[Federal Register Volume 88, Number 245 (Friday, December 22, 2023)]
[Rules and Regulations]
[Pages 88533-88539]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-27939]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 211, 212, 245, and 252

[Docket DARS-2023-0017]
RIN 0750-AL14


Defense Federal Acquisition Regulation Supplement: Consolidation 
of DoD Government Property Clauses (DFARS Case 2020-D029)

AGENCY: Defense Acquisition Regulations System, Department of Defense 
(DoD).

ACTION: Final rule.

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SUMMARY: DoD is issuing a final rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to consolidate existing 
contract clauses for the management and reporting of Government 
property into a single contract clause. The final rule also replaces 
references to legacy software applications used for reporting 
Government property within the DoD enterprise-wide eBusiness platform, 
and converts existing form-based processes into electronic processes 
within that platform.

DATES: Effective January 22, 2024.

FOR FURTHER INFORMATION CONTACT: Heather Kitchens, telephone 571-296-
7152.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD published a proposed rule in the Federal Register at 88 FR 
25600 on April 27, 2023, to amend the DFARS to consolidate contract 
clauses related to management and reporting of Government property, 
update references to certain forms that are being incorporated into 
electronic processes, and update references to applications used to 
report receipt, shipment, transfer, or loss of Government property, or 
excess Government property. DoD developed the Government-Furnished 
Property (GFP) module within the Procurement Integrated Enterprise 
Environment (PIEE) to house the GFP life-cycle reporting requirements 
to provide end-to-end accountability for all GFP transactions within a 
single, secure, integrated system, while employing enhancements in 
technology to reduce burden on the public and the Government. The final 
rule creates a new consolidated clause at DFARS 252.245-7005, 
Management and Reporting of Government Property, and removes and 
reserves the following DFARS clauses:

[[Page 88534]]

    <bullet> 252.211-7007, Reporting of Government-Furnished Property.
    <bullet> 252.245-7001, Tagging, Labeling, and Marking of 
Government-furnished Property.
    <bullet> 252.245-7002, Reporting Loss of Government Property.
    <bullet> 252.245-7004, Reporting, Reutilization, and Disposal.
    Four respondents submitted public comments in response to the 
proposed rule.

II. Discussion and Analysis

    DoD reviewed the public comments in the development of the final 
rule. Public comments from three respondents were unrelated to the 
rule, and therefore were not considered in the development of the final 
rule. A discussion of the respondent's comments and the changes made to 
the rule, as a result of those comments, is provided as follows:

A. Summary of Significant Changes From the Proposed Rule

    The term ``physical'' was removed from the requirement to report 
receipt of GFP. The discussion of workmanship errors was removed from 
the requirement to report loss of property. The seven-day reporting 
requirement for loss was removed, thereby defaulting to the timeframe 
identified in the clause at Federal Acquisition Regulation (FAR) 
52.245-1, Government Property. Marking of GFP was clarified by stating 
it is only applicable to items being repaired by a contractor. Outdated 
weblinks were revised.

B. Analysis of Public Comments

1. Marking Government-Furnished Property
    Comment: The respondent questioned why the proposed rule creates a 
new requirement for marking equipment.
    Response: DFARS clause 252.245-7001 Tagging, Labeling, and Marking 
of Government-Furnished Property, requires contractors to mark all 
Government-furnished property that is identified as serially managed 
and has not been previously marked. The consolidated clause, DFARS 
252.245-7005, reduces that requirement to only mark items that are 
identified as serially managed, where the contractor has access to the 
technical data and the technical data indicates a marking requirement. 
To further restrict the application of this requirement, the language 
has been modified to clarify that the marking requirement only applies 
to serially managed items being repaired by the contractor, where the 
contractor has access to the technical data and the technical data 
requires marking. DFARS clause 252.245-7001 is removed and reserved by 
this final rule.
    Comment: The respondent questioned why the term ``technical 
drawings'' does not include technical data in other media and stated 
that the term may be misinterpreted. The respondent expressed concern 
that the requirement could be misinterpreted as requiring contractors 
to have technical data packages on all GFP.
    Response: The final rule retains the term ``technical drawing'' in 
paragraph (d) of the new clause at DFARS 252.245-7005. This term 
reflects the Government's needs and is more limited in scope that other 
terms such as ``technical data'' or ``technical data package.'' In 
addition, restricting this requirement to items the contractor is 
repairing eliminates the opportunity to misinterpret the requirement 
and to potentially apply it to a broader scope than intended.
    Comment: The respondent asked for clarification if an item has been 
marked but not registered, and if that is a new requirement.
    Response: As noted above, the requirement for marking items is an 
existing requirement. In this final rule, marking has been limited to 
repairs, where the technical drawing requires marking and registration 
of the item, and therefore has limited and specific applicability.
2. Misinterpretation of DFARS PGI
    Comment: The respondent commented on marking contractor acquired 
property (CAP) when it is delivered. The comments identified that the 
statement in DFARS PGI 245.402-71(3)(iii) on the delivery of 
contractor-acquired property, ``Contractor-acquired property items 
shall be marked as required by DFARS clause 252.211-7003'', was 
interpreted to require marking of CAP at delivery.
    Response: While DFARS PGI 245.402-71(3)(iii) is not part of DFARS 
Case 2020-D029, the reference to DFARS clause 252.211-7003, Item Unique 
Identification and Valuation, is correct. DFARS clause 252.211-7003 is 
required ``. . . in solicitations and contracts, including 
solicitations and contracts using FAR part 12 procedures for the 
acquisition of commercial products and commercial services, for 
supplies, and for services involving the furnishing of supplies. . . 
.'' This would include where line items are established for the 
delivery of CAP. It is the presence of the clause 252.211-7003 that may 
require the marking of CAP at delivery.
    Comment: The respondent inquired why there is no existing 
requirement to report or mark items shipped-in-place.
    Response: DFARS clause 252.211-7003 identifies the criteria for 
marking and requires reporting the receipt of all Government-furnished 
property. The clause does not provide an exception or exclusion for 
property shipped-in-place. If an item requires marking under the 
clause, the marking is required regardless of the shipping destination.
3. Data Elements
    Comment: The respondent stated the rule creates a ``proxy'' 
National Stock Number where it states one of the data elements is ``(1) 
National stock number (NSN).'' The respondent asked if an NSN is not 
available, if it is appropriate to use either the combination of 
manufacturer's CAGE code and part number, or model number.
    Response: DFARS 252.245-7005 includes more specific details of the 
requirement in FAR 52.245-1 that the contractor's property records 
contain ``The name, part number and description, National Stock Number 
(if needed for additional item identification tracking and/or 
disposition), and other data elements as necessary and required in 
accordance with the terms and conditions of the contract.'' It is not 
creating a proxy but indicates a preference for when the National Stock 
Number is used and identifies the alternatives, when it is not.
    Comment: The respondent stated that sometimes serially managed 
assets are received without serial numbers, and therefore instructions 
should be provided that the serial number is not mandatory.
    Response: The requirement relates to the ability of the 
contractor's system to capture data when they create records. The 
requirement is that the contractor records be able to record serial 
numbers for serially managed items when a unique item identifier (UII) 
is not present, not that a serial number is mandatory in all cases.
4. Reporting Consumption of Serially Managed Assets
    Comment: The respondent inquired as to why reporting of serially 
managed assets occurs when consumed into higher-level components as a 
new requirement.
    Response: This is not a new requirement as the DFARS clause 
252.211-7007 required the reporting of serially managed items when they 
are ``Consumed or expended, reasonably and properly, or otherwise 
accounted for, in the performance of the contract

[[Page 88535]]

as determined by the Government property administrator, including 
reasonable inventory adjustments.'' DFARS clause 252.245-7005 also 
requires reporting when serially-managed items of GFP are incorporated 
into a higher-level component, assembly, or end item.
5. Physical Receipt
    Comment: The respondent stated that the term ``physical'' receipt 
is confusing as receipt may be virtual for property transferred in 
place or received by a subcontractor on behalf of the contractor.
    Response: The term physical has been removed in the final rule.
6. Reporting Transfer of GFP
    Comment: The respondent took exception to the requirement to report 
the transfer of property between contracts, both in the proposed rule 
and DFARS clause 252.211-7007, as the transfer of property between 
contracts should be done by the Government through modification.
    Response: FAR 45.106 and DFARS PGI 245.103-71 both require a 
contract modification to transfer the accountability of property 
between contracts. FAR 45.106 states that once transferred the property 
becomes Government-furnished property on the new contract. Just as the 
Government listing the property in the contract does not show receipt 
of the property, the contract modification does not reflect any 
physical or virtual updates to the contractor records to reflect the 
change in accountability. The contractor reporting of transfers at 
DFARS 252.245-7005(b)(ii) shows that the action required by the 
modification changing accountability is complete as required to enable 
accurate accountability of assets. This is not a change from the clause 
252.211-7007.
7. Reporting Through Commercial Asset Visibility
    Comment: The respondent questioned whether there is duplication 
between the requirements of the proposed rule (and the DFARS clause 
252.211-7007) with requirements to report to the Commercial Asset 
Visibility System (CAV). CAV is a system used by the Department of the 
Navy to track assets during the repair process. The recommendation is 
made that reporting reparables should be removed from this case in 
favor of new rulemaking.
    Response: The respondent's recommendation is not accepted. CAV 
reporting covers a specific organization's reporting requirements that 
include reporting not covered by the proposed rule and excludes 
reporting required on all Government property. FAR clause 52.245-1, at 
paragraphs (f)(1)(iii) and (vi), identifies that there will be contract 
specific reporting requirements. Including contract specific reporting 
requirements, however, does not eliminate DoD's need for standard 
reporting for all GFP. DoD has created significant efficiencies and 
reduced the burden on contractors by incorporating multiple legacy 
tools into the PIEE GFP Module. This rule advances the process of 
creating standard Government property reporting, and DoD continues to 
reduce duplicative reporting where practical.
8. Timeframe for Reporting
    Comment: The respondent inquired as to whether creating a standard 
timeframe for reporting is arbitrary and will increase the cost of 
compliance.
    Response: The data reported on Government property is used for 
numerous purposes by multiple functional communities including finance, 
logistics, asset managers, and acquisition. These stakeholders were 
involved in the drafting of the proposed rule. The seven-day standard 
represents a time that supports their needs for timely information and 
minimizes the need for contract specific reporting or timeframes. The 
establishment of a timeframe does not increase the volume of what will 
be reported or the time it takes to report each action, and therefore 
should have no impact on the public burden compared to the previous 
requirement. To minimize the impact on contractors, reporting of loss 
has been removed from the seven-day reporting requirement so that any 
action with an established timeframe in FAR clause 52.245-1 will use 
the existing FAR timeframe.
9. Reporting of Loss Can Be Misinterpreted
    Comment: The respondent inquired whether the statement ``Unless 
otherwise provided for in this contract, this requirement applies to a 
loss of GFP that results from damage that occurs during work in process 
(e.g., workmanship errors)'' will be subject to misinterpretation and 
does not consider long-standing industry processes.
    Response: The statement has been removed from the final rule to 
avoid the possibility of misinterpretation.
10. Economic Burden of Rule
    Comment: The respondent disagreed with the statement that DoD does 
not expect the proposed rule to 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 the rule is 
not creating any new requirements for contractors.
    Response: The items identified as new requirements by the 
respondent in prior comments are requirements in the existing contract 
clauses. Many of those requirements have been simplified or reduced in 
the final rule to reduce the impact on contractors. The improvements in 
automation and the standardization of business processes in this rule 
are expected to substantially reduce the burden on industry.
11. Use of Hyperlinks
    Comment: The respondent expressed concern for the practice of 
including hyperlinks to documents within policy.
    Response: Hyperlinks in the rule were reviewed for accuracy and 
relevance as follows: (1) SAM.GOV as an authoritative Government 
source; (2) the Procurement Integrated Enterprise Environment (PIEE) to 
provide access to the GFP Module, the required application for 
reporting; and (3) the Defense Logistics Standards Manual to provide 
ready access to supply condition code information. These links are 
beneficial to contractors who will need to execute the requirements of 
DFARS clause 252.245-7005.
12. Request for Additional Rulemaking
    Comment: The respondent inquired if the Department should provide 
instruction on reporting of embedded items removed during repair.
    Response: Reporting of embedded items during repair is based on the 
requirements of the contract and the GFP attachment. The request for 
policy clarification will be reviewed and may be subject to future 
rulemaking.

C. Other Changes

    The final rule adds a clarification that the IUID Registry is to be 
used for the purpose of verifying whether a marked item had been 
registered.

III. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold (SAT), for Commercial Products (Including Commercially 
Available Off-the-Shelf (COTS) Items), and for Commercial Services

    This final rule creates a new DFARS contract clause 252.245-7XXX, 
Management and Reporting of Government Property. DFARS 252.245-7XXX is 
prescribed at DFARS 245.107(4) for use in solicitations and contracts 
containing the clause at FAR 52.245-1, Government Property. DFARS 
252.245-7XXX is applicable to acquisitions at or below the SAT and to

[[Page 88536]]

acquisitions of commercial products and commercial services, when the 
contract contains the clause at FAR 52.245-1. For DoD, the FAR clause 
52.245-1 is required to be used in all purchase orders for repair, 
maintenance, overhaul, or modification of Government property 
regardless of the unit acquisition cost of the items to be repaired. 
These types of purchase orders are likely to fall under the SAT. Not 
applying this clause to contracts below the SAT and for the acquisition 
of commercial products, including COTS items, and commercial services 
would exclude contracts intended to be covered by this rule and 
undermine the overarching purpose of the rule. Consequently, DoD is 
applying the rule to contracts at or below the SAT, for the acquisition 
of commercial products including COTS items, and for the acquisition of 
commercial services.

IV. Expected Impact of the Rule

    The final rule consolidates the requirements for Government 
property reporting from multiple DFARS contract clauses into a single 
DFARS clause, reflecting the move of this activity into a single 
integrated eBusiness platform. This change will improve the ability of 
contractors and the Government to access and use the data across the 
Government property life cycle. The technical enhancements of the PIEE 
GFP Module allow for importing data, which will substantially reduce 
the reporting burden on DoD contractors while improving the accuracy of 
information. The PIEE GFP Module further enables DoD to consolidate and 
electronically share data about Government property in the possession 
of contractors, thereby improving accountability and auditability.

V. 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 not a significant regulatory action and, therefore, was not 
subject to review under section 6(b) of E.O. 12866, Regulatory Planning 
and Review, as amended.

VI. Congressional Review Act

    As required by the Congressional Review Act (5 U.S.C. 801-808) 
before an interim or final rule takes effect, DoD will submit a copy of 
the interim or final rule with the form, Submission of Federal Rules 
under the Congressional Review Act, to the U.S. Senate, the U.S. House 
of Representatives, and the Comptroller General of the United States. A 
major rule under the Congressional Review Act cannot take effect until 
60 days after it is published in the Federal Register. The Office of 
Information and Regulatory Affairs has determined that this rule is not 
a major rule as defined by 5 U.S.C. 804.

VII. Regulatory Flexibility Act

    A final regulatory flexibility analysis has been prepared 
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., 
and is summarized as follows:
    DoD is amending the Defense Federal Acquisition Regulation 
Supplement (DFARS) to consolidate existing contract clauses for the 
management and reporting of Government property into a single DFARS 
clause, eliminate some form-based reporting by providing an electronic 
equivalent, and replace references to legacy software applications used 
for the reporting of Government property with updated language 
directing the Government and contractors to utilize the Procurement 
Integrated Enterprise Environment (PIEE) Government-furnished property 
(GFP) Module within the DoD enterprise-wide eBusiness platform. DoD 
developed the GFP module within the PIEE to house the GFP life-cycle 
reporting requirements, thus providing end-to-end accountability for 
all GFP transactions within a single, secure, integrated system. Use of 
the PIEE GFP Module capitalizes on technological enhancements and 
reduces burden on the public and the Government.
    The objective of the rule is to create more efficient instructions 
for reporting Government property by consolidating reporting 
requirements for Government property. The rule transitions instructions 
for property reporting from multiple stand-alone, legacy software 
applications to the PIEE GFP Module, a fully integrated, DoD 
enterprise-wide eBusiness platform. Use of the new system functionality 
will enable DoD to address numerous audit findings and security 
concerns. The legal basis for the rule is 41 U.S.C. 1303.
    No comments were received in response to the initial regulatory 
flexibility analysis.
    This rule will likely affect some small business concerns that are 
provided Government-furnished property in the performance of their 
contracts. Data generated from the Federal Procurement Data System for 
fiscal years 2019 through 2021 indicates that, on average, 2,022 unique 
small entities per year received awards with Government property that 
would be subject to this rule.
    The rule does not impose any new reporting, recordkeeping, or 
compliance requirements. The replacement application used for reporting 
is intended to maintain the status quo regarding the information to be 
reported and to reduce compliance requirements due to the technological 
advances in the PIEE GFP Module.
    There are no practical alternatives that would reduce burden on 
small entities and still meet the objective of creating efficiency by 
consolidating reporting requirements for Government property.

VIII. Paperwork Reduction Act

    This rule contains information collection requirements that have 
been approved by the Office of Management and Budget under the 
Paperwork Reduction Act (44 U.S.C. chapter 35). This information 
collection requirement is assigned OMB Control Number 0704-0246, 
Defense Federal Acquisition Regulation Supplement (DFARS) part 245, 
Government Property.

List of Subjects in 48 CFR Parts 211, 212, 245, and 252

    Government procurement.

Jennifer D. Johnson,
Editor/Publisher, Defense Acquisition Regulations System.

    Therefore, 48 CFR parts 211, 212, 245, and 252 are amended as 
follows:

0
1. The authority citation for 48 CFR parts 211, 212, 245, and 252 
continues to read as follows:

    Authority:  41 U.S.C. 1303 and 48 CFR chapter 1.

PART 211--DESCRIBING AGENCY NEEDS


211.274-4  [Removed]

0
2. Remove section 211.274-4.


211.274-5 and 211.274-6  [Redesignated as 211.274-4 and 211.274-5]

0
3. Redesignate sections 211.274-5 and 211.274-6 as sections 211.274-4 
and 211.274-5, respectively.


211.274-5  [Amended]

0
4. Amend the newly redesignated section 211.274-5 by--

[[Page 88537]]

0
a. Redesignating paragraphs (a)(1), (2), and (3) as paragraphs (a) 
introductory text and (a)(1) and (2), respectively;
0
b. Removing paragraph (b); and
0
c. Redesignating paragraph (c) as paragraph (b).

PART 212--ACQUISITION OF COMMERCIAL PRODUCTS AND COMMERCIAL 
SERVICES

0
5. Amend section 212.301--
0
a. In paragraph (f)(v)(A) by removing ``211.274-6(a)(1)'' and adding 
``211.274-5(a)'' in its place;
0
b. By removing paragraph (f)(v)(B);
0
c. By redesignating paragraph (f)(v)(C) as paragraph (f)(v)(B);
0
d. In the newly redesignated paragraph (f)(v)(B) by removing ``211.274-
6(c)'' and adding ``211.274-5(b)'' in its place;
0
e. Redesignating paragraphs (f)(xix) and (xx) as paragraphs (f)(xx) and 
(xxi), respectively; and
0
f. Adding a new paragraph (f)(xix).
    The addition reads as follows:


212.301  Solicitation provisions and contract clauses for the 
acquisition of commercial products and commercial services.

* * * * *
    (f) * * *
    (xix) Part 245--Government Property. Use the clause at 252.245-
7005, Management and Reporting of Government Property, as prescribed in 
245.107(4).
* * * * *

PART 245--GOVERNMENT PROPERTY

0
6. Amend section 245.102--
0
a. By revising paragraph (2);
0
b. In the paragraph (4) heading and paragraphs (4)(i) and (4)(ii)(A) by 
removing ``Government-furnished property'' and adding ``GFP'' in their 
places, respectively; and
0
c. By revising paragraph (5).
    The revisions read as follows:


245.102  Policy.

* * * * *
    (2) Government supply sources. When a contractor will be 
responsible for preparing requisitioning documentation to acquire 
Government-furnished property (GFP) from Government supply sources, 
include in the contract the requirement to prepare the documentation in 
accordance with DLM 4000.25, Defense Logistics Management Standards 
(DLMS), Volume 2, Supply Standards and Procedures. Copies are available 
from the address cited at PGI 251.102.
* * * * *
    (5) Reporting Government property. It is DoD policy that all 
Government property be reported in the GFP module or Wide Area WorkFlow 
module of the Procurement Integrated Enterprise Environment (PIEE) as 
required by the clause at 252.245-7005, Management and Reporting of 
Government Property.

0
7. Revise section 245.103-72 to read as follows:


245.103-72  Government-furnished property attachments to solicitations 
and awards.

    When performance will require the use of GFP, contracting officers 
shall include the GFP attachment to solicitations and awards. See PGI 
245.103-72 for links to the formats and procedures for preparing the 
GFP attachment.

0
8. Amend section 245.107 by--
0
a. Removing paragraphs (3), (4), and (6);
0
b. Redesignating paragraph (5) as paragraph (3); and
0
c. Adding a new paragraph (4).
    The addition reads as follows:


245.107  Contract clauses.

* * * * *
    (4) Use the clause at 252.245-7005, Management and Reporting of 
Government Property, in solicitations and contracts, including 
solicitations and contracts using FAR part 12 procedures for the 
acquisition of commercial products and commercial services, that 
contain the clause at FAR 52.245-1, Government Property.


245.201-70  [Removed]

0
9. Remove section 245.201-70.


245.201-71  [Redesignated as 245.201-70]

0
10. Redesignate section 245.201-71 as 245.201-70 and revise the newly 
designated section to read as follows:


245.201-70  Security classification.

    Follow the procedures at PGI 245.201-70 for security 
classification.

0
11. Amend section 245.604-1--
0
a. In paragraph (1) by removing ``(formal or informal sales)'';
0
b. By revising the paragraph (2) heading;
0
c. In paragraph (3)(ii) by removing ``252.245-7004, Reporting, 
Reutilization, and Disposal'' and adding ``252.245-7005, Management and 
Reporting of Government Property'' in its place;
0
d. In the paragraph (4) heading and paragraphs (4)(i) introductory text 
and (4)(ii) by removing ``Noncompetitive'' and adding ``Negotiated'' in 
its place wherever it appears, and in paragraph (4)(iii) introductory 
text by removing ``noncompetitive'' and adding ``negotiated'' in its 
place; and
0
e. In paragraph (5) by removing ``Implementation of Trade Security 
Controls'' and adding ``Implementation of Trade Security Controls 
(TSCs) for Transfers of DoD Personal Property to Parties Outside DoD 
Control'' in its place.
    The revision reads as follows:


245.604-1  Sales procedures.

* * * * *
    (2) Invitation for bid procedures. * * *
* * * * *

SUBPART 245.70 [Removed and Reserved]

0
12. Remove and reserve subpart 245.70 consisting of sections 245.7001 
and 245.7001-1 through 245.7001-6.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES


252.211-7003  [Amended]

0
13. Amend section 252.211-7003 introductory text by removing ``211.274-
6(a)(1)'' and adding ``211.274-5(a)'' in its place.


252.211-7007  [Removed and Reserved]

0
14. Remove and reserve section 252.211-7007.


252.211-7008  [Amended]

0
15. Amend section 252.211-7008 introductory text by removing ``211.274-
6(c)'' and adding ``211.274-5(b)'' in its place.


252.245-7001  [Removed and Reserved]

0
16. Remove and reserve section 252.245-7001.


252.245-7002  [Removed and Reserved]

0
17. Remove and reserve section 252.245-7002.


252.245-7003  [Amended]

0
18. Amend section 252.245-7003 introductory text by removing 
``245.107(5)'' and adding ``245.107(3)'' in its place.


252.245-7004  [Removed and Reserved]

0
19. Remove and reserve section 252.245-7004.

0
20. Add section 252.245-7005 to read as follows:


252.245-7005  Management and Reporting of Government Property.

    As prescribed in 245.107(4), use the following clause:

Management and Reporting of Government Property (Jan 2024)

    (a) Definitions. As used in this clause--

[[Page 88538]]

    As is means that the Government makes no warranty with respect 
to the serviceability and/or suitability of the Government property 
for contract performance and that the Government will not pay for 
any repairs, replacement, and/or refurbishment of the property.
    Commercial and Government Entity (CAGE) code means--
    (1) An identifier assigned to entities located in the United 
States or its outlying areas by the Defense Logistics Agency (DLA) 
Commercial and Government Entity (CAGE) Branch to identify a 
commercial or government entity by unique location; or
    (2) An identifier assigned by a member of the North Atlantic 
Treaty Organization (NATO) or by the NATO Support and Procurement 
Agency (NSPA) to entities located outside the United States and its 
outlying areas that the DLA Commercial and Government Entity (CAGE) 
Branch records and maintains in the CAGE master file. This type of 
code is known as a NATO CAGE (NCAGE) code.
    Contractor-acquired property, contractor inventory, Government 
property, Government-furnished property, and loss of Government 
property have the meanings given in the Federal Acquisition 
Regulation (FAR) 52.245-1, Government Property, clause of this 
contract.
    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.
    Export-controlled items has the meaning given in the Defense 
Federal Acquisition Regulation Supplement (DFARS) 252.225-7048, 
Export-Controlled Items, clause of this contract.
    Ineligible transferee means an individual, an entity, or a 
country--
    (1) Excluded from Federal programs by the General Services 
Administration as identified in the System for Award Management 
Exclusions located at https://sam.gov;
    (2) Delinquent on obligations to the U.S. Government under 
surplus sales contracts;
    (3) Designated by the Department of Defense as ineligible, 
debarred, or suspended from defense contracts; or
    (4) Subject to denial, debarment, or other sanctions under 
export control laws and related laws and regulations, and orders 
administered by the Department of State, the Department of Commerce, 
the Department of Homeland Security, or the Department of the 
Treasury.
    Item unique identification means a system of assigning, 
reporting, and marking DoD property with unique item identifiers 
that have machine-readable data elements to distinguish an item from 
all other like and unlike items.
    National stock number means a 13-digit stock number used to 
identify items of supply. It consists of a four-digit Federal Supply 
Code and a nine-digit National Item Identification Number.
    Reparable item means an item, typically in unserviceable 
condition, furnished to the contractor for maintenance, repair, 
modification, or overhaul.
    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.''
    Serially-managed item means an item designated by DoD to be 
uniquely tracked, controlled, or managed in maintenance, repair, 
and/or supply systems by means of its serial number or unique item 
identifier.
    Serviceable or usable property means property with potential for 
reutilization or sale as is or with minor repairs or alterations.
    Supply condition code means a classification of materiel in 
terms of readiness for issue and use or to identify action underway 
to change the status of materiel.
    Unique item identifier (UII) means a set of data elements marked 
on an item that is globally unique and unambiguous. The term 
includes a concatenated UII or a DoD recognized unique 
identification equivalent.
    (b) Reporting Government property. (1) The Contractor shall use 
the Government Furnished Property (GFP) module of the Procurement 
Integrated Enterprise Environment (PIEE) to--
    (i) Report receipt of GFP;
    (ii) Report the transfer of GFP to another DoD contract;
    (iii) Report the shipment of GFP to the Government or to a 
contractor. The GFP module generates the electronic equivalent of 
the DD Form 1149, DD Form 1348-1, or other required shipping 
documents;
    (iv) Report when serially-managed items of GFP are incorporated 
into a higher-level component, assembly, or end item;
    (v) Report the loss of Government property in accordance with 
paragraph (f)(1)(vii) of the FAR 52.245-1 clause of this contract;
    (vi) Complete the plant clearance inventory schedule in 
accordance with paragraph (j)(2) of the FAR 52.245-1 clause of this 
contract, unless disposition instructions are otherwise included in 
this contract. The GFP module generates the electronic equivalent of 
the Standard Form (SF) 1428, Inventory Disposal Schedule; and
    (vii) Submit a request to buy back or to convert to GFP items of 
Contractor-acquired property.
    (2) Information regarding the GFP module is available in the GFP 
Module Vendor Guide at https://dodprocurementtoolbox.com/site-pages/gfp-resources. Users may also register for access to the GFP module 
and obtain training on the PIEE home page at https://piee.eb.mil.
    (3) In complying with paragraphs (b)(1)(i) through (iv) of this 
clause, the Contractor shall report the updated status of the 
property to the GFP module within 7 business days of the date the 
change in status occurs, unless otherwise specified in the contract.
    (4) The Contractor shall use Wide Area WorkFlow in accordance 
with DFARS Appendix F, Material Inspection and Receiving Report, to 
report the shipment of reparable items after completion of repair, 
maintenance, modification, or overhaul.
    (5) When Government property is in the possession of 
subcontractors, the Contractor shall ensure that reporting is 
accomplished using the data elements required in paragraph (c) of 
this clause.
    (c) Records of Government property. To facilitate reporting of 
Government property to the GFP module, the Contractor's property 
records, in addition to the requirements of paragraph (f)(1)(iii) of 
the FAR 52.245-1 clause of this contract, shall enable recording of 
the following data elements:
    (1) National stock number (NSN). If an NSN is not available, use 
either the combination of the manufacturer's CAGE code and part 
number, or model number.
    (2) CAGE code on the accountable Government contract.
    (3) Received/sent (shipped) date.
    (4) Accountable Government contract number.
    (5) Serial number (for serially-managed items that do not have a 
UII); and
    (6) Supply condition code (only required for reporting of 
reparable items). For information on Federal supply condition codes, 
see DLM 4000.25, Defense Logistics Management Standards (DLMS), 
Volume 2, Supply Standards and Procedures, Appendix 2.5 at https://www.dla.mil/HQ/InformationOperations/DLMS/elibrary/manuals/v2/.
    (d) Marking, reporting, and UII registration of GFP 
requirements. The Contractor--
    (1) Shall assign the UII and mark the reparable items identified 
as serially managed in the GFP attachment to this contract with an 
item unique identification (IUID) data matrix, when the technical 
drawing for the item is accessible to the Contractor and includes 
IUID data matrix location and marking method;
    (2) Shall report the UII either before or during shipment of the 
repaired item;
    (3) Is not required to mark items that were previously marked 
with an IUID data matrix and registered in accordance with DFARS 
252.211-7003, Item Unique Identification and Valuation; and
    (4) Shall assign a new UII, then mark and register the item, 
when the conditions of paragraph (d)(1) are met, if an item is found 
to be marked but not registered in the IUID Registry.
    (e) Disposing of Government property. (1) The Contractor shall 
complete the plant clearance inventory schedule using the plant 
clearance capability of the GFP module of the PIEE to generate an 
electronic equivalent of the SF 1428, Inventory Disposal Schedule. 
The plant clearance inventory schedule requires 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 16 or 17 and FSCs 2620, 2810, 2915, 2925, 
2935, 2945, 2995, 4920, 5821, 5826, 5841, 6340, and 6615.

[[Page 88539]]

    (iii) The manufacturer name, make, model number, model year, and 
serial number for all aircraft under FSCs 1510 and 1520.
    (2) If the schedules are acceptable, the plant clearance officer 
will confirm acceptance in the GFP module plant clearance 
capability, which will transmit a notification to the Contractor. 
The electronic acceptance is equivalent to the DD Form 1637, Notice 
of Acceptance of Inventory.
    (f) 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, 
DoD Manual (DoDM) 4160.28-M, edition in effect as of the date of 
this contract. If the property is available for purchase, 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.
    (g) 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.
    (h) Inherently dangerous Contractor inventory. Contractor 
inventory that is dangerous to public health or safety shall not be 
disposed of unless rendered innocuous or until adequate safeguards 
are provided.
    (i) 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.
    (j) Disposal of scrap--(1) Contractor 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.
    (k) Sale of surplus Contractor inventory--(1)Sales procedures. 
(i) 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. The Contractor 
shall include in its invitation for bids the sales terms and 
conditions provided by the plant clearance officer.
    (ii) The Contractor may conduct internet-based sales, to include 
use of a third party.
    (iii) 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.
    (iv) The Contractor shall solicit bids to obtain adequate 
competition. Negotiated sales are subject to obtaining such 
competition as is feasible under the circumstances of the negotiated 
sale.
    (v) The Contractor shall solicit bids at least 15 calendar days 
before bid opening to allow adequate opportunity to inspect the 
property and prepare bids.
    (vi) For large sales, the Contractor may use summary lists of 
items offered as bid sheets with detailed descriptions attached.
    (vii) In addition to providing 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 in local newspapers.
    (viii) The plant clearance officer or designated Government 
representative will witness the bid opening. The Contractor shall 
submit the bid abstract in electronic format to the plant clearance 
officer within 2 days of bid opening. If the Contractor is unable to 
submit the bid abstract electronically, the Contractor may submit 2 
copies of the abstract manually within 2 days of bid opening. The 
plant clearance officer will not approve award to any bidder who is 
an ineligible transferee.
    (2) Required terms and conditions for sales contracts. The 
Contractor shall include the following terms and conditions in sales 
contracts:
    (i) For sales contracts or other documents transferring title:
    ``The Purchaser certifies that the property covered by this 
contract will be used in [insert 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 re-export license approval.''
    (ii) For sales contracts that require demilitarization, 
mutilation, or destruction of property:
    ``The following items [insert list provided by plant clearance 
officer] require demilitarization, mutilation, or destruction by the 
Purchaser. Additional instructions are provided in accordance with 
Defense Demilitarization Manual, DoDM 4160.28-M, edition in effect 
as of the date of this sales contract. A Government representative 
will certify and verify demilitarization of items. Prepare 
demilitarization certificates in accordance with DoDM 4160.28, 
Volume 2, section 4.5, DEMIL Certificate (see figure 2, Example 
DEMIL Certificate).''
    (iii) Removal and title transfer:
    ``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.''
    (iv) Assumption of cost incident to demilitarization:
    ``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.''
    (v) Failure to demilitarize:
    ``If the Purchaser fails to demilitarize, mutilate, or destroy 
the property as specified in the sales contract, the Contractor may, 
upon giving 10 days written notice 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, and 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.''
    (l) Restrictions on purchase or retention of Contractor 
inventory. The Contractor may not knowingly sell the inventory to 
any person or that person's agent, employee, or household member if 
that person--
    (1) Is a civilian employee of DoD or the U.S. Coast Guard;
    (2) Is a member of the Armed Forces of the United States, 
including the U.S. Coast Guard; or
    (3) Has any functional or supervisory responsibilities for or 
within DoD's property disposal, disposition, or plant clearance 
programs or for the disposal of contractor inventory.
    (m) 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 pursuant to the termination of the contract;
    (3) Credited to the price or cost of the contract; or
    (4) Applied as otherwise directed by the Contracting Officer.


(End of clause)

[FR Doc. 2023-27939 Filed 12-21-23; 8:45 am]
BILLING CODE 6001-FR-P