applicable to

this revised proposed rule. A summary

of the analysis was published in the

Federal Register on June 2, 1997.

C. Paperwork Reduction Act

The Paperwork Reduction Act (Pub.

L. 104–13) applies because the proposed

rule contains information collection

requirements. The Office of

Management and Budget (OMB)

approved the information collection

requirements contained in the proposed

rule dated June 2, 1997, under OMB

Clearance Number 9000–0151. In

response to public comments on the

proposed rule, this revised proposed

rule eliminates one additional

notification requirement, replaces three

of the reports identified in the proposed

rule with notices, and simplifies the

information collection requirements for

the annual report of Government

property in the possession of

contractors. These changes slightly

reduce the proposed rule’s estimated

information collection hours. The

Councils will recalculate the paperwork

burden using the latest labor and

overhead rates when this proposed rule

is finalized. It is estimated that this rule,

when final, will reduce the public

paperwork associated with Government

property management by approximately

3,147,000 hours per year.

List of Subjects in 48 CFR Parts 1, 2, 4,

7, 8, 15, 16, 17, 22, 27, 28, 31, 32, 35,

37, 42, 43, 44, 45, 49, 51, 52, and 53

Government procurement.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

Therefore, DoD, GSA, and NASA

propose that 48 CFR parts 1, 2, 4, 7, 8,

Federal Register / Vol. 65, No. 6 / Monday, January 10, 2000 / Proposed Rules 1439

15, 16, 17, 22, 27, 28, 31, 32, 35, 37, 42,

43, 44, 45, 49, 51, 52, and 53 be

amended as set forth below:

1. The authority citation for 48 CFR

parts 1, 2, 4, 7, 8, 15, 16, 17, 22, 27, 28,

31, 32, 35, 37, 42, 43, 44, 45, 49, 51, 52,

and 53 continues to read as follows:

Authority: 40 U.S.C. 486(c); 10 U.S.C.

chapter 137; and 42 U.S.C. 2473(c).

PART 1—FEDERAL ACQUISITION

REGULATIONS SYSTEM

2. Amend section 1.106 in the table

following the introductory paragraph

by—

a. Revising the OMB Control Number

at entries for FAR segments 45, SF 1428,

and SF 1429 to read ‘‘9000–0151’’;

b. Removing the FAR segment entries

and their corresponding OMB Control

Numbers at 52.216–13, 52.232–21,

52.245–2, 52.245–3, 52.245–5, 52.245–7,

52.245–8, 52.245–9, 52.245–10, 52.245–

11, 52.245–16, 52.245–17, 52.245–18,

SF 1423, SF 1424, SF 1426, SF 1427, SF

1430, SF 1432, and SF 1434; and

c. Adding entries to read as follows:

1.106 OMB approval under the Paperwork

Reduction Act.

* * * * *

FAR segment OMB control

No.

* * * **

52.245–1 ................................... 9000–0151

52.245–2 ................................... 9000–0151

52.245–3 ................................... 9000–0151

52.245–4 ................................... 9000–0151

52.245–5 ................................... 9000–0151

52.245–6 ................................... 9000–0151

52.245–7 ................................... 9000–0151

52.245–8 ................................... 9000–0151

* * * **

SF 1450 .................................... 9000–0151

* * * **

PART 2—DEFINITIONS OF WORDS

AND TERMS

3. Amend section 2.101 by revising

the definition ‘‘Supplies’’; and by

adding, in alphabetical order, the

definitions ‘‘Property’’, ‘‘Real property’’,

and ‘‘Personal property’’ to read as

follows:

2.101 Definitions.

* * * * *

Personal property means property of

any kind or interest in it except real

property, battleships, cruisers, aircraft

carriers, destroyers, submarines, and

records of the Federal Government.

* * * * *

Property means real and personal

property.

Real property means land and rights

in land, ground improvements, utility

distribution systems, and buildings and

other structures. It does not include

foundations and other work necessary

for installing special tooling, special test

equipment, or equipment.

Supplies means all property except

land or interest in land. It includes (but

is not limited to) public works and

buildings; ships, floating equipment,

and vessels of every character, type, and

description, together with parts and

accessories; aircraft and aircraft parts,

accessories, and equipment; machine

tools; and the alteration or installation

of any of the foregoing.

* * * * *

PART 4—ADMINISTRATIVE MATTERS

4. Amend section 4.703 by revising

the first sentence of paragraph (b)(3) to

read as follows:

4.703 Policy.

* * * * *

(b) * * *

(3) The contractor does not meet the

original due date for submission of final

indirect cost rate proposals specified in

paragraph (e)(2) of the clause at 52.216–

7, Allowable Cost and Payment. * * *

* * * * *

5. Amend section 4.804–4 by revising

paragraph (b) to read as follows:

4.804–4 Physically completed contracts.

* * * * *

(b) Rental, use, and storage

agreements are considered physically

complete when the performance period

stipulated in the agreement expires.

PART 7—ACQUISITION PLANNING

6. Amend section 7.105 by revising

paragraph (b)(14) to read as follows:

7.105 Contents of written acquisition

plans.

* * * * *

(b) * * *

(14) Government-furnished property.

Identify any property to be furnished to

contractors and discuss any associated

considerations, such as the property’s

availability and compliance with the

requirements at 45.201.

* * * * *

7.501 [Amended]

7. Amend section 7.501 in the second

sentence of paragraph (b) by removing

‘‘facilities operations and maintenance,’’

and adding ‘‘property management,’’ in

its place.

PART 8—REQUIRED SOURCES OF

SUPPLIES AND SERVICES

8. Revise section 8.101 to read as

follows:

8.101 Definition.

Excess personal property means any

personal property (see 2.101) under the

control of a Federal agency that the

agency head or a designee determines is

not required for its needs or for the

discharge of its responsibilities.

PART 15—CONTRACTING BY

NEGOTIATION

9. Amend section 15.305 by

redesignating paragraphs ‘‘(a)(3)’’ and

‘‘(a)(4)’’ as ‘‘(a)(4)’’ and ‘‘(a)(5)’’,

respectively, and by adding a new

paragraph (a)(3) to read as follows:

15.305 Proposal evaluation.

* * * * *

(a) * * *

(3) Government property adjustment.

Offerors who will use Government

property to perform a contract usually

have a price advantage relative to

competitors who will use their own

property or will acquire or fabricate

property to perform that contract. When

evaluating offers, that advantage must

be eliminated to the extent practicable.

(i) Contracting officers must adjust

offers by applying a rental adjustment

determined, to the extent practicable,

using the rental guidelines in the clause

at 52.245–6, Rental Charges for

Commercial Use.

(ii) It is not necessary to calculate a

Government property adjustment

when—

(A) The solicitation requires the

offerors to use specific Governmentfurnished property items during

contract performance; or

(B) It is apparent that the difference

between the offer or offers most

advantageous to the Government and

competing offers is so great that a rental

adjustment will not affect source

selection.

* * * * *

PART 16—TYPES OF CONTRACTS

16.307 [Amended]

10. Amend section 16.307—

a. In the first sentence of paragraph

(a)(1) by removing the parenthetical

‘‘(other than a facilities contract)’’;

b. In paragraph (b) by removing from

the parenthetical the words ‘‘a facilities

contract or’’;

c. In paragraph (d) by removing

‘‘(other than a facilities contract)’’;

d. In paragraph (e)(1) by removing ‘‘or

a facilities contract’’;

1440 Federal Register / Vol. 65, No. 6 / Monday, January 10, 2000 / Proposed Rules

e. In paragraph (f)(1) by removing

‘‘(other than a facilities contract)’’;

f. By removing paragraphs (g) and (h);

and

g. By redesignating paragraph ‘‘(i)’’ as

paragraph ‘‘(g)’’, and amending it by

removing the last sentence.

PART 17—SPECIAL CONTRACTING

METHODS

11. Amend section 17.603 by revising

paragraph (a)(5) to read as follows:

17.603 Limitations.

(a) * * *

(5) Functions that can more properly

be accomplished in accordance with

subpart 45.2, Furnishing Government

Property.

* * * * *

PART 22—APPLICATION OF LABOR

LAWS TO GOVERNMENT

ACQUISITIONS

22.400 [Amended]

12. Amend section 22.400 by

removing the parenthetical ‘‘(See

definition of Construction in section

22.401.)’’.

22.405 [Amended]

13. Amend section 22.405, in the first

sentence, by removing ‘‘Facilities

Contracts’’ and adding ‘‘GovernmentFurnished Real Property’’ in its place.

14. Amend section 22.407 by revising

paragraph (d) to read as follows:

22.407 Contract clauses.

* * * * *

(d) The contracting officer shall insert

the clause at 52.222–17, Labor

Standards for Construction Work—

Government-Furnished Real Property,

when the Government will furnish real

property for performance of a contract

and the Government is not certain at the

time of contract award that it may

require covered construction work (see

22.402(b)) to be performed in the United

States.

PART 27—PATENTS, DATA, AND

COPYRIGHTS

27.409 [Amended]

15. Amend section 27.409 in the first

sentence of paragraph (e) by removing

the word ‘‘facilities’’ and adding

‘‘property’’ in its place.

PART 28—BONDS AND INSURANCE

16. Revise section 28.303 to read as

follows:

28.303 Insurance against loss of or

damage to Government property.

When the Government requires or

approves insurance to cover loss, theft,

or destruction of or damage to

Government property, it may be

provided by specific insurance policies

or by inclusion of the risks in the

contractor’s existing policies. The

policies shall disclose the Government’s

interest in the property.

PART 31—CONTRACT COST

PRINCIPLES AND PROCEDURES

31.106 [Removed and Reserved]

17. Remove and reserve sections

31.106 through 31.106–3.

31.205–40 [Amended]

18. Amend section 31.205–40 in

paragraph (a) by removing the citation

‘‘45.101’’ and inserting ‘‘45.001’’ in its

place.

PART 32—CONTRACT FINANCING

32.403 [Amended]

19. Amend section 32.403 by

removing and reserving paragraph (c).

32.407 [Amended]

20. Amend section 32.407 by

removing and reserving paragraph (c).

32.503–15 [Removed and Reserved]

21. Remove and reserve section

32.503–15.

32.704 [Amended]

22. Amend section 32.704 in the

introductory text of paragraph (a)(1) by

removing ‘‘52.232–21, Limitation of

Cost (Facilities);’’.

23. Amend section 32.705–2 by

revising paragraph (a); by removing

paragraph (b); and by redesignating

paragraph (c) as paragraph (b). The

revised text reads as follows:

32.705–2 Clauses for limitation of cost or

funds.

(a) The contracting officer shall insert

the clause at 52.232–20, Limitation of

Cost, in solicitations and contracts if a

fully funded cost-reimbursement

contract is contemplated whether or not

the contract provides for payment of a

fee.

* * * * *

PART 35—RESEARCH AND

DEVELOPMENT CONTRACTING

24. Revise the section heading and

text of 35.014 to read as follows:

35.014 Title to tangible personal property.

The provisions of 31 U.S.C. 6306 for

vesting title to equipment and other

tangible property in nonprofit

organizations whose primary purpose is

the conduct of scientific research or

nonprofit institutions of higher

education are implemented through

Alternate II to the clause at 52.245–2,

Government Property, and Alternate II

to the clause at 52.245–7, Government

Property—Alternate Procedures. It is

generally in the Government’s interests

to vest title with such contractors unless

an agency head has provided otherwise

or the property can be used for followon contracts to be performed on real

property owned or leased by the

Government.

PART 37—SERVICE CONTRACTING

25. Amend section 37.101 by revising

paragraph (e) of the definition ‘‘Service

contract’’ to read as follows:

37.101 Definitions.

* * * * *

Service Contract ***

* * * * *

(e) Operation of Government-owned

equipment, real property, and systems.

* * * * *

PART 42—CONTRACT

ADMINISTRATION AND AUDIT

SERVICES

26. Amend section 42.302 by revising

paragraphs (a)(26), (a)(27), and (a)(28),

and by removing and reserving (a)(30) to

read as follows:

42.302 Contract administration functions.

(a) * * *

(26) Perform property administration

(see part 45), including review and

approval of contractor property

management systems, assessment of

contractor processes for the acquisition

or fabrication of property under costreimbursement contracts, and the

management and disposal of

Government property.

(27) Determine reasonable rentals for

noninterference use of Government

property for commercial purposes (see

52.245–2, 52.245–6, and 52.245–7).

(28) Perform necessary screening,

redistribution, and disposal of

Government property.

* * * * *

(30) [Reserved]

* * * * *

42.705–1 [Amended]

27. Amend section 42.705–1 in the

first sentence of paragraph (b)(1) by

removing ‘‘or 52.216–13’’.

42.708 [Amended]

28. Amend section 42.708 in

paragraph (b) by removing ‘‘or 52.216–

13’’.

Federal Register / Vol. 65, No. 6 / Monday, January 10, 2000 / Proposed Rules 1441

42.709–6 [Amended]

29. Amend section 42.709–6 by

removing ‘‘52.216–13,’’.

PART 43—CONTRACT

MODIFICATIONS

43.205 [Amended]

30. Amend section 43.205 by

removing paragraph (b)(5); by

redesignating paragraph ‘‘(b)(6)’’ as

‘‘(b)(5)’’, and amending it by removing

‘‘Alternate V’’ and adding ‘‘Alternate

IV’’ in its place.

PART 44—SUBCONTRACTING

POLICIES AND PROCEDURES

44.101 [Amended]

31. Amend section 44.101 by

removing the definition ‘‘Facilities’’.

32. Amend section 44.202–2 by

revising paragraph (a)(2); by removing

paragraph (a)(10); and by redesignating

paragraphs (a)(11) through (a)(13) as

(a)(10) through (a)(12), respectively. The

revised text reads as follows:

44.202–2 Considerations.

(a) * * *

(2) Is the subcontract for property

identified in the solicitation as property

the Government will furnish for contract

performance?

* * * * *

33. Revise part 45 to read as follows:

PART 45—GOVERNMENT PROPERTY

IN THE POSSESSION OF

CONTRACTORS

Sec.

45.000 Scope of part.

45.001 Definitions.

Subpart 45.1—General

45.101 Property management procedures.

45.102 Policy.

Subpart 45.2—Furnishing Government

Property

45.201 Furnishing property for performance

of a Government contract.

45.201–1 Criteria for furnishing

Government property.

45.201–2 Restrictions on furnishing

Government property.

45.201–3 Documentation and approval

requirements.

45.202 Competitive advantage.

45.203 Solicitation and contract

requirements.

45.204 Postaward requests for Government

property.

45.205 Repair or replacement of

Government-furnished property.

45.205–1 Maintenance.

45.205–2 Property losses.

45.206 Government-furnished property to

be returned to a Government activity.

45.207 Solicitation provision and contract

clauses.

45.207–1 Solicitation provision.

45.207–2 Contract clauses.

Subpart 45.3—Contractor-Acquired or

Produced Property

45.301 General.

45.302 Fixed-price and labor-hour

contracts.

45.303 Cost-reimbursement and time-andmaterials contracts.

45.304 Contract clause.

Subpart 45.4—Liability for Property Losses

45.400 General.

45.401 Liability for property losses—

contracts that include the clause at

52.245–2, Government Property.

45.401–1 Government liability.

45.401–2 Contractor liability.

45.402 Liability for property losses—

contracts that include the clause at

52.245–7, Government Property—

Alternate Procedures.

45.402–1 Government liability.

45.402–2 Contractor liability.

45.403 Post delivery considerations.

45.404 Contract clause.

Subpart 45.5—Government Property

Management

45.501 Preaward considerations.

45.502 Standard and alternate property

management systems.

45.502–1 Property management under the

clause at 52.245–5, Government Property

Administration.

45.502–2 Property management under the

clause at 52.245–8, Government Property

Administration—Alternate Procedures.

45.503 Government property records and

reports.

45.504 Property accountability.

45.504–1 Accountability.

45.504–2 Transferring accountability to

other contracts.

45.505 Reutilization, transfer, and donation

of Government property.

45.505–1 Contractor actions.

45.505–2 Inventory disposal schedules.

45.505–3 Reutilization priorities.

45.505–4 Screening.

45.505–5 Waiver of screening requirements.

45.505–6 Interagency property transfer

costs.

45.506 Abandonment, destruction, or

donation of excess agency property.

45.507 Disposal of scrap.

45.507–1 Production scrap.

45.507–2 Other scrap.

45.508 Disposal of surplus Government

property.

45.508–1 Abandonment, destruction, or

donation of surplus property in lieu of

sale.

45.508–2 Sale of surplus property.

45.508–3 Proceeds from sales.

45.509 Inventory Disposal Reports.

45.510 Contract clause.

Subpart 45.6—Authorizing the Use of

Government Property for Commercial

Purposes

45.601 Policy.

45.602 Contract clause.

45.000 Scope of part.

This part prescribes policies for

furnishing Government property to

contractors, contractors’ use and

management of Government property,

and, except for real property, the

disposal of Government property. It

does not apply to—

(a) Property leased under the

provisions of 10 U.S.C. 2667, Leases:

nonexcess property; or

(b) Property to which the Government

has obtained title, a lien, or other

security interest solely as a result of

financing arrangements under fixedprice contracts.

45.001 Definitions.

As used in this part—

Commercial purpose means any

purpose other than performance of a

U.S. Government contract or

subcontract thereunder.

Contractor’s managerial personnel

means the contractor’s directors,

officers, and any of the contractor’s

managers, superintendents, or

equivalent representatives who have

supervision or direction of all or

substantially all of the contractor’s

business or operations at a site

connected with performance of a

Government contract.

Demilitarization means rendering a

product unusable for, and not restorable

to, the purpose for which it was

designed or is customarily used.

Equipment means nonexpendable,

tangible personal property. The term

does not include property that satisfies

the definition in this part of material,

unique Federal property, special

tooling, or special test equipment.

Expendable property means property

that is customarily consumed during

design, manufacture, or testing of a

product or performance of a service.

General purpose equipment means

items that can be used, or with only

minor modification could be used, to

develop, produce, test, or maintain more

than one type of item or perform more

than one type of service.

Government-furnished property

means Government property that a

contracting officer authorizes a

contractor to use for performance of a

Government contract.

Government property means property

the Government owns or leases.

Low value property means equipment,

special tooling, or special test

equipment that has an acquisition cost

less than $5,000 and is not sensitive

property.

Material means expendable property

and property incorporated into or

attached to an item deliverable under a

contract.

Natural disaster means a sudden and

unusual natural occurrence causing

catastrophic damage, including floods,

hurricanes, tornadoes, cyclones,

1442 Federal Register / Vol. 65, No. 6 / Monday, January 10, 2000 / Proposed Rules

atmospheric electrical storms, tidal

waves, avalanches, mudslides,

landslides, volcanic eruptions,

earthquakes, and other similar perils.

The term does not include fire or

explosion, unless directly or indirectly

caused by a covered peril.

Nonprofit organization means a

business entity organized and operated

exclusively for charitable, scientific, or

educational purposes, the net earnings

of which do not inure to the benefit of

any private shareholder or individual,

that is exempt from Federal income

taxation under section 501 of the

Internal Revenue Code and does not

conduct a substantial portion of its

activities carrying on propaganda or

otherwise attempting to influence

legislation or participating in any

political campaign on behalf of any

candidate for public office.

Personal property (see 2.101).

Plant clearance officer means a

person appointed to disposition

property accountable under Government

contracts.

Precious metals means silver, gold,

platinum, palladium, iridium, osmium,

rhodium, and ruthenium.

Property (see 2.101).

Property administrator means a

person appointed to perform property

administration for the Government.

Real property (see 2.101).

Rental period means the calendar

period during which Government

property is made available for

commercial purposes.

Rental time means the number of

hours, to the nearest whole hour, rented

property is actually used for commercial

purposes. It includes time to set up the

property for such purposes, perform

required maintenance, and restore the

property to its condition prior to rental

(less normal wear and tear).

Scrap means personal property that

has no value except its basic metallic,

mineral, or organic content.

Sensitive property means property

potentially dangerous to the public

safety or security if stolen, lost, or

misplaced, or that must be subject to

exceptional physical security,

protection, control, and accountability

such as classified property, weapons,

ammunition, explosives, controlled

substances, radioactive materials,

hazardous materials or wastes, or

precious metals.

Special test equipment means—

(1) Test equipment designed

specifically to conduct testing required

by a Government contract provided

such equipment cannot be used for

other purposes;

(2) General purpose test equipment or

modifications thereof that are

interconnected and interdependent to

form a new functional entity that can

only be used to perform testing required

by a contract while so interconnected

and interdependent; or

(3) Any combination of specifically

designed, general purpose, or modified

general purpose test equipment that are

so interconnected and interdependent to

form a new functional entity that can

only be used to perform special purpose

testing required by a contract while so

interconnected and interdependent.

Special tooling means items, such as

jigs, dies, fixtures, molds, patterns, taps,

gauges, or other equipment and

manufacturing aids, that are of such a

specialized nature that without

substantial modification or alteration

their use is limited to the development,

production, repair, or maintenance of

particular supplies or components

thereof, or to the performance of

particular services.

Unique Federal property means

Government-owned personal property,

or components thereof, that is specially

designed to perform or support the

mission of one or more Federal agencies

and is not available to the public. The

term does not include property that is

incorporated into or attached to an item

deliverable under a contract.

Work in process means bench stock

materials, complete or incomplete

fabricated parts, subassemblies,

assemblies, and similar items that are

created during production of deliverable

end items, or are required to construct

special tooling or special test equipment

needed to produce deliverable end

items, or are otherwise needed for

design or testing required by a contract.

Subpart 45.1—General

45.101 Property management procedures.

(a) The Government permits offerors

to elect to manage Government property

under a standard, process based system

or, alternatively, to manage Government

property using the same business

practices the contractors use to manage

their own property. The solicitation

provision at 52.245–1, Government

Property Availability and Information

Required from Offerors, is used for the

election. See the clause at 52.245–5,

Government Property Administration,

for the standard, process based system,

and the clause at 52.245–8, Government

Property Administration—Alternate

Procedures, if the election is to use the

contractor’s own business practices.

Subparts 45.4 and 45.5 provide

guidance regarding contractors’ property

liability and property management

responsibilities.

(b) It is in the Government’s interest

to have a contractor use a single

property management system at each

location at which the contractor will

perform Government contracts.

Therefore, contracting officers should

not question a contractor’s election to

use the alternate property management

procedures if the contractor’s election is

consistent with the contractor’s

practices at a particular location. If the

contractor’s election is not consistent,

the contracting officer should advise the

contractor of the inconsistency and

request the contractor to withdraw the

election or agree to include the elective

procedures in all contracts being

performed at that location at no increase

in the price or fee of such contracts.

45.102 Policy.

(a) Agencies must not—

(1) Furnish Government property to

contractors except as provided in

subpart 45.2;

(2) Specify, direct, or require for

contract performance the use of specific

(e.g., brand name, brand name or equal,

part number, or similar identifier)

commercial items that will become

Government property under a contract

unless the contract’s stated purpose is

the acquisition of such items;

(3) Acquire commercial items or

general purpose equipment for the sole

purpose of subsequently furnishing

such items as Government-furnished

property to any contractor unless the

commercial items are components of

deliverable items; or

(4) Authorize contractors to acquire

for the Government—

(i) Property not required for

performance of a contract or subcontract

thereunder;

(ii) Real property, alterations thereof,

or improvements thereto, unless the

contract’s primary purpose is the

maintenance of an essential industry

capability or the contract requires the

performance of alterations or

improvements to real property; or

(iii) General purpose equipment,

unless the contract’s stated purpose is

the acquisition of the equipment (see

paragraph (b) of this section for

nonprofit organizations).

(b) Under contracts for basic or

applied scientific research, contracting

officers may authorize nonprofit

organizations whose primary purpose is

the conduct of scientific research, or

nonprofit institutions of higher

education, to acquire tangible personal

property for the Government, including

commercial items.

Federal Register / Vol. 65, No. 6 / Monday, January 10, 2000 / Proposed Rules 1443

Subpart 45.2—Furnishing Government

Property

45.201 Furnishing property for

performance of a Government contract.

Government property may be

furnished for performance of a

Government contract, subject to the

restrictions in 45.201-2, only when at

least one of the criteria in 45.201–1 and

the corresponding documentation and

approval requirements in 45.201–3 are

satisfied.

45.201–1 Criteria for furnishing

Government property.

The criteria for furnishing

Government property are:

(a) The Government is the sole source

of property required to perform a

contract.

(b) The property will be incorporated

into or attached to a deliverable end

item.

(c) The property’s use will result in

substantial measurable cost savings to

the Government when compared to

estimated costs of contract performance

without such property (consider the

Government’s costs to activate property

or maintain property in an active status

of ownership when determining cost

savings).

(d) The Government must furnish the

property to assure that items delivered

under a contract are compatible with

other Government items.

(e) The property must be furnished to

accomplish repairs to, or maintenance

or reconditioning of, Governmentfurnished property or items to be

delivered under a contract and such

repair, maintenance, or reconditioning

is not the contractor’s responsibility

under the contract.

(f) The property must be furnished to

respond to an unusual and compelling

urgency for supplies or services (see

6.302–2) or to support contingency

contracting.

(g) The property will be used on a

contract for scientific research

conducted by an institution of higher

education or a nonprofit organization.

(h) Government-furnished equipment

or real property is needed for the

retention or operation of an essential

Government-owned capability.

45.201–2 Restrictions on furnishing

Government property.

The restrictions on furnishing

Government property are:

(a) Government-owned material may

be furnished to contractors only under

the criteria in 45.201–1(a), (b), (c), (f), or

(g). The quantity furnished may include

reasonable amounts for repairs or

corrections to work in process, scrap, or

spoilage.

(b) Government-owned equipment

may be furnished to contractors only

under the criteria in 45.201–1 (c), (f), (g),

or (h).

(c) Contracting officers may furnish

commercial computer software or

commercial computer software

documentation to contractors only when

the Government has a license in the

software or documentation that permits

release or disclosure to and use by third

parties and the software or

documentation is required to operate,

maintain, or install other Government

property furnished for performance of a

Government contract.

(d) Contracting officers must not

furnish noncommercial computer

software or noncommercial computer

software documentation (software or

documentation that does not satisfy the

requirements in 2.101 for commercial

items) to contractors unless the

Government is the software or

documentation licensor or, prior to

furnishing the software or

documentation, the Government obtains

a license in the software or

documentation that permits release or

disclosure to, or use by, third parties

and the intended recipient has

completed any use and nondisclosure

agreement required by part 27 or an

agency supplement.

45.201–3 Documentation and approval

requirements.

Decisions to furnish property to

contractors must be documented in the

contract file. Contracting officers may

make decisions based upon the criteria

in 45.201–1(b) and (d) through (g).

Unless otherwise designated in agency

regulations, approval is required by—

(a) The contracting officer’s first level

supervisor when using the criterion in

45.201–1(c);

(b) The contracting officer’s second

level supervisor when using the

criterion in 45.201–1(a); or

(c) The head of the contracting

activity when using the criterion in

45.201–1(h).

45.202 Competitive advantage.

Offerors who will use Government

property to perform a contract usually

have a price advantage relative to

competitors who will acquire, fabricate,

or use their own property to perform

that contract. When evaluating offers,

that advantage must be eliminated to the

extent practicable (see 15.305(a)(3)).

45.203 Solicitation and contract

requirements.

When the Government will make

property available for contract

performance—

(a) Competitive solicitations must—

(1) List the available property by item

name, national stock number (if the item

has a national stock number), or other

appropriate nomenclature; identify the

quantity available; and, when known,

identify the date the property was

acquired;

(2) Include, or offer to provide, real

property maps, drawings, plans, or

similar information in sufficient detail

to enable an offeror to prepare its offer;

(3) Separately identify property

available on an ‘‘as is’’ basis;

(4) Separately identify property the

Government will reactivate, rehabilitate,

or convert;

(5) Identify the adjustment that will

be applied to the cost or price of offers

that contemplate use of Governmentfurnished property. The adjustment may

be specified as a dollar amount, a

formula, or any combination thereof;

and

(6) Identify any special requirements

for security, maintenance, liability, or

property administration.

(b) Contracts must—

(1) List and identify (nomenclature,

quantity, serial number or other

appropriate identifier, or, for real

property, maps, drawings, plans, or

similar information) the Government

property furnished for performance of

the contract;

(2) Separately identify property

furnished ‘‘as is’’;

(3) Provide that costs incurred by the

contractor to transport ‘‘as is’’ property

to its place of business or to modify or

otherwise make such property suitable

for the contractor’s use must not result

in an increase in contract price or fee;

(4) Identify any constraints on the

period for, or amount of, use;

(5) Identify any special requirements

for security, maintenance, liability, or

property control applicable to a

particular Government-furnished item;

(6) Identify any Governmentfurnished property that is to be returned

directly to a Government activity in lieu

of initiating disposal action and specify

the method and point of return;

(7) For fixed-price construction

contracts that contemplate furnishing

property f.o.b. railroad cars or f.o.b.

truck, specify the point of delivery and

include appropriate terms and

conditions if the Government or another

person will install, prepare, or test the

property; and

(8) To the extent known, identify the

Government-furnished property’s

acquisition cost and acquisition date.

45.204 Postaward requests for

Government property.

(a) Contracting officers must not

furnish Government property to

1444 Federal Register / Vol. 65, No. 6 / Monday, January 10, 2000 / Proposed Rules

contractors subsequent to contract

award unless adequate consideration is

received. If a contractor requests the use

of property that is accountable under

another contract, the contracting officer

for the contract under which the

property is accountable must authorize

the proposed use, and the contracting

officer responsible for the contract

under which the property’s use has been

requested must agree with such use.

Modify each contract for which use is

authorized to identify the conditions for

use and the applicable consideration.

(b)(1) The clause at 52.245–2,

Government Property, authorizes a

contractor to use Government property

accountable under a contract in

performance of all Government

contracts at the same location if—

(i) The Contracting officer has agreed

to such use; or

(ii) The contractor requests the use of

the property and the contracting officer

does not object within 30 days following

receipt of the contractor’s request.

(2) Generally, the contracting officer

should not object unless—

(i) The program manager for the

contract under which the property is

accountable, or his designee, advises

that the requested use of the property

will have an adverse affect on the

property’s capability to perform that

contract or on program budgets; or

(ii) A contracting officer responsible

for a contract on which use has been

requested (an affected contracting

officer) advises that the pricing structure

of that contract would be affected or the

property is not suitable for use under

that contract.

(3) If the program manager (or

designee) or an affected contracting

officer objects to the requested use, the

contracting officer must advise the

contractor of the Government’s

objection within 30 days following

receipt of the contractor’s request.

(4) The contracting officer may

negotiate with the contractor to remove

the Government’s objections by

rescoping the contractor’s proposal or

obtaining other consideration acceptable

to the program manager (or designee)

and the affected contracting officers.

45.205 Repair or replacement of

Government-furnished property.

45.205–1 Maintenance.

Contractors are required to maintain

Government property in a condition

suitable for intended use. The

Government property clauses at 52.245–

2, Government Property, and 52.245–7,

Government Property—Alternate

Procedures, require contractors to notify

the Government when the maintenance

actions required by those clauses do not

sustain the property’s suitability for use

and request direction regarding repair,

rehabilitation, or replacement of the

property.

(a) Contracting officers may elect to—

(1) Repair or replace the property;

(2) Substitute other property for the

property requiring additional

maintenance;

(3) Authorize the contractor to repair,

rehabilitate, or replace the property;

(4) Authorize the contractor to

dispose of the property; or

(5) Negotiate an equitable adjustment.

(b) Contracting officers should not

authorize the repair, rehabilitation, or

replacement of Government-furnished

property, including property furnished

‘‘as is’’, or make a repair, rehabilitation,

or replacement unless—

(1) The property is required for

continued performance of the contract

under which the property is

accountable;

(2) The Government is obligated

contractually to provide the property for

performance of another contract; or

(3) The property is needed for work to

be performed by the Government at a

Government installation.

(c) Contracting officers must consult

with appropriate technical, logistics,

program office, and property specialists

to determine whether the Governmentfurnished property should be replaced,

the appropriate method and type of

replacement, or if the contractor should

repair or rehabilitate the property. If the

Government does not elect to repair or

replace Government-furnished property

that is needed for continued contract

performance, the contractor might be

entitled to an equitable adjustment.

45.205–2 Property losses.

(a) Property losses for which the

Government is liable. Generally, the

Government is responsible for property

losses under contracts that include the

Government property clause at 52.245–

2. The Government is also liable for

certain property losses under contracts

that contain the Government property

clause at 52.245–7. Follow the guidance

in 45.205–1(a) and (b) to remedy a

property loss for which the Government

is liable.

(b) Property losses for which the

contractor is liable. When a contractor

is liable for a property loss under the

Government property clauses at 52.245–

2 or 52.245–7, the contracting officer

may authorize the contractor to repair or

replace the property at no change in

contract price or fee if the property is

needed for continued performance of

the contract or negotiate an equitable

reduction in contract price or fee if the

property is not needed for continued

contract performance.

45.206 Government-furnished property to

be returned to a Government activity.

When a contract requires the

contractor to return Governmentfurnished property directly to a

Government activity (in lieu of entering

the property into the disposal process),

the property administrator should

determine the property’s condition as

near to the return date as practicable

and must promptly notify the

contracting officer if the property is not

suitable for its intended use. The

contracting officer promptly must direct

the contractor to take any necessary

corrective action or negotiate an

equitable adjustment incident to the

contractor’s failure to sustain the

property’s suitability for intended use.

When corrective action is not practical,

the contracting officer must direct the

contractor to dispose of the property

(see 45.505–3) and promptly advise the

property administrator of the action

directed.

45.207 Solicitation provision and contract

clauses.

45.207–1 Solicitation provision.

(a) Insert the provision at 52.245–1,

Government Property Availability and

Information Required from Offerors,

when soliciting offers from more than

one source, regardless of contract type,

and the Government contemplates

furnishing property for performance of

the resulting contract.

45.207–2 Contract clauses.

(a) Except as provided in 45.207–2(d),

insert the clause at 52.245–2,

Government Property, in—

(1) All cost-reimbursement and timeand-materials solicitations and contracts

for supplies, services, or research and

development;

(2) Fixed-price or labor-hour

solicitations and contracts for supplies,

services, or research and development

under which the Government will

furnish property for performance of the

contract;

(3) Contract modifications or orders

for property repair under fixed-price or

labor-hour contracts that do not include

that clause when—(i) The aggregate

acquisition cost of the property to be

repaired exceeds or is reasonably

anticipated to exceed $100,000; or

(ii) The Government will furnish

property for performance of the repairs.

(b) Insert the clause with its Alternate

I in solicitations and contracts that

contemplate fixed-price awards based

upon adequate price competition or

Federal Register / Vol. 65, No. 6 / Monday, January 10, 2000 / Proposed Rules 1445

when the contract price is set by law or

regulation.

(c) Insert the clause with its Alternate

II in cost-reimbursement or time-andmaterials solicitations and contracts for

basic or applied scientific research to be

conducted by nonprofit organizations

whose primary purpose is the conduct

of scientific research or by nonprofit

institutions of higher education (see

35.014).

(d) Insert the clause at 52.245–7,

Government Property—Alternate

Procedures, when an offeror has elected

to use that clause in the solicitation

provision at 52.245–1, Government

Property Availability and Information

required from Offerors.

(1) Insert the clause with its Alternate

I in contracts for services to be

performed primarily on real property

owned or leased by the Government and

the contractor will not control access to

or use of the property furnished for

performance of the contract.

(2) Insert the clause with its Alternate

II in cost-reimbursement or time-andmaterials solicitations and contracts for

basic or applied scientific research to be

conducted by nonprofit organizations

whose primary purpose is the conduct

of scientific research or by nonprofit

institutions of higher education (see

35.014).

Subpart 45.3—Contractor-Acquired or

Produced Property

45.301 General.

A contractor’s contention that

property was acquired to perform a

specific contract and is not needed for

any other purpose does not alter the fact

that the property might not qualify for

treatment as a direct cost under the

contractor’s cost accounting practices

and 31.202.

45.302 Fixed-price and labor-hour

contracts.

(a) Property acquired or produced by

the contractor for performance of a

fixed-price or labor-hour contract is not

Government-furnished property and is

not subject to the clause at 52.245–5,

Government Property Administration,

or the clause at 52.245–8, Government

Property Administration—Alternate

Procedures, except—

(1) Delivered property accepted by the

Government that the Government has

directed the contractor to store; or

(2) Special tooling and special test

equipment the contractor is required to

store during the Government notice

period under the clause at 52.245–3,

Delivery—Special Tooling and Special

Test Equipment (Fixed-Price Contracts)

(see paragraphs (b) and (d) of this

section).

(b)(1) The clause at 52.245–3,

Delivery—Special Tooling and Special

Test Equipment (Fixed-Price Contracts),

requires a contractor to notify the

Government if the contractor has

acquired or produced special tooling or

special test equipment that is not

required to be delivered under the

contract. The contractor’s notice is

required not later than the earlier of—

(i) 30 days following the contractor’s

determination that such special tooling

or special test equipment is no longer

required for contract performance; or

(ii) 120 days prior to completion of

scheduled deliveries (other than

technical data) under the contract.

(2) The Government has 120 days

following receipt of the contractor’s

notice (or such other period mutually

agreed upon) to notify the contractor

that the Government requires delivery of

any of the items identified in the

contractor’s notice. The Government’s

notice must identify the special tooling

or special test equipment item(s) to be

delivered, and must—

(i) Provide packing, packaging,

marking, and shipping instructions;

(ii) Direct the contractor to prepare

the property for storage at the

contractor’s facility or a Government

facility; or

(iii) Provide instructions when

accountability is to be transferred to

another contract.

(c) The contractor is obligated to store

the property during the notice period at

no change in price. Storage subsequent

to the Government’s delivery notice

might entitle the contractor to an

equitable adjustment.

(d) Prior to furnishing any property

delivered to the Government under the

clause at 52.245–3 to a contractor for

performance of a Government contract,

including the contract under which

delivery occurred, the contracting

officer responsible for the receiving

contract must modify that contract to

identify the property as Governmentfurnished property. If the receiving

contract does not contain either the

clause at 52.245–2 or the clause at

52.245–7, the modification must add

whichever of those clauses is

appropriate for the location at which the

receiving contract is performed and

other clauses prescribed for use with the

added clause. Notwithstanding any

other provision of the receiving

contract, the modification must specify

that the property is furnished in

accordance with the terms of the added

clauses.

(e) Contracting officers must not

exercise the Government’s right to

require delivery of special tooling or

special test equipment items unless the

items are needed for follow-on

competitive procurements, component

breakout, mobilization, or to establish a

Government repair or maintenance

capability.

45.303 Cost-reimbursement and time-andmaterials contracts.

(a) Property acquired or produced by

a contractor for performance of a costreimbursement and time-and-materials

contract is subject to the clause at

52.245–5, Government Property

Administration, or the clause at 52.245–

8, Government Property

Administration—Alternate Procedures,

at the time the property’s costs are

properly allocable to a contract as direct

costs except—

(1) Special tooling items, or special

test equipment items to which the

contractor has title under the clause at

52.216–7, Allowable Cost and Payment;

and

(2) Property to which title has been

vested in the contractor under Alternate

II to the clause at 52.245–2, Government

Property, or Alternate I to the clause at

52.245–7, Government Property—

Alternate Procedures (See 35.014).

(b) If a person responsible for

establishing requirements has

determined that the Government

requires delivery of certain low value

(less than $5,000 acquisition cost)

special tooling items or low value

special test equipment items that do not

contain general purpose test units, such

items must be identified as deliverable

items under the contract.

(c) Property acquired or produced

under a cost-reimbursement contract is

not property furnished for the

performance of that contract. If the

contracting officer elects to furnish that

property to the contractor for

performance of the contract under

which the property was acquired or

produced, or to a contractor for

performance of another Government

contract, the contracting officer must

modify the receiving contract to identify

the property as Government-furnished

property and, if necessary, include the

appropriate contract clauses. The

modification must specify that the

property is furnished in accordance

with the terms of the clauses added.

(d) To avoid unnecessary

maintenance and storage costs,

contractors are required to enter into the

disposal process property no longer

required for contract performance.

Contracting officers must not authorize

the repair, rehabilitation, or replacement

of property no longer needed for

performance of a cost-reimbursement or

time-and-materials contract, except

special tooling or special test equipment

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items described in 45.303(b) that

diligent exercise of the contractor’s

contractual maintenance responsibilities

cannot sustain in a condition suitable

for intended use.

45.304 Contract clause.

Insert the clause at 52.245–3,

Delivery—Special Tooling and Special

Test Equipment (Fixed-Price Contracts),

in fixed-price solicitations and contracts

for supplies, services, or research and

development where the effort to be

performed will require the contractor to

acquire or produce special tooling or

special test equipment.

Subpart 45.4—Liability for Property

Losses

45.400 General.

(a) As used in this subpart, the terms

loss and losses include the physical loss

of, the theft of, or the destruction of

Government property, and damage to

Government property.

(b) The clauses at 52.245–2,

Government Property, and 52.245–7,

Government Property—Alternate

Procedures, identify the conditions

under which either the Government or

the contractor is liable for a property

loss. See 45.401 for guidance on

contracts that include the clause at

52.245–2 and 45.402 for contracts that

include the clause at 52.245–7.

45.401 Liability for property losses—

contracts that include the clause at 52.245–

2, Government Property.

45.401–1 Government liability.

(a) The Government is liable for

property losses that occur while the

contractor is maintaining a property

management system that satisfies

contract requirements, except losses or

any portion thereof—

(1) For which the contractor expressly

is liable under the terms of a contract;

or

(2) Are identified in 45.401–2.

(b) The Government’s liability for a

property loss is reduced by the amount

of any reimbursement the contractor

receives from a third party. Contracting

officers may direct the contractor to use

the reimbursement proceeds to repair,

rehabilitate, or replace the property or

may equitably adjust the contract.

Repair, rehabilitation, or replacement

should be considered only when the

property is needed for continued

performance of the contract, there is a

known need for the property at a

Government repair activity, or the

Government is contractually obligated

to furnish the property for performance

of another contract.

45.401–2 Contractor liability.

(a) The contractor is liable for losses

that—

(1) Occur at a time when the

contractor has not established a

property management system that

satisfies the requirements of this

contract;

(2) Occur on or after the date of a

written or electronic notice from the

property administrator that the

Government has withdrawn approval of

the contractor’s property management

system, unless the contractor can

establish by clear and convincing

evidence that a loss did not result from

the contractor’s failure to maintain an

approved system;

(3) Occur on or after the first calendar

day following the contractor’s failure to

correct a property system deficiency

within the time specified by the

property administrator or such other

mutually agreed upon time for

correction;

(4) Result from the contractor’s failure

to take reasonable and prudent steps to

avoid losses resulting from acts of war,

civil insurrection, or natural disasters;

or (5) Result from the willful

misconduct or lack of good faith on the

part of the contractor’s managerial

personnel.

(b) The contractor’s liability for a loss

that results from a risk expressly

required to be insured under this

contract is limited to the extent of the

insurance required to be purchased and

maintained, or to the extent of the

insurance actually purchased and

maintained, whichever is greater.

(c) The contractor’s transfer of

Government property to the possession

and control of a subcontractor does not

affect the contractor’s liability for

property losses.

45.402 Liability for property losses—

contracts that include the clause at 52.245–

7, Government Property— Alternate

Procedures.

45.402–1 Government liability.

(a) The Government is liable for losses

to Government property—

(1) Caused by acts of war, civil

insurrection, or natural disasters,

regardless of property value, except a

loss or portion thereof caused by or

attributable to the contractor’s or a

subcontractor’s failure to take

reasonable and prudent steps to avoid or

reduce such losses; and (2) Losses to

Government property items that have an

acquisition cost greater than $1,000,000

per item, except a loss or portion thereof

caused by willful misconduct or lack of

good faith on the part of the contractor’s

or a subcontractor’s managerial

personnel.

(b) The Government’s liability for a

property loss is reduced by the amount

of any reimbursement the contractor

receives from a third party. Contracting

officers may direct the contractor to use

the reimbursement proceeds to repair,

rehabilitate, or replace the property or

may equitably adjust the contract.

Repair, rehabilitation, or replacement

should be considered only when the

property is needed for continued

performance of the contract, there is a

known need for the property at a

Government repair activity, or the

Government is contractually obligated

to furnish the property for performance

of another contract.

45.402–2 Contractor liability.

The contractor is liable for all losses

of property accountable under the

contract, except losses for which the

Government is liable under 45.402–1.

The contractor’s transfer of Government

property to the possession and control

of a subcontractor does not affect the

contractor’s liability for property losses.

45.403 Post delivery considerations.

Contractors are liable for losses to

property delivered to or accepted by the

Government at a contractor or

subcontractor managed location until

the property is placed on board a

carrier’s conveyance (see appropriate

f.o.b. clauses at 52.247–29 through

52.247–33).

45.404 Contract clause.

Insert the clause at 52.245–4, Liability

for Government Property—Demolition

Services Contracts, in addition to the

clauses prescribed at 37.304, in

solicitations and contracts for

dismantling, demolition, or removal of

improvements.

Subpart 45.5—Government Property

Management

45.501 Preaward considerations.

(a) Contracting officers should

consider whether an offeror’s property

management capabilities might affect

source selection and must structure

appropriate evaluation criteria.

(b) When property management

capabilities will be evaluated, the

official responsible for source selection

should obtain and consider the

cognizant property administrator’s

advice regarding the adequacy of

offerors’ plans to establish acceptable

property management systems under

contracts that contain the clause at

52.245–5, Government Property

Administration, or the adequacy of

offerors’ plans to establish acceptable

systems of property management

practices under the clause at 52.245–8,

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Government Property Administration—

Alternate Procedures.

45.502 Standard and alternate property

management systems.

Contractors are required to have a

property management system that

performs the processes identified in the

clause at 52.245–5, Government

Property Administration, unless they

have elected to use the clause at 52.245–

8, Government Property

Administration—Alternate Procedures.

See 45.502–1 for guidance regarding

property management under contracts

that include the clause at 52.245–2,

Government Property, or 45.502–2 for

guidance regarding the clause at 52.245–

8, Government Property

Administration—Alternate Procedures.

45.502–1 Property management under the

clause at 52.245–5, Government Property

Administration.

(a) General. (1) A contractor’s

property management system and

processes must provide for the control

of property in the possession of its

subcontractors.

(2) The periods for establishing a new

system or submitting changes to an

existing system should be extended only

when the contractor demonstrates a

reasonable need for an extension. When

authorizing an extension, the property

administrator must specify the new

establishment or submission date(s).

(b) Property management system

reviews and approvals—(1) New

systems or systems not previously

reviewed by the Government. Property

administrators must—

(i) Review new property management

systems or existing systems that have

not been reviewed by a property

administrator as soon as practicable;

(ii) Approve a system if the system’s

processes are sufficient to assure

compliance with contract requirements;

(iii) Require contractors to correct

systems that do not include all

processes identified in 52.245–5(c) or

that include processes that are not

sufficient to assure compliance with

contract requirements. Notify the

contractor of the corrections required

and specify the date(s) by which the

corrections must be made; and

(iv) Promptly refer to the contracting

officer a contractor’s failure to establish

a property control system that satisfies

the requirements in the clause at

52.245–5.

(2) Changes to previously approved

systems. Contractors that have a

Government-approved property

management system are required to

submit to the cognizant property

administrator within 90 days following

contract award any changes to that

system that are required to conform the

system to the contract’s requirements.

Property administrators must—

(i) Review the proposed changes

within 90 days following receipt;

(ii) Validate the system’s approval if

the contractor-proposed changes are

sufficient to assure contract compliance;

(iii) Require the contractor to make

changes only to the extent necessary for

contract compliance;

(iv) Notify the contractor of the

corrections required and specify the

date(s) by which the corrections must be

made. The notice must advise the

contractor that the contractor’s failure to

correct its system within the time

specified might result in the contractor’s

assumption of liability for property

losses that the Government might

otherwise be liable for under the

contract’s Government Property clause;

and

(v) Notify the contracting officer

immediately following issuance of a

notice under paragraph (b)(2)(iv) of this

section.

(3) Corrections following property

control system reviews. Property

administrators must provide a

correction notice to a contractor

promptly following a control system

review that discloses a previously

approved system no longer satisfies one

or more requirements for an approved

system. The notice must specify the

corrections required to make the system

compliant and the date for completing

corrective action. The notice must

advise the contractor that the

contractor’s failure to correct its system

within the time specified might result in

the contractor’s assumption of liability

for property losses that the Government

otherwise would be liable for under

those clauses.

(c) Withdrawing system approval. The

administrative contracting officer’s

concurrence is required prior to

withdrawing approval of an approved

property management system.

Generally, approval should be

withdrawn only when a contractor fails

to maintain a Government property

control system that satisfies contract

requirements.

45.502–2 Property management under the

clause at 52.245–8, Government Property

Administration— Alternate Procedures.

(a) The Government will rely upon a

contractor’s use of sound business

practices to maintain, protect, preserve,

control, and account for Government

property.

(b) The property administrator must

notify the contracting officer responsible

for contract administration promptly if

experience under a contract indicates

that the contractor’s property

management practices are not sufficient

to maintain, protect, preserve, or control

the Government’s property as required

by the contract.

(c) The contracting officer responsible

for contract administration may require

the contractor to correct the property

system deficiencies, may negotiate an

equitable reduction in contract price in

lieu of correction, or may negotiate

other appropriate corrective action. The

procuring contracting officer should be

consulted prior to implementing any

corrective action.

45.503 Government property records and

reports.

(a) Generally, it is in the

Government’s interests to have a

contractor generate records and reports

of Government property using the same

practices the contractor uses for its own

property. The property records

maintained by a contractor are the

Government’s official property records.

A contracting office may elect to

establish and maintain the

Government’s property records and

generate required property reports when

the contracting office retains contract

administration functions and the

contracting officer considers

Government recordkeeping and reports

generation to be in the Government’s

interests. The circumstances under

which Government recordkeeping and

reporting might be warranted are—

(1) Contract performance periods less

than 6 months; or

(2) When Government property will

be furnished for a contract for services

to be performed entirely at real property

owned or leased by the Government

such as the management or operation of

installations, bases, or portions thereof,

warehouses, libraries, stock rooms,

mailrooms, or computer centers.

(b) The contracting office responsible

for contract administration must process

property reports in accordance with

agency procedures.

45.504 Property accountability.

45.504–1 Accountability.

(a) Government-furnished property is

accountable under the contract for

which it was furnished.

(b) Property acquired or produced by

a contractor to which the Government

has title is accountable under the

contract for which the property was

acquired or produced until the

contracting officer directs a transfer of

accountability, the property is placed

aboard a carrier’s conveyance (f.o.b.

origin), or is delivered at the specified

f.o.b. destination point.

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45.504–2 Transferring accountability to

other contracts.

(a) Contract modification.

Accountability transfers should be made

only when the property is currently

needed for the performance of another

Government contract or is needed to

preserve or maintain an essential

industrial capability. All transfers must

be reflected in a contract modification.

(b) Special consideration for special

tooling or special test equipment.

Accountability for a special tooling or

special test equipment item acquired or

produced by a contractor to which the

Government has title, may be

transferred to another contract with that

contractor provided the property is

identified as property furnished ‘‘as is,’’

the receiving contract’s price or

estimated cost and fee is adjusted in

accordance with paragraph (c) of this

subsection, and property records are

adjusted in accordance with paragraph

(d) of this subsection. Accountability

instructions should be included in the

notice required by paragraph (d) of the

clause at 52.245–3, Delivery—Special

Tooling and Special Test Equipment

(Fixed-Price Contracts).

(c) Price adjustment. When a property

item’s accountability is transferred to

another contract, the price or estimated

cost and fee of the receiving contract

should be equitably reduced if the

receiving contract’s current price or

estimated cost and fee was established

without a requirement for the

Government to furnish the item for that

contract.

(d) Property records. All property

accountability transfers must be

reflected in the property control records

for the contract from which

accountability is transferred (the losing

contract) and the contract to which

accountability is transferred (the gaining

contract). When a Governmentfurnished property item’s accountability

is transferred, the respective contracting

officers must modify the list of

Government-furnished property items

contained in the losing and gaining

contracts.

45.505 Reutilization, transfer, and

donation of Government property.

This section is applicable to the

reutilization, transfer, and donation of

Government property that is not

required for continued performance of a

Government contract. It does not apply

to scrap (see 45.507).

45.505–1 Contractor actions.

Contractors are required to—

(a) Make reasonable efforts to return

Government property that was acquired

or produced by the contractor and is no

longer needed for contract performance

to the appropriate supplier or to use the

property in performance of other

contracts; and

(b) List property that could not be

returned to a supplier or used in the

performance of other Government

contracts on Standard Form 1428,

Inventory Disposal Schedule.

45.505–2 Inventory disposal schedules.

(a) Plant clearance officers should

review and accept, or return for

correction, inventory disposal schedules

or scrap lists within 10 days following

receipt. Schedules or lists that are

completed in accordance with the

instructions for Standard Form 1428

should be accepted.

(b) Plant clearance officers must—

(1) Use Standard Form 1423 to verify

accepted schedules within 20 days

following acceptance.

(2) Require a contractor to correct any

discrepancies found during verification

or a contractor’s failure to complete the

actions described in subsection 45.505–

1.

(3) Provide the contractor disposition

instructions for property identified on

an acceptable inventory disposal

schedule within 120 days following

receipt of the schedule. A failure to

provide timely disposition instructions

might entitle the contractor to an

equitable adjustment.

(c) Contractors must obtain the plant

clearance officer’s approval to remove a

Government property item from an

inventory disposal schedule. Removal

should be approved when the contractor

has found a buyer for a contractoracquired or produced item at full

acquisition cost, the Government has

authorized the contractor to use the

property on another Government

contract, or the contractor has justified

continued use of a Governmentfurnished property item. Plant clearance

officers must consult with appropriate

program and technical personnel to

determine whether the contractor’s

rationale for retaining a Governmentfurnished property item is valid. If the

screening process (see 45.505–4,

45.505–5, and 45.505–6) has not begun,

the plant clearance officer must adjust

the schedule or return the schedule to

the contractor for correction. If

screening has begun, the plant clearance

officer must promptly notify the activity

performing the screening and must

identify the items that should be

removed from the screening process.

45.505–3 Reutilization priorities.

Plant clearance officers must initiate

reutilization actions using the highest

priority method appropriate for the

property. Authorized methods, listed in

descending order from highest to lowest

priority, are—

(a) Reuse within the agency (see

45.506 for circumstances under which

excess agency property may be

abandoned, destroyed, or donated);

(b) Transfer of educationally useful

equipment to schools and nonprofit

organizations for educational and

research activities (provided no other

Federal agency has expressed a need for

the property prior to screening by other

Federal agencies) or report such

property to the General Services

Administration (see Executive Order

12999);

(c) Reuse within the Government; and

(d) Donation to an eligible donee

designated by the GSA.

45.505–4 Screening.

The screening periods begin upon the

plant clearance officer’s acceptance of

an inventory disposal schedule. The

plant clearance officer must determine

whether standard or special screening is

appropriate and initiate screening

actions.

(a) Standard screening. The standard

screening period is 56 days.

(1) 1st through 20th day—screening

by the contracting agency. The

contracting agency has 20 days to screen

excess property for other use within the

agency. Plant clearance officers must

delete from an inventory disposal

schedule any items for which other

intra-agency use is identified, prepare

revised schedules, and, no later than the

21st day, submit four copies of the

revised schedules and Standard Form

(SF) 120, Report of Excess Personal

Property, or an electronic equivalent to

GSA (see 41 CFR 101–43.4901–120–1,

Instructions for Preparing SF 120). Enter

the date of the 42nd day as the

automatic surplus release date and the

date of the 56th day as the screening

completion date.

(2) 21st through 41st day—screening

by other Federal agencies. GSA will

normally honor requests for transfers of

property on a first-come-first-served

basis through the 41st day. When a

request is honored, the GSA regional

office must promptly transmit to the

plant clearance officer an approved

transfer order that includes shipping

instructions.

(3) 42nd through 56th day—GSA

screening for possible donation. During

this period, GSA must screen property

that has not been transferred to schools

or nonprofit organizations or has not

been identified for Federal reutilization

for possible donation to eligible donees.

(4) Screening period transfer request.

If an agency receives an intra-agency

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transfer request during the screening

periods described in paragraphs (a)(2) or

(a)(3) of this subsection, the plant

clearance officer must request GSA

approval to withdraw the item from the

inventory disposal schedule.

(b) Special screening requirements—

(1) Special tooling. Agencies must

follow the procedures at 45.505–4(a).

Special tooling owned by the

Department of Defense (DoD) or the

National Aeronautics and Space

Administration (NASA) may be

screened for reutilization within the

agency only.

(2) Special test equipment. (i)

Agencies must complete the screening

required by 45.505–4(a). If an agency

has no further need for the property and

the contractor has not expressed an

interest in using or acquiring the

property by annotating the inventory

disposal schedule, the plant clearance

officer must forward the inventory

disposal schedule to the GSA regional

office that serves the region in which

the property is located.

(ii) If the contractor has expressed an

interest in using the property on another

Government contract, the plant

clearance officer must contact the

contracting officer for that contract. If

the contracting officer concurs with the

proposed use, the contracting officer for

the contract under which the property is

accountable must transfer the property’s

accountability to that contract. If the

contracting officer does not concur with

the proposed use, the plant clearance

officer must deny the contractor’s

request and must resume the screening

process.

(iii) If the contractor has expressed an

interest in acquiring the property, and

no other party expresses an interest

during agency or GSA screening, the

property may be sold to the contractor.

(3) Printing equipment. Agencies must

report all excess printing equipment to

the Public Printer, Government Printing

Office, North Capitol and H Streets, NW,

Washington, DC 20401, after screening

within the agency (see 44 U.S.C. 312).

If the Public Printer does not express a

need for the equipment within 21 days,

the agency must submit the report to

GSA for further use and donation

screening.

(4) Nonnuclear hazardous materials,

hazardous wastes, and classified items.

These items must be screened in

accordance with agency procedures.

(5) Nuclear materials. The possession,

use, and transfer of certain nuclear

materials are subject to the regulatory

controls of the Nuclear Regulatory

Commission (NRC). Contracting

activities must screen excess nuclear

materials in the following categories:

(i) By-product material. Any

radioactive material (except special

nuclear material) yielded in or made

radioactive by exposure to the radiation

incident to producing or using special

nuclear material.

(ii) Source material. Uranium or

thorium, or any combination thereof, in

any physical or chemical form; or ores

that contain by weight one-twentieth of

1 percent (0.05 percent) or more of

uranium, thorium, or any combination

thereof. Source material does not

include special nuclear material.

(iii) Special nuclear material.

Plutonium, Uranium 233, Uranium

enriched in the isotope 233 or in the

isotope 235, and any other material that

the NRC determines to be special

nuclear material (but not including

source material); or any material

artificially enriched by any nuclear

material.

45.505–5 Waiver of screening

requirements.

Agency heads may waive agency

screening requirements when it is

clearly in the Government’s interests to

do so. When circumstances suggest a

waiver of GSA screening requirements

would be in the Government’s interests,

the agency must submit the justification

for the waiver to the General Services

Administration, Office of

Governmentwide Policy, Office of

Transportation and Personal Property

(MT), 1800 F Street NW, Washington,

DC 20405, at least 10 days prior to

implementing the waiver. The waiver

will be effective unless GSA takes

exception within 10 days of receipt. The

agency must notify the contract

administration office when

implementing a waiver.

45.505–6 Interagency property transfer

costs.

Agencies whose property is

transferred to other agencies must not be

reimbursed for the property in any

manner unless the circumstances of 41

CFR 101–43.309–3 apply. The agency

receiving the property must pay any

transportation costs that are not the

contractor’s responsibility and any costs

to pack, crate, or otherwise prepare the

property for shipment. The contract

administration office must process

appropriate contract modifications. To

accelerate plant clearance, the receiving

agency must promptly furnish funding

data, and transfer or shipping

documents to the contract

administration office.

45.506 Abandonment, destruction, or

donation of excess agency property.

(a) Agencies may abandon, destroy, or

donate to public bodies excess property

that does not contain precious metals,

hazardous materials or wastes, is not

sensitive or classified property, and

does not require demilitarization if the

plant clearance officer determines in

writing that—

(1) The property has no residual

monetary value; or

(2) The estimated cost to sell the

property, including advertising, storage

and other costs associated with making

the sale, is greater than the probable sale

proceeds.

(b) Plant clearance officers must

assure that the Government does not

bear any of the costs incident to a

donation.

(c) Property that contains hazardous

materials or wastes, sensitive property,

and property that requires

demilitarization may be abandoned at a

contractor’s premises if the contractor

consents.

45.507 Disposal of scrap.

45.507–1 Production scrap.

Contractors may dispose of scrap left

over from the normal production

process that has only remelting or

reprocessing value (such as textile and

metal clippings, borings, and faulty

castings or forgings) without

Government approval, provided the

scrap does not contain precious metals,

hazardous materials or wastes, nuclear

materials, or classified materials; or

does not require demilitarization.

45.507–2 Other scrap.

(a) Except as provided in 45.507–2(b),

contractors must list scrap that is not

production scrap on inventory disposal

schedules and submit the schedules to

the plant clearance officer. The plant

clearance officer must process the

schedules as described in 45.505–2.

(b) Under contracts that contain the

clause at 52.245–2, Government

Property, contractor’s that have

Government approved scrap procedures

may submit scrap lists in lieu of

inventory disposal schedules.

(1) The plant clearance officer must

review scrap lists within 10 days

following receipt. Generally, the plant

clearance officer should accept scrap

lists that are consistent with a

contractor’s Government approved scrap

procedures, correctly identify the

contracts under which the property is

accountable, and correctly identify the

property’s quantity and condition. The

plant clearance officers must provide

disposition instructions to the

contractor within 60 days following

receipt of an acceptable scrap list. If

disposition instructions are not

provided within that period, the clause

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at 52.245–2 permits a contractor to

dispose of scrap identified on a scrap

list without further Government

approval.

(2) The plant clearance officer must

reject or require correction of scrap lists

that contain property that must be

demilitarized prior to disposal,

classified items, scrap generated from

classified items, scrap that contains

hazardous materials or hazardous

wastes, precious metals, or items that

are dangerous to the public health,

safety, or welfare and require

contractors to submit inventory disposal

schedules for such items.

(c) Under contracts that contain the

clause at 52.245–7, Government

Property—Alternate Procedures, the

plant clearance officer should consider

favorably a contractor request to

negotiate expedited nonproduction

scrap disposal procedures when the

contractor’s experience under other

Government contracts or the

contractor’s business practices indicate

that the contractor will adequately

protect the Government’s interests.

45.508 Disposal of surplus Government

property.

(a) Applicability. This section

addresses the disposal of Government

property in the possession of contractors

that, after applicable screening, has not

been reutilized or transferred (hereafter

referred to as surplus property). It does

not apply to the abandonment,

destruction, or donation of excess

agency property (see 45.506) or to the

disposal of production scrap (see

45.507–1).

(b) Disposal priorities. Except as

provided in paragraphs (c) and (d) of

this section, surplus property must be

sold in accordance with 45.508–2 or

abandoned, destroyed or donated to

public bodies in accordance with

45.508–1.

(c) Disposal using agency procedures.

The surplus property identified in this

paragraph must be disposed of in

accordance with agency procedures:

(1) Classified items.

(2) Nonnuclear hazardous materials or

hazardous wastes.

(3) Property that contains precious

metals or requires demilitarization.

(4) Government property physically

located outside the United States or its

possessions (see 40 U.S.C. 511–514).

(d) Disposal of Nuclear materials.

Nuclear materials (see 45.505–4(b)(5))

must be disposed of in accordance with

NRC or applicable state licenses,

applicable Federal regulations, and

agency regulations.

45.508–1 Abandonment, destruction, or

donation of surplus property in lieu of sale.

(a) Except as provided in paragraph

(c) of this subsection, agencies may

abandon, destroy, or donate surplus

property, if the plant clearance officer

determines in writing that the property

does not constitute a danger to public

health, safety, or welfare and—

(1) The property has no residual

monetary value; or

(2) The estimated cost to sell the

property, including advertising, storage

and other costs associated with making

the sale, is greater than the probable sale

proceeds.

(b) All costs incident to a donation

must be borne by the donee.

(c) Property that contains hazardous

materials or wastes, sensitive property,

or property that requires

demilitarization, may be abandoned at a

contractor’s premises if the contractor

consents.

45.508–2 Sale of surplus property.

Policy for the sale of surplus property

is contained in the Federal Property

Management Regulations, 41 CFR part

101–45. Agencies may specify

implementing procedures.

45.508–3 Proceeds from sales.

Except for contracts that authorize

proceeds from sales to be credited to the

price or cost of the work (40 U.S.C.

485(a) and (e)), all sale proceeds are to

be credited to the Treasury of the United

States as miscellaneous receipts.

45.509 Inventory Disposal Reports.

Promptly following disposition of the

property identified on an inventory

disposal schedule and the crediting of

any related proceeds, the plant

clearance officer must prepare an SF

1424, Inventory Disposal Report, to

account for the property. The report

must identify any lost, stolen, damaged,

destroyed, or otherwise unaccounted for

property and any changes in quantity or

value of the property made by the

contractor after submission of the initial

inventory disposal schedule. The report

must be addressed to the administrative

contracting officer or, for termination

inventory, to the termination

contracting officer, with a copy to the

property administrator.

45.510 Contract clauses.

(a) Insert the clause 52.245–5,

Government Property Administration,

in solicitations and contracts that

include the clause at 52.245–2,

Government Property. If required for

agency financial management or

reporting purposes, agencies may

modify paragraphs (f)(1)(vi) and (f)(2)(i)

of the clause at 52.245–5 to specify

different dollar thresholds.

(b) Insert the clause at 52.245–5 with

its Alternate I when the Government

will maintain the Government’s official

property records.

(c) The clause at 52.245–5 and its

Alternate I may be modified to delete

references to low-value property when

contracting for services to be performed

entirely on property owned or leased by

the Government and the contracting

officer determines in writing that it is in

the Government’s interests to have a

contractor inventory all property and

immediately notify the Government of a

property loss regardless of the

property’s value.

(d) Insert the clause at 52.245–8,

Government Property Administration—

Alternate Procedures, in solicitations

and contracts that include the clause at

52.245–7, Government Property—

Alternate Procedures.

(e) Insert the clause at 52.245–8 with

its Alternate I when the Government

will maintain the Government’s official

property records.

(f) The clause at 52.245–8 and its

Alternate I may be modified to delete

references to low-value property when

contracting for services to be performed

entirely on property owned or leased by

the Government and the contracting

officer determines in writing that it is in

the Government’s interests to have a

contractor inventory all property and

immediately notify the Government of a

property loss regardless of the

property’s value.

Subpart 45.6—Authorizing the Use of

Government Property for Commercial

Purposes

45.601 Policy.

(a) Unless prohibited by law,

contracting officers may authorize the

contractor performing a contract under

which Government property is

accountable to use that property for

commercial purposes on a

noninterference basis if the Government

receives an equitable rental for such use.

(b) An authorization for use for

commercial purposes must be reflected

in a contract modification and must

specify—

(1) The property is available ‘‘as is’’

without any representation as to

suitability for intended use;

(2) The rental time and rental period

during which the property may be used;

(3) Any restrictions on, or conditions

of, use; and

(4) The rent or estimated rent the

Government will receive.

(c) Contracting officers must require

contractors to assume the liability for

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property losses that occur while the

property is being used for commercial

purposes and to indemnify the

Government against claims for injury to

persons or damage to the contractor’s or

a third party’s property that arise from

the contractor’s use or possession of the

Government property for commercial

purposes.

(d) If damaged, lost, stolen, or

destroyed property is required for

continued performance of a Government

contract and cannot be repaired or

replaced by the contractor without

affecting scheduled deliveries, an

equitable adjustment should be

negotiated that includes schedule

adjustments at no cost to the

Government. Negotiate an equitable

reduction in price or fee in lieu of repair

or replacement when the property is not

required for continued performance of a

Government contract.

(e) The contracting officer must not

revoke an authorization to use

Government property for commercial

purposes unless the contractor fails to

comply with the terms and conditions

governing such use or the Government

has a compelling need that precludes

continued availability for commercial

purposes.

45.602 Contract clause.

Insert the clause at 52.245–6, Rental

Charges for Commercial Use, in

solicitations and contracts that include

the clause at 52.245–2, Government

Property, or the clause at 52.245–7,

Government Property—Alternate

Procedures. The contracting officer must

also insert the clause at 52.245–6 when

the clause at 52.245–2 or 52.245–7 is

inserted in a contract subsequent to

contract award.

PART 49—TERMINATION OF

CONTRACTS

35. Amend section 49.001 by revising

the definition ‘‘Termination inventory’’

to read as follows:

49.001 Definitions.

* * * * *

Termination inventory includes parts,

work in process, completed work,

supplies, other material produced or

acquired for the work terminated,

completed or partially completed plans,

drawings, or information, property that

would have been delivered to the

Government if the contract had been

completed, and Government-furnished

property.

* * * * *

49.105 [Amended]

36. Amend section 49.105 in the

introductory text of paragraph (b)(4) by

removing ‘‘(see subpart 45.6)’’.

37. Amend section 49.108–3 by

revising paragraph (b)(1) to read as

follows:

49.108–3 Settlement procedure.

* * * * *

(b) * * *

(1) All subcontractor termination

inventory be disposed of and accounted

for in accordance with the procedures

contained in paragraph (g) of the clause

at 52.245–2, Government Property; and

* * * * *

38. Amend section 49.108–4 by

revising paragraphs (a)(1)(ii) and (b) to

read as follows:

49.108–4 Authorization for subcontract

settlements without approval or ratification.

(a)(1) * * *

(ii) Any termination inventory

included in determining the amount of

the settlement will be disposed of as

directed by the prime contractor, except

that the disposition of the inventory

shall not be subject to—

(A) Review by the TCO under 49.108–

3(c); or

(B) The screening requirements in

45.504; and

* * * * *

(b) Section 45.504 shall apply to

disposal of completed end items

allocable to the terminated subcontract.

However, these items may be disposed

of without review by the TCO under

49.108–3 and without screening under

45.504, if the items do not require

demilitarization and the total amount (at

the subcontract price) when added to

the amount of the settlement does not

exceed the amount authorized under

this subsection.

* * * * *

49.202 [Amended]

39. Amend section 49.202 in

paragraph (b)(3)(iii) by removing

‘‘materials, facilities,’’ and adding

‘‘property’’ in its place.

49.204 [Amended]

40. Amend section 49.204 in

paragraph (a) by removing the words

‘‘materials sold that have’’ and adding

‘‘property sold that has’’ in its place.

41. Revise the section heading and

text of 49.206–3 to read as follows:

49.206–3 Submission of inventory

disposal schedules.

Subject to the terms of the termination

clause, and whenever termination

inventory is involved, the contractor

shall submit complete inventory

disposal schedules to the TCO reflecting

inventory that is allocable to the

terminated portion of the contract. The

inventory disposal schedules shall be

submitted within 120 days from the

effective date of termination unless

otherwise extended by the TCO based

on a written justification to support the

extension. The inventory schedules

shall be prepared on SF 1428.

42. Revise the section heading and

text of 49.303–2 to read as follows:

49.303–2 Submission of inventory

disposal schedules.

Subject to the terms of the termination

clause, and whenever termination

inventory is involved, the contractor

shall submit complete inventory

disposal schedules to the TCO reflecting

inventory that is allocable to the

terminated portion of the contract. The

inventory disposal schedules shall be

submitted within 120 days from the

effective date of termination unless

otherwise extended by the TCO based

on a written justification to support the

extension. The inventory disposal

schedules shall be prepared on SF 1428.

49.505 [Amended]

43. Amend section 49.505 by

removing paragraphs (a) and (c); and by

redesignating paragraphs ‘‘(b)’’, ‘‘(d)’’,

and ‘‘(e)’’ as ‘‘(a)’’, ‘‘(b)’’, and ‘‘(c)’’,

respectively.

44. Revise the section heading and

text of 49.602–2 to read as follows:

49.602–2 Inventory forms.

Standard Form (SF) 1428, Inventory

Disposal Schedule, and SF 1429,

Inventory Disposal Schedule—

Continuation Sheet, must be used to

support settlement proposals submitted

on the forms specified in 49.602–1(a),

(b), and (c).

PART 51—USE OF GOVERNMENT

SOURCES BY CONTRACTORS

45. Revise section 51.106 to read as

follows:

51.106 Title.

Title to all property acquired by the

contractor under the contracting

officer’s authorization shall vest in the

parties as provided in the contract.

46. Revise section 51.107 to read as

follows:

51.107 Contract clause.

Insert the clause at 52.251–1,

Government Supply Sources, in

solicitations and contracts when the

contracting officer may authorize the

contractor to acquire supplies or

services from a Government supply

source.

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51.200 [Amended]

47. Amend section 51.200 at the end

of the second sentence by removing

‘‘(see 45.304)’’.

PART 52—SOLICITATION PROVISIONS

AND CONTRACT CLAUSES

48. Amend section 52.216–7 by

revising the date of the clause; in

paragraph (b)(3) by removing

‘‘paragraph (g)’’ and ‘‘paragraph (d)’’

and adding in their places ‘‘paragraph

(h)’’ and ‘‘paragraph (e)’’, respectively;

by redesignating paragraphs (c) through

(h) as (d) through (i), respectively, and

adding a new paragraph (c); and in

newly designated paragraph (i)(1) by

revising ‘‘paragraph (d)(4)’’ to read

‘‘paragraph (e)(4)’’. The new paragraph

(c) reads as follows:

52.216–7 Allowable Cost and Payment.

* * * * *

ALLOWABLE COST AND PAYMENT

(DATE)

* * * * *

(c) Title—(1) Government title. Except as

provided in paragraph (c)(3) of this clause,

title to all property acquired or produced by

the Contractor for performance of this

contract, the costs of which are allocable to

this contract as direct costs, shall vest in the

Government when the cost of the property is

or should have been allocable or properly

chargeable to this contract under sound and

generally accepted accounting principles and

practices.

(2) Relationship to Government-furnished

property. Property to which the Government

has obtained title solely under this clause is

not ‘‘Government-furnished property.’’

(3) Contractor title. The Contractor shall

have title to special test equipment items that

do not contain general purpose test

equipment and special tooling items,

provided such items—

(i) Were acquired or produced for this

contract;

(ii) Have an acquisition cost less than

$5,000 that was allocated to this contract as

direct cost; and

(iii) Are not identified in the contract as

deliverable items.

(4) Lien. By execution of this contract, the

Contractor grants to the Government a

security lien paramount to any other on the

property to which the Contractor has title

under paragraph (c)(3) of this clause. During

performance of this contract, the Contractor

shall not offer or provide such property as

collateral for any purpose and shall not

encumber in any manner title to that

property.

* * * * *

52.216–11 [Amended]

49. Amend section 52.216–11 in the

first sentence of the introductory

paragraph by removing ‘‘or a facilities

contract’’.

52.216–12 [Amended]

50. Amend section 52.216–12 in the

first sentence of the introductory

paragraph by removing the parenthetical

‘‘(other than a facilities contract)’’.

52.216–13 and 52.216–14 [Removed and

Reserved]

51. Remove and reserve sections

52.216–13 and 52.216–14.

52.222–17 Labor Standards for

Construction Work—GovernmentFurnished Real Property.

52. Revise the section heading of

52.222–17 and the clause heading to

read as follows:

* * * * *

LABOR STANDARDS FOR

CONSTRUCTION WORK—GOVERNMENTFURNISHED REAL PROPERTY (FEB 1988)

* * * * *

53. Amend section 52.232–16 by

revising the date of the clause and

paragraphs (d), (e), and (h) of the clause

to read as follows:

52.232–16 Progress Payments.

* * * * *

PROGRESS PAYMENTS (DATE)

* * * * *

(d) Title. (1) Title to all property acquired

or produced by the Contractor for

performance of this contract, the costs of

which are allocable to this contract, shall vest

in the Government when the property is or

should have been allocable or properly

chargeable to this contract under sound and

generally accepted accounting principles and

practices. Upon liquidation of all progress

payments, the Contractor shall have title to

property acquired or produced for this

contract that is not required to be delivered

to the Government.

(2) Property to which the Government has

obtained title solely under this clause is not

‘‘Government-furnished property.’’

(3) The procedures for the disposal of

Government-furnished property that is scrap

are contained in the Government Property

clause, 52.245–2, Government Property, of

this contract. The Contractor may sell all

other scrap resulting from production or

testing under this contract without

Government approval if the scrap does not

contain precious metals, hazardous materials

or wastes, nuclear materials, classified

materials, or does not require

demilitarization. The proceeds shall be

credited against the costs of performance.

(4) The Contractor shall not use property

to which title is vested in the Government

under this clause to perform other contracts,

transfer the property to another contract or

dispose of the property unless authorized to

do so by the Contracting Officer or paragraph

(d)(3) of this clause. When transfer or

disposal is authorized, the Contractor shall—

(i) Exclude the allocable costs of the

property from the costs of contract

performance; and

(ii) Repay to the Government any amount

of unliquidated progress payments allocable

to the property.

(e) Liability. The Contractor is liable for

loss, theft, or destruction of, or damage to,

property acquired or produced for

performance of this contract unless the

Government has expressly assumed such

risks or accepted the property. The

Contractor shall repay the Government an

amount equal to the unliquidated progress

payments that are based on costs allocable to

property that is damaged, lost, stolen, or

destroyed.

* * * * *

(h) Special terms regarding default. If this

contract is terminated under the Default

clause of this contract—

(1) The Contractor shall, on demand, repay

to the Government the amount of

unliquidated progress payments.

(2) Upon full liquidation of progress

payments, the Contractor shall have title to

all property acquired or produced for

performance of this contract, except such

property required to be delivered to the

Government under the Default clause of this

contract or the clause at 52.245–3, Delivery—

Special Tooling and Special Test Equipment

(Fixed-Price Contracts), if applicable and

included in the contract.

* * * * *

52.232–21 [Removed and Reserved]

54. Remove and reserve section

52.232–21.

55. Amend section 52.232–32 by

revising the date of the clause and

paragraphs (f), (g), and (j) to read as

follows:

52.232–32 Performance-Based Payments.

* * * * *

PERFORMANCE-BASED PAYMENTS

(DATE)

* * * * *

(f) Title. (1) Title to all property acquired

or produced by the Contractor for

performance of this contract, the costs of

which are allocable to this contract, shall vest

in the Government when the property is or

should have been allocable or properly

chargeable to this contract under sound and

generally accepted accounting principles and

practices. Except as provided in the clause at

52.245–3, Delivery—Special Tooling and

Special Test Equipment (Fixed-Price

Contracts), upon liquidation of all

performance-based payments, the Contractor

shall have title to property acquired or

produced for this contract that is not required

to be delivered to the Government.

(2) Property to which the Government has

obtained title solely under this clause is not

‘‘Government-furnished property.’’

(3) The procedures for the disposal of

Government-furnished property that is scrap

are contained in the clause 52.245–2,

Government Property, of this contract. The

Contractor may sell all other scrap resulting

from production or testing under this

contract without Government approval

provided that—

(i) Any significant reduction in the value

of the property to which the Government has

Federal Register / Vol. 65, No. 6 / Monday, January 10, 2000 / Proposed Rules 1453

title under this clause is reported to the

Contracting Officer; and

(ii) The scrap does not contain precious

metals, hazardous materials or wastes,

nuclear materials, classified materials, or

does not require demilitarization. The

proceeds shall be credited against the costs

of performance.

(4) The Contractor shall not use property

to which title is vested in the Government

under this clause to perform other contacts,

transfer the property to another contract, or

dispose of the property unless authorized to

do so by the Contracting Officer or paragraph

(d)(3) of this clause.

(g) Liability. The Contractor is liable for

loss, theft, or destruction of, or damage to,

property acquired or produced for

performance of this contract unless the

Government has expressly assumed such

risks or accepted the property.

* * * * *

(j) Special terms regarding default. If this

contract is terminated under the Default

clause—

(1) The Contractor shall, on demand, repay

to the Government the amount of

unliquidated performance-based payments;

and

(2) Upon full liquidation of performancebased payments, the Contractor shall have

title to all property acquired or produced for

performance of this contract except such

property required to be delivered to the

Government under the Default clause or the

clause at 52.245–3.

* * * * *

52.243–2 [Amended]

56. Amend section 52.243–2 by

removing Alternate IV and redesignating

‘‘Alternate V’’ as ‘‘Alternate IV’’ of the

clause.

57. Amend section 52.243–4 by

revising the date of the clause and

paragraph (a)(3) of the clause to read as

follows:

52.243–4 Changes.

* * * * *

CHANGES (DATE)

(a) * * *

(3) In the Government property or services

furnished for contract performance; or

* * * * *

58. Revise sections 52.245–1 through

52.245–8 to read as follows:

52.245–1 Government Property Availability

and Information required from Offerors.

As prescribed in 45.207–1(a), insert

the following solicitation provision:

GOVERNMENT PROPERTY AVAILABILITY

AND INFORMATION REQUIRED FROM

OFFERORS (DATE)

(a) Definitions.

Government-furnished property means

Government property that a Contracting

Officer authorizes a Contractor to use for

performance of a Government contract.

Government property means property the

Government owns or leases.

Personal property means property of any

kind or interest in it except real property,

battleships, cruisers, aircraft carriers,

destroyers, submarines, and records of the

Federal Government.

Property means real and personal property.

Property administrator means a person

appointed to perform property

administration for the Government.

Real property means land and rights in

land, ground improvements, utility

distribution systems, and buildings and other

structures. It does not include foundations

and other work necessary for installing

special tooling, special test equipment, or

equipment.

Special test equipment means—

(1) Test equipment designed specifically to

conduct testing required by a Government

contract provided such equipment cannot be

used for other purposes;

(2) General purpose test equipment or

modifications thereof that are interconnected

and interdependent to form a new functional

entity that can only be used to perform

testing required by a contract while so

interconnected and interdependent; or

(3) Any combination of specifically

designed, general purpose, or modified

general purpose test equipment that is so

interconnected and interdependent to form a

new functional entity that can only be used

to perform special purpose testing required

by a contract while so interconnected and

interdependent.

Special tooling means items such as jigs,

dies, fixtures, molds, patterns, taps, gauges,

or other equipment and manufacturing aids,

that are of such a specialized nature that

without substantial modification or alteration

their use is limited to the development,

production, repair, or maintenance of

particular supplies or components thereof, or

to the performance of particular services.

(b) Property available for contract

performance. (1) The property listed below,

or in an attachment to this provision, is

available for performance of the contract

contemplated by this solicitation and is in a

condition suitable for use.

(2) The property listed below, or in an

attachment to this provision, is available for

use on an ‘‘as is’’ basis.

(i) Offerors are responsible for assuring that

Government property made available on an

‘‘as is’’ basis is suitable for the offerors’

purposes. Such property will be furnished

f.o.b. at the location specified in the

solicitation or contract. Costs incurred to

transport, install, modify, or otherwise make

such property suitable for the successful

offeror’s intended use and any cost incurred

to return such property to the Government

shall not increase the price or fee of any

Government contract. Amendments to

property furnished ‘‘as is’’ require the

Contracting Officer’s prior written approval.

(ii) The Government makes no warranty

whatsoever with respect to property

furnished ‘‘as is’’ except that the property

will be in the same condition when placed

at the specified f.o.b. location as when

inspected by the offeror or, if not inspected

by the offeror, as of the last date for

inspection specified in the solicitation. The

offeror is responsible for verifying that the

property’s condition has not changed during

that period and shall notify the Contracting

Officer promptly identifying any changed

condition that will adversely affect the

offeror. If the Contracting Officer concurs that

the property’s condition has changed, the

Contracting Officer may restore the property,

substitute other Government property, or

withdraw the property’s availability. A

substitution or withdrawal shall be reflected

in a modification to the solicitation. The

Government has no liability for changes in

the property’s condition discovered after

removal from the specified f.o.b. location.

(iii) Special tooling or special test

equipment will be furnished ‘‘as is’’ if the

successful offeror acquired or produced the

tooling and test equipment and the

Government obtained title to the tooling or

test equipment under a Government contract.

(c) Government title. The Government

retains title to any property furnished for

performance of the contract contemplated by

this solicitation. Contractor repairs to or

modifications of that property do not affect

the Government’s title to the property.

(d) Property administration considerations.

The successful offeror will be responsible for

the care, maintenance, and preservation of

Government property accountable under a

contract resulting from this solicitation,

including property the successful offeror

permits a subcontractor to use for

performance of that contract.

(1) The clauses at 52.245–2, Government

Property, and 52.245–5, Government

Property Administration, will be included in

a contract resulting from this solicitation

unless a successful offeror elects to use, by

inserting the offeror’s name on the line

provided in paragraph (d)(3) of this

provision, the clauses at 52.245–7,

Government Property—Alternate Procedures,

and 52.245–8, Government Property

Administration—Alternate Procedures.

Generally, under the Government Property

clause at 52–245–2, the Government is liable

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

the Government property accountable under

the contract (hereinafter referred to as

property losses), and the Contractor must

maintain a Government property

management system that includes the

processes specified in the Government

Property Administration clause at 52.245–5.

The clause at 52.245–7 generally makes a

successful offeror responsible for property

losses and the clause at 52.245–8 generally

permits a successful offeror(s) to manage

Government property using the same

procedures that are used to manage the

offeror’s property.

(2) An offeror should make the election in

paragraph (d)(3) of this provision only if the

election is consistent with the offeror’s

property management practices under other

Government contracts performed or to be

performed at the location at which the

contract resulting from this solicitation will

be performed.

(3) Alternate Clause Election. The offeror,

llllllllll, elects to have the

clauses at 52.245–7, Government Property—

Alternate Procedures, and 52.245–8,

Government Property Administration—

Alternate Procedures, included in a contract

1454 Federal Register / Vol. 65, No. 6 / Monday, January 10, 2000 / Proposed Rules

resulting from this solicitation in lieu of the

corresponding clauses at 52.245–2 and

52.245–5.

(e) Information required from all offerors.

Offers shall—

(1) List or describe all Government

property the offeror or its potential

subcontractors propose to use on a rent-free

basis, including—

(i) Property offered for use in this

solicitation; and

(ii) Property already in possession of the

offeror or its prospective subcontractors

under other contracts.

(2) Identify the contracts or other

instruments under which the property listed

or described in paragraph (d)(1) is

accountable; and

(3) Identify the estimated period during

which the property will be used, the

estimated hours of use within that period,

and the offeror’s estimated costs to acquire,

produce, lease, or rent the property if it is not

furnished by the Government.

(f) Additional information required from

offerors that do not make the election

available in paragraph (d)(3) of this

provision. (1) The offeror shall state—

(i) Whether the offeror has an approved

property management system;

(ii) The date the system was last reviewed;

and

(iii) The name and address of the Property

Administrator who performed the last

review.

(2) Offers shall include a proposed

Government property management system

if—

(i) The offeror does not have a property

system that has been approved by a Property

Administrator;

(ii) The offeror’s property system was last

approved or validated by a Property

Administrator more than 2 years prior to the

date of this offer;

(iii) A Property Administrator has

requested corrections to the offeror’s system

and such corrections have not been made; or

(iv) Approval of the offeror’s system has

been withdrawn.

(3) Offerors should propose and use an

existing property management system or a

modification thereof when the existing or

modified system satisfies the requirements of

the Government Property and Government

Property Administration clauses identified in

this solicitation.

(4) A successful offeror whose property

system has been approved or validated by the

Government no more than 2 years prior to the

date of its offer is required only to submit to

the Property Administrator, within 90 days

following contract award, the changes

required to conform the system to the

requirements of the successful offeror’s

contract.

(5) As provided in the clause at 52.245–5,

Government Property Administration, the

Property Administrator might require a

successful offeror to make changes to a

proposed or previously approved system if

deemed necessary for contract compliance.

(g) Liability for loss, theft, damage, or

destruction. (Not applicable when the

election in paragraph (d)(3) of this provision

is made.) Notwithstanding any other

provision of this solicitation regarding

liability for loss, theft, or destruction of, or

damage to Government property, the

successful offeror shall be liable for such

loss, theft, destruction, or damage until its

Government property system is approved by

the Property Administrator.

(h) Overseas contracts. In a contract to be

performed outside the United States, its

territories, or possessions, the words

‘‘Government’’ and ‘‘Government-furnished’’,

as used in this provision, mean ‘‘United

States Government’’ and ‘‘United States

Government-furnished,’’ respectively.

(End of provision)

Alternate I (Date). As prescribed in 45.207–

1(b), replace paragraphs (b) through (g) of the

basic clause with the following paragraphs

(b) through (d) and renumber paragraph (h)

of the basic clause as paragraph (e).

(b) Property administration considerations.

The successful offeror will be responsible for

the care, maintenance, and preservation of

Government property accountable under a

contract resulting from this solicitation,

including property the successful offeror

permits a subcontractor to use for

performance of that contract.

(1) The clauses at 52.245–2, Government

Property, and 52.245–5, Government

Property Administration, will be included in

a contract resulting from this solicitation

unless a successful offeror elects to use, by

inserting the offeror’s name on the line

provided in paragraph (b)(3) of this

provision, the clauses at 52.245–7,

Government Property—Alternate Procedures,

and 52.245–8, Government Property

Administration—Alternate Procedures.

Generally, under the Government Property

clause at 52–245–2, the Government is liable

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

the Government property accountable under

the contract (hereinafter referred to as

property losses), and the Contractor must

maintain a Government property

management system that includes the

processes specified in the Government

Property Administration clause at 52.245–5.

The clause at 52.245–7 generally makes a

successful offeror responsible for property

losses and the clause at 52.245–8 generally

permits a successful offeror to manage

Government property using the same

procedures that are used to manage the

offeror’s property.

(2) An offeror should make the election in

paragraph (b)(3) of this provision only if the

election is consistent with the offeror’s

property management practices under other

Government contracts performed or to be

performed at the location at which the

contract resulting from this solicitation will

be performed.

(3) Alternate Clause Election The offeror,

llllllllll, elects to have the

clauses at 52.245–7, Government Property—

Alternate Procedures and 52.245–8,

Government Property Administration—

Alternate Procedures, included in a contract

resulting from this solicitation in lieu of the

corresponding clauses at 52.245–2 and

52.245–5.

(c) Information required from offerors that

do not make the election available in

paragraph (b)(3) of this provision. (1) The

offeror shall state whether the offeror has an

approved property management system, the

date the system was last reviewed, and the

name and address of the Property

Administrator who performed the last

review.

(2) Offers shall include a proposed

Government property management system

if—

(i) The offeror does not have a property

system that has been approved by a Property

Administrator;

(ii) The offeror’s property system was last

approved or validated by a Property

Administrator more than 2 years prior to the

date of this offer;

(iii) A Property Administrator has

requested corrections to the offeror’s system

and such corrections have not been made; or

(iv) Approval of the offeror’s system has

been withdrawn.

(3) Offerors should propose and use an

existing property management system or a

modification thereof when the existing or

modified system satisfies the requirements of

the Government Property and Government

Property Administration clauses identified in

this solicitation.

(4) A successful offeror whose property

system has been approved or validated by the

Government no more than 2 years prior to the

date of its offer is required only to submit to

the Property Administrator, within 90 days

following contract award, the changes

required to conform the system to the

requirements of the successful offeror’s

contract.

(5) As provided in the clause at 52.245–5,

Government Property Administration, the

Property Administrator might require a

successful offeror to make changes to a

proposed or previously approved system if

deemed necessary for contract compliance.

(d) Liability for loss, theft, damage, or

destruction. (Not applicable when the

election in paragraph (b)(3) of this provision

is made.) Notwithstanding any other

provision of this solicitation regarding

liability for loss, theft, or destruction of, or

damage to Government property, the

successful offeror shall be liable for such

loss, theft, destruction, or damage until its

Government property system is approved by

the Property Administrator.

52.245–2 Government Property.

As prescribed in 45.207–2, insert the

following clause:

GOVERNMENT PROPERTY (DATE)

(a) Definitions. As used in this clause—

Commercial purpose means any purpose

other than performance of a U.S. Government

contract or subcontract thereunder.

Contractor’s managerial personnel means

the Contractor’s directors, officers, and any of

the Contractor’s managers, superintendents,

or equivalent representatives who have

supervision or direction of all or

substantially all of the Contractor’s business

or the Contractor’s operations at a site

connected with performance of a

Government contract.

Demilitarization means rendering a

product unusable for, and not restorable to,

the purpose for which it was designed or is

customarily used.

Federal Register / Vol. 65, No. 6 / Monday, January 10, 2000 / Proposed Rules 1455

Equipment means nonexpendable, tangible

personal property. The term does not include

property that satisfies the definition in this

clause of material, unique Federal property,

special tooling, or special test equipment.

Expendable property means property that

is customarily consumed during design,

manufacture, or testing of a product or

performance of a service.

General purpose equipment means

equipment items that can be used, or with

only minor modification could be used, to

develop, produce, test, or maintain more than

one type of item or perform more than one

type of service.

Government-furnished property means

Government property that a Contracting

Officer authorizes a Contractor to use for

performance of a Government contract.

Government property means property the

Government owns or leases.

Low value property means equipment,

special tooling, or special test equipment that

has an acquisition cost less than $5,000 and

is not sensitive property.

Material means expendable property and

property incorporated into or attached to an

end item.

Natural disaster means a sudden and

unusual natural occurrence causing

catastrophic damage, including floods,

hurricanes, tornadoes, cyclones, atmospheric

electrical storms, tidal waves, avalanches,

mudslides, landslides, volcanic eruptions,

earthquakes, and other similar perils. The

term does not include fire or explosion,

unless directly or indirectly caused by a

covered peril.

Nonprofit organization means a business

entity organized and operated exclusively for

charitable, scientific, or educational

purposes, the net earnings of which do not

inure to the benefit of any private

shareholder or individual, that is exempt

from Federal income taxation under section

501 of the Internal Revenue Code and does

not conduct a substantial portion of its

activities carrying on propaganda or

otherwise attempting to influence legislation

or participating in any political campaign on

behalf of any candidate for public office.

Personal property means property of any

kind or interest in it except real property,

battleships, cruisers, aircraft carriers,

destroyers, submarines, and records of the

Government.

Plant clearance officer means a person

appointed to disposition property

accountable under Government contracts.

Precious metals means silver, gold,

platinum, palladium, iridium, osmium,

rhodium, and ruthenium.

Property means real and personal property.

Property administrator means a person

appointed to perform property

administration for the Government.

Real property means land and rights in

land, ground improvements, utility

distribution systems, and buildings and other

structures. It does not include foundations

and other work necessary for installing

special tooling, special test equipment, or

equipment.

Rental period means the calendar period

during which Government property is made

available for commercial purposes.

Rental time means the number of hours, to

the nearest whole hour, rented property is

actually used for commercial purposes. It

includes time to set up the property for such

purposes, perform required maintenance, and

restore the property to its condition prior to

rental (less normal wear and tear).

Scrap means personal property that has no

value except its basic metallic, mineral, or

organic content.

Sensitive property means property

potentially dangerous to the public safety or

security if stolen, lost, or misplaced, or that

must be subject to exceptional physical

security, protection, control, and

accountability such as classified property,

weapons, ammunition, explosives, controlled

substances, radioactive materials, hazardous

materials or wastes, or precious metals.

Special test equipment means—

(1) Test equipment designed specifically to

conduct testing required by a Government

contract, provided such equipment cannot be

used for other purposes;

(2) General purpose test equipment, or

modifications thereof, that are interconnected

and interdependent to form a new functional

entity that can only be used to perform

testing required by a contract while so

interconnected and interdependent; or

(3) Any combination of specifically

designed, general purpose, or modified

general purpose test equipment that is so

interconnected and interdependent to form a

new functional entity that can only be used

to perform special purpose testing required

by a contract while so interconnected and

interdependent.

Special tooling means items such as jigs,

dies, fixtures, molds, patterns, taps, gauges,

or other equipment and manufacturing aids,

that are of such a specialized nature that

without substantial modification or alteration

their use is limited to the development,

production, repair, or maintenance of

particular supplies or components thereof, or

to the performance of particular services.

Unique Federal property means

Government-owned personal property, or

components thereof, that is specially

designed to perform or support the mission

of one or more Federal agencies and is not

available to the public. The term does not

include property that is incorporated into or

attached to an item deliverable under a

contract.

Work in process means bench stock

materials, complete or incomplete fabricated

parts, subassemblies, assemblies, and similar

items that are created during production of

deliverable end items, or are required to

construct special tooling or special test

equipment needed to produce deliverable

end items, or are otherwise needed for design

or testing required by a contract.

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

Government-furnished property; Government

property stored by the Contractor at the

Government’s direction; items accepted by

the Government at origin that are in the

Contractor’s possession; and under costreimbursement or time-and-materials

contracts, property acquired or produced by

a Contractor to which the Government has

title under the Allowable Cost and Payment

clause of this contract. For purposes of this

clause, such property and items are

collectively referred to as ‘‘Government

property.’’ The clause does not apply to

property to which the Government has

obtained title, a lien, or other security

interest solely as a result of financing

arrangements under fixed-price contracts.

(2) Except as provided in paragraph (c) of

this clause, the Contractor shall use its own

property to perform this contract.

(3) The Contractor is responsible for the

maintenance, protection, and preservation of

Government property accountable under this

contract, including property in the

possession of a subcontractor, and shall

account for such property as required by this

contract.

(4) The Contractor shall not—

(i) Use Government property for

commercial purposes without the

Contracting Officer’s prior approval. Unless

otherwise permitted by law, commercial use

shall be on a rental basis. The terms and

conditions of the Rental Charges for

Commercial Use clause of this contract shall

apply to each rental; or

(ii) Permit a subcontractor or supplier to

use property furnished for the performance of

this contract unless the Contractor has

verified that the subcontractor or supplier

has a property management system that has

been approved by the cognizant Property

Administrator.

(5) If this contract is a cost-reimbursement

or time-and-materials contract, the Contractor

shall not acquire general purpose equipment

to which the Government will have title

under the clause at 52.216–7, Allowable Cost

and Payment, or real property for

performance of this contract unless the

general purpose equipment or real property

is specified as a deliverable end item.

(6) If this contract is a fixed-price or laborhour contract, property acquired or produced

by the Contractor for performance of the

contract is not Government-furnished

property. Property identified as a deliverable

item becomes Government property upon

acceptance by the Government.

(c) Government-furnished property. The

property identified in this contract as

Government-furnished property is furnished

to the Contractor on a rent-free basis for

performance of this contract.

(1) Title. The Government retains title to

Government-furnished property, including

Government-furnished property that is

incorporated into or attached to any property

owned by the Contractor. Governmentfurnished property does not become a fixture

or lose its identity as personal property by

being attached to real property.

(2) Suitability for intended use. (i)

Government-furnished property, other than

property furnished ‘‘as is’’, shall be in a

condition suitable for the property’s intended

use at the time the property is furnished to

the Contractor. The Government shall, when

requested by the Contractor, provide

information reasonably required for the

intended use of such property to the extent

the Government has the right to release or

disclose the information.

(ii) The contract delivery or performance

dates are based upon the expectation that

Government-furnished property, except

1456 Federal Register / Vol. 65, No. 6 / Monday, January 10, 2000 / Proposed Rules

property furnished ‘‘as is’’, will be suitable

for its intended use and delivered to the

Contractor at the times stated in the contract.

If a time is not stated, the property shall be

furnished in sufficient time to enable the

Contractor to meet the contract’s delivery or

performance dates.

(iii) If Government-furnished property is

received in a condition not suitable for its

intended use, the Contractor shall notify the

Contracting Officer as soon as the

unsuitability is known and shall take

corrective action or dispose of the property

as directed by the Contracting Officer. The

contract shall be equitably adjusted in

accordance with paragraph (c)(7) of this

clause.

(iv) The Contractor may request an

equitable adjustment when Governmentfurnished property is not delivered to the

Contractor by the required time and such

untimely delivery has affected contract

performance.

(v) If the Contractor commingles

Contractor-acquired or produced material

with Government-furnished material, the

provisions of this clause regarding suitability

for intended use shall not apply to the

commingled Government-furnished material.

Notwithstanding any other provision of this

contract, the Contractor shall be responsible

for any failure to comply with contract

requirements attributable to material that was

commingled.

(3) Authorized use. The Contractor may

request, in writing, the Contracting Officer to

authorize use of the property furnished for

performance of this contract to perform other

Government contracts at the same location.

Rent-free use is authorized if the Contracting

Officer does not object to such use, either in

whole or in part, within 30 days following

confirmed receipt of the Contractor’s request.

Costs incurred by the Contractor to relocate,

modify, or adapt the property for

performance of other Government contracts

or to restore the property to a condition

suitable for intended use under this contract

shall not increase the price or fee of any

Government contract.

(4) Real property restrictions. The

Contractor shall not improve or make

structural alterations to real property

furnished for performance of this contract

unless the contract specifically identifies the

alterations or improvements as work to be

performed under the contract or unless

expressly authorized to do so in writing by

the Contracting Officer. Title to

improvements or alterations to Governmentfurnished real property shall vest in the

Government.

(5) Property furnished ‘‘as is’’. (i) The

Contractor is responsible for assuring that

Government property furnished on an ‘‘as is’’

basis is suitable for the Contractor’s

purposes. Such property is furnished f.o.b. at

the location specified in the solicitation or

contract. Costs incurred by the Contractor to

transport, install, modify, or otherwise make

such property suitable for the Contractor’s

intended use and any cost incurred to return

such property to the Government shall not

increase the price or fee of any Government

contract. Modifications to property furnished

‘‘as is’’ require the Contracting Officer’s prior

written approval.

(ii) Special tooling or special test

equipment is furnished ‘‘as is’’ for

performance of this contract if the

Contractor-acquired or produced, and the

Government obtained title to, such tooling or

test equipment under this or another

Government contract.

(iii) The Government makes no warranty

whatsoever with respect to property

furnished ‘‘as is’’ except that the property

will be in the same condition when placed

at the specified f.o.b. location as when

inspected by the Contractor or, if not

inspected by the Contractor, as of the last

date identified in the solicitation or contract

for Contractor inspection. The Contractor is

responsible for verifying that the property’s

condition has not changed during that

period. If the Contractor determines the

property’s condition has changed and such

change will adversely affect the Contractor,

the Contractor shall notify the Contracting

Officer promptly and identify the changed

condition. If the Contracting Officer concurs

that the property’s condition has changed,

the Contracting Officer may restore the

property or substitute other Government

property at no change in the contract’s price

or fee; permit the Contractor to restore the

property subject to an equitable adjustment;

or decline to provide the property subject to

an equitable adjustment. The foregoing

provisions for adjustment are the exclusive

remedies available to the Contractor. The

Government has no liability for changes in

the property’s condition discovered after

removal from the specified f.o.b. location.

(iv) Repairs to or modifications of property

furnished ‘‘as is’’ do not affect the

Government’s title to such property.

(6) Changes in Government-furnished

property. (i) The Contracting Officer may

increase, decrease, or substitute other

Government property for the property

furnished or to be furnished for performance

of this contract or require use of Governmentfurnished property in lieu of Contractor

property.

(ii) Any increase in the amount of property

furnished for performance of this contract

shall result in an equitable reduction in

contract price or fee and appropriate

adjustment of the contract delivery or

performance dates.

(iii) The Contractor may request an

equitable adjustment for a decrease in or

substitution for the property identified in the

contract or withdrawal of authority to use

property accountable under another contract

in performance of this contract provided

such decrease, substitution, or withdrawal

increases contract costs or schedule.

(iv) If the Contracting Officer directs the

Contractor to use Government-furnished

property in lieu of Contractor property in

performance of this contract, any adjustment

to the contract shall be made in accordance

with paragraph (c)(7) of this clause.

(7) Equitable adjustments. Equitable

adjustments shall be the Contractor’s

exclusive remedy for Government actions

under this clause and shall be made in

accordance with the procedures of the

Changes clause of this contract.

(i) Equitable adjustments may include an

amount for the restoration and rehabilitation

of the Contractor’s premises caused by

Government-furnished property that is not in

a condition suitable for intended use, the

withdrawal or substitution of Governmentfurnished property, or the Government’s

abandonment of hazardous property (see

paragraph (h)(1) of this clause).

(ii) The Government shall not be liable for

breach of contract for—

(A) Any delay in delivery of Governmentfurnished property;

(B) Delivery of Government-furnished

property in a condition not suitable for its

intended use;

(C) An increase or decrease in, or

substitution of, Government-furnished

property; or

(D) Failure to repair or replace

Government-furnished property.

(8) Return of Government-furnished

property. If this contract requires

Government-furnished property to be

returned directly to a Government activity—

(i) The property, including property

furnished ‘‘as is’’, shall be returned to the

Government in the same condition, less

normal wear and tear, or better condition

than when furnished to the Contractor

except—

(A) Lost, stolen, or destroyed property that

the Government has determined will not be

replaced; and

(B) Damaged property that the Government

has elected not to have repaired or replaced.

(ii) The Contractor shall notify the contract

administration office of its intent to return

Government-furnished property at least 10

working days prior to return. Notices shall

identify the contracts under which the items

are accountable and shall provide each item’s

name, description, national stock number (if

known), and part number or identification

number.

(d) Property loss liability. As used in this

clause, the terms loss and losses include,

either individually or in any combination,

the physical misplacement of, the theft of,

the destruction of, or damage to, Government

property accountable under this contract.

(1) Limited liability. (i) The Contractor is

not liable for property losses that occur while

the Contractor is maintaining a property

management system that satisfies the

requirements of this contract, except losses

for which the Contractor expressly is liable

under the terms of this contract.

(ii) The Contractor’s liability for a loss that

results from a risk expressly required to be

insured under this contract is limited to the

extent of the insurance required to be

purchased and maintained, or to the extent

of the insurance actually purchased and

maintained, whichever is greater.

(2) Full liability. The Contractor is liable

for all property losses that—

(i) Occur at a time when the Contractor has

not established a property management

system that satisfies the requirements of this

contract;

(ii) Occur on or after the date of a written

or electronic notice from the Property

Administrator that the Government has

withdrawn approval of the Contractor’s

property management system, unless the

Contractor can establish by clear and

convincing evidence that a loss did not result

Federal Register / Vol. 65, No. 6 / Monday, January 10, 2000 / Proposed Rules 1457

from the Contractor’s failure to maintain an

approved system;

(iii) Occur on or after the first calendar day

following the Contractor’s failure to correct a

property system deficiency by the date

specified by the Property Administrator for

such correction or such other mutually

agreed upon date for correction;

(iv) Result from the Contractor’s failure to

take reasonable and prudent steps to avoid

losses resulting from acts of war, civil

insurrection, or natural disasters; or (v)

Result from the willful misconduct or lack of

good faith on the part of the Contractor’s

managerial personnel.

(3) Property in the possession of

subcontractors or suppliers. The Contractor’s

transfer of Government property to a

subcontractor or supplier does not affect the

Contractor’s liability for property losses.

(4) Contractor required actions following a

property loss. The Contractor shall—

(i) Take all reasonable action to protect

damaged Government property from further

damage and to physically separate such

property from all other property;

(ii) Notify the Contracting Officer as

required by the Government Property

Administration clause of this contract

(52.245–5(f)(4));

(iii) Not repair, replace, or substitute other

property, for the property suffering a loss

unless authorized to do so by the Contracting

Officer; and

(iv) Do nothing to prejudice the

Government’s rights to recover against third

parties for any property loss. When requested

by the Contracting Officer, 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.

(5) Insurance charges or reserves. The

Contractor shall not include in the contract

price or fee, or any adjustment thereof, any

charge or reserve for insurance (including

any self-insurance fund or reserve) covering

Government property losses, except to the

extent this contract expressly requires the

Contractor to carry such insurance.

(e) Property loss remedies. (1) Following

receipt of a property loss notification from

the Contractor, the Contracting Officer may—

(i) Replace or substitute other property for

the Government property suffering a loss;

(ii) Authorize the Contractor to repair, or

replace the property or take other appropriate

action; or

(iii) Negotiate an equitable adjustment in

lieu of repair or replacement when the

Government is liable for the property loss.

(2) The Contracting Officer’s authorization

to remedy a loss for which the Contractor is

liable under this clause shall not increase the

contract price or fee.

(3) The Contractor may request an

equitable adjustment to remedy a loss for

which the Government is liable under this

clause.

(4) The extent of the Government’s liability

for a property loss shall be reduced by the

amount of any reimbursement the Contractor

receives for that loss from a source other than

the Government. The Contractor shall use

any reimbursement for a property loss from

a source other than the Government to repair,

rehabilitate, or replace the property that

suffered a loss, or equitably reimburse the

Government, as directed by the Contracting

Officer.

(f) Government property maintenance. The

contract price or fee includes an amount for

performance of the maintenance actions

required by paragraphs (f)(1) and (f)(2) of this

clause. If maintenance of stored items is

required, the Contractor might be entitled to

an equitable adjustment.

(1) Government-furnished property. The

Contractor shall maintain Governmentfurnished property in a condition suitable for

its intended use. The Contractor shall—

(i) Maintain real property, special tooling,

and special test equipment in accordance

with the specific maintenance instructions

contained in this contract. If maintenance

instructions are not specified, the Contractor

shall use sound business practices to

maintain that property.

(ii) Maintain unique Federal property as

specified in this contract, or if not specified,

agency instructions for the maintenance of

such property.

(iii) Preserve, protect, and care for material

and general purpose equipment in

accordance with the property manufacturer’s

standards of care for such items, or when the

manufacturer has not released standards of

care, the Contractor’s standard business

practices for comparable Contractor-owned

material and equipment.

(iv) Promptly notify the contract

administration office when the maintenance

actions required by paragraphs (f)(1)(i)

through (f)(1)(iii) are not sufficient to sustain

a Government-furnished property item’s

suitability for its intended use and request

direction regarding repair, rehabilitation, or

replacement. The Contractor shall not repair,

rehabilitate, or replace such items unless

authorized to do so by the Contracting

Officer.

(2) Property to which the Government

obtains title under a cost-reimbursement or

time-and-materials contract. The Contractor

shall maintain property to which the

Government obtains title under a costreimbursement or time-and-materials

contract in a condition suitable for the

property’s intended use until the Contractor

determines the property is no longer needed

for continued performance of this contract.

Promptly following that determination, the

Contractor shall enter the items into the

property disposal process.

(3) Additional maintenance actions. When

the Contractor’s diligent performance of the

maintenance actions required by paragraphs

(f)(1) and (f)(2) of this clause is not sufficient

to sustain a Government-furnished property

item’s suitability for its intended use, the

Contracting Officer may—

(i) Replace or substitute other property for

such property;

(ii) Direct the Contractor to repair,

rehabilitate, or replace the property;

(iii) Direct the Contractor to take other

appropriate action; or

(iv) Negotiate an equitable adjustment in

lieu of repair, replacement, or other action.

(4) Equitable adjustment. The Contractor

may request an equitable adjustment for

performance of a property repair,

rehabilitation, or replacement directed by the

Contracting Officer pursuant to paragraph

(f)(3) of this clause.

(5) Stored Government property. The

Contractor shall store Government property

only if specifically directed to do so by the

Contracting Officer. Stored property shall be

maintained in accordance with instructions

provided by the Contracting Officer. Except

as provided in the clause 52.245–3,

Delivery—Special Tooling and Special Test

Equipment, of this contract, and paragraph

(g)(7) of this clause, the price or fee of the

contract does not include an amount for such

maintenance.

(g) Government property disposal. Except

as provided in paragraphs (c)(8), (g)(2), and

(g)(8) of this clause, the Contractor shall not

dispose of Government property until

authorized to do so by the Plant Clearance

Officer.

(1) Scrap—(i) Production Scrap.

Contractors may dispose of scrap resulting

from production or testing under this

contract without Government approval if the

scrap does not require demilitarization or

does not contain precious metals, hazardous

materials or wastes, nuclear materials or

classified materials.

(ii) Scrap lists. Contractors that have

Government-approved scrap procedures may

prepare scrap lists in lieu of inventory

disposal schedules (provided such lists are

consistent with the approved scrap

procedures) except for scrap that—

(A) Requires demilitarization;

(B) Is a classified item;

(C) Is generated from classified items;

(D) Contains hazardous materials or

hazardous wastes;

(E) Contains precious metals; or

(F) Is dangerous to the public health,

safety, or welfare.

(iii) Other scrap. The Contractor shall use

an inventory disposal schedule to identify

scrap that is not production scrap or is not

reportable on a scrap list.

1458 Federal Register / Vol. 65, No. 6 / Monday, January 10, 2000 / Proposed Rules

(2) Pre-disposal requirements. When the

Contractor determines that a property item

acquired or produced by the Contractor is no

longer needed for performance of this

contract, the Contractor shall—

(i) 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) and

credit the price or estimated cost of this

contract with the proceeds of such returns;

and

(ii) List property that could not be returned

to a supplier or used in the performance of

other Government contracts on Standard

Form 1428, Inventory Disposal Schedule.

(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 a cost-reimbursement or

time-and-materials contract, 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 general

purpose components;

(B) Special test equipment that does not

contain general purpose 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. Special test

equipment shall be described in sufficient

detail to permit an understanding of the

special test equipment’s intended use.

(4) Submission requirements. Inventory

disposal schedules shall be submitted 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 receipt of an acceptable

inventory disposal schedule, might entitle

the Contractor to an equitable adjustment for

costs incurred to store such property on or

after the 121st day following receipt of an

acceptable schedule.

(ii) The Contractor must 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

must 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 60 days

following receipt of an acceptable scrap list,

the Contractor may dispose of the listed scrap

in accordance with the Contractor’s

Government-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 (c)(7) of this

clause.

(9) Disposal proceeds. The Contractor shall

credit the net proceeds from the disposal of

Government property in accordance with

instructions received from the Plant

Clearance 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 (g)(4) of this clause.

(h) Abandonment of Government property

at a Contractor-owned location. (1) The

Government shall not abandon at a

Contractor-owned location Government

property that is or contains a hazardous

material without the Contractor’s written

concurrence. The Contractor may request an

equitable adjustment incident to such

agreement.

(2) The Government, upon notice to the

Contractor, may abandon any nonhazardous

Government-furnished property in place at

which time all obligations of the Government

regarding such abandoned property shall

cease. Except as provided in paragraph

(c)(7)(i) of this clause, the Government has no

obligation to restore or rehabilitate the

Contractor’s premises under any

circumstances.

(i) Overseas contracts. In a contract

performed outside the United States, 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 (Date). As prescribed in 45.207–

2(b), replace paragraph (d)(1) of the basic

clause with the following paragraph (d)(1),

remove paragraph (d)(2), renumber

paragraphs (d)(3), (d)(4), and (d)(5) as (d)(2),

(d)(3), and (d)(4), respectively, and modify

the references to ‘‘Government property’’ in

the renumbered paragraphs (d)(2), (d)(3), and

(d)(4) to read ‘‘Government-furnished

property’’:

(d)(1) The Contractor is liable for

Government-furnished property losses,

except losses resulting from acts of war, civil

insurrection, or natural disasters, provided

the Contractor has taken reasonable and

prudent steps to avoid or mitigate such

losses.

Alternate II (Date). As prescribed in

45.207–2(c), replace paragraph (b) of the

basic clause with the following paragraph (b)

and add the following paragraph (j) to the

basic clause:

(b) General. (1) Except as provided in

paragraph (c) of this clause, the Contractor

shall use its own property to perform this

contract.

(2) The Contractor is responsible for the

maintenance, protection, and preservation of

Government property accountable under this

contract that is in the Contractor’s or its

subcontractors’ possession and shall account

for such property as required by this contract.

(3) Property acquired or produced by the

Contractor for performance of this contract

that the Government obtains title to under

the clause at 52.216–7, Allowable Cost and

Payment, is Government property

accountable under this contract.

(j) Title to Contractor-acquired or produced

property, nonprofit organizations or

nonprofit institutions. (1) Notwithstanding

any other provision of this contract regarding

title to property acquired or produced by a

Contractor, the Contractor shall have title to

equipment and other tangible property

purchased with Government funds provided

for the conduct of basic or applied research

under this contract, if—

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(i) The Contracting officer has agreed, prior

to the Contractor’s purchase of such property,

that the Contractor shall have title to that

property; and

(ii) The Contractor has agreed that

depreciation or amortization costs for such

property shall not be allocated to any existing

or future Government contract and that such

property may be used by the Government or

its subcontractors without charge in

performance of any Government contract or

subcontract thereunder.

(2) As a condition for obtaining title to

property under this clause, the Contractor, by

signing this contract, agrees that no person in

the United States shall, on the ground of race,

color, or national origin, be excluded from

participation in, be denied the benefits of, or

be otherwise subjected to discrimination

under this contemplated financial assistance

(title to equipment or other tangible personal

property) (41 U.S.C. 2000d).

52.245–3 Delivery—Special Tooling and

Special Test Equipment (Fixed-Price

Contracts)

As prescribed in 45.305, insert the

following clause:

DELIVERY—SPECIAL TOOLING AND

SPECIAL TEST EQUIPMENT (FIXED-PRICE

CONTRACTS) (DATE)

(a) Definitions. When a term defined in the

clause at 52.245–2, Government Property, is

used in this clause, the term has the same

meaning as when used in 52.245–2.

(b) Contractor notice. (1) The Contractor

shall notify the Contracting Officer of special

tooling or special test equipment acquired or

produced by the Contractor for performance

of this contract that is not scheduled for

delivery under the contract, as soon as

practicable during contract performance but

not later than the earlier of—

(i) One hundred twenty days prior to

completion of scheduled deliveries (other

than technical data) under this contract; or

(ii) Thirty days following the Contractor’s

determination that such special tooling or

special test equipment is no longer required

for contract performance.

(2) For each special tooling or special test

equipment item, or groups of identical items,

the Contractor’s notice shall identify the

item’s or group’s—

(i) Nomenclature;

(ii) Quantity;

(iii) Acquisition cost (by item);

(iv) Part number(s) with which the special

tooling or special test equipment is used; and

(v) Identification number.

(c) Storage. The Contractor shall store the

special tooling or special test equipment

identified in the Contractor’s notice at no

change in contract price (or target price and

ceiling amount) until expiration of the

Government notice period or until the

Government notifies the Contractor that

delivery of a special tooling or test

equipment item or items is required,

whichever occurs first. Items shall be stored

in a manner sufficient to preserve capability

and provide protection from damage. If the

Government requires items to be stored

subsequent to the Government’s delivery

notice, the Contractor might be entitled to an

equitable adjustment as provided in

paragraph (f) of this clause.

(d) Government notice. (1) The

Government must notify the Contractor in

writing within 120 days, or such other period

mutually agreed upon, following receipt of

the notice required by paragraph (b) of this

clause that delivery of a special tooling or

special test equipment item or items is

required.

(2) The Government’s notice shall identify

the special tooling or special test equipment

item(s), and shall—

(i) Provide packing, packaging, marking,

and shipping instructions;

(ii) Direct the Contractor to prepare the

property for storage at the Contractor’s

facility or a Government facility; or

(iii) Provide instructions when

accountability is to be transferred to another

contract.

(3) The Contractor’s storage obligations are

not diminished if the Government notice

period, or any extension thereof, extends

beyond the date contract deliveries are

completed.

(e) Repair or rehabilitation. The

Contracting Officer may require the

Contractor to repair or rehabilitate the special

tooling or special test equipment identified

in the Government’s notice to the extent

necessary to return an item to a condition

suitable for its intended use at no change in

price.

(f) Equitable adjustment. The contract may

be equitably adjusted for costs incurred by

the Contractor to prepare the tooling or test

equipment for storage or shipment. Equitable

adjustments shall be made in accordance

with the procedures of the Changes clause of

this contract and only to the extent the

Contracting Officer’s actions under paragraph

(d) of this clause required the Contractor to

incur costs that it would not have incurred

under customary commercial practices.

(g) Liability. The Contractor is liable for

any loss, theft, or destruction of, or damage

to, special tooling or special test equipment

delivered to the Government under this

clause during the period commencing upon

the Government’s acceptance of the items

and ending upon placement aboard a

carrier’s conveyance (f.o.b. origin) or delivery

at the specified f.o.b. destination point.

(h) Flow down. The Contractor shall insert

this or a substantially similar clause in all

contracts and similar instruments with its

first-tier subcontractors or suppliers, other

than subcontractors or suppliers of

commercial items, that will fabricate or

acquire special tooling or special test

equipment for performance of this contract.

(End of clause)

§ 52.245–4 Liability for Government

Property (Demolition Services Contracts).

As prescribed in 45.403, insert the

following clause:

LIABILITY FOR GOVERNMENT PROPERTY

(DEMOLITION SERVICES CONTRACTS)

(DATE)

Except for reasonable wear and tear

incident to the removal and delivery of

property to the Government, the Contractor is

liable for any loss or destruction of or damage

to property—

(a) Required to be delivered to the

Government; and

(b) Title to which is vested in the

Contractor but that under the termination

clauses of this contract reverts to the

Government upon notice of termination.

(End of clause)

§ 52.245–5 Government Property

Administration.

As prescribed in 45.510(a), insert the

following clause:

GOVERNMENT PROPERTY

ADMINISTRATION (DATE)

(a) Definitions. When a term defined in the

clause at 52.245–2, Government Property, is

used in this clause, the term has the same

meaning as when used in 52.245–2.

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

Government-furnished property; Government

property stored by the Contractor at the

Government’s direction; and, under costreimbursement or time-and-materials

contracts, property acquired or produced by

a Contractor to which the Government has

title under the Allowable Cost and Payment

clause of this contract.

(2) If the Contractor does not have a

property management system that has been

approved by the Property Administrator, the

Contractor shall submit a proposed system to

the Property Administrator within 90 days

following contract award (or such other

mutually agreed to period).

Notwithstanding any other provision of

this contract regarding liability for

Government property losses, the Contractor

shall be liable for such losses until its

property management system is approved by

the Property Administrator. The system shall

be maintained during the period Government

property is accountable under this contract.

(3) The Contractor should use an existing

property management system or a

modification thereof when the existing or

modified system satisfies the requirements of

this contract.

(c) Property system requirements. The

property management system shall include

written processes to assure compliance with

contract requirements and to provide for

system assessment. At a minimum, the

system shall contain processes for—

(1) Assessing the system’s efficiency and

effectiveness, recommending corrective

action or general improvements, and

implementing appropriate changes;

(2) Inspecting property acquired by the

Contractor or furnished by the Government

for performance of this contract upon receipt;

(3) Promptly entering all Government

property into the property management

system;

(4) Assuring Government property is used

only as authorized by the Contracting Officer;

(5) Controlling the distribution and return

of pilferable property;

(6) Scheduling and monitoring

Government property maintenance to assure

timely performance and recording of all

maintenance actions;

(7) Accurately recording by type and

quantity Government material consumed

during contract performance;

(8) Performing, reporting, and recording all

inventories required by this contract;

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(9) Assuring subcontractors have adequate

procedures for the control and protection of

Government property;

(10) Justifying the continued need for

Government property to perform this

contract;

(11) Moving and storing Government

property in a manner commensurate with the

property’s handling and storage

requirements; and

(12) Disposing of Government property in

accordance with the requirements of this

contract.

(d) Property Management system review

and approval. (1) A Contractor whose

property management system has been

approved or validated by the Government no

more than 2 years prior to the date of its offer

is required only to submit to the Property

Administrator, within 90 days following

contract award, the changes required to

conform the system to requirements in this

contract. The submission date may be

extended by the Property Administrator if an

extension is in the Government’s interests.

(2) The Property Administrator shall

review the Contractor’s proposed or modified

system within 90 days following receipt and

may approve or require corrections to the

system. The Contractor shall accomplish the

required corrections at no change in price or

fee.

(3) The Property Administrator may review

the Contractor’s system at any time during

contract performance to assure compliance

with contract requirements. The Property

Administrator may validate approval of,

require corrections to, or, with the

Administrative Contracting Officer’s

concurrence, withdraw approval of the

Contractor’s system. The Contractor shall

implement corrections required by the

Property Administrator by the date specified

by the Property Administrator, or such other

date agreed upon, at no change in price or

fee. The Contractor’s failure to implement

corrections in a timely manner might result

in the Contractor’s assumption of liability for

property losses for which the Government

might otherwise be liable.

(4) The Contractor shall make available to

the Property Administrator all records and

related information reasonably required to

verify that the Contractor’s Government

property management system conforms to

contract requirements. Any disagreement as

to the amount or type of information required

for such verification shall be referred to the

Administrative Contracting Officer for

resolution.

(e) Records and supporting information—

(1) Property records. (i) Except as provided in

paragraph (e)(1)(ii) of this clause, the

Contractor shall establish or maintain and

keep current a property record for each

Government property item accountable under

this contract. Identical items may be

consolidated in a single property record if the

consolidated record provides the information

required by this clause. The Contractor shall

identify useable components permanently

removed from Government property as

Government property items and establish and

maintain appropriate property records.

Property records created by a subcontractor

that has a property management system that

has been approved by a Property

Administrator may be used in lieu of creating

new records.

(ii) Property records are not required for

work in process or for property specifically

acquired or constructed for tests that will

destroy the property.

(iii) Contractors that use a material

requirements planning system,

manufacturing resource planning system,

material management accounting system, or

an enterprise resource planning system, may

use the records generated by those systems as

the records for material items provided such

records otherwise satisfy the requirements in

paragraph (e)(2) of this clause.

(iv) The Contractor shall close a

Government property item’s record when the

item is replaced and create a new property

record for the replacement item if that item

is Government property.

(v) The Contractor shall enter the

property’s acquisition cost into the record for

each Government property item that was

acquired or produced by the Contractor

during performance of this contract. For each

item having an acquisition cost of

lllllll (insert the agency

capitalization threshold amount) or more, the

Contractor also shall enter the date the item

was acquired or produced.

(vi) The Contractor shall notify the

Contracting Officer promptly if the contract

does not identify a Government-furnished

property item’s nomenclature or acquisition

cost.

(vii) Property records shall legibly and

conspicuously identify sensitive property.

(viii) The property records for items

requiring maintenance shall identify the

dates maintenance actions (including

calibration if required) were performed and

any deficiencies discovered. The

maintenance information may be kept

separately if the Contractor has a direct link

between the information and the affected

property records.

(2) Standard information. Except as

provided in paragraphs (e)(4) and (e)(5) of

this clause, each property control record

shall contain the following information:

(i) The item’s name, description, and

national stock number. If the item does not

have a national stock number and the item’s

acquisition cost is llllllllll

(insert the agency capitalization threshold

amount) or more, enter the four digit federal

supply classification code.

(ii) Contract number or equivalent code

designation.

(iii) Quantity received or fabricated, issued,

and on hand.

(iv) The date of the most recent physical

inventory or other posting reference.

(v) Acquisition cost and, for items having

an acquisition cost of lllllll (insert

the agency capitalization threshold amount)

or more, the date the items were acquired or

produced.

(vi) Current location (for low value

property, identify the initial location only).

(vii) The property’s classification. Use only

one of the following for each property item—

land, buildings, other real property,

equipment, special test equipment, special

tooling, unique Federal property, or material.

(3) Additional information. In addition to

the information required by paragraph (e)(2)

of this clause, the property records for—

(i) Special tooling and special test

equipment shall identify each part number

with which a special tool or special test

equipment item is used;

(ii) Special test equipment that includes

general purpose equipment shall include the

information required by paragraph (e)(2) of

this clause for each removable or reusable

general purpose component if removal and

reuse is economically feasible;

(iii) Equipment shall include the

manufacturer’s name, serial number, and

model or part number; and

(iv) Scrap shall identify the material

content, contract from which the scrap was

derived, and the scrap’s disposition and

disposition date(s).

(4) Real property. (i) Real property records

must contain a description of the property,

its location, original acquisition cost, a

description of property alterations made or

construction work performed by the

Contractor, including an identification of the

construction sites supporting such alterations

or construction, and must separately identify

the cost of such alterations or construction.

Supporting documentation shall include

maps, drawings, plans, specifications, and, if

necessary, supplementary data needed to

completely describe and value the property.

(ii) Costs incurred by the Government or

the Contractor, to acquire, construct, alter, or

improve Government-owned or leased real

property, including additions, expansions,

extensions, or conversions thereof, shall be

added to the property’s acquisition cost if

they increase the value, life, utility,

capability, or serviceability of the property.

(iii) A real property record shall be

annotated with a statement of the pertinent

facts when the property is sold, transferred,

donated, destroyed, abandoned by the

Government, or condemned.

(5) Property returned under warranty. The

Contractor shall establish a property record

for each item returned for correction under

a warranty and maintain the records on a

contract-by-contract basis. The records shall

identify the date received, and the date the

item is returned to the Government. Once a

property record has been established,

identical items received for corrective action

shall be added to the established record and

the information required by this paragraph

maintained for each item.

(f) Reports and notices—(1) Annual

Government property report. The Contractor

shall report all Government property

accountable under this contract that is in its

or its subcontractors’ possession as of

September 30 of each calendar year or upon

completion of all property disposal actions

under this contract, whichever is sooner.

Unless otherwise stated in this contract, the

report shall be prepared using Standard Form

1450, U.S. Government Property in the

Possession of Contractors, and submitted to

the Property Administrator no later than

October 31 of each calendar year.

(2) Misdirected Government property. The

Contractor shall notify the Property

Administrator in writing immediately

following receipt of Government property

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intended for another person or Government

property not required for performance of a

Government contract with the Contractor and

shall request disposition instructions. To the

extent practical, the Contractor shall identify

the shipment’s content, intended recipient,

carrier that made delivery, the Government

activity from which the shipment originated,

and the shipment’s current location.

(3) Late Government-furnished property.

The Contractor shall notify promptly the

Contracting Officer of a failure to receive

Government-furnished property at the time

stated in the contract or, when a time is not

stated, in sufficient time to enable the

Contractor to meet the contract’s delivery or

performance dates. Each notice shall forward

the Contractor’s estimate of the extent to

which such failure has affected or might

affect contract performance.

(4) Property losses. Except as provided in

paragraph (f)(5) of this clause, the Contractor

shall notify the Property Administrator in

writing promptly upon learning that a

Government property loss has occurred. The

notice shall identify the property by item and

include—

(i) The item’s description, contract number,

national stock number (if known), and either

part number or identification number;

(ii) The date a physical loss or theft was

discovered or damage or destruction

occurred and, if known, the circumstances;

(iii) The item’s acquisition cost;

(iv) The contracts affected;

(v) All known interests in commingled

property of which the Government property

is a part; and

(vi) The insurance, if any, covering any

part of or interest in the property.

(5) Low value property losses. The

Contractor is not required to provide a

property loss notice for low value property

until contract completion or termination,

except low value property that the Contractor

needs for continued performance of this

contract or low value Government-furnished

property that the Government is

contractually obligated to provide to the

Contractor for performance of another

contract. Notice of such loss shall be

provided in accordance with paragraph (f)(4)

of this clause.

(g) Inventories. The Contractor shall assure

that the location of each Government

property item is accurately established and

the records and reports required by this

clause are complete and accurate.

(1) Contract termination inventories. The

Contractor shall inventory all property

accountable under this contract immediately

following a notice of termination or partial

termination of the contract. Electronic,

optical, electro-magnetic, or similar systems

may be used.

(2) Contract completion inventory.

Promptly following completion of deliveries

or performance under the contract, the

Contractor shall inventory all Government

property accountable under this contract that

the Government is not contractually

obligated to furnish to the Contractor for

performance of another Government contract.

(h) Markings—(1) Contractor-acquired or

produced property (other than material). As

soon as practicable following the assumption

of title to property acquired or produced for

performance of a cost-reimbursement or timeand-materials contract, the Contractor shall

legibly and conspicuously mark such

property with the phrase ‘‘U.S. Government

Property’’ (or a similar phrase that conveys

Government ownership) and a control

number that links the property to the

property records maintained by the

Contractor.

(2) Government-furnished property (other

than material). Promptly following receipt of

Government-furnished property, the

Contractor shall determine whether the

property bears a Government ownership

marking, mark unmarked property with the

markings identified in paragraph (g)(1) of this

clause, and replace any control numbers

affixed by other Contractors with the

Contractor’s control number.

(3) Exceptions. (i) The Contractor is not

required to mark Government-furnished or

Contractor-acquired or produced material.

(ii) In lieu of the requirements in paragraph

(h)(1) or (h)(2) of this clause, the Contractor

shall contact promptly the Property

Administrator for alternate instructions when

marking would damage a property item or

the Contractor considers a physical marking

to be impractical.

(i) Overseas contracts. In a contract

performed outside the United States, its

territories, or possessions, the words

‘‘Government’’ and ‘‘Government-furnished’’,

as used in this clause, mean ‘‘United States

Government’’ and ‘‘United States

Government-furnished,’’ respectively.

(End of clause)

Alternate I (Date) As prescribed in

45.510(b), substitute the following

paragraphs (e) and (f) for paragraphs (e) and

(f) of the basic clause:

(e) Property records. The Contractor shall

establish a property record for each

Government property item returned for

correction under a warranty and shall

maintain the records on a contract-bycontract basis. The records shall identify the

item’s name, description, property

classification, national stock number, the

date received and the date the item is

returned to the Government. For items

having an acquisition cost greater than 

(insert the agency capitalization threshold),

the Contractor shall enter the item’s fourdigit federal supply classification code. Once

a property record has been established,

identical items received for corrective action

shall be added to the established record and

the information required by this paragraph

maintained for each item.

(f) Notices—(1) Misdirected Government

property. The Contractor shall notify the

Property Administrator, promptly following

receipt of Government property intended for

another person or Government property not

required for performance of a Government

contract, and shall request disposition

instructions. To the extent practical, the

Contractor shall identify the shipment’s

content, intended recipient, carrier that made

delivery, the Government activity from

which the shipment originated, and the

shipment’s current location.

(2) Late Government-furnished property.

The Contractor shall notify promptly the

Contracting Officer of a failure to receive

Government-furnished property at the time

stated in the contract or, when a time is not

stated, in sufficient time to enable the

Contractor to meet the contract’s delivery or

performance dates. Each notice shall forward

the Contractor’s estimate of the extent to

which such failure has affected or might

affect contract performance.

(3) Property losses. Except as provided in

paragraph (f)(4) of this clause, the Contractor

shall notify the Property Administrator in

writing promptly upon learning that a

Government property loss has occurred. The

notice shall identify the property by item and

include—

(i) The item’s description, contract number,

national stock number (if known), and either

part number or identification number;

(ii) The date a physical loss or theft was

discovered or damage or destruction

occurred and, if known, the circumstances;

(iii) The item’s acquisition cost;

(iv) The contracts affected;

(v) All known interests in commingled

property of which the Government property

is a part; and

(vi) The insurance, if any, covering any

part of or interest in the property.

(4) Low value property losses. The

Contractor is not required to provide a

property loss notice for low value property

until contract completion or termination,

except low value property that the Contractor

needs for continued performance of this

contract or low value Government-furnished

property that the Government is

contractually obligated to provide to the

Contractor for performance of another

contract. The notice shall contain the

information required by paragraph (f)(3) of

this clause.

52.245–6 Rental Charges for Commercial

Use.

As prescribed in 45.602 insert the

following clause:

RENTAL CHARGES FOR COMMERCIAL

USE (DATE)

(a) Definitions. (1) When a term defined in

the clause at 52.245–2, Government Property,

is used in this clause, the term has the same

meaning as when used in 52.245–2.

(2) As used in this clause—

Base cost means the acquisition cost

recorded in the Contractor’s property control

system or, in the absence of such record, the

value attributed by the Government to a

Government property item for purposes of

determining a reasonable rental charge.

(b) General. (1) Rental requests must be

submitted to the Administrative Contracting

Officer, identify the property for which rental

is requested, propose a rental period, and

calculate an estimated rental charge by using

the Contractor’s best estimate of rental time

in the formulae described in paragraph (c) of

this clause.

(2) The Contractor shall not use

Government property for commercial

purposes, including independent research

and development, until a rental charge for

real property, or estimated rental charge for

other property, is agreed upon. Rented

property shall be used only on a

noninterference basis.

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(c) Rental charge—(1) Real property and

associated fixtures. (i) The Contractor shall

obtain, at no cost to the Government, a

property appraisal from an independent,

licensed, accredited or certified appraiser

that computes a monthly, daily, or hourly

rental rate for comparable commercial

property. The appraisal may be used to

compute rentals under this clause throughout

its effective period or, if an effective period

is not stated in the appraisal, for 1 year

following the date the appraisal was

performed. The Contractor shall submit the

appraisal to the Administrative Contracting

Officer at least 30 days prior to the date the

property is needed for commercial use.

Except as provided in paragraph (c)(1)(iii) of

this clause, the Administrative Contracting

Officer shall use the appraisal rental rate to

determine a reasonable rental charge.

(ii) Rental charges shall be determined by

multiplying the rental time by the appraisal

rental rate expressed as a rate per hour.

Monthly or daily appraisal rental rates shall

be divided by 720 or 24, respectively, to

determine an hourly rental rate.

(iii) When the Administrative Contracting

Officer has reason to believe the appraisal

rental rate is not reasonable, the

Administrative Contracting Officer shall

promptly notify the Contractor and provide

the rationale. The parties may agree on an

alternate means for computing a reasonable

rental charge.

(2) Other Government property. The

Contractor may elect to calculate the final

rental charge using the appraisal method

described in paragraph (c)(1) of this clause

subject to the constraints therein or the

following formula in which rental time shall

be expressed in increments of not less than

1 hour with portions of hours rounded to the

next higher hour:

Rental charge = (Rental time in hours) (.02

per month) (Base cost) 720 hours per month

(3) Alternate methodology. The Contractor

may request consideration of an alternate

basis for computing the rental charge if it

considers the monthly rental rate or a time

based rental unreasonable or impractical.

(d) Rental payments. (1) Rent is due at the

time and place specified by the Contracting

Officer. If a time is not specified, the rental

is due 60 days following completion of the

rental period. The Contractor shall calculate

the rental due and furnish records or other

supporting data in sufficient detail to permit

the Administrative Contracting Officer to

verify the rental time and computation.

Unless otherwise permitted by law, payment

shall be made by check payable to the

Treasurer of the United States and sent to an

office designated by the Administrative

Contracting Officer to receive rental

payments or by electronic funds transfer to

that office.

(2) Interest will be charged if payment is

not made by the specified payment date or,

in the absence of a specified date, the 61st

day following completion of the rental

period. Interest will accrue at the

Renegotiation Board Interest Rate (published

in the Federal Register semiannually on or

about January 1st and July 1st) for the period

in which the rent is due.

(3) The Government’s acceptance of any

rental payment under this clause, in whole

or in part, shall not be construed as a waiver

or relinquishment of any rights it may have

against the Contractor stemming from the

Contractor’s unauthorized use of Government

property or any other failure to perform this

contract according to its terms.

(e) Liability for loss, theft, damage, or

destruction. When Government property is

used for commercial purposes, the Contractor

shall be liable for, and shall reimburse the

Government for, any damage to or loss, theft,

or destruction of such property except

damage resulting from wear and tear

reasonable for the period during which use

for commercial purposes was authorized. The

Contractor shall indemnify the Government

against claims for injury to persons or

damage to the Contractor’s or a third party’s

property arising from the Contractor’s use or

possession of the Government property for

commercial purposes.

(f) Use revocation. (1) At any time during

the rental period, the Government may

revoke commercial use authorization. When

practical, the Government may provide the

reason of revocation in a reasonable period

of time prior to such revocation.

(2) Promptly following a use revocation,

the Contractor shall restore the property to its

pre-rental condition (less normal wear and

tear) and return the property to the

Government. Such return and restoration

shall be accomplished at no cost to the

Government.

(g) Unauthorized use. The unauthorized

use of Government property can subject a

person to fines, imprisonment, or both, under

18 U.S.C. 641.

(End of clause)

52.245–7 Government Property—Alternate

Procedures.

As prescribed in 45.207–2(d), insert

the following clause:

GOVERNMENT PROPERTY—ALTERNATE

PROCEDURES (DATE)

(a) Definitions. As used in this clause—

Commercial purpose means any purpose

other than performance of a U.S. Government

contract or subcontract thereunder.

Contractor’s managerial personnel means

the Contractor’s directors, officers, and any of

the Contractor’s managers, superintendents,

or equivalent representatives who have

supervision or direction of all or

substantially all of the Contractor’s business

or the Contractor’s operations at a site

connected with performance of a

Government contract.

Demilitarization means rendering a

product unusable for, and not restorable to,

the purpose for which it was designed or is

customarily used.

Equipment means nonexpendable, tangible

personal property. The term does not include

property that satisfies the definition in this

clause of material, unique Federal property,

special tooling, or special test equipment.

Expendable property means property that

is customarily consumed during design,

manufacture, or testing of a product or

performance of a service.

General purpose equipment means

equipment items that can be used, or with

only minor modification could be used, to

develop, produce, test, or maintain more than

one type of item or perform more than one

type of service.

Government-furnished property means

Government property that a Contracting

Officer authorizes a Contractor to use for

performance of a Government contract.

Government property means property the

Government owns or leases.

Low value property means equipment,

special tooling, or special test equipment that

has an acquisition cost less than $5,000 and

is not sensitive property.

Material means expendable property and

property incorporated into or attached to an

end item.

Natural disaster means a sudden and

unusual natural occurrence causing

catastrophic damage, including floods,

hurricanes, tornadoes, cyclones, atmospheric

electrical storms, tidal waves, avalanches,

mudslides, landslides, volcanic eruptions,

earthquakes, and other similar perils. The

term does not include fire or explosion,

unless directly or indirectly caused by a

covered peril.

Nonprofit organization means a business

entity organized and operated exclusively for

charitable, scientific, or educational

purposes, the net earnings of which do not

inure to the benefit of any private

shareholder or individual, that is exempt

from Federal income taxation under section

501 of the Internal Revenue Code and does

not conduct a substantial portion of its

activities carrying on propaganda or

otherwise attempting to influence legislation

or participating in any political campaign on

behalf of any candidate for public office.

Personal property means property of any

kind or interest in it except real property,

battleships, cruisers, aircraft carriers,

destroyers, submarines, and records of the

Government.

Plant clearance officer means a person

appointed to disposition property

accountable under Government contracts.

Precious metals means silver, gold,

platinum, palladium, iridium, osmium,

rhodium, and ruthenium.

Property means real and personal property.

Property administrator means a person

appointed to perform property

administration for the Government.

Real property means land and rights in

land, ground improvements, utility

distribution systems, and buildings and other

structures. It does not include foundations

and other work necessary for installing

special tooling, special test equipment, or

equipment.

Rental period means the calendar period

during which Government property is made

available for commercial purposes.

Rental time means the number of hours, to

the nearest whole hour, rented property is

actually used for commercial purposes. It

includes time to set up the property for such

purposes, perform required maintenance, and

restore the property to its condition prior to

rental (less normal wear and tear).

Scrap means personal property that has no

value except its basic metallic, mineral, or

organic content.

Sensitive property means property

potentially dangerous to the public safety or

Federal Register / Vol. 65, No. 6 / Monday, January 10, 2000 / Proposed Rules 1463

security if stolen, lost, or misplaced, or that

must be subject to exceptional physical

security, protection, control, and

accountability such as classified property,

weapons, ammunition, explosives, controlled

substances, radioactive materials, hazardous

materials or wastes, or precious metals.

Special test equipment means—

(1) Test equipment designed specifically to

conduct testing required by a Government

contract, provided such equipment cannot be

used for other purposes;

(2) General purpose test equipment or

modifications thereof that are interconnected

and interdependent to form a new functional

entity that can only be used to perform

testing required by a contract while so

interconnected and interdependent; or

(3) Any combination of specifically

designed, general purpose, or modified

general purpose test equipment that is so

interconnected and interdependent to form a

new functional entity that can only be used

to perform special purpose testing required

by a contract while so interconnected and

interdependent.

Special tooling means items such as jigs,

dies, fixtures, molds, patterns, taps, gauges,

or other equipment and manufacturing aids,

that are of such a specialized nature that

without substantial modification or alteration

their use is limited to the development,

production, repair, or maintenance of

particular supplies or components thereof, or

to the performance of particular services.

Unique Federal property means

Government-owned personal property, or

components thereof, that is specially

designed to perform or support the mission

of one or more Federal agencies and is not

available to the public. The term does not

include property that is incorporated into or

attached to an item deliverable under a

contract.

Work in process means bench stock

materials, complete or incomplete fabricated

parts, subassemblies, assemblies, and similar

items that are created during production of

deliverable end items, or are required to

construct special tooling or special test

equipment needed to produce deliverable

end items, or are otherwise needed for design

or testing required by a contract.

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

Government-furnished property; Government

property stored by the Contractor at the

Government’s direction; items accepted by

the Government at origin that are in the

Contractor’s possession; and under costreimbursement or time-and-materials

contracts, property acquired or produced by

a Contractor to which the Government has

title under the clause 52.216–7, Allowable

Cost and Payment, of this contract. For

purposes of this clause, such property and

items are collectively referred to as

‘‘Government property.’’ The clause does not

apply to property to which the Government

has obtained title, a lien, or other security

interest solely as a result of financing

arrangements under fixed-price contracts.

(2) Except as provided in paragraph (c) of

this clause, the Contractor shall use its own

property to perform this contract.

(3) The Contractor is responsible for the

maintenance, protection, and preservation of

Government property accountable under this

contract, including property in the

possession of a subcontractor, and shall

account for such property as required by this

contract.

(4) The Contractor shall not use

Government property for commercial

purposes without the Contracting Officer’s

prior approval. Unless otherwise permitted

by law, commercial use shall be on a rental

basis. The terms and conditions of the Rental

Charges for Commercial Use clause of this

contract shall apply to each rental.

(5) If this contract is a cost-reimbursement

or time-and-materials contract, the Contractor

shall not acquire general purpose equipment

to which the Government will have title

under the clause at 52.216–7, Allowable Cost

and Payment, or real property for

performance of this contract, unless the

general purpose equipment or real property

is specified as a deliverable end item.

(6) If this contract is a fixed-price or laborhour contract, property acquired or produced

by the Contractor for performance of the

contract is not Government property.

Property identified as a deliverable item

becomes Government property upon

acceptance by the Government.

(c) Government-furnished property. The

property identified in this contract as

Government-furnished property is furnished

to the Contractor on a rent-free basis for

performance of this contract. The Contractor

shall use sound business practices to protect,

maintain, and account for the property and

shall repair, replace, and dispose of the

property in accordance with this clause.

(1) Title. The Government retains title to

Government-furnished property including

Government-furnished property that is

incorporated into or attached to any property

owned by the Contractor. Governmentfurnished property does not become a fixture

or lose its identity as personal property by

being attached to real property.

(2) Suitability for intended use. (i)

Government-furnished property, other than

property furnished ‘‘as is’’, shall be in a

condition suitable for the property’s intended

use at the time the property is furnished to

the Contractor. The Government shall, when

requested by the Contractor, provide

information reasonably required for the

intended use of such property to the extent

the Government has the right to release or

disclose the information.

(ii) The contract delivery or performance

dates are based upon the expectation that

Government-furnished property, except

property furnished ‘‘as is’’, will be suitable

for its intended use and delivered to the

Contractor at the times stated in the contract.

If a time is not stated, the property shall be

furnished in sufficient time to enable the

Contractor to meet the contract’s delivery or

performance dates.

(iii) If Government-furnished property is

received in a condition not suitable for its

intended use, the Contractor shall notify the

Contracting Officer as soon as the

unsuitability is known and shall take

corrective action or dispose of the property

as directed by the Contracting Officer. The

contract shall be equitably adjusted in

accordance with paragraph (c)(7) of this

clause.

(iv) The Contractor may request an

equitable adjustment when Governmentfurnished property is not delivered to the

Contractor by the required time and such

untimely delivery has affected contract

performance.

(v) If the Contractor commingles Contractor

acquired or produced material with

Government-furnished material, the

provisions of this clause regarding suitability

for intended use shall not apply to the

commingled Government-furnished material.

Notwithstanding any other provision of this

contract, the Contractor shall be responsible

for any failure to comply with contract

requirements attributable to material that was

commingled.

(3) Authorized use. The Contractor may

request, in writing, the Contracting Officer to

authorize use of the property furnished for

performance of this contract to perform other

Government contracts at the same location.

Rent-free use is authorized if the Contracting

Officer does not object to such use, either in

whole or in part, within 30 days following

confirmed receipt of the Contractor’s request.

Costs incurred by the Contractor to relocate,

modify, or adapt the property for

performance of other Government contracts

or to restore the property to a condition

suitable for intended use under this contract

shall not increase the price or fee of any

Government contract.

(4) Real Property restrictions. The

Contractor shall not improve or make

structural alterations to real property

furnished for performance of this contract,

unless the contract specifically identifies the

alterations or improvements as work to be

performed under the contract or unless

expressly authorized to do so in writing by

the Contracting Officer. Title to

improvements or alterations to Governmentfurnished real property shall vest in the

Government.

(5) Property furnished ‘‘as is’’. (i) The

Contractor is responsible for assuring that

Government property furnished on an ‘‘as is’’

basis is suitable for the Contractor’s

purposes. Such property is furnished f.o.b. at

the location specified in the solicitation or

contract. Costs incurred by the Contractor to

transport, install, modify, or otherwise make

such property suitable for the Contractor’s

intended use and any cost incurred to return

such property to the Government shall not

increase the price or fee of any Government

contract. Modifications to property furnished

‘‘as is’’ require the Contracting Officer’s prior

written approval.

(ii) Special tooling or special test

equipment is furnished ‘‘as is’’ for

performance of this contract if the Contractor

acquired or produced, and the Government

obtained title to, such tooling or test

equipment under this or another Government

contract.

(iii) The Government makes no warranty

whatsoever with respect to property

furnished ‘‘as is’’, except that the property

will be in the same condition when placed

at the specified f.o.b. location as when

inspected by the Contractor or, if not

inspected by the Contractor, as of the last

date identified in the solicitation or contract

for Contractor inspection. The Contractor is

1464 Federal Register / Vol. 65, No. 6 / Monday, January 10, 2000 / Proposed Rules

responsible for verifying that the property’s

condition has not changed during that

period. If the Contractor determines the

property’s condition has changed and such

change will adversely affect the Contractor,

the Contractor shall notify the Contracting

Officer promptly and identify the changed

condition. If the Contracting Officer concurs

that the property’s condition has changed,

the Contracting Officer may restore the

property or substitute other Government

property at no change in the contract’s price

or fee; permit the Contractor to restore the

property subject to an equitable adjustment;

or decline to provide the property subject to

an equitable adjustment. The foregoing

provisions for adjustment are the exclusive

remedies available to the Contractor. The

Government has no liability for changes in

the property’s condition discovered after

removal from the specified f.o.b. location.

(iv) Repairs to or modifications of property

furnished ‘‘as is’’ do not affect the

Government’s title to such property.

(6) Changes in Government-furnished

property. (i) The Contracting Officer may

increase, decrease, or substitute other

Government property for the property

furnished or to be furnished for performance

of this contract or require use of Governmentfurnished property in lieu of Contractor

property.

(ii) Any increase in the amount of property

furnished for performance of this contract

shall result in an equitable reduction in

contract price or fee and appropriate

adjustment of the contract delivery or

performance dates.

(iii) The Contractor may request an

equitable adjustment for a decrease in or

substitution for the property identified in the

contract or withdrawal of authority to use

property accountable under another contract

in performance of this contract provided

such decrease, substitution, or withdrawal

increases contract costs or schedule.

(iv) If the Contracting Officer directs the

Contractor to use Government-furnished

property in lieu of Contractor property in

performance of this contract, any adjustment

to the contract shall be made in accordance

with paragraph (c)(7) of this clause.

(7) Equitable adjustments. Equitable

adjustments shall be the Contractor’s

exclusive remedy for Government actions

under this clause and shall be made in

accordance with the procedures of the

Changes clause of this contract.

(i) Equitable adjustments may include an

amount for the restoration and rehabilitation

of the Contractor’s premises caused by

Government-furnished property that is not in

a condition suitable for intended use, the

withdrawal or substitution of Governmentfurnished property, or the Government’s

abandonment of hazardous property (see

paragraph (h)(1) of this clause).

(ii) The Government shall not be liable for

breach of contract for—

(A) Any delay in delivery of Governmentfurnished property;

(B) Delivery of Government-furnished

property in a condition not suitable for its

intended use;

(C) An increase or decrease in, or

substitution of, Government-furnished

property; or

(D) Failure to repair or replace

Government-furnished property.

(8) Return of Government-furnished

property. If this contract requires

Government-furnished property to be

returned directly to a Government activity—

(i) The property, including property

furnished ‘‘as is’’, shall be returned to the

Government in the same condition, less

normal wear and tear, or better condition

than when furnished to the Contractor

except—

(A) Lost, stolen, or destroyed property that

the Government has determined will not be

replaced; and

(B) Damaged property that the Government

has elected not to have repaired or replaced.

(ii) The Contractor shall notify the contract

administration office of its intent to return

Government-furnished property at least 10

working days prior to return. Notices shall

identify the contracts under which the items

are accountable and shall provide each item’s

name, description, national stock number (if

known), and part number or identification

number.

(d) Property loss liability. As used in this

clause, the terms loss and losses include,

either individually or in any combination,

physical misplacement of, theft of,

destruction of, or damage to, Government

property accountable under this contract.

(1) Contractor liability. The Contractor is

liable for property losses, except losses for

which the Government is liable under

paragraph (d)(2) of this clause.

(2) Government liability. The Government

is liable for losses—

(i) Caused by acts of war, civil insurrection,

or natural disasters, regardless of property

value, except a loss or portion thereof caused

by or attributable to the Contractor’s or a

subcontractor’s failure to take reasonable and

prudent steps to avoid or reduce such losses;

and

(ii) To Government property items that

have an acquisition cost greater than

$1,000,000 per item, except a loss or portion

thereof caused by willful misconduct or lack

of good faith on the part of the Contractor’s

or a subcontractor’s managerial personnel.

(3) Reduced Government liability. The

Government’s liability for a property loss

shall be reduced by the amount of any

reimbursement the Contractor receives from

a third party for the loss.

(4) Property in the possession of a

subcontractor. The Contractor’s transfer of

Government property to the possession and

control of a subcontractor does not affect the

Contractor’s liability for property losses.

(5) Contractor required actions following a

property loss. The Contractor shall—

(i) Take all reasonable action to protect

damaged Government property from further

damage and to physically separate such

property from all other property;

(ii) Notify the Contracting Officer as

required by the Government Property

Administration—Alternate Procedures clause

of this contract (52.245–8(e)(4));

(iii) Not repair, replace, or otherwise

remedy a loss for which the Government is

liable under paragraph (d)(2) of this clause,

unless authorized to do so by the Contracting

Officer; and

(iv) Do nothing to prejudice the

Government’s rights to recover against third

parties for any Government property loss.

When requested by the Contracting Officer,

the Contractor shall, at Government expense,

furnish to the Government all reasonable

assistance and cooperation (including the

prosecution of suit and the execution of

instruments of assignment in favor of the

Government) in obtaining recovery.

(6) Insurance charges or reserves. Unless

expressly required by this contract, the

Contractor shall not include in the contract

price, fee, or any adjustment thereof, any

charge or reserve for insurance (including

any self-insurance fund or reserve) covering

losses for which the Government is liable

under paragraph (d)(2) of this clause.

(e) Property loss remedies. Following

notification that a property loss has

occurred—

(1) If the Government is liable for the loss,

the Contracting Officer may—

(i) Elect to repair, replace, substitute other

property for such property, or negotiate an

equitable adjustment in lieu of repair,

replacement, or substitution; or

(ii) Authorize the Contractor to repair or

replace the property or take other appropriate

action. If authorized, the Contractor may

request an equitable adjustment.

(2) If the Contractor is liable for the loss,

the Contracting Officer may—

(i) Authorize the Contractor to repair or

replace the property or take other appropriate

action at no change in price or fee; or

(ii) Elect to receive an equitable reduction

in contract price or fee in lieu of requiring

the Contractor to remedy the loss.

(3) The Contractor shall use any

reimbursement for a property loss from a

source other than the Government to repair,

or replace the property that suffered a loss,

or equitably reimburse the Government, as

directed by the Contracting Officer.

(f) Government property maintenance. The

contract price or fee includes an amount for

performance of the maintenance actions

required by paragraphs (f)(1) and (f)(2) of this

clause.

(1) Government-furnished property. The

Contractor shall maintain Governmentfurnished property in a condition suitable for

its intended use. The Contractor shall—

(i) Use sound business practices to

maintain real property, special tooling, and

special test equipment;

(ii) Maintain unique Federal property as

specified in this contract, or if not specified,

agency instructions for the maintenance of

such property;

(iii) Preserve, protect, and care for material

and general purpose equipment in

accordance with the property manufacturer’s

standards of care for such items, or when the

manufacturer has not released standards of

care, the Contractor’s standard business

practices for comparable Contractor-owned

material and equipment; and

(iv) Promptly notify the contract

administration office when the maintenance

actions required by paragraphs (e)(1)(i)

through (e)(1)(iii) are not sufficient to sustain

a Government-furnished property item’s

suitability for its intended use and request

direction regarding repair, rehabilitation, or

Federal Register / Vol. 65, No. 6 / Monday, January 10, 2000 / Proposed Rules 1465

replacement. The Contractor shall not repair,

rehabilitate, or replace such items unless

authorized to do so by the Contracting

Officer.

(2) Property to which the Government

obtains title under a cost-reimbursement or

time-and-materials contract. The Contractor

shall maintain property to which the

Government obtains title under a costreimbursement or time-and-materials

contract in a condition suitable for the

property’s intended use until the Contractor

determines the property is no longer needed

for continued performance of this contract.

Promptly following that determination, the

Contractor shall enter the items into the

property disposal process.

(3) Additional maintenance actions. When

the Contractor’s diligent performance of the

maintenance actions required by paragraph

(f)(1) and (f)(2) of this clause is not sufficient

to sustain a Government-furnished property

item’s suitability for its intended use, the

Contracting Officer may—

(i) Repair, rehabilitate, replace, or

substitute other property for the property

requiring additional maintenance; or

(ii) Authorize the Contractor to repair,

rehabilitate, or replace, the property.

(4) Equitable adjustment. The Contractor

may request an equitable adjustment for

property repair, rehabilitation, or

replacement authorized by the Contracting

Officer.

(5) Stored Government property. The

Contractor shall store Government property

only if specifically directed to do so by the

Contracting Officer. Stored property shall be

maintained in accordance with instructions

provided by the Contracting Officer. Except

as provided in the clause 52.245–3,

Delivery—Special Tooling and Special Test

Equipment, of this contract and paragraph

(g)(7) of this clause, the price or fee of the

contract does not include an amount for such

maintenance.

(g) Government property disposal. Except

as provided in paragraphs (c)(8), (g)(1), and

(g)(2) of this clause, the Contractor shall not

dispose of Government property until

authorized to do so by the Plant Clearance

Officer.

(1) Scrap. (i) Contractors may dispose of

scrap that results from production or testing

under this contract without Government

approval if the scrap does not contain

precious metals, hazardous materials or

wastes, nuclear materials, classified

materials, or does not require

demilitarization. All other scrap must be

disposed of in accordance with paragraphs

(g)(3) through (g)(8) of this clause.

(ii) The Contractor and the Plant Clearance

Officer may agree to expedited scrap

procedures for nonproduction scrap without

consideration by either party.

(2) Predisposal requirements. When the

Contractor determines that a property item

acquired or produced by the Contractor is no

longer needed for performance of this

contract, the Contractor shall—

(i) Make reasonable efforts to return

unused property to the appropriate supplier

at acquisition cost (less, if applicable, a

reasonable restocking fee that is consistent

with the supplier’s customary practices) and

credit the price or estimated cost of this

contract with the proceeds of such returns;

and

(ii) List property that could not be returned

to a supplier or used in the performance of

other Government contracts on Standard

Form 1428, Inventory Disposal Schedule.

(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 cost-reimbursement or

time-and-materials contracts, 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 general

purpose components;

(B) Special test equipment that does not

contain general purpose 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. Special test

equipment shall be described in sufficient

detail to permit an understanding of the

special test equipment’s intended use.

(4) Submission requirements. Inventory

disposal schedules shall be submitted 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 receipt of an acceptable

inventory disposal schedule, might entitle

the Contractor to an equitable adjustment for

costs incurred to store such property on or

after the 121st day following receipt of an

acceptable schedule.

(ii) The Contractor must 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

must 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) 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.

(ii) 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 (c)(7) of this

clause.

(9) Disposal proceeds. The Contractor shall

credit the net proceeds from a disposal of

Government property in accordance with

instructions received from the Plant

Clearance 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 (g)(4) of this clause.

(h) Abandonment of Government property

at a Contractor-owned location. (1) The

Government shall not abandon at a

Contractor-owned location Government

property that is or contains a hazardous

material without the Contractor’s written

concurrence. The Contractor may request an

equitable adjustment incident to such

agreement.

(2) The Government, upon notice to the

Contractor, may abandon any nonhazardous

Government-furnished property in place at

which time all obligations of the Government

regarding such abandoned property shall

cease. Except as provided in paragraph

1466 Federal Register / Vol. 65, No. 6 / Monday, January 10, 2000 / Proposed Rules

(c)(7)(i) of this clause, the Government has no

obligation to restore or rehabilitate the

Contractor’s premises under any

circumstances.

(i) Overseas contracts. In a contract

performed outside the United States, 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 (Date). As prescribed in 45.207–

2(d)(1), replace paragraph (d)(1) of the basic

clause with the following paragraph (d)(1)

and modify the references to ‘‘Government

property’’ in paragraphs (d)(2), (d)(3), and

(d)(4) to read ‘‘Government-furnished

property’’:

(d)(1) Contractor liability. Except as

provided in paragraph (d)(2) of this clause,

the Contractor is liable for losses to

Government-furnished property during the

times the property is in the Contractor’s

possession.

Alternate II (Date). As prescribed in

45.207–2(d)(2), replace paragraph (b) of the

basic clause with the following paragraph (b)

and add the following paragraph (j) to the

basic clause:

(b) General. (1) Except as provided in

paragraph (c) of this clause, the Contractor

shall use its own property to perform this

contract.

(2) The Contractor is responsible for the

maintenance, protection, and preservation of

Government property accountable under this

contract that is in the Contractor’s or its

subcontractors’ possession and shall account

for such property as required by this contract.

(3) Property acquired or produced by the

Contractor for performance of this contract

that the Government obtains title to under

the clause at 52.216–7, Allowable Cost and

Payment, is Government property

accountable under this contract.

(j) Title to Contractor-acquired or produced

property, nonprofit organizations or

nonprofit institutions. (1) Notwithstanding

any other provision of this contract regarding

title to property acquired or produced by a

Contractor, the Contractor shall have title to

equipment and other tangible property

purchased with Government funds provided

for the conduct of basic or applied research

under this contract, if—

(i) The Contracting officer has agreed, prior

to the Contractor’s purchase of such property,

that the Contractor shall have title to that

property; and

(ii) The Contractor has agreed that

depreciation or amortization costs for such

property shall not be allocated to any existing

or future Government contract and that such

property may be used by the Government or

its subcontractors without charge in

performance of any Government contract or

subcontract thereunder.

(2) As a condition for obtaining title to

property under this clause, the Contractor, by

signing this contract, agrees that no person in

the United States shall on the ground of race,

color, or national origin, be excluded from

participation in, be denied the benefits of, or

be otherwise subjected to discrimination

under this contemplated financial assistance

(title to equipment or other tangible personal

property) (41 U.S.C. 2000d).

52.245–8 Government Property

Administration—Alternate Procedures.

As prescribed in 45.510(d), insert the

following clause:

GOVERNMENT PROPERTY

ADMINISTRATION—ALTERNATE

PROCEDURES (DATE)

(a) Definitions. When a term defined in the

clause at 52.245–7, Government Property—

Alternate Procedures, is used in this clause,

the term has the same meaning as when used

in 52.245–7.

(b) Applicability. This clause is applicable

to Government-furnished property;

Government property stored by the

Contractor at the Government’s direction;

and under cost-reimbursement or time-andmaterials contracts, property acquired or

produced by a Contractor to which the

Government has title under the Allowable

Cost and Payment clause of this contract.

(c) Access. The Government shall have

access, at all reasonable times, to all premises

at which Government property accountable

under this contract is located and to

applicable property records and supporting

information.

(d) Records and supporting information—

(1) Property records. (i) Except as provided in

paragraph (d)(1)(ii) of this clause, the

Contractor shall establish or maintain and

keep current a property record for each

Government property item accountable under

this contract that is in the Contractor’s or its

subcontractors’ possession. Identical items

may be consolidated in a single property

record if the consolidated record provides the

information required by this clause. The

Contractor shall identify useable components

permanently removed from Government

property as Government property items and

establish and maintain appropriate property

records. Property records created by a

subcontractor that uses sound business

practices to control, maintain, and account

for property may be used in lieu of creating

new records.

(ii) Property records are not required for

work in process or for property specifically

acquired or constructed for tests that will

destroy the property.

(iii) Contractors that use a material

requirements planning system,

manufacturing resource planning system,

material management accounting system, or

an enterprise resource planning system, may

use the records generated by those systems as

the records for material items provided such

records otherwise satisfy the requirements in

paragraph (d)(2) of this clause.

(iv) The Contractor shall close a

Government property item’s record when the

item is replaced and create a new property

record for the replacement item if that item

is Government property.

(v) The Contractor shall enter the

property’s acquisition cost into the record for

each Government property item that was

acquired or produced by the Contractor

during performance of this contract. For each

item having an acquisition cost of lll

(insert the agency capitalization threshold

amount) or more, the Contractor also shall

enter the date the item was acquired or

produced.

(vi) The Contractor shall notify the

Contracting Officer promptly if the contract

does not identify a Government-furnished

property item’s nomenclature or acquisition

cost.

(vii) Property records shall legibly and

conspicuously identify sensitive property.

(viii) The property records for items

requiring maintenance shall identify the

dates maintenance actions (including

calibration if required) were performed and

any deficiencies discovered. The

maintenance information may be kept

separately if the Contractor has a direct link

between the information and the affected

property records.

(2) Standard information. Except as

provided in paragraphs (d)(4) and (d)(5) of

this clause, each property control record

shall contain the following information—

(i) The item’s name, description, and

national stock number. If the item does not

have a national stock number and the item’s

acquisition cost is lll (insert the agency

capitalization threshold amount) or more,

enter the four digit federal supply

classification code;

(ii) Contract number or equivalent code

designation;

(iii) Quantity received or fabricated, issued,

and on hand;

(iv) The date of the most recent physical

inventory or other posting reference;

(v) Acquisition cost and, for items having

an acquisition cost of lll (insert the

agency capitalization threshold amount) or

more, the date the items were acquired or

produced;

(vi) Current location (for low value

property, identify the initial location only);

and

(vii) The property’s classification. Use only

one of the following for each property item:

Land, buildings, other real property,

equipment, special test equipment, special

tooling, unique Federal property, or material.

(3) Additional information. In addition to

the information required by paragraph (d)(2)

of this clause, the property records for—

(i) Special tooling and special test

equipment shall identify each part number

with which a special tool or special test

equipment item is used;

(ii) Special test equipment that includes

general purpose equipment shall include the

information required by paragraph (f)(2) of

this clause for each removable or reusable

general purpose component if removal and

reuse is economically feasible;

(iii) Equipment shall include the

manufacturer’s name, serial number, and

model or part number; and

(iv) Scrap shall identify the material

content, contract from which the scrap was

derived, and the scrap’s disposition and

disposition date(s).

(4) Real property. (i) Real property records

must contain a description of the property,

its location, original acquisition cost, a

description of property alterations made or

construction work performed by the

Contractor including an identification of the

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construction sites supporting such alterations

or construction, and must separately identify

the cost of such alterations or construction.

Supporting documentation shall include

maps, drawings, plans, specifications, and, if

necessary, supplementary data needed to

completely describe and value the property.

(ii) Costs incurred by the Government or

the Contractor, to acquire, construct, alter, or

improve Government-owned or leased real

property, including additions, expansions,

extensions, or conversions thereof, shall be

added to the property’s acquisition cost if

they increase the value, life, utility,

capability, or serviceability of the property.

(iii) A real property record shall be

annotated with a statement of the pertinent

facts when the property is sold, transferred,

donated, destroyed, abandoned by the

Government, or condemned.

(5) Property returned under warranty. The

Contractor shall establish a property record

for each item returned for correction under

a warranty and maintain the records on a

contract-by-contract basis. The records shall

identify the date received, and the date the

item is returned to the Government. Once a

property record has been established,

identical items received for corrective action

shall be added to the established record and

the information required by this paragraph

maintained for each item.

(e) Reports and notices—(1) Annual

Government property report. The Contractor

shall report all Government property

accountable under this contract that is in its

or its subcontractors’ possession as of

September 30 of each calendar year or upon

completion of all property disposal actions

under this contract, whichever is sooner.

Unless otherwise stated in this contract, the

report shall be prepared using Standard Form

1450, U.S. Government Property in the

Possession of Contractors, and submitted to

the Property Administrator no later than

October 31 of each calendar year.

(2) Misdirected Government property. The

Contractor shall notify the Property

Administrator in writing immediately

following receipt of Government property

intended for another person or Government

property not required for performance of a

Government contract with the Contractor and

shall request disposition instructions. To the

extent practical, the Contractor shall identify

the shipment’s content, intended recipient,

carrier that made delivery, the Government

activity from which the shipment originated,

and the shipment’s current location.

(3) Late Government-furnished property.

The Contractor shall notify promptly the

Contracting Officer of a failure to receive

Government-furnished property at the time

stated in the contract or, when a time is not

stated, in sufficient time to enable the

Contractor to meet the contract’s delivery or

performance dates. Each notice shall forward

the Contractor’s estimate of the extent to

which such failure has affected or might

affect contract performance.

(4) Property losses. Except as provided in

paragraph (e)(5) of this clause, the Contractor

shall notify the Property Administrator in

writing promptly upon learning that a

Government-furnished property loss has

occurred. The notice shall identify the

property by item and include—

(i) The item’s description, contract number,

national stock number (if known), and either

part number or identification number;

(ii) The date the physical loss or theft was

discovered or damage or destruction

occurred and, if known, the circumstances;

(iii) The item’s acquisition cost;

(iv) The contracts affected;

(v) All known interests in commingled

property of which the Government property

is a part; and

(vi) The insurance, if any, covering any

part of or interest in the property.

(5) Low value Government-furnished

property losses. The Contractor is not

required to provide a property loss notice for

low value Government-furnished property

until contract completion or termination,

except low value Government-furnished

property that the Contractor needs for

continued performance of this contract or

low value Government-furnished property

that the Government is contractually

obligated to provide to the Contractor for

performance of another contract. The notice

shall contain the information required by

paragraph (e)(4) of this clause.

(f) Inventories. The Contractor shall assure

that the location of each Government

property item is accurately established and

the records and reports required by this

clause are complete and accurate.

(1) Contract termination inventories. The

Contractor shall inventory all property

accountable under this contract immediately

following a notice of termination or partial

termination of the contract. Electronic,

optical, electro-magnetic, or similar systems

may be used.

(2) Contract completion inventory.

Promptly following completion of deliveries

or performance under the contract, the

Contractor shall inventory all Government

property accountable under this contract that

the Government is not contractually

obligated to furnish to the Contractor for

performance of another Government contract.

(g) Markings—(1) Contractor-acquired or

produced property (other than material). As

soon as practicable following the

Government’s assumption of title to property

acquired or produced for performance of a

cost-reimbursement or time-and-materials

contract, the Contractor shall legibly and

conspicuously mark such property with the

phrase ‘‘U.S. Government Property’’ (or a

similar phrase that conveys Government

ownership) and a control number that links

the property to the property records

maintained by the Contractor.

(2) Government-furnished property (other

than material). Promptly following receipt of

Government-furnished property, the

Contractor shall determine whether the

property bears a Government ownership

marking, mark unmarked property with the

markings identified in paragraph (g)(1) of this

clause, and replace any control numbers

affixed by other Contractors with the

Contractor’s control number.

(3) Exceptions. (i) The Contractor is not

required to mark Government-furnished or

Contractor-acquired or produced material.

(ii) In lieu of the requirements in paragraph

(g)(1) or (g)(2) of this clause, the Contractor

shall contact promptly the Property

Administrator for alternate instructions when

marking would damage a property item or

the Contractor considers a physical marking

to be impractical.

(h) Overseas contracts. In a contract

performed outside the United States, its

territories, or possessions, the words

‘‘Government’’ and ‘‘Government-furnished’’,

as used in this clause, mean ‘‘United States

Government’’ and ‘‘United States

Government-furnished,’’ respectively.

(End of clause)

Alternate I (Date) As prescribed in

45.510(b), substitute the following

paragraphs (d) and (e) for paragraphs (d) and

(e) of the basic clause:

(d) Property records. The Contractor shall

establish a property record for each

Government property item returned for

correction under a warranty and shall

maintain the records on a contract-bycontract basis. The records shall identify the

item’s name, description, property

classification, national stock number, the

date received, the contract number under

which the item was returned, the corrective

action performed, and the date the item is

returned to the Government. For items

having an acquisition cost greater

thanllllllllll (insert the agency

capitalization threshold), the Contractor shall

enter the item’s four-digit federal supply

classification code. Once a property record

has been established, identical items received

for corrective action shall be added to the

established record and the information

required by this paragraph maintained for

each item.

(e) Notices—(1) Misdirected Government

property. The Contractor shall notify the

Property Administrator, promptly following

receipt of Government property intended for

another person or Government property not

required for performance of a Government

contract, and shall request disposition

instructions. To the extent practical, the

Contractor shall identify the shipment’s

content, intended recipient, carrier that made

delivery, the Government activity from

which the shipment originated, and the

shipment’s current location.

(2) Late Government-furnished property.

The Contractor shall notify promptly the

Contracting Officer of a failure to receive

Government-furnished property at the time

stated in the contract or, when a time is not

stated, in sufficient time to enable the

Contractor to meet the contract’s delivery or

performance dates. Each notice shall forward

the Contractor’s estimate of the extent to

which such failure has affected or might

affect contract performance.

(3) Government-furnished property losses.

Except as provided in paragraph (e)(4) of this

clause, the Contractor shall notify the

Property Administrator in writing promptly

upon learning that a Government-furnished

property loss has occurred. The notice shall

identify the property by item and include—

(i) The item’s description, contract number,

national stock number, if known, and either

part number or identification number;

(ii) The date the physical loss or theft was

discovered or damage or destruction

occurred and, if known, the circumstances;

(iii) The item’s acquisition cost;

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(iv) The contracts affected;

(v) All known interests in commingled

property of which the Government-furnished

property is a part; and

(vi) The insurance, if any, covering any

part of or interest in such commingled

property.

(4) Low value Government-furnished

property losses. The Contractor is not

required to provide a property loss notice for

low value Government-furnished property

until contract completion or termination,

except low value Government-furnished

property that the Contractor needs for

continued performance of this contract or

low value Government-furnished property

that the Government is contractually

obligated to furnish to the Contractor for

performance of another Government contract.

The notice shall contain the information

required by paragraph (e)(3) of this clause.

52.245–9 through 52.245–19 [Removed]

59. Remove sections 52.245–9 through

52.245–19.

52.246–18 [Amended]

60. Amend section 52.246–18 by

revising the date of the clause; and in

the first sentence of paragraph (b)(3) by

removing the word ‘‘facilities’’ and

adding ‘‘Government property’’ in its

place.

61. Amend section 52.249–2 by

revising the date of the clause and

paragraph (b)(2); by removing paragraph

(d); and by redesignating paragraphs

‘‘(e)’’ through ‘‘(n)’’ as ‘‘(d)’’ through

‘‘(m)’’, respectively. The revised text

reads as follows:

52.249–2 Termination for Convenience of

the Government (Fixed-Price).

* * * * *

Termination for Convenience of the

Government (Fixed-Price) (Date)

* * * * *

(b) * * *

(2) Place no further subcontracts or orders

(referred to as subcontracts in this clause),

except as necessary to complete the

continued portion of the contract.

* * * * *

62. Amend section 52.249–3 by

revising the date of the clause and

paragraph (b)(2); by removing paragraph

(d); and by redesignating paragraphs

‘‘(e)’’ through ‘‘(n)’’ as ‘‘(d)’’ through

‘‘(m)’’, respectively. The revised text

reads as follows:

52.249–3 Termination for Convenience of

the Government (Dismantling, Demolition,

or Removal of Improvements).

* * * * *

Termination for Convenience of the

Government (Dismantling, Demolition, or

Removal of Improvements) (Date)

* * * * *

(b) * * *

(2) Place no further subcontracts or orders

(referred to as subcontracts in this clause),

except as necessary to complete the

continued portion of the contract.

* * * * *

52.249–6 [Amended]

63. Amend section 52.249–6 by

revising the date of the clause; by

removing paragraph (e); and by

redesignating paragraphs ‘‘(f)’’ through

‘‘(n)’’ as ‘‘(e)’’ through ‘‘(m)’’,

respectively.

52.249–11 [Removed and Reserved]

64. Remove and reserve section

52.249–11.

52.249–13 [Removed and Reserved]

65. Remove and reserve section

52.249–13.

66. Amend section 52.249–14 by

revising the second and fourth

sentences of the introductory paragraph

to read as follows:

52.249–14 Excusable Delays.

* * * Also insert the clause in timeand-materials contracts and labor-hour

contracts. * * * When used in

construction contracts, substitute the

words ‘‘completion time’’ for ‘‘delivery

schedule’’ in the last sentence of the

clause.

* * * * *

67. Amend section 52.251–1 by

revising the clause to read as follows:

52.251–1 Government Supply Sources.

* * * * *

Government Supply Sources (Date)

(a) The Contracting Officer may authorize

the Contractor to use Government supply

sources in the performance of this contract.

Such property is not ‘‘Government-furnished

property.’’

(b) Title to property acquired by the

Contractor under paragraph (a) of this clause

shall vest for—

(1) Fixed-price contracts, as provided in

the contract financing provisions and the

Delivery—Special Tooling and Special Test

Equipment (Fixed-Price Contracts) clause of

this contract.

(2) Cost-type contracts, as provided in the

Allowable Cost and Payment clause of this

contract.

(End of clause)

PART 53—FORMS

68. Revise section 53.245 to read as

follows:

53.245 Government property.

The following forms are prescribed, as

specified in this section for use in

reporting, redistribution, and disposal of

Government property and in accounting

for this property:

(a) SF 120 (GSA), Report of Excess

Personal Property, and SF 120–A (GSA),

Continuation Sheet (Report of Excess

Personal Property). (See 45.504–5(a) and

41 CFR 101–43.)

(b) SF 126 (GSA), Report of Personal

Property for Sale, and SF 126–A (GSA),

Report of Personal Property for Sale

(Continuation Sheet).

(c) SF 1423 (Rev. DATE), Inventory

Verification Survey. (See 45.304–3(b).)

(d) SF 1424 (Rev. 7/89), Inventory

Disposal Report. SF 1424 is authorized

for local reproduction and a copy is

furnished for this purpose in part 53 of

the looseleaf edition of the FAR.

(e) SF 1428 (Rev. DATE), Inventory

Disposal Schedule, and SF 1429 (Rev.

DATE), Inventory Disposal ScheduleContinuation Sheet. (See 52.245–2(g)(2)

and 52.245–7(g)(2).) SF 1428 and SF

1429 are authorized for local

reproduction and copies are furnished

for this purpose in part 53 of the

looseleaf edition of the FAR.

(f) SF 1450 (DATE), U.S. Government

Property in the Possession of

Contractors. (See 52.245–6(g)(1).) SF

1450 is authorized for local

reproduction and a copy is furnished for

this purpose in part 53 of the looseleaf

edition of the FAR.

69. Amend section 53.249 by revising

paragraph (b) to read as follows:

53.249 Termination of contracts.

* * * * *

(b) Standard Form 1428 (Rev. DATE),

Inventory Disposal Schedule, and

Standard Form 1429 (Rev. DATE),

Inventory Disposal Schedule—

Continuation Sheet, must be used to

support termination settlement

proposals listed in paragraph (a) of this

section, as specified in 49.602–2.

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70. Revise section 53.301–1423 to read as follows:

53.301–1423 Inventory Verification Survey.

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71. Revise section 53.301–1424 to read as follows:

§ 43.301–1424 Inventory Disposal Report.

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72. Revise section 53.301–1428 to read as follows:

53.301–1428 Inventory Disposal Schedule.

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73. Revise section 53.301–1429 to read as follows:

53.301–1429 Inventory Disposal Schedule—Continuation Sheet.

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74. Revise section 53.301–1436 to read as follows:

53.301–1436 Settlement Proposal (Total Cost Basis).

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75. Revise section 53.301–1438 to read as follows:

53.301–1438 Settlement Proposal (Short Form).

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76. Add section 53.301–1450 to read as follows:

53.301–1450 U.S. Government Property in the Possesssion of Contractors.

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[FR Doc. 00–115 Filed 1–7–00; 8:45 am]

BILLING CODE 6820–EP–C