54878 Federal Register / Vol. 70, No. 180 / Monday, September 19, 2005 / Proposed Rules 

maintain documentation in existence 

when its return is filed regarding the 

allocation of gross income, and 

allocation and apportionment of 

expenses, losses, and other deductions, 

the methodologies used, and the 

circumstances justifying use of those 

methodologies. The taxpayer must make 

available such documentation within 30 

days upon request. 

(3) Access to software. If the taxpayer 

or any third party used any computer 

software, within the meaning of section 

7612(d), to allocate gross income, or to 

allocate or apportion expenses, losses, 

and other deductions, the taxpayer must 

make available upon request—

(i) Any computer software executable 

code, within the meaning of section 

7612(d), used for such purposes, 

including an executable copy of the 

version of the software used in the 

preparation of the taxpayer’s return 

(including any plug-ins, supplements, 

etc.) and a copy of all related electronic 

data files. Thus, if software 

subsequently is upgraded or 

supplemented, a separate executable 

copy of the version used in preparing 

the taxpayer’s return must be retained; 

(ii) Any related computer software 

source code, within the meaning of 

section 7612(d), acquired or developed 

by the taxpayer or a related person, or 

primarily for internal use by the 

taxpayer or such person rather than for 

commercial distribution; and 

(iii) In the case of any spreadsheet 

software or similar software, any 

formulae or links to supporting 

worksheets. 

(4) Use of allocation methodology. In 

general, when a taxpayer allocates gross 

income under paragraph (b)(2)(iii), 

(b)(2)(iv), or (h)(1)(ii) of this section, it 

does so by making the allocation on a 

timely filed original return (including 

extensions). However, a taxpayer will be 

permitted to make changes to such 

allocations made on its original return 

with respect to any taxable year for 

which the statute of limitations has not 

closed as follows: 

(i) In the case of a taxpayer that has 

made a change to such allocations prior 

to the opening conference for the audit 

of the taxable year to which the 

allocation relates or who makes such a 

change within 90 days of such opening 

conference, if the IRS issues a written 

information document request asking 

the taxpayer to provide the documents 

and such other information described in 

paragraphs (k)(2) and (3) of this section 

with respect to the changed allocations 

and the taxpayer complies with such 

request within 30 days of the request, 

then the IRS will complete its 

examination, if any, with respect to the 

allocations for that year as part of the 

current examination cycle. If the 

taxpayer does not provide the 

documents and information described 

in paragraphs (k)(2) and (3) of this 

section within 30 days of the request, 

then the procedures described in 

paragraph (k)(4)(ii) of this section shall 

apply. 

(ii) If the taxpayer changes such 

allocations more than 90 days after the 

opening conference for the audit of the 

taxable year to which the allocations 

relate or the taxpayer does not provide 

the documents and information with 

respect to the changed allocations as 

requested in accordance with 

paragraphs (k)(2) and (3) of this section, 

then the IRS will, in a separate cycle, 

determine whether an examination of 

the taxpayer’s allocations is warranted 

and complete any such examination. 

The separate cycle will be worked as 

resources are available and may not 

have the same estimated completion 

date as the other issues under 

examination for the taxable year. The 

IRS may ask the taxpayer to extend the 

statute of limitations on assessment and 

collection for the taxable year to permit 

examination of the taxpayer’s method of 

allocation, including an extension 

limited, where appropriate, to the 

taxpayer’s method of allocation. 

(l) Effective date. This section applies 

to taxable years beginning on or after the 

date of publication of final regulations 

in the Federal Register. 

Mark E. Matthews, 

Deputy Commissioner for Services and 

Enforcement. 

[FR Doc. 05–18265 Filed 9–16–05; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF DEFENSE 

GENERAL SERVICES 

ADMINISTRATION 

NATIONAL AERONAUTICS AND 

SPACE ADMINISTRATION 

48 CFR Parts 1, 2, 17, 31, 32, 35, 42, 

45, 49, 51, 52, and 53 

[FAR Case 2004–025] 

RIN: 9000–AK30 

Federal Acquisition Regulation; 

Government Property 

AGENCIES: Department of Defense (DoD), 

General Services Administration (GSA), 

and National Aeronautics and Space 

Administration (NASA). 

ACTION: Proposed rule. 

SUMMARY: The Civilian Agency 

Acquisition Council and the Defense 

Acquisition Regulations Council 

(Councils) are proposing to amend the 

Federal Acquisition Regulation (FAR) to 

simplify procedures, clarify language, 

and eliminate obsolete requirements 

related to the management and 

disposition of Government property in 

the possession of contractors. Various 

FAR parts are amended to implement a 

policy that fosters efficiency, flexibility, 

innovation, and creativity, while 

continuing to protect the Government’s 

interest in the public’s property. The 

proposed rule specifically impacts 

contracting officers, property 

administrators, and contractors 

responsible for the management of 

Government property. 

DATES: Interested parties should submit 

written comments to the FAR 

Secretariat on or before November 18, 

2005 to be considered in the 

formulation of a final rule. 

ADDRESSES: Submit comments 

identified by FAR case 2004–025 by any 

of the following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Agency Web Site: http:// 

www.acqnet.gov/far/ProposedRules/ 

proposed.htm. Click on the FAR case 

number to submit comments. 

• E-mail: farcase.2004–025@gsa.gov. 

Include FAR case 2004–025 in the 

subject line of the message. 

• Fax: 202–501–4067. 

• Mail: General Services 

Administration, Regulatory Secretariat 

(VIR), 1800 F Street, NW, Room 4035, 

ATTN: Laurieann Duarte, Washington, 

DC 20405. 

Instructions: Please submit comments 

only and cite FAR case 2004–025 in all 

correspondence related to this case. All 

comments received will be posted 

without change to http:// 

www.acqnet.gov/far/ProposedRules/ 

proposed.htm, including any personal 

and/or business confidential 

information provided. 

FOR FURTHER INFORMATION CONTACT The 

FAR Secretariat at (202) 501–4755 for 

information pertaining to status or 

publication schedules. For clarification 

of content, contact Ms. Jeritta Parnell, 

Procurement Analyst, at (202) 501–

4082. Please cite FAR case 2004–025. 

SUPPLEMENTARY INFORMATION: 

A. Background 

In the late 1990s, the Department of 

Defense (DoD) initiated a complete 

rewrite of FAR Part 45 and associated 

clauses. Beyond attempting to address 

long-standing property management 

Federal Register / Vol. 70, No. 180 / Monday, September 19, 2005 / Proposed Rules 54879 

issues, the effort reflected the general 

consensus that adoption of more 

typically commercial business practices 

would not only attract more commercial 

firms to the marketplace but also result 

in significant savings of acquisition 

dollars. For many reasons, only one 

portion of that rewrite - Subpart 45.6 

with its associated clauses and forms, 

was published as a final rule. Therefore, 

another rewrite of Part 45 and its 

associated clauses is being proposed. 

The proposed language, by 

encouraging efficiency, flexibility, 

innovation, and creativity, complements 

the use of current processes and 

technologies such as Enterprise 

Resource Planning, relational databases, 

unique item identification, radio 

frequency tags, bar-coding, and the 

general trend toward commercialization 

of components and equipment. 

The concepts of the proposed rewrite 

have been discussed and presented to a 

wide audience. Briefings were presented 

at public meetings, defense industry 

representative meetings, industry and 

trade associations, and to the military 

departments, GSA Property 

Management Executive Council and 

other interested parties. 

The new language reflects a life-cycle, 

performance-based approach to property 

management and permits the adoption 

of more typically commercial business 

practices. 

The proposed rule requires 

contracting officers, property 

administrators and other personnel 

involved in awarding or administering 

contracts with Government property to 

be aware of industry-leading practices 

and standards for managing Government 

property. Other associated impacts 

include—

(a) Stricter policy for contracting 

officers to follow when determining 

whether or not to provide property to 

contractors. 

(b) Possible contracting officer 

revocation of the Government’s 

assumption of risk when the property 

administrator determines that the 

contractor’s property management 

practices are inadequate and/or present 

an undue risk to the Government. 

(c) An outcome-based framework for 

the management of property in 

possession of contractors. 

(d) Identification by contractors of the 

standard or practice proposed for 

managing Government property. 

Many of the policy language changes 

are administrative in nature (i.e., 

deleting obsolete terms, eliminating 

duplicate language, clarifying and 

relocating definitions to clauses, etc.). 

Other policy changes include revising or 

adding new definitions as a result of 

previous changes and/or lessons 

learned. FAR Subparts 45.1, General; 

45.2, Competitive Advantage; 45.3, 

Providing Government Property to 

Contractors; 45.4, Contractor Use and 

Rental of Government Property; and 

45.5, Management of Government 

Property in the Possession of 

Contractors, have been revised and 

reorganized in such a manner that it was 

necessary to delete language in these 

sections in their entirety and replace 

them with revised language and titles. 

FAR Subpart 45.6 remains unchanged, 

except for the revision of the term 

‘‘Government property’’ found in FAR 

45.600 to read ‘‘contractor inventory’’

and the movement of the definitions to 

the new FAR 45.101 and the revised 

clause at 52.245–1(a). 

Definitions for ‘‘Special Test 

Equipment’’ and ‘‘Special Tooling’’ are 

revised and moved from Part 45 to Part 

2 and a new definition ‘‘Voluntary 

Consensus Standards’’ is added in Part 

2. The definition for ‘‘Plant Clearance 

Officer’’ in Part 2 is also revised. 

Definitions for ‘‘Acquisition cost,’’

‘‘Real property,’’ and ‘‘Government 

property’’ located in the clause at 

52.245–9, Use and Charges, are revised 

and included in the new FAR 45.101. 

The proposed rule includes the 

following new definitions in FAR 

45.101 and the clause at 52.245–1: 

• ‘‘Contractor Inventory’’

• ‘‘Contractor’s Managerial 

Personnel’’

• ‘‘Equipment’’

• ‘‘Property’’

• ‘‘Provide’’

• ‘‘Unique Federal Property’’. 

The proposed rule, if adopted, would 

eliminate the following definitions: 

• Agency Peculiar Property 

• Accessory Item 

• Auxiliary Item 

• Custodial Records 

• Facilities 

• Facilities Contracts 

• Government Furnished Material 

• Government Production and 

Research Property 

• Individual Item Record 

• Plant equipment 

• Nonprofit Organization 

• Salvage 

• Stock Record 

• Summary Record 

• Utility Distribution System 

• Work-in-Process. 

The FAR clauses at 52.245–1, 

Property Records; 52.245–2, 

Government Property (Fixed Price 

Contracts); 52.245–5, Government 

Property (Cost-Reimbursement, Time 

and Material, or Labor Hour Contracts); 

and 52.245–19, Government Property 

Furnished ‘‘As Is’’, were combined to 

form one new clause—52.245–1, 

Government Property. A new property 

clause at 52.245–2, Government 

Property (Installation Operations for 

Services), was added specifically to 

address contracts designed for military 

base-operating and installation-level 

contracts, particularly those awarded 

under the Office of Management and 

Budget Circular A–76 process. The 

Councils seek specific comment on the 

new clause at FAR 52.245–1 as to: (1) 

whether the proposed wording of 

paragraphs (f) and (g) are clear in their 

intent; and (2) whether the intent of 

paragraphs (f) and (g) could be achieved 

in some other manner. 

The following clauses were deleted in 

their entirety because they were either 

obsolete or conflicted with the use of 

consensus standards and/or industryleading standards and practices for 

property management: 

• 52.245–3 

• 52.245–4 

• 52.245–5 

• 52.245–6 

• 52.245–7 

• 52.245–8 

• 52.245–10 

• 52.245–11 

• 52.245–12 

• 52.245–13 

• 52.245–14 

• 52.245–15 

• 52.245–16 

• 52.245–17 

• 52.245–18. 

The rule deletes the current FAR text 

on facilities contracts and the associated 

clauses because the Councils believe 

they are outmoded and no longer 

necessary. The Councils found that 

facilities contracts, contracts established 

solely to account for property with 

subsequent contracts authorized to use 

that property, are rarely used. The 

Councils also found that facilities 

clauses are being used in service 

contracts for the operation of 

Government-Owned ContractorOperated Facilities (GOCOs). In the case 

of GOCOs, it is believed that agencies’

property management needs can better, 

and more appropriately, be met through 

tailoring the statement of work in these 

service contracts to the agency’s specific 

needs and incorporating the new 

property clause at FAR 52.245–1. 

Should the facilities contract coverage 

be deleted in a subsequent final rule, 

any required administrative conforming 

revisions (e.g., elimination of cross 

references to deleted facilities contract 

clauses) will be effected in the final 

rule. 

The Councils seek specific comment 

on instances in which there is a 

continued need for coverage or clauses 

similar to those that are being deleted. 

54880 Federal Register / Vol. 70, No. 180 / Monday, September 19, 2005 / Proposed Rules 

The following additional FAR 

changes are consistent with the intent of 

this proposed rule: 

• Deletion of 42.302(a)(27). This 

paragraph refers to the Special Test 

Equipment clause which is being 

deleted. 

• Revision of FAR 51.107 to delete 

references to facilities contracts. 

• Revision of FAR 52.245–17, 

Special Tooling, was originally 

proposed under FAR Case 2002–015, 

Use and Rental and Special Tooling. 

Public comments recommended 

deletion of this clause rather than 

revision. Therefore, this case solicits 

comments on the deletion of the clause 

at 52.245–17, Special Tooling. 

The cost principle at FAR 31.205–19 

is revised to reflect the changes made in 

the proposed clause at FAR 52.245–1, to 

indicate that, unless the Government 

has determined that the contractor’s 

property management practices are 

inadequate and/or present an undue risk 

to the Government, the cost of insurance 

is allowable when the contractor is 

liable and the insurance does not cover 

loss, damage, destruction, or theft which 

results from willful misconduct or lack 

of good faith on the part of the 

contractor’s managerial personnel. 

This is not a significant regulatory 

action and, therefore, was not subject to 

review under Section 6(b) of Executive 

Order 12866, Regulatory Planning and 

Review, dated September 30, 1993. This 

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

804. 

B. Regulatory Flexibility Act 

The changes may 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 affects the method of managing 

Government property and is intended to 

give agencies and contractors more 

flexibility in applying industry-leading 

practices and standards. As such, it is 

expected that the rule will have a 

positive effect on small business. 

An Initial Regulatory Flexibility 

Analysis (IRFA) has been prepared. The 

analysis is summarized as follows: 

The Civilian Agency Acquisition Council 

and the Defense Acquisition Regulations 

Council (Councils) are proposing revising the 

FAR to update FAR Parts 45 and 52. The 

revisions will attempt to address longstanding property management issues and 

will reflect a general consensus that adoption 

of more typically commercial business 

practices would not only attract more 

commercial firms to the marketplace but also 

result in significant savings of acquisition 

dollars. Moreover, much of the current FAR 

language related to property management is 

well over fifty years old, and contains 

inconsistent, often conflicting guidance that 

is at odds with modern materials 

management technology such as Enterprise 

Resource Planning, relational databases, 

unique item identification, radio frequency 

tags, bar-coding, and the general trend 

toward commercialization of components 

and equipment. 

Title II of the Federal Property and 

Administrative Services Act of 1949, Public 

Law 81–152, as amended, requires, in part 

that executive agencies account for 

Government property, determine when such 

property is excess, and dispose of excess 

Government property promptly. The 

proposed rule amends the FAR to revise the 

policies for the management of Governmentowned property used and acquired by private 

industry in the performance of Government 

contracts. 

It is estimated that approximately 5000 

contractors have Federal property in their 

possession. DoD has 2,242 contractors. 

Approximately 62 percent of DoD’s 

contractors are small businesses. Given that 

property in the possession of contractors is 

overwhelmingly DoD property, it is estimated 

the DoD ratio of small business to total 

businesses having such property is a 

reasonable approximation for all Government 

contractors. Therefore, it is estimated that 

approximately 3,100 small businesses have 

Government property in their possession. 

This proposed rule substantially decreases 

the impact of the current FAR provisions by 

simplifying procedures, reducing 

recordkeeping and eliminating requirements 

related to the management of Government 

property in the possession of contractors. The 

rule continues the philosophy of ordinarily 

requiring contractors to furnish all property 

necessary to perform Government contracts, 

but also introduces more modern and 

innovative concepts. 

The rule is structured around a number of 

principles or objectives which, it is believed, 

will have an overall positive impact on 

contractors regardless of size. The rule 

balances regulation with principle-based 

standards that allow for minimal regulatory 

requirement and greater flexibility and 

efficiency to achieve best value for the 

Government. The rule introduces commercial 

standards and industry best practices into the 

property management process to the 

maximum extent possible. This facilitates 

moving from a prescribed regulatory process 

to a performance-based outcome 

environment. The use of sound business 

practices should reduce both the 

Government’s and the contractor’s ongoing 

administrative costs of dealing with 

Government property. Contractors will 

initiate and maintain the processes, systems, 

records, and methodologies necessary for 

effective control of the Government’s 

property. 

While it may be that small businesses are 

more dependent on Government—furnished 

property than large businesses, the 

underlying philosophy has not changed (i.e., 

contractors are ordinarily required to furnish 

all property necessary to perform the 

Government contracts). 

The Federal Property Management 

Regulation and the Federal Management 

Regulation published by the General Services 

Administration provide property 

management guidance to Government 

personnel. Some of the material overlaps or 

is duplicated by the FAR property 

management provisions. The duplication or 

overlap stems from the need to have contract 

administration issues addressed in the FAR 

and broadly disseminated to Government and 

contractor personnel. 

The FAR Secretariat has submitted a 

copy of the IRFA to the Chief Counsel 

for Advocacy of the Small Business 

Administration. A copy of the IRFA may 

be obtained from the FAR Secretariat. 

The Councils will consider comments 

from small entities concerning the 

affected FAR parts 1, 2, 17, 31, 32, 35, 

42, 45, 49, 51, 52, and 53, in accordance 

with 5 U.S.C. 610. Comments must be 

submitted separately and should cite 5 

U.S.C 601, et seq. (FAR case 2004–025), 

in correspondence. 

C. Paperwork Reduction Act 

The Paperwork Reduction Act (Pub. 

L. 104–13) applies because the proposed 

rule contains information collection 

requirements. Accordingly, the FAR 

Secretariat submitted a request for a 

revised information collection 

requirement concerning Government 

Property to the Office of Management 

and Budget under 44 U.S.C. 3501, et 

seq. 

The present FAR requirements 

currently approved by the Office of 

Management and Budget (OMB) are 

being revised under OMB Control 

Number 9000–0075. 

The information collection includes 

the following requirements relating to 

FAR Part 45 and 52.245: 

1. FAR 45.606–1 requires a contractor 

to submit inventory schedules. 

2. FAR 45.606–3(a) requires a 

contractor to correct and resubmit 

inventory schedules as necessary. 

3. FAR 52.245–1(f)(1)(ii) requires 

contractors to receive, record, identify 

and manage Government property. 

4. FAR 52.245–1(f)(1)(iii) requires 

contractors to create and maintain 

records of all Government property 

accountable to the contract. 

5. FAR 52.245–1(f)(1)(iv) requires 

contractors to periodically perform, 

record, and report physical inventories 

during contract performance. 

6. FAR 52.245–1(f)(1)(vi) requires 

contractors to have a process to create 

and provide reports. 

7. FAR 52.245–1(f)(1)(viii) requires 

contractors to promptly disclose and 

report Government Property in their 

possession that is excess to contract 

performance. 

8. FAR 52.245–1(f)(1)(ix) requires 

contractors to disclose and report to the 

Property Administrator the need for 

Federal Register / Vol. 70, No. 180 / Monday, September 19, 2005 / Proposed Rules 54881 

replacement and/or capital 

rehabilitation. 

9. FAR 52.245–1(f)(1)(x) requires 

contractors to perform and report to the 

Property Administrator contract 

property closeout. 

10. FAR 52.245–1(f)(2) requires 

contractors to establish and maintain 

source data, particularly in the areas of 

recognition of acquisitions and 

dispositions of material and equipment. 

11. FAR 52.245–1(j)(4) requires 

contractors to submit inventory disposal 

schedules to the Plant Clearance Officer. 

12. FAR 52.245–9(f) requires a 

contractor to submit a facilities use 

statement to the contracting officer 

within 90 days after the close of each 

rental period. 

The information will be used to 

control and account for Governmentowned property in the possession of 

contractors. 

Annual Reporting Burden: 

Public reporting burden for this 

collection of information is estimated to 

average .4598 hours per response, 

including the time for reviewing 

instructions, searching existing data 

sources, gathering and maintaining the 

data needed, and completing and 

reviewing the collection of information. 

The annual reporting burden is 

estimated as follows: 

Respondents: 15,100. 

Responses per respondent: 896.71. 

Total annual responses: 13,540,450. 

Preparation hours per response: .46. 

Total response burden hours: 

6,226.350. 

D. Request for Comments Regarding 

Paperwork Burden 

Submit comments, including 

suggestions for reducing this burden, 

not later than November 18, 2005 to: 

FAR Desk Officer, OMB, Room 10102, 

NEOB, Washington, DC 20503, and a 

copy to the General Services 

Administration, FAR Secretariat (VIR), 

1800 F Street, NW, Room 4035, 

Washington, DC 20405. 

Public comments are particularly 

invited on: whether this collection of 

information is necessary for the proper 

performance of functions of the FAR, 

and will have practical utility; whether 

our estimate of the public burden of this 

collection of information is accurate, 

and based on valid assumptions and 

methodology; ways to enhance the 

quality, utility, and clarity of the 

information to be collected; and ways in 

which we can minimize the burden of 

the collection of information on those 

who are to respond, through the use of 

appropriate technological collection 

techniques or other forms of information 

technology. 

Requester may obtain a copy of the 

justification from the General Services 

Administration, FAR Secretariat (VIR), 

Room 4035, Washington, DC 20405, 

telephone (202) 501–4755. Please cite 

OMB Control Number 9000–0075, 

Government Property, in all 

correspondence. 

List of Subjects in 48 CFR Parts 1, 2, 17, 

31, 32, 35, 42, 45, 49, 51, 52, and 53 

Government procurement. 

Dated: September 7, 2005. 

Julia B. Wise, 

Director, Contract Policy Division. 

Therefore, DoD, GSA, and NASA 

propose amending 48 CFR parts 1, 2, 17, 

31, 32, 35, 42, 45, 49, 51, 52, and 53, as 

set forth below: 

1. The authority citation for 48 CFR 

parts 1, 2, 17, 31, 32, 35, 42, 45, 49, 51, 

52, and 53, is revised to read as follows: 

Authority: 40 U.S.C. 121(c); 10 U.S.C. 

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

PART 1—FEDERAL ACQUISITION 

REGULATIONS SYSTEM 

1.106 [Amended] 

2. Amend section 1.106 in the table 

following the introductory paragraph by 

removing FAR segments ‘‘52.245–3’’, 

‘‘52.245–5’’, ‘‘52.245–7’’, ‘‘52.245–8’’, 

‘‘52.245–10’’, ‘‘52.245–11’’, ‘‘52.245–

16’’, ‘‘52.245–17’’, and ‘‘52.245–18’’ and 

the corresponding OMB Control 

Number ‘‘9000–0075’’. 

PART 2—DEFINITIONS OF WORDS 

AND TERMS 

3. Amend section 2.101 in paragraph 

(b) by revising the definition ‘‘Plant 

clearance officer’’, and by adding, in 

alphabetical order, the definitions 

‘‘Special test equipment’’, ‘‘Special 

tooling’’, and ‘‘Voluntary Consensus 

Standards’’ to read as follows: 

2.101 Definitions. 

* * * * * 

(b) * * * 

Plant clearance officer means an 

authorized representative of the 

contracting officer assigned the 

responsibility of screening, 

redistributing, and disposing of 

Contractor Inventory from a Contractor’s 

plant or work site. The term 

‘‘Contractor’s plant’’ includes, but is not 

limited to, Government-owned 

Contractor-operated plants and Federal 

installations as may be required under 

the scope of the contract. 

* * * * * 

Special test equipment means either 

single or multipurpose integrated test 

units engineered, designed, fabricated, 

or modified to accomplish special 

purpose testing in performing a 

contract. It consists of items or 

assemblies of equipment including 

standard or general purpose items or 

components that are interconnected and 

interdependent so as to become a new 

functional entity for special testing 

purposes. Special test equipment does 

not include material, special tooling, 

real property (except foundations and 

similar improvements necessary for 

installing special test equipment), and 

equipment items used for general testing 

purposes or property that with relatively 

minor expense can be made suitable for 

general purpose use. 

Special tooling means jigs, dies, 

fixtures, molds, patterns, taps, gauges, 

all components of these items, and 

replacement of these items, which are of 

such a specialized nature that without 

substantial modification or alteration 

their use is limited to the development 

or production of particular supplies or 

parts thereof or to the performance of 

particular services. Special tooling does 

not include material, special test 

equipment, unique federal property, real 

property (except foundations and 

similar improvements necessary for 

installing special tooling), equipment, 

machine tools, or similar capital items. 

* * * * * 

Voluntary Consensus Standards 

means common and repeated use of 

rules, conditions, guidelines or 

characteristics for products, or related 

processes and production methods and 

related management systems. Voluntary 

Consensus Standards are developed or 

adopted by domestic and international 

voluntary consensus standard making 

bodies. 

* * * * * 

PART 17—SPECIAL CONTRACTING 

METHODS 

4. Amend section 17.603 by revising 

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

17.603 Limitations. 

(a) * * * 

(5) Functions that can more properly 

be accomplished in accordance with 

Subpart 45.3, Authorizing the Use and/ 

or Rental of Government Property. 

* * * * * 

PART 31—CONTRACT COST 

PRINICPLES AND PROCEDURES 

5. Amend section 31.205–19 by 

revising paragraph (e)(2)(iv) to read as 

follows: 

31.205–19 Insurance and indemnification. 

* * * * * 

(e) * * * 

(2) * * * 

54882 Federal Register / Vol. 70, No. 180 / Monday, September 19, 2005 / Proposed Rules 

(iv) Unless the Government has 

determined that the contractor’s 

property management practices are 

inadequate and/or present an undue risk 

to the Government, costs of insurance 

for the risk of loss, damage, destruction, 

or theft of Government property are 

allowable to the extent that the 

contractor is liable for such loss, 

damage, destruction, or theft, and such 

insurance does not cover loss, damage, 

destruction, or theft which results from 

willful misconduct or lack of good faith 

on the part of any of the contractor’s 

managerial personnel (as described in 

the FAR clause at 52.245–1(h)(1)(ii)). 

* * * * * 

31.205–40 [Amended] 

6. Amend section 31.205–40 in 

paragraph (a) by removing ‘‘45.101’’ and 

adding ‘‘2.101(b)’’ in its place. 

PART 32—CONTRACT FINANCING 

7. Amend section 32.503–15 by 

revising paragraph (b)(1) to read as 

follows: 

32.503–15 Application of Government title 

terms. 

* * * * * 

(b) * * * 

(1) The clause at 52.245–1, 

Government Property. 

* * * * * 

PART 35—RESEARCH AND 

DEVELOPMENT CONTRACTING 

35.014 [Removed and Reserved] 

8. Remove and reserve section 35.014. 

PART 42—CONTRACT 

ADMINISTRATION AND AUDIT 

SERVICES 

42.302 [Amended] 

9. Amend section 42.302 by removing 

and reserving paragraph (a)(27). 

PART 45—GOVERNMENT PROPERTY 

10. Amend section 45.000 by revising 

the second sentence to read as follows: 

45.000 Scope of part. 

* * * It does not apply to property 

under any statutory leasing authority, 

(except as to non-Government use of 

plant equipment under 45.301(f)); to 

property to which the Government has 

acquired a lien or title solely because of 

partial, advance, progress, or 

performance-based payments; or to 

disposal of real property. 

11. Revise Subparts 45.1 through 45.5 

to read as follows: 

Subpart 45.1—General 

Sec. 

45.101 Definitions. 

45.102 Policy. 

45.103 General. 

45.104 Responsibility and liability for 

Government property. 

45.105 Analysis of contractors’ property 

management system. 

45.106 Transferring accountability. 

45.107 Contract clauses. 

Subpart 45.2—Solicitation and Evaluation 

Procedures 

45.201 General. 

Subpart 45.3—Authorizing the Use and/or 

Rental of Government Property 

45.301 Use and rental. 

45.302 Contracts with foreign Governments 

or international organizations. 

45.303 Use of Government property on 

independent research and development 

programs. 

Subpart 45.4—Title to Government Property 

45.401 Title to Government property. 

Subpart 45.5—Support Government 

Property Administration 

45.501 Support Government property 

administration. 

Subpart 45.1—General 

45.101 Definitions. 

As used in this part—

Acquisition cost means—

(1) For contractor acquired property, 

the full cost determined in accordance 

with the system established by the 

Contractor in conformance with 

consistently applied sound accounting 

principles. 

(2) For Government furnished 

property, the amount identified in the 

contract, or in the absence of such 

identification, the fair market value 

attributed to the item by the contractor. 

Common item means material that is 

common to the applicable Government 

contract and the contractor’s other work. 

Contractor acquired property means 

property acquired, fabricated, or 

otherwise provided by the contractor for 

performing a contract and to which the 

Government has title. 

Contractor inventory means—

(1) Any property acquired by and in 

the possession of a contractor or 

subcontractor under a contract for 

which title is vested in the Government 

and which exceeds the amounts needed 

to complete full performance under the 

entire contract; 

(2) Any property that the Government 

is obligated or has the option to take 

over under any type of contract, e.g., as 

a result either of any changes in the 

specifications or plans thereunder or of 

the termination of the contract (or 

subcontract thereunder), before 

completion of the work, for the 

convenience or at the option of the 

Government; and 

(3) Government-furnished property 

that exceeds the amounts needed to 

complete full performance under the 

entire contract. 

Contractor’s managerial personnel 

means the contractor’s directors, 

officers, managers, superintendents, or 

equivalent representatives who have 

supervision or direction of all or 

substantially all of the contractor’s 

business; all or substantially all of the 

contractor’s operation at any one plant 

or separate location; or a separate and 

complete major industrial operation. 

Demilitarization means rendering a 

product designated for demilitarization 

unusable for, and not restorable to, the 

purpose for which it was designed or is 

customarily used. 

Discrepancies incident to shipment 

means all deficiencies incident to 

shipment of Government property to or 

from a contractor’s facility whereby 

differences exist between the property 

purported to have been shipped and 

property actually received. 

Equipment means a tangible article of 

personal property that is complete inand-of itself, durable, nonexpendable, 

and needed for the performance of a 

contract. Equipment generally has an 

expected service life of one year or 

more, and does not ordinarily lose its 

identity or become a component part of 

another article when put into use. 

Government-furnished property 

means property in the possession of, or 

directly acquired by, the Government 

and subsequently furnished to the 

contractor for performance of a contract. 

Government property means all 

property owned or leased by the 

Government. Government property 

includes both Government-furnished 

and contractor-acquired property. 

Material means property that may be 

consumed or expended during the 

performance of a contract, component 

parts of a higher assembly, or items that 

lose their individual identity through 

incorporation into an end-item. Material 

does not include equipment, special 

tooling, special test equipment, or 

unique federal property. 

Nonseverable means property that 

cannot be removed after erection or 

installation without substantial loss of 

value or damage to the installed 

property or to the premises where 

installed. 

Precious metals means silver, gold, 

platinum, palladium, iridium, osmium, 

rhodium, and ruthenium. 

Property means all tangible property, 

both real and personal. 

Property Administrator means an 

authorized representative of the 

contracting officer assigned the 

responsibility of administering the 

Federal Register / Vol. 70, No. 180 / Monday, September 19, 2005 / Proposed Rules 54883 

contract requirements and obligations 

relating to Government property in the 

possession of a contractor. 

Provide means to furnish existing 

Government property or to allow the 

contractor to acquire property on behalf 

of the Government under this contract. 

Real property means land, land rights, 

buildings, structures, utility systems, 

steam-generation systems, and 

equipment attached to and made part of 

buildings and structures (such as 

heating systems). As such, land rights 

are considered real property. It does not 

include foundations and other work 

necessary for installing special tooling, 

special test equipment, or equipment. 

Sensitive property means property 

potentially dangerous to the public 

safety or security if stolen, lost, or 

misplaced, or that shall be subject to 

exceptional physical security, 

protection, control, and accountability 

such as classified property, weapons, 

ammunition, explosives, controlled 

substances, radioactive materials, 

hazardous materials or wastes, or 

precious metals. 

Surplus property means excess 

personal property not required by any 

Federal agency as determined by the 

Administrator of the General Services 

Administration (GSA). 

Unique Federal property means 

Government-owned personal property 

that is peculiar to the mission of an 

agency, e.g., military or space property. 

Unique federal property excludes 

material, special test equipment, special 

tooling, real property and equipment. 

45.102 Policy. 

(a) Contractors are ordinarily required 

to furnish all property necessary to 

perform Government contracts. 

(b) Contracting officers shall provide 

property to contractors only when it is 

clearly demonstrated—

(1) To be in the Government’s best 

interest; 

(2) That the overall benefit to the 

procurement significantly outweighs the 

increased cost of administration, 

including ultimate property disposal; 

(3) That providing the property does 

not substantially increase the 

Government’s assumption of risk; and 

(4) That Government requirements 

cannot otherwise be met. 

(c) The contractor’s inability or 

unwillingness to supply its own 

resources is not sufficient reason for the 

furnishing or acquisition of property. 

45.103 General. 

(a) Agencies shall—

(1) Allow and encourage contractors 

to use voluntary consensus standards 

(see 11.101(c)) and/or industry-leading 

practices and standards to manage 

Government property in their 

possession. 

(2) Eliminate to the maximum 

practical extent any competitive 

advantage a prospective contractor may 

have by using Government property and 

ensure maximum practical reutilization 

of Contractor Inventory for Government 

purposes (see 45.602). 

(3) Require contractors to use 

Government property already in their 

possession to the maximum extent 

possible in performing Government 

contracts. 

(4) Charge appropriate rentals when 

the property is authorized for use on 

other than a rent-free basis. 

(5) Require contractors to justify 

retaining Government property not 

needed for contract performance and to 

declare property as excess when no 

longer needed for contract performance. 

(b) Agencies will not generally require 

contractors to establish property 

management systems that are separate 

from a contractor’s established 

procedures, practices, and systems used 

to account for and manage contractorowned property. 

45.104 Responsibility and liability for 

Government property. 

(a) Generally, contractors are not held 

liable for loss, damage, destruction, or 

theft of Government property under the 

following types of contracts: 

(1) Cost reimbursement contracts. 

(2) Time and material contracts. 

(3) Labor hour contracts. 

(4) Negotiated fixed price contracts for 

which the price is not based upon an 

exception at 15.403–1. 

(b) However, the contracting officer 

may revoke the Government’s 

assumption of risk when the property 

administrator determines that the 

contractor’s property management 

practices are inadequate and/or present 

an undue risk to the Government. A 

prime contractor that provides 

Government property to a subcontractor 

shall not be relieved of any 

responsibility to the Government that 

the prime contractor may have under 

the terms of the prime contract. 

45.105 Analysis of contractors’ property 

management system. 

(a) The agency responsible for 

contract administration shall conduct an 

analysis of the contractor’s property 

management policies, procedures, 

practices, and systems. This analysis 

shall be accomplished as frequently as 

conditions warrant, in accordance with 

agency procedures. 

(b) The property administrator shall 

notify the contractor in writing when 

the contractor’s property management 

system does not comply with 

contractual requirements, (i.e., is 

inadequate, not acceptable and/or 

presents an undue risk to the 

Government), and shall request prompt 

correction of deficiencies and shall 

provide a schedule for their completion. 

If the contractor does not correct the 

deficiencies in accordance with the 

schedule, the contracting officer shall 

notify the contractor, in writing, that 

failure to take the required corrective 

action(s) may result in—

(1) Contract price adjustment; 

(2) Withdrawal of the Government’s 

assumption of risk for loss, damage, 

destruction, or theft; and/or 

(3) Other such action as determined 

by the contracting officer. 

(c) If the contractor fails to take the 

required corrective action(s) in response 

to the notification provided by the 

contracting officer in accordance with 

paragraph (b) of this section, the 

contracting officer shall notify the 

contractor in writing of any Government 

decision to apply the remedies 

described in paragraphs (b)(1) through 

(b)(3) of this section. 

45.106 Transferring accountability. 

Government property shall be 

transferred from one contract to another 

only when firm requirements exist 

under the gaining contract (see 45.102). 

Such transfers shall be documented by 

modifications to both gaining and losing 

contracts. Once transferred, all property 

shall be considered Governmentfurnished property to the gaining 

contract. 

45.107 Contract clauses. 

(a)(1) Except as provided in paragraph 

(d) of this section, the contracting officer 

shall insert the clause at 52.245–1, 

Government Property, in—

(i) All cost reimbursement, time-andmaterial, and labor hour type 

solicitations and contracts; and 

(ii) Fixed-price solicitations and 

contracts when the Government will 

provide Government property. 

(2) The contracting officer shall use 

the clause with its Alternate I in 

contracts other than those identified in 

45.104(a). 

(3) The contracting officer shall use 

the clause with its Alternate II when a 

contract for the conduct of basic or 

applied research at nonprofit 

institutions of higher education or at 

nonprofit organizations whose primary 

purpose is the conduct of scientific 

research (see 35.014) is contemplated. 

(b) The contracting officer shall insert 

the clause at 52.245–2, Government 

Property (Installation Operations for 

54884 Federal Register / Vol. 70, No. 180 / Monday, September 19, 2005 / Proposed Rules 

Services), in service contracts to be 

performed on a Government installation 

when Government-furnished property 

will be provided for initial provisioning 

only and the Government is not 

responsible for repair or replacement. 

(c) The contracting officer shall insert 

the clause at 52.245–9, Use and Charges, 

in solicitations and contracts when 

rental of Government property is 

contemplated. 

(d) When the acquisition cost of the 

item to be repaired does not exceed the 

simplified acquisition threshold, 

purchase orders for property repair need 

not include a Government property 

clause. 

Subpart 45.2—Solicitation and 

Evaluation Procedures 

45.201 General. 

(a) The contracting officer shall insert 

a listing of the Government property to 

be offered in all solicitations where 

Government-furnished property is 

anticipated (see 45.102). The listing 

shall include at a minimum—

(1) The name, commercial part 

number and description, manufacturer, 

bulk identifier, model number, and 

National Stock Number (if needed for 

additional item identification tracking 

and/or disposition); 

(2) Quantity/unit of measure; 

(3) Unit acquisition cost; and 

(4) Unique-item identifier or 

equivalent (if available and necessary 

for individual item tracking). 

(b) When Government property is 

offered for use in a competitive 

acquisition, solicitations will ordinarily 

require that the contractor assume all 

costs related to making the property 

available for use, such as payment of all 

transportation, installation or 

rehabilitation costs. 

(c) The solicitation shall describe the 

evaluation procedures to be followed, 

including rental charges or equivalents 

and other costs or savings to be 

evaluated, and shall require all offerors 

to submit the following information 

with their offers: 

(1) A list or description of all 

Government property that the offeror or 

its subcontractors propose to use on a 

rent-free basis. The list shall identify the 

accountable contract under which the 

property is held and the authorization 

for its use (from the contracting officer 

having cognizance of the property). 

(2) The dates during which the 

property will be available for use 

(including the first, last, and all 

intervening months) and, for any 

property that will be used concurrently 

in performing two or more contracts, the 

amounts of the respective uses in 

sufficient detail to support prorating the 

rent. 

(3) The amount of rent that would 

otherwise be charged in accordance 

with the clause at 52.245–9, Use and 

Charges. 

(4) The voluntary consensus standard 

or industry leading practices and 

standards to be used in the management 

of Government property, or existing 

property management plans, methods, 

practices, or procedures for accounting 

for property. 

(d) The contracting officer shall 

consider any potentially unfair 

competitive advantage that may result 

from the contractor possessing 

Government property. At a minimum, 

this shall be done by—

(1) Adjusting the offers by applying, 

for evaluation purposes only, a rental 

equivalent evaluation factor; or 

(2) By charging the offeror rent for 

using the property when adjusting the 

offer is not practical. 

(e) The contracting officer shall 

ensure the offeror’s property 

management plans, methods, practices, 

or procedures for accounting for 

property are consistent with the 

requirements of the solicitation. 

Subpart 45.3—Authorizing the Use 

and/or Rental of Government Property 

45.301 Use and rental. 

This subpart prescribes policies and 

procedures for contractor use and rental 

of Government Property. 

(a) Government property shall 

normally be provided on a rent-free 

basis in performance of the contract 

under which it is accountable or 

otherwise authorized. 

(b) Rental charges, to the extent 

authorized do not apply to the 

following: 

(1) Government property that is 

located in Government-owned, 

contractor-operated plants operated on a 

cost-plus-fee basis. 

(2) Government property that is left in 

place or installed on contractor-owned 

property for mobilization or future 

Government production purposes; 

however, rental charges shall apply to 

that portion of property or its capacity 

used for non-government commercial 

purposes or otherwise authorized for 

use. 

(c) The contracting officer cognizant 

of the Government property may 

authorize the rent-free use of property in 

the possession of nonprofit 

organizations when used for research, 

development, or educational work 

and—

(1) The use of the property is in the 

national interest; 

(2) The property will not be used for 

the direct benefit of a profit-making 

organization; and 

(3) The Government receives some 

direct benefit, such as rights to use the 

results of the work without charge, from 

its use. 

(d) In exchange for consideration as 

determined by the cognizant contracting 

officer(s), the contractor may use 

Government property under fixed-price 

contracts other than the contract to 

which it is accountable. When, after 

contract award, a contractor requests the 

use of Government property, the 

contracting officer shall obtain a fair 

rental or other adequate consideration if 

use is authorized. 

(e) The cognizant contracting 

officer(s) may authorize the use of 

Government property on a rent-free 

basis on a cost-type Government 

contract other than the contract to 

which it is accountable. 

(f) In exchange for consideration as 

determined by the cognizant contracting 

officer, the contractor may use 

Government property for commercial 

use. Prior approval of the Head of the 

Contracting Activity is required where 

non-Government use is expected to 

exceed 25 percent of the total use of 

Government and commercial work 

performed. 

45.302 Contracts with foreign 

Governments or international 

organizations. 

Requests by, or for the benefit of, 

foreign governments or international 

organizations to use Government 

property shall be processed in 

accordance with agency procedures. 

45.303 Use of Government property on 

independent research and development 

programs. 

The contracting officer may authorize 

a contractor to use the property on an 

independent research and development 

(IR&D) program, if—

(a) Such use will not conflict with the 

primary use of the property or enable 

the contractor to retain property that 

could otherwise be released; 

(b) The contractor agrees not to 

include as a charge against any 

Government contract the rental value of 

the property used on its IR&D program; 

and 

(c) A rental charge for the portion of 

the contractor’s IR&D program cost 

allocated to commercial work is 

deducted from any agreed-upon 

Government share of the contractor’s 

IR&D costs. 

Federal Register / Vol. 70, No. 180 / Monday, September 19, 2005 / Proposed Rules 54885 

Subpart 45.4—Title to Government 

Property 

45.401 Title to Government property. 

(a) The Government retains title to all 

Government-furnished property until 

properly disposed of, as authorized by 

law or regulation. Property that is leased 

by the Government and subsequently 

furnished to the contractor for use shall 

be considered Government-furnished 

property under the clause at 52.245–1, 

Government Property. 

(b) Under fixed price type contracts, 

the contractor retains title to all 

property acquired by the contractor for 

use on the contract, except for property 

identified as a deliverable end item. If 

a deliverable item is to be retained by 

the contractor for use after inspection 

and acceptance by the Government, it 

shall be made accountable to the 

contract through a contract modification 

listing the item as Governmentfurnished property. 

(c) Under cost-type and time-andmaterial contracts, the Government 

acquires title to all property to which 

the contractor is entitled to 

reimbursement as a direct item of cost, 

provided the property acquired is 

reasonable, allocable, and allowable (see 

Part 31). If the contractor is covered by 

Cost Accounting Standards, its 

disclosure statement may affect the 

charging, and consequently, the title 

vesting provisions. 

Subpart 45.5—Support Government 

Property Administration 

45.501 Support Government property 

administration. 

(a) To ensure subcontractor 

compliance with Government property 

administration requirements, the 

property administrator assigned to the 

prime contract may request support 

property administration from another 

contract administration office, provided 

the contractor has agreed to allow such 

property administration. 

(b) In instances where the prime 

contractor does not agree to allow the 

support property administrator to 

provide support property 

administration, the prime property 

administrator shall immediately refer 

the matter to the contracting officer. 

(c) In instances where the prime 

contractor does not concur with the 

findings of the support Property 

Administrator, the prime property 

administrator shall immediately refer 

the matter to the contracting officer. 

(d) The prime property administrator 

shall accept the findings of the 

delegated support property 

administrator and advise the prime 

contractor of any deficiencies within the 

subcontractor’s property management 

system. 

45.600 [Amended] 

12. Amend section 45.600 by 

removing ‘‘Government property’’ and 

‘‘or progress’’ and adding ‘‘contractor 

inventory’’ and ‘‘, progress, or 

performance-based’’ in their places, 

respectively. 

45.601 [Removed and Reserved] 

13. Remove and reserve section 

45.601. 

PART 49—TERMINIATION OF 

CONTRACTS 

14. Amend section 49.108–3 by 

revising paragraph (b)(1) to read as 

follows: 

49.108–3 Settlement procedure. 

* * * * * 

(b) * * * 

(1) All subcontractor termination 

inventory be disposed of and accounted 

for in accordance with the procedures 

contained in paragraph (j) of the clause 

at 52.245–1, Government Property; and 

* * * * * 

PART 51—USE OF GOVERNMENT 

SOURCES BY CONTRACTORS 

51.106 [Amended] 

15. Amend section 51.106 by 

removing from paragraph (b) ‘‘52.245–

2’’ and adding ‘‘52.245–1’’ in its place, 

and removing ‘‘, or 52.245–5, Alternate 

I’’. 

51.107 [Amended] 

16. Amend section 51.107 by 

removing the last sentence. 

51.200 [Amended] 

17. Amend section 51.200 by 

removing ‘‘45.304’’ and adding ‘‘45.102’’

in its place. 

PART 52—SOLICIATION PROVISIONS 

AND CONTRACT CLAUSES 

18. Revise sections 52.245–1 and 

52.245–2 to read as follows: 

52.245–1 Government Property. 

As prescribed in 45.107(a), insert the 

following clause: 

GOVERNMENT PROPERTY (DATE) 

(a) Definitions. As used in this clause—

Acquisition cost means—

(1) For Contractor acquired property, the 

full cost determined in accordance with the 

system established by the Contractor in 

conformance with consistently applied 

sound accounting principles. 

(2) For Government furnished property, the 

amount identified in the contract, or in the 

absence of such identification, the fair market 

value attributed to the item by the Contractor. 

Common item means material that is 

common to the applicable Government 

contract and the contractor’s other work. 

Contractor-acquired property means 

property acquired, fabricated, or otherwise 

provided by the Contractor for performing a 

contract, and to which the Government has 

title. 

Contractor’s managerial personnel means 

the Contractor’s directors, officers, managers, 

superintendents, or equivalent 

representatives who have supervision or 

direction of all or substantially all of the 

Contractor’s business; all or substantially all 

of the Contractor’s operation at any one plant 

or separate location. 

Contractor inventory means—

(1) Any property acquired by and in the 

possession of a Contractor or subcontractor 

under a contract for which title is vested in 

the Government and which exceeds the 

amounts needed to complete full 

performance under the entire contract; 

(2) Any property that the Government is 

obligated or has the option to take over under 

any type of contract, e.g., as a result either 

of any changes in the specifications or plans 

thereunder or of the termination of the 

contract (or subcontract thereunder), before 

completion of the work, for the convenience 

or at the option of the Government; and 

(3) Government-furnished property that 

exceeds the amounts needed to complete full 

performance under the entire contract. 

Demilitarization means rendering a 

product designated for demilitarization 

unusable for and not restorable to, the 

purpose for which it was designed or is 

customarily used. 

Discrepancies incident to shipment means 

all deficiencies incident to shipment of 

Government property to or from a 

Contractor’s facility whereby differences 

exist between the property purported to have 

been shipped and property actually received. 

Equipment means a tangible article of 

personal property that is complete in-and-of 

itself, durable, nonexpendable, and needed 

for the performance of a contract. Equipment 

generally has an expected service life of one 

year or more, and does not ordinarily lose its 

identity or become a component part of 

another article when put into use. 

Government-furnished property means 

property in the possession of, or directly 

acquired by, the Government and 

subsequently furnished to the Contractor for 

performance of a contract. 

Government property means all property 

owned or leased by the Government. 

Government property includes both 

Government-furnished and contractoracquired property. 

Material means property that may be 

consumed or expended during the 

performance of a contract, component parts 

of a higher assembly, or items that lose their 

individual identity through incorporation 

into an end-item. Material does not include 

equipment, special tooling, special test 

equipment, or unique Federal property. 

Nonseverable means property that cannot 

be removed after erection or installation 

without substantial loss of value or damage 

54886 Federal Register / Vol. 70, No. 180 / Monday, September 19, 2005 / Proposed Rules 

to the installed property or to the premises 

where installed. 

Precious metals means silver, gold, 

platinum, palladium, iridium, osmium, 

rhodium, and ruthenium. 

Property means all tangible property, both 

real and personal. 

Property Administrator means an 

authorized representative of the Contracting 

Officer assigned the responsibility of 

administering the contract requirements and 

obligations relating to Government property 

in the possession of a Contractor. 

Provide means to furnish existing 

Government property or to allow the 

Contractor to acquire property on behalf of 

the Government under this contract. 

Real property means land, land rights, 

buildings, structures, utility systems, steamgeneration systems, and equipment attached 

to and made part of buildings and structures 

(such as heating systems). As such, land 

rights are considered real property. It does 

not include foundations and other work 

necessary for installing special tooling, 

special test equipment, or equipment. 

Sensitive property means property 

potentially dangerous to the public safety or 

security if stolen, lost, or misplaced, or that 

shall be subject to exceptional physical 

security, protection, control, and 

accountability such as classified property, 

weapons, ammunition, explosives, controlled 

substances, radioactive materials, hazardous 

materials or wastes, or precious metals. 

Surplus property means excess personal 

property not required by any Federal agency 

as determined by the Administrator of the 

General Services Administration (GSA). 

Unique Federal Property means 

Government-owned personal property that is 

peculiar to the mission of an agency, e.g., 

military or space property. Unique Federal 

property excludes material, special test 

equipment, special tooling, real property and 

equipment. 

(b) Property management. (1) The 

Contractor shall have a system to manage 

(control, use, preserve, protect, repair and 

maintain) Government property in its 

possession. The system shall be adequate to 

satisfy the requirements of this clause. In 

doing so, the Contractor shall initiate and 

maintain the processes, systems, records, and 

methodologies necessary for effective control 

of Government property, consistent with 

voluntary consensus standards and/or 

industry-leading practices and standards for 

Government property management. 

(2) The Contractor’s responsibility extends 

from the initial acquisition and receipt of 

property, through stewardship, custody, and 

use until formally relieved of responsibility 

by authorized means, including delivery, 

consumption, expending, disposition, or via 

a completed investigation, evaluation, and 

final determination for lost, damaged, or 

destroyed property. This requirement applies 

to all Government property under the 

Contractor’s accountability, stewardship, 

possession or control, including its vendors 

or subcontractors (see paragraph (f)(1)(v) of 

this clause). 

(3) The Contractor shall include the 

requirements of this clause in all 

subcontracts under which Government 

property is acquired or furnished for 

subcontract performance. 

(c) Use of Government property. The 

Contractor shall use Government property, 

either furnished or acquired under this 

contract, only for performing this contract, 

unless otherwise provided for in this contract 

or approved by the Contracting Officer. The 

Contractor shall not modify, cannibalize, or 

make alterations to Government property 

unless this contract specifically identifies the 

modifications, alterations or improvements 

as work to be performed. 

(d) Government-furnished property. (1) The 

Government shall deliver to the Contractor 

the Government-furnished property 

described in this contract. The Government 

shall furnish related data and information 

needed for the intended use of the property. 

(2) The Government shall retain title to all 

Government-furnished property; title shall 

not be affected by incorporation into, or 

attachment to, any property not owned by the 

Government. Government-furnished property 

shall not lose its identity as Government 

property by its attachment to real property. 

(3) The delivery and/or performance dates 

specified in this contract are based upon the 

expectation that the Government-furnished 

property will be suitable for contract 

performance and will be delivered to the 

Contractor by the dates stated in the contract. 

(i) If the property is not delivered to the 

Contractor by the dates stated in the contract, 

the Contracting Officer shall, upon the 

Contractor’s timely written request, consider 

an equitable adjustment to the contract. 

(ii) In the event property is received by the 

Contractor in a condition not suitable for its 

intended use, the Contracting Officer shall, 

upon the Contractor’s timely written request, 

advise the Contractor on a course of action 

to remedy the problem. Such action may 

include repairing, replacing, modifying, 

returning, or otherwise disposing of the 

property at the Government’s expense. Upon 

completion of the required action(s) the 

Contracting Officer shall consider an 

equitable adjustment to the contract (see also 

paragraph (f)(1)(ii)(A) of this clause). 

(iii) The Government may, at its option, 

furnish property in an ‘‘as is’’ condition. In 

such cases, the Government makes no 

warranty with respect to the serviceability 

and/or suitability of the property for contract 

performance. Any repairs, replacement, and/ 

or refurbishment shall be at the Contractor’s 

expense. 

(4)(i) The Contracting Officer may by 

written notice, at any time—

(A) Increase or decrease the amount of 

Government-furnished property under this 

contract; 

(B) Substitute other Government-furnished 

property for the property previously 

furnished, to be furnished, or to be acquired 

by the Contractor for the Government under 

this contract; or 

(C) Withdraw authority to use property. 

(ii) Upon completion of any action(s) under 

paragraph (d)(4)(i) of this clause, and the 

Contractor’s timely written request, the 

Contracting Officer shall consider an 

equitable adjustment to the contract. 

(e) Title to Contractor-acquired property. 

Title to all property purchased by the 

Contractor, for which the Contractor is 

entitled to be reimbursed as a direct item of 

cost, under this contract, shall pass to and 

vest in the Government upon—

(1) A vendor’s or supplier’s initial delivery 

of such property to the Contractor; 

(2) Issuance of the property for use in 

contract performance, including the 

installation of parts through normal 

maintenance; 

(3) Commencement of processing of the 

property for use in contract performance; or 

(4) Reimbursement by the Government for 

the cost of the property, whichever occurs 

first. 

(f) Contractor plans and systems. (1) 

Contractors shall develop property 

management plans and systems, at the 

contract, program, site or entity level to 

enable the following outcomes: 

(i) Acquisition of property. The Contractor 

shall document that all property was 

acquired consistent with its engineering, 

production planning, material control 

operations, and/or cost accounting disclosure 

statement. 

(ii) Receipt of Government property. The 

Contractor shall receive Government 

property (document the receipt), record (the 

information necessary to meet the record 

requirements of paragraphs (f)(1)(iii)(A)(1), 

(2), (3), (4) and (5) of this clause), identify (as 

Government-owned), and manage any 

discrepancies incident to shipment. 

(A) Government-furnished property. The 

Contractor shall furnish a written statement 

to the Property Administrator containing all 

relevant facts, such as cause or condition and 

a recommended course(s) of action, if 

overages, shortages, or damages and/or other 

discrepancies are discovered upon receipt of 

Government-furnished property. 

(B) Contractor-acquired property. The 

Contractor shall take all actions necessary to 

adjust for overages, shortages, damage and/or 

other discrepancies discovered upon receipt, 

in shipment of Contractor-acquired property 

from a vendor or supplier, so as to ensure the 

proper allocability and allowability of 

associated costs. 

(iii) Records of Government property. The 

Contractor shall create and maintain records 

of all Government property accountable to 

the contract, including Governmentfurnished and Contractor-acquired property. 

(A) Property records shall enable a 

complete, current, auditable record of all 

transactions and shall, unless otherwise 

approved by the Property Administrator, 

contain the following data: 

(1) The name, commercial part number and 

description, manufacturer, bulk identifier, 

model number, and National Stock Number 

(if needed for additional item identification 

tracking and/or disposition). 

(2) Quantity received (or fabricated), 

issued, and balance-on-hand. 

(3) Unit acquisition cost. 

(4) Unique-item identifier or equivalent (if 

available and necessary for individual item 

tracking). 

(5) Unit of measure. 

(6) Accountable contract number or 

equivalent code designation. 

(7) Location. 

(8) Disposition. 

Federal Register / Vol. 70, No. 180 / Monday, September 19, 2005 / Proposed Rules 54887 

(9) Posting reference and date of 

transaction. 

(10) Date placed in service. 

(B) When approved by the Property 

Administrator, the Contractor may maintain, 

in lieu of formal property records, a file of 

appropriately cross-referenced documents 

evidencing receipt, issue, and use of material 

that is issued for immediate consumption. 

(iv) Physical inventory. The Contractor 

shall periodically perform, record, and report 

physical inventories during contract 

performance. A final physical inventory shall 

be performed upon contract completion or 

termination. The Property Administrator may 

waive this final inventory requirement, 

depending on the circumstances, e.g., overall 

reliability of the Contractor’s system or the 

property is to be transferred to a follow-on 

contract. 

(v) Subcontractor control. (A) The 

Contractor shall award subcontracts that 

clearly identify assets to be provided and 

shall ensure appropriate flow down of 

contract requirements, including any cost 

savings achieved as a result of its prime 

contract relationship with the Government. 

(B) The Contractor shall assure its 

subcontracts are properly administered and 

reviews are periodically performed to 

determine the adequacy of the 

subcontractor’s property management 

system. 

(vi) Reports. The Contractor shall have a 

process to create and provide reports 

including: reports of discrepancies; loss, 

damage and destruction; physical inventory 

results; audits and self-assessments; 

corrective actions; and other reports as 

directed by the Contracting Officer. 

(A) Loss, damage, destruction, and theft. 

Unless otherwise directed by the Property 

Administrator, the Contractor shall 

investigate and promptly furnish to the 

Property Administrator, a written narrative of 

all incidents of loss, damage, destruction, or 

theft, as soon as the facts become known or 

when requested by the Government. Such 

reports shall, at a minimum, contain the 

following information: 

(1) Date of incident (if known). 

(2) The name, commercial description, 

manufacturer, model number, and National 

Stock Number (if applicable). 

(3) Quantity. 

(4) Unique Item Identifier (if available). 

(5) Accountable Contract number. 

(6) A statement indicating current or future 

need. 

(7) Acquisition cost, or if applicable, 

estimated scrap proceeds, estimated repair or 

replacement costs. 

(8) All known interests in commingled 

property of which the Government property 

is a part. 

(9) Cause and corrective action taken or to 

be taken to prevent recurrence. 

(10) A statement that the Government will 

receive any reimbursement covering the loss, 

damage, destruction, or theft, in the event the 

Contractor was or will be reimbursed or 

compensated. 

(11) Copies of all supporting 

documentation. 

(B) The Contractor shall take all reasonable 

actions necessary to protect the Government 

property from further loss, damage, 

destruction, or theft. The Contractor shall 

separate the damaged and undamaged 

Government property, place all the affected 

Government property in the best possible 

order, and take such other action as the 

Property Administrator directs. 

(C) The Contractor shall do nothing to 

prejudice the Government’s rights to recover 

against third parties for any loss, damage, 

destruction, or theft of Government property. 

(D) Upon the request of the Contracting 

Officer, the Contractor shall, at the 

Government’s expense, furnish to the 

Government all reasonable assistance and 

cooperation, including the prosecution of 

suit and the execution of instruments of 

assignment in favor of the Government in 

obtaining recovery. 

(vii) Relief of stewardship responsibility. 

Unless the contract provides otherwise, the 

Contractor shall be relieved of stewardship 

responsibility for Government property when 

such property is—

(A) Consumed or expended, reasonably 

and properly, or otherwise accounted for, in 

the performance of the contract as 

determined by the Property Administrator, 

including reasonable inventory adjustments; 

(B) Delivered or shipped from the 

Contractor’s plant, under Government 

instructions, except when shipment is to a 

subcontractor or other location of the 

Contractor; or 

(C) Disposed of in accordance with 

paragraphs (j) and (k) of this clause. 

(viii) Utilizing Government property. The 

Contractor shall utilize, consume, and store 

Government property only as authorized 

under this contract. The Contractor shall 

promptly disclose and report Government 

property in its possession that is excess to 

contract performance. 

(ix) Maintenance. The Contractor shall 

properly maintain Government property. The 

Contractor’s maintenance program shall 

enable the identification, disclosure, and 

performance of normal preventative 

maintenance and repair. The Contractor shall 

disclose and report to the Property 

Administrator the need for replacement and/ 

or capital rehabilitation. 

(x) Property closeout. The Contractor shall 

promptly perform and report to the Property 

Administrator contract property closeout, to 

include reporting, investigating and securing 

closure of all loss, damage, destruction, or 

theft cases; physically inventorying all 

property upon termination or completion of 

this contract; and disposing of items at the 

time they are determined to be excess to 

contractual needs. 

(2) The Contractor shall establish and 

maintain Government accounting source 

data, as may be required by this contract, 

particularly in the areas of recognition of 

acquisitions and dispositions of material and 

equipment. 

(3) The Contractor shall establish and 

maintain procedures necessary to assess its 

property management system effectiveness, 

and shall perform periodic internal reviews 

and audits. The findings and/or results of 

such reviews and audits shall be made 

available to the Property Administrator. 

(g) Systems analysis. (1) The Government 

shall have access to the Contractor’s 

premises, at reasonable times, for the 

purposes of reviewing, inspecting and 

evaluating the Contractor’s property 

management systems, procedures, records, 

and supporting documentation. 

(2) Records of Government property shall 

be readily available to authorized 

Government personnel and shall be 

safeguarded from tampering or destruction. 

(3) Should it be determined by the 

Government that the Contractor’s property 

management practices are inadequate or not 

acceptable for the effective management and/ 

or control of Government property under this 

contract; and/or present an undue risk to the 

Government, the Contractor shall 

immediately take all necessary corrective 

actions as directed by the Property 

Administrator. 

(h) Contractor Liability for Government 

Property. (1) Unless otherwise provided for 

in the contract, the Contractor shall not be 

liable for loss, damage, destruction, or theft 

to the Government property furnished or 

acquired under this contract, except when 

any one of the following applies: 

(i) The risk is covered by insurance or the 

Contractor is otherwise reimbursed (to the 

extent of such insurance or reimbursement). 

(ii) The loss, damage, destruction, or theft 

is the result of willful misconduct or lack of 

good faith on the part of the Contractor’s 

managerial personnel. Contractor’s 

managerial personnel, in this clause, means 

the Contractor’s directors, officers, managers, 

superintendents, or equivalent 

representatives who have supervision or 

direction of all or substantially all of the 

Contractor’s business; all or substantially all 

of the Contractor’s operation at any one plant 

or separate location; or a separate and 

complete major industrial operation. 

(iii) The Contracting Officer has, in writing, 

withdrawn the Government’s assumption of 

risk for loss, damage, destruction, or theft, 

due to a determination under paragraph (g) 

of this clause that the Contractor’s property 

management practices are inadequate, and/or 

present an undue risk to the Government, 

and the Contractor failed to take timely 

corrective action. If the Contractor can 

establish by clear and convincing evidence 

that the loss, damage, destruction, or theft of 

Government property occurred while the 

Contractor had adequate property 

management practices or the loss, damage, 

destruction, or theft of Government property 

did not result from the Contractor’s failure to 

maintain adequate property management 

practices, the Contractor shall not be held 

liable. 

(2) The allowability of insurance costs 

shall be determined in accordance with 

31.205–19 of the Federal Acquisition 

Regulation. 

(i) Equitable adjustment. Equitable 

adjustments under this clause shall be made 

in accordance with the procedures of the 

Changes clause. The right to an equitable 

adjustment shall be the Contractor’s 

exclusive remedy and the Government shall 

not be liable to suit for breach of contract for 

the following—

(1) Any delay in delivery of Governmentfurnished property. 

54888 Federal Register / Vol. 70, No. 180 / Monday, September 19, 2005 / Proposed Rules 

(2) Delivery of Government-furnished 

property in a condition not suitable for its 

intended use. 

(3) An increase, decrease, or substitution of 

Government-furnished property. 

(4) Failure to repair or replace Government 

property for which the Government is 

responsible. 

(j) Contractor inventory disposal. Except as 

otherwise provided for in this contract, the 

Contractor shall not dispose of Contractor 

inventory until authorized to do so by the 

Plant Clearance Officer. 

(1) Scrap to which the Government has 

obtained title under paragraph (e) of this 

clause.—(i) Contractor with an approved 

scrap procedure. (A) The Contractor may 

dispose of scrap resulting from production or 

testing under this contract without 

Government approval. However, if the scrap 

requires demilitarization or is sensitive 

property, the Contractor shall submit the 

scrap on an inventory disposal schedule. 

(B) For scrap from other than production 

or testing the Contractor may prepare scrap 

lists in lieu of inventory disposal schedules 

(provided such lists are consistent with the 

approved scrap procedures), except that 

inventory disposal schedules shall be 

submitted for scrap aircraft or aircraft parts 

and scrap that—

(1) Requires demilitarization; 

(2) Is a classified item; 

(3) Is generated from classified items; 

(4) Contains hazardous materials or 

hazardous wastes; 

(5) Contains precious metals; or 

(6) Is dangerous to the public health, 

safety, or welfare. 

(ii) Contractor without an approved scrap 

procedure. The Contractor shall submit an 

inventory disposal schedule for all scrap. 

(2) Predisposal requirements. Once the 

Contractor determines that Contractoracquired property is no longer needed for 

contract performance, the Contractor in the 

following order of priority—

(i) May purchase the property at the 

acquisition cost; 

(ii) Shall make reasonable efforts to return 

unused property to the appropriate supplier 

at fair market value (less, if applicable, a 

reasonable restocking fee that is consistent 

with the supplier’s customary practices); and 

(iii) Shall list, on Standard Form 1428, 

Inventory Disposal Schedule, property that 

was not purchased under paragraph (j)(2)(i) 

of this clause, could not be returned to a 

supplier, or could not be used in the 

performance of other Government contracts. 

(3) Inventory disposal schedules. (i) The 

Contractor shall use Standard Form 1428, 

Inventory Disposal Schedule, to identify—

(A) Government-furnished Property that is 

no longer required for performance of this 

contract, provided the terms of another 

Government contract do not require the 

Government to furnish that property for 

performance of this contract; 

(B) Contractor acquired property, to which 

the Government has obtained title under 

paragraph (e) of this clause, which is no 

longer required for performance of that 

contract; and 

(C) Termination inventory. 

(ii) The Contractor may annotate inventory 

disposal schedules to identify property the 

Contractor wishes to purchase from the 

Government. 

(iii) Unless the Plant Clearance Officer has 

agreed otherwise, or the contract requires 

electronic submission of inventory disposal 

schedules, the Contractor shall prepare 

separate inventory disposal schedules for—

(A) Special test equipment with 

commercial components; 

(B) Special test equipment without 

commercial components; 

(C) Printing equipment; 

(D) Information technology (e.g., 

computers, computer components, peripheral 

equipment, and related equipment); 

(E) Precious metals; 

(F) Nonnuclear hazardous materials or 

hazardous wastes; or 

(G) Nuclear materials or nuclear wastes. 

(iv) The Contractor shall describe the 

property in sufficient detail to permit an 

understanding of its intended use. Property 

with the same description, condition code, 

and reporting location may be grouped in a 

single line item. 

(4) Submission requirements. The 

Contractor shall submit inventory disposal 

schedules to the Plant Clearance Officer no 

later than—

(i) 30 days following the Contractor’s 

determination that a Government property 

item is no longer required for performance of 

this contract; 

(ii) 60 days, or such longer period as may 

be approved by the Plant Clearance Officer, 

following completion of contract deliveries 

or performance; or 

(iii) 120 days, or such longer period as may 

be approved by the Termination Contracting 

Officer following contract termination in 

whole or in part. 

(5) Corrections. The Plant Clearance Officer 

may—

(i) Reject a schedule for cause (e.g., 

contains errors, determined to be inaccurate); 

and 

(ii) Require the Contractor to correct an 

inventory disposal schedule. 

(6) Postsubmission adjustments. The 

Contractor shall notify the Plant Clearance 

Officer at least 10 working days in advance 

of its intent to remove an item from an 

approved inventory disposal schedule. Upon 

approval of the Plant Clearance Officer, or 

upon expiration of the notice period, the 

Contractor may make the necessary 

adjustments to the inventory schedule. 

(7) Storage. (i) The Contractor shall store 

the property identified on an inventory 

disposal schedule pending receipt of disposal 

instructions. The Government’s failure to 

furnish disposal instructions within 120 days 

following acceptance of an inventory 

disposal schedule may entitle the Contractor 

to an equitable adjustment for costs incurred 

to store such property on or after the 121st 

day. 

(ii) The Contractor shall obtain the Plant 

Clearance Officer’s approval to remove 

Government property from the premises 

where the property is currently located prior 

to receipt of final disposition instructions. If 

approval is granted, any costs incurred by the 

Contractor to transport or store the property 

shall not increase the price or fee of any 

Government contract. The storage facility 

shall be appropriate for assuring the 

property’s physical safety and suitability for 

use. Approval does not relieve the Contractor 

of any liability for such property under this 

contract. 

(8) Disposition instructions. (i) If the 

Government does not furnish disposition 

instructions to the Contractor within 45 days 

following acceptance of a scrap list, the 

Contractor may dispose of the listed scrap in 

accordance with the Contractor’s approved 

scrap procedures. 

(ii) The Contractor shall prepare for 

shipment, deliver f.o.b. origin, or dispose of 

Contractor inventory as directed by the Plant 

Clearance Officer. If not returned to the 

Government, the Contractor shall remove and 

destroy any markings identifying the 

property as U.S. Government-owned property 

prior to its disposal. 

(iii) The Contracting Officer may require 

the Contractor to demilitarize the property 

prior to shipment or disposal. In such cases, 

the Contractor may be entitled to an equitable 

adjustment under paragraph (i) of this clause. 

(9) Disposal proceeds. The Contractor shall 

credit the net proceeds from the disposal of 

Contractor inventory to the price or cost of 

work or as the Contracting Officer directs. 

(10) Subcontractor inventory disposal 

schedules. The Contractor shall require its 

Subcontractors to submit inventory disposal 

schedules to the Contractor in accordance 

with the requirements of paragraph (j)(4) of 

this clause. 

(k) Abandonment of Government property. 

(1) The Government shall not abandon 

sensitive Government property or 

termination inventory without the 

Contractor’s written consent. 

(2) The Government, upon notice to the 

Contractor, may abandon any nonsensitive 

Government property in place, at which time 

all obligations of the Government regarding 

such property shall cease. 

(3) The Government has no obligation to 

restore or rehabilitate the Contractor’s 

premises under any circumstances; however, 

if Government—furnished property is 

withdrawn or is unsuitable for the intended 

use, or if other Government property is 

substituted, then the equitable adjustment 

under paragraph (i) of this clause may 

properly include restoration or rehabilitation 

costs. 

(l) Communication. All communications 

under this clause shall be in writing. 

(m) Overseas Contracts. If this contract is 

to be performed outside of the United States 

and its outlying areas, the words 

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

(wherever they appear in this clause) shall be 

construed as ‘‘United States Government’’

and ‘‘United States Government-furnished,’’

respectively. 

(End of clause) 

Alternate I (Date). As prescribed in 

45.107(a)(2), substitute the following for 

paragraph (h)(1) of the basic clause: 

(h)(1) The Contractor assumes the risk of, 

and shall be responsible for, any loss, 

damage, destruction, or theft of Government 

property upon its delivery to the Contractor 

as Government-furnished property. However, 

the Contractor is not responsible for 

reasonable wear and tear to Government 

Federal Register / Vol. 70, No. 180 / Monday, September 19, 2005 / Proposed Rules 54889 

property or for Government property 

properly consumed in performing this 

contract. 

Alternate II (Date). As prescribed in 

45.107(a)(3), substitute the following for 

paragraph (e) of the basic clause: 

(e) Title to property (and other tangible 

personal property) purchased with funds 

available for research and having an 

acquisition cost of less than $5,000 shall vest 

in the Contractor upon acquisition or as soon 

thereafter as feasible; provided that the 

Contractor obtained the Contracting Officer’s 

approval before each acquisition. Title to 

property purchased with funds available for 

research and having an acquisition cost of 

$5,000 or more shall vest as set forth in this 

contract. If title to property vests in the 

Contractor under this paragraph, the 

Contractor agrees that no charge will be made 

to the Government for any depreciation, 

amortization, or use under any existing or 

future Government contract or subcontract 

thereunder. The Contractor shall furnish the 

Contracting Officer a list of all property to 

which title is vested in the Contractor under 

this paragraph within 10 days following the 

end of the calendar quarter during which it 

was received. Vesting title under this 

paragraph is subject to civil rights legislation, 

42 U.S.C. 2000d. Before title is vested and by 

signing this contract, the Contractor accepts 

and agrees that—

‘‘No person in the United States or its 

outlying areas shall, on the ground of race, 

color, or national origin, be excluded from 

participation in, be denied the benefits of, or 

be otherwise subjected to discrimination 

under this contemplated financial assistance 

(title to property).’’

52.245–2 Government Property 

(Installation Operations for Services). 

As prescribed in 45.107(b), insert the 

following clause: 

Government Property (Installation 

Operations for Services) (Date) 

(a) This Government Property is furnished 

to the Contractor in an ‘‘as-is, where is’’

condition. The Government makes no 

warranty regarding the suitability for use of 

the Government property specified in this 

contract. The Contractor shall be afforded the 

opportunity to inspect the Government 

property as specified in the solicitation. 

(b) The Government bears no responsibility 

for repair or replacement of any lost, 

damaged or destroyed Government property. 

If any or all of the Government property is 

lost, damaged or destroyed or becomes no 

longer usable, the Contractor shall be 

responsible for replacement of the property at 

Contractor expense. The Contractor shall 

have title to all replacement property and 

shall continue to be responsible for contract 

performance. 

(c) Unless the Contracting Officer 

determines otherwise, the Government 

abandons all rights and title to unserviceable 

(i.e., scrap) property resulting from contract 

performance. Upon notification to the 

Contracting Officer, the Contractor shall 

remove such property from the Government 

premises and dispose of it at Contractor 

expense. 

(d) Except as provided in this clause, 

Government property furnished under this 

contract shall be governed by the 

Government Property clause of this contract. 

(End of clause) 

52.245–3 through 52.245–8 [Removed and 

Reserved] 

19. Remove and reserve sections 

52.245–3 through52.245–8. 

20. Amend section 52.245–9 by—

a. Removing from the introductory 

paragraph ‘‘45.106(h)’’ and adding 

‘‘45.107(c)’’ in its place; 

b. Revising the date of the clause; and 

c. Revising in paragraph (a) the 

definitions ‘‘Acquisition cost’’, 

‘‘Government property’’, and ‘‘Real 

property’’. 

The revised text reads as follows: 

52.245–9 Use and Charges. 

* * * * * 

USE AND CHARGES (DATE) 

(a) * * * 

Acquisition cost means—

(1) For Contractor acquired property, the 

full cost determined in accordance with the 

system established by the Contractor in 

conformance with consistently applied 

sound accounting principles. 

(2) For Government-furnished property, the 

amount identified in the contract, or in the 

absence of such identification, the fair market 

value attributed to the item by the Contractor. 

Government property means all property 

owned or leased by the Government. 

Government property includes both 

Government-furnished and Contractoracquired property. 

Real property means land, land rights, 

buildings, structures, utility systems, steamgeneration systems, and equipment attached 

to and made part of buildings and structures 

(such as heating systems). As such, land 

rights are considered real property. It does 

not include foundations and other work 

necessary for installing special tooling, 

special test equipment, or equipment. 

* * * * * 

52.245–10 through 52.245–19 [Removed 

and Reserved] 

21. Remove and reserve sections 

52.245–10 through 52.245–19. 

PART 53—FORMS 

53.245 [Amended] 

22. Amend section 52.245 in 

paragraph (e) by removing ‘‘52.245–2(i), 

52.245–5(i)’’ and adding ‘‘52.245–1’’ in 

its place. 

[FR Doc. 05–18516 Filed 9–16–05; 8:45 am] 

BILLING CODE 6820–EP–S 

DEPARTMENT OF TRANSPORTATION 

National Highway Traffic Safety 

Administration 

49 CFR Part 572 

[Docket No. 2005–22068] 

Anthropomorphic Test Devices; Denial 

of Petition for Consideration 

Regarding Amending the Side Impact 

Dummy (SID); Specifications 

AGENCY: National Highway Traffic 

Safety Administration (NHTSA), DOT. 

ACTION: Denial of petition for 

rulemaking. 

SUMMARY: This notice denies a petition 

for rulemaking submitted by Ford Motor 

Company (Ford) on December 19, 2003, 

that asked the National Highway Traffic 

Safety Administration (NHTSA) to 

amend the Side Impact Dummy (SID) 

specifications in 49 CFR Part 572, 

Subpart F, for use in Federal Motor 

Vehicle Safety Standard (FMVSS) No. 

214, ‘‘Side Impact Occupant 

Protection,’’ and the Side Impact New 

Car Assessment Program (Side NCAP). 

FOR FURTHER INFORMATION CONTACT: For 

technical issues: Mr. Sean Doyle, 

NHTSA Office of Crashworthiness 

Standards. Telephone: (202) 366–1740. 

Facsimile: (202) 366–7002. 

For legal issues: Ms. Dee Fujita, 

NHTSA Office of the Chief Counsel. 

Telephone: (202) 366–2992. Facsimile: 

(202) 366–3820. 

Both officials can be reached by mail 

at the National Highway Traffic Safety 

Administration, 400 Seventh Street, 

SW., Washington, DC 20590. 

SUPPLEMENTARY INFORMATION: 

Background 

On October 30, 1990, NHTSA 

published a final rule (Federal Register 

Vol. 55, No. 210, Docket Number 88–06; 

Notice 8) to amend FMVSS No. 214, at 

the time titled, ‘‘Side Door Strength.’’

Prior to this final rule, a vehicle’s side 

impact performance was determined 

solely by a static assessment of the 

ability of a door to resist forces imparted 

by a piston pressing a rigid steel 

cylinder against the door’s outer surface. 

However, with the implementation of 

this final rule, effective September 1, 

1993, vehicles were additionally 

required to undergo full-scale dynamic 

crash tests to assess occupant 

protection. Because of its acceptable 

reliability and durability during 

research testing conducted in support of 

the final rule, the agency chose the SID 

to measure the potential for injuries to 

an occupant’s thorax and pelvis in a 

side impact crash (Federal Register Vol.