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Federal Management Regulation; FMR Case 2007-102-1, Replacement of Personal Property Pursuant to th - ComplianceOnline.com
Federal Management Regulation; FMR Case 2007-102-1, Replacement of Personal Property Pursuant to th
41 CFR Part 102-39
[FMR Amendment 2008-07; FMR Case 2007-102-1; Docket 2007-0001; Sequence
RIN 3090-AI38
Federal Management Regulation; FMR Case 2007-102-1, Replacement
of Personal Property Pursuant to the Exchange/Sale Authority
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.
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
Robert.Holcombe@gsa.gov. 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.
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
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
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
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
Planning and Review, dated September 30, 1993 and,
[[Page 50880]]
therefore, was not subject to review under Section 6(b) of that
U.S.C. 553 (a)(2); therefore, the Regulatory Flexibility Act, 5 U.S.C.
The Paperwork Reduction Act does not apply because these final
changes to the FMR do not impose information collection requirements
Government property management, Reporting and recordkeeping
requirements, and Government property.
39 as set forth below:
PART 102-39--REPLACEMENT OF PERSONAL PROPERTY PURSUANT TO THE
1. The authority citation for 41 CFR part 102-39 is revised to read as
Authority:  40 U.S.C. 121(c); 40 U.S.C. 503.
Sec.  102-39.50  [Removed]
2. Remove Sec.  102-39.50.
Sec.  102-39.55  [Removed]
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]
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:
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
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.''
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
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;
(2) Does not meet the agency's need as well as the personal
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
(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
(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
Surplus property means excess personal property not required for
the needs of any Federal agency, as determined by GSA under part 102-37
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
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.
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.
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
You should consider using the exchange/sale authority when
replacing personal property.
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
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
[[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).
11. Amend newly redesignated Sec.  102-39.55 by revising the section
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)?
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:
15 Aircraft and airframe structural components (except FSC Class
1560 Airframe Structural Components).
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).
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
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
You may use the exchange/sale authority only if you meet all of the
(a) The property exchanged or sold is similar to the property
(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
(2) The number of items exchanged or sold, and the number of items
(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;
(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.
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]