Rule: Federal Acquisition Regulation (FAR) : Government Property

27364 Federal Register / Vol. 72, No.
93 / Tuesday, May 15, 2007 / Rules and Regulations
DEPARTMENT OF DEFENSE and National Aeronautics and Space DATES: For effective dates and comment
Administration (NASA). dates, see separate documents, which
GENERAL SERVICES ACTION: Summary presentation of final follow.
ADMINISTRATION rule.
FOR FURTHER INFORMATION CONTACT: The
NATIONAL AERONAUTICS AND SUMMARY: This document summarizes analyst whose name appears in the table
SPACE ADMINISTRATION the Federal Acquisition Regulation below in relation to the FAR case.
(FAR) rule agreed to by the Civilian Please cite FAC 2005–17, FAR case
48 CFR Chapter 1 Agency Acquisition Council and the 2004–025. For information pertaining to
Defense Acquisition Regulations status or publication schedules, contact
[Docket FAR–2007–0002, Sequence 2] Council in this Federal Acquisition the FAR Secretariat at (202) 501–4755.
Federal Acquisition Regulation; Circular (FAC) 2005–17. A companion
Federal Acquisition Circular 2005–17; document, the Small Entity Compliance
Introduction Guide (SECG), follows this FAC. The
FAC, including the SECG, is available
AGENCIES: Department of Defense (DoD), via the Internet at http://
General Services Administration (GSA), www.regulations.gov.
LIST OF RULE IN FAC 2005–17

Item Subject FAR case Analyst
I ............ Government Property ....................................................................................................................... 2004–025 Parnell.
SUPPLEMENTARY INFORMATION: Summary Dated: May 2, 2007. DEPARTMENT OF DEFENSE

for the FAR rule follows. For the actual Al Matera,
revisions and/or amendments refer to Acting Director, Contract Policy Division. GENERAL SERVICES
FAR case 2004-025. ADMINISTRATION
Federal Acquisition Circular
FAC 2005–17 amends the FAR as
NATIONAL AERONAUTICS AND
specified below: Federal Acquisition Circular (FAC) SPACE ADMINISTRATION
Item I—Government Property (FAR 2005-17 is issued under the authority of
Case 2004–025) the Secretary of Defense, the 48 CFR Parts 1, 2, 4, 7, 14, 15, 16, 17,
Administrator of General Services, and 18, 19, 22, 28, 31, 32, 35, 37, 41, 42, 43,
This final rule amends Federal the Administrator for the National 44, 45, 46, 49, 51, 52, and 53
Acquisition Regulation (FAR) Part 45, Aeronautics and Space Administration.
Government Property, and associated Unless otherwise specified, all [FAC 2005–17; FAR Case 2004–025; Docket
FAR language and clauses to implement Federal Acquisition Regulation (FAR) 2007–0001, Sequence 2]
a policy that fosters efficiency, and other directive material contained
flexibility, innovation and creativity in FAC 2005-17 is effective June 14, RIN 9000–AK30
while continuing to protect the 2007.
Government’s interest. This rule Federal Acquisition Regulation; FAR
simplifies procedures, clarifies Dated: April 30, 2007.
Case 2004–025, Government Property
language, and eliminates obsolete Shay D. Assad,
requirements related to the management Director, Defense Procurement and AGENCIES: Department of Defense (DoD),
and disposition of Government property Acquisition Policy. General Services Administration (GSA),
and National Aeronautics and Space
in the possession of contractors by Dated: April 27, 2007. Administration (NASA).
moving, clarifying, and deleting
George Barclay, ACTION: Final rule.
definitions; establishing a life-cycle
approach to property management; and, Acting Senior Procurement Executive,
General Services Administration. SUMMARY: The Civilian Agency
sanctioning the use of consensus Acquisition Council and the Defense
standards and/or industry-leading Dated: April 19, 2007. Acquisition Regulations Council
standards and practices for property Sheryl Goddard, (Councils) have agreed on a final rule
management. This rule deletes outdated Acting Assistant Administrator for amending the Federal Acquisition
clauses, combines selected FAR Procurement, National Aeronautics and Regulation (FAR) to simplify
property clauses into a single clause, Space Administration. procedures, clarify language, and
and implements a new clause designed [FR Doc. 07–2257 Filed 5–14–07; 8:45 am] eliminate obsolete requirements related
for military base and installation-level to the management and disposition of
BILLING CODE 6820–EP–S
contracts awarded under the OMB Government property in the possession
Circular A–76 process. FAR language of contractors. FAR parts are amended
and associated clauses for special to implement a policy that improves the
tooling, special test equipment and management of Government property
ycherry on PROD1PC64 with RULES2
facilities contracts is deleted. It is not while fostering efficiency, flexibility,

the Government’s intention to change innovation and creativity by adopting
the intent or meaning of the language property practices typically used in the
pertaining to ‘‘title to Government commercial arena while continuing to
property.’’ protect the Government’s interest. In
VerDate Aug<31>2005 16:30 May 14, 2007 Jkt 211001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 E:\FR\FM\15MYR2.SGM 15MYR2
Federal Register / Vol. 72, No. 93 / Tuesday, May 15, 2007 / Rules and Regulations 27365
addition, the rule simplifies dispositioned as discussed below. The 45.401 and FAR 52.245–1(e) to clarify
requirements on contractors by reducing comments received were grouped under indirect and direct overhead property.
the number of FAR clauses from 32 general topics. A summary of the (10) One respondent provided the
nineteen clauses to three overarching comments follows: following response to the proposed rule
clauses. The final rule specifically 1. Title. at FAR 52.245–1, ‘‘While the
impacts contracting officers, property a. Title to Government Property. Government has not asserted title to all
administrators, and contractors Fourteen comments were received from materials that may support the charging
responsible for the management of ten respondents regarding the title of of indirect costs, including (for instance)
Government property. Government property. office supplies (some portions of the
DATES: Effective Date: June 14, 2007. (1) Two respondents addressed the cost of which may be allocated to a
FOR FURTHER INFORMATION CONTACT For proposed FAR revision as containing an contract), we believe that financing
clarification of content, contact Mrs. elimination of the state law ‘‘sale for payments normally must be secured by
Jeritta Parnell, Procurement Analyst, at resale’’ exemption for overhead property a title interest in contract materials. As
(202) 501–4082. Please cite FAC 2005– allocable to cost type contracts. The a general rule, the value of the payments
17, FAR case 2004–025. For information respondents stated that the proposed will be fairly approximated by the value
pertaining to status or publication rule eliminates the exemption from of goods that are either incorporated
schedules, contact the FAR Secretariat sales and use taxes on contractor into the end items, or consumed in their
at (202) 501–4755. overhead property allocable to cost type production (such as cutting materials,
contracts and should be withdrawn and abrasives, special tooling, etc.). The
SUPPLEMENTARY INFORMATION:
full consideration given to the impact of Government’s interest in such materials
A. Background the change. is not dependent on whether their costs
The Department of Defense (DoD) (2) One respondent requested adding are charged as direct or indirect costs.
proposed a rewrite of FAR Part 45, the statement to the proposed rule at Sections 45.401(b) and (c), and
Government Property and associated FAR 52.245–1(e) ‘‘Under cost paragraph (e) of the proposed
clauses, to implement a policy that reimbursement and cost sharing Government Property clause, have
fosters efficiency, flexibility, innovation contracts’’ to clarify title under cost type therefore been corrected in this draft to
and creativity while continuing to contracts versus fixed price contracts. eliminate this distinction.’’
protect the Government’s interest. In the (3) One respondent requested an (11) One respondent provided three
late 1990s, the DoD initiated a complete additional sentence be added to the title comments.
rewrite of the FAR, Part 45 and paragraph clarifying that when this (i) A contract modification may not be
associated clauses. Beyond attempting clause is used with Time-and-Material necessary if contractor retention and use
to address long-standing property (T&M) contracts, contractors shall only was the original intent of the contract.
management issues, the effort reflected acquire material for direct charge to the Requiring a modification serves no
the general consensus that adoption of contract. purpose. Under fixed price type
more typically commercial business (4) One respondent recommended the contracts, the contractor retains title to
practices would not only attract more following change to clarify FAR 45.401, all property acquired by the contractor
commercial firms to the marketplace but ‘‘Under fixed price type contracts, the for use on the contract except for
also result in significant savings of contractor retains title to all property property identified as a deliverable
acquisition dollars. For many reasons, acquired by the contractor for use on the item. If a deliverable item is to be
only one of the proposed rules (Subpart contract, up until the time that such furnished to the contractor for use after
45.6) was implemented; the legalities property is received, delivered and inspection and acceptance by the
and complexities that characterize accepted as a part of the deliverable Government, it shall be made
Government property management drew end-item by the Government.’’ accountable to the receiving contract as
out differences between the Government (5) One respondent recommended Government-furnished property.
and industry parties, resulting in adding a section to address cost (ii) Clarify the FAR to be more
suspension of the rest of the project. Contract Line Item Numbers (CLINs) consistent with the current and
DoD, GSA, and NASA published a under fixed price contracts in FAR proposed title provisions. We believe
proposed rule in the Federal Register at 45.401(b). there is no intent on the Government’s
70 FR 54878, September 19, 2005, and (6) One respondent recommended part or the contractor’s part to change
the public comment period closed that FAR 52.245–1(e) be revised to how the title provisions currently
November 18, 2005. replace direct item of cost with, either function.
Forty respondents submitted two- directly or conditionally, based upon (iii) Revise 52.245–1(d) and (e).
hundred-eighty-seven comments. The the sub paragraphs (2), (3), and (4) that Response: The intent of 52.245–2 and
two-hundred-eighty-seven comments followed. 52.245–5 remains unchanged. The
were grouped into thirty-two categories. (7) One respondent requested FAR proposed language at 45.401 and
The Councils considered all comments 52.245–1(e) be revised to replace ‘‘direct 52.245–1(d) and (e) is revised to reflect
and concluded that the proposed rule item of cost’’ with ‘‘either directly or the current language in the FAR found
should be converted to a final rule, with conditionally based on the at 52.245–2 and 52.245–5.
changes to the proposed rule. subparagraphs (2), (3) and (4)’’ or use Administrative changes (i.e., deletion of
Differences between the proposed rule optional wording ‘‘FFP and Cost-type references to Special Tooling and
and final rule are identified in the reimbursable contracts.’’ Facilities) were made to 45.402 and
Summary of Changes in Section C, and (8) One respondent recommended the 52.245–1(e)(2) and (3) in order to
discussed in the responses to the public retention of the current language in FAR correlate with the final rule. Though the
comments in Section B. 52.245–2 and 52.245–5 as to when title intent of the proposed rule was to
passes. provide clarity for title issues, the
B. Public Comments (9) One respondent requested a disparate public comments received
The 287 comments received from revision to title language referring to gave evidence that questions still
forty respondents have been indirect title issues as proposed in FAR remain. Therefore, the Councils have
27366 Federal Register / Vol. 72, No. 93 / Tuesday, May 15, 2007 / Rules and Regulations
fundamentally retained existing FAR contracting officer shall consider an property being provided under contract
language under this case. equitable adjustment to the contract. as stated in the revised rule, FAR clause
b. Title Under Progress Payments. d. Six respondents offered 52.245–1(d)(3)(iii), renumbered as
One respondent requested recommendations to the language 52.245–1(d)(2)(iii).
clarification in 52.232–16 that the regarding property offered ‘‘as-is.’’ The g. One respondent recommended that
Government does not take title to proposed rule did not address pre- a reference to the Changes clause be
overhead property. contract inspection by the contractor for included at FAR 52.245–1(i). The
Response: The Councils do not Government-furnished property offered respondent further commented that the
believe the recommended change at in an ‘‘as-is’’ condition. This may cause language is somewhat limiting. If a
52.232–16 is necessary as related to this adverse ramifications associated with contractor relies on Government-
case. With respect to overhead the use of the ‘‘as-is’’ provisions. Furnished Property (GFP) and that
materials, language will not be changed Response: The Councils believe that property is delayed, received in an
by the FAR Part 45 rewrite. the recommendation to add language unsuitable condition, substituted, etc.
2. Use of Government Property addressing pre-contract inspection by (see FAR 52.245–1(i)(1)-(4)), contract
(Suitability for Use and As-Is). the contractor for Government-furnished performance may be impacted. An
a. One respondent recommended that property offered in an ‘‘as-is’’ condition equitable adjustment may not be
contractors be allowed the opportunity is appropriate and has added language sufficient remedy for the contractor.
to inspect Government-furnished at FAR 45.201(a)(5). The new language Response: The Councils believe that
property, expected to be suitable for requires the contracting officer to the proposed language should not be
contract performance, after the property include a statement in all solicitations revised to include a reference to the
has been received and installed. as to whether the Government property Changes clause nor should the equitable
Response: The Councils agree that is to be furnished in an ‘‘as-is’’ adjustment language be revised. A
contractors should be allowed to condition and provide instructions for change is affected according to whether
determine whether Government- physical inspection. or not the contracting officer determines
furnished property is suitable for e. One respondent recommended that the necessity for such, in accordance
contract performance. Therefore FAR FAR clause 52.245–1(d)(3)(iii) be with contract terms and conditions.
52.245–1(d)(3)(ii), renumbered as deleted in its entirety as the unilateral Equitable adjustments require
52.245–1(d)(2)(ii), is revised to allow provisioning of ‘‘as-is’’ property is high agreement by both parties.
contractors the opportunity to risk to the contractor. In addition, it 3. Scope.
determine whether Government- delays scheduling, increases cost to the a. One respondent suggested the
furnished property is suitable for use contractor and to the Government and addition of a sentence to FAR 45.000,
after receipt and installation. may present a costly event to the scope of part, stating that ‘‘nothing in
b. One respondent recommended that contractor should the item be this part prohibits the use of a property
FAR clause 52.245–1(d)(3)(i) and (ii) be determined hazardous. management contract.’’
revised to specify what constitutes a Response: The Councils do not agree Response: The FAR does not prohibit
contractor’s timely written request for with the recommendation to delete the the use of a contract for performance of
equitable adjustment. Government’s option to furnish property property management. Contracts for the
Response:The Councils believe the in an ‘‘as-is’’ condition. The FAR performance of property management
final rule language is adequate for the currently provides language to provide are a common form of service contracts.
contractor to advise the contracting property in an as-is condition and the The Councils do not believe it is
officer of Government property received Councils see no evidence to justify the necessary to specifically state that the
in a condition not suitable for its removal of this language. However, the use of a contract for performance of
intended use or if the property is not Councils recognize the respondent’s property management is ‘‘not
delivered to the contractor by the concern and have mitigated the risk by prohibited.’’
contractually required date. The rule revising FAR clause 52.245–1(d)(3)(iii), b. One respondent suggested adding
allows flexibility in accordance with renumbered as 52.245–1(d)(2)(iii), to language to FAR 45.000, scope of part,
agency procedures and/or individual clarify that the contractor will be given to specifically exclude software.
contract requirements. the opportunity to inspect property Response: While the definition of
c. One respondent recommended provided in an ‘‘as-is’’ condition prior to Contractor-acquired property remains
using original language as stated in FAR the property being provided. unchanged, FAR 45.000 is revised to
52.245–2(a)(2) to disposition f. One respondent stated that the exclude software and intellectual
Government property not suitable for listing at FAR 45.201(a) should include property from this rule.
intended use. Since the property is all material information required to c. Three respondents suggested
owned by the Government, the decision make an informed decision regarding replacing ‘‘plant’’ or ‘‘plant equipment’’
concerning an appropriate action should Government property to be offered in in the parenthetical phrase in FAR
rest with the contracting officer. solicitations in an ‘‘as-is’’ condition. 45.000.
Response: The Councils believe the The respondent recommended adding Response: The language is revised to
final rule language is sufficient for supply condition code and current delete the term ‘‘Plant equipment’’ and
disposition of Government property not location to the proposed listing. replace it with the word ‘‘Property’’ in
suitable for intended use. The language Response: The Councils believe the the parenthetical phrase in FAR 45.000.
gives the contracting officer the list in the proposed final rule is The term ‘‘Property,’’ rather than the
flexibility when choosing a course of sufficient for inclusion in solicitations term ‘‘Plant equipment’’ is more
action to remedy the problem. FAR where Government-furnished property appropriately used because it is more
clause 52.245–1(d)(2)(ii) specifically is anticipated and should not be inclusive and more definitive.
states that actions may include modified to add supply condition code d. One respondent suggested that
repairing, replacing, modifying, and current location. The contractor has since the definition for plant equipment
returning or otherwise disposing of the the right to inspect property furnished has been deleted, and the term
property at the Government’s expense. ‘‘as-is’’ and determine the condition ‘‘Equipment’’ has been substituted in
Upon completion of the action(s), the relative to overall utility prior to the most cases in the re-write, the all-
inclusive term ‘‘Government property,’’ Response: The term ‘‘Common item’’ unusable for, and not restorable to, the
as used in FAR 45.301(f) of the is used in Part 31 and in the inventory purpose for which it was designed or is
proposed rule, should also be replaced disposal forms. However, because the customarily used’’ by deleting the
with the term ‘‘Equipment’’ based on term is used in more than one section phrase ‘‘a product designated for
the context. of the FAR, the Councils decided the demilitarization.’’ One respondent
Response: The term ‘‘Government definition should be moved to Part 2. stated that definition needed to be
property,’’ rather than the term e. Contractor-Acquired Property. revised to replace ‘‘product designated
‘‘Equipment’’ or ‘‘Government Two comments received from two for demilitarization’’ with ‘‘equipment
equipment’’, is more appropriately used respondents recommended revising the and material.’’
because it is more inclusive and more definition of ‘‘Contractor-acquired Response: The definition is revised to
definitive. property.’’ One respondent remove the words ‘‘designated for
4. Definitions. recommended revising the definition as demilitarization,’’ but the Councils did
a. Acquisition Cost. follows: ‘‘means property acquired or not concur with substituting
Seven comments were received from otherwise provided by the contractor for ‘‘equipment or material’’ with
five respondents concerning the performing a contract and to which the ‘‘disenable, neutralize, incapacitate or
definition of ‘‘Acquisition cost.’’ One Government has provided funding or decommission.’’ Demilitarization is a
respondent stated that the proposed has title.’’ One respondent term of art specific for military purposes
definition did not provide for the use of recommended adding the word and denotes more requirements than are
original acquisition cost. One ‘‘Government’’ to the term to say implied by the suggested terms.
respondent recommended deleting the ‘‘Contractor acquired government h. Discrepancies Incident to
language at paragraph (2) of the property.’’ Shipment.
Response: The Councils believe the Four comments were received from
definition. One respondent
definition is adequate as written. The three respondents to revise the
recommended that the definition be
definition states ‘‘to which the definition of ‘‘Discrepancies incident to
revised to refer to generally accepted
Government has title’’ so, there is no shipment’’ to mean any difference
accounting principles (GAAP), not
additional value to adding the word between the items documented to have
consistently applied sound accounting
Government to the term. been shipped and items actually
principles, and asked whether Cost f. Contractor Inventory.
Accounting Standards (CAS) is received.
Eleven comments were received from Response: The Councils agree with
applicable. One respondent stated the three respondents recommending
definition should be revised to state that the suggested revisions and the
changes to the definition of ‘‘Contractor definition is revised in 45.101 and
the fair market value attributed to the inventory.’’ Four comments stated that
item should be agreed upon by the 52.245–1.
paragraph (1) should be revised to state i. Equipment.
parties. One respondent stated that the only: ‘‘Any property acquired by and or Three comments were received from
definition in 45.101, 52.245–1, and in the possession of a contractor or three respondents to revise the
52.245–9 included the term ‘‘full cost’’ subcontractor under a contract for definition of ‘‘Equipment.’’ One
which may be confusing to personnel which title is vested in the Government respondent stated the phrase ‘‘in-and-of-
unfamiliar with contractor’s systems, and delete the language that states: ‘‘and itself’’ is limiting, the statement on the
e.g., for equipment, acquisition cost is which exceeds the amounts needed to expected useful life is superfluous and
referred to as ‘‘unit acquisition cost.’’ complete full performance under the the phrase ‘‘does not lose its identity or
Response: The Councils recognize the entire contract.’’ Two comments stated become a component part of another
concerns and have revised the the term should be changed to ‘‘Contract article when put into use’’ creates
definition of acquisition cost that inventory.’’ Two comments stated that confusion. One respondent stated ‘‘in-
provides sufficient detail to permit paragraph (2) should be deleted. Two and-of-itself’’ should be replaced with
application. As part of this revision, the comments stated that paragraph (3) ‘‘functionally complete for its intended
Councils have replaced the term ‘‘Full should be deleted. One comment stated purpose.’’ One respondent stated special
cost’’ with ‘‘Cost’’ to avoid any potential that term should be ‘‘contractor tooling should be a subset of equipment.
confusion. property.’’ Response: The Councils agree that the
b. Approved Scrap Procedure. Response: The term and the definition phrase ‘‘in-and-of-itself’’ should be
One respondent recommended of contractor inventory reflect the revised and replaced it with
including a definition for ‘‘Approved statutory definition in 40 U.S.C. 472. ‘‘functionally complete for its intended
scrap procedures.’’ g. Demilitarization. purpose,’’ but there are instances where
Response: The Councils believe there Five comments were received from a piece of equipment becomes part of a
is no single definition for approved four respondents regarding the higher assembly, so that distinction is
scrap procedure; it will vary, dependent definition of ‘‘Demilitarization.’’ One necessary.
upon the individual contractor. respondent stated that the definition of j. Government-Furnished Property.
c. Cannibalize. demilitarization was ill-suited for its Two comments were received from
Two respondents recommended intended purpose and recommended it one respondent to revise the definition
adding a definition for ‘‘Cannibalize.’’ be toned down and moved away from of ‘‘Government-furnished property’’ to
Response: The Councils agree with its military slant. Other terms suggested be consistent with the Unique
the recommendation and a definition for were disenable, neutralize, incapacitate Identification (UID) requirements by
‘‘Cannibalize’’ is added to 45.101 and or decommission. One respondent adding the phrase ‘‘is a subset of
52.245–1. stated that the word ‘‘demilitarization’’ property in the possession of a
d. Common Item. should be removed from the body of the contractor (PIPC),’’ in both 45.101 and
Two comments received from one definition. One respondent stated that the clause at 52.245–1.
respondent recommended the definition the definitions in 45.101 and 52.245–1 Response: The Councils do not
for ‘‘Common item’’ be deleted at 45.101 should be revised to say believe the additional language is
and 52.245–1(a) because it is ‘‘demilitarization means rendering necessary and does not add clarity. UID
superfluous and not used elsewhere. designated equipment or material is a unique DoD initiative, and the term
PIPC is a DoD unique term, and q. Plant Clearance Officer (PLCO) and install plant equipment. Plant
therefore are not appropriate for Property Administrator (PA). equipment is currently defined as
inclusion in the FAR. Four comments were received from encompassing only Personal property.
k. Industry Leading Standard or two respondents regarding revisions to However, the term ‘‘Equipment’’ can
Practice. the definition of ‘‘Plant Clearance encompass both Real and Personal
One respondent stated that there Officer’’ (PLCO) and ‘‘Property property. Thus, the Councils believe it
should be a definition for ‘‘Industry Administrator’’ (PA). One respondent is advisable to retain the current
leading standard or practice’’ added to stated that PLCO and PA should be definitions of Real property and Plant
the clause at 52.245–1. defined in the same place and that the equipment. However, in Section 45.000,
Response: The Councils believe that word ‘‘assigned’’ should be revised to Scope of part, the Councils believe that
the term is a commonly used term and read ‘‘appointed’’ in both definitions the term ‘‘Property’’ is more appropriate
is meant to convey industry strategies because they both must have a than ‘‘Plant equipment’’, i.e., the
and processes that are quantifiably and certificate of appointment. One distinction between Real and Personal
qualitatively demonstrated to be top respondent stated that the revisions to property is not relevant in the context
performing. the PLCO definition appear to redefine of this particular section.
l. Information Technology Equipment. the duties of the PLCO and proposed a t. Scrap.
Two comments were received from revised definition as ‘‘an authorized Two comments were received from
one respondent stating that a definition representative of the contracting officer two respondents stating that the
should be added for ‘‘Information appointed to disposition property proposed rule does not provide a
Technology Equipment (ITE)’’ in 45.101 accountable under Government definition of ‘‘Scrap.’’
and the clause at 52.245–1. contracts.’’ One respondent stated that Response: FAR Part 2 includes a
Response: A definition of information the definition should be left as is. definition of scrap.
technology exists in 2.101 and captures Response: The definitions of PLCO u. Sensitive Property.
information technology equipment and PA were revised to replace the word One respondent stated that the
within that definition. ‘‘assigned’’ with ‘‘appointed’’ in FAR definition of ‘‘Sensitive property’’
m. Material. 2.101 (PLCO), 45.101 (PA) and 52.245– should include sensitive and classified
Two comments were received from 1 (PA). The Councils believe the information.
one respondent to revise the definition proposed revision most accurately Response: A revision to the definition
of ‘‘Material’’ to be more in line with the reflects the duties and authorities of the of ‘‘Sensitive property’’ is not necessary.
concept that tangible personal property appointed individual. PLCO is defined The proposed rule applies only to
is either material or equipment and to in FAR 2.101. PA is only used in 45 and tangible property and does apply to
remove the exclusions of special is therefore inappropriate to be defined information such as software or
tooling, special test equipment and in FAR 2.101. intellectual property.
unique Federal property, in 45.101 and r. Provide. v. Special Tooling and Special Test
in the clause at 52.245–1. Two comments were received from Equipment.
Response: The Councils believe one respondent recommending that the Four comments were received from
special tooling and special test definition of ‘‘Provide’’ should be four respondents regarding the use of
equipment are still valid classifications consistent with the Defense Federal the terms ‘‘Special Tooling (ST)’’ and
and the exclusion still applies. Unique Acquisition Regulation Supplement ‘‘Special Test Equipment (STE)’’ and the
Federal property may be applicable at (DFARS) 245.301 definition. location of the definitions. One
an agency level. The term ‘‘Unique Response: The definition of ‘‘Provide’’ respondent stated that if the ST and STE
Federal property’’ was removed from is revised in the final rule at 45.101 and clauses are being deleted, then the terms
the final rule language. 52.245–1. should be deleted as well. One
n. Non-severable. s. Real Property. respondent asked whether Part 2 was
Two comments were received from Two comments were received from going to be revised to include the
one respondent to substitute the word one respondent stating that the definitions of ST and STE, since it does
construction for erection in the definitions for ‘‘Real property’’ should not currently. One respondent stated
definition of ‘‘Non-severable’’ in both be moved from 45.101 and 52.245–1 to that ‘‘replacement of these items’’
45.101 and the clause at 52.245–1. 2.101. should be deleted from the definition of
Response: The definition is revised Response: The Councils believe that Special tooling.
because the Councils believe that the definition for ‘‘Real property’’ is Response:Even though the clauses for
‘‘construction’’ provides a better more appropriate in Part 45 because this special tooling and special test
description. definition relates to property equipment are being deleted, the terms
o. Personal Property. management and may conflict with the are still appropriate classifications. The
Two respondents stated that there is use of the term as used elsewhere in the definitions of ST and STE are included
no definition for ‘‘Personal property’’ FAR. The final rule retains the current in the proposed rule under Part 2. The
and a definition should be included FAR Part 45 definitions of Real property Councils agree that the phrase
here. and Plant equipment. The proposed rule ‘‘replacement of these items’’ should be
Response: The definition for Personal included a revised definition of Real deleted from the special tooling
property can be found in 2.101. property in FAR Part 45, and also definition in FAR 2.101 and has revised
p. Property in the Possession of deleted the definition of Plant the definition accordingly.
Contractors (PIPC). equipment. However, upon further w. Stewardship.
One comment was received stating review, the Councils are concerned that Two respondents stated that the
there needed to be a definition for removing the term ‘‘Plant’’ from ‘‘Plant revised rule should include a definition
‘‘Property in the Possession of equipment’’ may inappropriately of ‘‘Stewardship.’’

Contractors (PIPC).’’ narrow the definition of Real property. Response: The Councils believe the
Response: An additional definition is The current definition states that Real term is a common dictionary term and
not necessary because this is not a term property does not include the does not need to be defined.
used in the FAR. foundations and work necessary to x. Surplus Property.
Two comments were received from officers’ flexibility in making informed Response: In order to ensure
one respondent stating the definition of business decisions in the best interest of maximum practical use of the property
‘‘Surplus property’’ should be revised in the Government. and timely disposition of excess
both 45.101 and 52.245–1 to state c. One respondent questioned how property, the Councils believe the final
‘‘excess personal property not required contracting officers are supposed to rule language found at FAR 45.103(a)(6),
by any Federal agency as determined by calculate the cost of administration etc. which requires contractors to justify
the Administrator of the General under FAR 45.102(b)(2). retaining Government property not
Services Administration (GSA) or as Response: Calculating the cost of needed for contract performance, is
delegated.’’ administration should be considered on necessary. It should be noted that the
Response: GSA has not delegated the a case by case basis and in accordance prescriptive language would be subject
authority to determine that items are with Agency procedures and individual to agency procedures.
surplus to the Government. contractual circumstances and b. One respondent suggested that FAR
y. Unique Federal Property. requirements. 45.103(a)(2) be divided into two
Two comments were received from d. One respondent questioned what is separate requirements, as the subject
one respondent stating that ‘‘Unique meant by the phrase ‘‘increase the matter is not related.
Federal property’’ is a subset of Government’s assumption of risk’’ Response: The Councils agree with
equipment and the definition of under FAR 45.102(b)(3). the respondent and has revised FAR
‘‘Unique Federal property’’ should be Response: The Government’s 45.103(a)(2) to make two separate
revised to replace the term ‘‘Personal assumption of risk is not specifically requirements. As a result, proposed
property’’ with ‘‘Equipment’’ in both defined since the FAR cannot predict all paragraphs (3), (4), and (5) have been
FAR 45.101 and the clause at 52.245–1. aspects of risk. Such aspects may renumbered in the final rule as (4), (5),
Response: ‘‘Unique Federal property’’ include, but are not limited to, and (6). In addition, the invalid
is not exclusively a subset of equipment. successful contract completion, loss of reference to 45.602 has been deleted.
‘‘Unique Federal property’’ may include Government property, national security, c. One respondent questioned what
equipment and other classifications of etc. To further define these possible justification could a contractor
personal property. However, the requirements would hinder contracting provide to substantiate keeping
definition is deleted because it is not officers’ flexibility in making informed Government property not required for
used in the prescriptive language or in business decisions in the best interest of performance of a Government contract.
the clause. Response: Normally Government
the Government.
z. Voluntary Consensus Standards. property is returned to the Government.
e. Two respondents were concerned
One respondent stated that definition Contractors are required to justify
that the proposed rule will make
of ‘‘Voluntary consensus standards’’ retention of Government property not
furnishing property to contractors much
should be the same as the definition in needed for contract performance in
easier administratively, and
OMB Circular A–119. order to ensure maximum practical use
consequently will result in more
Response: The definition is based on of the property and to ensure timely
Government property being furnished to
the definition in OMB Circular A–119 disposition of excess property. There are
contractors.
and is tailored to the requirements of several instances in which it is in the
Response: The language allows
FAR Part 45. Government’s best interest for
aa. Work In Progress (WIP). contracting officers, the flexibility to
contractors to retain Government
One comment was received regarding make appropriate business decisions
property (e.g., future procurements and
the addition of a definition for ‘‘WIP,’’ regarding their contracts. This may
spare part procurements, medical
in both Part 45 and the clause at 52.245– include the provision of property, but
studies and industrial readiness).
1. only when it is in the best interests of 7. Industry Leading Standards and
Response: The term ‘‘WIP’’ is not used the Government. Practices.
in Part 45, and therefore, there is no f. One respondent stated that FAR a. One respondent, with respect to
need to define the term. 45.103 also defines Voluntary consensus 45.103, asked who sets the ‘‘Leading
5. Policy. standards and as such, they embrace Industry Standards.’’
a. One respondent stated that the FAR this concept whole-heartedly. The Response: An ‘‘Industry leading’’
should provide a more detailed respondent suggested that for standard is meant to convey industry
explanation of what is needed for a consistency, it would make sense to use strategies and processes that are both
contracting officer to provide property. the verbiage as spelled out in FAR quantifiably and qualitatively
Response: FAR 45.102(b) sets forth 11.101(c). demonstrated to be top performing
overall requirements that must be met Response: Section 11.101 provides within a given industry.
for contracting officers to make a guidance for the use of Voluntary b. Two respondents, with respect to
determination to furnish Government consensus standards. To restate such the Background Section of the Federal
property. Any further details are subject guidance would be redundant. The Register Notice, stated that it is unclear
to Agency policies and procedures. definition of Voluntary consensus how the use of commercial practices
b. One respondent suggested the standards was added to 2.101 in the will apply to the management of
Councils clarify the intent of the proposed rule and is based on the Government property under
requirement that contracting officers definition in OMB circular A–119. Government contracts especially when
‘‘provide property to contractors only 6. General. contractors do not provide their own
when it is clearly demonstrated.’’ a. One respondent stated that it may property to other contractors under their
Response: The proposed language in be difficult to estimate Government- contracts.
FAR 45.102(b) sets forth clear Furnished Property (GFP) utilization Response: Contractors are not
requirements regarding what must be over a 5 or 10-year contract period and necessarily being asked to provide
demonstrated in order for contracting recommended that allowances be made processes for contractor-to-contractor
officers to provide Government for revisiting the timely turn-in of relationships. Rather, contractors are
property. To further define these excess property, where exceptional being required to apply the same
requirements would hinder contracting circumstances exist. industry leading standards or voluntary
consensus standards that they use to risk.’’ The respondent stated that • One respondent recommended
manage their own property. ‘‘materiality’’ is defined in FAR 30.602 eliminating the word ‘‘theft’’ from FAR
c. One respondent stated, with respect (48 CFR 9903.305), and (3) remove the 52.245–1(f)(1)(vi)(C) and provided the
to 45.103, that voluntary consensus word ‘‘theft.’’ The respondent stated following suggested language: ‘‘The
standards currently in print would not that the word ‘‘loss’’ is still listed, and contractor shall do nothing to prejudice
be efficient to protect the Government’s theft is just one specific type of ‘‘loss.’’ the Government’s rights to recover
interest. An area that is unclear is The addition of the word ‘‘theft’’ here against third parties for any loss,
whether contractors will be required to and in other parts of the re-write is damaged, or destruction, of Government
go to a voluntary consensus standard if redundant. Two respondents property.’’
for the past twenty years the contractor’s recommended that the word ‘‘undue’’ be • One respondent recommended
property control system has met or replaced with ‘‘material’’ in FAR eliminating the word ‘‘theft’’ from FAR
exceeded the requirements of FAR 31.205–19(e)(2)(iv) per the definition in 52.245–1(f)(1)(x) and suggested
Subpart 45.5. If contractor metrics 30.602, and both respondents replacing with the following language:
ASTM, ISO, etc., are used by the recommended deleting the word ‘‘theft’’ ‘‘The contractor shall promptly perform
Government to monitor contractor as it is a subset of loss and should be and report to the Property Administrator
compliance, what precedent does the deleted in FAR 31.205–19(e)(2)(iv) and contract property closeout, to include
FAR, DoD Supplement, and DoD in FAR 32.502–16 risk of loss. reporting, investigating and securing
Manual have in relationship to the Response: The Councils disagree with closure of all loss, damage, or
contractor based metric? the recommendation to replace the term destruction, cases; physically
Response: The effectiveness of ‘‘Undue’’ with ‘‘Material’’ and have inventorying all property upon
Voluntary consensus standards is well removed the language from this Subpart. termination or completion of this
established; their use is prescribed in The Councils did not agree with the contract; and disposing of items at the
OMB Circular 119 and in FAR Part 11. deletion of the word ‘‘theft’’ because it time they are determined to be excess to
The proposed rule included the denotes a specific meaning. In addition, contractual needs.’’
requirement for consistent application the Councils believe that the term • One respondent recommended
of prescribed outcomes. ‘‘Government’’ allows the Government eliminating the word ‘‘theft’’ from FAR
d. One respondent stated that the use decision maker greater flexibility than 52.245–1(h) and suggested language as
of industry-leading standards and follows: ‘‘Contractor liability for
use of the term ‘‘final determination.’’
practices versus the previous standard government property. (1) Unless
9. Theft.
of sound industrial practices imposes a otherwise provided for in the contract,
Nine comments were received from the contractor shall not be liable for
hardship on small business.
Response: The Councils believe that one respondent recommending omitting loss, damaged, or destruction to the
the rule allows small businesses to use the word ‘‘theft’’ from various parts and Government property furnished or
industry practices instead of clauses in the proposed rule. acquired under this contract, except
Government imposed standards and is • One respondent recommended when any one of the following applies:’’
therefore less burdensome. Industry eliminating the word ‘‘theft’’ from FAR • One respondent recommended
leading practices are not an exclusive 45.104(a). The elimination would be eliminating the word ‘‘theft’’ from FAR
purview of large business. The rule consistent with prior comments on 52.245–1(h)(1)(ii) and the suggested
balances regulation with principle- damage, or destruction, of Government language as follows: ‘‘The loss, damage,
based standards that allow for minimal property. or destruction, is the result of willful
regulatory requirement and greater • One respondent recommended misconduct or lack of good faith on the
flexibility and efficiency to achieve best eliminating the word ‘‘theft’’ from FAR part of the contractor’s managerial
value for the Government. 52.245–1(f)(1)(vi)(A). The following personnel. Contractor’s managerial
e. One respondent asks, ‘‘How are change was suggested for ‘‘Loss, personnel, in this clause mean the
contracting officers to be aware of damaged, or destruction. Unless contractor’s directors, officers,
industry leading practices? Will the otherwise directed by the Property managers, superintendents, or
council direct the creation of new Administrator, the contractor shall equivalent representatives who have
Defense Acquisition University (DAU) investigate and promptly furnish to the supervision or direction of all or
courses specifically for this purpose?’’ Property Administrator, a written substantially all of the contractor’s
Response: The Councils believe that narrative of all incidents of loss, business; all or substantially all of the
contracting officers are professionals in damage, or destruction, as soon as the contractor’s operation at any one plant
their fields of acquisition and are facts become known or when requested or separate location; or a separate and
capable of accessing the necessary by the Government. Such reports shall, complete major industrial operation.’’
information from various sources at a minimum, contain the following • One respondent recommended
applicable to their respective fields. The information....’’ eliminating the words ‘‘theft and
Councils will work with DAU to • One respondent recommended undue’’ from FAR 52.245–1(h)(1)(iii).
determine if and to what extent course eliminating the word ‘‘theft’’ from FAR The respondent also recommended
revisions or new courses are required. 52.245–1(f)(1)(vi)(B) and provided the eliminating the words ‘‘Clear and
8. Insurance and Indemnification suggested language as follows: ‘‘The convincing evidence,’’ because the
(FAR 31.205–19). contractor shall take all reasonable standard places an undue burden on
Three respondents requested a change actions necessary to protect the Government contractors. The suggested
to the use of ‘‘undue’’ and ‘‘theft’’ in Government property from further loss, change provided by the respondent is as
regard to FAR 31.205–19. One damage, or destruction. The contractor follows: ‘‘The contracting office has, in
respondent recommended a revision of shall separate the damaged and writing, withdrawn the Government’s
paragraph 31.205–19(e)(2)(iv) to (1) undamaged Government property, place assumption of risk for loss, damage, or
remove ‘‘Government has determined’’ all the affected Government property in destruction, due to a determination
and replace with the ‘‘contracting officer the best possible order, and take such under paragraph (g) of this clause that
has made a final determination,’’ and (2) other action as the Property the contractor’s property management
to use ‘‘material risk’’ instead of ‘‘undue Administrator directs.’’ practices are inadequate, and/or present
a material risk to the Government, and c. One respondent stated that FAR actions suggested by the Property
the contractor failed to take timely 45.104(b) contains two separate Administrator, differences will be
corrective action. If the contractor can thoughts and recommended that it be resolved with consultation with the
establish that the loss, damage or divided into two separate paragraphs (b) contracting officer.’’
destruction of Government property revocation and (c) dealing with prime Response: The term ‘‘undue’’ is better
occurred while the contractor had and subcontractor risk of loss suited to the context of the clause. The
adequate property management relationships. Councils believe that it is unnecessary
practices, or the loss, damage, or Response: Paragraph is revised to to specifically state that consultation
destruction of Government property did reflect suggested structure. with the contracting officer is required.
not result from the contractor’s failure to d. One respondent recommended Communication between the
maintain adequate property adding or reinstating language that is Government and the contractor should
management practices, the contractor substantially similar to the current FAR take place throughout contract
shall not be held liable.’’ 45.103(c) to proposed FAR 45.104, in performance.
• One respondent recommended order to be consistent with the proposed h. One respondent recommended
eliminating the word ‘‘theft’’ from the FAR clause 52.245–1(h). The current replacing the word ‘‘undue’’ with
proposed rule at FAR 52.245–1(h) and FAR 45.103(c) states that ‘‘the contract ‘‘material’’ in FAR 45.104(b), as material
the suggested language as follows: ‘‘The may require the contractor to assume can be quantified by industry writings
contractor assumes the risk of, and shall greater liability for loss of or damage to and documents and the word undue is
be responsible for, any loss, damage, or Government property than that purely subjective
destruction, of Government property contemplated by the Government Response: The term ‘‘undue’’ is better
upon its delivery to the contractor as property clauses....’’ suited to the context of the clause.
Government-furnished property. Response: The Councils believe the i. The respondent suggested adding
However, the contractor is not liability provisions in proposed FAR the following language to 52.245–1(h):
responsible for reasonable wear and tear 45.104 are sufficient to protect the ‘‘The prime contractor shall enforce
to Government property properly Government’s interest. for the benefit of the Government any
consumed in performing this contract.’’ e. One respondent recommended that liability that the subcontractor may have
Response: The Councils concluded at FAR 45.105(b) the contractor rather for loss, damage, destruction, or theft of
that the word ‘‘theft’’ would not be than the Government provide the Government property.’’
deleted from the FAR due to the specific schedule for the correction of Response: The language provided for
meaning associated with the word. deficiencies to a contractor’s subcontractor controls is sufficient. The
10. Responsibility and Liability. management of property, since the prime contractor has the right to enforce
a. One respondent recommended that contractor is in a better position to remedies against their subcontractors.
procedures be added at FAR 45.102 for establish such a schedule. The The Government does not prescribe
the flow of accountability for respondent stated that a contractor- prime contractor remedies.
Government- Furnished Property (GFP) developed schedule would assist in 11. Subcontractor.
from a contractor back to the correcting root causes rather than a. One respondent recommended that
Government, with the Government achieving a quick fix. instruction to the contractor related to
organization in possession of the GFP Response: The Councils believe that a subcontractor control be removed from
having liability for the GFP, or Government provided schedule is 45.501 and be added to the clause at
alternatively that clarification be added necessary to ensure the correction of 52.245–1(f)(1)(v).
that GFP provided to a contractor is for contractor deficiencies that place the Response: The Councils revised the
the sole use of the contractor in meeting Government at risk, within a reasonable language in Subpart 45.5 and added
the requirements of the contract, and period. language at 52.245–1(f)(1)(v).
not as a repository for Government f. Two respondents recommended b. Two respondents recommended
property intended for actual use by the replacing the word ‘‘undue’’ with that the language at 52.245–1(f)(1)(v) be
Government. ‘‘material’’ in FAR 45.105(b), and revised to remove the language related
Response: Since procedures do exist change the wording to ‘‘shall request to cost savings.
in Agency directives and in individual from the contractor prompt correction of Response: The paragraph is revised to
contracts on the accountability of GFP, deficiencies and a schedule for their read, ‘‘The contractor shall award
which is used by the Government, it is completion.’’ subcontracts that clearly identify assets
not necessary to prescribe procedures Response: The Councils concluded to be provided and shall ensure
for such an event in the FAR. Liability that the term ‘‘undue’’ is better suited to appropriate flow down of contract terms
and accountability are not synonymous the context of the prescriptive language. and conditions, e.g., extent of liability
and are addressed separately in the The Government must retain the right to for loss, damage, destruction or theft of
FAR. A contractor could serve as a determine the scope and schedule of Government property.’’ The language
repository for Government property, any corrective actions for a contractor related to cost savings is removed.
depending on contract requirements. deficiency that puts the Government at c. Two respondents recommended
b. One respondent asked, what does risk. language related to the flow down of the
‘‘revoke Government’s assumption of g. One respondent recommended appropriate assumption for risk of loss,
risk’’ at FAR 45.104(b) entail, and why changes to FAR 52.245–1(g)(3) to allow damage or destruction to subcontracts.
would this compel compliance? for resolution where the contractor does One respondent questioned the effect of
Response: Since revocation not believe direction provided by the the language regarding flow down of
justification information would be set property administrator would result in risk of loss to subcontractors.
forth in agency procedures, it is not the best value for the Government. The Response: FAR 52.245–1(f)(1)(v)
necessary to prescribe this information respondent suggested replacing the allows for flow-down to subcontractors.
in the FAR. Revocation would compel word ‘‘undue’’ with ‘‘material’’ and the Limited risk of loss is added as an
compliance because contractors would addition of the following sentence: example. The paragraph is revised to
then be financially liable for loss, ‘‘In instances where the contractor read, ‘‘The contractor shall award
damage, destruction, or theft. does not concur with the corrective subcontracts that clearly identify assets
to be provided and shall ensure additional burden on the contracting i. One respondent recommends
appropriate flow down of contract terms officer without a just cause to suspect adding language in the clause at 52.245–
and conditions, e.g., limited liability for the initial is faulty or not in use. 1(b)(1), ‘‘except where inconsistent with
loss, damage, destruction or theft of Response: The respondent suggests a law or regulation’’ after the words
Government property.’’ risk-based approach to system analysis; ‘‘property management’’.
d. One respondent stated that the the proposed rule does not prohibit Response: FAR 52.245–1(b)(1) is
language at 52.245–1(f)(1)(v)(B) was such an approach. Current language revised to add ‘‘except where
vague because it did not assign allows agencies maximum flexibility in inconsistent with law or regulation’’
responsibility for accomplishing conducting system analysis. after the words ‘‘property management.’’
reviews of subcontractors and providing d. One respondent recommended that 13. Contract Price Adjustment.
determinations related to those reviews. FAR 45.105(b) be revised so that the Three respondents made three
Response: The language assigns contracting officer and not the property comments recommending the deletion
responsibility to the prime contractor administrator is the official requesting/ of ‘‘contract price adjustment’’ as one of
for performance of subcontractors, directing correction of deficiencies. the examples of corrective action if a
including the performance of Response: The Property Administrator contractor does not correct property
Government property management performs the analysis of the contractor’s management system deficiencies or
functions. The language provides the system, and so is in the best position to suggested including enablers in the FAR
contractor the flexibility to determine request/direct the contractor on clause 52.245–1 for contracting officers
the most appropriate method for correction of deficiencies. to effect a price adjustment.
accomplishing those reviews and e. One respondent recommend that Response: FAR 45.105(b)(1) is deleted
obtaining subcontract compliance. the language be changed at FAR and the remaining paragraphs
e. One respondent recommended the 45.105(b)(3) to state, ‘‘other rights or renumbered because it would be
deletion of 52.245–1(f)(1)(v)(A) and remedies available to the contracting difficult for contracting officers to
52.245–1(f)(1)(v)(B) because methods of officer under the contract.’’ quantify a contract price adjustment
subcontract property management Response: The Councils revised associated with the failure to correct a
would be included in the prime’s language at FAR 45.105(b)(3) to state property management system
property plans. ‘‘other rights or remedies available to deficiency.
Response: Paragraph A will not be the contracting officer.’’ In addition, 14. Relief of Responsibility.
deleted but the language is revised for FAR 45.105(b)(3) is renumbered as a. Two respondents requested
clarity. This language and practice 45.105(b)(2) in accordance with another addition of language that describes the
protects the Government’s interest. recommendation. conditions and circumstances under
Paragraph B will not be deleted because f. One respondent recommended which a property administrator could
this language and practice, as well, changing the wording at FAR 45.105(b) grant contractors relief of accountability
protects the Government’s interest. to delete the words ‘‘shall provide’’ from and responsibility.
12. Contractor Property Management the phrase ‘‘shall provide a schedule for Response: Language is added to
System. their completion’’ which would allow 45.105(d) and 52.245–1(f)(1)(vii)(A) to
a. One respondent submitted two the contractor to propose a schedule for describe the conditions and
comments in regard to 45.105. The corrective action instead of the circumstances under which a property
respondent suggested that FAR 45.105 Government. administrator could grant contractors
should be renamed ‘‘Analysis and Response: A definitive action and a relief of accountability and
correction of contractor’s property schedule for completion of corrective responsibility.
management system’’ and that actions are reasonable and mitigate risk b. One respondent requested language
notification to the contractor for the to the Government. to set a threshold for automatic relief of
withdrawal of assumption of risk should g. One respondent recommended a responsibility based on the contractor’s
be by certified mail. requirement to maintain utilization data property plan.
Response: The heading in FAR 45.105 similar to that of FAR 45.509–2(b)(2) be Response: The Government intends to
is changed to ‘‘Contractor’s property reinstated. retain the authority to determine
management system compliance.’’ This Response: The current rule allows for whether or not to grant relief of
is a more meaningful heading, the flexibility of data retention. FAR responsibility for loss, damage,
consistent with the spirit of the 45.105 allows contractors and property destruction or theft. The Councils do
respondent’s comment. Any additional administrators to establish methods to not believe thresholds are advisable.
requirements for certified mail ensure property is fully utilized. The determination of relief of
notification would be addressed in h. One respondent recommends responsibility should be determined on
Agency procedures. adding language to provide the option a case-by-case basis.
b. One respondent recommended that for the Property Administrator to 15. Transferring Accountability.
‘‘In areas where the FAR requires a request the contractor submit (by a a. One respondent requested
response, a suggested time frame for specific date) a corrective action plan. clarification and additional language for
responses should be stated (i.e., within As written, FAR 45.105(b) requires the warranty of Government-furnished
10 business days).’’ Property Administrator to provide the property acquired or fabricated initially
Response: Specifying an exact number contractor with a schedule for by the contractor.
of days would limit flexibility. completion of corrective action. Response: Language is added at
However, Agencies may require specific Response: Definitive action and 52.245–1(d) and 45.106 to provide for
timeframes in their agency procedures schedule of corrective actions needs to the inapplicability of warranties of
and in accordance with specific issues. be defined by the Government for a suitability of use and timely delivery of
c. One respondent recommended that contractor deficiency that puts the Government-furnished property to
after initial contract award, verification Government at risk. The FAR does not property acquired or fabricated initially
of the existence of inventory systems be prohibit Property Administrators from by the contractor, and subsequently
done by exception. Requiring routine negotiating a schedule and corrective transferred to another contract with this
verifications places an unnecessary action. contractor.
b. One respondent requested that 45.107(d), and 52.245–2 to incorporate and to remove references to facilities
consideration might be given to adding the recommended revisions. clauses.
guidance as to which contractor, gaining b. One respondent recommended that 17. Solicitation and Evaluation
or losing, would typically absorb (or bill the language found at 45.107(d) be Procedures.
for) the cost of the property transfer. changed to clarify the use of a. One respondent recommended that
Response: The language as written Government property clauses in a clause be established, or the current
allows flexibility. Costs for the property purchase orders for property repair. clause be modified, to provide the list
transfer are covered under FAR Part 31. Response: The Councils agree the of requirements found at FAR 45.201(a)
c. One respondent stated confusion language should be clarified, and when it is anticipated that Government-
between 52.245–1(d)(4)(i) and 45.106. revised FAR 45.107(d) with some Furnished Property (GFP) will be
52.245–1 states the contracting officer editorial changes to the respondent’s provided.
may by written notification, at any time recommended language. Response: The Councils do not
increase or decrease the amount of c. One respondent recommended the believe that an additional clause is
Government-furnished property under Government property clause not be necessary. The proposed FAR clause
this contract. FAR 45.106 states such included in all cost reimbursement, 52.245–1, paragraph (f)(1)(iii) requires
transfer shall be documented by time-and-material, and labor-hour the contractor to create and maintain
modification to both gaining and losing solicitations and contracts, especially in records of all Government property,
contracts. service contracts where property is not including GFP. The clause also requires
Response: The coverage in FAR involved or where the contractor the contractor to maintain certain
45.106 (Transferring Accountability) is supplies all required property. information in the property record
the policy for transferring Government- Response: Due to the uncertainties (paragraph (f)(1)(iii)(A)) which the
furnished property from one contract to involved in cost-reimbursement, time- Councils consider to be adequate for
another. The clause at 52.245–1(d)(4)(i) and-material, and labor-hour contracts, tracking GFP.
provides for the increase or decrease in and the fact that each contract has the b. One respondent recommended
the amount of Government-furnished potential for Government property, the Contract-Acquired Property (CAP) be
property. Councils believe it is in the identified by the contractor, and
d. One respondent stated that Government’s best interest to include contracting officer approval be obtained
requiring formal modifications to the Government property clause in prior to acquiring CAP.
those solicitations and contracts. Response: The Councils believe the
transfer property between contracts is
d. One respondent recommended the proposed property rewrite is adequate
incompatible with the FAR principle of
prescriptive language at FAR 45.107(b) and flexible enough to allow the
minimizing administrative cost. The
specifically limit FAR clause 52.245–2 contracting officer to establish
respondent has suggested that there
to fixed price contracts. solicitation requirements to sufficiently
should be another administrative
Response: The FAR clause 52.245–2 comply with FAR 45.102 and 45.105.
mechanism to accomplish this effort
was created for use in solicitations and Many times CAP cannot be identified at
more efficiently that satisfies the desired
contracts for Installation Operation the time of award.
outcome. Current practice only requires c. One respondent recommended
Services. This type of effort can be
a contract modification to the gaining changes to 45.201(b) to eliminate
contracted using a fixed price
contract. The respondent recommended predetermined contractual
arrangement or a cost-reimbursement
the use of Wide Area Work Flow requirements, as the requirements may
arrangement.
(WAWF) for such transfers. e. One respondent recommended a be counter to seeking best value.
Response: A contract modification is Fixed Price with Cost CLINs contract Response: FAR 45.201(b) states that
the only authority to affect the transfer type be listed among the types of ‘‘in a competitive acquisition,
of Government property between contracts because fixed price contracts solicitations should specify that the
contracts. may contain cost-reimbursement type contractor is responsible for’’ all costs
16. Contract Clauses. contract line items. related to making the property available
a. Two respondents made three Response: The Councils believe the for use - and it is generally in the
comments that recommended prescriptive language sufficiently Government’s best interest to allow
clarification of the prescription and use addresses all FAR types of contracts, contractors to assess transportation,
of the clauses provided in 45.107. which are grouped into two broad installation or rehabilitation costs.
Respondents recommended several categories (fixed price and cost- However, the language is flexible
changes regarding the use of the reimbursement). It is not necessary to enough to allow contracting officers to
contract clauses including: the name a combination of types. adjust the requirements.
concurrent use of FAR clauses 52.245– f. One respondent questioned where 18. Use and Rental.
1, Government Property, and 52.245–2, the definition of ‘‘Simplified acquisition a. One respondent recommended
Government Property Installation threshold’’ could be found in the FAR. exclusion of Government-owned,
Operations for Services; the mandatory Response: The simplified acquisition contractor operated plants operating on
use of FAR clause 52.245–9, Uses and thresholds are defined in FAR 2.101. a cost-plus-fixed-fee basis from rental
Charges, in all solicitations and g. One respondent recommended the charges.
contracts that furnish or authorize the reference to FAR 35.014 be deleted from Response: The Councils agree with
acquisition of Government Property; FAR 45.107(a)(3) as it is slated for the recommendation to change FAR
and the recommendation to add removal, as stated in Federal Register 45.301(b) to remove the exception for
language regarding the appropriate use Volume 70, Number 180, dated Government-owned, contractor-operated
of FAR clause 52.245–1 in FAR Part 12 September 19, 2005 (FAR Case 2004– plants operating on a cost-plus-fixed-fee
solicitations and contracts. 025). basis from rental charges. The language
Response: The Councils believe that Response: FAR 35.014 is not being in the final rule is revised accordingly.
the recommended clarifications are deleted in its entirety, however, b. One respondent stated FAR
appropriate and have revised FAR paragraph (e) is revised to delete 45.303(b) conflicts with Cost
45.107(a)(1)(iii), 45.107(b), 45.107(c), references to outdated property clauses Accounting Standards 420 and the
contractor’s disclosure statement. The d. One respondent recommended that considered to be an undue
conflict will cause confusion and 45.501(b) and (c) be modified to allow administrative burden.
extraordinary administrative burden to a team approach to deciding whether or Response: FAR 52.245–1(c) does not
the contractor and the Government as not support property administration is require modification to the contract to
consideration for rental costs is required necessary and for resolution of other obtain contracting officer approval. The
under FAR clause 52.245–9, Uses and disputes when the prime does not agree. contracting officer has the discretion as
Charges. Response: Ultimately, the to whether a contract modification is
Response: The Councils recognize the responsibility for protecting the public’s necessary.
concern and have revised the language interest in Government property resides 21. Inventory Systems.
to preclude ‘‘reimbursement’’ rather with the Government. A contractor One respondent believes that
than not permitting the costs to be disagreement with the Government’s maintaining a separate property system
‘‘charged.’’ resolution is covered by the disputes for the management of Government
c. One respondent recommended clause. property is an onerous burden on
deletion of FAR 45.303(c). e. One respondent recommended that contractors and recommended that the
Response: The Councils believe the FAR 45.501(d) be deleted, citing proposed language be changed to allow
language at FAR 45.303(c) is necessary concerns that the prime contractor’s contractors to use Government systems
because the rental charge protects the property administrator is forced by the for the management of property when
interest of the Government when language to accept a support property the systems exist and the records are
independent research and development administrator’s findings. already in the systems.
costs are allocated to commercial Response: The prime contractor has Response: Neither the current or
contracts. It should be noted that the responsibility for proper administration proposed rules require contractors to
original language is retained and of Government property. However, the establish separate property systems for
relocated from 45.406(c) to 45.303(c) Government must have the right to the management of Government
and the reference for computing rent is inspect, review and assure that property, only that their systems meet
updated in the final rule. Government property is properly minimal standards for protection of the
19. Support Property Administration. managed by the prime contractor Government’s interest. In fact,
a. One respondent observed that the contractors are encouraged to use the
regardless of location. FAR Subpart 45.5
task of support property administration same property systems they use for their
has been revised to clarify support
involves more than subcontractors. own property to manage Government
Response: FAR 45.501 is revised to Government property administration.
20. Use of Government Property. property. Furthermore, contractors may
add language for clarification that the use existing inventory systems to
coverage includes subcontractors and a. One respondent believes that there
manage Government property under
prime contractor alternate locations. is confusion regarding the treatment of
certain circumstances (GOCO’s).
b. Four respondents requested more Government property (such as desks, 22. Inventory Thresholds.
clarification regarding the process for computers, phones etc.) that remains Three respondents provided three
contracting officer action when a prime under the Government’s control as comments regarding establishment of
contractor rejects a request for support Government-furnished property subject value thresholds for recording and
property administration. to the requirement in FAR 45. They do reporting Government property.
Response: The language at 45.501(b) not believe that the intent of the a. One respondent commented that
is renumbered as 45.502(a) and clarified revision is to cover the aforementioned requiring recording of low dollar value
to state that the prime contractor must circumstances. If this is in fact correct, equipment is not cost effective.
agree to allow support property then the respondent believes this should Response: Voluntary consensus
administration. However, the process be made clear. However, if this standards and leading industry practices
can vary by agency and is most interpretation is incorrect, then they allow for the creation of summary
appropriately addressed in agency recommend a third alternate to the records and recording of items in
regulations. clause at 52.245–1, or a new clause, that quantity rather than individually, based
c. Three respondents suggested specifically addresses the contractor’s on the requirements of the contract.
changes to the language of 45.501 that use of Government property that never Also, reporting of contractor inventory
would place the responsibility for leaves the Government’s possession and for possible, alternative use by the
initiating a request for support property for which the Government retains Government or eligible donees is
administration with the prime responsibility. required by law, whenever the property
contractor rather than the property Response: Use of property by is no longer required for contract
administrator. The respondents suggest contractors performing on a Government performance. Without some form of
that the initiation of this action by the installation does not meet the typical records, it would be difficult or
property administrator may exceed the meaning of Government provided or impossible to comply with this legal
scope of contract privity. furnished property. The Government requirement.
Response: The Councils do not retains responsibility for accountability, b. One respondent stated that the use
completely agree. However, FAR security, use, maintenance, and disposal of voluntary consensus standards and
Subpart 45.5 has been revised to clarify of this property. Therefore, a third sound business standards would be a
support Government property alternate to 52.245–1 is not necessary. major improvement for managing
administration. This is not a privity of b. One respondent recommended Government property if contractors
contract issue since the prime contractor revising FAR clause 52.245–1(c) to didn’t have to account for all
still has responsibility for proper enable the contracting officer to Government owned property upon
administration of Government property. effectively use discretionary authority completion or termination of a contract.
The Government must have the right to without having to modify the contract. Contractors typically do not tag and
inspect, review and assure that Such approvals are generally considered record contractor owned equipment
Government property is properly routine and administrative in nature, under their depreciation threshold.
managed by the prime contractor and the requirement to modify the Response: Reporting of contractor
regardless of location. contract in all such instances is inventory for possible, alternative use
by the Government or eligible recipients 24. Property Management. separate system is required for
is required by law, whenever the a. Two respondents recommended management of Government property.
property is no longer required for adding ‘‘procedures’’ after the word 26. Contractor Plans and Systems.
contract performance. Without some ‘systems’ in the third sentence of the a. One respondent recommends
form of record, it would be difficult or clause at FAR 52.245–1(b)(1) for clarification of FAR 52.245–1(f)(1)(ii) to
impossible to identify the available clarification. require identification of Government
property and comply with this legal Response: The Councils agree and property by adding an addendum
requirement. FAR 52.245–1(b)(1) is revised ‘‘physically identify the property as
c. One respondent expressed concern accordingly. Government property with an
that contractors should be accountable b. One respondent recommended appropriate identification, e.g., stamp,
for all Government property in their revising FAR 52.245–1(f)(1) to add the tag, mark or other identification that is
possession for the protection of the word ‘‘procedures’’ to the first sentence legible, conspicuous and securely
taxpayers’ interests. in (f)(1) after the word ‘‘system.’’ affixed.’’
Response: The proposed rule Response: The Councils agree and Response: The Councils agree that, in
establishes minimal standards within FAR 52.245–1(f)(1) is revised some instances, appropriate
the clause and allows for flexibility for accordingly for clarification. identification is necessary. However, the
both the Government and the contractor c. One respondent recommended Councils also believe the recommend
to implement processes and practices to adding the word ‘‘move’’, i.e., language is overly broad. Therefore,
mitigate risk to the Government ‘‘consume, MOVE and store...’’ to FAR FAR 52.245–1(f)(1)(ii) is revised to
associated with the provision of 52.245–1(f)(1)(viii). clarify the identification of Government
property. Response: The Councils agree and property.
23. Physical Inventory. FAR 52.245–1(f)(1)(viii) is revised
a. Two comments questioned b. One respondent recommended
accordingly for clarification.
ambiguity of instructions regarding revising FAR 52.245–1(f)(1) to add a
d. One respondent recommended
requirements for timing of physical new paragraph as follows: ‘‘The
adding the words ‘‘including the multi-
inventories. One of these also contractor shall disclose significant
part assets’’ at FAR 52.245–1(b).
questioned testing for unauthorized use. Response: The Councils do not changes in its property management
Response: Physical inventory believe additional language is necessary; system to the Property Administrator 30
requirements cannot be reduced to a the proposed language includes ‘‘all’’ Days prior to implementation.’’
one-size fits-all regulatory requirement. property. Response: The Councils agree that
The requirements contained in the e. One respondent recommended contractors should be required to
clause are substantially the same as the revising 52.245–1(f)(1)(viii) to add the disclose significant changes to its
current FAR. Physical inventory following at (B) ‘‘unless otherwise property management system. FAR
practices are complex, and can be authorized in this contract or by the 52.245–1(b)(1) is revised. However, the
effectively accomplished using a Property Administrator the contractor Councils do not believe that a specific
number of different techniques and shall not commingle Government number of days should be specified.
practices. Effective physical inventory property with property not owned by Contractors should notify the
performance is not dependent solely on the Government.’’ Government as soon as they become
timing. Best physical inventory Response: The Councils agree and aware that significant changes will be
practices consider a variety of factors FAR 52.245–1(f)(1)(viii) is revised to made to their property management
such as the value and sensitivity of the include new paragraph (B) for system.
inventory, the number of transactions clarification. c. One respondent recommended
posted against the item’s record, prior 25. Systems Analysis. revising FAR 52.245–1(f)(1)(ii)(A) to add
evaluations of record accuracy, and the a. One respondent recommended ‘‘The contractor shall report all
results of prior physical inventories. revising language at FAR 52.245–1(g) to discrepancies pertaining to the
Physical inventory practices should be include access to all Government shipment, packaging, or transportation
included in the contractor’s property property as well as premises. of Government-furnished property in
management plan, based on the type of Response: The Councils agree and accordance with agency procedures.’’ In
property, the scope of the procurement, FAR 52.245–1(g) is revised to require addition, the respondent recommends
and other factors. Unauthorized use of access to all Government property as adding the following language, ‘‘Upon
Government property will continue to well as premises. request from the contractor, the property
be tested during Property Management b. One respondent recommends administrator may assist and coordinate
System analysis. revising FAR 52.245–1(g)(1) to read as resolution of unresolved discrepancies.’’
b. One respondent recommended follows: ‘‘The Government shall have Response: Additional prescriptive
removal of all language requiring access to the contractor’s premises, at language is not necessary. Assisting and
physical inventories, stating that this reasonable times, for the purposes of coordinating resolution of unresolved
could be addressed within a contractors’ reviewing, inspecting and evaluating the discrepancies is a normal part of the
property management plan. contractor’s Government property property administrator’s duties and does
Response: Physical inventories are the management plan, systems, procedures, not need to be specified in the FAR.
primary tool used to establish the records, and supporting documentation d. Two respondents recommended
existence of property and the that pertains to Government property.’’ revising FAR 52.245–1(f)(1) to delete
completeness of Government property Response: The Councils agree to paragraphs (i) and (ii). The wording is
records. As such, they serve as the revise FAR 52.245–1(g)(1) to add the redundant to 52.245–1(b)(1) and
ultimate test of property record words ‘‘plan’’ and ‘‘that pertains to prescriptive in nature. In addition the
accuracy. They support both property Government property’’, to clarify that respondents recommend inserting at
management and financial reporting the focus is on Government property 52.245–1(b)(1) ‘‘The contractor shall
requirements. This language and only. However, the Councils do not have a system to manage (acquire,
practice protects the Government’s agree with the recommendation to add receive, control, utilize, preserve,
interest. ‘‘Government’’ as this would imply a protect, move, repair, maintain, dispose
and report) Government property in its have actual unit cost information Response: The Councils do not
possession.’’ available. Therefore, no change to the completely agree. The proposed rule
Response: The Councils do not agree. final rule is necessary. provides access to the results of the
The language at FAR 52.245–1(f)(1)(i) d. One respondent states that while contractors’ internal audit of property
and (ii) is retained to protect the the Government does not specify a relevant to a specific Government
Government’s interest. numbering system for items of property, contract or groups of Government
e. One respondent recommended the implementation of a consistent contracts. The recommended limitations
revising FAR 52.245–1(f)(1)(i) to add ‘‘of numbering system by contractors is would be inconsistent with FAR
the prime contractor’’ after ‘‘disclosure critical and recommends that it should 52.215–2. However, FAR 52.245–1(f)(3)
statement.’’ be added to the data elements set forth is revised to include ‘‘significant
Response: The reference to ‘‘cost at FAR clause 52.245–1(f)(1)(iii)(A). findings’’ and ‘‘audits pertaining to
accounting disclosure statement’’ was Response: The Councils believe that a Government property’’ which provides
removed. numbering system is but one of many access to findings and/or results of
27. Records. industry leading practices and does not reviews related directly to Government
a. One respondent recommended need to be identified in the clause. property.
changing the phrase ‘‘all Government j. One respondent asks what does
e. One respondent states that the term
property accountable to the contract’’ at ‘‘posting reference’’ and ‘‘date of
‘‘Receipt and issue’’ is not clear at FAR
FAR clause 52.245–1(f)(1)(iii) to ‘‘all transaction’’ mean at FAR clause
clause 52.245–1(f)(1)(iii)(B). This
Government property in the contractor’s 52.245–1(f)(1)(iii). The respondent
respondent recommended adding a
possession, regardless of value.’’ The suggests clarifying them to respectively
heading, ‘‘Use of a receipt and issue
respondent used the example of a read ‘‘the document that caused the
system for Government material,’’ and
logistics services operation where transaction’’ and ‘‘the date the
modifying the word ‘‘formal’’ to ‘‘stock
receipt, storage, loan and issue of transaction occurred.’’
record’’ or ‘‘perpetual inventory
Government property on a continuing Response: The Councils believe the
property record.’’
basis is the primary function of the terms ‘‘posting reference’’ and ‘‘date of
Response: The Councils agree with
contract and that the contractor should transaction’’ are self-explanatory.
the title addition. However, the
not be required to maintain records of k. One respondent states that the
Councils do not agree with the proposed
the property that was not specifically requirements at FAR clause 52.245–
revision to ‘‘stock record’’ or ‘‘perpetual
furnished to the contractor under the 1(f)(1)(i) on documenting the acquisition
inventory property record’’ because the
contract. of property are too prescriptive in light
Response: The Councils believe that if term ‘‘formal record’’ is more
of the requirements for a property
a contract is for the storage, encompassing and does not specify a
management system at paragraph (b)(1)
maintenance and issue of Government particular recording system.
of the same clause.
property, then the property should be f. One respondent recommended Response: The Councils believe that
listed on the contract and accountable to adding acquisition contract number to this documentation is necessary to
the contract and records maintained by the required fields at FAR clause protect the Government’s interest.
the contractor. 52.245–1(f)(1)(iii) to assist in the audit l. One respondent states that the
b. One respondent stated that with the trail to validate correct ownership. requirements at FAR clause 52.245–
elimination of the language at the Response: The Councils believe that 1(f)(1)(i) on documenting the receipt of
current FAR 45.105, it appears that it this information is not necessary and Government property are too
may now become necessary for the that the clause is sufficient for audit prescriptive in light of the requirements
Government to maintain its own official purposes. for a property management system at
property records separate from the g. One respondent recommended that paragraph (b)(1) of the same clause.
contractor’s records. This respondent FAR clause 52.245–1(f)(1)(viii) specify Response: The Councils believe that
asked whether the contractor’s records what constitutes prompt reporting. this documentation is necessary to
are still intended to serve as the Response: The Councils do not agree. protect the Government’s interest.
Government’s official property records. As soon as the contractor determines m. One respondent states that the
The respondent stated that if this is the that the property is no longer required requirements at FAR clause 52.245–
case then those records should be for contract performance, they must 1(f)(1)(ii)(A) on procedures for reporting
clearly and concisely defined in the report to the Government. The rule damages/discrepancies upon the receipt
FAR. allows flexibility in accordance with of Government-furnished property to
Response: The Councils do not agree. agency procedures. the Property Administrator are too
Only the Government can keep the h. One respondent recommended that prescriptive in light of the requirements
Government’s ‘‘official’’ records. The FAR clause 52.245–1(f)(1)(viii) specify for a property management system at
Government will maintain their own what constitutes a prompt disclosure. paragraph (b)(1) of the same clause. The
Government property records. However, Response: The Councils do not agree. respondent further states that such
custodial records must be maintained by As soon as the contractor determines reporting is currently handled through
the contractor. that the property is no longer required the Government’s Report of Discrepancy
c. One respondent recommends that for contract performance, they must (ROD) form issued as required. The
at ‘‘FAR clause 52.245–1(f)(iii)(A)(3),’’ report it to the Government. The rule respondent also states that the ROD is
unit acquisition cost be revised to add allows flexibility in accordance with processed per the ROD instructions, and
‘‘(or reasonable estimate if definite unit agency procedures. that resolution of this type of issue is a
cost cannot be obtained)’’ because i. Two respondents recommended contracts/quality/program office issue.
obtaining the actual unit cost of minor that the requirements at FAR clause Response: The Councils do not agree.
contractor fabricated items that must be 52.245–1(f)(3) be revised to clearly The Councils believe these procedures
identified and controlled is, at times, indicate access to a contractor’s internal are necessary to protect both the
not practical or possible. audits and reviews will be limited to Government’s interest and the
Response: The Councils do not agree. information related directly to contractor’s interest. The final rule
Contractors’ accounting systems should Government property. language also protects the contractor in
terms of timeliness, availability, and receipt, issue, and use of material that language of 52.245–1(f)(1)(vi) requires
possible liability for the property being is issued for immediate consumption, that contractor systems are capable of
furnished. particularly in the case of non- providing results of physical inventories
n. One respondent stated that in the production contracts, engineering and the final language at 52.245–
data elements for property records studies, and low dollar research and 1(f)(1)(iv) is revised to require
under FAR clause 52.245– development efforts. The respondent disclosure of the results of the physical
1(f)(1)(iii)(A)(1) that not all property has suggested the following substitute inventory.
a ‘‘commercial part number,’’ that ‘‘Bulk language ‘‘In accordance with a (2) A second comment was received
identifier’’ is covered by ‘‘Unit of contractor’s property plan, the from the same respondent,
measure,’’ and that not all property has contractor may maintain, in lieu of recommending that the proposed clause
a ‘‘model number.’’ The respondent formal property records, a file of at 52.245–1(f)(1)(vi) be revised to
recommends substituting the following appropriately cross-referenced include direction to subcontractors in
language, ‘‘The name, commercial part documents evidencing receipt, issue, the preparation of reports of loss,
number, if provided, and description, and use of material that is issued for damage or destruction of Government
manufacturer, model/part number, and immediate consumption.’’ property.
National Stock Number (if needed for Response: The Councils believe the Response: The Councils do not
additional item identification tracking Property Administrator must approve completely agree. The Government’s
and/or disposition).’’ Another receipt and issue records on a case-by- contractual relationship remains with
respondent recommended that the term case basis. Receipt and issue systems the prime contractor. Property is
‘‘bulk identifier’’ be clarified. may put the Government at risk and the provided to the prime contractor for
Response: While the Councils do not Property Administrator is in the best performance of the contract. Should the
agree with the specific recommended position to determine the level of risk prime contractor further provide the
language, for clarification purposes the the Government is willing to accept. Government property to a subcontractor,
final rule is revised at 45.201(a)(1) and Property Administrator approval and the prime retains responsibility for the
52.245–1(f)(1)(iii)(A)(1) to replace the plan are not mutually exclusive. The compliance with contract terms and
‘‘commercial part number’’ with ‘‘part contractor must identify in the proposed conditions and for obtaining any
number’’ and remove ‘‘bulk identifier.’’ plan any requirement for receipt and necessary information for the reports
o. One respondent recommended issue. from subcontractors. However, the
revising the term ‘‘acquisition cost’’ for 28. Reports. language of the clause at 52.245–
the property records data element at a. One comment from one respondent 1(f)(1)(v) is revised to require
FAR clause 52.245–1(f)(1)(iii)(A)(3) recommended that the language at appropriate subcontractor flow down of
because it may be confusing to 52.245–1(f)(1)(vi)(B), (C), and (D) be contract requirements.
personnel unfamiliar with contractors’ moved to 52.245–1(h)(2), (3), (4), and (5) (3) A third comment recommended
systems. This respondent states that renumbered. The language was actually adding information to reports of loss,
‘‘unit acquisition cost’’ is the more instructions to the contractor on how to damage or destruction regarding the last
appropriate data element for the clause. store, protect and manage property that known location of the property, whether
Response: No action is necessary. The had been damaged or destroyed, not on or not the property was sensitive or
term for the data element at FAR clause the preparation of reports. hazardous and whether or not the
52.245–1(f)(1)(iii)(A)(3) is ‘‘unit Response: The Councils agree. agencies involved had been notified of
acquisition cost’’ rather than Language is moved from 52.245– the loss or theft.
‘‘acquisition cost.’’ This respondent 1(f)(1)(vi)(B), (C), and (D) to 52.245– Response: The Councils agree. FAR
referenced the same comment for FAR 1(h)(2), (3), (4) and (5) renumbered for 52.245–1(f)(1)(vi) is revised to add
clause 52.245–1(f)(1)(iii)(A)(3) and FAR clarification. paragraphs (12) and (13) to add language
clause 52.245–1(a)(1) which does b. Three comments were received for last known location and a statement
contain the term ‘‘Acquisition cost.’’ from a single respondent. that the property did or did not contain
p. One respondent recommended (1) The first comment recommended sensitive or hazardous material, and if
deleting the property records data adding the language, ‘‘The type, so, that the appropriate agencies were
element ‘‘date placed in service’’ at FAR frequency and reporting format will be notified.
clause 52.245–1(f)(1)(iii)(A)(10) for agreed upon between the contractor and b. One respondent submitted two
production material or non-capitalized property administrator’’ to the physical comments related to reports. One
items, citing needless, significant cost inventory reporting section at 52.245– recommended clarification of the report
impact for system and process changes. 1(f)(1)(iv) of the clause. requirement at 52.245–1(f)(1)(vi) by
Response: The Councils believe the Response: The Councils do not changing the language to read: ‘‘(vi)
data must be required, unless otherwise believe that the recommended language Reports. The contractor shall have a
determined by the Property should be accepted. Both industry process to create and provide reports
Administrator. Capital equipment and leading standards and practices and such as discrepancies; loss, damage and
real property requires ‘‘date placed in voluntary consensus standards destruction; physical inventory results;
service’’ for accounting purposes. recognize the importance of physical audits and self-assessments; corrective
Agencies have different capital inventories. Both include methods to actions; and other property related
thresholds; therefore, the property perform them and to disclose their reports relevant to the contract as
administrator is in the best position for results. As a result, responsible directed by the contracting officer.’’
making these decisions. contractor property management plans Response: The Councils do not
q. One respondent recommended not should include the format for disclosing completely agree. 52.245–1(f)(1)(vi) is
requiring the approval at FAR clause physical inventory results and the revised to clarify the lead-in language
52.245–1(f)(1)(iii)(B) of the Property timing of those disclosures. If these for examples of reports to be provided
Administrator for contractors to plans lack this, agencies will have the by the contractor. The Councils believe
maintain in lieu of formal property opportunity to review and recommend the phrase ‘‘relevant to the contract’’ is
records, a file of appropriately cross- appropriate revision of plans prior to not necessary, as all reports are relevant
referenced documents evidencing contract inception. However, the to the contract.
c. The respondent also suggested that require disposition schedules if property between Government
a standard form be developed for disposition guidance is covered in the contracts.
reporting Lost, Damaged, or Destroyed contract, via the scrap procedure. In f. One respondent recommended that
(LDD) property in concert with Plant addition, plans approved by the ‘‘customary’’ be deleted from the
Clearance Automated Reutilization contracting officer may be developed language at FAR clause 52.245–1(j)(2)(ii)
Screening System (PCARSS) changes. with more expertise and understanding because it was redundant. By definition,
Response: The Councils do not of the contractual requirements than a practice is done customarily.
believe it is necessary to develop those considered necessary by plant Response: While the word
standard forms for reporting LDD clearance officers. The respondent ‘‘customary’’ may seem redundant when
property. Information required for a recommends revising the language at used with respect to all contractors, the
LDD report need not be submitted on a FAR clause 52.245–1(j)(1)(A) to add ‘‘is final rule uses the word to refer to
standard form. In addition, the FAR not covered under the contractor’s practices that are considered to be
does not mandate the use of PCARRS. property plan’’ to the last sentence of ‘‘customary’’ to that specific supplier.
PCARRS is a Department of Defense the paragraph. The Councils believe that the final rule
electronic system and not all non-DoD Response: The Councils do not provides clear guidance regarding
agencies may have access to that system. believe the recommended language predisposal requirements.
29. Annual Reports. should be added to the FAR. The g. One respondent recommended
One respondent stated that the proposed rule did not change the revision of FAR clause 52.245–1(j)(2)(iii)
requirement for an annual report is original disposal requirements. The risk because it was redundant with 52.245–
essential. Agencies have a continued associated with possible improper 1(j)(2)(i) and (ii).
need to collect and report the value of disposition of sensitive property or Response: FAR clause 52.245–
Government property associated with property requiring demilitarization 1(j)(2)(iii), renumbered as 52.245–
existing contracts as part of their necessitates Government oversight, 1(j)(2)(ii), provides instructions for
financial statements and the associated notwithstanding whether disposal of the reporting property not included earlier
audits. FAR should require contractors property is covered in the contractors’ in paragraph (j)(2). Therefore, the
to submit an annual report. property plan. language is not considered to be
Response: The final rule contains a redundant.
d. One respondent recommended h. One respondent recommended
requirement for the contractor to be able adding ‘‘overhaul, repair’’ to the
to produce ‘‘property’’ reports. The deletion of FAR clause 52.245–
description of services generating scrap. 1(j)(3)(iii)(A) through (G). Individual
timing and format for such reports will In addition the respondent
be defined by Agencies. schedules are no longer required per
recommended deletion of the inventory FAR Subpart 45.6 for termination
30. Disposal.
a. One respondent requested that the disposal schedule requirements list at inventory.
proposed rule accommodate Plant FAR clause 52.245–1(j)(1)(B). Individual Response: The Councils believe that
Clearance Automated Reutilization contracts should address disposition of separate schedules are required for
Screening System (PCARSS) and allow aircraft parts under such contracts. The disposal of different types of property.
submission of a SF 1428 or electronic propose rule is contrary to current Prior revisions to FAR Subpart 45.6
equivalents. practices under long-term arrangements. eliminated duplicate reporting forms.
Response: The FAR does not mandate Response: The Councils do not However, unless the Plant Clearance
the use of PCARRS. PCARRS is a believe the proposed rule is contrary to Officer has agreed otherwise or the
Department of Defense electronic current practices, as the original contract requires electronic submission,
system. Non-DoD agencies may not have disposal requirements for scrap the contractor shall prepare separate
access or choose not to use that system. resulting from other than production or inventory disposal schedules for
Agencies may provide electronic testing have not changed. Proper different types of property, using the
equivalents as needed. disposition of scrap that is created from Standard Form 1428, Inventory Disposal
b. One respondent recommended overhaul/repair is addressed at FAR Schedule.
deletion of the language ‘‘by the plant 52.245–1(j)(1). The final rule is i. One respondent recommended a
clearance officer’’ at FAR clause 52.245– appropriate for disposal of scrap. revision of FAR clause 52.245–1(j)(3)(iv)
1(j) because many contracts are not e. One respondent stated that internal to delete the first sentence and replace
delegated for property management or contractor screening should occur with ‘‘The contractor shall describe the
for plant clearance and therefore do not before items are processed through plant property consistent with the
have a plant clearance officer identified. clearance. The respondent requirements contained in FAR 52.245–
Response: The plant clearance officer recommended revising the language at 1(f)(1)(iii).’’
is an authorized representative of the FAR clause 52.245–1(j)(2) to add ‘‘under Response: Understanding the
contracting officer and is appointed the this contract or other contracts’’ for intended use or possible use of an item
responsibility of directing the disposal predisposal requirements. allows the Government to facilitate
of contractor inventory from a Response: The Councils believe the reutilization, transfer, or donation
contractor’s plant or work site. In the final rule language is adequate and potential. Therefore, the Councils
absence of a delegation to a Plant should not be changed to add contractor believe the final rule is adequate as
Clearance Officer, the contracting officer internal screening requirements. written.
would retain those responsibilities. The Contractor-acquired property is j. Two respondents recommended
Councils believe the language in the accountable to individual contracts and revisions to FAR clause 52.245–1(j)(4)(i)
final rule is adequate for contractor the recommended revised language to provide an extension period for
inventory disposal. would be redundant. Predisposal submitting inventory disposal schedules
c. One respondent stated the requirements allow Government for screening and to remove reference to
contractors scrap plan/agreement visibility for the use of property on performance on the specific contract.
should cover all items that would other contracts or for other Government The recommended changes will allow
generally be produced under the use. In addition, FAR 45.106 sets forth enough time for contractors to generate
contract and there would be no need to the policy for transfer of Government inventory schedules and to conduct
internal screening with other site n. One respondent recommended Government has no obligation to restore
contracts. revising the language at FAR clause or rehabilitate the contractor’s premises
Response: The Councils believe the 52.245–1(j)(9) to read ‘‘contract under any circumstances;’’ because it is
30-day period allowed for submission of property’’ instead of ‘‘Contractor overly restrictive.
inventory disposal schedules to the inventory.’’ Response: The Councils believe the
plant clearance officer is reasonable. It Response: The Councils believe the language regarding abandonment of
should be noted that the original FAR term ‘‘Contractor inventory’’ has a Government property stating that the
disposal requirements have not specific meaning under statute and is Government has no obligation to restore
changed. Regarding other site contracts, relevant to the clause language. or rehabilitate the contractor’s premises
property is accountable to a specific o. One respondent recommended under any circumstances is not overly
contract and the contractor must make deleting FAR clause 52.245–1(j)(10), restrictive. While the Government is not
a determination that the Government subcontractor inventory disposal under obligation to restore or
property is no longer required for schedules, because it limits the prime rehabilitate the contractors premises,
performance of that contract. FAR contractor’s ability to minimize there are situations which the
45.106 prescribe the policy for administrative costs. The prime should Government may consider on a case by
transferring Government property be able to delegate the submission of case basis where an equitable
between contracts. subcontractor inventory schedules adjustment may properly include
k. One respondent recommended directly to the plant clearance officer, as restoration or rehabilitation costs (see
revisions to FAR clause 52.245–1(j)(6), currently allowed in PCARSS. FAR clause 52.245–1(k)(3)). The
removing the specific timeframe of 10 Response: The Councils believe the
language is necessary to protect the
days for notification in order to enable FAR language for obtaining
interest of the Government.
reutilization of Government property subcontractor inventory disposal
schedules is necessary and should not s. One respondent asked how the
within the contract. Post submission contracting officer will know the
adjustments normally occur on an be deleted. The language assigns
responsibility to the prime contractor ‘‘authorized’’ law or regulation
exception basis and timing is not governing the disposition of property.
usually controllable. The respondent for performance of subcontractors,
including the submission of The respondent requests that the
also recommended elimination of plant Councils explain the rule or give
clearance officer approval prior to subcontractor inventory disposal
schedules. The language does provide reference to the law or regulation.
withdrawal. Response: The FAR (specifically FAR
Response: The Councils believe the the contractor the flexibility to
determine the most appropriate Subpart 45.6) provides regulatory
notification timeframes and approvals guidance sufficient for the
stated in the final rule are reasonable to methods for ensuring subcontractor
performance. administration of the law.
flexibly manage post submission
Abandonment of Government t. One respondent stated that the
adjustments, e.g., to rescind actions that
Property proposed amendment does not address
have occurred subsequent to acceptance p. Two respondents recommended the disparity in the disposition of
of the inventory disposal schedule. adding language to FAR clause 52.245– excess/surplus property in the
l. One respondent recommended FAR 1(k)(1) and (k)(2) to prevent possession of a Federal Agency and the
clause 52.245–1(j)(7)(ii) be deleted and abandonment of Government property same type of property in the possession
replaced with, ‘‘The contractor shall on a Federal installation. of a contractor.
notify the Plant Clearance Officer when Response: The Councils believe that
property that is on a plant clearance Response: There is no disparity in the
policy relevant to preventing disposition of excess/surplus property
case is relocated prior to final abandonment of Government property
disposition instructions.’’ The in the possession of a Federal Agency or
on a Federal installation would be more contractor. However, the FAR provides
respondent believes contractors are appropriately covered in agency
already required to have a system in an opportunity for the contractor to
procedures and not in the FAR because purchase contractor-acquired inventory,
place to manage movement and storage the cost of disposal is typically a local
of Government property. at acquisition cost, prior to the property
issue. being declared excess.
Response: The Councils believe it is q. Two respondents submitted three
necessary for the contractor to obtain 31. Property Classification (Facilities,
recommendations to revise FAR clause
the plant clearance officer’s approval Special Tooling, Special Test
52.245–1(k)(1) to remove the word
before removing Government property Equipment).
‘‘sensitive’’ and require mutual consent
from the premises in order to protect the for abandoning any Government a. One respondent supports the
interest of the Government in managing property. elimination of the 1989 version of the
and tracking Government property. It Response: The Councils believe the special tooling clause, which is
should be noted that the proposed rule abandonment of sensitive Government currently in the FAR. However, the
did not change the original storage property must be coordinated and respondent does not support
requirements. managed in a manner that protects the elimination of the 1984 version of the
m. One respondent recommended interest of the Government. There are special tooling clause that the
changing the title and language of FAR times when it is more advantageous to Department of Defense is using through
clause 52.245–1(j)(8)(i) to read ‘‘scrap the Government to abandon a Deviation that has been in force and
disposition instructions’’ and Government property, e.g., estimated effect since 1990. This protects the
‘‘inventory schedule or scrap list’’ cost to sell the property is greater than Government from multiple purchases of
because an inventory schedule can be a the proceeds from the sale, and the unidentified special tooling and should
scrap list. Government may do so in accordance be retained.

Response: The Councils believe with FAR 45.604–2. Response: The Councils do not agree.
disposition instructions include more r. One respondent suggested deleting If needed, Special Tooling (ST) may be
than ‘‘scrap’’ and the recommended part of the language at FAR clause obtained as a deliverable under a
language would be too broad. 52.245–1(k)(3) stating, ‘‘The Contract Line Item (CLIN).
b. One respondent recommended prescriptive or proscriptive processes paragraph (f) Contract plans and
redefining the term ‘‘facilities’’ in FAR and requirements. systems.
Part 2 to mean real property. f. One respondent agreed with the Response: The Councils do not agree.
Response: The Councils do not agree deletion of the Special Tooling clause. Paragraphs (2) and (3) are not part of
that the term ‘‘facilities’’ should be Response: The Councils agree. (f)(1)(x); they are (f)(2) and (f)(3) and
redefined in Part 2 to mean ‘‘real g. One respondent stated that the contain higher-level clausal language to
property.’’ The term ‘‘facilities’’ is Councils should carefully consider the support contract property closeout and
broader than the term ‘‘real property’’ impact of the elimination of facilities are properly located under paragraph (f).
since it can also include equipment and use contracting on tenant use c. Awards Under A–76. One
utility services. However, the Council agreements entered into under the respondent stated that with the
deleted the term ‘‘facilities’’ as it relates authority of the Armament Retooling emphasis directed at awards under the
to facilities contracts. Where the term and Manufacturing Support (ARMS) A–76 process, consideration might be
‘‘facilities’’ is used to reference Act. given to providing property
Government property, the term is Response: The Councils do not agree. accountability guidance relative to the
substituted with ‘‘Government A ‘‘facilities contract’’ is merely a form different types of service providers (as
property.’’ of service contract for property opposed to merely contractors) that may
c. One respondent stated that ‘‘if the management. Agencies are not be selected under A–76.
Special Tooling clause is eliminated, prohibited from issuing service Response: The Councils do not agree.
additional language should be added at contracts for this purpose. Property management for property in
52.245–1 to either: 1) include a h. One respondent does not agree the custody of the Government is
provision directing the contractor to with the elimination of the Special Test covered under the Federal Management
submit a final list of acquired Special Equipment clause. Regulation and specific agency
Tooling to the contracting officer for regulations. A–76 competitions that are
Response: The Councils do not agree.
review, 60 days prior to contract
Screening of Special Test Equipment won by commercial firms become
completion, identifying those tools that
prior to acquisition is no longer feasible contracts that are subject to FAR.
have not become obsolete. The
or practical because the Government no d. Use of Government Sources. One
contracting officer will issue a
longer centrally manages Special Test respondent stated that FAR 51.106(b)
modification, adding a Contract Line
Equipment. references an old clause that the
Item for those items of Special Tooling,
i. One respondent does not agree with proposed rule eliminates, and
and corresponding tool drawings
the elimination of the Special Tooling recommended that the final rule be
(electronic or physical), required by the
clause, especially right to title language. updated to reflect the appropriate
Government as deliverable end items, or
Air Force Equipment Management reference.
2) include a provision giving the
System (AFEMS) has been mandated for Response: The proposed rule updated
Government unlimited rights to the tool
managing and tracking all Government the reference cited at FAR 51.106(b) to
drawings (electronic or physical)
owned tooling, which allows the Air read ‘‘52.245–1’’ and no further change
produced in performance of the
Force to comply with CFO reporting is necessary.
contract.’’
Response: The Councils do not agree. requirements. Most of the AFEMS data e. Service Contracts. One respondent
If needed, special tooling may be requirements for tooling mirror the data requested that sample language be
obtained as a deliverable under a requirement in the Special Tooling provided for use of Government
contract line item number. clause. property in services contracts when
d. One respondent stated that they Response: The Councils do not agree. Government personnel will be
currently have a facilities type contract If needed, special tooling may be maintaining records/inventories of the
and having that type contract in place obtained as a deliverable under a ‘‘provided property.’’
saves the Government both time and contract line item. Reporting Response: The Councils do not agree.
money. Property on this contract requirements may be imposed on a The statement of work should reflect the
supports over 150 Government tasks, contract-by-contract basis dependant on individual requirements of the agency.
across multiple agencies. The performance requirements. Agencies may choose to provide
elimination of the facilities use type of j. One respondent recommended that examples within Agency policies and
contracts will have a negative effect on the Special Tooling clause be retained. training materials.
how we currently manage Government Response: The Councils do not agree. f. Inter-work Transfer Agreements
property. If needed, Special Tooling may be (IWTAs). One respondent asks, ‘‘Should
Response: The Councils do not agree. obtained as a deliverable under a IWTAs be addressed somewhere? Are
A ‘‘facilities contract’’ is merely a form Contract Line Item. all of the branches from a corporation
of service contract for property 32. Miscellaneous. really to be considered alternate
management. Agencies are not a. OMB Approvals. One respondent locations?’’
prohibited from issuing service stated that FAR 1.106 should be Response: The Councils do not agree.
contracts for this purpose. changed to match the proposed rule. The Government does not use these
e. One respondent proposed that Response: FAR 1.106, which lists types of documents.
service contracts have a standard OMB approvals under the paperwork g. One respondent supports the
template of terms and conditions for the reduction act, should reflect the regulation as is.
management of Government property proposed rule. However, the Councils Response: Noted.
for consistency through the various believe no further change is necessary,
as the revision was accomplished in the C. Summary of Proposed Rule Changes
agencies.
Response: The Councils do not agree. proposed rule. The Team made the following
Terms and conditions are negotiated on b. Closeout. One respondent changes to the proposed rule as a result
a contract by contract basis to provide requested moving paragraphs (2) and (3) of the public comments and Team
flexibility to both Government and from FAR 52.245–1(f)(1)(x) as it does deliberations:
contractor communities rather than not belong under property closeout to Facilities contracts:
The final rule reflects the following Retained the definition of ‘‘Real revised to state ‘‘other rights or remedies
changes and includes administrative property’’ in 45.101, 52.245–1, and available to the contracting officer.’’
changes as a result of the deletions of 52.245–9. Revised 45.105(d) to add language
‘‘facilities contracts’’ (ref: FAR Case In the definition of ‘‘Sensitive describing the conditions and
2005–008, Use of Facilities Contracts): property’’ at 45.101 and 52.245–1, circumstances under which the Property
Revised or deleted FAR 4.703(b)(3), removed the example of classified Administrator may grant relief of
4.804–4(b), 7.105(b)(14), 14.502(b)(2), property. responsibility.
15.209(b)(2), 15.404–1(e)(1), 15.407– Revised 2.101 definition of ‘‘Special Revised 45.106 and 52.245–1(d)(1) to
2(e)(1), 15.407–4(a)(1) and (c)(1), tooling.’’ to remove references to add language for the inapplicability of
15.605(b)(4), 16.302(b), 16.307(a)(1), (b), ‘‘replacement’’ and ‘‘unique Federal warranties of suitability of use and
(d), (e)(1), (f)(1), (g)(1) and (2), (h), and property’’. timely delivery of Government-
(i), 17.603(a)(5), 19.803(b)(2), Deleted the definition for ‘‘Unique furnished property, to property acquired
19.1103(b), 19.1307(c), 22.405, Federal property’’ from FAR 45.101 and or fabricated initially by the contractor,
22.407(d), 31.106, 32.403(c), 32.407(c), 52.245–1, and references to it in the and subsequently transferred to another
32.704(a)(1), 32.705–2(a), (b) and (c), definitions of ‘‘Material’’ and ‘‘Special contract with this contractor.
35.014(e), 35.017(a)(2), 37.101, tooling’’. Revised 45.107(a)(1)(iii) to add
41.102(b)(6), 41.701(b), 42.302(a)(30), In 2.101 added example of language regarding the use of the
42.1102, 42.1107, 42.1305(c) and (d), international voluntary consensus Government property clause 52.245–1
43.205(b)(5), 44.101, 44.202–2(a)(2) and standard making bodies in the in FAR Part 12 solicitations and
(10), extensively throughout Part 45 and definition of ‘‘Voluntary consensus contracts.
especially Subpart 45.3, 46.310, 49.505, standards’’. Revised 45.107(b) to clarify that
51.107, 52.215–2 Alternate I, 52.216–11, Other changes: Government property clauses 52.245–1
52.216–12, 52.216–13 and Alternate I, Revised 31.205–19(e)(2)(iv) to clarify and 52.245–2 may be used concurrently
52.216–14, 52.222–17, 52.232–20, the allowability of the cost of insurance under a single contract.
52.232–21, 52.242–16, 52.243–2 for the risk of loss, damage, destruction Revised 45.107(c) to mandate the use
Alternate IV, 52.243–4, 52.246–10, or theft of Government property. of clause 52.245–9, Uses and Charges,
52.249–11, 52.249–12, 52.249–13, Revised 32.503–15(b)(1) to make an for all solicitations and contracts that
52.249–14, and 52.251–1 Alternate I to editorial change. furnish or authorize the acquisition of
remove any references to ‘‘facilities Government property.
Revised 45.000 to clarify language
contracts.’’ Revised 45.107(d) to clarify the use of
regarding management and use of
Changes to definitions: Government property clauses in
Government property; to replace the
Revised the definition of ‘‘Acquisition purchase orders for property repair.
term ‘‘Plant equipment’’ with the term Revised 45.201(a)(1) and 52.245–
cost’’ in 45.101, 52.245–1, and 52.245– ‘‘Property’’; and to exclude software and 1(f)(1)(iii)(A)(1) to replace ‘‘commercial
9 for compliance with Generally intellectual property and the scenario part number’’ with ‘‘part number’’ and
Accepted Accounting Principles. for which the Government has acquired remove ‘‘bulk identifier’’ as required
Revised 45.101 and 52.245–1 to a lien or title to property solely because elements of property records.
include a definition of ‘‘Cannibalize’’. of performance-based payments from Revised 45.201(a) to add a
Moved the definition of ‘‘Common the scope of this subpart. requirement for the contracting officer
item’’ from 45.101 and 52.245–1 to Revised 45.102 to set forth the to include a statement in all
2.101. exception for property furnished for solicitations as to whether the
Revised the definition at 52.245–1 of repair or overhaul to requirements that Government property is to be furnished
‘‘Contractor’s management personnel’’ must be met for contracting officers to in an ‘‘as-is’’ condition and instructions
to add paragraph (3) to be consistent make a determination to furnish for physical inspection.
with the same definition at 45.101. Government property. Revised 45.201 to move paragraphs
Revised the definition of Revised FAR 45.103(a)(2) to correct a (d) and (e) into FAR 45.202, and
‘‘Demilitarization’’ in 45.101 and formatting error. As a result, eliminate the (d)(2) requirement to
52.245–1. subparagraphs (3), (4), and (5) have been charge rent when adjusting the
Revised 45.101 and 52.245–1 for the renumbered as (4), (5), and (6). evaluation is not practical; add a new
definition of ‘‘Discrepancies incident to Revised FAR 45.103(a)(3) to remove paragraph (d) to provide guidance for
shipment’’ to clarify that it means any the invalid reference to FAR 45.602. the use of property on more than one
differences between items shipped and Revised 45.104(b) to identify two contract.
items received. issues: (1) the revocation of Deleted the requirement of
Revised 45.101 and 52.245–1 to Government’s assumption of risk and (2) 45.301(b)(1) to exclude Government-
clarify the definition of ‘‘Equipment’’. prime and subcontractor risk of loss owned, contractor-operated plants
Revised 45.101 and 52.245–1 to relationships, by reformatting the operating on a cost-plus-fixed-fee basis
replace ‘‘erection’’ with ‘‘construction’’ section into two paragraphs, (b) and (c). from rental charges. As a result of the
in the definition of ‘‘Non-severable’’. Revised 45.105 to change the heading deletion, 45.301(b) is restructured.
Retained the definition of ‘‘Plant to ‘‘Contractor’s property management Revised 45.303(b) for clarification and
equipment’’ in 45.101 and added the system compliance.’’ (c) to update the reference for
definition in 52.245–1 and 52.245–9. Deleted 45.105(b)(1) and renumbered computing rent.
Revised the definition of ‘‘Property remaining paragraphs in order to Revised 45.401(b) and (c), moved
Administrator’’ in 45.101 and 52.245–1 eliminate ‘‘contract price adjustment’’ as them into 45.402, and revised clause
and Plant Clearance Officer in 2.101 to one of the examples of corrective action 52.245–1(d) and (e) to retain title
change ‘‘assigned’’ to ‘‘appointed.’’ if a contractor does not correct property language in the current FAR at 52.245–
Revised 45.101 and 52.245–1 for the management system deficiencies. 2 and 52.245–5.
definition of ‘‘Provide’’ to clarify when Revised 45.105(b)(3) to renumber as Revised 45.501 to provide for the
property is Government-furnished or 45.105(b)(2) in accordance with another property administrator assigned to the
contractor-acquired. recommendation. 45.105(b)(2) was prime contract to request support
property administration from another Revised 52.245–1(f)(1)(vi) to clarify Government property promptly. The final
contract administration office, for the lead-in language for examples of rule amends the FAR to revise the policies
purposes of evaluating prime contractor reports to be provided by the contractor. for the management of Government owned
Revised 52.245–1(f)(1)(vi)(B), (C), and property used and acquired by private
management of property located at
industry in the performance of Government
subcontractors and alternate locations. (D); and moved language to 52.245– contracts.
Revised 45.501 and 45.502 to provide 1(h)(2), (3), (4), and (5) and renumbered. 2. Summary of the significant issues raised
that for property located at a Revised 52.245–1(f)(1)(vi) to add by the public comments in response to the
subcontractor, the prime contractor paragraphs (12) and (13) to add language initial regulatory flexibility analysis, a
must agree to allow support property for last known location and a statement summary of the assessment of the agency of
administration. Should the prime that the property did or did not contain such issues, and a statement of any changes
contractor not agree, the property sensitive or hazardous material, and if made in the proposed rule as a result of such
so, that the appropriate agencies were comments.
administrator assigned to the prime
No comments were received that
contractor shall immediately refer the notified.
specifically mentioned the Initial Regulatory
matter to the contracting officer. Revised 52.245–1(f)(1)(vii)(A) to state Flexibility Analysis.
Revised 52.244–2(b) to delete the that a Property Administrator may grant 3. Description of and an estimate of the
reference to special test equipment and relief for loss, damage, destruction or number of small entities to which the rule
the clause at 52.245–18. theft of Government property. will apply.
Revised the third sentence of 52.245– Revised 52.245–1(f)(1)(viii), adding It is estimated that approximately 5000
1(b)(1) to add ‘‘procedures’’ and add the word ‘‘move’’, and revised FAR contractors have Federal property in their
52.245–1(f)(1)(viii) to add a new possession. Department of Defense (DoD) has
‘‘except where inconsistent with law or 2,242 contractors. Approximately 62 percent
regulation’’ after the words ‘‘property paragraph (B).
Revised 52.245–1(f)(1)(ix) to add the of DoD’s contractors are small businesses.
management.’’. Added a new fourth Given that property in the possession of
sentence: ‘‘During the period of words ‘‘and routine.’’
contractors is overwhelmingly DoD property,
performance, the contractor shall Revised 52.245–1(f)(3) to include
it is estimated the DoD ratio of small business
disclose any significant changes to their ‘‘significant’’ and ‘‘pertaining to to total businesses having such property is a
property management system to the Government property’’ which now reasonable approximation for all Government
Property Administrator prior to provides access to significant findings contractors. Therefore, it is estimated that
implementation.’’ and/or results of reviews and audits approximately 3,100 small businesses have
Revised 52.245–1(b)(2) to add words related directly to Government property. Government property in their possession.
Revised 52.245–1(g)(1) to add the 4. Description of the projected reporting,
‘‘or stolen.’’ recordkeeping and other compliance
words ‘‘plan’’ and ‘‘that pertains to
Revised clause 52.245–1(d)(3)(ii) requirements of the rule, including an
Government property’’, and (g)(1) and
(renumbered as (d)(2)(ii)) to allow the estimate of the classes of small entities,
(4) are revised to require access to all
contractor the opportunity to inspect which will be subject to the requirement and
Government property as well as the type of professional skills necessary for
Government-furnished property,
premises, and to premises of the preparation of the report or record.
expected to be suitable for contract
subcontractor as well as the prime. The rule does not impose any new
performance, after receipt and Revised the title to the clause 52.245–
installation. reporting, recordkeeping, or compliance
2 and the prescriptive language for the requirements. This final rule substantially
Revised clause 52.245–1(d)(3)(iii) clause in FAR 45.107(b) for clarity. decreases the impact of the current Federal
(renumbered as (d)(2)(iii)) to ensure that Revised 52.245–2(c) to delete ‘‘(i.e.)’’ Acquisition Regulation (FAR) provisions by
the contractor is given the opportunity and add the word ‘‘and.’’ simplifying procedures, reducing
to inspect property furnished in an ‘‘as- Revised 52.245–2 to add a paragraph recordkeeping and eliminating requirements
is’’ condition prior to the property being (e) which requires the contracting related to the management of Government
provided on contract. officer to identify Government Property property in the possession of contractors. The
Revised 52.245–1(f)(1) to add the final rule continues the philosophy of
provided under the clause, and to revise ordinarily requiring contractors to furnish all
word ‘‘procedures’’ to the first sentence paragraph (a) to add reference to (e). property necessary to perform Government
in (f)(1) after the word ‘‘system.’’ This is not a significant regulatory contracts, but also introduces more modern
Revised 52.245–1(f)(1)(ii) to clarify action, and therefore, is not subject to and innovative concepts.
the identification of Government review under Section 6(b) of Executive The final rule is structured around a
property. Order 12866, Regulatory Planning and number of principles or objectives, which it
Revised 52.245–1(f)(1)(iii)(B) to add Review, dated September 30, 1993. This is believed, will have an overall positive
the heading ‘‘Use of a Receipt and Issue rule is not a major rule under 5 U.S.C. impact on contractors regardless of size. The
System for Government Material’’ and 804. rule balances regulation with principle-based
make editorial changes. standards that allow for minimal regulatory
Revised 52.245–1(f)(1)(iv) to require D. Regulatory Flexibility Act requirement and greater flexibility and
efficiency to achieve best value for the
disclosure of the results of the physical The Regulatory Flexibility Act, 5 Government. The rule introduces commercial
inventory. U.S.C. 601, et seq., applies to this final standards and industry best practices into the
Revised 52.245–1(f)(1)(v) to provide rule. The Councils prepared a Final property management process to the
that the contractor shall award Regulatory Flexibility Analysis (FRFA), maximum extent possible. This facilitates
subcontracts that clearly identify assets and it is summarized as follows: moving from a prescribed regulatory process
to be provided and shall ensure This final regulatory flexibility analysis has to a performance-based outcome
appropriate flow down of contract terms been prepared consistent with 5 U.S.C. 604. environment. The use of voluntary consensus
and conditions, e.g., extent of liability 1. Succinct statement of the need for, and standards and leading industry practices
for loss, damage, destruction or theft of the objectives of, the rule. should reduce both the Government’s and the
Title II of the Federal Property and contractor’s ongoing administrative costs of
Government property, and deleted the Administrative Services Act of 1949, Public dealing with Government property. The
requirement to flow down any cost Law 81–152, as amended, requires, in part contractors will initiate and maintain the
savings achieved as a result of its prime that executive agencies account for processes, systems, records, and
contract relationship with the Government property, determine when such methodologies necessary for effective control
Government. property is excess, and dispose of excess of the Government’s property.
While it may be that small businesses are ■ 1. The authority citation for 48 CFR or modified to accomplish special
more dependent on Government—furnished parts 1, 2, 4, 7, 14, 15, 16, 17, 18, 19, purpose testing in performing a
property than large businesses, the 22, 28, 31, 32, 35, 37, 41, 42, 43, 44, 45, contract. It consists of items or
underlying philosophy has not changed (i.e., 46, 49, 51, 52, and 53 continues to read assemblies of equipment including
contractors are ordinarily required to furnish
all property necessary to perform the
as follows: foundations and similar improvements
Government contracts). Authority: Authority: 40 U.S.C. 121(c); 10 necessary for installing special test
5. Description of the steps the agency has U.S.C. chapter 137; and 42 U.S.C. 2473(c). equipment, and standard or general
taken to minimize the significant economic purpose items or components that are
impact on small entities consistent with the PART 1—FEDERAL ACQUISITION interconnected and interdependent so
stated objectives of applicable statutes, REGULATIONS SYSTEM as to become a new functional entity for
including a statement of the factual, policy, special testing purposes. Special test
and legal reasons for selecting the 1.106 [Amended] equipment does not include material,
alternative adopted in the final rule and why ■ 2. Amend section 1.106, in the table special tooling, real property, and
each one of the other significant alternatives following the introductory paragraph, equipment items used for general testing
to the rule considered by the agency which by—
affect the impact on small entities was
purposes or property that with relatively
■ minor expense can be made suitable for
rejected.
The final rule changes the approach to ■ a. Removing FAR segment ‘‘52.216– general purpose use.
managing Government property by accepting 13’’, and its corresponding OMB Control Special tooling means jigs, dies,
commercial practices and standards instead Number ‘‘9000–0069’’; fixtures, molds, patterns, taps, gauges,
of prescriptive-type requirements, alleviating ■ b. Removing FAR segment ‘‘52.232– and all components of these items
the need for a separate and costly 21’’, and its corresponding OMB Control including foundations and similar
Government-dictated property system. The Number ‘‘9000–0074’’; improvements necessary for installing
final rule further alleviates the burden on ■ c. Adding FAR segment ‘‘52.245–1’’, special test equipment, and which are of
small businesses by reducing their risk on and its corresponding OMB Control such a specialized nature that without
‘‘as-is’’ Government-furnished property by Number ‘‘9000–0075’’; and
allowing contractors to inspect ‘‘as-is’’
substantial modification or alteration
■ d. Removing FAR segments ‘‘52.245– their use is limited to the development
property prior to acceptance. By moving to
one clause at FAR 52.245–1, Government 2’’, ‘‘52.245–3’’, ‘‘52.245–5’’, ‘‘52.245– or production of particular supplies or
Property, the Government has streamlined 7’’, ‘‘52.245–8’’, ‘‘52.245–10’’, ‘‘52.245– parts thereof or to the performance of
numerous clauses into one ‘‘overarching’’ 11’’, ‘‘52.245–16’’, ‘‘52.245–17’’, and particular services. Special tooling does
clause, simplifying the understanding of ‘‘52.245–18’’ and their corresponding not include material, special test
Government property to the contracting OMB Control Number ‘‘9000–0075’’. equipment, real property, equipment,
community. The rule will reduce burdens on machine tools, or similar capital items.
the entire contracting community, large PART 2—DEFINITIONS OF WORDS
business as well as small. * * * * *
AND TERMS Voluntary consensus standards means
Interested parties may obtain a copy
■ 3. Amend section 2.101 in paragraph common and repeated use of rules,
of the FRFA from the FAR Secretariat.
(b) by— conditions, guidelines or characteristics
The FAR Secretariat has submitted a
■ a. Adding, in alphabetical order, the for products, or related processes and
copy of the FRFA to the Chief Counsel
definition ‘‘Common item’’; production methods and related
for Advocacy of the Small Business
■ b. Revising the definition ‘‘Plant management systems. Voluntary
Administration.
clearance officer’’; and Consensus Standards are developed or
E. Paperwork Reduction Act ■ c. Adding, in alphabetical order, the adopted by domestic and international
definitions ‘‘Special test equipment’’, voluntary consensus standard making
The Paperwork Reduction Act (Pub.
‘‘Special tooling’’, and ‘‘Voluntary bodies (e.g., International Organization
L. 104–13) applies because the final rule
consensus standards’’ to read as follows: for Standardization (ISO) and ASTM-
contains information collection
International). See OMB Circular A–119.
requirements. Accordingly, the FAR 2.101 Definitions.
Secretariat will forward a request for * * * * *
* * * * *
approval of a new information
(b) * * * PART 4—ADMINISTRATIVE MATTERS
collection requirement concerning
Common item means material that is
9000–0075 to the Office of Management 4.703 [Amended]
common to the applicable Government
and Budget under 44 U.S.C. 3501, et ■ 4. Amend section 4.703 in paragraph
contract and the contractor’s other work.
seq. Public comments concerning this (b)(3) by removing ‘‘, and subparagraph
request will be invited through a * * * * *
(c)(2) of the clause at 52.216–13,
subsequent Federal Register notice. Plant clearance officer means an
Allowable Cost and Payment—
authorized representative of the
List of Subjects in 48 CFR Parts 1, 2, 4, Facilities’’.
contracting officer, appointed in
7, 14, 15, 16, 17, 18, 19, 22, 28, 31, 32, accordance with agency procedures, 4.804–4 [Amended]
35, 37, 41, 42, 43, 44, 45, 46, 49, 51, 52, responsible for screening, redistributing, ■ 5. Amend section 4.804–4 by
and 53 and disposing of contractor inventory removing from paragraph (b) ‘‘Facilities
Government procurement. from a contractor’s plant or work site. contracts and rental’’ and adding
The term ‘‘Contractor’s plant’’ includes, ‘‘Rental’’ in its place.
Dated: May 2, 2007. but is not limited to, Government-
Al Matera, owned contractor-operated plants and PART 7—ACQUISITION PLANNING
Acting Director,Contract Policy Division. Federal installations as may be required
■ 6. Amend section 7.105 by revising
■ Therefore, DoD, GSA, and NASA under the scope of the contract.
paragraph (b)(14) to read as follows:
amend 48 CFR parts 1, 2, 4, 7, 14, 15, * * * * *
16, 17, 18, 19, 22, 28, 31, 32, 35, 37, 41, Special test equipment means either 7.105 Contents of written acquisition
42, 43, 44, 45, 46, 49, 51, 52, and 53 as single or multipurpose integrated test plans.
set forth below: units engineered, designed, fabricated, * * * * *
(b) * * * ■ e. Removing from paragraph (f)(1) PART 31—CONTRACT COST

(14) Government-furnished property. ‘‘(other than a facilities contract)’’; PRINCIPLES AND PROCEDURES
Indicate any Government property to be ■ f. Removing paragraphs (g) and (h);
furnished to contractors, and discuss 31.106 [Removed and Reserved]
and redesignating paragraph (i) as
any associated considerations, such as ■ 23. Remove and reserve section
paragraph (g); and
its availability or the schedule for its 31.106.
acquisition (see 45.102). ■ g. Removing the last sentence from the ■ 23a. Remove sections 31.106–1
* * * * * newly designated paragraph (g). through 31.106–3.
■ 24. Amend section 31.205–19 by
PART 14—SEALED BIDDING PART 17—SPECIAL CONTRACTING revising paragraph (e)(2)(iv) to read as
METHODS follows:
paragraph (b)(2) to read as follows: ■ 15. Amend section 17.603 by revising 31.205–19 Insurance and indemnification.
paragraph (a)(5) to read as follows: * * * * *
14.502 Conditions for use.
(e) * * *
* * * * * 17.603 Limitations. (2) * * *
(b) * * * (iv) Costs of insurance for the risk of
(2) Government property to be made (a) * * *
loss, damage, destruction, or theft of
available to the successful bidder. (5) Functions that can more properly Government property are allowable to
* * * * * be accomplished in accordance with the extent that—
Subpart 45.3, Authorizing the Use and (A) The contractor is liable for such
PART 15—CONTRACTING BY Rental of Government Property. loss, damage, destruction, or theft;
NEGOTIATION * * * * * (B) The contracting officer has not
15.209 [Amended]
revoked the Government’s assumption
PART 18—EMERGENCY of risk (see 45.104(b)); and
8. Amend section 15.209 by removing ACQUISITIONS (C) Such insurance does not cover
and reserving paragraph (b)(2). loss, damage, destruction, or theft which
18.123 [Amended]
15.404–1 [Amended] results from willful misconduct or lack
■ 9. Amend section 15.404–1 by ■ 16. Amend section 18.123 by of good faith on the part of any of the
removing from paragraph (e)(1) removing ‘‘45.404(a)(3) and (4)’’ and contractor’s managerial personnel (as
‘‘facilities’’ and adding ‘‘equipment, real adding ‘‘45.301’’ in its place. described in FAR 52.245–1(h)(1)(ii)).
property’’ in its place. * * * * *
PART 19—SMALL BUSINESS
15.407–2 [Amended] PROGRAMS 31.205–40 [Amended]
10. Amend section 15.407–2 by ■ 25. Amend section 31.205–40 by
19.803 [Amended]
removing from paragraph (e)(1) removing from paragraph (a) ‘‘45.101’’
‘‘facilities’’ and adding ‘‘equipment or ■ 17. Amend section 19.803 by and adding ‘‘2.101(b)’’ in its place.
real property’’ in its place. removing from paragraph (b)(2)
‘‘facilities’’ and adding ‘‘equipment and PART 32—CONTRACT FINANCING
15.407–4 [Amended]
real property’’ in its place. ■ 26. Amend section 32.403 by revising
19.1103 [Amended] paragraph (c) to read as follows:
removing from paragraph (a)(1)
‘‘facilities’’ and adding ‘‘equipment, real ■ 18. Amend section 19.1103 by 32.403 Applicability.
property’’ in its place; and by removing removing from paragraph (b) ‘‘facilities’’ * * * * *
from paragraph (c)(1) ‘‘facilities’’ and and adding ‘‘property’’ in its place. (c) Contracts for acquisition, at cost, of
adding ‘‘real property,’’ in its place. property for Government ownership.
19.1307 [Amended]
15.605 [Amended] * * * * *
■ 12. Amend section 15.605 by ■ 19. Amend section 19.1307 by
32.407 [Amended]
removing from paragraph (b)(4) removing from paragraph (c) ‘‘facilities’’
and adding ‘‘property’’ in its place. ■ 27. Amend section 32.407 by
‘‘facilities, equipment, materials,’’ and
removing from paragraph (c) ‘‘facilities’’
adding ‘‘Government property’’ in its
PART 22—APPLICATION OF LABOR and adding ‘‘property’’ in its place.
place. ■ 28. Amend section 32.503–15 by
LAWS TO GOVERNMENT
PART 16—TYPES OF CONTRACTS ACQUISITIONS removing from the introductory text of
paragraph (b) ‘‘other clauses, as
16.302 [Amended] 22.405 [Removed and Reserved] follows:’’ and adding an em-dash in its
■ 13. Amend section 16.302 by ■ 20. Section 22.405 is removed and place; and by revising paragraph (b)(1)
removing from paragraph (b) ‘‘, and for reserved. to read as follows:
facilities contracts’’.
22.407 [Amended] 32.503–15 Application of Government title
16.307 [Amended] terms.
■ 14. Amend section 16.307 by— ■ 21. Amend section 22.407 by * * * * *
■ a. Removing from paragraph (a)(1) removing and reserving paragraph (d). (b) * * *
‘‘(other than a facilities contract)’’; (1) The clause at 52.245–1,
■ b. Removing from paragraph (b) PART 28—BONDS AND INSURANCE Government Property; and
‘‘facilities contract or a’’; 28.303 [Amended] * * * * *

■ c. Removing from paragraph (d)
‘‘(other than a facilities contract)’’; ■ 22. Amend section 28.303 by 32.704 [Amended]
■ d. Removing from paragraph (e)(1) ‘‘or removing ‘‘45.103’’ and adding ‘‘45.104’’ ■ 29. Amend section 32.704 by
a facilities contract’’; in its place. removing from paragraph (a)(1)
‘‘52.232–21, Limitation of Cost (30) When contractors request ■

(Facilities);’’. Government property— ■ 47. Amend section 44.202–2 by
(i) Evaluate the contractor’s requests revising paragraphs (a)(2) and (a)(10) to
32.705–2 [Amended] for Government property and for read as follows:
■ 30. Amend section 32.705–2 by changes to existing Government
removing from paragraph (a) ‘‘, except property and provide appropriate 44.202–2 Considerations.
those for consolidated facilities, recommendations to the contracting (a) * * *
facilities acquisition, or facilities use’’; officer; (2) Is the subcontract for special test
removing paragraph (b); and (ii) Ensure required screening of equipment, equipment or real property
redesignating paragraph (c) as paragraph Government property before acquisition that are available from Government
(b). by the contractor; sources?
(iii) Approve use of Government * * * * *
PART 35—RESEARCH AND property on a noninterference basis in (10) Has adequate consideration been
DEVELOPMENT CONTRACTING accordance with the clause at 52.245–9, obtained for any proposed subcontract
Use and Charges; that will involve the use of Government-
* * * * * provided equipment and real property?
paragraph (e) to read as follows:
* * * * *
35.014 Government property and title. 42.705–1 [Amended]
■ 37. Amend section 42.705–1 by PART 45—GOVERNMENT PROPERTY
* * * * *
removing from paragraph (b)(1) ‘‘or
(e) The policies in paragraphs (b)(1) ■ 48. Revise section 45.000 to read as
52.216–13’’.
through (b)(3) and paragraph (d) of this follows:
section are implemented in the 42.705–3 [Amended]
Government Property clauses. 45.000 Scope of part.
removing from paragraph (b)(5)(ii) This part prescribes policies and
35.017 [Amended] procedures for providing Government
‘‘16.307(i)’’ and adding ‘‘16.307(g)’’ in
■ 32. Amend section 35.017 by its place. property to contractors, contractors’
removing from paragraph (a)(2) management and use of Government
‘‘facilities’’, each time it appears, and 42.708 [Amended] property, and reporting, redistributing,
adding ‘‘installations equipment and ■ 39. Amend section 42.708 by and disposing of contractor inventory. It
real property’’ in its place (twice). removing from paragraph (b) ‘‘or does not apply to property under any
52.216–13’’. statutory leasing authority, (except as to
PART 37—SERVICE CONTRACTING non-Government use of property under
42.709–6 [Amended]
37.101 [Amended] 45.301(f)); to property to which the
■ 40. Amend section 42.709–6 by Government has acquired a lien or title
■ 33. Amend section 37.101, by removing ‘‘52.216–13,’’. solely because of partial, advance,
removing from paragraph (5) of the
42.1102 [Amended] progress, or performance-based
definition ‘‘Service Contract’’
■ 41. Amend section 42.1102 by payments; to disposal of real property;
‘‘facilities’’ and adding ‘‘real property’’
removing ‘‘facilities,’’. or to software and intellectual property.
in its place. ■ 49. Revise Subparts 45.1 through 45.5
PART 41—ACQUISITION OF UTILITY 42.1107 [Amended] to read as follows:
SERVICES ■ 42. Amend section 42.1107 by Subpart 45.1—General
removing from paragraph (a) ‘‘a facilities
Sec.
41.102 [Amended] contract,’’. 45.101 Definitions.
■ 34. Amend section 41.102 by 45.102 Policy.
42.1305 [Amended]
removing from paragraph (b)(6) 45.103 General.
‘‘Government-owned facilities’’ and ■ 43. Amend section 42.1305 by 45.104 Responsibility and liability for
adding ‘‘Government-owned equipment removing paragraph (c), and Government property.
and real property’’ in its place. redesignating paragraph (d) as 45.105 Contractors’ property management
paragraph (c). system compliance.
41.701 [Amended] 45.106 Transferring accountability.
■ 35. Amend section 41.701 by PART 43—CONTRACT 45.107 Contract clauses.
removing from paragraph (b) ‘‘facilities’’ MODIFICATIONS
Subpart 45.2—Solicitation and Evaluation
and adding ‘‘equipment and real 43.205 [Amended] Procedures
property’’ in its place. ■ 44. Amend section 43.205 by 45.201 Solicitation.
removing and reserving paragraph 45.202 Evaluation procedures.
PART 42—CONTRACT (b)(5).
ADMINISTRATION AND AUDIT Subpart 45.3—Authorizing the Use and
SERVICES Rental of Government Property
PART 44—SUBCONTRACTING
45.301 Use and rental.
■ 36. Amend section 42.302 by POLICIES AND PROCEDURES
45.302 Contracts with foreign governments
removing and reserving paragraph 44.101 [Amended] or international organizations.
(a)(27); and by revising the introductory 45.303 Use of Government property on
■ 45. Amend section 44.101 by
text of paragraph (a)(30), and (a)(30)(i) independent research and development
removing the definition ‘‘Facilities’’. programs.
through (a)(30)(iii) to read as follows:
44.202–1 [Amended] Subpart 45.4—Title to Government Property

42.302 Contract administration functions.
■ 46. Amend section 44.202–1 by 45.401 Title to Government-furnished
(a) * * * removing from paragraph (c) ‘‘paragraph property.
(27) [Reserved] (k)’’ and adding ‘‘paragraph (j)’’ in its 45.402 Title to contractor-acquired
* * * * * place. property.
Subpart 45.5—Support Government condition) between the items for installing special tooling, special test
Property Administration documented to have been shipped and equipment, or plant equipment.
45.501 Prime contractor alternate locations. items actually received. Sensitive property means property
45.502 Subcontractor locations. Equipment means a tangible asset that potentially dangerous to the public
45.503 Support property administrator is functionally complete for its intended safety or security if stolen, lost, or
findings. purpose, durable, nonexpendable, and misplaced, or that shall be subject to
needed for the performance of a exceptional physical security,
Subpart 45.1—General
contract. Equipment is not intended for protection, control, and accountability.
45.101 Definitions. sale, and does not ordinarily lose its Examples include weapons,
As used in this part— identity or become a component part of ammunition, explosives, controlled
Acquisition cost means the cost to another article when put into use. substances, radioactive materials,
acquire a tangible capital asset Government-furnished property hazardous materials or wastes, or
including the purchase price of the asset means property in the possession of, or precious metals.
and costs necessary to prepare the asset directly acquired by, the Government Surplus property means excess
for use. Costs necessary to prepare the and subsequently furnished to the personal property not required by any
asset for use include the cost of placing contractor for performance of a contract. Federal agency as determined by the
the asset in location and bringing the Government property means all Administrator of the General Services
asset to a condition necessary for property owned or leased by the Administration (GSA).
normal or expected use. Government. Government property
45.102 Policy.
Cannibalize means to remove includes both Government-furnished
property and contractor-acquired (a) Contractors are ordinarily required
serviceable parts from one item of to furnish all property necessary to
equipment in order to install them on property.
Material means property that may be perform Government contracts.
another item of equipment. (b) Contracting officers shall provide
Contractor-acquired property means consumed or expended during the
performance of a contract, component property to contractors only when it is
property acquired, fabricated, or clearly demonstrated—
otherwise provided by the contractor for parts of a higher assembly, or items that
lose their individual identity through (1) To be in the Government’s best
performing a contract and to which the interest;
Government has title. incorporation into an end-item. Material
(2) That the overall benefit to the
Contractor inventory means— does not include equipment, special
acquisition significantly outweighs the
(1) Any property acquired by and in tooling, and special test equipment.
increased cost of administration,
the possession of a contractor or Nonseverable means property that
including ultimate property disposal;
subcontractor under a contract for cannot be removed after construction or
(3) That providing the property does
which title is vested in the Government installation without substantial loss of
not substantially increase the
and which exceeds the amounts needed value or damage to the installed
Government’s assumption of risk; and
to complete full performance under the property or to the premises where
(4) That Government requirements
entire contract; installed.
cannot otherwise be met.
(2) Any property that the Government Plant equipment means personal (c) The contractor’s inability or
is obligated or has the option to take property of a capital nature (including unwillingness to supply its own
over under any type of contract, e.g., as equipment, machine tools, test resources is not sufficient reason for the
a result either of any changes in the equipment, furniture, vehicles, and furnishing or acquisition of property.
specifications or plans thereunder or of accessory and auxiliary items) for use in (d) Exception. Property provided to
the termination of the contract (or manufacturing supplies, in performing contractors for repair or overhaul is not
subcontract thereunder), before services, or for any administrative or subject to the requirements of paragraph
completion of the work, for the general plant purpose. It does not (b) of this section.
convenience or at the option of the include special tooling or special test
Government; and equipment. 45.103 General.
(3) Government-furnished property Precious metals means silver, gold, (a) Agencies shall—
that exceeds the amounts needed to platinum, palladium, iridium, osmium, (1) Allow and encourage contractors
complete full performance under the rhodium, and ruthenium. to use voluntary consensus standards
entire contract. Property means all tangible property, (see FAR 11.101(c)) and industry-
Contractor’s managerial personnel both real and personal. leading practices and standards to
means the contractor’s directors, Property Administrator means an manage Government property in their
officers, managers, superintendents, or authorized representative of the possession;
equivalent representatives who have contracting officer appointed in (2) Eliminate to the maximum
supervision or direction of— accordance with agency procedures, practical extent any competitive
(1) All or substantially all of the responsible for administering the advantage a prospective contractor may
contractor’s business; contract requirements and obligations have by using Government property;
(2) All or substantially all of the relating to Government property in the (3) Ensure maximum practical
contractor’s operation at any one plant possession of a contractor. reutilization of contractor inventory for
or separate location; or Provide means to furnish, as in government purposes;
(3) A separate and complete major Government-furnished property, or to (4) Require contractors to use
industrial operation. acquire, as in contractor-acquired Government property already in their
Demilitarization means rendering a property. possession to the maximum extent
product unusable for, and not restorable Real property means land and rights practical in performing Government
to, the purpose for which it was in land, ground improvements, utility contracts;
designed or is customarily used. distribution systems, and buildings and (5) Charge appropriate rentals when
Discrepancies incident to shipment other structures. It does not include the property is authorized for use on
means any differences (e.g., count or foundations and other work necessary other than a rent-free basis; and
(6) Require contractors to justify (c) If the contractor fails to take the FAR 45.104(a), Responsibility and
retaining Government property not required corrective action(s) in response Liability for Government Property.
needed for contract performance and to to the notification provided by the (3) The contracting officer shall use
declare property as excess when no contracting officer in accordance with the clause with its Alternate II when a
longer needed for contract performance. paragraph (b) of this section, the contract for the conduct of basic or
(b) Agencies will not generally require contracting officer shall notify the applied research at nonprofit
contractors to establish property contractor in writing of any Government institutions of higher education or at
management systems that are separate decision to apply the remedies nonprofit organizations whose primary
from a contractor’s established described in paragraphs (b)(1) and (b)(2) purpose is the conduct of scientific
procedures, practices, and systems used of this section. research (see 35.014) is contemplated.
to account for and manage contractor- (d) When the property administrator (b) The contracting officer shall also
owned property. determines that a reported case of loss, insert the clause at 52.245–2,
damage, destruction or theft of Government Property (Installation
45.104 Responsibility and liability for Government property constitutes a risk Operation Services), in service contracts
Government property.
assumed by the Government, the to be performed on a Government
(a) Generally, contractors are not held property administrator shall notify the installation when Government-
liable for loss, damage, destruction, or contractor in writing that they are furnished property will be provided for
theft of Government property under the granted relief of responsibility in initial provisioning only and the
following types of contracts: accordance with FAR clause 52.245– Government is not responsible for repair
(1) Cost-reimbursement contracts. 1(f)(1)(vii). Where the property or replacement.
(2) Time-and-material contracts. administrator determines that the risk of (c) The contracting officer shall insert
(3) Labor-hour contracts. loss is not assumed by the Government, the clause at 52.245–9, Use and Charges,
(4) Fixed-price contracts awarded on the property administrator shall forward in solicitations and contracts when the
the basis of submission of cost or a recommendation requesting that the clause at 52.245–1 is included.
pricing data. contracting officer hold the contractor (d) Purchase orders for property repair
(b) The contracting officer may revoke liable. need not include a Government
the Government’s assumption of risk property clause when the acquisition
when the property administrator 45.106 Transferring accountability. cost of Government property to be
determines that the contractor’s Government property shall be repaired does not exceed the simplified
property management practices are transferred from one contract to another acquisition threshold, unless other
inadequate and/or present an undue risk only when firm requirements exist Government property (not for repair) is
to the Government. under the gaining contract (see 45.102). provided.
(c) A prime contractor that provides Such transfers shall be documented by
Government property to a subcontractor modifications to both gaining and losing Subpart 45.2—Solicitation and
shall not be relieved of any contracts. Once transferred, all property Evaluation Procedures
responsibility to the Government that shall be considered Government-
the prime contractor may have under 45.201 Solicitation.
furnished property to the gaining
the terms of the prime contract. contract. The warranties of suitability of (a) The contracting officer shall insert
use and timely delivery of Government- a listing of the Government property to
45.105 Contractors’ property management be offered in all solicitations where
system compliance. furnished property do not apply to
property acquired or fabricated by the Government-furnished property is
(a) The agency responsible for contractor as contractor-acquired anticipated (see 45.102). The listing
contract administration shall conduct an property that is subsequently transferred shall include at a minimum—
analysis of the contractor’s property to another contract with the same (1) The name, part number and
management policies, procedures, contractor. description, manufacturer, model
practices, and systems. This analysis number, and National Stock Number (if
shall be accomplished as frequently as 45.107 Contract clauses. needed for additional item
conditions warrant, in accordance with (a)(1) Except as provided in paragraph identification tracking and/or
agency procedures. (d) of this section, the contracting officer disposition);
(b) The property administrator shall shall insert the clause at 52.245–1, (2) Quantity/unit of measure;
notify the contractor in writing when Government Property, in— (3) Unit acquisition cost;
the contractor’s property management (i) All cost reimbursement, time-and- (4) Unique-item identifier or
system does not comply with material, and labor-hour type equivalent (if available and necessary
contractual requirements, and shall solicitations and contracts; and for individual item tracking); and
request prompt correction of (ii) Fixed-price solicitations and (5) A statement as to whether the
deficiencies and shall provide a contracts when the Government will property is to be furnished in an ‘‘as-is’’
schedule for their completion. If the provide Government property. condition and instructions for physical
contractor does not correct the (iii) Contracts or modifications inspection.
deficiencies in accordance with the awarded under FAR Part 12 procedures (b) When Government property is
schedule, the contracting officer shall where Government property that offered for use in a competitive
notify the contractor, in writing, that exceeds the simplified acquisition acquisition, solicitations should specify
failure to take the required corrective threshold, as defined in FAR 2.101, is that the contractor is responsible for all
action(s) may result in— furnished or where the contractor is costs related to making the property
(1) Revocation of the Government’s directed to acquire property for use available for use, such as payment of all
assumption of risk for loss, damage, under the contract that is titled in the transportation, installation or
destruction, or theft; and/or Government. rehabilitation costs.
(2) The exercise of other rights or (2) The contracting officer shall use (c) The solicitation shall describe the
remedies available to the contracting the clause with its Alternate I in evaluation procedures to be followed,
officer. contracts other than those identified in including rental charges or equivalents
and other costs or savings to be (b) Rental charges, to the extent (a) Such use will not conflict with the
evaluated, and shall require all offerors authorized do not apply to Government primary use of the property or enable
to submit the following information property that is left in place or installed the contractor to retain property that
with their offers— on contractor-owned property for could otherwise be released;
(1) A list or description of all mobilization or future Government (b) The contractor agrees not to claim
Government property that the offeror or production purposes; however, rental reimbursement against any Government
its subcontractors propose to use on a charges shall apply to that portion of contract for the rental value of the
rent-free basis. The list shall identify the property or its capacity used for non- property; and
accountable contract under which the government commercial purposes or (c) A rental charge for the portion of
property is held and the authorization otherwise authorized for use. the contractor’s IR&D program cost
for its use (from the contracting officer (c) The contracting officer cognizant allocated to commercial work is
having cognizance of the property); of the Government property may deducted from the claim for
(2) The dates during which the authorize the rent-free use of property in reimbursement of any agreed-upon
property will be available for use the possession of nonprofit Government share of the contractor’s
(including the first, last, and all organizations when used for research, IR&D costs.
intervening months) and, for any development, or educational work
property that will be used concurrently and— Subpart 45.4—Title to Government
in performing two or more contracts, the (1) The use of the property is in the Property
amounts of the respective uses in national interest; 45.401 Title to Government-furnished
sufficient detail to support prorating the (2) The property will not be used for property.
rent; the direct benefit of a profit-making
(3) The amount of rent that would The Government retains title to all
organization; and Government-furnished property until
otherwise be charged in accordance (3) The Government receives some
with FAR 52.245–9, Use and Charges; properly disposed of, as authorized by
direct benefit, such as rights to use the law or regulation. Property that is leased
and results of the work without charge, from
(4) The voluntary consensus standard by the Government and subsequently
its use. furnished to the contractor for use shall
or industry leading practices and
(d) In exchange for consideration as be considered Government-furnished
standards to be used in the management
determined by the cognizant contracting property under the clause 52.245–1,
of Government property, or existing
officer(s), the contractor may use Government Property.
property management plans, methods,
Government property under fixed-price
practices, or procedures for accounting 45.402 Title to contractor-acquired
contracts other than the contract to
for property. property.
(d) When use of property on more which it is accountable. When, after
contract award, a contractor requests the (a) Under fixed price type contracts,
than one contract is anticipated, any
additional instructions to the contractor use of Government property, the the contractor retains title to all
regarding property management, contracting officer shall obtain a fair property acquired by the contractor for
accountability, and use, not addressed rental or other adequate consideration if use on the contract, except for property
in FAR clause 52.245–1, Government use is authorized. identified as a deliverable end item. The
Property, should be specifically (e) The cognizant contracting Government acquires title to property
addressed in the statement of work on officer(s) may authorize the use of acquired or fabricated by the contractor
the contract providing property. Government property on a rent-free in accordance with the financing
basis on a cost type Government provisions or other specific
45.202 Evaluation procedures. contract other than the contract to requirements for passage of title in the
(a) The contracting officer shall which it is accountable. contract. If a deliverable item is to be
consider any potentially unfair (f) In exchange for consideration as retained by the contractor for use after
competitive advantage that may result determined by the cognizant contracting inspection and acceptance by the
from the contractor possessing officer, the contractor may use Government, it shall be made
Government property. This shall be Government property for commercial accountable to the contract through a
done by adjusting the offers by use. Prior approval of the Head of the contract modification listing the item as
applying, for evaluation purposes only, Contracting Activity is required where Government-furnished property.
a rental equivalent evaluation factor. non-Government use is expected to (b) Under cost type and time-and-
(b) The contracting officer shall exceed 25 percent of the total use of material contracts, the Government
ensure the offeror’s property Government and commercial work acquires title to all property to which
management plans, methods, practices, performed. the contractor is entitled to
or procedures for accounting for reimbursement, in accordance with
property are consistent with the 45.302 Contracts with foreign paragraph (e)(3) of clause 52.245–1.
requirements of the solicitation. governments or international organizations.
Requests by, or for the benefit of, Subpart 45.5—Support Government
Subpart 45.3—Authorizing the Use and foreign Governments or international Property Administration
Rental of Government Property organizations to use Government
45.501 Prime contractor alternate
property shall be processed in
45.301 Use and rental. locations.
accordance with agency procedures.
This subpart prescribes policies and The property administrator assigned
procedures for contractor use and rental 45.303 Use of Government property on to the prime contract may request
of Government property. independent research and development support property administration from
(a) Government property shall programs. another contract administration office,

normally be provided on a rent-free The contracting officer may authorize for purposes of evaluating prime
basis in performance of the contract a contractor to use the property on an contractor management of property
under which it is accountable or independent research and development located at subcontractors and alternate
otherwise authorized. (IR&D) program, if— locations.
45.502 Subcontractor locations. for in accordance with the procedures 52.216–13 and 52.216–14 [Removed and
(a) For property located at a contained in paragraph (j) of the clause Reserved]
subcontractor, FAR 52.245–1(g) requires at 52.245–1, Government Property; and ■ 64. Remove and reserve sections
that the prime contractor allow support * * * * * 52.216–13 and 52.216–14.
property administration. Should the
49.502 [Amended] 52.216–15 [Amended]
prime contractor fail to comply with
FAR 52.245–1(g), the property ■ 55. Amend section 49.502 by ■ 65. Amend the introductory text of
administrator assigned to the prime removing from paragraphs (a)(1)(iv) and section 52.216–15 by removing
contractor shall immediately refer the (b)(1)(i)(C) ‘‘49.505(a), (b), or (e)’’ and ‘‘16.307(i)’’ and adding ‘‘16.307(g)’’ in
matter to the contracting officer. adding ‘‘49.505(a) or (c)’’ in its place. its place.
(b) The prime property administrator ■ 56. Amend section 49.505 by 52.222–17 [Removed and Reserved]
shall accept the findings of the removing paragraphs (a) and (c), and ■ 66. Remove and reserve section
delegated support property redesignating paragraph (b) as paragraph 52.222–17.
administrator and advise the prime (a), paragraph (d) as paragraph (b), and
contractor of any deficiencies within the paragraph (e) as paragraph (c); and 52.232–20 [Amended]
subcontractor’s property management revising the last sentence of the newly ■ 67. Amend the introductory text of
system. designated paragraph (b) to read as section 52.232–20 by removing ‘‘except
45.503 Support property administrator follows: those for consolidated facilities,
findings. facilities acquisition, or facilities use,’’.
49.505 Other termination clauses.
In instances where the prime * * * * * 52.232–21 [Removed and Reserved]
contractor does not concur with the ■ 68. Remove and reserve section
(b) * * * The contracting officer shall
findings of the support Property 52.232–21.
also insert the clause in time-and-
Administrator, the prime property
material contracts, and labor-hour
administrator shall immediately refer 52.232–22 [Amended]
contracts.
the matter to the contracting officer. ■ 69. Amend the introductory text of
■ 50. Revise section 45.600 to read as * * * * *
section 52.232–22 by removing
follows: 49.603 [Amended] ‘‘32.705–2(c)’’ and adding ‘‘32.705–2(b)’’
45.600 Scope of subpart. ■ 57. Amend section 49.603 by in its place.
This subpart establishes policies and removing ‘‘49.505(e)’’ and adding 52.242–16 [Removed and Reserved]
procedures for the reporting, ‘‘49.505(c)’’ in its place. ■ 70. Remove and reserve section
reutilization, and disposal of contractor 52.242–16.
inventory excess to contracts and of PART 51—USE OF GOVERNMENT
property that forms the basis of a claim SOURCES BY CONTRACTORS 52.242–17 [Amended]
against the Government (e.g., 51.106 [Amended] ■ 71. Amend the introductory text of
termination inventory under fixed-price section 52.242–17 by removing
contracts). This subpart does not apply ■ 58. Amend section 51.106 by ‘‘42.1305(d)’’ and adding ‘‘42.1305(c)’’
to the disposal of real property or to removing from paragraph (b) ‘‘52.245– in its place.
property for which the Government has 2’’ and adding ‘‘52.245–1’’ in its place;
a lien or title solely as a result of and by removing ‘‘, or 52.245–5, 52.243–2 [Amended]
advance, progress, or performance-based Alternate I’’. ■ 72. Amend section 52.243–2 by
payments that have been liquidated. removing and reserving Alternate IV.
51.107 [Amended]
45.601 [Removed and Reserved] ■ 59. Amend section 51.107 by revising the date of the clause and
■ 51. Remove and reserve section removing ‘‘may authorize’’ and adding paragraph (a)(3) to read as follows:
45.601. ‘‘authorizes’’ in its place, and by
removing the last sentence. 52.243–4 Changes.
PART 46—QUALITY ASSURANCE * * * * *
51.200 [Amended] CHANGES (JUNE 2007)
46.202–3 [Amended] ■ 60. Amend section 51.200 by (a) * * *
■ 52. Amend section 46.202–3 by removing ‘‘45.304’’ and adding ‘‘45.102’’ (3) In the Government-furnished property
removing from paragraph (a) ‘‘and in its place. or services; or
46.310,’’. * * * * *
PART 52—SOLICITATION PROVISIONS
46.310 [Removed and Reserved] 52.244–2 [Amended]
AND CONTRACT CLAUSES
■ 53. Remove and reserve section ■ 74. Amend section 52.244–2 by—
46.310. 52.215–2 [Amended] ■ a. Revising the date of the clause to
■ 61. Amend section 52.215–2 by read ‘‘(JUNE 2007)’’;
PART 49—TERMINATION OF removing and reserving Alternate I. ■ b. Removing paragraph (b) and
CONTRACTS redesignating paragraphs (c) through (k)
52.216–11 [Amended] as (b) through (j), respectively;
revising paragraph (b)(1) to read as ■ 62. Amend section 52.216–11 by ■ c. Amending the newly designated
follows: removing from the introductory text ‘‘or paragraph (b) by removing ‘‘paragraph
a facilities contract’’. (d) or (e)’’ and adding ‘‘paragraph (c) or
49.108–3 Settlement procedure. (d)’’ in its place;

52.216–12 [Amended] ■ d. Amending the newly designated
* * * * *
(b) * * * ■ 63. Amend section 52.216–12 by paragraphs (e)(1) and (e)(2) by removing
(1) All subcontractor termination removing from the introductory text ‘‘paragraph (c), (d), or (e)’’ and adding
inventory be disposed of and accounted ‘‘(other than a facilities contract)’’. ‘‘paragraph (b), (c), or (d)’’ in its place;
■ e. Amending the newly designated Demilitarization means rendering a ammunition, explosives, controlled
paragraph (j) by removing ‘‘Paragraphs product unusable for, and not restorable to, substances, radioactive materials, hazardous
(d) and (f)’’ and adding ‘‘Paragraphs (c) the purpose for which it was designed or is materials or wastes, or precious metals.
customarily used. Surplus property means excess personal
and (e)’’ in its place; and
Discrepancies incident to shipment means property not required by any Federal agency
■ f. Amending Alternate I as follows:
any differences (e.g., count or condition) as determined by the Administrator of the
■ 1. Revising the date of Alternate I to
between the items documented to have been General Services Administration (GSA).
read ‘‘(JUNE 2007)’’; shipped and items actually received. (b) Property management. (1) The
■ 2. Removing from the introductory Equipment means a tangible asset that is Contractor shall have a system to manage
text of Alternate I ‘‘paragraph (f)(2)’’, functionally complete for its intended (control, use, preserve, protect, repair and
each time it appears, and adding purpose, durable, nonexpendable, and maintain) Government property in its
‘‘paragraph (e)(2)’’ in its place (twice); needed for the performance of a contract. possession. The system shall be adequate to
■ 3. Redesignating paragraph (f)(2) as Equipment is not intended for sale, and does satisfy the requirements of this clause. In
paragraph (e)(2), and removing not ordinarily lose its identity or become a doing so, the Contractor shall initiate and
‘‘paragraph (d), or (e)’’ and adding component part of another article when put maintain the processes, systems, procedures,
into use. records, and methodologies necessary for
‘‘paragraph (c), or (d)’’ in its place; and
Government-furnished property means effective control of Government property,
■ 4. Removing from the newly
property in the possession of, or directly consistent with voluntary consensus
designated paragraph (e)(2)(ii) acquired by, the Government and standards and/or industry-leading practices
‘‘paragraphs (f)(1)(i) through (f)(1)(iv)’’ subsequently furnished to the Contractor for and standards for Government property
and adding ‘‘paragraphs (e)(1)(i) through performance of a contract. management except where inconsistent with
(e)(1)(iv)’’ in its place. Government property means all property law or regulation. During the period of
■ 75. Revise sections 52.245–1 and owned or leased by the Government. performance, the Contractor shall disclose
52.245–2 to read as follows: Government property includes both any significant changes to their property
Government-furnished and Contractor- management system to the Property
52.245–1 Government Property. acquired property. Administrator prior to implementation.
As prescribed in 45.107(a), insert the Material means property that may be (2) The Contractor’s responsibility extends
following clause: consumed or expended during the from the initial acquisition and receipt of
GOVERNMENT PROPERTY (JUNE 2007) performance of a contract, component parts property, through stewardship, custody, and
(a) Definitions. As used in this clause— of a higher assembly, or items that lose their use until formally relieved of responsibility
Acquisition cost means the cost to acquire individual identity through incorporation by authorized means, including delivery,
a tangible capital asset including the into an end-item. Material does not include consumption, expending, disposition, or via
purchase price of the asset and costs equipment, special tooling and special test a completed investigation, evaluation, and
necessary to prepare the asset for use. Costs equipment. final determination for lost, damaged,
necessary to prepare the asset for use include Nonseverable means property that cannot destroyed, or stolen property. This
the cost of placing the asset in location and be removed after construction or installation requirement applies to all Government
bringing the asset to a condition necessary for without substantial loss of value or damage property under the Contractor’s
normal or expected use. to the installed property or to the premises accountability, stewardship, possession or
Cannibalize means to remove serviceable where installed. control, including its vendors or
parts from one item of equipment in order to Plant equipment as used in this part, subcontractors (see paragraph (f)(1)(v) of this
install them on another item of equipment. means personal property of a capital nature cluase).
Contractor-acquired property means (including equipment, machine tools, test (3) The Contractor shall include the
property acquired, fabricated, or otherwise equipment, furniture, vehicles, and accessory requirements of this clause in all
provided by the Contractor for performing a and auxiliary items) for use in manufacturing subcontracts under which Government
contract, and to which the Government has supplies, in performing services, or for any property is acquired or furnished for
title. administrative or general plant purpose. It subcontract performance.
Contractor inventory means— does not include special tooling or special (c) Use of Government property. The
(1) Any property acquired by and in the test equipment. Contractor shall use Government property,
possession of a Contractor or subcontractor Precious metals means silver, gold, either furnished or acquired under this
under a contract for which title is vested in platinum, palladium, iridium, osmium, contract, only for performing this contract,
the Government and which exceeds the rhodium, and ruthenium. unless otherwise provided for in this contract
amounts needed to complete full Property means all tangible property, both or approved by the Contracting Officer. The
performance under the entire contract; real and personal. Contractor shall not modify, cannibalize, or
(2) Any property that the Government is Property Administrator means an make alterations to Government property
obligated or has the option to take over under authorized representative of the Contracting unless this contract specifically identifies the
any type of contract, e.g., as a result either Officer appointed in accordance with agency modifications, alterations or improvements
of any changes in the specifications or plans procedures, responsible for administering the as work to be performed.
thereunder or of the termination of the contract requirements and obligations (d) Government-furnished property. (1) The
contract (or subcontract thereunder), before relating to Government property in the Government shall deliver to the Contractor
completion of the work, for the convenience possession of a Contractor. the Government-furnished property
or at the option of the Government; and Provide means to furnish, as in described in this contract. The Government
(3) Government-furnished property that Government-furnished property, or to shall furnish related data and information
exceeds the amounts needed to complete full acquire, as in contractor-acquired property. needed for the intended use of the property.
performance under the entire contract. Real property means land and rights in The warranties of suitability of use and
Contractor’s managerial personnel means land, ground improvements, utility timely delivery of Government-furnished
the Contractor’s directors, officers, managers, distribution systems, and buildings and other property do not apply to property acquired
superintendents, or equivalent structures. It does not include foundations or fabricated by the Contractor as contractor-
representatives who have supervision or and other work necessary for installing acquired property and subsequently
direction of— special tooling, special test equipment, or transferred to another contract with this
(1) All or substantially all of the plant equipment. Contractor.
Contractor’s business; Sensitive property means property (2) The delivery and/or performance dates
(2) All or substantially all of the potentially dangerous to the public safety or specified in this contract are based upon the
Contractor’s operation at any one plant or security if stolen, lost, or misplaced, or that expectation that the Government-furnished
separate location; or shall be subject to exceptional physical property will be suitable for contract
(3) A separate and complete major security, protection, control, and performance and will be delivered to the
industrial operation. accountability. Examples include weapons, Contractor by the dates stated in the contract.
(i) If the property is not delivered to the (A) Title to material purchased from a of all Government property accountable to
Contractor by the dates stated in the contract, vendor shall pass to and vest in the the contract, including Government-
the Contracting Officer shall, upon the Government upon the vendor’s delivery of furnished and Contractor-acquired property.
Contractor’s timely written request, consider such material; and (A) Property records shall enable a
an equitable adjustment to the contract. (B) Title to all other material shall pass to complete, current, auditable record of all
(ii) In the event property is received by the and vest in the Government upon— transactions and shall, unless otherwise
Contractor, or for Government-furnished (1) Issuance of the material for use in approved by the Property Administrator,
property after receipt and installation, in a contract performance; contain the following:
condition not suitable for its intended use, (2) Commencement of processing of the (1) The name, part number and
the Contracting Officer shall, upon the material or its use in contract performance; description, manufacturer, model number,
Contractor’s timely written request, advise or and National Stock Number (if needed for
the Contractor on a course of action to (3) Reimbursement of the cost of the additional item identification tracking and/or
remedy the problem. Such action may material by the Government, whichever disposition).
include repairing, replacing, modifying, occurs first. (2) Quantity received (or fabricated),
returning, or otherwise disposing of the (3) Title under Cost-Reimbursement or issued, and balance-on-hand.
property at the Government’s expense. Upon Time-and-Material Contracts or Cost- (3) Unit acquisition cost.
completion of the required action(s), the Reimbursable contract line items under (4) Unique-item identifier or equivalent (if
Contracting Officer shall consider an Fixed-Price contracts. (i) Title to all property available and necessary for individual item
equitable adjustment to the contract (see also purchased by the Contractor for which the tracking).
paragraph (f)(1)(ii)(A) of this clause). Contractor is entitled to be reimbursed as a (5) Unit of measure.
(iii) The Government may, at its option, direct item of cost under this contract shall (6) Accountable contract number or
furnish property in an ‘‘as-is’’ condition. The pass to and vest in the Government upon the equivalent code designation.
Contractor will be given the opportunity to vendor’s delivery of such property. (7) Location.
inspect such property prior to the property (ii) Title to all other property, the cost of (8) Disposition.
being provided. In such cases, the which is reimbursable to the Contractor, shall (9) Posting reference and date of
Government makes no warranty with respect pass to and vest in the Government upon— transaction.
to the serviceability and/or suitability of the (A) Issuance of the property for use in (10) Date placed in service.
property for contract performance. Any contract performance; (B) Use of a Receipt and Issue System for
repairs, replacement, and/or refurbishment (B) Commencement of processing of the Government Material. When approved by the
shall be at the Contractor’s expense. property for use in contract performance; or Property Administrator, the Contractor may
(3)(i) The Contracting Officer may by (C) Reimbursement of the cost of the maintain, in lieu of formal property records,
property by the Government, whichever
written notice, at any time— a file of appropriately cross-referenced
occurs first.
(A) Increase or decrease the amount of documents evidencing receipt, issue, and use
(iii) All Government-furnished property
Government-furnished property under this of material that is issued for immediate
and all property acquired by the Contractor,
contract; consumption.
title to which vests in the Government under
(B) Substitute other Government-furnished (iv) Physical inventory. The Contractor
this paragraph (e)(3)(i) (collectively referred
property for the property previously to as ‘‘Government property)’’, are subject to shall periodically perform, record, and
furnished, to be furnished, or to be acquired the provisions of this clause. disclose physical inventory results. A final
by the Contractor for the Government under (f) Contractor plans and systems. (1) physical inventory shall be performed upon
this contract; or Contractors shall establish and implement contract completion or termination. The
(C) Withdraw authority to use property. property management plans, systems, and Property Administrator may waive this final
(ii) Upon completion of any action(s) under procedures at the contract, program, site or inventory requirement, depending on the
aragraph (d)(3)(i) of this clause, and the entity level to enable the following outcomes: circumstances (e.g., overall reliability of the
Contractor’s timely written request, the (i) Acquisition of Property. The Contractor Contractor’s system or the property is to be
Contracting Officer shall consider an shall document that all property was transferred to a follow-on contract).
equitable adjustment to the contract. acquired consistent with its engineering, (v) Subcontractor control. (A) The
(e) Title to Government property. (1) The production planning, and material control Contractor shall award subcontracts that
Government shall retain title to all operations. clearly identify assets to be provided and
Government-furnished property. Title to (ii) Receipt of Government Property. The shall ensure appropriate flow down of
Government property shall not be affected by Contractor shall receive Government contract terms and conditions (e.g., extent of
its incorporation into or attachment to any property (document the receipt), record the liability for loss, damage, destruction or theft
property not owned by the Government, nor information necessary to meet the record of Government property).
shall Government property become a fixture requirements of paragraph (f)(1)(iii)(A)(1) (B) The Contractor shall assure its
or lose its identity as personal property by through (5) of this clause, identify as subcontracts are properly administered and
being attached to any real property. Government owned in a manner appropriate reviews are periodically performed to
(2) Fixed-price contracts. (i) All to the type of property (e.g., stamp, tag, mark, determine the adequacy of the
Government-furnished property and all or other identification), and manage any subcontractor’s property management
property acquired by the Contractor, title to discrepancies incident to shipment. system.
which vests in the Government under this (A) Government-furnished property. The (vi) Reports. The Contractor shall have a
paragraph (collectively referred to as Contractor shall furnish a written statement process to create and provide reports of
‘‘Government property)’’, are subject to the to the Property Administrator containing all discrepancies; loss, damage, destruction, or
provisions of this clause. relevant facts, such as cause or condition and theft; physical inventory results; audits and
(ii) Title to each item of equipment, special a recommended course(s) of action, if self-assessments; corrective actions; and
test equipment and special tooling acquired overages, shortages, or damages and/or other other property related reports as directed by
by the Contractor for the Government under discrepancies are discovered upon receipt of the Contracting Officer.
this contract shall pass to and vest in the Government-furnished property. (A) Loss, damage, destruction, or theft.
Government when its use in performing this (B) Contractor-acquired property. The Unless otherwise directed by the Property
contract commences or when the Contractor shall take all actions necessary to Administrator, the Contractor shall
Government has paid for it, whichever is adjust for overages, shortages, damage and/or investigate and promptly furnish a written
earlier, whether or not title previously vested other discrepancies discovered upon receipt, narrative of all incidents of loss, damage,
in the Government. destruction, or theft to the property
in shipment of Contractor-acquired property

(iii) If this contract contains a provision from a vendor or supplier, so as to ensure the administrator as soon as the facts become
directing the Contractor to purchase material proper allocability and allowability of known or when requested by the
for which the Government will reimburse the associated costs. Government.
Contractor as a direct item of cost under this (iii) Records of Government property. The (B) Such reports shall, at a minimum,
contract— Contractor shall create and maintain records contain the following information:
(1) Date of incident (if known). property upon termination or completion of for loss, damage, destruction, or theft, due to
(2) The name, commercial description, this contract; and disposing of items at the a determination under paragraph (g) of this
manufacturer, model number, and National time they are determined to be excess to clause that the Contractor’s property
Stock Number (if applicable). contractual needs. management practices are inadequate, and/or
(3) Quantity. (2) The Contractor shall establish and present an undue risk to the Government,
(4) Unique Item Identifier (if available). maintain Government accounting source and the Contractor failed to take timely
(5) Accountable Contract number. data, as may be required by this contract, corrective action. If the Contractor can
(6) A statement indicating current or future particularly in the areas of recognition of establish by clear and convincing evidence
need. acquisitions and dispositions of material and that the loss, damage, destruction, or theft of
(7) Acquisition cost, or if applicable, equipment. Government property occurred while the
estimated scrap proceeds, estimated repair or (3) The Contractor shall establish and Contractor had adequate property
replacement costs. maintain procedures necessary to assess its management practices or the loss, damage,
(8) All known interests in commingled property management system effectiveness, destruction, or theft of Government property
property of which the Government property and shall perform periodic internal reviews did not result from the Contractor’s failure to
is a part. and audits. Significant findings and/or maintain adequate property management
(9) Cause and corrective action taken or to results of such reviews and audits pertaining practices, the Contractor shall not be held
be taken to prevent recurrence. to Government property shall be made liable.
(10) A statement that the Government will available to the Property Administrator. (2) The Contractor shall take all reasonable
receive any reimbursement covering the loss, (g) Systems analysis. (1) The Government actions necessary to protect the Government
damage, destruction, or theft, in the event the shall have access to the contractor’s premises property from further loss, damage,
Contractor was or will be reimbursed or and all Government property, at reasonable destruction, or theft. The Contractor shall
compensated. times, for the purposes of reviewing, separate the damaged and undamaged
(11) Copies of all supporting inspecting and evaluating the Contractor’s Government property, place all the affected
documentation. property management plan, systems, Government property in the best possible
(12) Last known location. procedures, records, and supporting order, and take such other action as the
(13) A statement that the property did or documentation that pertains to Government Property Administrator directs.
did not contain sensitive or hazardous property. (3) The Contractor shall do nothing to
material, and if so, that the appropriate (2) Records of Government property shall prejudice the Government’s rights to recover
agencies were notified. be readily available to authorized against third parties for any loss, damage,
(vii) Relief of stewardship responsibility. Government personnel and shall be destruction, or theft of Government property.
Unless the contract provides otherwise, the safeguarded from tampering or destruction. (4) Upon the request of the Contracting
(3) Should it be determined by the
Contractor shall be relieved of stewardship Officer, the Contractor shall, at the
Government that the Contractor’s property
responsibility for Government property when Government’s expense, furnish to the
management practices are inadequate or not
such property is— Government all reasonable assistance and
acceptable for the effective management and/
(A) Consumed or expended, reasonably cooperation, including the prosecution of
or control of Government property under this
and properly, or otherwise accounted for, in suit and the execution of instruments of
contract, and/or present an undue risk to the
the performance of the contract, including Government, the Contractor shall assignment in favor of the Government in
reasonable inventory adjustments of material immediately take all necessary corrective obtaining recovery.
as determined by the Property Administrator; actions as directed by the Property (i) Equitable adjustment. Equitable
or a Property Administrator granted relief of Administrator. adjustments under this clause shall be made
responsibility for loss, damage, destruction or (4) The Contractor shall ensure in accordance with the procedures of the
theft of Government property; Government access to subcontractor Changes clause. The right to an equitable
(B) Delivered or shipped from the premises, and all Government property adjustment shall be the Contractor’s
Contractor’s plant, under Government located at subcontractor premises, for the exclusive remedy and the Government shall
instructions, except when shipment is to a purposes of reviewing, inspecting and not be liable to suit for breach of contract for
subcontractor or other location of the evaluating the subcontractor’s property the following:
Contractor; or management plan, systems, procedures, (1) Any delay in delivery of Government-
(C) Disposed of in accordance with records, and supporting documentation that furnished property.
paragraphs (j) and (k) of this clause. pertains to Government property. (2) Delivery of Government-furnished
(viii) Utilizing Government property. (A) (h) Contractor Liability for Government property in a condition not suitable for its
The Contractor shall utilize, consume, move, Property. (1) Unless otherwise provided for intended use.
and store Government Property only as in the contract, the Contractor shall not be (3) An increase, decrease, or substitution of
authorized under this contract. The liable for loss, damage, destruction, or theft Government-furnished property.
Contractor shall promptly disclose and report to the Government property furnished or (4) Failure to repair or replace Government
Government property in its possession that is acquired under this contract, except when property for which the Government is
excess to contract performance. any one of the following applies— responsible.
(B) Unless otherwise authorized in this (i) The risk is covered by insurance or the (j) Contractor inventory disposal. Except as
contract or by the Property Administrator the Contractor is otherwise reimbursed (to the otherwise provided for in this contract, the
Contractor shall not commingle Government extent of such insurance or reimbursement). Contractor shall not dispose of Contractor
property with property not owned by the The allowability of insurance costs shall be inventory until authorized to do so by the
Government. determined in accordance with 31.205–19. Plant Clearance Officer.
(ix) Maintenance. The Contractor shall (ii) The loss, damage, destruction, or theft (1) Scrap to which the Government has
properly maintain Government property. The is the result of willful misconduct or lack of obtained title under paragraph (e) of this
Contractor’s maintenance program shall good faith on the part of the Contractor’s clause. (i) Contractor with an approved scrap
enable the identification, disclosure, and managerial personnel. Contractor’s procedure. (A) The Contractor may dispose of
performance of normal and routine managerial personnel, in this clause, means scrap resulting from production or testing
preventative maintenance and repair. The the Contractor’s directors, officers, managers, under this contract without Government
Contractor shall disclose and report to the superintendents, or equivalent approval. However, if the scrap requires
Property Administrator the need for representatives who have supervision or demilitarization or is sensitive property, the
replacement and/or capital rehabilitation. direction of all or substantially all of the Contractor shall submit the scrap on an
(x) Property closeout. The Contractor shall inventory disposal schedule.
Contractor’s business; all or substantially all

promptly perform and report to the Property of the Contractor’s operation at any one plant (B) For scrap from other than production
Administrator contract property closeout, to or separate location; or a separate and or testing the Contractor may prepare scrap
include reporting, investigating and securing complete major industrial operation. lists in lieu of inventory disposal schedules
closure of all loss, damage, destruction, or (iii) The Contracting Officer has, in writing, (provided such lists are consistent with the
theft cases; physically inventorying all revoked the Government’s assumption of risk approved scrap procedures), except that
inventory disposal schedules shall be (G) Nuclear materials or nuclear wastes. property as U.S. Government-owned property
submitted for scrap aircraft or aircraft parts (iv) The Contractor shall describe the prior to its disposal.
and scrap that— property in sufficient detail to permit an (iii) The Contracting Officer may require
(1) Requires demilitarization; understanding of its intended use. Property the Contractor to demilitarize the property
(2) Is a classified item; with the same description, condition code, prior to shipment or disposal. In such cases,
(3) Is generated from classified items; and reporting location may be grouped in a the Contractor may be entitled to an equitable
(4) Contains hazardous materials or single line item. adjustment under paragraph (i) of this clause.
hazardous wastes; (4) Submission requirements. The (9) Disposal proceeds. As directed by the
(5) Contains precious metals; or Contractor shall submit inventory disposal Contracting Officer, the Contractor shall
(6) Is dangerous to the public health, schedules to the Plant Clearance Officer no credit the net proceeds from the disposal of
safety, or welfare. later than— Contractor inventory to the contract, or to the
(ii) Contractor without an approved scrap (i) 30-days following the Contractor’s Treasury of the United States as
procedure. The Contractor shall submit an determination that a Government property miscellaneous receipts.
inventory disposal schedule for all scrap. The item is no longer required for performance of (10) Subcontractor inventory disposal
Contractor may not dispose of scrap resulting this contract; schedules. The Contractor shall require its
from production or testing under this (ii) 60 days, or such longer period as may Subcontractors to submit inventory disposal
contract without Government approval. be approved by the Plant Clearance Officer, schedules to the Contractor in accordance
(2) Predisposal requirements. (i) Once the following completion of contract deliveries with the requirements of paragraph (j)(4) of
Contractor determines that Contractor- or performance; or this clause.
acquired property is no longer needed for (iii) 120 days, or such longer period as may (k) Abandonment of Government property.
contract performance, the Contractor in the be approved by the Termination Contracting (1) The Government shall not abandon
following order of priority— Officer following contract termination in sensitive Government property or
(A) May contact the Contracting Officer if whole or in part. termination inventory without the
use of the property in the performance of (5) Corrections. The Plant Clearance Officer Contractor’s written consent.
other Government contracts is practical; may— (2) The Government, upon notice to the
(B) May purchase the property at the (i) Reject a schedule for cause (e.g.,
acquisition cost; or Contractor, may abandon any nonsensitive
contains errors, determined to be inaccurate); Government property in place, at which time
(C) Shall make reasonable efforts to return and
unused property to the appropriate supplier all obligations of the Government regarding
(ii) Require the Contractor to correct an such property shall cease.
at fair market value (less, if applicable, a inventory disposal schedule.
reasonable restocking fee that is consistent (3) The Government has no obligation to
(6) Postsubmission adjustments. The restore or rehabilitate the Contractor’s
with the supplier’s customary practices).
Contractor shall notify the Plant Clearance premises under any circumstances; however,
(ii) The Contractor shall list, on Standard
Officer at least 10 working days in advance if Government—furnished property is
Form 1428, Inventory Disposal Schedule,
of its intent to remove an item from an withdrawn or is unsuitable for the intended
property that was not used in the
approved inventory disposal schedule. Upon use, or if other Government property is
performance of other Government contracts
approval of the Plant Clearance Officer, or substituted, then the equitable adjustment
under paragraph (j)(2)(i)(A) of this clause,
property that was not purchased under upon expiration of the notice period, the under paragraph (i) of this clause may
paragraph (j)(2)(i)(B) of this clause, and Contractor may make the necessary properly include restoration or rehabilitation
property that could not be returned to a adjustments to the inventory schedule. costs.
supplier under paragraph (j)(2)(i)(C) of this (7) Storage. (i) The Contractor shall store (l) Communication. All communications
clause. the property identified on an inventory under this clause shall be in writing.
(3) Inventory disposal schedules. (i) The disposal schedule pending receipt of disposal (m) Contracts outside the United States. If
Contractor shall use Standard Form 1428, instructions. The Government’s failure to this contract is to be performed outside of the
Inventory Disposal Schedule, to identify— furnish disposal instructions within 120 days United States and its outlying areas, the
(A) Government-furnished property that is following acceptance of an inventory words ‘‘Government’’ and ‘‘Government-
no longer required for performance of this disposal schedule may entitle the Contractor furnished’’ (wherever they appear in this
contract, provided the terms of another to an equitable adjustment for costs incurred clause) shall be construed as ‘‘United States
Government contract do not require the to store such property on or after the 121st Government’’ and ‘‘United States
Government to furnish that property for day. Government-furnished,’’ respectively.
performance of this contract; (ii) The Contractor shall obtain the Plant (End of Clause)
(B) Contractor-acquired property, to which Clearance Officer’s approval to remove Alternate I ‘‘(JUNE 2007)’’. As
the Government has obtained title under Government property from the premises prescribed in 45.107(a)(2), substitute the
paragraph (e) of this clause, which is no where the property is currently located prior
to receipt of final disposition instructions. If
following for paragraph (h)(1) of the
longer required for performance of that basic clause:
contract; and approval is granted, any costs incurred by the
Contractor to transport or store the property (h)(1) The Contractor assumes the risk of,
(C) Termination inventory. and shall be responsible for, any loss,
(ii) The Contractor may annotate inventory shall not increase the price or fee of any
Government contract. The storage facility damage, destruction, or theft of Government
disposal schedules to identify property the property upon its delivery to the Contractor
Contractor wishes to purchase from the shall be appropriate for assuring the
property’s physical safety and suitability for as Government-furnished property. However,
Government.
use. Approval does not relieve the Contractor the Contractor is not responsible for
(iii) Unless the Plant Clearance Officer has
of any liability for such property under this reasonable wear and tear to Government
agreed otherwise, or the contract requires
contract. property or for Government property
electronic submission of inventory disposal
(8) Disposition instructions. (i) If the properly consumed in performing this
schedules, the Contractor shall prepare
Government does not furnish disposition contract.
separate inventory disposal schedules for—
(A) Special test equipment with instructions to the Contractor within 45 days Alternate II ‘‘(JUNE 2007)’’. As
commercial components; following acceptance of a scrap list, the prescribed in 45.107(a)(3), substitute the
(B) Special test equipment without Contractor may dispose of the listed scrap in following for paragraph (e)(3) of the
commercial components; accordance with the Contractor’s approved basic clause:
(C) Printing equipment; scrap procedures. (e)(3) Title to property (and other tangible
(ii) The Contractor shall prepare for personal property) purchased with funds
(D) Information technology (e.g.,

computers, computer components, peripheral shipment, deliver f.o.b. origin, or dispose of available for research and having an
equipment, and related equipment); Contractor inventory as directed by the Plant acquisition cost of less than $5,000 shall vest
(E) Precious metals; Clearance Officer. If not returned to the in the Contractor upon acquisition or as soon
(F) Nonnuclear hazardous materials or Government, the Contractor shall remove and thereafter as feasible; provided that the
hazardous wastes; or destroy any markings identifying the Contractor obtained the Contracting Officer’s
approval before each acquisition. Title to contract shall be governed by the 52.246–10 [Removed and Reserved]
property purchased with funds available for Government Property clause of this contract.
■ 79. Remove and reserve section
research and having an acquisition cost of (e) Government property provided under
$5,000 or more shall vest as set forth in this this clause: 52.246–10.
contract. If title to property vests in the lllllllllllll 52.249–11 [Removed and Reserved]
Contractor under this paragraph, the lllllllllllll
Contractor agrees that no costs shall be lllllllllllll ■ 80. Remove and reserve section
allowed for any depreciation, amortization, (End of clause) 52.249–11.
or use under any existing or future
Government contract or subcontract 52.245–3 through 52.245–8 [Removed and 52.249–12 [Amended]
thereunder. The Contractor shall furnish the Reserved] ■ 81. Amend section 52.249–12 by
Contracting Officer a list of all property to ■ 76. Remove and reserve sections removing from the introductory text
which title is vested in the Contractor under
this paragraph within 10 days following the 52.245–3 through 52.245–8. ‘‘49.505(b)’’ and adding ‘‘49.505(a)’’ in
end of the calendar quarter during which it ■ 77. Amend section 52.245–9 by— its place.
was received. Vesting title under this ■ a. Removing from the introductory
paragraph is subject to civil rights legislation, text ‘‘45.106(h)’’ and adding ‘‘45.107(c)’’ 52.249–13 [Removed and Reserved]
42 U.S.C. 2000d. Before title is vested and by in its place; ■ 82. Remove and reserve section
signing this contract, the Contractor accepts ■ b. Revising the date of clause; 52.249–13.
and agrees that— ■ c. Revising the definitions ■ 83. Revise the introductory text of
‘‘No person in the United States or its
outlying areas shall, on the ground of race,
‘‘Acquisition cost’’ and ‘‘Government section 52.249–14 to read as follows:
color, or national origin, be excluded from property’’;
■ 52.249–14 Excusable Delays.
participation in, be denied the benefits of, or
be otherwise subjected to discrimination d. Adding the definition ‘‘Plant
■ As prescribed in 49.505(b), insert the
equipment’’; and
under this contemplated financial assistance following clause in solicitations and
(title to property).’’ ■ e. Amending the definition ‘‘Real contracts for supplies, services,
property’’ by removing ‘‘or equipment’’ construction, and research and
52.245–2 Government Property Installation
Operation Services. and adding ‘‘or plant equipment’’ in its development on a fee basis whenever a
place. cost-reimbursement contract is
As prescribed in 45.107(b), insert the
■ The revised and added text reads as contemplated. Also insert the clause in
following clause:
GOVERNMENT PROPERTY follows: time-and-material contracts, and labor-
INSTALLATION OPERATION SERVICES hour contracts. When used in
52.245–9 Use and Charges. construction contracts, substitute the
(JUNE 2007)
(a) This Government Property listed in * * * * * words ‘‘completion time’’ for ‘‘delivery
paragraph (e) of this clause is furnished to USE AND CHARGES (JUNE 2007) schedule’’ in the last sentence of the
the Contractor in an ‘‘as-is, where is’’ (a) * * * clause.
condition. The Government makes no Acquisition cost means the cost to acquire
warranty regarding the suitability for use of a tangible capital asset including the * * * * *
the Government property specified in this purchase price of the asset and costs
52.251–1 [Amended]
contract. The Contractor shall be afforded the necessary to prepare the asset for use. Costs
opportunity to inspect the Government necessary to prepare the asset for use include ■ 84. Amend section 52.251–1 by
property as specified in the solicitation. the cost of placing the asset in location and removing Alternate I.
(b) The Government bears no responsibility bringing the asset to a condition necessary for
for repair or replacement of any lost, normal or expected use. PART 53—FORMS
damaged or destroyed Government property. Government property means all property
If any or all of the Government property is owned or leased by the Government. 53.245 [Amended]
lost, damaged or destroyed or becomes no Government property includes both ■ 85. Amend section 53.245 by
longer usable, the Contractor shall be Government-furnished and Contractor-
responsible for replacement of the property at removing from paragraph (e) ‘‘SF 1428
acquired property.
Contractor expense. The Contractor shall Plant equipment, as used in this part,
(Rev. 5/04)’’ and adding ‘‘SF 1428 (Rev.
have title to all replacement property and means personal property of a capital nature 6/2007)’’ in its place and removing
shall continue to be responsible for contract (including equipment, machine tools, test ‘‘52.245-2(i), 52.245-5(i)’’ and adding
performance. equipment, furniture, vehicles, and accessory ‘‘52.245-1,’’ in its place.
(c) Unless the Contracting Officer and auxiliary items) for use in manufacturing
determines otherwise, the Government supplies, in performing services, or for any 53.249 [Amended]
abandons all rights and title to unserviceable administrative or general plant purpose. It ■ 86. Amend section 53.249 by
and scrap property resulting from contract does not include special tooling or special
performance. Upon notification to the
removing from paragraph (b) ‘‘SF 1428
test equipment. (Rev. 5/04)’’ and adding ‘‘SF 1428 (Rev.
Contracting Officer, the Contractor shall
remove such property from the Government * * * * * 6/2007)’’ in its place.
premises and dispose of it at Contractor ■ 87. Amend section 53.301-1428 by
52.245–10 through 52.245–19 [Removed]
expense. revising the form to read as follows:
(d) Except as provided in this clause, ■ 78. Remove sections 52.245–10
Government property furnished under this through 52.245–19. 53.301-1428 Inventory Disposal Schedule.
ER15MY07.000</GPH>
ER15MY07.001</GPH>
[FR Doc. 07–2256 Filed 5–14–07; 8:45 am] and National Aeronautics and Space parties may obtain further information
BILLING CODE 6820–EP–S Administration (NASA). regarding this rule by referring to FAC
ACTION: Small Entity Compliance Guide. 2005–17, which precedes this
document. These documents are also
DEPARTMENT OF DEFENSE SUMMARY: This document is issued available via the Internet at http://
under the joint authority of the www.regulations.gov/.
GENERAL SERVICES
ADMINISTRATION Secretary of Defense, the Administrator FOR FURTHER INFORMATION CONTACT:
of General Services and the Laurieann Duarte, FAR Secretariat, (202)
NATIONAL AERONAUTICS AND Administrator of the National
501–4225. For clarification of content,
SPACE ADMINISTRATION Aeronautics and Space Administration.
contact the analyst whose name appears
This Small Entity Compliance Guide
has been prepared in accordance with in the table below.
48 CFR Chapter 1
Section 212 of the Small Business
[Docket FAR–2007–0002, Sequence 2] Regulatory Enforcement Fairness Act of
1996. It consists of a summary of the
Federal Acquisition Regulation;
rule appearing in Federal Acquisition
Federal Acquisition Circular 2005–17;
Circular (FAC) 2005–17, which amends
Small Entity Compliance Guide
the FAR. An asterisk (*) next to a rule
AGENCIES: Department of Defense (DoD), indicates that a regulatory flexibility
General Services Administration (GSA), analysis has been prepared. Interested
LIST OF RULE IN FAC 2005–17

Item Subject FAR case Analyst
*I ........... Government Property ....................................................................................................................... 2004–025 Parnell.
Item I—Government Property (FAR in the possession of contractors by and associated clauses for special
Case 2004–025) moving, clarifying, and deleting tooling, special test equipment and
This final rule amends Federal definitions; establishing a life-cycle facilities contracts is deleted. It is not
Acquisition Regulation (FAR) Part 45, approach to property management; and, the Government’s intention to change
Government Property, and associated sanctioning the use of consensus the intent or meaning of the language
FAR language and clauses to implement standards and/or industry-leading pertaining to ‘‘title to Government
a policy that fosters efficiency, standards and practices for property property.’’
flexibility, innovation and creativity management. This rule deletes outdated
clauses, combines selected FAR Dated: May 2, 2007.
while continuing to protect the Al Matera,
Government’s interest. This rule property clauses into a single clause,
simplifies procedures, clarifies and implements a new clause designed Acting Director, Contract Policy Division.
language, and eliminates obsolete for military base and installation-level [FR Doc. 07–2255 Filed 5–14–07; 8:45 am]
requirements related to the management contracts awarded under the OMB BILLING CODE 6820–EP–S
and disposition of Government property Circular A–76 process. FAR language

Rule: Federal Acquisition Regulation (FAR) : Government Property

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Rule: Federal Acquisition Regulation (FAR) : Government Property

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27364 Federal Register / Vol. 72, No.

93 / Tuesday, May 15, 2007 / Rules and Regulations

LIST OF RULE IN FAC 2005–17

I ............ Government Property ....................................................................................................................... 2004–025 Parnell.

SUPPLEMENTARY INFORMATION: Summary Dated: May 2, 2007. DEPARTMENT OF DEFENSE

facilities contracts is deleted. It is not while fostering efficiency, flexibility,

‘‘Property in the Possession of equipment’’ may inappropriately of ‘‘Stewardship.’’

scrap list. Government may do so in accordance be retained.

(b) * * * ■ e. Removing from paragraph (f)(1) PART 31—CONTRACT COST

‘‘facilities contract or a’’; 28.303 [Amended] * * * * *

‘‘52.232–21, Limitation of Cost (30) When contractors request ■

44.202–1 [Amended] Subpart 45.4—Title to Government Property

(a) Government property shall programs. another contract administration office,

49.108–3 Settlement procedure. (d)’’ in its place;

in shipment of Contractor-acquired property

Contractor’s business; all or substantially all

(D) Information technology (e.g.,

LIST OF RULE IN FAC 2005–17

*I ........... Government Property ....................................................................................................................... 2004–025 Parnell.

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