[Federal Register Volume 62, Number 201 (Friday, October 17, 1997)]
[Proposed Rules]
[Pages 54008-54017]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-27438]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
48 CFR Parts 216, 245, and 252
[DFARS Case 97-D027]
Defense Federal Acquisition Regulation Supplement; Title to
Government Property
AGENCY: Department of Defense (DoD).
ACTION: Proposed rule with request for comments.
-----------------------------------------------------------------------
SUMMARY: The Under Secretary of Defense, Acquisition and Technology,
has requested the Director, Defense Procurement, to obtain public
comment on Government property management policy changes intended to
reduce the amount of Government-owned tooling and equipment in the
possession of DoD contractors. This proposed rule solicits those
comments and is structured as a deviation from the Federal Acquisition
Regulation (FAR) Part 45 proposed rule on Government property (FAR Case
95-013) that was published in the Federal Register on June 2, 1997 (62
FR 30186). This proposed DFARS rule will be amended at a later date to
incorporate changes resulting from public comments on the FAR Part 45
proposed rule.
DATES: Comments on the proposed rule should be submitted in writing to
the address shown below on or before December 16, 1997 to be considered
in the formulation of the final rule.
ADDRESSES: Interested parties should submit written comments to:
Director, Defense Procurement, Deputy Director, Major Policy
Initiatives, Attention: Ms. Angelena Moy, Room 3C128, 3060 Defense
Pentagon, Washington, DC 20301-3060. Please cite DFARS Case 97-D027 in
all correspondence related to this proposed rule. Address E-mail
(Internet) comments to Moyac@acq.osd.mil.
FOR FURTHER INFORMATION CONTACT:
Ms. Angelena Moy by phone at (703) 695-1097/8, by fax at (703) 695-
7569, or at the E-mail address provided above. Please cite DFARS Case
97-D027.
SUPPLEMENTARY INFORMATION:
A. Background
The value of Government-owned equipment and tooling in the
possession of DoD contractors increased substantially during the past
decade although long-standing acquisition policy generally requires
contractors to furnish the property needed to perform Government
contracts. An Integrated Process Team, led by the Office of the Under
Secretary of Defense, Industrial Affairs and Installations, has made
recommendations intended to reverse this trend and reduce the amount of
Government property in the possession of DoD contractors. These
recommendations are:
1. Under cost-reimbursement contracts, DoD should cease taking
title automatically to contractor acquired or fabricated equipment and
tooling. DoD should have the right to take title to all special tooling
and special test equipment for which costs are allocated to DoD
contracts as direct costs, and items of equipment having an acquisition
cost in excess of the DoD internal property accountability threshold
(currently $2,500), the costs of which are allocated as direct costs to
DoD contracts. This recommendation will reduce contract performance
costs by removing low value equipment items from the property control,
management, and disposal requirements in FAR Part 45. To implement this
recommendation, language creating a deviation to the proposed FAR Part
45 rule appears in this proposed DFARS rule at 252.216-7002(c) and
252.245-7002(b)(2).
2. When a contractor that acquired or fabricated equipment, special
tooling, or special test equipment to which DoD has taken title needs
that equipment, special tooling, or special test equipment to perform
follow-on contracts for the same items, DoD should furnish the
equipment, special tooling, or special test equipment items to the
contractor on an ``as is'' basis. To implement this recommendation,
language creating a deviation to the proposed FAR Part 45 rule appears
in this proposed DFARS rule at 252.245-7001(d)(2).
3. Property no longer needed for performance of a particular
contract should be disposed of immediately if not needed for future
procurements and placed under funded storage contracts if the future
need is not within 60 days following the date the contractor identifies
the property as no longer needed. This recommendation is intended to
expedite property disposal and assure that contractors are paid for
storing Government property. To implement this recommendation, language
creating a deviation to the proposed FAR Part 45 rule appears in this
proposed DFARS rule at 245.101-71.
B. Regulatory Flexibility Act
This proposed rule is not expected to have a significant economic
impact on a substantial number of small entities within the meaning of
the Regulatory Flexibility Act 5 U.S.C. 601, et seq., because the rule
further reduces the economic impact on small entities from the
estimated impact contained in the proposed rule under FAR Case 95-013,
FAR Part 45, Government Property Rewrite, by reducing the
administrative burden on contractors through reduction of the amount of
Government property in the possession of contractors. The impact is not
considered significant because the rule applies only to those small
entities that request Government property to perform a contract or
create Government property during contract performance, and contract
prices compensate such contractors for their Government property
management activities. An initial regulatory flexibility analysis has,
therefore, has not been performed. Comments are invited from small
businesses and other interested parties. Comments from small entities
concerning the affected DFARS subparts also will be considered in
accordance with 5 U.S.C. 610. Such comments should be submitted
separately and should cite DFARS Case 97-D027 in correspondence.
C. Paperwork Reduction Act
This proposed rule reduces the amount of property that will become
Government property under cost-reimbursement contracts. Therefore, the
paperwork burden approved under Office of Management and Budget
Clearance No. 9000-0151 for the proposed FAR rule published at 62 FR
30186 on June 2, 1997, is expected to be reduced.
List of Subjects in 48 CFR Parts 216, 245, and 252
Government procurement.
Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.
There, 48 CFR Parts 216, 245, and 252 are proposed to be amended as
follows:
1. The authority citation for 48 CFR Parts 216, 245, and 252
continues to read as follows:
Auhority: 41 U.S.C. 421 and 48 CFR Chapter 1.
[[Page 54009]]
PART 216--TYPES OF CONTRACTS
2. Section 216.307 is added to read as follows:
216.307 Contract clauses.
(a)(1) Use the clause at 252.216-7002, allowable Cost and Payment,
instead of the clause at FAR 52.216--7, Allowable Cost and Payment, in
all cost-reimbursement contracts.
(2) Use the clause at 252.216-7002 with its Alternate I if the
contract is a construction contract that contains the clause at FAR
52.232-27, Prompt Payment for Construction Contracts.
PART 245--GOVERNMENT PROPERTY
3. Section 245.101, 245.101-70, and 245.101-71 are added to read as
follows:
245.101 Policy.
(d) Contractors are expected to have the means to perform DoD
contracts. Furnish property to contractors only under the circumstances
described in FAR 45.201 and only for performance of a specific contract
or contracts.
245.101-70 Equipment, special tooling, and special test equipment.
Items of equipment, special tooling, or special test equipment that
otherwise may be furnished to contractors under FAR 45.201 shall be
furnished on an ``as is'' basis to the contractor that acquired or
fabricated the items when that contractor needs the items for
performance of follow-on contracts and the Government took title to the
items under 252.245-7002, Right to Title--Equipment, Special Tooling,
and Special Test Equipment.
245.101-71 Disposal and storage.
Immediately dispose of Government furnished property that a
contractor has identified as no longer needed for contract performance
except when there is a contractual requirement to furnish that property
as Government furnished property under a follow-on contract. Contract
for the property's storage when the property owner has a known future
need for the property, a follow-on contract(s) has not been awarded,
and the property will not be used within 60 days of the date upon which
the contractor identified the property as no longer needed for contract
performance.
4. Section 245.102 is added to read as follows:
245.102 Contract clauses.
(a)(1) Use the clause at 252.245-7001, Government Furnished
Property, instead of the clause at FAR 52.245-1, Government Furnished
Property (Fixed-Price and Labor-Hour Contracts), in all solicitations
and contracts for supplies, services, or research and development if
the Government anticipates furnishing property for performance of the
contract.
(2) Use the clause at 252.245-7001 with its Alternate I in fixed-
price competitive contracts or competitive labor-hour contracts.
(b)(i) Use the clause at 252.245-7002, Right to Title--Equipment,
special Tooling, and Special Test Equipment, instead of the clause at
FAR 52.245-2, Special Tooling and Special Test Equipment--Right to
Title (Fixed-Price Contracts), in all solications and contracts.
(ii) Use the clause at 252.245-7002 with its Alternate I in cost-
reimbursement or time-and-materials solicitations and contracts for
basic or a applied research to be conducted by nonprofit organizations
whose primary purpose is the conduct of scientific research on
nonprofit in stitutions of higher education (see FAR 35.014).
(c)(i) Use the clause at 252.245-7003, Government Property Control,
instead of the clause at FAR 52.245-3, Government Property Control, in
all solicitations and contracts that include the clause at 252.245-
7001.
(ii) Use the clause at 252.245-7003 with its Alternate I when the
Government will maintain the Government's official property records
(see FAR 45.302(b)).
(d) Use the clause at 252.245-7001, Government Furnished Property,
instead of the clause at FAR 52.245-4, Government Property (Cost-
Reimbursement and Time-and-Material Contracts), in all solicitations
and contracts for supplies, services, or research and development if
the Government anticipates furnishing property for performance of the
contract.
245.505-14 [Removed]
5. Section 245.505-14 is removed.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
6. Section 252.216-7002 is added to read as follows:
252.216-7002 Allowable Cost and Payment.
As prescribed in 216.307(a)(1), used the following clause:
Allowable Cost and Payment (XXX 19XX)
(a) Invoicing. The Government shall make payments to the
Contractor when requested as work progresses, but (except for small
business concerns) not more often than once every 2 weeks, in
amounts determined to be allowable by the Contracting Officer in
accordance with Subpart 31.2 of the Federal Acquisition Regulation
(FAR) in effect on the date of this contract and the terms of this
contract. The Contractor may submit to an authorized representative
of the Contracting Officer, in such form and reasonable detail as
the representative may require, an invoice or voucher supported by a
statement of the claimed allowable cost for performing this
contract.
(b) Reimbursing costs.
(1) For the purpose of reimbursing allowable costs (except as
provided in paragraph (b)(2) of this clause, with respect to
pension, deferred profit sharing, and employee stock ownership plan
contributions), the term ``costs'' includes only--
(i) Those recorded costs that, at the time of the request for
reimbursement, the Contractor has paid by cash, check, or other form
of actual payment for items or services purchased directly for the
contract;
(ii) When the Contractor is not delinquent in paying costs of
contract performance in the ordinary course of business, costs
incurred, but not necessarily paid, for--
(A) Materials issued from the Contractor's inventory and placed
in the production process for use on the contract;
(B) Direct labor;
(C) Direct travel;
(D) Other direct in-house costs; and
(E) Properly allocable and allowable indirect costs, as shown in
the records maintained by the Contractor for purposes of obtaining
reimbursement under Government contracts; and
(iii) The amount of progress and other payments that have been
paid by cash, check, or other form of payment to the Contractor's
subcontractors under similar cost standards.
(2) Contractor contributions to any pension or other post-
retirement benefit, profit-sharing, or employee stock ownership plan
funds that are paid quarterly or more often may be included in
indirect costs for payment purposes; provided, that the Contractor
pays the contribution to the fund within 30 days after the close of
the period covered. Payments made 30 days or more after the close of
a period shall not be included until the Contractor actually makes
the payment. Accrued costs for such contributions that are paid less
often than quarterly shall be excluded from indirect costs for
payment purposes until the Contractor actually makes the payment.
(3) Notwithstanding the audit and adjustment of invoices or
vouchers under paragraph (h) of this clause, allowable indirect
costs under this contract shall be obtained by applying indirect
cost rates established in accordance with paragraph (e) of this
clause.
(4) Any statements in specifications or other documents
incorporated in this contract by reference designating performance
of services or furnishing of materials at the Contractor's expense
or at no cost to the Government shall be disregarded for purposes of
cost reimbursement under this clause.
(c) Title.
(1) Title to property acquired or fabricated by the Contractor
for performance of this
[[Page 54010]]
contract, the costs of which are allocable to this contract as
direct costs, shall vest in the Government. For property acquired or
produced prior to execution of this contract, vestiture occurs upon
execution of the contract. Otherwise, vestiture occurs when the
property is or should have been allocable or properly chargeable to
this contract under sound and generally accepted accounting
principles and practices. Except as provided in the Right to Title--
Equipment, Special Tooling, and Special Test Equipment clause of the
contract, upon completion of deliveries under a contract for
supplies or upon completion of effort required under a contract for
services, the Contractor shall have title to all property acquired
or fabricated for this contract that is not required to be delivered
to the Government.
(2) Property to which the Government has obtained title under
this clause is not ``Government furnished property.''
(d) Small business concerns. A small business concern may be
paid more often than every 2 weeks and may invoice and be paid for
recorded costs for items or services purchased directly for the
contract, even though the concern has not yet paid for those items
or services.
(e) Final indirect cost rates.
(1) Final annual indirect cost rates and the appropriate bases
shall be established in accordance with Subpart 42.7 of the FAR in
effect for the period covered by the indirect cost rate proposal.
(2) The Contractor shall, within 90 days after the expiration of
each of its fiscal years, or by a later date approved by the
Contracting Officer, submit to the cognizant Contracting Officer
responsible for negotiating its final indirect cost rates and, if
required by agency procedures, to the cognizant audit activity,
proposed final indirect cost rates for that period and supporting
cost data specifying the contract and/or subcontract to which the
rates apply. The proposed rates shall be based on the Contractor's
actual cost experience for that period. The appropriate Government
representative and the Contractor shall establish the final indirect
cost rates as promptly as practical after receipt of the
Contractor's proposal.
(3) The Contractor and the appropriate Government representative
shall execute a written understanding setting forth the final
indirect cost rates. The understanding shall specify (i) the agreed-
upon final annual indirect cost rates, (ii) the bases to which the
rates apply, (iii) the periods for which the rates apply, (iv) any
specific indirect cost items treated as direct costs in the
settlement, and (v) the affected contract and/or subcontract,
identifying any with advance agreements or special terms and the
applicable rates. The understanding shall not change any monetary
ceiling, contract obligation, or specific cost allowance or
disallowance provided for in this contract. The understanding is
incorporated into this contract upon execution.
(4) Within 120 days after settlement of the final indirect cost
rates covering the year in which this contract is physically
complete (or longer, if approved in writing by the Contracting
Officer), the Contractor shall submit a completion invoice or
voucher to reflect the settled amounts and rates.
(5) Failure by the parties to agree on a final annual indirect
cost rate shall be a dispute within the meaning of the Disputes
clause of this contract.
(f) Billing rates. Until final annual indirect cost rates are
established for any period, the Government shall reimburse the
Contractor at billing rates established by the Contracting Officer
or by an authorized representative (the cognizant auditor), subject
to adjustment when the final rates are established. These billing
rates--(1) Shall be the anticipated final rates; and (2) May be
prospectively or retroactively revised by mutual agreement, at
either party's request, to prevent substantial overpayment or
underpayment.
(g) Quick-closeout procedures. Quick-closeout procedures are
applicable when the conditions in FAR 42.708(a) are satisfied.
(h) Audit. At any time or times before final payment, the
Contracting Officer may have the Contractor's invoices or vouchers
and statements of cost audited. Any payment may be reduced by
amounts found by the Contracting Officer not to constitute allowable
costs or adjusted for prior overpayments or underpayments.
(i) Final payment.
(1) Upon approval of a completion invoice or voucher submitted
by the Contractor in accordance with paragraph (e)(4) of this
clause, and upon the Contractor's compliance with all terms of this
contract, the Government shall promptly pay any balance of allowable
costs and that part of the fee (if any) not previously paid.
(2) The Contractor shall pay to the Government any refunds,
rebates, credits, or other amounts (including interest, if any)
accruing to or received by the Contractor or any assignee under this
contract, to the extent that those amounts are properly allocable to
costs for which the Contractor has been reimbursed by the
Government. Reasonable expenses incurred by the Contractor for
securing refunds, rebates, credits, or other amounts shall be
allowable costs if approved by the Contracting Officer. Before final
payment under this contract, the Contractor and each assignee whose
assignment is in effect at the time of final payment shall execute
and deliver--
(i) An assignment to the Government, in form and substance
satisfactory to the Contracting Officer, of refunds, rebates,
credits, or other amounts (including interest, if any) properly
allocable to costs for which the Contractor has been reimbursed by
the Government under this contract; and
(ii) A release discharging the Government, its officers, agents,
and employees from all liabilities, obligations, and claims arising
out of or under this contract, except--
(A) Specified claims stated in exact amounts, or in estimated
amounts when the exact amounts are not known;
(B) Claims (including reasonable incidental expenses) based upon
liabilities of the Contractor to third parties arising out of the
performance of this contract; provided, that the claims are not
known to the Contractor on the date of the execution of the release,
and that the Contractor gives notice of the claims in writing to the
Contracting Officer within 6 years following the release date or
notice of final payment date, whichever is earlier; and
(C) Claims for reimbursement of costs, including reasonable
incidental expenses, incurred by the Contractor under the patent
clauses of this contract, excluding, however, any expenses arising
from the Contractor's indemnification of the Government against
patent liability.
(End of clause)
ALTERNATE I (XXX 19XX). As prescribed in 216.307(a)(2),
substitute the following paragraph (b)(1)(iii) for paragraph
(b)(1)(iii) of the basic clause:
(iii) The amount of progress and other payments to the
Contractor's subcontractors that either have been paid, or that the
Contractor is required to pay pursuant to the Prompt Payment for
Construction Contracts clause of this contract. Payments shall be
made by cash, check, or other form of payment to the Contractor's
subcontractors under similar cost standards.
7. Section 252.245-7001 is revised to read as follows:
252.245-7001 Government Furnished Property.
As prescribed in 245.102(a) (1) and (d), use the following clause:
Government Furnished Property (XXX 19XX)
(a) Definitions.
The terms defined in the Right to Title--Equipment, Special
Tooling, and Special Test Equipment clause of this contract have the
same meaning in this clause.
(b) Property furnished for performance of this contract.
(1) The Government furnished property identified in this
contract may be used for performance of the contract on a rent-free
basis. The Contractor shall not use such property on any other
Government contracts or for commercial purposes without the
Contracting Officer's prior approval. Unless otherwise permitted by
law, commercial use shall be on a rental basis. The terms and
conditions of the Rental Charges for Commercial Use clause of this
contract shall apply to each rental.
(2) The Contractor shall not improve or make structural
alterations to real property owned or leased by the Government and
made available for performance of this contract unless expressly
authorized to do so in writing by the Contracting Officer. Title to
such improvements or alterations shall vest in the Government if the
property is accountable under this contract or will be determined by
the terms of the contract under which the real property is
accountable.
(3) The Government retains title to Government furnished
property including Government furnished property that is
incorporated into or attached to any property it does not own.
Government furnished property does not become a fixture or lose its
identity as personal property by being attached to real property.
(4) The Government shall, when requested by the Contractor,
provide information reasonably required for the property's intended
use to the extent the Government has the right to release or
disclose the information.
(5) If the Contractor commingles Contractor acquired or
fabricated material with
[[Page 54011]]
Government furnished material, the provisions of paragraph (c) of
this clause regarding suitability for intended use shall not apply
to the commingled Government furnished material. Notwithstanding any
other provision of this contract, the Contractor shall be
responsible for any failure to comply with contract requirements
attributable to material that was commingled.
(c) Suitability for intended use.
The contract delivery or performance dates are based upon the
expectation that Government furnished property will be suitable for
its intended use, except property furnished ``as is'' (see paragraph
(d) of this clause), and delivered to the Contractor at the times
stated in the contract or, if not so stated, in sufficient time to
enable the Contractor to meet the contract's delivery or performance
dates.
(1) The Contractor shall notify the Contracting Officer promptly
following receipt of Government furnished property that is not
suitable for its intended use and take corrective action or dispose
of the property as directed by the Contracting Officer. The contract
shall be equitably adjusted in accordance with paragraph (g) of this
clause.
(2) The Contractor may request an equitable adjustment when
Government furnished property is not delivered to the Contractor by
the required time and such untimely delivery has affected contract
performance. Any equitable adjustment shall be made in accordance
with paragraph (g) of this clause.
(d) Property furnished as is.
(1) Offerors and the Contractor are responsible for assuring
that Government property made available on an ``as is'' basis is
suitable for the offerors' or Contractor's purposes. Such property
is furnished f.o.b. at the location specified in the solicitation or
contract. Any cost incurred by the Contractor to transport, install,
modify, repair, or otherwise make such property suitable for the
Contractor's intended use shall not result in an increase in price
or fee. Modifications to property furnished ``as is'' require the
Contracting Officer's prior written approval.
(2) Equipment, special tooling, or special test equipment is
furnished ``as is'' for performance of this contract if the
Contractor acquired or fabricated, and the Government took title to,
such items under this or a prior contract.
(3) The Government makes no warranty whatsoever with respect to
property furnished ``as is'' except that the property will be in the
same condition when placed at the specified f.o.b. location as when
inspected by the Contractor or, if not inspected by the Contractor,
as of the last date identified in the solicitation or contract for
Contractor inspection. The Contractor is responsible for verifying
that the property's condition has not changed during that period. If
the Contractor determines the property's condition has changed and
such change will adversely affect the Contractor, the Contractor
shall immediately notify the Contracting Officer and identify the
changed condition. If the Contracting Officer concurs that the
property's condition has changed, the Contracting Officer may
restore the property or substitute other Government property at no
change in price or fee; permit the Contractor to restore the
property subject to an equitable adjustment; or decline to furnish
the property subject to an equitable adjustment. The foregoing
provisions for adjustment are the exclusive remedies available to
the Contractor. The Government has no liability for changes in the
property's condition discovered after removal from the specified
f.o.b. location.
(4) Repairs to or modifications of property furnished ``as is''
do not affect the Government's title to such property.
(e) Changes in Government furnished property.
(1) The Contracting Officer may increase, decrease, or
substitute other Government property for the property furnished or
to be furnished for performance of this contract or require use of
Government furnished property in lieu of Contractor property.
(2) Except as provided in paragraph (e)(4) of this clause, any
increase in the amount of property furnished for performance of this
contract shall result in an equitable reduction in price or fee, and
an appropriate adjustment of the contract delivery or performance
dates.
(3) The Contractor may request an equitable adjustment in
accordance with paragraph (g) of this clause for a decrease in or
substitution for the property identified in the contract or
withdrawal of authority to use property accountable under another
contract in performance of this contract, provided such decrease,
substitution, or withdrawal increases the costs of contract
performance.
(4) If the Contracting Officer directs the Contractor to use
Government furnished property in lieu of Contractor property in
performance of this contract, any adjustment to the contract shall
be made in accordance with the Changes clause of this contract.
(f) Limited risk of loss.
(1) The Contractor's liability for loss, theft, or destruction
of, or damage to, Government furnished property accountable under
this contract shall be limited if the Contractor maintains a
property control system that satisfies the requirements of the
Government Property Control clause of this contract (hereinafter
referred to as an approved system).
(2) When the Contractor maintains an approved system, the
Contractor shall not be liable for loss, theft, or destruction of,
or damage to, Government property accountable under this contract
except loss, theft, destruction, or damage for which the Contractor
is expressly responsible under the terms of this contract or loss,
theft, destruction, or damage that results from--
(i) A risk expressly required to be insured under this contract
but only to the extent of the insurance required to be purchased and
maintained, or to the extent of insurance actually purchased and
maintained, whichever is greater;
(ii) A risk that is in fact covered by insurance or for which
the Contractor is otherwise reimbursed, but only to the extent of
such insurance or reimbursement; or
(iii) Willful misconduct or lack of good faith on the part of
the Contractor's managerial personnel.
(3) Following notice from the Government's property
administrator to one of the Contractor's managerial personnel that
the Contractor's or a subcontractor's property control system is not
in compliance with the requirements of the Government Property
Control clause of this contract, the Contractor's failure to correct
its system or to have a subcontractor's system corrected within the
dates specified by the Government's property administrator, or such
other mutually agreed dates, shall be considered willful misconduct
or lack of good faith on the part of the Contractor's managerial
personnel. The Contractor shall be liable for any loss, theft, or
destruction of, or damage to, the Government furnished property
accountable under this contract except such loss, theft,
destruction, or damage that the Contractor can establish by clear
and convincing evidence--
(i) Did not result from the Contractor's failure to maintain an
approved system; or
(ii) Occurred while an approved system was maintained by the
Contractor.
(4) Except as provided in paragraphs (f)(3) (i) and (ii) of this
clause, the Contractor shall be liable for loss, theft, or
destruction of, or damage to, Government furnished property
accountable under this contract immediately upon notice by certified
mail that the Government has withdrawn approval of the Contractor's
property control system.
(5) The Contractor is not liable for Government furnished
property properly consumed in performing this contract. The
Contractor shall have no liability for loss, theft, or destruction
of, or damage to, Government property furnished for performance of
services entirely on real property owned or leased by the Government
when the Contractor does not control the use of, or access to, such
property.
(6) The Contractor's transfer of Government furnished property
to the possession and control of a subcontractor, does not affect
the Contractor's liability for loss, theft, or destruction of, or
damage to, that property.
(7) Except as provided in paragraph (f)(8) of this clause, the
Contractor shall notify the Government's property administrator in
writing promptly following the loss, theft, or destruction of, or
damage to, Government furnished property. Such notice shall
identify--
(i) Lost, stolen, destroyed, or damaged Government property by
description, contract number, national stock number (if known), and
either part number or identification number;
(ii) The date a loss or theft was discovered or damage or
destruction occurred and, if known, the circumstances;
(iii) Each property item's acquisition cost;
(iv) The contracts affected;
(v) All known interests in commingled property of which
Government furnished property is a part; and
(vi) The insurance, if any, covering any part of or interest in
such commingled property.
(8) The Contractor is not required to provide notice of loss,
theft, or destruction of, or damage to, low value property that the
Contractor does not need for continued performance of this contract
until contract
[[Page 54012]]
completion or termination. Such notice shall include the information
required by paragraph (f)(7) of this clause.
(9) The Contractor shall take all reasonable action to protect
damaged Government furnished property from further damage and to
physically separate such property from all other property.
(10) The Contractor shall repair, renovate, or take such other
action with respect to lost, stolen, damaged, or destroyed
Government furnished property as the Contracting Officer directs and
adjust the property records accordingly. When such repair,
renovation, or action is not the Contractor's responsibility under
this contract, the Contractor shall be entitled to an equitable
adjustment in accordance with paragraph (g) of this clause.
Contractor-responsible repairs to, or replacement of, Government
furnished property shall be accomplished at no change price or fee.
(11) The Contractor shall not include in the price or fee of
this contract any charge or reserve for insurance (including any
self-insurance fund or reserve) covering loss, theft, or destruction
of, or damage to, Government furnished property except to the extent
the Government might have expressly required the Contractor to carry
such insurance under another provision of this contract.
(12) If the Contractor is reimbursed or otherwise compensated
for any loss, theft, or destruction of, or damage to, Government
furnished property, the Contractor shall use the proceeds to repair,
renovate, or replace such property or equitably reimburse the
Government, as directed by the Contracting Officer, and adjust the
property records accordingly.
(13) The Contractor shall do nothing to prejudice the
Government's rights to recover against third parties for any loss,
theft, or destruction of, or damage to, Government furnished
property. When requested by the Contracting Officer, the Contractor
shall, at Government expense, furnish to the Government all
reasonable assistance and cooperation (including the prosecution of
suit and the execution of instruments of assignment in favor of the
Government) in obtaining recovery.
(g) Equitable adjustments. (1) Equitable adjustments shall be
the Contractor's exclusive remedy for Government actions under this
clause and shall be made in accordance with the procedures of the
Changes clause of this contract. The Government shall not be liable
to suit for breach of contract for--
(i) Any delay in delivery of Government furnished property;
(ii) Delivery of Government furnished property in a condition
not suitable for its intended use;
(iii) An increase or decrease in, or substitution of, Government
furnished property; or
(iv) Failure to repair or replace Government furnished property
when the Government is responsible for repair or replacement.
(2) An equitable adjustment for Government furnished property
that is not in a condition suitable for intended use or the
withdrawal or substitution of Government furnished property may
include an amount for the restoration and rehabilitation of the
Contractor's premises caused by such condition, withdrawal, or
substitution.
(h) Maintenance responsibilities. (1) The Contractor is
responsible for the maintenance of Government furnished property
accountable under this contract, including such property stored at a
Contractor managed site. The Contractor shall perform all
maintenance, including preventive maintenance, necessary to assure
that Government furnished property remains suitable for its intended
use unless the Contracting Officer specifically relieves the
Contractor of its maintenance responsibility for a particular item
or class of items. If routine and preventive maintenance are not
sufficient to sustain a property item's suitability for intended
use, the Contractor shall notify the Contracting Officer promptly
and request direction regarding repair or replacement.
(2) The Contractor shall notify promptly the Government's
property administrator of the need for any replacement of, or major
repair or rehabilitation to, Government furnished property
discovered during its maintenance activities and shall not effect
such repair, replacement, or rehabilitation unless authorized to do
so by the Contracting Officer.
(i) Return of Government furnished property. If this contract
requires Government furnished property to be returned directly to
the Government and not entered into the property disposal process--
(1) The Contractor shall notify the Contract Administration
Office of its intent to return such property at least 10 working
days prior to return. Notices shall identify the contracts under
which the items are accountable and provide each item's name,
description, and national stock number, if known, or part number or
identification number.
(2) The property shall be returned to the Government in a
condition suitable for its intended use except--
(i) Lost, stolen, or destroyed property that the Government has
determined will not be replaced;
(ii) Damaged property that the Government has determined will
not be repaired;
(iii) Property consumed in performance of this contract;
(iv) Property attached to, incorporated into, or delivered with,
a deliverable end item; or
(v) Property furnished ``as is'' shall be returned in equal or
better condition than when furnished to the Contractor.
(j) Disposal of Government furnished property.--(1) Inventory
disposal schedules. Except as provided in paragraph (i) or (j)(2) of
this clause, the Contractor shall identify Government furnished
property no longer required for performance of this contract using
Standard Form 1428, Inventory Disposal Schedule. Unless the plant
clearance officer has agreed to a different submission basis, or the
contract requires inventory disposal schedules to be submitted
electronically, the Contractor shall prepare separate inventory
disposal schedules for: special test equipment with general purpose
components; special test equipment that does not contain general
purpose components; printing equipment; automatic data processing
equipment; nonnuclear hazardous materials; and nuclear materials.
Property with the same description, condition code, and reporting
location may be grouped in a single line item. Special test
equipment shall be described in sufficient detail to permit an
understanding of the special test equipment's intended use. The
Contractor may annotate the schedule to identify test equipment the
Contractor wishes to purchase from the Government or general purpose
components thereof the Contractor wishes to purchase or use in the
performance of other Government contracts.
(2) Scrap Lists. Contractors that have Government approved scrap
procedures may prepare scrap lists (provided such lists are
consistent with the approved scrap procedures) in lieu of inventory
disposal schedules except for scrap that--
(i) Requires demilitarization;
(ii) Is a classified item;
(iii) Is generated from classified items;
(iv) Contains hazardous materials; or
(v) Is dangerous to the public health, safety, or welfare.
(3) Corrections. If the plant clearance officer finds that
property identified on an inventory disposal schedule or scrap list
is not accountable under this contract or is not in the quantity or
condition indicated on the inventory disposal schedule or scrap
list, the plant clearance officer may require the Contractor to
correct the inventory disposal schedule or scrap list, may reject
such schedules or lists at any time, or may require submission of an
inventory control schedule in lieu of a scrap list.
(4) Submission requirements. Inventory disposal schedules or
scrap lists shall be submitted to the plant clearance officer for
approval no later than--
(i) 30 days following the Contractor's determination that a
Government furnished property item is no longer required for
performance of the contract;
(ii) 60 days following completion of contract deliveries or
performance or such longer period as may be approved by the plant
clearance officer; or
(iii) 120 days following contract termination in whole or in
part or such longer period as may be approved by the Contracting
Officer.
(5) Inventory schedule adjustments. The Contractor shall provide
the plant clearance officer at least 10 working days advance written
notice of its intent to remove a Government furnished property item,
including an item identified as scrap, from an approved inventory
disposal schedule. Unless the plant clearance officer objects to the
intended schedule adjustment within the notice period, the
Contractor may make the adjustment upon expiration of the notice
period.
(6) Storage. The Contractor shall store the Government furnished
property identified in an inventory disposal schedule pending
receipt of disposal instructions. If the Government fails to provide
disposal instructions within 120 days following receipt of an
acceptable inventory disposal schedule, the Contractor might be
entitled to
[[Page 54013]]
an equitable adjustment for costs incurred to store such property on
or after the 121st day following receipt of an acceptable schedule.
(7) Disposal. Except as provided in paragraph (j)(7)(i) of this
clause, Government furnished property shall not be disposed of until
the Contractor has been authorized to do so by the plant clearance
officer.
(i) If the Government does not provide disposition instructions
to the Contractor within 60 days following receipt of an acceptable
scrap list, the Contractor may dispose of the listed scrap.
(ii) The Contractor shall prepare for shipment, deliver f.o.b.
origin, or dispose of Government furnished property as directed by
the plant clearance officer. The Contractor shall remove and destroy
any markings identifying the property as Government property when
the plant clearance officer directs disposal by sale or donation,
notifies the Contractor that the Government has abandoned the
property, or directs the Contractor to scrap the property.
(iii) The net proceeds from a disposal action of scrapped
Government furnished property shall be credited to the contract
under which the Government furnished property was accountable or,
when scrapped Government furnished property cannot be segregated
from other scrap, to an appropriate overhead account. The Contractor
shall credit the net proceeds or other disposal actions in
accordance with instructions provided by the plant clearance
officer.
(iv) The Contracting Officer may require the Contractor to
demilitarize the property prior to shipment or disposal. Any
adjustment in contract price incident to the Contracting Officer's
direction to demilitarize Government furnished property shall be
made in accordance with paragraph (g) of this clause.
(8) Contractor removal of property. The Contractor must obtain
the plant clearance officer's approval to remove Government
furnished property from its premises prior to receipt of final
disposition instructions. If approval is granted, the Contractor
shall transport and store the property at no change in price or fee.
The storage facility must be appropriate for assuring the property's
physical safety and suitability for use. Approval does not relieve
the Contractor of liability for loss, theft, or destruction of, or
damage to, such property.
(9) Subcontractor inventory disposal schedules. When the
Contractor permits a subcontractor or supplier to use, at a
subcontractor or supplier managed site, Government property
furnished to the Contractor for performance of this contract, the
Contractor shall require the subcontractor or supplier to submit
inventory disposal schedules or scrap lists to the Contractor in
sufficient time for the Contractor to comply with the requirements
of paragraph (j)(4) of this clause.
(k) Abandonment and restoration of Contractor's premises. (1)
The Government shall not abandon Government furnished property that
is or contains a hazardous material at a Contractor-owned location
without the Contractor's written concurrence. The Contractor may
request an equitable adjustment incident to such agreement.
(2) The Government, upon notice to the Contractor, may abandon
any nonhazardous Government property in place at which time all
obligations of the Government regarding such abandoned property
shall cease. The Government has no obligation to restore or
rehabilitate the Contractor's premises under any circumstances and,
except as provided in paragraphs (g)(2) and (k)(1) of this clause,
has no liability for such restoration or rehabilitation.
(l) Overseas contracts. In a contract performed outside the
United States, its territories, or possessions, the words
``Government'' and ``Government furnished,'' as used in this clause,
mean ``United States Government'' and ``United States Government
furnished,'' respectively.
(End of clause)
Alternate I (XXX 19XX). As prescribed in 245.102(a)(2),
substitute the following paragraph (f) for paragraph (f) of the
basic clause:
(f) Risk of loss.
(1) Except as provided in paragraph (f)(3) of this clause, the
Contractor is liable for any loss, theft, or destruction of, or
damage to, Government furnished property accountable under this
contract.
(2) Contractor-responsible repairs to, or replacements of,
Government furnished property shall be accomplished at no change in
price or fee.
(3) The Contractor is not liable for--
(i) Government furnished property properly consumed in
performing this contract; or
(ii) Loss, theft, or destruction of, or damage to, Government
furnished property when the Contractor is providing services
performed entirely on real property owned or leased by the
Government and the Contractor does not control the use of, or access
to, the Government furnished property.
(4) Except as provided in paragraph (f)(5) of this clause, the
Contractor shall notify the Government's property administrator in
writing promptly following the loss, theft, or destruction of, or
damage to, Government furnished property. Such notice shall
identify--
(i) Lost, stolen, destroyed, or damaged Government property by
description, contract number, national stock number (if known), and
either part number or identification number;
(ii) The date a loss or theft was discovered or damage or
destruction occurred and, if known, the circumstances;
(iii) Each property item's acquisition cost;
(iv) The contracts affected;
(v) All known interests in commingled property of which the
Government property is a part; and
(vi) The insurance, if any, covering any part of or interest in
such commingled property.
(5) The Contractor is not required to provide notice of loss,
theft, or destruction of, or damage to, low value property that the
Contractor does not need for continued performance of this contract
until contract completion or termination. Such notice shall include
the contract number and each such property item's acquisition cost,
description, national stock number (if known), and either its part
number or identification number.
(6) The Contractor shall take all reasonable action to protect
damaged Government furnished property from further damage and to
physically separate such property from all other property.
(7) The Contracting Officer may replace, direct the Contractor
to repair or replace, or direct the Contractor to take other
appropriate action regarding lost, stolen, damaged, or destroyed
Government furnished property for which the Government has
specifically assumed such risks in this contract. When lost,
damaged, stolen, or destroyed Government furnished property is
replaced by the Government or the Contractor, the replacement
property shall be entered into the property control system as a
Government furnished property item. Any equitable adjustment
incident to such direction shall be determined in accordance with
paragraph (g) of this clause.
8. Section 252.245-7002 is added to read as follows:
252.245-7002 Right to Title--Equipment, Special Tooling, and Special
Test Equipment.
As prescribed in 245.102(b)(i), use the following clause:
Right to Title--Equipment, Special Tooling, and Special Test Equipment
(XXX 19XX)
(a) Definitions.
As used in this clause--
``Contractor's managerial personnel'' means the Contractor's
directors, officers, and any of the Contractor's managers,
superintendents, or equivalent representatives who have supervision
or direction of all or substantially all of the Contractor's
business; or operations at a site connected with performance of this
contract.
``Equipment'' means items whose use is not limited to, or with
only minor modification would be limited to, the development,
production, or maintenance of a particular item or the performance
of a particular service. The term includes, but is not limited to,
automatic data processing equipment, office equipment, construction
equipment, hand tools, machine tools (other than special tooling),
test equipment (other than special test equipment or components
thereof), furniture, and vehicles.
``Government property'' means property the Government owns or
leases.
``Government furnished property'' means property provided by the
Government to a contractor for performance of a contract.
``Low value property'' means equipment, special tooling, or
special test equipment that has an acquisition cost of $2,500 or
less and is not sensitive property.
``Material'' means property to be consumed or expended to
perform a service or produce a deliverable end item and property
incorporated into or attached to an end item. The term includes
assemblies, components, parts, raw and processed materials, and
supplies that may be consumed in normal use in performing a
contract. It does not include equipment, real property, special test
equipment, special tooling, or unique Federal property.
``Nonprofit organization'' means a business entity organized and
operated exclusively for
[[Page 54014]]
charitable, scientific, or educational purposes, the net earnings of
which do not inure to the benefit of any private shareholder or
individual, that is exempt from Federal income taxation under
section 501 of the Internal Revenue Code and does not conduct a
substantial portion of its activities carrying on propaganda or
otherwise attempting to influence legislation or participating in
any political campaign on behalf of any candidate for public office.
``Personal property'' means property of any kind or interest in
it except real property, battleships, cruisers, aircraft carriers,
destroyers, submarines, and records of the Government.
``Plant clearance officer'' means a person appointed to perform
plant clearance functions.
``Precious metals'' means silver, gold, platinum, palladium,
iridium, osmium, rhodium, and ruthenium.
``Preventive maintenance'' means regularly scheduled maintenance
performed to sustain suitability for intended use and detect and
correct minor deficiencies before they result in serious
consequences.
``Property'' means real and personal property.
``Property administrator'' means a person appointed to perform
Government property administration.
``Real property'' means land and rights in land, ground
improvements, utility distribution systems, and buildings and other
structures. It does not include foundations and other work necessary
for installing special tooling, special test equipment, or
equipment.
``Scrap'' means personal property that has no value except its
basic metallic, mineral, or organic content.
``Sensitive property'' means property potentially dangerous to
the public safety or security if stolen, lost, or misplaced, or that
must be subject to exceptional physical security, protection,
control, and accountability such as classified property, weapons,
ammunition, explosives, controlled substances, radioactive
materials, hazardous materials or wastes, or precious metals.
``Special test equipment'' means a test unit or units designed,
fabricated, or modified to accomplish special purpose testing,
groupings of such items, that are interconnected and interdependent
so as to become a new functional entity.,
``Special tooling'' means items, such as jigs, dies, fixtures,
molds, patterns, taps, gauges, or other equipment and manufacturing
aids, that are of such a specialized nature that without substantial
modification or alteration their use is limited to the development,
production, repair, or maintenance of particular supplies or
components thereof, or to the performance of particular services.
``Unique Federal property'' means Government owned personal
property, or components thereof, that is specially designed to
perform or support the mission of one or more Federal agencies and
is not available to the public.
``Work in process'' means bench stock materials, complete or
incomplete fabricated parts, subassemblies, assemblies, and similar
items that are created during production of deliverable end items or
are required to construct special tooling or special test equipment
needed to produce deliverable end items.
(b) Right to title.--(1) Fixed-price contracts. The Government
has the right, at no change in contract price, to take title to each
special tooling or special test equipment item acquired or
fabricated by the Contractor that is not required to be delivered
under this contract if the item's cost is allocable to this contract
as a direct cost.
(2) Cost-reimbursement contracts. The Government has the right,
at no change in cost or fee, to take title to each--
(i) Special tooling or special test equipment item acquired or
fabricated by the Contractor that is not required to be delivered
under this contract if the item's cost is allocable to this contract
as a direct cost.
(ii) Item of equipment acquired or fabricated by the Contractor
that is not required to be delivered under this contract if the
item's cost is greater than $2,500 and is allocable to this contract
as a direct cost.
(3) Expiration. The Government's rights in paragraphs (b)(1) and
(b)(2) of this clause end upon expiration of the time period in
paragraph (e) of this clause.
(c) Reports. (1) The Contractor shall submit to the Contracting
Officer a report identifying right to title items as soon as
practicable during contract performance but not later than the
earlier of--
(i) 90 days prior to completion of scheduled deliveries (other
than technical data) under this contract; or
(ii) 30 days following the Contractor's determination that a
right to title item is no longer required for contract performance.
For each right to title item or groups of identical items, the
reports shall identify the item's or group's--
(i) Nomenclature;
(ii) Quantity;
(iii) Acquisition cost;
(iv) Contract number;
(v) Part number(s) made or tested; and
(vi) Identification number.
(d) Storage. The Contractor shall store each right to title item
identified in a report required by paragraph (c) of this clause at
no increase in fee or price. The Contractor's storage obligations
for a right to title item end when the Government notifies the
Contractor that it has taken title to that item or upon expiration
of the Government notice period. Items shall be stored in a manner
sufficient to preserve capability and provide protection from
damage. If the Government requires items to be stored subsequent to
the Government's assumption of title, the Contractor might be
entitled to an equitable adjustment as provided in paragraph (g) of
this clause.
(e) Assumption of title. (1) The Government must notify the
Contractor that it is taking title to an item or items within 120
days, or such other period mutually agreed upon, following receipt
of a report required by paragraph (c) of this clause or other
written notice from the Contractor identifying the item or items as
no longer required for performance of this contract.
(2) The Government's notice shall be in writing, shall identify
the item(s), and may, in any combination--
(i) Provide packing, packaging, marking, and shipping
instructions;
(ii) Direct the Contractor to prepare the property for storage
at the Contractor's facility or a Government facility; or
(iii) Provide instructions when accountability is to be
transferred to another contract.
(3) The Contractor's storage obligations are not diminished if
the Government notice period, or any extension thereof, extends
beyond the date contract deliveries are completed.
(f) Marking. The Contractor shall legibly and conspicuously mark
property to which the Government has taken title under this contract
with the phrase ``U.S. Government Property'' (or a similar phrase
that conveys Government ownership), as soon as practicable following
the Government's assumption of title.
(g) Price adjustment. The cost and fee of a cost-reimbursement
contract or the price of a fixed-price contract may be equitably
adjusted for costs incurred by the Contractor to store, prepare for
storage, package, pack, or mark for shipment, the equipment, special
tooling, or special test equipment to which the Government has taken
title. Any adjustment shall be made in accordance with the
procedures of the Changes clause of this contract and only to the
extent the Contracting Officer's actions under paragraph (e) of this
clause required the Contractor to incur costs that it would not have
incurred under customary commercial practices.
(h) Risk of loss. The Contractor is responsible for any loss,
theft, or destruction of, or damage to, right to title items during
the period commencing upon the Government's delivery of the notice
required by paragraph (e) of this clause and ending upon placement
aboard a carrier's conveyance (f.o.b. origin) or delivery at the
specified f.o.b. destination point.
(i) Flow down. The Contractor shall insert this or a
substantially similar clause in all contracts and similar
instruments with its first-tier subcontractors or suppliers, other
than subcontractors or suppliers of commercial items, that will
fabricate or acquire equipment, special tooling, or special test
equipment for performance of this contract.
(End of clause)
ALTERNATE I (XXX 19XX). As prescribed in 245.102(b)(ii),
substitute the following paragraph (b) for paragraph (b) of the
basic clause:
(b) Right to title--(1) General. The Government has the right,
at no change in cost or fee, to take title to each--
(i) Special tooling or special test equipment item acquired or
fabricated by the Contractor that is not required to be delivered
under this contract if the item's cost is allocable to this contract
as a direct cost.
(ii) Item of equipment acquired or fabricated by the Contractor
that is not required to be delivered under this contract if the
item's cost is greater than $2,500 and is allocable to this contract
as a direct cost.
(2) Expiration. Except as provided in paragraph (b)(3) of this
clause, the
[[Page 54015]]
Government's rights in paragraphs (b)(1)(i) and (b)(1)(ii) of this
clause end upon expiration of the time period in paragraph (e) of
this clause.
(3) Relinquishment of rights. Prior to purchasing equipment,
special tooling, or special test equipment with Government funds
provided for the conduct of basic or applied research, nonprofit
organizations whose primary purpose is the conduct of scientific
research or nonprofit institutions of higher education (see FAR
35.014) may request the Contracting Officer to relinquish the
Government's right to take title of such items. If the Contracting
Officer agrees, prior to purchase, the Contractor shall have title
to each such item having an acquisition cost less than $5,000. The
Contractor shall furnish the Contracting Officer a list of all
purchased property to which the Government has relinquished right to
title within 10 days following the end of the calendar quarter
during which the Contractor receives the property. The Contractor
agrees that it will not allocate depreciation or amortization costs
for such property to any existing or future Government contract and
such property may be used by the Government or its subcontractors
without charge in performance of any Government contract or
subcontract thereunder. As a condition for the Government's
relinquishing its rights to title under this clause, the Contractor,
by signing this contract, agrees that--
No person in the United States shall, on the ground of race,
color, or national origin, be excluded from participation in, be
denied the benefits of, or be otherwise subjected to discrimination
(42 U.S.C. 2000d) under this contemplated financial assistance
(title to equipment, special tooling or special test equipment).
9. Section 252.245-7003 is added to read as follows:
252.245-7003 Government Property Control.
As prescribed in 245.102(c)(i), use the following clause:
Government Property Control (XXX 19XX)
(a) Definitions. The terms defined in the Right to Title--
Equipment, Special Tooling, and Special Test Equipment clause of
this contract have the same meaning in this clause.
(b) General. (1) This clause is applicable to Government
furnished property and Government property stored by the Contractor
at the Government's direction including property to which the
Government has taken title under the Right to Title--Equipment,
Special Tooling, and Special Test Equipment clause of this contract.
It does not apply to property in which title is vested in the
Government solely as a result of the financing provisions of this
contract.
(2) The Contractor is responsible for the maintenance,
protection, and preservation of Government property in its or its
subcontractors' possession. The Contractor shall account for such
property as required by this contract.
(3) If the Contractor does not have a property control system
that is approved by the Government's property administrator, it
shall establish a system that satisfies the requirements of this
clause within 90 days following contract award (or such other
mutually agreeable period). Notwithstanding any other provision of
this contract regarding liability for loss, theft, or destruction
of, or damage to, Government property in the Contractor's or its
subcontractors' possession, the Contractor shall be liable for such
loss, theft, destruction, or damage until its system is approved by
the Government's property administrator. The Contractor shall
maintain its system during the period Government property is in its
or its subcontractors' possession.
(4) The Contractor should use its existing property control
system or a modification thereof when the existing or modified
system satisfies the requirements of this clause.
(c) Control system requirements. The property control system
shall include written processes for--
(1) Assessing the system's efficiency and effectiveness,
recommending corrective action or general improvements, and
implementing appropriate changes;
(2) Obtaining approval of property actions from the responsible
Government representative no later than the time specified in this
contract (when such approval is required by this contract) and
appropriately documenting such approval;
(3) Inspecting property acquired by the Contractor or furnished
by the Government for performance of this contract upon receipt;
(4) Identifying Government property received by the Contractor
that was intended for other persons or discrepancies between the
type, quantity, or condition of Government furnished property
shipped to and actually received by the Contractor and initiating
corrective action;
(5) Promptly entering all Government property into the property
control system;
(6) Ensuring that Government property is properly classified
(see paragraph (f)(2)(viii) of this clause);
(7) Ensuring that Government property's used only as authorized
by the Contracting Officer;
(8) Controlling the distribution and return of pilferable
property;
(9) Scheduling and monitoring Government property maintenance to
ensure timely performance and recording of all maintenance actions;
(10) Accurately recording by type and quantity Government
furnished material consumed during contract performance;
(11) Performing, reporting, and recording all inventories
required by this contract;
(12) Identifying and reporting lost, damaged, or destroyed
Government property and generating corrective action
recommendations;
(13) Maintaining special security for classified or sensitive
property commensurate with the property's security classification,
special handling requirements, or both;
(14) Accurately preparing and timely submitting the records and
reports required by this contract;
(15) Ensuring the subcontractors have adequate procedures for
the control and protection of Government property;
(16) Justifying the continued need for Government property to
perform this contract;
(17) Moving and storing Government property in a manner
commensurate with the property's handling and storage requirements;
and
(18) Disposing of Government property in accordance with the
requirements of this contract.
(d) Access. The Government shall have access, at all reasonable
times, to the premises at which any Government property is located
and to the Contractor's Government property records and supporting
information.
(e) Property control system submission, review, and approval.
(1) Except as provided in paragraph (e)(2) of this clause, offerors
shall submit their written property control systems and processes
with their offer if--
(i) The offeror does not have an existing property control
system or its existing system has not been approved by a Government
property administrator;
(ii) The offeror's property control system last was approved, or
approval validated, more than 2 years prior to the date of its
offer;
(iii) A Government property administrator has requested
corrections to the offeror's system or procedures and such
corrections have not been made; or
(iv) Approval of the system has been withdrawn.
(2) The submission requirements in paragraph (e)(1) of this
clause do not apply to offerors that have a Government property
system that has been approved or validated by the Government no more
than 2 years prior to the time for submission offers. Such offerors
are required only to submit to the Government's property
administrator, within 90 days following contract award, changes
required to conform the system with requirements in this contract.
The submission date may be extended by the Government's property
administrator if the property administrator determines that an
extension is warranted.
(3) The Government's property administrator shall review the
Contractor's system for conformance with contract requirements and
approve or require corrections to the system and its implementing
procedures. The Contractor shall accomplish the required corrections
at no change in price or fee.
(4) The Government may review the Contractor's previously
approved system or require the Contractor to review a
subcontractor's system to assure compliance with contract
requirements. The Government's property administrator may validate
approval of, require corrections to, or with the Administrative
Contracting Officer's concurrence, withdraw approval of the
Contractor's system or require the Contractor to have a
subcontractor's system corrected. The Contractor shall implement
corrections required by the Government's property administrator by
the date specified by the property administrator or such other date
agreed upon at no change in price or fee. The Contractor's failure
to implement corrections in a timely manner might result in the
system's approval being withdrawn.
[[Page 54016]]
(5) The Contractor shall make available to the Government's
property administrator all records and related information
reasonably required to verify that the Contractor's or a
subcontractor's property control system conforms to contract
requirements. Any disagreement as to the amount or type of
information required for such verification shall be referred to the
Administrative Contracting Officer for resolution.
(f) Property records and supporting information--(1) General.
(i) The Contractor shall establish or maintain a property record
that is current and complete for each Government property item in
its or its subcontractors' possession. Identical items may be
consolidated in a single property record if the consolidated record
provides the information required by this clause. The Contractor
shall identify useable components permanently removed from
Government property as Governmental property items, enter such items
into its property control system, and establish and maintain
appropriate property records. Property records created by a
subcontractor that has an approved property system may be used in
lieu of creating new records.
(ii) If the Contractor has an approved property control system,
its documents evidencing receipt and issue shall be the property
control records for Government material issued for immediate
consumption.
(iii) When the Government is responsible for the replacement of
a property item under this contract and has elected--
(A) To replace or have the Contractor replace the item, the
Contractor shall annotate appropriately the property record for the
item being replaced, close that record, and create a new property
record for the replacement item; or
(B) Not to replace or have the Contractor replace the item, the
Contractor shall close the property record for that item.
(iv) The Government shall provide the acquisition cost for
Government furnished property within 30 days following delivery of
the property to the Contractor. The Contractor shall notify the
Government's property administrator promptly if the acquisition cost
information is not received within the period.
(v) Property records are not required for work in process.
(2) Standard information. Each property control record shall
contain the following information.
(i) The item's name, description, and national stock number (if
the item has a national stock number). The national stock number for
property controlled by documents evidencing that receipt and issue
is not required until property disposal.
(ii) Contract number or equivalent code designation.
(iii) Quantity received, issued, and on hand.
(iv) The date of the most recent physical inventory or other
posting reference.
(v) Acquisition cost.
(vi) Current location (for low value property, identify the
initial location only).
(vii) The most recent transaction date.
(viii) The property's classification. (Use only one of the
following for each property item: Land, Buildings, Other Real
Property, Equipment, Special Test Equipment, Special Tooling, Unique
Federal Property, or Material.)
(3) Additional information--(i) Special test equipment records.
The Contractor shall provide the information required by paragraph
(f)(2) of this clause for each general purpose test equipment item
that is a removable or reusable component or Government owned
special test equipment it removal and reuse is economically
feasible.
(ii) Equipment records. Each record shall include the
manufacturer's name, Commercial and Government Entity (CAGE) code or
equivalent information, serial number, and model or part number.
(iii) Real property records. (A) Records are not required for
portable buildings or facilities specifically acquired or
constructed for tests that will result in the destruction of such
buildings or facilities.
(B) Real property records must be itemized, indexed, and contain
a description of the property, its location, original acquisition
cost, a description of property alterations made or construction
work performed by the Contractor including an identification of the
construction sites supporting such alterations or construction, and
separately identify the cost of such alterations or construction.
Supporting documentation shall include maps, drawings, plans,
specifications, and, if necessary, supplementary data needed to
completely describe and value the property.
(C) Costs incurred by the Government or the Contractor, to
acquire, construct, alter, or improve Government owned or leased
real property, including additions, expansions, extensions,
conversions, shall be added to the property's acquisition cost if
they increase the value, life, utility, capability, or
serviceability of the property.
(D) The real property records shall be modified and annotated
with a statement of the pertinent facts when property is sold,
transferred, donated, destroyed, abandoned by the Government in
place, or condemned.
(iv) Records of maintenance actions. The property records for
items requiring maintenance shall contain the maintenance schedule,
the dates maintenance actions were performed, and identify and
deficiencies discovered.
(v) Scrap records. (A) The scrap records shall provide the--
(1) Contract number or equivalent code designation from which
the scrap was derived;
(2) Scrap classification by material content; and
(3) Disposition and disposition dates.
(B) When Contractor and Government owned property of the same
stock or classification are used to produce an item or any component
thereof and property scrapped during such production cannot be
identified as Contractor or Government owned property, the
Government property scrap records shall reflect a proportional,
equitable share of such scrap.
(vi) Property returned under warranty. The Contractor shall
establish a separate property record for each item returned for
correction under a warranty and maintain the records on a contract-
by-contract basis. The records shall identify the date received, the
contract number under which the item was returned, the corrective
action performed, and the date the item is returned to the
Government. Once a property record has been established, identical
items received for corrective action shall be added to the
established record and the information required by this paragraph
maintained for each item.
(vii) Sensitive property. Property records shall legibly and
conspicuously identify sensitive property.
(g) Reports--(1) Government property. The Contractor shall
report all Government property accountable under this contract that
is in its or its subcontractors' possession as of September 30 of
each calendar year or upon completion of all property disposal
actions under this contract, whichever is sooner. The report shall
be prepared using Standard Form 1422, U.S. Government Property in
the Custody of Contractors (or an agency equivalent furnished by the
Contracting Officer), and submitted to the Government's property
administrator no later than October 31 of each calendar year.
(2) Misdirected Government property. The Contractor shall submit
a written report to the Government's property administrator
immediately following receipt of Government property intended for
another person or Government property not required for performance
of a Government contract and request disposition instructions. To
the extent practical, the report shall identify the shipment's
content, the intended recipient, the carrier that made delivery, the
Government activity from which the shipment originated, and the
shipment's current location.
(3) Late Government furnished property. The Contractor shall
report to the Contracting Officer, with a concurrent copy to the
Government's property administrator, a failure to receive Government
furnished property at the time stated in the contract or, when a
time is not stated, in sufficient time to enable the Contractor to
meet the contract's delivery or performance dates. Each report shall
forward the Contractor's estimate of the extent to which such
failure has affected or might affect contract performance.
(h) Physical inventories.--(1) Periodic. Except for low value
property and work in process, the Contractor shall periodically
physically inventory all Government property in its possession. The
Contractor, with the approval of the property administrator, shall
establish the method, frequency, and procedures for such inventories
to ensure that the existence and location of such property are
accurately established and the records and reports required by this
clause are complete and accurate. For purposes of this clause,
electronic, optical, electro-magnetic, or similar inventory systems
approved by the Government's property administrator satisfy the
requirement for physical inventories.
(2) Contract termination or completion inventories. The
Contractor shall inventory all property furnished by the Government
and all property to which the Government has taken title under this
contract immediately following a notice of
[[Page 54017]]
termination or partial termination of this contract or upon
completion of deliveries or performance under the contract except
property that is authorized for use on a follow-on or other
Government contract. Such property does not have to be inventoried
if the Contractor has notified the property administrator that
record balances have been transferred to the receiving contract.
(3) Restriction. The Contractor personnel who perform physical
inventories shall not be the same individuals who maintain the
property records required by this contract or have custody of the
property unless authorized to do so by the property administrator.
(i) Markings. Promptly following receipt of Government furnished
property, the Contractor shall determine whether the property bears
a Government ownership marking, legibly and conspicuously mark
unmarked property with the phrase ``U.S. Government Property'' (or a
similar phrase that conveys Government ownership), and replace any
control numbers affixed by others with the Contractor's control
number.
(j) Overseas contracts. In a contract performed outside the
United States, its territories, or possessions, the words
``Government'' and ``Government furnished,'' as used in this clause,
mean ``United States Government'' and ``United States Government
furnished,'' respectively.
(End of clause)
ALTERNATE I (XXX 19XX) As prescribed in 245.102(c)(ii),
substitute the following paragraphs (f) and (g) for paragraphs (f)
and (g) of the basic clause:
(f) Property records. The Contractor shall establish a separate
property record for each Government property item returned for
correction under a warranty and maintain the records on a contract-
by-contract basis. The records shall identify the item's name,
description, property classification, and national stock number (if
the item has a national stock number), the date received, the
contract number under which the item was returned, the corrective
action performed, and the date the item is returned to the
Government. Once a property record has been established, identical
items received for corrective action shall be added to the
established record and the information required by this paragraph
maintained for each item.
(g) Reports.--(1) Misdirected Government property. The
Contractor shall submit a written report to the Government's
property administrator immediately following receipt of Government
property intended for another person or Government property not
required for performance of a Government contract and request
disposition instructions. To the extent practical, the report shall
identify the shipment's content, the intended recipient, the carrier
that made delivery, the Government activity from which the shipment
originated, and the shipment's current location.
(2) Late Government furnished property. The Contractor shall
report to the Contracting Officer, with a concurrent copy to the
Government's property administrator, a failure to receive Government
furnished property at the time stated in the contract or, when a
time is not stated, in sufficient time to enable the Contractor to
meet the contract's delivery or performance dates. Each report shall
forward the Contractor's estimate of the extent to which such
failure has affected or might affect contract performance.
[FR Doc. 97-27438 Filed 10-16-97; 8:45 am]
BILLING CODE 5000-04-M
