[Federal Register Volume 73, Number 169 (Friday, August 29, 2008)]
[Rules and Regulations]
[Pages 50878-50881]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-19892]


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GENERAL SERVICES ADMINISTRATION

41 CFR Part 102-39

[FMR Amendment 2008-07; FMR Case 2007-102-1; Docket 2007-0001; Sequence 
3]
RIN 3090-AI38


Federal Management Regulation; FMR Case 2007-102-1, Replacement 
of Personal Property Pursuant to the Exchange/Sale Authority

AGENCY:  Office of Governmentwide Policy, General Services 
Administration (GSA).

ACTION:  Final rule.

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SUMMARY:  The General Services Administration is amending the Federal 
Management Regulation (FMR) by updating coverage on the replacement of 
personal property pursuant to the exchange/sale authority. The changes 
were prompted by recommendations of

[[Page 50879]]

the Federal Asset Management Evaluation (FAME) interagency working 
group led by GSA.

DATES:  This final rule is effective August 29, 2008.

FOR FURTHER INFORMATION CONTACT:  For clarification of content, contact 
Mr. Robert Holcombe, Office of Governmentwide Policy, Office of Travel, 
Transportation, and Asset Management (MT), (202) 501-3828 or e-mail at 
<a href="/cdn-cgi/l/email-protection#c092afa2a5b2b4ee88afaca3afada2a580a7b3a1eea7afb6"><span class="__cf_email__" data-cfemail="3b6954595e494f15735457585456595e7b5c485a155c544d">[email protected]</span></a>. For information pertaining to status or 
publication schedules contact the Regulatory Secretariat, 1800 F 
Street, NW, Room 4035, Washington, DC, 20405, (202) 501-4755. Please 
cite FMR Amendment 2008-07, FMR case 2007-102-1.

SUPPLEMENTARY INFORMATION:

A. Background

    The General Services Administration's (GSA's) Office of 
Governmentwide Policy (OGP) facilitated the interagency Federal Asset 
Management Evaluation (FAME) initiative during 2004 and 2005. 
Discussions with GSA's Federal customers during this initiative 
revealed a perception that there were too many unnecessary restrictions 
and ``hurdles'' hindering the effective use of this authority. One of 
the recommendations of the FAME report (March 31, 2005) was to 
``increase the flexibility of the exchange/sale program to promote the 
use of this authority throughout the Government.''
    A proposed rule was published in the Federal Register on December 
11, 2007 (72 FR 70266). Two Federal agencies provided comments. Those 
comments and GSA's response to the comments are as follows:
    Comment: One comment questioned the need to expand the discussion 
of deviations to the exchange/sale regulations; particularly, which 
regulatory provisions are or are not subject to deviation. It was also 
noted that other GSA asset management regulations do not describe 
deviations to this extent.
    GSA Response: FMR 102-39.25 is being added to clarify which 
regulatory provisions are subject to deviation. This is due to numerous 
questions received by GSA/OGP on this topic. Also, in contrast to the 
other GSA asset management regulations, most of the restrictions found 
in FMR 102-39 are not required by statute and therefore are subject to 
deviation where beneficial to the Federal Government. GSA has made no 
changes as a result of this comment.
    Comment: One comment suggested that the answer to FMR 102-39.40 
could be interpreted as requiring agencies to use the exchange/sale 
authority.
    GSA Response: Agencies are not required to use the exchange/sale 
authority. In order to eliminate any confusion, GSA has clarified that 
agencies should consider using this authority. The text of FMR 102-
39.40 has been modified in this final rule.
    Comment: One comment questioned the discussion in FMR 102-39.40 
comparing the retention of sales proceeds under the exchange/sale 
authority to the retention of sales proceeds when selling surplus 
property. The comment also indicated that use of the exchange/sale 
authority constitutes an illegal augmentation of appropriations.
    GSA Response: The discussion of the handling of exchange/sale sales 
proceeds vs. surplus sales proceeds has been in the exchange/sale 
regulations for over 10 years. That discussion is included for the 
benefit of GSA's customers who are not aware of the difference. In 
summary, if an agency has a continuing need for an item, the agency may 
exchange or sell the item and use the proceeds to acquire a similar 
replacement item. Under that scenario, the agency should not report the 
item as excess. Also, the exchange/sale authority is NOT an illegal 
augmentation of appropriations; rather, the law expressly authorizes 
the use of sales proceeds in the acquisition of a similar item. GSA has 
made no changes as a result of this comment.
    Comment: One comment objected to the language in a sentence being 
added to FMR 102-39.40 to explain to readers that exchange allowances 
and sales proceeds may only be used to offset the cost of replacement 
property, not services. The language at issue specifically addresses 
the use of exchange allowances and sales proceeds in the context of a 
contract for services.
    GSA Response: It is essential to include this language so readers 
are clear that under a contract for services arrangement (which is 
fairly common with respect to certain types of personal property), 
exchange allowances and sales proceeds can only be used for property 
acquired under the contract, not services acquired under the contract. 
GSA has made no changes as a result of this comment.
    Comment: One comment questioned an exception provided in FMR 102-
39.60 for the handling of certain Department of Defense (DOD) property 
under the exchange/sale authority.
    GSA Response: The exception at issue has been in the exchange/sale 
regulations for over six years. The exception exists because the DOD 
property concerned is generally not suitable for transfer to other 
Federal agencies or donation to State Agencies for Surplus Property. 
Also, DOD regulations sufficiently control the disposition of such 
property (e.g., through requirements contained in the DOD 4160.21-M 
policies). GSA has made no changes as a result of this comment.
    Comment: One comment objected to the elimination of a requirement 
in FMR 102-39.65 that the number of items acquired must equal the 
number of items exchanged or sold unless certain exceptions are met.
    GSA Response: GSA is eliminating this requirement for several 
reasons. First, it is not required by statute. Also, through GSA's 
meetings and discussions with Federal agencies over recent years, GSA 
found that there is a great deal of confusion about the exceptions to 
the one-for-one requirement. Finally, GSA is aware of many instances 
where an agency would like to adhere to the requirement and replace 
property on a one-for-one basis but the agency is unable to receive 
sufficient funds from the sale and therefore has to ask GSA for a 
deviation from this requirement. This creates an administrative burden 
for agencies to prepare deviation requests and for GSA to process those 
requests. As the statute does not require the one-for-one requirement, 
GSA almost always approves such requests (as long as all other 
applicable requirements are met). GSA has made no changes as a result 
of this comment.
    Comment: One comment objected to the addition of a requirement to 
FMR 102-39.85 that Federal agencies must report annually to GSA on 
property acquired under the exchange/sale authority.
    GSA Response: GSA has reconsidered this proposed change, and will 
not go forward with it at this time.
    Comment: Finally, two comments were based on a misunderstanding of 
how the proposed rule was presented. The proposed rule showed only the 
fourteen proposed changes to the FMR and the text affected by those 
changes. The proposed rule did not show text which is not being revised 
(except in some cases where immediately adjacent text was shown).
    GSA Response: GSA has made no changes as a result of these 
comments.

B. Executive Order 12866

    This regulation is excepted from the definition of ``regulation'' 
or ``rule'' under Section 3(d)(3) of Executive Order 12866, Regulatory 
Planning and Review, dated September 30, 1993 and,

[[Page 50880]]

therefore, was not subject to review under Section 6(b) of that 
Executive Order.

C. Regulatory Flexibility Act

    This final rule is not required to be published in the Federal 
Register for notice and comment as per the exemption specified in 5 
U.S.C. 553 (a)(2); therefore, the Regulatory Flexibility Act, 5 U.S.C. 
601, et seq., does not apply.

D. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because these final 
changes to the FMR do not impose information collection requirements 
that require the approval of the Office of Management and Budget under 
44 U.S.C. 3501, et seq.

E. Small Business Regulatory Enforcement Fairness Act

    This final rule is exempt from Congressional review under 5 U.S.C. 
801 since it relates solely to agency management and personnel.

List of Subjects in 41 CFR Part 102-39

    Government property management, Reporting and recordkeeping 
requirements, and Government property.

    Dated: June 23, 2008.
David L. Bibb,
Acting Administrator of General Services.

0
For the reasons set forth in the preamble, GSA amends 41 CFR part 102-
39 as set forth below:

PART 102-39--REPLACEMENT OF PERSONAL PROPERTY PURSUANT TO THE 
EXCHANGE/SALE AUTHORITY

0
1. The authority citation for 41 CFR part 102-39 is revised to read as 
follows:

    Authority:  40 U.S.C. 121(c); 40 U.S.C. 503.


Sec.  102-39.50  [Removed]

0
2. Remove Sec.  102-39.50.


Sec.  102-39.55  [Removed]

0
3. Remove Sec.  102-39.55.


Sec. Sec.  102-39.5, 102-39.15, 102-39.25, 102-39.30, 102-39.35, 102-
39.40, 102-39.45, 102-39.60, 102-39.65, 102-39.70, 102-
39.75  [Redesignated]

0
4. Redesignate Sec. Sec.  102-39.5, 102-39.15, 102-39.25, 102-39.30, 
102-39.35, 102-39.40, 102-39.45, 102-39.60, 102-39.65, 102-39.70, 102-
39.75 as follows:
    Old section New section
    102-39.5 102-39.15
    102-39.15 102-39.40
    102-39.25 102-39.30
    102-39.30 102-39.45
    102-39.35 102-39.50
    102-39.40 102-39.55
    102-39.45 102-39.60
    102-39.60 102-39.70
    102-39.65 102-39.75
    102-39.70 102-39.80
    102-39.75 102-39.85
0
5. Add new Sec.  102-39.5 to read as follows:


Sec.  102-39.5  What is the exchange/sale authority?

    The exchange/sale authority is a statutory provision, (40 U.S.C. 
503), which states in part: ``In acquiring personal property, an 
executive agency may exchange or sell similar items and may apply the 
exchange allowance or proceeds of sale in whole or in part payment for 
the property acquired.''
0
6. Amend Sec.  102-39.20 by revising the definitions of the terms 
``Acquire'', ``Replacement'', and ``Similar''; and, by alphabetically 
adding the terms and definitions ``Excess property'', ``Service Life 
Extension Program (SLEP)'', and ``Surplus property'' to read as 
follows:


Sec.  102-39.20  What definitions apply to this part?

* * * * *
    Acquire means to procure or otherwise obtain personal property, 
including by lease (sometimes known as rent).
* * * * *
    Excess property means any personal property under the control of 
any Federal agency that is no longer required for that agency's needs 
or responsibilities, as determined by the agency head or designee.
* * * * *
    Replacement means the process of acquiring personal property to be 
used in place of personal property that is still needed but:
    (1) No longer adequately performs the tasks for which it is used; 
or
    (2) Does not meet the agency's need as well as the personal 
property to be acquired.
    Service Life Extension Program (SLEP) means the modification of a 
personal property item undertaken to extend the life of the item beyond 
that which was previously planned. SLEPs extend capital asset life by 
retrofit, major modification, remanufacturing, betterment, or 
enhancement.
    Similar means the acquired item(s) and replaced item(s):
    (1) Are identical; or
    (2) Fall within a single Federal Supply Classification (FSC) Group 
of property (includes any and all forms of property within a single FSC 
Group); or
    (3) Are parts or containers for similar end items; or
    (4) Are designed or constructed for the same purpose (includes any 
and all forms of property regardless of the FSC Group to which they are 
assigned).
    Surplus property means excess personal property not required for 
the needs of any Federal agency, as determined by GSA under part 102-37 
of this chapter.
0
7. Add new Sec.  102-39.25 to Subpart A to read as follows:


Sec.  102-39.25  Which exchange/sale provisions are subject to 
deviation?

    All of the provisions in this part are subject to deviation (upon 
presentation of adequate justification) except those mandated by 
statute. See the link on ``Exchange/Sale'' at www.gsa.gov/personalpropertypolicy for additional information on requesting 
deviations from this part.
0
8. Revise newly redesignated Sec.  102-39.30 to read as follows:


Sec.  102-39.30  How do I request a deviation from this part?

    See part 102-2 of this chapter (41 CFR part 102-2) to request a 
deviation from the requirements of this part.
0
9. Add new Sec.  102-39.35 to Subpart B to read as follows:


Sec.  102-39.35  When should I consider using the exchange/sale 
authority?

    You should consider using the exchange/sale authority when 
replacing personal property.
0
10. Transfer newly redesignated Sec.  102-39.40 to Subpart B and revise 
the section to read as follows:


Sec.  102-39.40  Why should I consider using the exchange/sale 
authority?

    You should consider using the exchange/sale authority to reduce the 
cost of replacement personal property. When you have personal property 
that is wearing out or obsolete and must be replaced, you should 
consider either exchanging or selling that property and using the 
exchange allowance or sales proceeds to offset the cost of the 
replacement personal property. Conversely, if you choose not to replace 
the property using the exchange/sale authority, you may declare it as 
excess and dispose of it through the normal disposal process as 
addressed in part 102-36 of this chapter. Keep in mind, however, that 
any net proceeds from the eventual sale of that property as surplus 
generally must be forwarded to the miscellaneous receipts account at 
the United States Treasury and thus would not be available to you. You 
may use the exchange/sale authority in the acquisition of personal 
property even if the acquisition is under a services contract, as long 
as the property

[[Page 50881]]

acquired under the services contract is similar to the property 
exchanged or sold (e.g., for a SLEP, exchange allowances or sales 
proceeds would be available for replacement of similar items, but not 
for services).
0
11. Amend newly redesignated Sec.  102-39.55 by revising the section 
heading to read as follows:


Sec.  102-39.55  When should I offer property I am exchanging or 
selling under the exchange/sale authority to other Federal agencies or 
State Agencies for Surplus Property (SASP)?

* * * * *
0
12. Amend newly redesignated Sec.  102-39.60 by revising the section 
heading, the introductory text, paragraph (a), the note to paragraph 
(a), and paragraph (i) to read as follows:


Sec.  102-39.60  What restrictions and prohibitions apply to the 
exchange/sale of personal property?

    Unless a deviation is requested of and approved by GSA as addressed 
in part 102-2 of this chapter and the provisions of Sec. Sec.  102-
39.25 and 102-39.30, you must not use the exchange/sale authority for:
    (a) The following FSC groups of personal property:
    10 Weapons.
    11 Nuclear ordnance.
    12 Fire control equipment.
    14 Guided missiles.
    15 Aircraft and airframe structural components (except FSC Class 
1560 Airframe Structural Components).
    42 Firefighting, rescue, and safety equipment.
    44 Nuclear reactors (FSC Class 4470 only).
    51 Hand tools.
    54 Prefabricated structure and scaffolding (FSC Class 5410 
Prefabricated and Portable Buildings, FSC Class 5411 Rigid Wall 
Shelters, and FSC Class 5419 Collective Modular Support System only).
    68 Chemicals and chemical products, except medicinal chemicals.
    84 Clothing, individual equipment, and insignia.
    Note to Sec.  102-39.60(a): Under no circumstances will deviations 
be granted for FSC Class 1005, Guns through 30mm. Deviations are not 
required for Department of Defense (DoD) property in FSC Groups 10 (for 
classes other than FSC Class 1005), 12 and 14 for which the applicable 
DoD demilitarization requirements, and any other applicable regulations 
and statutes are met.
* * * * *
    (i) Flight Safety Critical Aircraft Parts (FSCAP) and Critical 
Safety Items (CSI) unless you meet the provisions of Sec.  102-33.370 
of this title.
* * * * *
0
13. New Sec.  102-39.65 is added to Subpart B to read as follows:


Sec.  102-39.65  What conditions apply to the exchange/sale of personal 
property?

    You may use the exchange/sale authority only if you meet all of the 
following conditions:
    (a) The property exchanged or sold is similar to the property 
acquired;
    (b) The property exchanged or sold is not excess or surplus and you 
have a continuing need for similar property;
    (c) The property exchanged or sold was not acquired for the 
principal purpose of exchange or sale;
    (d) When replacing personal property, the exchange allowance or 
sales proceeds from the disposition of that property may only be used 
to offset the cost of the replacement property, not services; and
    (e) Except for transactions involving books and periodicals in your 
libraries, you document the basic facts associated with each exchange/
sale transaction. At a minimum, the documentation must include:
    (1) The FSC Group of the items exchanged or sold, and the items 
acquired;
    (2) The number of items exchanged or sold, and the number of items 
acquired;
    (3) The acquisition cost and exchange allowance or net sales 
proceeds of the items exchanged or sold, and the acquisition cost of 
the items acquired;
    (4) The date of the transaction(s);
    (5) The parties involved; and
    (6) A statement that the transactions comply with the requirements 
of this part 102-39.
    Note to Sec.  102-39.65: In acquiring items for historical 
preservation or display at Federal museums, you may exchange historic 
items in the museum property account without regard to the FSC group, 
provided the exchange transaction is documented and certified by the 
head of your agency to be in the best interests of the Government and 
all other provisions of this part are met. The documentation must 
contain a determination that the item exchanged and the item acquired 
are historic items.
0
14. Revise newly redesignated Sec.  102-39.80 to read asfollows:


Sec.  102-39.80  What are the accounting requirements for exchange 
allowances or proceeds of sale?

    You must account for exchange allowances or proceeds of sale in 
accordance with the general finance and accounting rules applicable to 
you. Except as otherwise authorized by law, all exchange allowances or 
proceeds of sale under this part will be available during the fiscal 
year in which the property was sold and for one fiscal year thereafter 
for the purchase of replacement property. Any proceeds of sale not 
applied to replacement purchases during this time must be deposited in 
the United States Treasury as miscellaneous receipts.
[FR Doc. E8-19892 Filed 8-28-08; 8:45 am]
BILLING CODE 6820-14-S


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