[Federal Register Volume 60, Number 58 (Monday, March 27, 1995)]
[Proposed Rules]
[Pages 15740-15742]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-7340]
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DEPARTMENT OF DEFENSE
48 CFR Part 45 and 52
Federal Acquisition Regulation; Government Property Class
Deviation
AGENCY: Department of Defense.
ACTION: Notice of proposed class deviation.
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SUMMARY: The Department of Defense (DoD) is proposing a class deviation
from the Federal Acquisition Regulation (FAR) record keeping and
physical inventory requirements for Special Tooling, Special Test
Equipment and Plant Equipment with an acquisition cost of $1,500 or
less. The proposed class deviation will apply to defense contractors,
holding them accountable for such property, but relieving them of he
requirement to track it, while revisions to the FAR are being drafted.
DATES: Comments on the proposed class deviation should be submitted in
writing at the address shown below on or before may 26, 1995 to be
considered in the formulation of the final class deviation.
ADDRESSES: Interested parties should submit written comments to: Mrs.
Linda W. Neilson, DAR Council, Attn: IMD 3D139, PDUSD(A&T)DP/DAR, 3062
Defense Pentagon, Washington DC 20301-3062. FAX (703) 602-0350.
FOR FURTHER INFORMATION CONTACT:
Ms. Angelena Moy, telephone (703) 604-5385.
SUPPLEMENTARY INFORMATION:
A. Background
On September 16, 1994, (59 FR 47583) the Director of Defense
Procurement, Department of Defense, announced an initiative to rewrite
FAR part 45, Government Property, to make it easier to understand and
to minimize the burdens imposed on contractors and the government. The
Director of Defense Procurement is providing a forum for an exchange of
ideas and information with government and industry personnel by holding
public meetings, soliciting public comments, and publishing notices of
the public meetings in the Federal Register. Interested parties were
invited to provide written suggestions or comments in the notice of
public hearing dated September 16, 1994 (59 FR 47583). Twenty-two
commentors provided approximately 500 comments, including a
recommendation that relief from the FAR tracking requirements for
government property under $1,500 would reduce administrative burdens
and provide cost savings.
In order to capture any savings quickly, DoD is proposing a class
deviation from current FAR record keeping and physical inventory
requirements for Special Tooling, Special Test Equipment and Plant
Equipment with an acquisition cost of $1,500 or less. The proposed
class deviation was included as a discussion topic at the public
meeting held on January 24, 1995 (60 FR 2370). DoD proposes to deviate
from certain FAR requirements as follows:
Part 45--Government Property
45.101 Definitions.
Deviation authorizes the use of two additional
definitions:
``Low Value Property,'' as used in this part, means Government
property in the classes of special tooling, special test equipment, and
plant equipment with an acquisition cost of $1,500 or less.
Specifically excluded from this definition are agency-peculiar
property, material, real property, and sensitive property.
``Sensitive Property,'' as used in this part, means Government
property for which the theft, loss, or misplacement could be
potentially dangerous to the public health or safety, or which must be
subject to exceptional physical security, protection, control,
maintenance, or accountability, including, but not limited to,
hazardous property, precious metals, arms, ammunition, explosives, and
classified property.
45.504 Contractor's liability.
Deviation authorizes contractors to report loss, damage,
or destruction of items of low value property at contract termination
or completion instead of when the facts become known.
45.505 Records and reports of Government property.
Deviation authorizes the exemption of low value property
from the requirement of 45.505(g) for contractor property control
systems to contain a system or technique to locate any item of
Government property within a reasonable period of time. As a result,
periodic physical inventories need not be performed for low value
property.
45.505-1 Basic information.
Deviation excludes low value property from the present
requirement for contractors to maintain current location for each item
of government property. Contractor's property control records for each
item of low value property in the contractor's possession must provide
the basic information listed in FAR paragraphs 45.505-1 (a)(1) through
(a)(7). However, contractors will not be required to update changes in
location of each item of low value property which occur after
establishment of the official government property record. This
exemption does not apply to ``sensitive property.''
45.508 hysical inventories.
With the exception of inventories conducted upon
termination or completion, the deviation authorizes an exemption for
low value property from the requirements of FAR 45.508 for contractors
to periodically physically inventory all Government property (except
materials issued from stock for manufacturing, research, design, or
other services required by the contract) in their possession or control
and to cause subcontractors to do likewise. In addition, the deviation
requires a contractor whose property control system is disapproved to
perform a physical inventory and report all loss, damage, or
destruction of Government property prior to system reapproval.
Part 52--Solicitation Provisions and Contract Clauses
52.245-2 Government Property (Fixed-Price Contracts) (DEC 1989).
Deviation authorizes the substitution of the following
paragraph (c)(2) for paragraph (c)(2) of the basic clause. The
substitute paragraph (c)(2) makes it clear that title to items of
[[Page 15741]] Government property lost, damaged, or destroyed and
replaced under the risk of loss provisions of the clause, vests in the
Government:
(c)(2) All Government-furnished property, property acquired by the
Contractor, or all property replaced by the Contractor under the risk
of loss provisions of this clause, title to which vests in the
Government under this paragraph (collectively referred to as
``Government property''), are subject to the provisions of this clause.
However, special tooling accountable to this contract is subject to the
provisions of the Special Tooling clause and is not subject to the
provisions of this clause. Title to Government property shall not be
affected by its incorporation into or attachment to any property not
owned by the Government, nor shall Government property become a fixture
or lose its identity as personal property by being attached to any real
property.
52.245-2 Government Property (Fixed Price Contracts) (Alternate I) (APR
1984).
Deviation authorizes substitution of ``Limited risk of
loss'' for the title of paragraph (g), and substitution of the
following subparagraph (g)(2), which requires contractors to assume the
risk of, and be responsible for, any loss, damage, or destruction of
low value property, with the exception of reasonable wear and tear:
(g)(2) The Contractor assumes the risk of and shall be responsible
for, any loss or destruction of, or damage to low value property upon
its delivery to the Contractor or upon passage of title to the
Government under paragraph (c) of this clause. However, the Contractor
is not responsible for reasonable wear and tear of low value property
or for low value property properly consumed in performing this
contract. With respect to all other Government property, the Contractor
shall not be liable for loss or destruction of, or damage to, the
Government property provided under this contract (or, if an educational
or nonprofit organization, for expenses incidental to such loss,
destruction, or damage), except as provided in subparagraphs (3) and
(4) below.
Deviation authorizes substitution of the following
subparagraph (g)(6), which allows contractors to report loss, damage,
or destruction of items of low value property at contract termination
or completion:
(g)(6) Upon loss or destruction of, or damage to, Government
property provided under this contract, (with the exception of low value
property for which loss, damage, or destruction is reported at contract
termination or completion), the Contractor shall so notify the
Contracting Officer and shall communicate with the loss and salvage
organization, if any, designated by the Contracting Officer. With the
assistance of any such organization, the Contractor shall take all
reasonable action to protect the Government property from further
damage, separate the damaged and undamaged Government property, put all
the affected Government property in the best possible order, and
furnish to the Contracting Officer as statement of--
(i) The lost, destroyed, or damaged Government property;
(ii) The time and origin of the loss, destruction, or damage;
(iii) All known interests in commingled property of which the
Government property is a part; and
(iv) The insurance, if any, covering any part of or interest in
such commingled property.
Deviation authorizes substitution of the following
subparagraph (g)(8), which makes the cost of insurance due to
assumption of risk of loss for low value property an allowable cost
pursuant to FAR 31.205-19:
(g)(8) The Contractor represents that it is not including in the
price and agrees it will not hereafter include in any price to the
Government any charge or reserve for insurance (including any self-
insurance fund or reserve) covering loss or destruction of, or damage
to, Government property, except:
(i) to the extent that the Government may have expressly required
the Contractor to carry such insurance under another provision of this
contract; or
(ii) low value property.
52.245-5 Government Property (Cost-Reimbursement, Time-and-Material, or
Labor-Hour Contracts) (JAN 1986).
Deviation authorizes substitution of the following
paragraphs (c)(2) and (c)(3), which clarify that title to items of
government property lost, damaged, or destroyed and replaced under the
risk of loss provisions of the clause vests in the government:
(c)(2) Title to all property purchased by the Contractor for which
the Contractor is entitled to be reimbursed as a direct item of cost
under this contract or for which the Contractor is responsible to
replace under the risk of loss provisions of this clause shall pass to
and vest in the Government upon the vendor's delivery of such property.
(c)(3) Title to all other property, the cost of which is
reimbursable to the Contractor, or for which the Contractor is
responsible to replace under the risk of loss provisions of this clause
shall pass to and vest in the Government upon--
(i) Issuance of the property for use in contract performance;
(ii) Commencement of processing of the property for use in contract
performance; or
(iii) Reimbursement of the cost of the property by the Government,
whichever occurs first.
Deviation authorizes substitution of ``Risk of loss'' for
the title of paragraph (g), and substitution of the following
subparagraph (g)(1), which requires contractors to assume the risk of,
and be responsible for, any loss, damage, or destruction of low value
property, with the exception of reasonable wear and tear:
(g) (1) The Contractor assumes the risk of, shall be responsible
for, and shall not be entitled to reimbursement as an allowable cost
for any loss or destruction of, or damage to low value property upon
its delivery to the contractor or upon passage of title to the
Government under paragraph (c) of this clause. However, the contractor
is not responsible for reasonable wear and tear of low value property
or for low value property properly consumed in performing this
contract. With respect to all other Government property, the Contractor
shall not be liable for loss or destruction of, or damage to, the
Government property provided under this Contract or for expenses
incidental to such loss, destruction, or damage, except as provided in
subparagraphs (2) and (3) below.
Deviation authorizes substitution of the following
subparagraph (g)(5), which allows contractors to report loss, damage,
or destruction of items of low value property at contract termination
or completion:
(g)(5) Upon loss or destruction of, or damage to, Government
property provided under this contract, with the exception of low value
property for which loss, damage, or destruction is reported at contract
termination or completion, the Contractor shall so notify the
Contracting Officer and shall communicate with the loss and salvage
organization, if any, designated by the Contracting Officer. With the
assistance of any such organization, the Contractor shall take all
reasonable action to protect the Government property from further
damage, separate the damaged and undamaged Government property, put all
the affected Government property in the best possible order, and
furnish to the Contracting Officer a statement of--
(i) The lost, destroyed, or damaged Government
property; [[Page 15742]]
(ii) The time and origin of the loss, destruction, or damage;
(iii) All known interests in commingled property of which the
Government property is a part; and
(iv) The insurance, if any, covering any part of or interest in
such commingled property.
Deviation authorizes substitution of the following
subparagraph (g)(7), which makes the cost of insurance due to DoD
contractors' assumption of risk of loss for low value property an
allowable cost pursuant to FAR 31.205-19:
(g)(7) The Contractor shall not be reimbursed for, and shall not
include as an item of overhead, the cost of insurance or of any reserve
covering risk of loss or destruction of, or damage to, Government
property, except:
(i) to the extent that the Government may have expressly required
the Contractor to carry such insurance under another provision of this
contract; or
(ii) low value property.
52.245-7 Government Property (Consolidated Facilities) (APR 1984).
Deviation authorizes substitution of the following
subparagraphs (d)(2) and (d)(4), which clarify that title to items of
Government property lost, damaged, or destroyed, and replaced under the
risk of loss provisions of this clause vests in the Government:
(d)(2) Title to all facilities and components shall pass to and
vest in the Government upon delivery by the vendor of all such items
purchased by the Contractor for which it is entitled to be reimbursed
as a direct item of cost under this contract or for which the
Contractor is responsible to replace under the risk of loss provisions
specified in the clause at FAR 52.245-8, Liability for the Facilities.
(d)(4) Title to other property, the cost of which is reimbursable
to the Contractor under this contract or for which the Contractor is
responsible to replace under the risk of loss provisions specified in
the clause at FAR 52.245-8, Liability for the Facilities, shall pass to
and vest in the Government upon----
(i) Issuance of the property for use in performing this contract;
(ii) Commencement of processing or use of the property in
performing this contract; or
(iii) Reimbursement of the cost of the property by the Government,
whichever occurs first.
52.245-8 Liability for the Facilities (APR 1984).
Deviation authorizes substitution of the following
paragraph (b), which requires contractors to assume risk of, and be
responsible for, any loss, damage, or destruction of low value
property, except for reasonable wear and tear:
(b) The Contractor assumes the risk of, shall be responsible for,
and shall not be entitled to reimbursement as an allowable cost for any
loss or destruction of, or damage to low value property upon its
delivery to the contractor or upon passage of title to the Government
as specified in the clause at FAR 52.245-7, Government Property
(Consolidated Facilities), FAR 52.245-10, Government Property
(Facilities Acquisition) or FAR 52.245-11, Government Property
(Facilities Use). However, the Contractor is not responsible for
reasonable wear and tear of low value property or for low value
property properly consumed in performing this contract. With respect to
all other Government property, the Contractor shall not be liable for
any loss or destruction of, or damage to, the facilities, or for
expenses incidental to such loss, destruction, or damage, except as
provided in this clause.
Deviation authorizes substitution of the following
paragraph (f), which makes the cost of insurance due to assumption of
risk of loss for low value property an allowable cost pursuant to FAR
31.205-19:
(f) Unless expressly directed in writing by the Contracting
Officer, the Contractor shall not include in the price or cost under
any contract with the Government the cost of insurance (including self-
insurance) against any form of loss, destruction, or damage to the
facilities. However, the Contractor may include the price or cost of
such insurance against any form of loss, destruction, or damage to low
value property. Any insurance required under this clause shall be in
such form, in such amounts, for such periods of time, and with such
insurers (including the Contractor as self-insurer in appropriate
circumstances) as the Contracting Officer shall require or approve.
Such insurance shall provide for 30 days advance notice to the
Contracting Officer, in the event of cancellation or material change in
the policy coverage on the part of the insurer. A certificate of
insurance or a certified copy of such insurance shall be deposited
promptly with the Contracting Officer. The Contractor shall, not less
than 30 days before the expiration of such insurance, deliver to the
Contracting Officer a certificate of insurance or a certified copy of
each renewal policy. The insurance shall be in the name of the United
States of America (Agency Name), the Contractor, and such other
interested parties as the Contracting Officer shall approve, and shall
contain a loss payable clause reading substantially as follows: Any
loss under this policy shall be adjusted with (Contractor) and the
proceeds, at the direction of the Government, shall be paid to
(Contractor). Proceeds not paid to (Contractor) shall be paid to the
office designated by the Contracting Officer.
Deviation authorizes substitution of the following
introductory text for paragraph (g), which allows contractors to report
loss, damage, or destruction of items of low value property only at
contract termination or completion:
(g) With the exception of low value property for which the loss,
damage, or destruction is required to be reported at contract
termination or completion, when there is any loss or destruction of, or
damage to, the facilities----
52.245-11 Government Property (Facilities Use) (APR 1984).
Deviation authorizes insertion of the following new
subparagraph (c)(2), which clarifies that title to items of Government
property lost, damaged, or destroyed, and replaced under the risk of
loss provisions of this clause vests in the Government. The deviation
also authorizes substitution of the numbering of the existing
subparagraphs (c)(2), (c)(3), and (c)(4) as (c)(3), (c)(4), and (c)(5),
respectively:
(c)(2) Title to facilities for which the Contractor is responsible
to replace under the risk of loss provisions specified in the clause at
FAR 52.245-8, Liability for the Facilities, shall pass to and vest in
the Government upon the vendor's delivery of such facilities. Title to
all other facilities for which the Contractor is responsible to replace
under the risk of loss provisions specified in the clause at FAR
52.245-8 shall pass to an vest in the Government upon----
(i) Issuance of the property for use in contract performance;
(ii) Commencement of processing of the property for use in contract
performance; or
(iii) Reimbursement of the cost of the property by the Government,
whichever occurs first.
List of Subjects in 48 CFR Parts 45 and 52
Government procurement.
Claudia L. Naugle,
Executive Editor, Defense Acquisition Regulations Council.
[FR Doc. 95-7340 Filed 3-24-95; 8:45 am]
BILLING CODE 5000-04-M
