Federal Register / Vol. 76, No. 161 / Friday, August 19, 2011 / Rules and Regulations 52139 

■ 1. The authority citation for 48 CFR 

parts 209 and 252 continues to read as 

follows: 

Authority: 41 U.S.C. 1303 and 48 CFR 

chapter 1. 

PART 209—CONTRACTOR 

QUALIFICATIONS 

■ 2. Add section 209.270–5 to read as 

follows: 

209.270–5 Contract clause. 

The contracting officer shall insert the 

clause at 252.209–7010, Critical Safety 

Items, in solicitations and contracts 

when the acquisition includes one or 

more items designated by the design 

control activity as critical safety items. 

PART 252—SOLICITATION 

PROVISIONS AND CONTRACT 

CLAUSES 

■ 3. Add section 252.209–7010 to read 

as follows: 

252.209–7010 Critical Safety Items. 

As prescribed in 209.270–5, use the 

following clause: 

CRITICAL SAFETY ITEMS (AUG 2011) 

(a) Definitions. 

Aviation critical safety item means a part, 

an assembly, installation equipment, launch 

equipment, recovery equipment, or support 

equipment for an aircraft or aviation weapon 

system if the part, assembly, or equipment 

contains a characteristic any failure, 

malfunction, or absence of which could 

cause— 

(i) A catastrophic or critical failure 

resulting in the loss of, or serious damage to, 

the aircraft or weapon system; 

(ii) An unacceptable risk of personal injury 

or loss of life; or 

(iii) An uncommanded engine shutdown 

that jeopardizes safety. 

Design control activity. (i) With respect to 

an aviation critical safety item, means the 

systems command of a military department 

that is specifically responsible for ensuring 

the airworthiness of an aviation system or 

equipment, in which an aviation critical 

safety item is to be used; and 

(ii) With respect to a ship critical safety 

item, means the systems command of a 

military department that is specifically 

responsible for ensuring the seaworthiness of 

a ship or ship equipment, in which a ship 

critical safety item is to be used. 

Ship critical safety item means any ship 

part, assembly, or support equipment 

containing a characteristic, the failure, 

malfunction, or absence of which could 

cause— 

(i) A catastrophic or critical failure 

resulting in loss of, or serious damage to, the 

ship; or 

(ii) An unacceptable risk of personal injury 

or loss of life. 

(b) Identification of critical safety items. 

One or more of the items being procured 

under this contract is an aviation or ship 

critical safety item. The following items have 

been designated aviation critical safety items 

or ship critical safety items by the designated 

design control activity: 

lllllllllllllllllllll

lllllllllllllllllllll

lllllllllllllllllllll

lllllllllllllllllllll

(Insert additional lines as necessary) 

(c) Heightened quality assurance 

surveillance. Items designated in paragraph 

(b) of this clause are subject to heightened, 

risk-based surveillance by the designated 

quality assurance representative. 

(End of clause) 

[FR Doc. 2011–20529 Filed 8–18–11; 8:45 am] 

BILLING CODE 5001–08–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Parts 201, 245, and 252 

RIN Number 0750–AG38 

Defense Federal Acquisition 

Regulation Supplement; Government; 

Property (DFARS Case 2009–D008) 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Final rule. 

SUMMARY: DoD is issuing a final rule 

amending the Defense Federal 

Acquisition Regulation Supplement 

(DFARS) regarding Government 

Property, to reflect the recent revisions 

to Government Property elsewhere in 

the Code of Federal Regulations. 

DATES: Effective Date: August 19, 2011. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Meredith Murphy, 703–602–1302. 

SUPPLEMENTARY INFORMATION: 

I. Background 

DoD is revising subparts 245.6 and 

245.7 to be consistent with the changes 

to FAR subparts 45.6 and 45.7, 

published in the Federal Register at 72 

FR 27364 on May 15, 2007. A proposed 

DFARS rule was published in the 

Federal Register at 75 FR 75444 on 

December 3, 2010. The public comment 

period for the proposed rule closed 

February 1, 2011. Comments were 

received from three respondents. A 

discussion and analysis of the 

comments is provided in section II of 

this notice. Any revisions to the final 

rule based on public comments are 

addressed in the DoD responses to the 

comments received. 

II. Discussion and Analysis 

Comments received in response to the 

proposed rule are organized into six 

categories and are discussed in the 

paragraphs that follow. 

A. Clarifying Responsibilities 

Comment: A respondent 

recommended that ‘‘* * * or the head 

of the contract administration office’’ be 

added to DFARS 201.670(a). 

DoD response: DFARS 201.670(a) has 

been revised to specify that the 

appropriate agency authority may 

delegate contract administration 

functions to the cognizant contract 

administration office, in which case the 

contract administration office appoints 

the property administrators and plant 

clearance officers in writing. This 

language was formerly found at DFARS 

245.70. 

Comment: A respondent 

recommended that DFARS 252.245– 

70XX(i) be revised to make the 

contractor’s responsibility for 

compliance with export control law and 

regulations a ‘‘due diligence 

responsibility.’’ 

DoD Response: In the context of 

surplus sales, it is the buyer’s 

responsibility to adhere to export 

control laws and regulations. Therefore, 

the referenced paragraph has been 

deleted and a new paragraph (g) has 

been inserted to specify that disposition 

shall be in accordance with foreign and 

U.S. laws and regulations, including 

regulations involving export controls, 

host nation requirements, Final 

Governing Standards, and Governmentto-Government agreements, and that the 

contractor’s responsibility to comply 

with all applicable laws and regulations 

regarding export-controlled items exists 

independent of the information 

provided by the clause. The new 

language is consistent with the 

respondent’s recommendation and 

current DFARS language at 252.204– 

7008. 

B. Inventory Schedules 

Comment: A respondent stated that 

the requirement at DFARS 245.602–1 for 

‘‘obtaining bills of material and 

reviewing recent purchases, and stock 

record entries’’ is not a part of the 

disposal process. The respondent 

commented that these duties require the 

plant clearance officer to have a working 

knowledge of every contract and that 

the process will drive up costs. 

DoD Response: The proposed 

language at 245.602–1 exists today in 

the current DFARS at 245.7201. The 

proposed rule moved 245.7201 to 

subpart 245.6, and renamed the subpart 

Reporting, Reutilization, and Disposal, 

to conform with the FAR; however, the 

language at DFARS 245.602–1 has been 


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clarified to specify applicability only to 

termination inventory. 

Comment: In reference to DFARS 

245.602–1, Inventory disposal 

schedules, a respondent asked for 

guidance on when a physical count was 

required and suggested ways of 

addressing efficiency. 

DoD response: Generally, the 

Government relies on quantity data 

provided by the contractor, and physical 

counts are usually required only if the 

plant clearance officer suspects data 

integrity issues; however, 245.602–1(2) 

has been clarified to specify potential 

methods of verifying quantities. 

Comment: A respondent was 

concerned about the requirement at 

252.245–70XX(b)(1)(i)(A) and (B) to 

provide Federal Supply Codes (FSCs) 

and manufacturer name, because this 

information is not always available or 

known. 

DoD Response: The language at 

252.245–7004(b)(1)(i)(A) and (B) has 

been modified in the final rule to 

require the FSC and manufacturer name 

only if the information is assigned and/ 

or available. 

Comment: A respondent 

recommended that new definitions for 

the terms ‘‘manufacturer name’’ and 

‘‘manufacturer part number’’ be added 

at the clause at 252.245–70XX. 

DoD response: These terms are used 

commonly; therefore, they have not 

been added to the definitions section of 

the clause. 

Comment: In reference to 252.245– 

70XX(b), Inventory disposal schedules, 

a respondent recommended that the 

supplier name and part number be 

required for all items in Federal 

condition code A1 being reported as 

excess on inventory schedules. 

DoD Response: The respondent’s 

recommendation would require 

reprogramming of the Plant Clearance 

Automated Redistribution and 

Screening System (PCARSS). The cost of 

such reprogramming would largely 

offset the marginal increase in 

reutilization realized. 

C. Sales of Surplus Property 

Comment: In reference to 245.604–3, 

Sale of surplus property, a respondent 

suggested that risk-based techniques be 

used. For example, high value items 

should be treated differently, according 

to the respondent, from items with little 

potential for proceeds. 

DoD Response: The language at 

245.604–3(1) has been clarified to 

ensure that plant clearance officers 

consider the market potential of items 

prior to authorizing surplus sales and 

determine the best value sales approach. 

Comment: A respondent 

recommended that 252.245–70XX(c), be 

changed to read ‘‘net proceeds.’’ The 

respondent cited the Federal Property 

Administration Act of 1949, which 

states that a portion of the proceeds goes 

to the ‘‘cost of the work.’’ The 

respondent also claimed that paragraph 

(c) conflicts with FAR 31.201–5 and 

ASTM International standard 2279–09, 

Establishing the Guiding Principles of 

Property Management (costs of sales 

may outweigh the return). 

DoD response: The respondent’s 

recommendation implies that 

contractors are entitled to a share of 

sales proceeds to cover the contractor 

costs of conducting the sale. There is no 

basis for such policy or for otherwise 

directly reimbursing a contractor for 

costs incurred in conducting surplus 

property sales. Such action is a normal 

part of contractor responsibilities under 

the clause at FAR 52.245–1(b)(2). FAR 

31.201–5 pertains to income, rebates, 

allowances, or other credits made to 

allowable costs. Because surplus 

property sales are a normal part of a 

contractor’s property management 

responsibilities under the clause at FAR 

52.245–1(b)(2) and are typically 

provided by the contractor as an 

overhead function, FAR 31.201–5 has 

no application here. ASTM 

International standard 2279–09 is not 

germane to the issue of proper deposit 

of sales proceeds received under surplus 

sales. 

Comment: A respondent 

recommended that a certification 

statement or a standard form providing 

the terms and conditions of the sale 

between the Government and buyer be 

provided at 252.245–70XX(e). The 

respondent also asked what the 

expectation is here. 

DoD Response: The language exists 

today in 245.604. As indicated in the 

proposed rule, 245.604 has been 

updated and the language moved to the 

final rule clause at 252.245.70XX. Its 

requirements are an important policy 

safeguard to ensure the integrity of the 

surplus sales process. 

Comment: A respondent requested 

that the language at 252.245–70XX(l)(2) 

be changed as follows, ‘‘(t)he Contractor 

shall solicit a sufficient number of 

bidders to obtain adequate competition 

and use informal invitations for bid 

unless the plant clearance officer 

approves use of formal bid procedures.’’ 

DoD Response: The language, which 

has been revised and relocated to 

252.245–7004(j)(4), specifies that 

informal bid procedures shall be used 

unless the plant clearance officer directs 

otherwise. 

Comment: A respondent 

recommended that formal sales be 

considered a part of the Contract Data 

Requirements List (CDRL). 

DoD Response: There is no basis for 

such policy. Including this on the CDRL 

would make the Government liable for 

directly reimbursing a contractor for 

costs incurred in conducting surplus 

property sales. However, such expenses 

are a normal part of contractor 

responsibilities under FAR 52.245– 

1(b)(2) and are not subject to direct 

reimbursement. 

Comment: A respondent 

recommended removing the dollar 

threshold at 252.245–70XX(l)(6) and 

requiring the plant clearance officer, not 

the contractor, to send the sales notice 

to FedBizOps. 

DoD Response: The plant clearance 

officer, not the contractor, is the 

appropriate sender of the sales notice; 

therefore, the requirement has been 

deleted. A more general requirement on 

the use of FedBizOps has been included 

in the DFARS companion resource, 

Procedures, Guidance, and Information 

(PGI) for the plant clearance officer. 

Comment: A respondent 

recommended changing the second 

sentence of 252.245–70XX(e)(9)(7) to, 

‘‘(b)id openings will be submitted to the 

plant clearance officer, either 

electronically or manually, two copies 

of the bid abstract.’’ 

DoD Response: The language has been 

revised and relocated to paragraph (j)(8) 

of 252.245–7004, and clarifies that the 

contractor shall provide two copies of 

the bid abstract to the plant clearance 

officer. 

Comment: A respondent 

recommended deleting the phrase 

‘‘(f)orwarded to the plant clearance 

officer’’ from 252.245–70XX(c), 

Proceeds from sale of surplus inventory. 

DoD Response: The language at 

252.245–7004(c) has been clarified to 

require proceeds to be forwarded to the 

contracting officer or plant clearance 

officer, credited to the Government 

through a settlement agreement, 

credited to the contract, applied to the 

contract as directed by the contracting 

officer, or forwarded to the plant 

clearance officer unless otherwise 

provided for in the contract. 

Comment: In reference to 252.245– 

70XX (l), a respondent asked if plant 

clearance officers must draw up and 

provide terms and conditions for the 

contractor to use on surplus sales. The 

respondent also requested that terms 

and conditions be included in this 

clause. 

DoD Response: Contractors are 

required to use Government-provided 

sales terms and conditions. This is not 


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a new requirement. DCMA is leading an 

effort to revise and update the sales 

terms and conditions found today at 

245.7309. Once completed, and in 

coordination with the Services, the sales 

terms and conditions will be 

incorporated into the DFARS. It should 

be noted that sales terms and conditions 

specific to demilitarization, mutilation, 

and destruction will remain within the 

clause at 252.245–7004 due to the 

general sensitivity of demilitarization, 

mutilation, and destruction actions. 

D. Demilitarization, Mutilation, and 

Destruction 

Comment: A respondent 

recommended that 252.245–70XX(e)(8) 

be deleted in its entirety and that 

special conditions be placed into the 

PGI, including that the agency must 

provide direction and funding. 

DoD Response: It is incumbent upon 

the Government to provide the 

contractor, as part of contract terms and 

conditions, any demilitarization, 

mutilation, or destruction requirements 

(reference DoD 5000.2–R, paragraph 

C2.8.7., Demilitarization and Disposal 

Planning). No additional clarification is 

necessary. 

Comment: A respondent requested 

confirmation that the requirement to 

validate disposal of contractor inventory 

in foreign countries at paragraph (d) of 

the clause at 252.245–70XX is a 

Government responsibility. The 

respondent also asked if validation takes 

place when the plant clearance officer 

reviews and accepts the bid and 

whether DCMA International should get 

involved. The respondent recommended 

indicating who has the responsibility, 

specifying that State Department 

approval is required, and adding a 

certification statement to the SF 1428 

providing the validation to the 

contractor. 

DoD Response: The language at 

DFARS 252.245–70XX(d) pertaining to 

disposal of contractor inventory 

overseas has been removed from the 

final rule. DFARS 252.245–7004, 

paragraph (g), has been clarified to 

ensure that disposal of contractor 

inventory located overseas is governed 

by contract terms and conditions. 

Additionally, the DoD responsibilities 

contained in the PGI sufficiently 

address this issue. 

Comment: A respondent expressed 

concern that the language at DFARS 

252.245–70XX could be interpreted as 

requiring the contractor to determine 

the appropriate level of demilitarization 

required; the respondent suggested 

clarifying the intent. 

DoD Response: It is incumbent upon 

the Government to provide the 

contractor with, as part of contract terms 

and conditions, any demilitarization, 

mutilation, or destruction requirements 

(reference DoD 5000.2–R, paragraph 

C2.8.7., Demilitarization and Disposal 

Planning). No additional clarification is 

needed. 

E. Scrap Procedures 

Comment: A respondent 

recommended deleting DFARS 252.245– 

70XX(j)(1), Contractor with an approved 

scrap procedure, in its entirety because 

the scrap procedures are typically 

incorporated within the contractor’s 

property management system. 

DoD Response: DoD agrees that a 

separate approval of contractor scrap 

procedures is neither practical nor 

necessary; however, the basic minimum 

requirements of an adequate scrap 

procedure are integral to proper 

application of the clause. Accordingly, 

the language referring to scrap 

procedure approvals at DFARS 252.245– 

70XX(j)(1) has been deleted from the 

final rule; the remaining language has 

been retained at paragraph (h) of 

252.245–7004. 

Comment: In reference to DFARS 

252.245–70XX(j)(i)(ii), a respondent 

recommended retaining the current 

language found in DFARS 245.610– 

3(1)(iv)(B), as follows: ‘‘When 

commingling is approved, the net 

proceeds for contractors with an 

approved scrap procedure will ensure 

(that sales) proceeds are appropriately 

applied to an overhead account.’’ 

DoD Response: While the requirement 

is still relevant, it is a normal part of a 

property administrator’s oversight 

function; therefore, the language is more 

suitable to internal DoD component 

guidance, e.g., DCMA instructions. 

Comment: A respondent 

recommended deleting the requirement 

for a scrap warranty at DFARS 252.245– 

70XX(j)(3). 

DoD Response: The referenced 

language has been modified to allow 

Government discretion in requiring a 

scrap warranty. 

Comment: A respondent 

recommended moving the requirements 

of DFARS 252.245–70XX(k), Disposal of 

contractor inventory for NATO 

cooperative services, to DFARS part 245 

or providing clarification that its 

requirements are a Government 

responsibility. 

DoD Response: The language has been 

deleted from the final rule clause, as 

DoD support to NATO cooperative 

projects is already covered under 

DFARS 225.871. 

F. Other Changes 

1. Comment: A respondent identified 

‘‘untability’’ as a typographical error at 

DFARS 252.245–70XX(j)(1)(i). 

DoD Response: The term has been 

changed to ‘‘accountability.’’ 

2. Comment: A respondent stated that 

the proposed changes do a good job of 

cleaning up and consolidating the plant 

clearance process and that the new PGI 

for DFARS Case 2009–D008 also looks 

good. 

DoD Response: Noted. 

3. The following changes have been 

incorporated into the final rule based on 

internal DoD coordinations: 

• Deleted the reference to FAR 

52.245–2 at 245.107 because the FAR 

clause 52.245–2 is not a stand-alone 

clause and can only be used in 

conjunction with FAR 52.245–1; 

• Added clarifying language on 

property condition at 245.602–1(3); 

• Clarified that 245.602–1 applies 

only to termination inventory and that 

such inventory may be verified by 

appropriate technical personnel; 

• Added clarifying language at 

245.602–3 on disposition of contractor 

inventory in overseas locations; 

arrangement of inspection of property 

and security requirements; and 

consideration by the plant clearance 

officer of any special disposition 

requirements, such as demilitarization; 

and trade security requirements; 

• Added 245.7101–5(d), Other 

disposal actions, to conform to the DD 

Form 1641; 

• Added a caveat in the clause at 

252.245–7004(b)(1) to use the Plant 

Clearance Automated Reutilization 

Screening System unless disposition 

instructions are otherwise included in 

the contract; 

• Relocated paragraph (e) of the 

252.245 clause to paragraph (j) to better 

align language with actual process; 

• Deleted ‘‘Commerce control list’’ 

and ‘‘Munitions list items’’ from the 

definitions and added definitions of 

‘‘Export-controlled items’’ and 

‘‘Ineligible transferees’’ to the clause at 

252.245–7004(a); 

• Added the terms ‘‘mutilation/ 

destruction’’ and ‘‘mutilate/destroy,’’ as 

appropriate, after each instance of the 

term ‘‘demilitarization’’ for consistency 

with DoD policy; 

• Deleted supply condition codes 

from 252.245–7004(b)(1), and added a 

hyperlink to DoD 4000.25–2–M; 

• Added clarifying language for 

disposition of contractor inventory 

located in foreign countries to the clause 

at 252.245–7004; 

• Modified language at 252.245– 

7004(h)(2) to allow the plant clearance 


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officer discretion in requiring scrap 

warranties; 

• Added clarifying language at 

252.245–7004(j)(9)(i) on verification of 

demilitarization actions by Government 

representatives, including use of DRMS 

Form 145 or equivalent; and 

• Renumbered the DFARS text and 

clauses, as necessary. 

III. Executive Orders 12866 and 13563 

Executive Orders (E.O.s) 12866 and 

13563 direct agencies to assess all costs 

and benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). E.O. 13563 emphasizes the 

importance of quantifying both costs 

and benefits, of reducing costs, of 

harmonizing rules, and of promoting 

flexibility. This is a significant 

regulatory action and, therefore, was 

subject to review under section 6(b) of 

E.O. 12866, Regulatory Planning and 

Review, dated September 30, 1993. This 

rule is not a major rule under 5 U.S.C. 

804. 

IV. Regulatory Flexibility Act 

DoD certifies that this final rule will 

not have a significant economic impact 

on a substantial number of small entities 

within the meaning of the Regulatory 

Flexibility Act, 5 U.S.C. 601, et seq., 

because this final rule imposes no new 

requirements on small entities. The rule 

revises DFARS part 245, Government 

Property, to reflect the recent revisions 

to FAR part 45, Government Property. It 

makes no significant change to DoD 

policy for the management of 

Government property in the possession 

of contractors. No comments were 

received on the expected impact of this 

rule on small entities in response to 

publication of the proposed rule. 

V. Paperwork Reduction Act 

The information collection 

requirements of the Defense Federal 

Acquisition Regulation Supplement 

(DFARS) part 245, Government 

Property, related clauses in DFARS part 

252, and related forms in DFARS part 

253, have been approved by the Office 

of Management and Budget (OMB) 

under OMB Control Number 0704–0246. 

No new information collection 

requirements are imposed by this final 

rule. 

List of Subjects in 48 CFR Parts 201, 

245, and 252 

Government procurement. 

Ynette R. Shelkin, 

Editor, Defense Acquisition Regulations 

System. 

Therefore, 48 CFR parts 201, 245, and 

252 are amended as follows: 

■ 1. The authority citation for 48 CFR 

parts 201; 245, and 252 continues to 

read as follows: 

Authority: 41 U.S.C. 1303 and 48 CFR 

chapter 1. 

PART 201—FEDERAL ACQUISITION 

REGULATIONS SYSTEM 

■ 2. Add section 201.670 to read as 

follows: 

201.670 Appointment of property 

administrators and plant clearance officers. 

(a) The appropriate agency authority 

shall appoint or terminate (in writing) 

property administrators and plant 

clearance officers. 

(b) In appointing qualified property 

administrators and plant clearance 

officers, the appointing authority shall 

consider experience, training, 

education, business acumen, judgment, 

character, and ethics. 

PART 245—GOVERNMENT PROPERTY 

■ 3. Amend section 245.107 by adding 

paragraph (e) to read as follows: 

245.107 Contract clauses. 

* * * * * 

(d) Use the clause at 252.245–7004, 

Reporting, Reutilization, and Disposal, 

in solicitations and contracts that 

contain the clause at FAR 52.245–1, 

Government Property. 

■ 4. Add subpart 245.5, consisting of 

section 245.570, to read as follows: 

Subpart 245.5—Support Government 

Property Administration 

245.570 Storage at the Government’s 

expense. 

All storage contracts or agreements 

shall be separately priced and shall 

include all costs associated with the 

storage. 

■ 5. Revise subpart 245.6 to read as 

follows: 

Subpart 245.6—Reporting, 

Reutilization, and Disposal 

Sec. 

245.602 Reutilization of Government 

property. 

245.602–1 Inventory disposal schedules. 

245.602–3 Screening. 

245.602–70 Plant clearance procedures. 

245.604 Disposal of surplus property. 

245.604–3 Sale of surplus property. 

Subpart 245.6—Reporting, 

Reutilization, and Disposal 

245.602 Reutilization of Government 

property. 

245.602–1 Inventory disposal schedules. 

For termination inventory, plant 

clearance officers shall verify inventory 

schedules, either directly or through 

appropriate technical personnel, to 

determine the following: 

(a) Allocability. 

(1) Review contract requirements, 

delivery schedules, bills of material, and 

other pertinent documents to determine 

whether schedules include property 

that— 

(i) Is appropriate for use on the 

contract; or 

(ii) Exceeds the quantity required for 

completion of the contract, but could be 

diverted to other commercial work or 

Government use. 

(2) Review the contractor’s— 

(i) Recent purchases of similar 

material; 

(ii) Plans for current and scheduled 

production; 

(iii) Stock record entries; and 

(iv) Bills of material for similar items. 

(b) Quantity. Take measures to 

provide assurance that available 

inventory is in accordance with 

quantities listed on the inventory 

schedules. Quantities may be verified by 

actual item count, acceptance of labeled 

quantities in unopened/sealed packages, 

scale counts, or other appropriate 

methods. 

(c) Condition. Ensure that the physical 

condition of the property is reasonably 

consistent with the Federal Condition 

Code supplied by the contractor. 

245.602–3 Screening. 

Property will be screened DoD-wide, 

including the contracting agency, 

requiring agency, and, as appropriate, 

the General Services Administration. 

The requiring agency shall have priority 

for retention of listed items. All required 

screening must be completed before any 

sale of contractor inventory, including 

contractor inventory in overseas 

locations (foreign excess personal 

property) can take place. Upon request 

of the prospective reutilization, transfer, 

donation, or sales customer, the plant 

clearance officer shall arrange for 

inspection of property at the 

contractor’s plant in such a manner as 

to avoid interruption of the contractor’s 

operations, and consistent with any 

security requirements. 


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245.602–70 Plant clearance procedures. 

Follow the procedures at PGI 

245.602–70 for establishing and 

processing a plant clearance case. 

245.604 Disposal of surplus property. 

245.604–3 Sale of surplus property. 

(a) Plant clearance officers shall 

determine a best value sales approach 

(formal or informal sales), to include 

due consideration for costs, risks, and 

benefits, e.g., potential sales proceeds. 

(b) Informal bid procedures. The plant 

clearance officer may direct the 

contractor to issue informal invitations 

for bid (orally, telephonically, or by 

other informal media), provided— 

(1) Maximum practical competition is 

obtained; 

(2) Sources solicited are recorded; and 

(3) Informal bids are confirmed in 

writing. 

(c) Sale approval and award. Plant 

clearance officers shall— 

(1) Evaluate bids to establish that the 

sale price is fair and reasonable, taking 

into consideration— 

(i) Knowledge or tests of the market; 

(ii) Current published prices for the 

property; 

(iii) The nature, condition, quantity, 

and location of the property; and 

(iv) Past sale history for like or similar 

items; 

(2) Approve award to the responsible 

bidder whose bid is most advantageous 

to the Government. The plant clearance 

officer shall not approve award to any 

bidder who is an ineligible transferee, as 

defined in 252.245–7004, Reporting, 

Reutilization, and Disposal; and 

(3) Notify the contractor of the bidder 

to whom an award will be made within 

five working days from receipt of bids. 

(d) Noncompetitive sales. 

(1) Noncompetitive sales include 

purchases or retention at less than cost 

by the contractor. Noncompetitive sales 

may be made when— 

(i) The plant clearance officer 

determines that this method is essential 

to expeditious plant clearance; and 

(ii) The Government’s interests are 

adequately protected. 

(2) Noncompetitive sales shall be at 

fair and reasonable prices, not less than 

those reasonably expected under 

competitive sales. 

(3) Conditions justifying 

noncompetitive sales are— 

(i) No acceptable bids are received 

under competitive sale; 

(ii) Anticipated sales proceeds do not 

warrant competitive sale; 

(iii) Specialized nature of the property 

would not create bidder interest; 

(iv) Removal of the property would 

reduce its value or result in 

disproportionate handling expenses; or 

(v) Such action is essential to the 

Government’s interests. 

(e) Plant clearance officers shall 

consider any special disposal 

requirements such as demilitarization or 

trade security control requirements in 

accordance with DoDM 4160.28–M, 

Defense Demilitarization Manual, and 

DoDI 2030.08, Implementation of Trade 

Security Controls, respectively (See PGI 

245.6).] 

Subpart 245.70—[Removed] 

■ 6. Remove subpart 245.70. 

Subpart 245.71—[Redesignated as 

Subpart 245.70] 

■ 7a. Redesignate subpart 245.71 as 

subpart 245.70. 

■ 7b. Revise newly redesignated subpart 

245.70 to read as follows: 

Subpart 245.70—Plant Clearance 

Forms 

Sec. 

245.7001 Forms. 

245.7001–1 Standard Form 97, Certificate of 

Release of a Motor Vehicle (Agency 

Record Copy). 

245.7001–2 DD Form 1149, Requisition and 

Invoice Shipping Document. 

245.7001–3 DD Form 1348–1, DoD Single 

Line Item Release/Receipt Document. 

245.7001–4 DD Form 1640, Request for 

Plant Clearance. 

245.7001–5 DD Form 1641, Disposal 

Determination/Approval. 

245.7001–6 Defense Logistics Agency Form 

1822, End Use Certificate. 

Subpart 245.70—Plant Clearance 

Forms 

245.7001 Forms. 

Use the forms listed below in 

performance of plant clearance actions. 

245.7001–1 Standard Form 97, Certificate 

of Release of a Motor Vehicle (Agency 

Record Copy). 

Use for transfers, donations, and sales 

of motor vehicles. The contracting 

officer shall execute the SF 97 and 

furnish it to the purchaser. 

245.7001–2 DD Form 1149, Requisition 

and Invoice Shipping Document. 

Use for transfer and donation of 

contractor inventory. 

245.7001–3 DD Form 1348–1, DoD Single 

Line Item Release/Receipt Document. 

Use when authorized by the plant 

clearance officer. 

245.7001–4 DD Form 1640, Request for 

Plant Clearance. 

Use to request plant clearance 

assistance or transfer plant clearance. 

245.7001–5 DD Form 1641, Disposal 

Determination/Approval. 

Use to record rationale for the 

following disposal determinations: 

(a) Downgrade useable property to 

scrap. 

(b) Abandonment or destruction. 

(c) Noncompetitive sale of surplus 

property. 

(d) Other disposal actions. 

245.7001–6, DD Form 1822, End Use 

Certificate. 

Use when directed by the plant 

clearance officer. 

Subpart 245.72—[Removed] 

■ 8. Subpart 245.72 is removed. 

Subpart 245.73—[Removed] 

■ 9. Subpart 245.73 is removed. 

PART 252—SOLICITATION 

PROVISIONS AND CONTRACT 

CLAUSES 

■ 10. Add section 252.245–7004 to read 

as follows: 

252.245–7004 Reporting, Reutilization, and 

Disposal. 

As prescribed in 245.107(e), use the 

following clause: 

REPORTING, REUTILIZATION, AND 

DISPOSAL (AUG 2011) 

(a) Definitions. As used in this clause— 

(1) Demilitarization means the act of 

eliminating the functional capabilities and 

inherent military design features from DoD 

personal property. Methods and degree range 

from removal and destruction of critical 

features to total destruction by cutting, 

tearing, crushing, mangling, shredding, 

melting, burning, etc. 

(2) Export-controlled items means items 

subject to the Export Administration 

Regulations (EAR) (15 CFR parts 730–774) or 

the International Traffic in Arms Regulations 

(ITAR) (22 CFR parts 120–130). The term 

includes— 

(i) Defense items, defined in the Arms 

Export Control Act, 22 U.S.C. 2778(j)(4)(A), 

as defense articles, defense services, and 

related technical data, etc.; and 

(ii) Items, defined in the EAR as 

‘‘commodities,’’ ‘‘software,’’ and 

‘‘technology,’’ terms that are also defined in 

the EAR, 15 CFR 772.1. 

(3) Ineligible transferees means 

individuals, entities, or countries— 

(i) Excluded from Federal programs by the 

General Services Administration as identified 

in the Excluded Parties Listing System 

(EPLS) (https://www.epls.gov/); 

(ii) Delinquent on obligations to the U.S. 

Government under surplus sales contracts; 

(iii) Designated by the Department of 

Defense as ineligible, debarred, or suspended 

from defense contracts; or 

(iv) Subject to denial, debarment, or other 

sanctions under export control laws and 

related laws and regulations, and orders 


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52144 Federal Register / Vol. 76, No. 161 / Friday, August 19, 2011 / Rules and Regulations 

administered by the Department of State, the 

Department of Commerce, the Department of 

Homeland Security, or the Department of the 

Treasury. 

(4) Scrap means property that has no value 

except for its basic material content. For 

purposes of demilitarization, scrap is defined 

as recyclable waste and discarded materials 

derived from items that have been rendered 

useless beyond repair, rehabilitation, or 

restoration such that the item’s original 

identity, utility, form, fit, and function have 

been destroyed. Items can be classified as 

scrap if processed by cutting, tearing, 

crushing, mangling, shredding, or melting. 

Intact or recognizable components and parts 

are not ‘‘scrap.’’ 

(5) Serviceable or usable property means 

property with potential for reutilization or 

sale ‘‘as is’’ or with minor repairs or 

alterations. 

(b) Inventory disposal schedules. Unless 

disposition instructions are otherwise 

included in this contract, the Contractor shall 

complete SF 1428, Inventory Schedule B, 

within the Plant Clearance Automated 

Reutilization Screening System (PCARSS). 

Information on PCARSS can be obtained 

from the plant clearance officer and at 

http://www.dcma.mil/ITCSO/CBT/PCARSS/ 

index.cfm. 

(1) The SF 1428 shall contain the 

following: 

(i) If known, the applicable Federal Supply 

Code (FSC) for all items, except items in 

scrap condition. 

(ii) If known, the manufacturer name for all 

aircraft components under Federal Supply 

Group (FSG) 16 or 17 and FSCs 2620, 2810, 

2915, 2925, 2935, 2945, 2995, 4920, 5821, 

5826, 5841, 6340, and 6615. 

(iii) The manufacturer name, make, model 

number, model year, and serial number for 

all aircraft under FSCs 1510 and 1520. 

(iv) Appropriate Federal Condition Codes. 

See Appendix 2 of DoD 4000.25–2, Military 

Standard Transaction Reporting and 

Accounting Procedures manual, edition in 

effect as of the date of this contract. 

Information on Federal Condition Codes can 

be obtained at http://www.DLA.Mil/J–6/ 

DLMSO/Elibrary/Manuals/Milstrap/ 

AP2_Index.asp. 

(2) If the schedules are acceptable, the 

plant clearance officer shall complete and 

send the Contractor a DD Form 1637, Notice 

of Acceptance of Inventory. 

(c) Proceeds from sales of surplus property. 

Unless otherwise provided in the contract, 

the proceeds of any sale, purchase, or 

retention shall be— 

(1) Forwarded to the Contracting Officer; 

(2) Credited to the Government as part of 

the settlement agreement; 

(3) Credited to the price or cost of the 

contract; or 

(4) Applied as otherwise directed by the 

Contracting Officer. 

(d) Demilitarization, mutilation, and 

destruction. If demilitarization, mutilation, or 

destruction of contractor inventory is 

required, the Contractor shall demilitarize, 

mutilate, or destroy contractor inventory, in 

accordance with the terms and conditions of 

the contract and consistent with Defense 

Demilitarization Manual, DoDM 4160.28–M, 

edition in effect as of the date of this 

contract. The plant clearance officer may 

authorize the purchaser to demilitarize, 

mutilate, or destroy as a condition of sale 

provided the property is not inherently 

dangerous to public health and safety. 

(e) Classified Contractor inventory. The 

Contractor shall dispose of classified 

contractor inventory in accordance with 

applicable security guides and regulations or 

as directed by the Contracting Officer. 

(f) Inherently dangerous Contractor 

inventory. Contractor inventory dangerous to 

public health or safety shall not be disposed 

of unless rendered innocuous or until 

adequate safeguards are provided. 

(g) Contractor inventory located in foreign 

countries. Consistent with contract terms and 

conditions, property disposition shall be in 

accordance with foreign and U.S. laws and 

regulations, including laws and regulations 

involving export controls, host nation 

requirements, Final Governing Standards, 

and Government-to-Government agreements. 

The Contractor’s responsibility to comply 

with all applicable laws and regulations 

regarding export-controlled items exists 

independent of, and is not established or 

limited by, the information provided by this 

clause. 

(h) Disposal of scrap. (1) Contractor with 

scrap procedures. (i) The Contractor shall 

include within its property management 

procedure, a process for the accountability 

and management of Government-owned 

scrap. The process shall, at a minimum, 

provide for the effective and efficient 

disposition of scrap, including sales to scrap 

dealers, so as to minimize costs, maximize 

sales proceeds, and, contain the necessary 

internal controls for mitigating the improper 

release of non-scrap property. 

(ii) The Contractor may commingle 

Government and contractor-owned scrap and 

provide routine disposal of scrap, with plant 

clearance officer concurrence, when 

determined to be effective and efficient. 

(2) Scrap warranty. The plant clearance 

officer may require the Contractor to secure 

from scrap buyers a DD Form 1639, Scrap 

Warranty. 

(i) Sale of surplus Contractor inventory. 

(1) The Contractor shall conduct sales of 

contractor inventory (both useable property 

and scrap) in accordance with the 

requirements of this contract and plant 

clearance officer direction. 

(2) Any sales contracts or other documents 

transferring title shall include the following 

statement: 

‘‘The Purchaser certifies that the property 

covered by this contract will be used in 

(name of country). In the event of resale or 

export by the Purchaser of any of the 

property, the Purchaser agrees to obtain the 

appropriate U.S. and foreign export or reexport license approval.’’ 

(j) Restrictions on purchase or retention of 

Contractor inventory. (1) The Contractor may 

not knowingly sell the inventory to any 

person or that person’s agent, employee, or 

household member if that person— 

(i) Is a civilian employee of the DoD or the 

U.S. Coast Guard; 

(ii) Is a member of the armed forces of the 

United States, including the U.S. Coast 

Guard; or 

(iii) Has any functional or supervisory 

responsibilities for or within the DoD’s 

property disposal/disposition or plant 

clearance programs or for the disposal of 

contractor inventory. 

(2) The Contractor may conduct Internetbased sales, to include use of a third party. 

(3) If the Contractor wishes to bid on the 

sale, the Contractor or its employees shall 

submit bids to the plant clearance officer 

prior to soliciting bids from other prospective 

bidders. 

(4) The Contractor shall solicit a sufficient 

number of bidders to obtain adequate 

competition. Informal bid procedures shall 

be used, unless the plant clearance officer 

directs otherwise. The Contractor shall 

include in its invitation for bids, the sales 

terms and conditions provided by the plant 

clearance officer. 

(5) The Contractor shall solicit bids at least 

15 calendar days before bid opening to allow 

adequate opportunity to inspect the property 

and prepare bids. 

(6) For large sales, the Contractor may use 

summary lists of items offered as bid sheets 

with detailed descriptions attached. 

(7) In addition to mailing or delivering 

notice of the proposed sale to prospective 

bidders, the Contractor may (when the results 

are expected to justify the additional 

expense) display a notice of the proposed 

sale in appropriate public places, e.g., 

publish a sales notice on the Internet in 

appropriate trade journals or magazines and 

local newspapers. 

(8) The plant clearance officer or 

representative will witness the bid opening. 

The Contractor shall submit, either 

electronically or manually, two copies of the 

bid abstract. 

(9) The following terms and conditions 

shall be included in sales contracts involving 

the demilitarization, mutilation, or 

destruction of property: 

(i) Demilitarization, mutilation, or 

destruction on Contractor or subcontractor 

premises. Item(s) ll require 

demilitarization, mutilation, or destruction 

by the Purchaser. Insert item number(s) and 

specific demilitarization, mutilation, or 

destruction requirements for item(s) shown 

in Defense Demilitarization Manual, DoDM 

4160.28–M, edition in effect as of the date of 

this contract. Demilitarization shall be 

witnessed and verified by a Government 

representative using DRMS Form 145 or 

equivalent. 

(ii) Demilitarization, mutilation, or 

destruction off Contractor or subcontractor 

premises. 

(A) Item(s) ll require demilitarization, 

mutilation, or destruction by the Purchaser. 

Insert item number(s) and specific 

demilitarization, mutilation, or destruction 

requirements for item(s) shown in Defense 

Demilitarization Manual, DoDM 4160.28–M, 

edition in effect as of the date of this 

contract. Demilitarization shall be witnessed 

and verified by a Government representative 

using DRMS Form 145 or equivalent. 

(B) Property requiring demilitarization 

shall not be removed, and title shall not pass 

to the Purchaser, until demilitarization has 

been accomplished and verified by a 

Government representative. Demilitarization 


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Federal Register / Vol. 76, No. 161 / Friday, August 19, 2011 / Rules and Regulations 52145 

will be accomplished as specified in the sales 

contract. Demilitarization shall be witnessed 

and verified by a Government representative 

using DRMS Form 145 or equivalent. 

(C) The Purchaser agrees to assume all 

costs incident to the demilitarization and to 

restore the working area to its present 

condition after removing the demilitarized 

property. 

(iii) Failure to demilitarize. If the Purchaser 

fails to demilitarize, mutilate, or destroy the 

property as specified in the contract, the 

Contractor may, upon giving 10 days written 

notice from date of mailing to the 

Purchaser— 

(A) Repossess, demilitarize, and return the 

property to the Purchaser, in which case the 

Purchaser hereby agrees to pay to the 

Contractor, prior to the return of the 

property, all costs incurred by the Contractor 

in repossessing, demilitarizing, and returning 

the property; 

(B) Repossess, demilitarize, and resell the 

property, and charge the defaulting Purchaser 

with all costs incurred by the Contractor. The 

Contractor shall deduct these costs from the 

purchase price and refund the balance of the 

purchase price, if any, to the Purchaser. In 

the event the costs exceed the purchase price, 

the defaulting Purchaser hereby agrees to pay 

these costs to the Contractor; or 

(C) Repossess and resell the property under 

similar terms and conditions. In the event 

this option is exercised, the Contractor shall 

charge the defaulting Purchaser with all costs 

incurred by the Contractor. The Contractor 

shall deduct these costs from the original 

purchase price and refund the balance of the 

purchase price, if any, to the defaulting 

Purchaser. Should the excess costs to the 

Contractor exceed the purchase price, the 

defaulting Purchaser hereby agrees to pay 

these costs to the Contractor. 

(End of clause) 

[FR Doc. 2011–20530 Filed 8–18–11; 8:45 am] 

BILLING CODE 5001–08–P 


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