Source: http://thefederalregister.com/2012/03/02/2012-4499.html
Timestamp: 2018-09-20 16:04:49
Document Index: 120320448

Matched Legal Cases: ['art 45', 'art 45', 'art 45', 'art 45', 'art 45', 'art 1', 'art 1', 'art 45', 'art 2', 'art 16', 'art 45', 'arts 45', 'art 45', 'art 45', 'arts 2', 'arts 2', 'arts 2', 'ART 2', 'ART 31', 'ART 32', 'ART 45', 'ART 49', 'ART 51', 'ART 52']

Federal Register | Federal Acquisition Regulation; Government Property
[FAC 2005-56; FAR Case 2010-009; Item VII; Docket 2010-0009, Sequence 1]
SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the Federal Acquisition Regulation (FAR) to clarify reporting, reutilization, and disposal of Government property.
DATES: Effective Date:April 2, 2012.
FOR FURTHER INFORMATION CONTACT: Mr. Curtis E. Glover, Sr., Procurement Analyst, at 202-501-1448 for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat at 202-501-4755. Please cite FAC 2005-56, FAR Case 2010-009.
DoD, GSA, and NASA published a proposed rule in theFederal Registerat 76 FR 18497 on April 4, 2011. Eight respondents submitted comments on the proposed rule. The comments received were grouped by topic area.
1. A definition of “surplus property” is added at FAR 2.101 to apply throughout the FAR.
2. Terminology used is updated and used consistently throughout the FAR,e.g.,“loss of Government property” is defined at FAR 45.101, and “loss” is used consistently in lieu of “loss, damage, destruction, or theft.”
3. Clarified, and distinguished among, the responsibilities and authorities of the contracting officer, property administrator, plant clearance officer, and contractor.
4. Reorganized and clarified procedures and responsibilities for Government property disposal (see FAR subpart 45.6).
5. Reorganized, clarified, and updated the Government property clause at FAR 52.245-1 to conform with revisions to FAR part 45.
B. Government Responsibilities
Comments:A respondent recommended a number of revisions to the Government responsibilities, primarily those in FAR subpart 45.6, Reporting, Reutilization, and Disposal. The respondent recommended revising FAR 45.606-1(a) to require that the property administrator work in coordination with the plant clearance officer to ensure that contractor scrap disposal processes are effective and properly documented. Another recommendation was to revert to the current regulation's use of “should” in lieu of “may” at FAR 45.602-1(c)(1) in order to ensure the Government's agreement before Government property is removed from a contractor's inventory schedule. The respondent recommended modifying FAR 45.606-1(b) to require that any deviation from the contractor's standard property plan and processes be identified as early as possible in the procurement process.
Response:The first two recommendations are adopted in this final rule. The final recommendation is not adopted because the Property Administrator can make that determination at any time.
Comments:The same respondent recommended a number of other revisions to the Government responsibilities, also primarily in FAR subpart 45.6, Reporting, Reutilization, and Disposal. The respondent proposed to revise FAR 45.600, Scope of subpart (which was not included in the proposed rule) to allow for either the contracting officer or the plant clearance officer to perform plant clearance officer duties. The respondent recommended removing the proposed rule's requirement, at FAR 45.603(b), for the plant clearance officer to obtain approval at one level higher than the contracting officer before allowing the abandonment of sensitive property that does not require demilitarization. The respondent requested the addition of more examples of items considered to be incidental to the place of performance (see FAR 45.000).
Response:The above recommendations are not incorporated into the final rule because (1) contracting officers generally rely on the Government property expertise of plant clearance officers, (2) additional review and approval requirements can provide a broader perspective, and (3) too often, lists of examples are treated inappropriately as exhaustive lists.
C. Contractor Property Management Systems
Comments:Two respondents recommended revisions to FAR subpart 45.1, General. One recommendation was to revise FAR 45.105(b) to prevent the Government from notifying a contractor of deficiencies in its property management system unless the deficiencies were “material.” The other recommendation was to modify FAR 45.104(b) to add the following: “When determining noncompliance, FAR part 1 concepts apply,e.g.,risk management, materiality, best value, and benefits of changes must justify their cost”.
Response:FAR part 1 is always applicable to all parts of the FAR. There is no need to repeat the statement in FAR part 45. “Materiality” is not defined in FAR part 2. If the Government determines thatdeficiencies in a contractor's property management system are significant enough to warrant a correction letter, then the contractor should treat those deficiencies as material.
Comments:A number of respondents proposed changes to the clause at FAR 52.245-1 that were associated with contractors' property management systems. These included the following:
• FAR 52.245-1(b)(1): Add “internal controls,” “efficient,” and “a new;” and delete “except where inconsistent with law or regulation.”
• FAR 52.245-1(b)(4): Change “property” to “asset.”
• FAR 52.245-1(f)(1)(iii)(A): Substitute “as appropriate to the circumstances” in place of “auditable.”
• FAR 52.245-1(f)(1)(iii)(A)(1): Do not use “description;” instead, retain “manufacturer and model number (if applicable) for Equipment, ST, and STE.”
• FAR 52.245-1(f)(1)(v)(A): Change “assets” to “items” and revise to read “shall have a process to manage Government property in the possession of subcontractors including identification and reporting of reportable items, as required in the contract as Government furnished or contractor acquired items.”
• FAR 52.245-1(f)(1)(vii)(C)(1): Clarify what is included in “consumed” and that the property administrator is the official determining the reasonableness of adjustments.
• FAR 52.245-1(g): Change “analysis” to “audit.”
• FAR 52.245-1(j): Delete, at FAR 52.245-1(j)(1)(i), “in consultation with the Property Administrator,” and retain existing language at (j)(2). Add “in accordance with agency procedures if included in the contract.”
• FAR 52.245-1(j): Delete (j)(3)(i)(B) and replace it with (j)(3)(i)(C). Revise the time allotted for contractor submission from “30 days” to “60 days or such other time frame agreed to by the PLCO.”
• FAR 52.245-1: Add a dollar threshold for the contractor's reporting and tracking,i.e.,“* * * property in excess of $5,000 or in accordance with risk levels in voluntary consensus standards or industry leading practices.” The respondent suggested allowing contractors to defer any reporting of certain low-risk or low-value items until contract termination.
• FAR 52.245-1(b)(1): Two of the recommended additions to FAR 52.245-1(b)(1) are incorporated into the final rule because they better explain the Government's requirements for the contractor's property management system. However, “a new” was not added because of the associated element related to “time.” The phrase “except where inconsistent with law or regulation” is not deleted because contractors are never authorized to employ commercial practices, voluntary consensus standards, or industry-leading practices if the former do not comply with law or regulation.
• FAR 52.245-1(b)(4): The term “property” is retained to maintain consistency in terminology.
• FAR 52.245-1(f)(1)(iii)(A) and (A)(1): The Councils did not revise “auditable” to “as appropriate for the circumstances” because the proposed change is too vague and does not provide an understandable or consistent standard. The final rule does not revert back to the use of “manufacturer and model number * * *” because this is a reasonable number of data elements at the Federal level.
• FAR 52.245-1(f)(1)(v)(A): Applying the same principle as is used at the beginning of this response results in revising “assets” to “items” at FAR 52.245-1(f)(1)(v)(A). The language regarding the management of Government property in subcontractors' possession is not added to paragraph (f)(1)(v)(A) because it would be redundant to the requirement already at FAR 52.245-1(f)(1)(v)(B).
• FAR 52.245-1(f)(1)(vii)(C)(1): It is not necessary to revise FAR 52.245-1(f)(1)(vii)(C)(1) because the text already clearly designates the property administrator as the deciding official, and the use of the term “consumed” is clear in the context of (C)(1) (“Such property is consumed or expended, reasonably and properly, or otherwise accounted for, in the performance of the contract, including reasonable inventory adjustments of material as determined by the Property Administrator”).
• FAR 52.245-1(g): “Analysis,” not “audit,” is the proper term.
• FAR 52.245-1(j): Paragraph (j) of the clause addresses contractor inventory disposal. The lead-in to paragraph (j) makes all contractor inventory disposal decisions subject to the authorization of the plant clearance officer; therefore, it is unnecessary to restate the qualifier in subordinate paragraphs of paragraph (j). Paragraph (j)(2) of the clause addresses inventory disposal schedules. The existing text had elicited many questions over time, so a revision was determined necessary to provide additional clarity; reverting to the current paragraph (j)(2) would be a step backward.
The authority to revise a contractor's use and receipt system for Government material (see FAR 52.245-1(f)(1)(iii)(B)) “in accordance with agency procedures * * *” is not included in the final rule because it would result in inconsistencies in treatment and problems when more than one Government agency had authorized the use of Government property in a single contractor facility.
• FAR 52.245-1(j): Effectively, the request to delete 52.245-1(j)(3)(i)(B) and replace it with (C) of the same paragraph would eliminate a 60-day period for submission of the contractor's inventory disposal schedule and replace it with a 120-day submission schedule. Allowing an extra two months for the contractor's submission is unnecessary if the contractor has an acceptable property management system. For the same reasons, the extension of the submission period from 30 days to 60 days is not made.
• FAR 52.245-1: The final recommendation would have established a dollar threshold and allowed contractors to defer any reporting of low-dollar items during contract performance. However, the Government property management principles have departed from the use of dollar thresholds and recognized that some low-dollar items may be sensitive and require closer management.
Comment:One respondent recommended adding, at FAR 45.201, a requirement that the solicitation indicate how the contractor's property management system plan would be utilized for disposal.
Response:FAR 45.201(c)(4) requires that the solicitation include a description of the offeror's property management system, plan, and practices and standards used by the offeror in managing Government property. In addition, the clause at 52.245-1, Government Property, which is required to be included in solicitations, thoroughly addresses the Government's uses of contractors' property management systems.
Comment:One respondent suggested that any additional instructions to offerors on management of Government property, currently allowed only in the statement of work, could also be included in a special provision of the contract.
Response:The allowance for including this information in a special provision is added at FAR 45.201(d).
Comment:One respondent suggested that it was not clear at FAR 52.245-1(j)(1)(i) that, in disposing of certain property, the contractor is limited to transferring the property to anotherGovernment contract, as opposed to any contract.
Response:The referenced section of the clause is revised to add “Government” in front of “contract” in two places.
Comment:One respondent suggested adding “with contractor's consent” at FAR 45.603(a)(2).
Response:The proposed change would require the Government to obtain the contractor's consent prior to abandoning non-sensitive property at the contractor's or subcontractor's premises. In order to minimize administrative burden, contractor consent is required only prior to abandoning sensitive property.
Comment:One respondent suggested revising FAR 45.604-1 to differentiate between formal and informal sales and “scrap” sales.
Response:The recommended change would require the creation of additional definitions. Any such distinctions are more appropriately located in the contractor's property management procedures.
Comment:One respondent suggested revising FAR 45.606-1(c) to ensure that the disposition of scrap items is addressed in the contractor's standard scrap processes and procedures.
Response:The decision on whether to abandon scrap (the subject of FAR 45.606-1) is a Government decision; it is not a subject to be included in the contractor's scrap procedures.
E. Exceptions and applicability
Comment:One respondent suggested that FAR 45.102(b) be clarified to demonstrate when cost-reimbursement contracts are used.
Response:There is no need to revise FAR 45.102, Policy, because that section addresses the circumstances under which it is appropriate to provide property to contractors. The limitations and requirements for contract types,e.g.,cost-reimbursement contracts, are found in FAR part 16 and are not related to whether Government property is provided.
Comment:The proposed rule included a new paragraph FAR 45.102(e) that would prohibit the installation, with certain exceptions, of Government property in such fashion as to become nonseverable, “unless the head of the contracting activity determines that such installation or construction is necessary and in the Government's interest.” One respondent recommended deleting the exception and creating a flat prohibition.
Response:Because there are instances when nonseverable installation of Government property may be appropriate, a flat prohibition is not adopted. The bar to nonseverable installation of Government property is set sufficiently high, requiring the head of the contracting activity to make a determination to waive the requirement, that it is unlikely to become a common occurrence.
F. Crediting Monies Received
Comment:One respondent suggested adding a paragraph on crediting disposal proceeds to the clause at FAR 52.245-1, as follows: “Disposal proceeds.If the contractor's practice is to comingle scrap from a variety of contract sources and ownership, the Contractor may credit net scrap proceeds to a contractor overhead account.”
Response:FAR 45.604-3 (formerly 45.604-4), Proceeds from sales of surplus property, requires that such monies be credited to the U.S. Treasury as miscellaneous receipts. Deposit of sales proceeds is already covered under FAR 45.604-3. No further regulatory amplification is needed.
Comment:Three respondents suggested various ways of crediting financial restitution to the contract, not back to the Treasury, as is required at FAR 45.104(e).
Response:With few statutory exceptions, monies received for the use of the United States, from whatever source, must be paid into the U.S. Treasury without deduction. The statute is the authoritative source.
Comment:One respondent suggested revising the definition of “production scrap,” changing the term to “material scrap,” and including scrap from non-production activities in the definition at FAR 45.101 and 52.245-1(a).
Response:The term “production scrap” is the recognized and consistent term used throughout the FAR, but the additional text is added to clarify what is included in the term.
Comment:Two respondents suggested changing the term “unit acquisition cost” to “item acquisition cost” at FAR 45.101 and 52.245-1(a). One of these respondents also suggested adding “fair value at the time of loss” to the definition.
Response:The Councils prefer the term “unit acquisition cost” versus “item acquisition cost.” The unit acquisition cost, provided by the Government, is the actual cost at the time of purchase and is the proper measure of value.
Comments:Four recommendations were received for revising the definition of “loss of Government property.” Two of these suggested adding “in the possession of a contractor under terms of a contract” to the definition. Another recommended adding “material” prior to “harm” to denote that damage should not include ordinary repairs due to normal wear and tear. A third recommendation was to add “occurrences such as” to the definition in order to make it consistent with Defense Federal Acquisition Regulation Supplement 252.245-7002.
Response:The first change is not made as it would be superfluous;i.e.,the entire FAR part 45 refers to Government Property in contractor's possession. “Material” is not added to the definition because the definition already excludes normal wear and tear. The phrase “occurrences such as” is added to the definition for additional clarity.
Comment:One respondent suggested adding a definition for “repair, maintenance, and overhaul scrap” at FAR 45.606-1.
Response:The essence of the proposed definition is included in the authority given to the contracting officer at FAR 45.603. There is no need to include a separate definition.
H. Contractor Use of Government Supply Sources
Comment:One respondent recommended revising the second sentence of the clause at FAR 52.251-1, Government Supply Sources, to state that title to such purchases vested in the Government “except when the transaction is based upon a cash sale to the Contractor.”
Response:There is no need to make distinctions in title vesting in this clause as long as the clause contains the phrase “unless otherwise specified in the contract.” Every contract must contain a payment clause, and it is the payment clause that determines when, and with whom, title vests.
I. Editorial Comments
The editorial comments are grouped by the FAR section they address.
Comments on FAR 45.104(d):This paragraph addresses contractor liability and the appropriate form of restitution once a loss of property has been established. One respondent recommended changing “lost property” to “property loss,” and another respondent suggested adding “fair value” and replacing “restitution” with “compensation.”
Response:The final rule uses “property loss” in lieu of “lost property.” The other recommendations are not incorporated in the final rule because (1) substituting “compensation”for “restitution” does not add clarity, and (2) the use of “fair value” would introduce a new concept of valuation.
Comments on FAR 45.105:Three comments were received on this section. One recommended substituting “liability” for “and liability;” another suggested deleting either “and” or “or” in paragraph (b)(1); and a third recommended adding “under the Government property clause” in paragraph (d).
Response:These edits are not incorporated in the final rule because they do not further clarify the coverage.
Comments on FAR 45.201:One respondent suggested deleting either “and” or “or” at FAR 45.201(a)(1). Another respondent suggested adding the contractor's property management “plan” to the list at FAR 45.201(c)(4), because the plan depicts the standard way a contractor does business.
Response:The final rule incorporates the recommended revisions because they increase clarity.
Comment on FAR 45.202:A respondent suggested that the rules for evaluating offers when one offeror possessed Government property, and other offerors did not, would be improved by adding the phrase “using the FAR 52.245-9 Rental Calculation process” in this section.
Response:FAR 45.202(a) is revised to read “a rental equivalent evaluation factor as specified in FAR 52.245-9.”
Comment on FAR 45.602:One respondent suggested changing “may entitle” to “entitles” at FAR 45.602-1(b)(4).
Response:This change, had it been incorporated in the final rule, would have been a policy change that effectively gave a contractor an absolute entitlement to an equitable adjustment if the Government did not provide timely disposition instructions. Contracting officers require discretion and flexibility in determining whether an equitable adjustment is warranted.
Comments on FAR 45.603:One respondent recommended relocating FAR 45.603(c) to 45.603(a)(1). A respondent recommended inserting “recipients” at FAR 45.603(c), and another respondent suggested adding “as applicable” to FAR 45.603(b).
Response:None of the recommendations is incorporated into the final rule. The Councils elected not to relocate FAR 45.603(c) because it would distort the proper sequence of events. “Recipient's” was not added to paragraph (c) because the Government will not bear any of the costs incident to such donations, regardless of who incurred them. “As applicable” is not added to paragraph (b) because review at a level higher than the plant clearance officer is required in cases of other contractor inventory.
Comment on FAR 45.606:One respondent suggested inserting “in coordination with the plant clearance officer” at FAR 45.606(a).
Response:The revision is incorporated in the final rule.
Comments on FAR 52.245-1(b):Several editorial revisions were recommended for this paragraph. One respondent suggested revising FAR 52.245-1(b)(4) by adding “surveillance, self-assessments, or” and deleting “and” in “and/or.”
Response:The final rule incorporates these edits, such that the contractor must perform periodic internal reviews, surveillances, self assessments, or audits.
Comments on FAR 52.245-1(f)(1)(vii):Five editorial recommendations were proposed for this paragraph of the Government Property clause, which addresses “Relief of stewardship responsibilities.” One recommendation was to revise 52.245-1(f)(1)(vii)(A) from “necessary” corrective actions to “any necessary,” and another was to delete “all” at paragraph 52.245-1(f)(1)(vii)(B)(10). Other recommendations were to amend paragraph 52.245-1(f)(1)(vii)(B)(8) to add “and preventive actions,” change “reimbursement” to “compensation,” insert “export controlled” and “and authorities” and delete “if so,” and amend paragraph 52.245-1(f)(1)(vii)(C)(3) so as not to unnecessarily limit the contractor's discretion to dispose of property in accordance with other paragraphs of the Government Property clause.
Response:The first two recommendations are not incorporated in the final rule because they would have introduced ambiguity and unintentionally introduced a lower standard. The next two recommendations starting at “other recommendations” are incorporated in the final rule. The last recommendation is not incorporated in the final rule because the proposed language does not limit the contractor's discretion.
Comments on FAR 52.245-1(h):One respondent suggested deleting “and/or” at paragraph (h)(1). A respondent suggested that paragraph (h)(3) should be revised to be more consistent with the policy intent. Another respondent recommended changing “directed” to “determined” at paragraph (h)(4).
Response:Paragraph (h)(1) is not changed because the intent is clear—either one or the other or both is acceptable. Paragraph (h)(3) is not revised because it is consistent with the policy. Paragraph (h)(4) was revised to adopt “determined” as a more consistent use of terminology.
Comment on FAR 52.245-1(k):One respondent recommended adding “non-sensitive.”
Response:The applicability of this paragraph is clear without the addition.
J. Out of Scope
Comment:One respondent suggested that small businesses should use Systems Applications Products to track scrap material as large businesses do.
Response:The Government does not recommend any particular commercial product.
DoD, GSA, and NASA prepared a Final Regulatory Flexibility Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. The FRFA is summarized as follows:
DoD, GSA, and NASA are revising FAR parts 45 and 52. The focus of this effort is to clarify FAR subpart 45.6, Reporting, Reutilization, and Disposal, and the contractor requirements under the clause at FAR 52.245-1, Government Property.
The revisions include technical corrections to align the FAR with the requirements of the Federal Management Regulation. Also included is new and expanded policy language on the disposal of scrap, new language for contracting officers and contract specialists on depositing of monies received from contractors for property that is lost, damaged, destroyed, or stolen, and new language prohibiting personal property from being installed or constructed on contractor-owned real property in such fashion as to become nonseverable.
DoD, GSA, and NASA published a proposed rule at 76 FR 18497 on April 4, 2011. The rule does not place new requirements on contractors; rather, it clarifies existing policies and procedures and should simplify compliance for contractors and enable consistent Government oversight.
No comments were received on the initial regulatory flexibility analysis in the proposed rule.
Approximately 5,000 contractors have Federal property in their possession. DoD has approximately 3,000 contractors with potential contract-property reporting requirements. Approximately 60 percent of all DoD contractors are small businesses. Given that property in the possession of contractors is over-whelmingly DoD property, it is estimated the DoD ratio of small businesses to total businesses having such property is a reasonable approximation for all Government contractors. Therefore, approximately 3,000 small businesses have Government property in their possession.
FAR Case 2004-025 streamlined the requirements concerning property management in FAR part 45. FAR Case 2008-011 continued that philosophy. This final rule provides continuous improvement to property management by streamlining and clarifying the policies for the disposition of contractor inventory.
There are four reports currently required to assure appropriate use and disposition of contract property (SF 1423, Inventory Verification Survey; SF 1424, Inventory Disposal Report; SF 1428, Inventory Disposal Schedule; and SF 1429, Inventory Disposal Schedule Continuation Sheet). All of these forms are available online and may be submitted by the contractor using electronic means. It should be noted that DoD no longer requires the use of the SF 1428 and 1429 forms and instead uses the Web-enabled Plant Clearance Automated Reutilization and Reporting System (PCARRS). NASA and other Federal agency contractors use PCARRS when their contracts are delegated to Defense Contract Management Agency (DCMA) for plant clearance. Use of PCARRS reduces burdens on small businesses as well as other businesses by providing an easily accessible Web-based reporting mechanism.
There are no known alternatives that would meet the objectives of this rule. However, this rule is not expected to have a significant economic impact on a substantial number of small entities. In fact, the current impact to both large and small contractors will be reduced. For example, the current FAR requires Government approval of contractor scrap procedures prior to allowing the contractor to dispose of ordinary production scrap. In addition, the current practice of requiring contractors (without approved scrap procedures) to submit inventory schedules or scrap lists for production scrap assumes that such practice is in all cases economically or otherwise justified. This practice unnecessarily burdens small contractors that generate only small amounts of scrap.
The final rule removes the requirement for Government approvals of contractor scrap procedures and submission of inventory schedules and scrap lists, thus easing the burden on large and small contractors alike. It should be noted that contractor procedures would still be required and evaluated by the agency responsible for contract administration, as a normal part of contract property administration. The new rule will also result in more consistent levels of Government oversight, further easing the burden on small entities.
The collection of information required by this rule has been reduced to the minimum necessary to assure compliance with the Government's statutory accountability requirements.
Interested parties may obtain a copy of the FRFA from the Regulatory Secretariat. The Regulatory Secretariat has submitted a copy of the Final Regulatory Flexibility Analysis (FRFA) to the Chief Counsel for Advocacy of the Small Business Administration.
The Paperwork Reduction Act (44 U.S.C. chapter 35) applies. The rule contains information collection requirements. OMB has cleared this information collection requirement under OMB Control Number 9000-0075, titled: Government Property.
List of Subjects in 48 CFR Parts 2, 31, 32, 45, 49, 51, 52, and 53
Therefore, DoD, GSA, and NASA amend 48 CFR parts 2, 31, 32, 45, 49, 51, 52, and 53 as set forth below:
1. The authority citation for 48 CFR parts 2, 31, 32, 45, 49, 51, 52, and 53 continues to read as follows: Authority:
PART 2—DEFINITIONS OF WORDS AND TERMS 2. Amend section 2.101 in paragraph (b) by adding, in alphabetical order, the definition “Surplus property” to read as follows:
Surplus propertymeans excess personal property not required by any Federal agency as determined by the Administrator of the General Services Administration (GSA). (See 41 CFR 102-36.40).
PART 31—CONTRACT COST PRINCIPLES AND PROCEDURES 3. Amend section 31.205-19 by revising paragraphs (e)(2)(iv) introductory text, (e)(2)(iv)(A), and (e)(2)(iv)(C) to read as follows:
(C) Such insurance does not cover loss of Government property that results from willful misconduct or lack of good faith on the part of any of the contractor's managerial personnel (as described in FAR 52.245-1 (h)(1)(ii)).
PART 32—CONTRACT FINANCING 4. Amend section 32.503-16 by revising the first sentence of paragraph (a) to read as follows:
(a) Under the Progress Payments clause, and except for normal spoilage, the contractor bears the risk of loss for Government property under the clause, even though title is vested in the Government, unless the Government has expressly assumed this risk. * * *
(a) Under the clause at 52.232-32, Performance-Based Payments, and except for normal spoilage, the contractor bears the risk of loss for Government property, even though title is vested in the Government, unless the Government has expressly assumed this risk. * * *
PART 45—GOVERNMENT PROPERTY 6. Revise section 45.000 to read as follows:
7. Amend section 45.101 by— a. Removing the definition “Acquisition cost”; b. Adding, in alphabetical order, the definitions “Loss of Government property” and “Production scrap”; c. Removing the definition “Surplus property”; and d. Adding, in alphabetical order, the definition “Unit acquisition cost”. The added text reads as follows:
Loss of Government propertymeans unintended, unforeseen or accidental loss, damage, or destruction of Government property that reduces the Government's expected economic benefits of the property. Loss of Government property does not include occurrences such as purposeful destructive testing, obsolescence, normal wear and tear, or manufacturing defects. Loss of Government property includes, but is not limited to—
Production scrapmeans unusable material resulting from production, engineering, operations and maintenance, repair, and research and development contract activities. Production scrap may have value when re-melted or reprocessed,e.g.,textile and metal clippings, borings, and faulty castings and forgings.
Unit acquisition costmeans—
9. Amend section 45.104 by— a. Revising the introductory text of paragraph (a); b. Revising paragraph (b); and c. Adding paragraphs (d) and (e).
10. Amend section 45.105, by revising the first sentence of the introductory text of paragraph (b), and paragraphs (b)(1) and (d) to read as follows:
45.105 Contractor's property management system compliance.
11. Amend section 45.107 by— a. Revising paragraph (a)(1)(i); b. Removing from paragraph (b) “service contracts” and adding “fixed-price service contracts” in its place; and c. Removing from paragraph (d) “acquisition cost” and adding “unit acquisition cost” in its place.
12. Amend section 45.201 by— a. Removing from paragraph (a)(1) “tracking and/or” and adding “tracking and management, and” in its place; b. Removing from paragraph (a)(4) “tracking); and” and adding “tracking and management); and” in its place; c. Revising paragraph (c)(4); and d. Removing from paragraph (d) “providing property.” and adding “providing property or in a special provision.” in its place.
13. Amend section 45.202 by revising paragraph (a) to read as follows:
14. Amend section 45.602-1 by— a. Removing from paragraphs (b)(2) and (b)(3) “Require a contractor” and adding “Require the contractor” in its place; b. Removing from paragraph (b)(4) “might entitle” and adding “may entitle” in its place; c. Revising the introductory text of paragraph (c) and the introductory text of paragraph (c)(1); d. Removing from paragraph (c)(1)(i) “acquisition cost” and adding “unit acquisition cost” in its place; and e. Revising paragraph (c)(1)(iv).
15. Revise section 45.602-2 to read as follows:
45.604-2 [Removed]
45.604-3 and 45.604-4 [Redesignated as 45.604-2 and 45.604-3]
20. Redesignate sections 45.604-3 and 45.604-4 as sections 45.604-2 and 45.604-3, respectively. 21. Revise the newly redesignated section 45.604-2 to read as follows:
22. Add section 45.604-4 to read as follows:
23. Revise section 45.605 to read as follows:
45.606 [Removed]
24. Remove section 45.606. 25. Redesignate section 45.606-1 as section 45.606; and revise the newly designated section 45.606 to read as follows:
45.606-2 and 45.606-3 [Removed]
26. Remove sections 45.606-2 and 45.606-3. PART 49—TERMINATION OF CONTRACTS
49.204 [Amended]
27. Amend section 49.204 by removing from paragraph (b) “destroyed, lost, stolen, or” and adding “lost or” in its place. PART 51—USE OF GOVERNMENT SOURCES BY CONTRACTORS
28. Amend section 51.106 by removing from paragraph (b) “having an” and adding “having a unit” in its place. PART 52—SOLICITATION PROVISIONS AND CONTRACT CLAUSES 29. Amend section 52.232-16 by revising the date of the clause, and the last sentence of paragraph (e) to read as follows:
52.232-16 Progress Payments. PROGRESS PAYMENTS (APR 2012)
30. Amend section 52.232-32 by revising the date of the clause, and the last sentence of paragraph (g) to read as follows:
52.232-32 Performance-Based Payments. PERFORMANCE-BASED PAYMENTS (APR 2012)
31. Amend section 52.245-1 by— a. Revising the date of the clause; b. In paragraph (a) by— i. Removing the definition “Acquisition cost”; ii. Adding, in alphabetical order, the definitions, “Loss of Government property”, and “Production scrap; iii. Removing the definition “Surplus property”; and iv. Adding, in alphabetical order, the definition “Unit acquisition cost”. c. Revising paragraph (b)(1); d. Removing from paragraph (b)(2) “, stolen, damaged, or destroyed”; e. Adding paragraph (b)(4); f. Revising paragraph (e); g. Removing from the introductory text of paragraph (f)(1)(ii) “property (document the receipt)” and adding “property and document the receipt” in its place; h. Revising paragraphs (f)(1)(iii)(A)(1), (f)(1)(iii)(A)(10), (f)(1)(v)(A), (f)(