[Federal Register Volume 77, Number 42 (Friday, March 2, 2012)]
[Rules and Regulations]
[Pages 12937-12947]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-4499]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 2, 31, 32, 45, 49, 51, 52, and 53
[FAC 2005-56; FAR Case 2010-009; Item VII; Docket 2010-0009, Sequence
1]
RIN 9000-AL95
Federal Acquisition Regulation; Government Property
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Final rule.
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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.
SUPPLEMENTARY INFORMATION:
I. Background
DoD, GSA, and NASA published a proposed rule in the Federal
Register at 76 FR 18497 on April 4, 2011. Eight respondents submitted
comments on the proposed rule. The comments received were grouped by
topic area.
II. Discussion and Analysis
The Civilian Agency Acquisition Council and the Defense Acquisition
Regulations Council (the Councils) reviewed the comments in the
development of the final rule. A discussion of the comments and the
changes made to the rule as a result of those comments are provided as
follows:
A. Summary of Significant Changes
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 that
[[Page 12938]]
deficiencies 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.
Response:
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.
D. Disposal
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 another
[[Page 12939]]
Government 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.
G. Definitions
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''
[[Page 12940]]
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.
III. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). E.O.
13563 emphasizes the importance of quantifying both costs and benefits,
of reducing costs, of harmonizing rules, and of promoting flexibility.
This is a significant regulatory action and, therefore, was subject to
review under section 6(b) of E.O. 12866, Regulatory Planning and
Review, dated September 30, 1993. This rule is not a major rule under 5
U.S.C. 804.
IV. Regulatory Flexibility Act
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.
[[Page 12941]]
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.
It should be noted that these recommended changes are consistent
with the Office of the Under Secretary of Defense, Acquisition,
Technology and Logistics, recent statements emphasizing the need to
improve the productivity of the defense industry and remove
Government impediments to efficiency.
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.
This rule does not duplicate, overlap, or conflict with any
other Federal rules.
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.
V. Paperwork Reduction Act
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
Government procurement.
Dated: February 21, 2012.
Laura Auletta,
Director, Office of Governmentwide Acquisition Policy, Office of
Acquisition Policy, Office of Governmentwide Policy.
Therefore, DoD, GSA, and NASA amend 48 CFR parts 2, 31, 32, 45, 49,
51, 52, and 53 as set forth below:
0
1. The authority citation for 48 CFR parts 2, 31, 32, 45, 49, 51, 52,
and 53 continues 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 2--DEFINITIONS OF WORDS AND TERMS
0
2. Amend section 2.101 in paragraph (b) by adding, in alphabetical
order, the definition ``Surplus property'' to read as follows:
2.101 Definitions.
* * * * *
(b) * * *
Surplus property means 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
0
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:
31.205-19 Insurance and indemnification.
* * * * *
(e) * * *
(2) * * *
(iv) Costs of insurance for the risk of loss of Government property
are allowable to the extent that--
(A) The contractor is liable for such loss;
* * * * *
(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
0
4. Amend section 32.503-16 by revising the first sentence of paragraph
(a) to read as follows:
32.503-16 Risk of loss.
(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. * * *
* * * * *
0
5. Amend section 32.1010 by revising the first sentence of paragraph
(a) to read as follows:
32.1010 Risk of loss.
(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
0
6. Revise section 45.000 to read as follows:
45.000 Scope of part.
(a) This part prescribes policies and procedures for providing
Government property to contractors; contractors' management and use of
Government property; and reporting, redistributing, and disposing of
contractor inventory.
(b) It does not apply to--
[[Page 12942]]
(1) Government property provided under any statutory leasing
authority, except as to non-Government use of property under 45.301(f);
(2) Property to which the Government has acquired a lien or title
solely because of partial, advance, progress, or performance based
payments;
(3) Disposal of real property;
(4) Software and intellectual property; or
(5) Government property that is incidental to the place of
performance, when the contract requires contractor personnel to be
located on a Government site or installation, and when the property
used by the contractor within the location remains accountable to the
Government. Items considered to be incidental to the place of
performance include, for example, office space, desks, chairs,
telephones, computers, and fax machines.
0
7. Amend section 45.101 by--
0
a. Removing the definition ``Acquisition cost'';
0
b. Adding, in alphabetical order, the definitions ``Loss of Government
property'' and ``Production scrap'';
0
c. Removing the definition ``Surplus property''; and
0
d. Adding, in alphabetical order, the definition ``Unit acquisition
cost''. The added text reads as follows:
45.101 Definitions.
* * * * *
Loss of Government property means 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--
(1) Items that cannot be found after a reasonable search;
(2) Theft;
(3) Damage resulting in unexpected harm to property requiring
repair to restore the item to usable condition; or
(4) Destruction resulting from incidents that render the item
useless for its intended purpose or beyond economical repair.
* * * * *
Production scrap means 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 cost means--
(1) For Government-furnished property, the dollar value assigned by
the Government and identified in the contract; and
(2) For contractor-acquired property, the cost derived from the
contractor's records that reflect consistently applied generally
accepted accounting principles.
0
8. Amend section 45.102 by adding paragraph (e) to read as follows:
45.102 Policy.
* * * * *
(e) Government property, other than foundations and similar
improvements necessary for installing special tooling, special test
equipment, or equipment, shall not be installed or constructed on
contractor-owned real 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.
0
9. Amend section 45.104 by--
0
a. Revising the introductory text of paragraph (a);
0
b. Revising paragraph (b); and
0
c. Adding paragraphs (d) and (e).
The revised and added text reads as follows:
45.104 Responsibility and liability for Government property.
(a) Generally, contractors are not held liable for loss of
Government property under the following types of contracts:
* * * * *
(b) The contracting officer may revoke the Government's assumption
of risk when the property administrator determines that the
contractor's property management practices are noncompliant with
contract requirements.
* * * * *
(d) With respect to loss of Government property, the contracting
officer, in consultation with the property administrator, shall
determine--
(1) The extent, if any, of contractor liability based upon the
amount of damages corresponding to the associated property loss; and
(2) The appropriate form and method of Government recovery (may
include repair, replacement, or other restitution).
(e) Any monies received as financial restitution shall be credited
to the Treasury of the United States as miscellaneous receipts, unless
otherwise authorized by statute (31 U.S.C. 3302(b)).
0
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.
* * * * *
(b) The property administrator shall notify the contractor in
writing when the contractor's property management system does not
comply with contractual requirements, shall request prompt correction
of deficiencies, and shall request from the contractor a corrective
action plan, including a schedule for correction of the deficiencies. *
* *
(1) Revocation of the Government's assumption of risk for loss of
Government property; and/or
* * * * *
(d) When the property administrator determines that a reported case
of loss of Government property is a risk assumed by the Government, the
property administrator shall notify the contractor in writing that it
is granted relief of stewardship responsibility and liability in
accordance with 52.245-1(f)(1)(vii). Where the property administrator
determines that the risk of loss of Government property is not assumed
by the Government, the property administrator shall request that the
contracting officer hold the contractor responsible and liable.
0
11. Amend section 45.107 by--
0
a. Revising paragraph (a)(1)(i);
0
b. Removing from paragraph (b) ``service contracts'' and adding
``fixed-price service contracts'' in its place; and
0
c. Removing from paragraph (d) ``acquisition cost'' and adding ``unit
acquisition cost'' in its place.
The revised text reads as follows:
45.107 Contract clauses.
(a)(1) * * *
(i) All cost-reimbursement and time-and-material type solicitations
and contracts, and labor-hour solicitations when property is expected
to be furnished for the labor-hour contracts.
* * * * *
0
12. Amend section 45.201 by--
0
a. Removing from paragraph (a)(1) ``tracking and/or'' and adding
``tracking and management, and'' in its place;
0
b. Removing from paragraph (a)(4) ``tracking); and'' and adding
``tracking and management); and'' in its place;
0
c. Revising paragraph (c)(4); and
0
d. Removing from paragraph (d) ``providing property.'' and adding
``providing property or in a special provision.'' in its place.
[[Page 12943]]
The revised text reads as follows:
45.201 Solicitation.
* * * * *
(c) * * *
(4) A description of the offeror's property management system,
plan, and any customary commercial practices, voluntary consensus
standards, or industry-leading practices and standards to be used by
the offeror in managing Government property.
* * * * *
0
13. Amend section 45.202 by revising paragraph (a) to read as follows:
45.202 Evaluation procedures.
(a) The contracting officer shall consider any potentially unfair
competitive advantage that may result from an offeror or contractor
possessing Government property. This shall be done by adjusting the
offers by applying, for evaluation purposes only, a rental equivalent
evaluation factor as specified in FAR 52.245-9.
* * * * *
0
14. Amend section 45.602-1 by--
0
a. Removing from paragraphs (b)(2) and (b)(3) ``Require a contractor''
and adding ``Require the contractor'' in its place;
0
b. Removing from paragraph (b)(4) ``might entitle'' and adding ``may
entitle'' in its place;
0
c. Revising the introductory text of paragraph (c) and the introductory
text of paragraph (c)(1);
0
d. Removing from paragraph (c)(1)(i) ``acquisition cost'' and adding
``unit acquisition cost'' in its place; and
0
e. Revising paragraph (c)(1)(iv).
The revised text reads as follows:
45.602-1 Inventory disposal schedules.
* * * * *
(c) The contractor may request the plant clearance officer's
approval to remove the Government property from an inventory schedule.
(1) Plant clearance officers should approve removal of Government
property from an inventory schedule when--
* * * * *
(iv) The contractor has requested continued use of the Government
property, and the contracting officer has authorized its retention and
further use.
* * * * *
0
15. Revise section 45.602-2 to read as follows:
45.602-2 Reutilization priorities.
Plant clearance officers shall initiate reutilization actions for
all property not meeting the abandonment or destruction criteria of
45.603(b). Authorized methods, listed in descending order from highest
to lowest priority, are--
(a) Reuse within the owning agency;
(b) Transfer of educationally useful equipment to schools and
nonprofit organizations (see Executive Order 12999, Educational
Technology: Ensuring Opportunity For All Children In The Next Century,
April 17, 1996, and 15 U.S.C. 3710(i));
(c) Report to GSA for reuse within the Federal Government or
donation as surplus property;
(d) Dispose of the following property in accordance with agency
procedures without reporting to GSA:
(1) Property determined appropriate for abandonment or destruction
(see Federal Management Regulation (FMR) 102-36.305, 41 CFR 102-
36.305).
(2) Property furnished to nonappropriated fund activities (see FMR
102-36.165, 41 CFR 102-36.165).
(3) Foreign excess personal property (see FMR 102-36.380, 41 CFR
102-36.380).
(4) Scrap, except aircraft in scrap condition.
(5) Perishables, defined for the purposes of this section as any
personal property subject to spoilage or decay.
(6) Trading stamps and bonus goods.
(7) Hazardous waste or toxic and hazardous materials.
(8) Controlled substances.
(9) Property dangerous to public health and safety.
(10) Classified items or property determined to be sensitive for
reasons of national security; and
(e) Dispose of nuclear materials (see 45.603-3(b)(5)) in accordance
with the Nuclear Regulatory Commission, applicable state licenses,
applicable Federal regulations, and agency regulations.
0
16. Revise section 45.603 to read as follows:
45.603 Abandonment or destruction of personal property.
(a) When contractor inventory is processed through the
reutilization screening process prescribed in 45.602-2 without success,
and provided the property has no commercial value, does not require
demilitarization, and does not constitute a danger to public health or
welfare, plant clearance officers or other authorized officials may
without further approval--
(1) Direct the contractor to destroy the property;
(2) Abandon non-sensitive property at the contractor's or
subcontractor's premises; or
(3) Abandon sensitive property at the contractor's or
subcontractor's premises, with contractor consent.
(b) Provided a Government reviewing official at least one level
higher than the plant clearance officer or other agency authorized
official approves, plant clearance officers or other agency authorized
officials may authorize the abandonment, or order the destruction of
other contractor inventory at the contractor's or subcontractor's
premises, in accordance with FMR 102-36.305 through 325 (41 CFR 102-
36.305-325) and consistent with the following:
(1) The property is not considered sensitive, does not require
demilitarization, has no commercial value or reutilization, transfer or
donation potential, and does not constitute a danger to public health
or welfare.
(2) The estimated cost of continued care and handling of the
property (including advertising, storage and other costs associated
with making the sale), exceed the estimated proceeds from its sale.
(c) In lieu of abandonment or its authorized destruction, the plant
clearance officer or authorized official may authorize the donation of
property including unsold surplus property to public bodies, provided
that the property is not sensitive property, does not require
demilitarization, and it does not constitute a danger to public health
or welfare. The Government will not bear any of the costs incident to
such donations.
(d) Unless the property qualifies for one of the exceptions under
FMR 102-36.330 (41 CFR 102-36.330), the plant clearance officer or
requesting official will ensure prior public notice of such actions of
abandonment or destruction consistent with FMR 102-36.325 (41 CFR 102-
36.325).
0
17. Revise the section heading of 45.604 to read as follows:
45.604 Sale of surplus personal property.
* * * * *
0
18. Revise section 45.604-1 to read as follows:
45.604-1 Sales procedures.
Surplus personal property that has completed screening in
accordance with 45.602-3(a) shall be sold in accordance with the policy
for the sale of surplus personal property contained in the Federal
Management Regulation, at part 102-38 (41 CFR part 102-38). Agencies
may specify implementing procedures.
45.604-2 [Removed]
0
19. Remove section 45.604-2.
[[Page 12944]]
45.604-3 and 45.604-4 [Redesignated as 45.604-2 and 45.604-3]
0
20. Redesignate sections 45.604-3 and 45.604-4 as sections 45.604-2 and
45.604-3, respectively.
0
21. Revise the newly redesignated section 45.604-2 to read as follows:
45.604-2 Use of GSA sponsored sales centers.
Agencies may use sales center services. Use of such centers for
sale of surplus property is authorized when in the best interest of the
Government, consistent with contract terms and conditions.
0
22. Add section 45.604-4 to read as follows:
45.604-4 Sale of property pursuant to the exchange/sale authority.
Agencies should consider the sale of property pursuant to the
exchange/sale authority in FMR 102-39 (41 CFR part 102-39) when
agencies are acquiring or plan to acquire similar products and other
requirements of the authority are satisfied.
0
23. Revise section 45.605 to read as follows:
45.605 Inventory disposal reports.
The plant clearance officer shall promptly prepare an SF 1424,
Inventory Disposal Report, following disposition of the property
identified on an inventory disposal schedule and the crediting of any
related proceeds. The report shall identify any lost or otherwise
unaccounted for property and any changes in quantity or value of the
property made by the contractor after submission of the initial
inventory disposal schedule. The report shall be provided to the
administrative contracting officer or, for termination inventory, to
the termination contracting officer, with a copy to the property
administrator.
45.606 [Removed]
0
24. Remove section 45.606.
0
25. Redesignate section 45.606-1 as section 45.606; and revise the
newly designated section 45.606 to read as follows:
45.606 Contractor scrap procedures.
(a) The property administrator should, in coordination with the
plant clearance officer, ensure that contractor scrap disposal
processes, methods, and practices allow for effective, efficient, and
proper disposition and are properly documented in the contractor's
property management procedures.
(b) The property administrator should determine the extent to which
separate disposal processing or physical segregation for different
scrap types is or may be required. Such scrap may require physical
segregation, unique disposal processing, or separate plant clearance
reporting. For example, the scope of work may create scrap--
(1) Consisting of sensitive items;
(2) Containing hazardous materials or wastes;
(3) Contaminated with hazardous materials or wastes;
(4) That is classified or otherwise controlled;
(5) Containing precious or strategic metals; or
(6) That is dangerous to public health or safety.
(c) Absent contract terms and conditions to the contrary, the
Government may abandon parts removed and replaced from property as a
result of normal maintenance actions or removed from property as a
result of the repair, maintenance, overhaul, or modification process.
45.606-2 and 45.606-3 [Removed]
0
26. Remove sections 45.606-2 and 45.606-3.
PART 49--TERMINATION OF CONTRACTS
49.204 [Amended]
0
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
51.106 [Amended]
0
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
0
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)
* * * * *
(e) * * * The Contractor shall repay the Government an amount
equal to the unliquidated progress payments that are based on costs
allocable to property that is lost (see 45.101).
* * * * *
0
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)
* * * * *
(g) * * * If any property is lost (see 45.101), the basis of
payment (the events or performance criteria) to which the property
is related shall be deemed to be not in compliance with the terms of
the contract and not payable (if the property is part of or needed
for performance), and the Contractor shall refund the related
performance-based payments in accordance with paragraph (d) of this
clause.
* * * * *
0
31. Amend section 52.245-1 by--
0
a. Revising the date of the clause;
0
b. In paragraph (a) by--
0
i. Removing the definition ``Acquisition cost'';
0
ii. Adding, in alphabetical order, the definitions, ``Loss of
Government property'', and ``Production scrap;
0
iii. Removing the definition ``Surplus property''; and
0
iv. Adding, in alphabetical order, the definition ``Unit acquisition
cost''.
0
c. Revising paragraph (b)(1);
0
d. Removing from paragraph (b)(2) ``, stolen, damaged, or destroyed'';
0
e. Adding paragraph (b)(4);
0
f. Revising paragraph (e);
0
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;
0
h. Revising paragraphs (f)(1)(iii)(A)(1), (f)(1)(iii)(A)(10),
(f)(1)(v)(A), (f)(1)(vi), and (f)(1)(vii);
0
i. Removing from paragraph (f)(1)(x) ``loss, theft, damage, or
destruction'' and adding ``loss of Government property'' in its place;
0
j. Removing from paragraph (f)(2) ``acquisitions and dispositions of''
and adding ``acquisitions, loss of Government property, and disposition
of'' in its place;
0
k. Removing paragraph (f)(3);
0
l. Removing from the introductory text of paragraph (h)(1) ``loss,
theft, damage or destruction to the'' and adding ``loss of'' in its
place;
0
m. Revising paragraphs (h)(1)(ii), (h)(1)(iii), (h)(2), and (h)(3);
0
n. Redesignating paragraph (h)(4) as paragraph (h)(5);
0
o. Adding a new paragraph (h)(4);
0
p. Adding the words ``or authorizing official'' to the end of the
introductory text of paragraph (j);
0
q. Removing paragraph (j)(1);
0
r. Redesignating paragraphs (j)(2) through (j)(10) as paragraphs (j)(1)
through (j)(9), respectively;
0
s. Revising the newly redesignated paragraph (j)(1), the introductory
text of
[[Page 12945]]
paragraph (j)(2)(i), (j)(2)(i)(A), (j)(2)(ii), (j)(2)(iii),
(j)(2)(iv)(C), and (j)(3);
0
t. Removing from the first sentence of the newly redesignated paragraph
(j)(6)(ii) the words ``Government property'' and adding ``property'' in
its place;
0
u. Removing the newly redesignated paragraph (j)(7)(i);
0
v. Further redesignating newly redesignated paragraphs (j)(7)(ii) and
(j)(7)(iii) as (j)(7)(i) and (j)(7)(ii), respectively;
0
w. Removing from the newly redesignated paragraph (j)(9) ``paragraph
(j)(4)'' and adding ``paragraph (j)(3)'' in its place;
0
x. Removing from paragraphs (k)(1) and (k)(2) ``Government property'',
and adding ``property'' in its place;
0
y. Redesignating paragraph (k)(3) as paragraph (k)(4); and adding a new
paragraph (k)(3);
0
z. Removing from Alternate I ``(AUG 2010)'' and adding ''(APR 2012)''
in its place; and removing from paragraph (h)(1) of Alternate I ``loss,
theft, damage, or destruction'' and adding ``loss'' in its place; and
0
aa. Removing from Alternate II ``(JUN 2007)'' and adding ''(APR 2012)''
in its place; and removing from the first and second sentences of
paragraph (e)(3) of Alternate II ``having an'' and adding ``having a
unit'' in its place (two times).
The added and revised text reads as follows:
52.245-1 Government Property.
* * * * *
GOVERNMENT PROPERTY (APR 2012)
(a) * * *
Loss of Government property means unintended, unforeseen or
accidental loss, damage or destruction to Government property that
reduces the Government's expected economic benefits of the property.
Loss of Government property does not include purposeful destructive
testing, obsolescence, normal wear and tear or manufacturing
defects. Loss of Government property includes, but is not limited
to--
(1) Items that cannot be found after a reasonable search;
(2) Theft;
(3) Damage resulting in unexpected harm to property requiring
repair to restore the item to usable condition; or
(4) Destruction resulting from incidents that render the item
useless for its intended purpose or beyond economical repair.
* * * * *
Production scrap means 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 cost means--
(1) For Government-furnished property, the dollar value assigned
by the Government and identified in the contract; and
(2) For contractor-acquired property, the cost derived from the
Contractor's records that reflect consistently applied generally
accepted accounting principles.
* * * * *
(b) * * *
(1) The Contractor shall have a system of internal controls 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,
procedures, records, and methodologies necessary for effective and
efficient control of Government property. The Contractor shall
disclose any significant changes to its property management system
to the Property Administrator prior to implementation of the
changes. The Contractor may employ customary commercial practices,
voluntary consensus standards, or industry-leading practices and
standards that provide effective and efficient Government property
management that are necessary and appropriate for the performance of
this contract (except where inconsistent with law or regulation).
* * * * *
(4) The Contractor shall establish and maintain procedures
necessary to assess its property management system effectiveness and
shall perform periodic internal reviews, surveillances, self
assessments, or audits. Significant findings or results of such
reviews and audits pertaining to Government property shall be made
available to the Property Administrator.
* * * * *
(e) Title to Government property. (1) All Government-furnished
property and all property acquired by the Contractor, title to which
vests in the Government under this paragraph (collectively referred
to as ``Government property''), is subject to the provisions of this
clause. The Government shall retain title to all Government-
furnished property. Title to Government property shall not be
affected by its incorporation into or attachment to any property not
owned by the Government, nor shall Government property become a
fixture or lose its identity as personal property by being attached
to any real property.
(2) Title vests in the Government for all property acquired or
fabricated by the Contractor in accordance with the financing
provisions or other specific requirements for passage of title in
the contract. Under fixed price type contracts, in the absence of
financing provisions or other specific requirements for passage of
title in the contract, 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
Government-furnished property.
(3) Title under Cost-Reimbursement or Time-and-Material
Contracts or Cost-Reimbursable contract line items under Fixed-Price
contracts. (i) 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 the vendor's delivery of such property.
(ii) Title to all other property, the cost of which is
reimbursable to the Contractor, shall pass to and vest in the
Government upon--
(A) Issuance of the property for use in contract performance;
(B) Commencement of processing of the property for use in
contract performance; or
(C) Reimbursement of the cost of the property by the Government,
whichever occurs first.
(f) * * *
(1) * * *
(iii) * * *
(A) * * *
(1) The name, part number and description, National Stock Number
(if needed for additional item identification tracking and/or
disposition), and other data elements as necessary and required in
accordance with the terms and conditions of the contract.
* * * * *
(10) Date placed in service (if required in accordance with the
terms and conditions of the contract).
* * * * *
(v) * * *
(A) The Contractor shall award subcontracts that clearly
identify items to be provided and the extent of any restrictions or
limitations on their use. The Contractor shall ensure appropriate
flow down of contract terms and conditions (e.g., extent of
liability for loss of Government property.
* * * * *
(vi) Reports. The Contractor shall have a process to create and
provide reports of discrepancies, loss of Government property,
physical inventory results, audits and self-assessments, corrective
actions, and other property-related reports as directed by the
Contracting Officer.
(vii) Relief of stewardship responsibility and liability. The
Contractor shall have a process to enable the prompt recognition,
investigation, disclosure and reporting of loss of Government
property, including losses that occur at subcontractor or alternate
site locations.
(A) This process shall include the corrective actions necessary
to prevent recurrence.
(B) Unless otherwise directed by the Property Administrator, the
Contractor shall investigate and report to the Government all
incidents of property loss as soon as the facts become known. Such
reports shall, at a minimum, contain the following information:
(1) Date of incident (if known).
(2) The data elements required under paragraph (f)(1)(iii)(A) of
this clause.
(3) Quantity.
(4) Accountable contract number.
(5) A statement indicating current or future need.
[[Page 12946]]
(6) Unit acquisition cost, or if applicable, estimated sales
proceeds, estimated repair or replacement costs.
(7) All known interests in commingled material of which includes
Government material.
(8) Cause and corrective action taken or to be taken to prevent
recurrence.
(9) A statement that the Government will receive compensation
covering the loss of Government property, in the event the
Contractor was or will be reimbursed or compensated.
(10) Copies of all supporting documentation.
(11) Last known location.
(12) A statement that the property did or did not contain
sensitive, export controlled, hazardous, or toxic material, and that
the appropriate agencies and authorities were notified.
(C) Unless the contract provides otherwise, the Contractor shall
be relieved of stewardship responsibility and liability for property
when--
(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;
(2) Property Administrator grants relief of responsibility and
liability for loss of Government property;
(3) Property is 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
(4) Property is disposed of in accordance with paragraphs (j)
and (k) of this clause.
* * * * *
(h) * * *
(1) * * *
(ii) Loss of Government property that is the result of willful
misconduct or lack of good faith on the part of the Contractor's
managerial personnel.
(iii) The Contracting Officer has, in writing, revoked the
Government's assumption of risk for loss of Government property 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 of Government property
occurred while the Contractor had adequate property management
practices or the loss did not result from the Contractor's failure
to maintain adequate property management practices, the Contractor
shall not be held liable.
(2) The Contractor shall take all reasonable actions necessary
to protect the property from further loss. The Contractor shall
separate the damaged and undamaged property, place all the affected
property in the best possible order, and take such other action as
the Property Administrator directs.
(3) The Contractor shall do nothing to prejudice the
Government's rights to recover against third parties for any loss of
Government property.
(4) The Contractor shall reimburse the Government for loss of
Government property, to the extent that the Contractor is
financially liable for such loss, as directed by the Contracting
Officer.
* * * * *
(j) * * *
(1) Predisposal requirements. (i) If the Contractor determines
that the property has the potential to fulfill requirements under
other contracts, the Contractor, in consultation with the Property
Administrator, shall request that the Contracting Officer transfer
the property to the contract in question, or provide authorization
for use, as appropriate. In lieu of transferring the property, the
Contracting Officer may authorize the Contractor to credit the costs
of Contractor-acquired property (material only) to the losing
contract, and debit the gaining contract with the corresponding
cost, when such material is needed for use on another contract.
Property no longer needed shall be considered contractor inventory.
(ii) For any remaining Contractor-acquired property, the
Contractor may purchase the property at the unit acquisition cost if
desired or 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.)
(2) Inventory disposal schedules. (i) Absent separate contract
terms and conditions for property disposition, and provided the
property was not reutilized, transferred, or otherwise disposed of,
the Contractor, as directed by the Plant Clearance Officer or
authorizing official, shall use Standard Form 1428, Inventory
Disposal Schedule or electronic equivalent, to identify and report--
(A) Government-furnished property that is no longer required for
performance of this contract;
* * * * *
(ii) The Contractor may annotate inventory disposal schedules to
identify property the Contractor wishes to purchase from the
Government, in the event that the property is offered for sale.
(iii) Separate inventory disposal schedules are required for
aircraft in any condition, flight safety critical aircraft parts,
and other items as directed by the Plant Clearance Officer.
(iv) * * *
(C) For precious metals in raw or bulk form, the type of metal
and estimated weight.
* * * * *
(3) Submission requirements. (i) The Contractor shall submit
inventory disposal schedules to the Plant Clearance Officer no later
than--
(A) 30 days following the Contractor's determination that a
property item is no longer required for performance of this
contract;
(B) 60 days, or such longer period as may be approved by the
Plant Clearance Officer, following completion of contract deliveries
or performance; or
(C) 120 days, or such longer period as may be approved by the
Termination Contracting Officer, following contract termination in
whole or in part.
(ii) Unless the Plant Clearance Officer determines otherwise,
the Contractor need not identify or report production scrap on
inventory disposal schedules, and may process and dispose of
production scrap in accordance with its own internal scrap
procedures. The processing and disposal of other types of
Government-owned scrap will be conducted in accordance with the
terms and conditions of the contract or Plant Clearance Officer
direction, as appropriate.
* * * * *
(k) * * *
(3) Absent contract terms and conditions to the contrary, the
Government may abandon parts removed and replaced from property as a
result of normal maintenance actions, or removed from property as a
result of the repair, maintenance, overhaul, or modification
process.
* * * * *
0
32. Amend section 52.245-2 by revising the date of the clause and
paragraph (b) to read as follows:
52.245-2 Government Property Installation Operation Services.
* * * * *
GOVERNMENT PROPERTY INSTALLATION OPERATION SERVICES (APR 2012)
* * * * *
(b) The Government bears no responsibility for repair or
replacement of any lost Government property. If any or all of the
Government property is lost 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.
* * * * *
0
33. Amend section 52.245-9 by revising the date of the clause; and
removing from paragraph (e)(2) ``The rental charge is'' and adding
``The hourly rental charge is'' in its place.
52.245-9 Use and Charges.
* * * * *
USE AND CHARGES (APR 2012)
* * * * *
0
34. Amend section 52.249-2 by revising the date of the clause and
paragraph (h) to read as follows:
52.249-2 Termination for Convenience of the Government (Fixed-Price).
* * * * *
TERMINATION FOR CONVENIENCE OF THE GOVERNMENT (FIXED-PRICE) (APR 2012)
* * * * *
(h) Except for normal spoilage, and except to the extent that
the Government expressly assumed the risk of loss, the Contracting
[[Page 12947]]
Officer shall exclude from the amounts payable to the Contractor
under paragraph (g) of this clause, the fair value as determined by
the Contracting Officer, for the loss of the Government property.
* * * * *
0
35. Amend section 52.249-3 by revising the date of the clause and
paragraph (h) to read as follows:
52.249-3 Termination for Convenience of the Government (Dismantling,
Demolition, or Removal of Improvements).
* * * * *
TERMINATION FOR CONVENIENCE OF THE GOVERNMENT (DISMANTLING, DEMOLITION,
OR REMOVAL OF IMPROVEMENTS) (APR 2012)
* * * * *
(h) Except for normal spoilage, and except to the extent that
the Government expressly assumed the risk of loss, the Contracting
Officer shall exclude from the amounts payable to the Contractor
under paragraph (g) of this clause, the fair value, as determined by
the Contracting Officer, for the loss of the Government property.
* * * * *
0
36. Revise section 52.251-1 to read as follows:
52.251-1 Government Supply Sources.
As prescribed in 51.107, insert the following clause:
GOVERNMENT SUPPLY SOURCES (APR 2012)
The Contracting Officer may issue the Contractor an
authorization to use Government supply sources in the performance of
this contract. Title to all property acquired by the Contractor
under such an authorization shall vest in the Government unless
otherwise specified in the contract. The provisions of the clause at
FAR 52.245-1, Government Property, apply to all property acquired
under such authorization.
(End of clause)
PART 53--FORMS
0
37. Amend section 53.245 by revising paragraph (c) to read as follows:
53.245 Government property.
* * * * *
(c) SF 1423 (Rev. 5/04), Inventory Verification Survey. (See
45.602-1(b)(1).)
* * * * *
[FR Doc. 2012-4499 Filed 3-1-12; 8:45 am]
BILLING CODE 6820-EP-P