04-7405. Federal Acquisition Regulation; Government Property Disposal

AGENCIES:

Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).

ACTION:

Final rule.

SUMMARY:

The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils) have agreed on a final rule amending the Federal Acquisition Regulation (FAR) to simplify procedures, reduce recordkeeping, and eliminate requirements related to the disposition of Government property in the possession of contractors.

DATES:

Effective Date: May 5, 2004.

FOR FURTHER INFORMATION CONTACT:

The FAR Secretariat at [phone] for information pertaining to status or publication schedules. For clarification of content, contact Ms. Jeritta Parnell, Procurement Analyst, at [phone]. Please cite FAC 2001-22, FAR case 1995-013.

SUPPLEMENTARY INFORMATION:

A. Background

DoD, GSA, and NASA published a proposed rule in the Federal Register at 65 FR 1438, January 10, 2000, to simplify the management and disposition of Government property in the possession of contractors. The FAR Council agreed to publish a final rule revising FAR Subpart 45.6, entitled Reporting, Reutilization, and Disposal. Comments on the other portions of the proposed Part 45 rewrite are still being evaluated.

Forty-five respondents provided public comments. Nineteen of the forty-five respondents provided comments on the reporting, reutilization, and disposal of Government property provisions in the proposed rule, and those comments were considered in drafting the final rule. Consideration of these comments resulted in only minor changes to the rule. The streamlining of the disposal process and the reductions in reporting requirements made it imperative that we finalize this FAR subpart. The resolution of the significant categories of comments concerning reporting, reutilization, and disposal of Government property follows:

Summary of Comments Received/Disposition

PR: Proposed Rule; FR: Final Rule

1. PR: 45.001, 52.245-2, and 52.245-7. FR: 45.601, 52.245-2(i), 52.245-5(i). Recommend you revisit your definition of “sensitive property” and separate the different types of materials, similar to the separate inventory disposal schedules called for in 52.245-2(g)(3)(B)(iii) and 52.245-7(g)(3)(B)(iii). Nonconcur. Under this final rule, the inventory disposal schedules do not separate the different types of materials.

2. Allow contractors to return Government property to the Government and have the Government dispose of the property. Nonconcur. Government cost would be prohibitive if all property was returned (shipping, packing, crating & handling).

3. PR: 45.506. FR: 45.603, 45.604-2. Do not allow unilateral abandonment by the Government on contractor premises. Nonconcur. Abandonment is consistent with current policy and to do otherwise would increase costs to the Government.

4. FR: 45.605-1, 52.245-2(i)(8)(iii), 52.245-5(i)(8)(iii). Do not impose demilitarization on the contractor. Nonconcur. Items have to be demilitarized. It is more cost effective for the Government to require the contractor to perform or be responsible for demilitarization of the property on a reimbursable basis than ship the property to the Government and have the Government demilitarize the property.

5. PR: 45.507-2(b)(1). FR: 45.606-3(b), 52.245-2(i)(8)(i), 52.245-5(i)(8)(i). Disposition of scrap. Recommend changing to 30 days. Partially concur. We revised the timeframe for disposition instructions from 60 days to 45 days.

6. PR: 52.245-2(g)(2)(i). FR: 45.602-1(c), 52.245-2(i)(2)(i), 52.245-5(i)(2)(i). Delete. The cost burden of attempting to have vendors accept “returned inventory” far out-weighs the costs saved in this exercise. Nonconcur. Government experience has shown that property is returned both before and after being reported excess to plant clearance demonstrating cost recovery (it only applies to new property). This is the current FAR requirement.

7. PR: 52.245-2(g)(4)(i). FR: 52.245-2(i)(4)(i), 52.245-5(i)(4)(i). Thirty days following the contractor's determination that a Government property item is no longer required for performance of the contract is too frequent. Nonconcur. We believe these timeframes are reasonable and will instill discipline to the process and is consistent with commercial practices. This is an effort to expedite the process and reduce costs.

8. PR: 52.245-2(g)(5). FR: 52.245-2(i)(5), 52.245-5(i)(5). Quantity reductions found after inventory schedule has been submitted should not be grounds for rejecting an inventory schedule. Nonconcur. The contractor is expected to submit accurate inventory disposal schedules. Adjustment or rejections are based on the severity or number of errors on a particular schedule.

9. PR: 52.245-2(g)(6). FR: 52.245-2(i)(6), 52.245-5(i)(6). The proposed statement reads; “The Contractor shall provide the Plant Clearance Officer (PLCO) at least 10 working days advance written notice of its intent to remove a property item from an approved inventory disposal schedule.” Delete timeframe. Revise statement to read: “The Contractor shall provide the Plant Clearance Officer written notice of its intent to remove a property item from an approved inventory disposal schedule.” Nonconcur. The property belongs to Government agencies. The time is needed to coordinate with the owning agency. It is a Government decision to delete property off the schedule.

10. Several contractors questioned why or how the Government performed internal Government processes. Response. After reviewing these comments the Government decided the Government internal processes are appropriate as stated.

11. PR: 45.507. FR: 45.606. Several comments addressed the requirement to screen scrap. Once scrap is reported, the Government makes the decision whether to screen, sell or abandon scrap. Not all scrap is screened.

12. PR & FR: SF 1428. Several comments addressed making the use of electronic submission of inventory disposal schedules mandatory. Other comments addressed the difference in distribution of paper copies and electronic copies. Nonconcur. To allow flexibility, the Government provides for electronic or paper copy submission of inventory disposal schedules. The paper copy process requires separate inventory disposal schedules in order for the different agencies to screen the items.

13. PR: 52.245-7(g)(9). FR: 45.604-4, 52.245-2(i)(9); 52.245-5(i)(9). The proposed statement reads; “The Contractor shall credit the net proceeds from a disposal of Government property in accordance with instructions received from the PLCO.” Revise the statement to read: “* * * PLCO or in the case of scrap, in accordance with the Contractor's approved Property procedures.” Same as 52.245-2. Nonconcur. This is an internal Government decision. The Government needs to reserve the right to direct proceeds.

14. PR: 52.245-2(g)(10). FR: 52.245(i)(10), 52.245-5(i)(10). The proposed statement reads “The Contractor shall require a subcontractor that is using property accountable under this contract at a subcontractor-managed site to submit inventory disposal schedules to the Contractor in sufficient time for the Contractor to comply with the requirements of paragraph (g)(4) of this clause.” Revise the statement to read: “* * * to the Contractor as soon as reasonably possible.” Same as 52.245-7. Nonconcur. Prime contractor should set limits to subcontractor, so that prime is in compliance.

15. PR & FR. 49.108-4(a)(1)(ii)(B). 45.504 reference is inconsistent. Make it 45.602-4. Concur. Changed in final rule to 45.602-3.

16. PR: 45.001. FR: 2.101. Definition of “plant clearance officer.” The proposed definition fails to address that the plant clearance officer is a Government representative and is an authorized representative of the contracting officer. Concur. Made change.

17. PR: 45.505-1. Placed within 45.5, the proposed language has no force or effect. Relocate the provisions at proposed 45.505-1 within the applicable contract clauses at 52.245-xx. Concur. Removed from 45.505-1 and included in the appropriate provisions.

18. PR: 45.507-2(a). FR: 52.245-2(i)(1)(i)(B), 52.245-5(i)(1)(i)(B). This is not contractually binding. Relocate within the applicable clauses at 52.245. Concur. Coverage in clauses.

19. PR: 45.001, 52.245-2, 52.245-7. Add definition of “Export control and high risk property.” Export controlled information means unclassified U.S. Government information if proposed for export by the private sector, would require a U.S. Department of Commerce or U.S. Department of State validated license, and which, if given uncontrolled release, could reasonably be expected to adversely affect U.S. national security or nuclear nonproliferation objectives. In suggesting the definition below it is recognized that the sensitive property definition is similar. Would suggest an incorporation of the two or additions of the portions of the high risk personal property definition that are not already included in the sensitive property definition. “ ‘High risk personal property' means property that, because of its potential impact on public health and safety, the environment, national security interests, or proliferation concerns, must be controlled and disposed of in other than the routine manner. The categories of high risk property are automatic data processing equipment, especially designed or prepared property, export controlled information, export controlled property, hazardous property, nuclear weapons components or weapon-like components, proliferation sensitive property, radioactive property, special nuclear material, and unclassified controlled nuclear information.” Nonconcur. Subject is not referred to in text. Therefore, no definition is required.

20. PR: 52.245-2(g)(8). FR: 52.245-2(i)(8), 52.245-5(i)(8). Include a requirement that the contractor be notified in the disposal instructions that the property may be subject to U.S. Export Control regulations. Should also be a part of subcontract terms and conditions. Nonconcur. The PLCO will notify the contractor concerning disposal instructions of property that is subject to U.S. Export Control regulations.

21. PR: 45.506(c). FR: 45.604-2. Amend to permit agencies to abandon property that requires demilitarization if the contractor consents by adding; “to perform all required demilitarization at its own expense is a condition for the abandonment of the property.” Concur. See 52.245-2(i)(8) and 52.245-5(i)(8)(iii).

22. FR: 45.606, 52.245-2(i)(1), 52.245-5(i)(1). Several contractors made comments relating to approved scrap procedures such as eliminating these procedures. Nonconcur. Not all contractors have approved scrap procedures.

23. PR: 45.505-2, 52.245-2(g)(6), and 52.245-7(g)(6). FR: 45.602-1, 52.245-2(i)(6), 52.245-5(i)(6). Replace (c) with: “If, before final disposition, the contractor becomes aware that any items of contractor acquired property listed in the inventory schedules are usable on other work without financial loss, the contractor shall purchase the items or retain them at cost and amend the inventory schedules and claim accordingly. Upon notifying the plant clearance officer, the contractor may purchase or retain at cost any other items of property included in the inventory schedules. Withdrawal of any Government-furnished property is subject to the written approval of the plant clearance officer. If withdrawal is requested after screening has started, the plant clearance officer shall notify immediately the appropriate screening activity.” Nonconcur. This is a contractor option before reporting property for disposal, after reporting it for disposal it is a Government action.

24. PR: 45.507-1. FR: 45.606-1. Revise proposed statement to read: “Contractors may dispose of scrap left-over from the normal production process that has no further intrinsic value without Government approval provided the scrap does not contain precious metals, hazardous materials or wastes, nuclear materials, or classified materials; or requires demilitarization.” Nonconcur. It is impracticable to list all items that could be included. See definition of scrap in 2.101.

25. PR: 52.245-2(g). FR: 52.245-2(i). Change (g) to read: “Except as provided in paragraphs (c)(8), (g)(1), (g)(2), and (g)(8) of this clause, the Contractor shall not dispose of Government property until authorized to do so by the Plant Clearance Officer.” Concur. Clause updated.

26. PR: 45.001. FR: 45.601. Recommend you delete this definition, Demilitarization, in its entirety and substitute in lieu thereof the definition of demilitarization found in the DoD Federal Acquisition Regulation Supplement. Nonconcur. The definition is more understandable and current.

27. PR: 45.505-3. FR: 45.602-2. This section should be consistent with GSA's requirement at 41 CFR 102-36.250. Nonconcur. 41 CFR 102-36.250 deals with excess property and is a different subject.

28. PR: 45.505-4. FR: 45.602-3. Screening requirements should be consistent with the provisions as contained in 41 CFR 101-43.4801, which excludes items that cost under $5,000. Nonconcur. FPMR has been changed. A low acquisition cost is no longer an exception to screening.

29. PR: 45.506. FR: 45.603. The Government should be able to abandon certain property items where there is not a good reason for the Government to retain title. 40 U.S.C. Sec. 483(h) does not require an item to be excess in order to be abandoned. This provision of the law provides for abandonment based upon commercial value or estimated cost of continued care and handling. Nonconcur. 40 U.S.C. Sec 483(h) (now 40 U.S.C. 527) deals with excess property.

30. PR: 45.507-2. FR: 45.606-2. The approved scrap procedure should facilitate the efficient disposition of scrap while requiring the contractor to provide the Plant Clearance Officer the necessary information to make reasonable determinations. Requiring the contract number for each item of scrap necessitates the generation of a different scrap list for each contract, causing excessive administrative burden on the Government and the contractor. The quantity of scrap is generally measured in short tons—most contractors do not have the equipment to weigh scrap. Nonconcur. Scrap reimbursement is allocable to specific contracts.

31. PR: 52.245-2(g)(7). FR: 52.245-2(i)(7), 52.245-5(i)(7). Storage is a given requirement under the contract. When business conditions require the movement of stored items, this cost is merely a cost of doing business. These costs should always be allowable unless they are deemed unreasonable. Nonconcur. It is unreasonable to move property without prior approval of the Government after the property is submitted for disposal.

32. PR: 52.245-2(h). FR: 52.245-2(j), 52.245-5(j). Should provide for a request for abandonment in an effort to reduce cost of dismantlement, movement, storage and administration. Nonconcur. The FAR does not prohibit the contractor from asking that property be considered for abandonment.

33. Move property disposal into the FPMR. No need for the new SF 1428, because of the SF 120. Remove revisions to 45.505-3. Make 45.506 and 45.508-1 similar to 101-45.9. Nonconcur. It is not cost effective to change the current electronic processing systems just for convenience. The FAR allows for both electronic and paper forms to be used.

34. PR: 52.245-2(g). FR: 52.245-5(i). This paragraph gives disposal authority to the PLCO. Clarify what authority the CO has or does not have to authorize disposal (including abandonment). Concur. Changed definition of plant clearance officer. The CO has the authority but must follow the statutory and regulatory requirements (screening).

35. PR: 52.245-2(g)(2)(i). FR: 52.245-2(i)(2)(i). Address what must be done with proceeds if the fair market value of unused property returned to the supplier is higher than the original cost. Nonconcur. In the cases where the fair market value is higher than the original cost it will be addressed at the agency level because it creates an allocation issue rather than a regulatory issue.

36. PR & FR SF 1428. Require adequately detailed or commercial descriptions on inventory schedules for excess property and revise schedule format to allow space for this. Nonconcur. Item 14 of the SF 1428 requires description in sufficient detail.

37. Prescribe the length of the agency screening period as a maximum time period. Concur. The time period is 20 days.

38. PR: 45.506. FR: 45.603. Add language on abandonment of excess property or reference FPMR 101-45.900 to require a reviewing official for abandonment determinations, to require public notice and to define the circumstances when public notice is not required. Nonconcur. This is not a commercial practice and would add another layer of bureaucracy to the process with little added value.

39. Abandonment in lieu of sale of surplus property should reference FPMR 101-44.7 for details of requirements for abandonment of surplus property in lieu of sale. Nonconcur. The specific requirements are stated in 45.603 and 45.604-2.

40. Government involvement in disposal of other than scrap should be limited to assisting in the disposal process. Nonconcur. This is Government property and disposal must be at Government direction.

41. Demilitarization. The proposed rewrite does not adequately address the longstanding issue of demilitarization. Perhaps this is more appropriate for a DFARS revision, but references to demilitarization in the FAR should be deleted until a final policy is in place within DoD. Nonconcur. Needs to be addressed not just for DoD, but also NASA, DOE, Coast Guard, etc.

42. PR: 1.106. FR: 1.106, 45.605. Delete reference to SF 1424. See Part 53. SF 1424 is still being used. FAR 45.509 which is appropriately titled “Inventory Disposal Reports.” Concur. SF 1424 is still being used. Language at 1.106 was updated for OMB clearance purposes.

43. PR: 45.505-1(a). FR: 45.602-1(c). Text states: Make reasonable efforts to return Government property that was acquired or produced by the contractor and is no longer needed for contract performance to the appropriate supplier or to use the property in performance of other contracts * * * #1036 no longer makes reference to restocking charges or other charges for returns. Needs to be added. This definition is not consistent with the definition for GP. Concur. Added restocking charge.

44. PR: 45.505-2. FR: 45.602-1. Please consider slight reduction in some PLCO schedule acceptance times. Concur. It now reads 10 days.

45. PR: 52.245-2(g)(7)(ii). FR: 52.245-2(i)(7)(ii). To “If approval is granted, any costs incurred by the Contractor to transport or store the property shall not increase the price or fee of any Government contract.” Add: “, unless incurred due to the Government's failure to provide disposal instructions within 120 days of receipt of * * *” Nonconcur. Covered in paragraph 52.245-2(g)(7)(i) (now 52.245-2(i)(7)(i).

46. PR: 45.505-4. FR: 45.602-3(b)(4). Paragraph 45.505-4(b)(4) addresses the screening of hazardous waste. This should read “property contaminated with hazardous wastes.” Waste of any kind should not be screened. If hazardous waste is a by-product of work performed on a contract, the contract should require its disposal in accordance with applicable Federal, State, and local laws. Nonconcur. Contractors must dispose of Government property in accordance with the new 45.602. The contractor is responsible for contractor-owned property and must dispose of it in accordance with applicable Federal, State, and local laws.

47. PR: 45.506. FR: 45.603. Paragraph 45.506(a)(2) provides a cost based justification for using abandonment, destruction, or donation in lieu of sale. The justification, as written, does not take into account that there are costs associated with these disposal alternatives. The Defense Reutilization and Marketing Service has long recognized that fact and has developed an economy formula to address the costs of disposal alternatives. There are times when a net sale loss can be less costly to the Government than exercising a disposal alternative. Therefore, this paragraph should be rewritten to require consideration of the cost of disposal alternatives in the decision process. Nonconcur. The plant clearance officer already considers these costs in all disposal determinations.

48. PR: 45.506(c). FR: 45.604-2. Paragraph (c) states: “* * * property that requires demilitarization may be abandoned. * * *” Property that requires demilitarization should not be abandoned unless the required demilitarization has been performed. Paragraph should read: “* * * property that has been demilitarized may be abandoned.” Concur in principle. See new paragraph 45.604-2.

49. PR: 45.508. FR: 45.604-2. The title of this section is incorrect. Part of the disposal process involving surplus property has already occurred at this point. On the 42nd day of screening, property that has not been selected for transfer to another Federal agency becomes surplus property which then becomes available for donation to eligible donees * * *. This section addresses what is done to surplus property that survives donation screening. Therefore, the section should be titled “Disposal of undonated surplus Government property.” 45.508(a), first sentence, should be written to read, “this section addresses the disposal of Government property * * * that, * * * has not been reutilized, transferred, or donated to eligible donees (i.e., public airports, service educational activities, and State agencies for surplus property). The parenthetical phrase “(hereafter referred to as surplus property)” at the end of the sentence should be deleted. Concur. Corrected text, but not the title. “Undonated” was not added to the title because once an item has been donated it is no longer available for disposal.

50. PR: 45.505-3. FR: 45.602-2. Clarify. Subparagraph (b) seems to indicate that donation of educationally useful property to schools and non-profit organizations can only be accomplished after all Federal agencies have declined the property. However, subparagraph (c) identifies other agency screening as lower in priority than donation to schools or non-profit organizations. Nonconcur. The order of priority of 45.602-2 is clear as written.

The other comments concerning the other subparts of FAR Part 45 were conflicting and a satisfactory resolution of those comments was not attained. Therefore, the other subparts of FAR Part 45 are not being revised by this final rule. This final rule amends the FAR by—

• Replacing five inventory disposal forms with one;
• Clearly delineating the responsibilities of the plant clearance officer;
• Decreasing the time for Government acceptance of inventory disposal schedules from 15 to 10 days;
• Decreasing the time for Government inventory verification from 30 days to 20 days;
• Decreasing agency and Federal screening time from 90 days to 46 days;
• Eliminating the Government requirement to screen most scrap;
• Allowing contractors with approved scrap procedures to submit scrap lists instead of inventory disposal schedules;
• Eliminating reporting of production scrap for contractors with approved scrap procedures;
• Authorizing contractors to dispose of production scrap without Government approval under most conditions; and
• Placing contractor responsibilities in clauses rather than the FAR text.

Some terminology found in the FAR, while appearing in the Federal Property Management Regulation (FPMR) and Federal Management Regulation (FMR), may not have the same intended meaning or be used in the same manner (e.g., reutilization, disposal, disposition). For this reason, the Councils are committed to the future establishment of a separate case for the purpose of reviewing and resolving possible inconsistent uses of terminology between the FAR and the FMR.

This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

The Regulatory Flexibility Act, 5 U.S.C. 601, et seq., applies to this final rule. The Councils prepared a Final Regulatory Flexibility Analysis (FRFA), and it is summarized as follows:

This final rule amends the FAR to simplify procedures, reduce recordkeeping, and eliminate requirements related to the disposition of Government property in the possession of contractors. No comments concerning the Initial Regulatory Flexibility Analysis were received that related to disposition of Government property. We estimate that approximately 6,850 contractors have Government property in their possession. Approximately 65 percent of DoD's contractors are small businesses. Given that property in the possession of contractors is overwhelmingly DoD property, it is estimated that the DoD ratio of small to total businesses having such property is a reasonable approximation for all Government contractors. Therefore, it is estimated that approximately 4,450 small businesses have Government property in their possession that at some point will need to be dispositioned. This final rule decreases the impact of the current FAR provisions by simplifying recordkeeping requirements, reducing the number of records to be maintained, reducing the number of reports to be submitted, and replacing five inventory disposal schedules with one inventory disposal schedule. The rule also streamlines the Government property disposal process by decreasing agency, Federal, and donation screening times and virtually eliminating the requirement to screen scrap. The records and reports required by this rule have been reduced to the minimum necessary to assure compliance with the Government's statutory accountability and disposal requirements.

Interested parties may obtain a copy of the FRFA from the FAR Secretariat. The FAR Secretariat has submitted a copy of the FRFA to the Chief Counsel for Advocacy of the Small Business Administration.

C. Paperwork Reduction Act

The Paperwork Reduction Act does apply; however, these changes to the FAR do not impose additional information collection requirements to the paperwork burden previously approved under OMB Control Number 9000-0075 on October 28, 2003. This final rule reduces the annual reporting burden for disposal of Government property.

List of Subjects in 48 CFR Parts 1, 2, 8, 45, 49, 52, and 53

• Government procurement

Dated: March 26, 2004.

Laura Auletta,

Director, Acquisition Policy Division.

Therefore, DoD, GSA, and NASA amend 48 CFR parts 1, 2, 8, 45, 49, 52, and 53 as set forth below:

1. The authority citation for 48 CFR parts 1, 2, 8, 45, 49, 52, and 53 is revised to read as follows:

Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 U.S.C. 2473(c).

PART 1—FEDERAL ACQUISITION REGULATIONS SYSTEM

1.106

[Amended]

2. Amend section 1.106 in the table following the introductory paragraph by—

a. Revising the OMB Control Number, “9000-0015” at entries for FAR segments SF 1428 and SF 1429, to read “9000-0075”; and

b. Removing the FAR segment entries and their corresponding OMB Control Numbers at SF 1423, 1424, 1426, 1427, 1430, 1431, 1432, 1433, and 1434.

PART 2—DEFINITIONS OF WORDS AND TERMS

3. Amend section 2.101 in paragraph (b) by adding, in alphabetical order, the definitions “Excess personal property,” “Personal property,” “Plant clearance officer,” “Scrap,” and “Termination inventory,” to read as follows:

2.101

Definitions.

* * * * *

(b) * * *

* * * * *

Excess personal property means any personal property under the control of a Federal agency that the agency head determines is not required for its needs or for the discharge of its responsibilities.

* * * * *

Personal property means property of any kind or interest in it except real property, records of the Federal Government, and naval vessels of the following categories:

(1) Battleships;

(2) Cruisers;

(3) Aircraft carriers;

(4) Destroyers; and

(5) Submarines.

* * * * *

Plant clearance officer means an authorized representative of the contracting officer appointed to disposition property accountable under Government contracts.

* * * * *

Scrap means personal property that has no value except its basic metallic, mineral, or organic content.

* * * * *

Termination inventory means any property purchased, supplied, manufactured, furnished, or otherwise acquired for the performance of a contract subsequently terminated and properly allocable to the terminated portion of the contract. It includes Government-furnished property. It does not include any facilities, material, special test equipment, or special tooling that are subject to a separate contract or to a special contract requirement governing their use or disposition.

* * * * *

PART 8—REQUIRED SOURCES OF SUPPLIES AND SERVICES

8.101

[Reserved]

4. Remove and reserve section 8.101.

8.104

[Amended]

5. Amend section 8.104 by removing “Federal Property Management Regulations ( 41 CFR 101-43.312)” and adding “Federal Management Regulations (41 CFR 102-36.90)” in its place.

PART 45—GOVERNMENT PROPERTY

6. Amend section 45.102 by revising paragraph (g) to read as follows:

45.102

Policy.

* * * * *

(g) Ensure maximum practical reutilization of Government property (see 45.602) within the Government.

45.501

[Amended]

7. Amend section 45.501 by removing the definition “Scrap.”

8. Revise Subpart 45.6 to read as follows:

Subpart 45.6—Reporting, Reutilization, and Disposal

45.600

Scope of subpart.

45.601

Definitions.

45.602

Reutilization of Government property.

45.602-1

Inventory disposal schedules.

45.602-2

Reutilization priorities.

45.602-3

Screening.

45.602-4

Interagency property transfer costs.

45.603

Abandonment, destruction or donation of excess personal property.

45.604

Disposal of surplus property.

45.604-1

Disposal methods.

45.604-2

Abandonment, destruction, or donation of surplus property.

45.604-3

Sale of surplus property.

45.604-4

Proceeds from sales of surplus property.

45.605

Inventory disposal reports.

45.606

Disposal of scrap.

45.606-1

Contractor with an approved scrap procedure.

45.606-2

Contractor without an approved scrap procedure.

45.606-3

Procedures.

Subpart 45.6—Reporting, Reutilization, and Disposal

45.600

Scope of subpart.

This subpart establishes policies and procedures for the reporting, reutilization, and disposal of Government property excess to contracts and of property that forms the basis of a claim against the Government (e.g., termination inventory under fixed-price contracts). This subpart does not apply to the disposal of real property or to property for which the Government has a lien or title solely as a result of advance or progress payments that have been liquidated.

45.601

Definitions.

As used in this subpart—

Common item means material that is common to the applicable Government contract and the contractor's other work.

Demilitarization means rendering a product designated for demilitarization unusable for, and not restorable to, the purpose for which it was designed or is customarily used.

Precious metals means silver, gold, platinum, palladium, iridium, osmium, rhodium, and ruthenium.

Sensitive property means property potentially dangerous to the public safety or security if stolen, lost, or misplaced, or that shall 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.

Surplus property means excess personal property not required by any Federal agency as determined by the Administrator of General Services (GSA).

45.602

Reutilization of Government property.

This section is applicable to the reutilization, including transfer and donation, of Government property that is not required for continued performance of a Government contract. Except for 45.602-1, this section does not apply to scrap other than scrap aircraft parts.

45.602-1

Inventory disposal schedules.

(a) Plant clearance officers should review and accept, or return for correction, inventory disposal schedules within 10 days following receipt from a contractor. Schedules that are completed in accordance with the instructions for Standard Form 1428 should be accepted.

(b) Plant clearance officers shall—

(1) Use Standard Form 1423 to verify, in accordance with agency procedures, accepted schedules within 20 days following acceptance;

(2) Require a contractor to correct any discrepancies found during verification;

(3) Require a contractor to correct any failure to complete predisposal requirements of the contract; and

(4) Provide the contractor disposition instructions for property identified on an acceptable inventory disposal schedule within 120 days. A failure to provide timely disposition instructions might entitle the contractor to an equitable adjustment.

(c) Contractors shall obtain the plant clearance officer's approval to remove Government property from an inventory disposal schedule.

(1) Plant clearance officers should approve removal when—

(i) The contractor wishes to purchase a contractor-acquired or contractor-produced item at acquisition cost and credit the contract;

(ii) The contractor is able to return unused property to the supplier at fair market value and credit the contract (less, if applicable, a reasonable restocking fee that is consistent with the supplier's customary practices);

(iii) The Government has authorized the contractor to use the property on another Government contract; or

(iv) The contractor has requested continued use of Government property, and the plant clearance officer has consulted with the appropriate program and technical personnel.

(2) If the screening process (see 45.602-3) has not begun, the plant clearance officer shall adjust the schedule or return the schedule to the contractor for correction. If screening has begun, the plant clearance officer shall promptly notify the activity performing the screening that the items should be removed from the screening process.

45.602-2

Reutilization priorities.

Plant clearance officers shall initiate reutilization actions using the highest priority method appropriate for the property. Authorized methods, listed in descending order from highest to lowest priority, are—

(a) Reuse within the agency (see 45.603 for circumstances under which excess personal property may be abandoned, destroyed, or donated);

(b) Transfer of educationally useful equipment, with GSA approval, to other Federal agencies that have expressed a need for the property;

(c) Transfer of educationally useful equipment to schools and nonprofit organizations (see Executive Order 12999, Educational Technology: Ensuring Opportunity For All Children In The Next Century, April 17, 1996), and 15 U.S.C. 3710(i);

(d) Reuse within the Federal Government; and

(e) Donation to an eligible donee designated by GSA.

45.602-3

Screening.

The screening period begins upon the plant clearance officer's acceptance of an inventory disposal schedule. The plant clearance officer shall determine whether standard or special screening is appropriate and initiate screening actions.

(a) Standard screening. The standard screening period is 46 days.

(1) First through twentieth day—Screening by the contracting agency. The contracting agency has 20 days to screen property reported on the inventory disposal schedule for: Other use within the agency; transfer of educationally useful equipment to other Federal agencies that have expressed a need for the property; and transfer of educationally useful equipment to schools and nonprofit organizations if a Federal agency has not expressed a need for the property. Excess personal property, meeting the conditions of 45.603, may be abandoned, destroyed, or donated to public bodies. No later than the 21st day, the plant clearance officer shall submit four copies of the revised schedules and Standard Form (SF) 120, Report of Excess Personal Property, or an electronic equivalent to GSA (see 41 CFR 102-36.215).

(2) Twenty-first through forty-sixth day (21 days concurrent screening plus 5 days donation processing).—(i) Screening by other Federal agencies. GSA will normally honor requests for transfers of property on a first-come-first-served basis through the 41st day. When a request is honored, the GSA regional office shall promptly transmit to the plant clearance officer an approved transfer order that includes shipping instructions.

(ii) Screening for possible donation. Screening for donation is also completed during days 21 through 41. Property is not available for allocation to donees until after the completion of screening. Days 42 through 46 are reserved for GSA to make such allocation.

(3) Screening period transfer request. If an agency receives an intra-agency transfer request during the screening periods described in paragraph (a)(2) of this subsection, the plant clearance officer shall request GSA approval to withdraw the item from the inventory disposal schedule.

(b) Special screening requirements.— (1) Special tooling and special test equipment without commercial components. Agencies shall follow the procedures in paragraph (a) of this subsection. This property owned by the Department of Defense (DoD) or the National Aeronautics and Space Administration (NASA) may be screened for reutilization only within these agencies.

(2) Special test equipment with commercial components.—(i) Agencies shall complete the screening required by paragraph (a) of this subsection. If an agency has no further need for the property and the contractor has not expressed an interest in using or acquiring the property by annotating the inventory disposal schedule, the plant clearance officer shall forward the inventory disposal schedule to the GSA regional office that serves the region in which the property is located.

(ii) If the contractor has expressed an interest in using the property on another Government contract, the plant clearance officer shall contact the contracting officer for that contract. If the contracting officer concurs with the proposed use, the contracting officer for the contract under which the property is accountable shall transfer the property's accountability to that contract. If the contracting officer does not concur with the proposed use, the plant clearance officer shall deny the contractor's request and shall continue the screening process.

(iii) If the property is contractor-acquired or -produced, and the contractor or subcontractor has expressed an interest in acquiring the property, and no other party expresses an interest during agency or GSA screening, the property may be sold to the contractor or subcontractor at acquisition cost.

(3) Printing equipment. Agencies shall report all excess printing equipment to the Public Printer, Government Printing Office, North Capitol and H Streets, NW., Washington, DC 20401, after screening within the agency (see 44 U.S.C. 312). If the Public Printer does not express a need for the equipment within 21 days, the agency shall submit the report to GSA for further use and donation screening as described in paragraph (a) of this subsection.

(4) Non-nuclear hazardous materials, hazardous wastes, and classified items. These items shall be screened in accordance with agency procedures. Report non-nuclear hazardous materials to GSA if the agency has no requirement for them.

(5) Nuclear materials. The possession, use, and transfer of certain nuclear materials are subject to the regulatory controls of the Nuclear Regulatory Commission (NRC). Contracting activities shall screen excess nuclear materials in the following categories:

(i) By-product material. Any radioactive material (except special nuclear material) yielded in or made radioactive by exposure to the radiation incident to producing or using special nuclear material.

(ii) Source material. Uranium or thorium, or any combination thereof, in any physical or chemical form; or ores that contain by weight one-twentieth of 1 percent (0.05 percent) or more of uranium, thorium, or any combination thereof. Source material does not include special nuclear material.

(iii) Special nuclear material. Plutonium, Uranium 233, Uranium enriched in the isotope 233 or in the isotope 235, any other material that the NRC determines to be special nuclear material (but not including source material); or any material artificially enriched by any nuclear material.

45.602-4

Interagency property transfer costs.

Agencies whose property is transferred to other agencies shall not be reimbursed for the property in any manner unless the circumstances of FMR 102-36.285 (41 CFR 102-36.285) apply. The agency receiving the property shall pay any transportation costs that are not the contractor's responsibility and any costs to pack, crate, or otherwise prepare the property for shipment. The contract administration office shall process appropriate contract modifications. To accelerate plant clearance, the receiving agency shall promptly furnish funding data, and transfer or shipping documents to the contract administration office.

45.603

Abandonment, destruction or donation of excess personal property.

(a) Plant clearance officers may abandon, destroy, or donate to public bodies excess property that is not sensitive property and does not require demilitarization.

(b) Plant clearance officers may abandon sensitive property that does not require demilitarization, with contractor consent, provided appropriate instructions are provided with respect to the proper care, handling, and disposal of the property.

(c) The Government may donate excess personal property to eligible donees in lieu of abandonment if the Government will not bear any of the costs incident to a donation.

(d)(1) Before abandoning, destroying, or donating excess personal property, the plant clearance officer shall determine in writing that the property does not constitute a danger to public health or welfare and—

(i) The property has no residual monetary value; or

(ii) The estimated cost to sell the property, including advertising, storage, and other costs associated with making the sale, is greater than the probable sale proceeds; and

(2) A Government reviewing official shall approve all written determinations for abandonment and destruction actions.

45.604

Disposal of surplus property.

45.604-1

Disposal methods.

(a) Except as provided in paragraphs (b) and (c) of this subsection, surplus property that has completed screening in accordance with 45.602-3(a) shall be sold in accordance with 45.604-3 or abandoned, destroyed, or donated to public bodies in accordance with 45.604-2.

(b) The following property that GSA has declared surplus or not required to be screened by GSA shall be disposed of in accordance with agency procedures:

(1) Classified items.

(2) Nonnuclear hazardous materials or hazardous wastes.

(3) Property that contains precious metals or requires demilitarization.

(4) Government property physically located outside the United States or its possessions (see 40 U.S.C. 701-705).

(c) Nuclear materials (see 45.602-3(b)(5)) shall be disposed of in accordance with NRC or applicable state licenses, applicable Federal regulations, and agency regulations.

45.604-2

Abandonment, destruction, or donation of surplus property.

(a) Plant clearance officers may abandon, destroy, or donate to public bodies surplus property that is not sensitive property, and does not require demilitarization.

(b) Plant clearance officers may abandon sensitive property that does not require demilitarization, with contractor consent, provided appropriate instructions are provided with respect to the proper care, handling, and disposal of the property.

(c) The Government may donate surplus property to eligible donees in lieu of abandonment if the Government will not bear any of the costs incident to donation.

(d) Before abandoning, destroying, or donating surplus property, the plant clearance officer shall determine in writing that the property does not constitute a danger to public health or welfare and—

(1) The property has no residual monetary value; or

(2) The estimated cost to sell the property, including advertising, storage, and other costs associated with making the sale, is greater than the probable sale proceeds.

45.604-3

Sale of surplus property.

Policy for the sale of surplus property is contained in the Federal Property Management Regulations, at Part 101-45 (41 CFR part 101-45). Agencies may specify implementing procedures.

45.604-4

Proceeds from sales of surplus property.

Proceeds of any sale are to be credited to the Treasury of the United States as miscellaneous receipts, unless otherwise authorized by statute or the contract or any subcontract thereunder authorizes the proceeds to be credited to the price or cost of the work (40 U.S.C. 571 and 574).

45.605

Inventory disposal reports.

The plant clearance officer shall promptly prepare an SF 1424, Inventory Disposal Report, following disposition of the property identified on an inventory disposal schedule or scrap list and the crediting of any related proceeds. The report shall identify any lost, stolen, damaged, destroyed, or otherwise unaccounted for property and any changes in quantity or value of the property made by the contractor after submission of the initial inventory disposal schedule. The report shall be addressed to the administrative contracting officer or, for termination inventory, to the termination contracting officer, with a copy to the property administrator.

45.606

Disposal of scrap.

45.606-1

Contractor with an approved scrap procedure.

(a) The contractor may dispose of scrap resulting from production or testing under this contract without Government approval. However, if the scrap requires demilitarization or is sensitive property, then the contractor shall submit the scrap on an inventory disposal schedule.

(b) For scrap from other than production or testing, the contractor may prepare scrap lists in lieu of inventory disposal schedules (provided such lists are consistent with the approved scrap procedures) except that inventory disposal schedules shall be submitted for scrap aircraft or aircraft parts and scrap that—

(1) Requires demilitarization;

(2) Is a classified item;

(3) Is generated from classified items;

(4) Contains hazardous materials or hazardous wastes;

(5) Contains precious metals; or

(6) Is dangerous to the public health, safety, or welfare.

45.606-2

Contractor without an approved scrap procedure.

The contractor shall submit an inventory disposal schedule for all scrap.

45.606-3

Procedures.

(a) The plant clearance officer shall process inventory disposal schedules in accordance with 45.602-1.

(b) The plant clearance officer shall—

(1) Accept, reject, or return for correction scrap lists within 10 days following receipt;

(2) Accept scrap lists that are consistent with a contractor's approved scrap procedure, correctly identify the contracts under which the scrap is accountable, and correctly identify the scrap's quantity and condition;

(3) Use Standard Form 1423 to verify accepted scrap lists, in accordance with agency procedures;

(4) Require a contractor to correct any discrepancies found during verification; and

(5) Provide disposition instructions to the contractor within 45 days following Government acceptance of a scrap list. If the plant clearance officer does not provide disposition instructions within that period, the contractor may dispose of scrap identified on a scrap list without further Government approval.

PART 49—TERMINATION OF CONTRACTS

49.001

[Amended]

9. Amend section 49.001 by adding, in alphabetical order, the definition “Plant clearance period”, and removing the definition “Termination inventory” to read as follows:

49.001

Definitions.

* * * * *

Plant clearance period, as used in this subpart, means the period beginning on the effective date of contract completion or termination and ending 90 days (or such longer period as may be agreed to) after receipt by the contracting officer of acceptable inventory schedules for each property classification. The final phase of the plant clearance period means that period after receipt of acceptable inventory schedules.

* * * * *

10. Amend section 49.108-3 by revising paragraph (b)(1) to read as follows:

49.108-3

Settlement procedure.

* * * * *

(b) * * *

(1) All subcontractor termination inventory be disposed of and accounted for in accordance with the procedures contained in paragraphs (i) and (j) of the clause at 52.245-2, Government Property (Fixed-Price Contracts), and paragraphs (i) and (j) of the clause at 52.245-5, Government Property (Cost-Reimbursement, Time-and-Material, or Labor-Hour Contracts); and

* * * * *

11. Amend section 49.108-4 by revising paragraphs (a)(1)(ii) and (b) to read as follows:

49.108-4

Authorization for subcontract settlements without approval or ratification.

(a)(1) * * *

(ii) Any termination inventory included in determining the amount of the settlement will be disposed of as directed by the prime contractor, except that the disposition of the inventory shall not be subject to—

(A) Review by the TCO under 49.108-3(c); or

(B) The screening requirements in 45.602-3; and

* * * * *

(b) Section 45.602 shall apply to disposal of completed end items allocable to the terminated subcontract. However, these items may be disposed of without review by the TCO under 49.108-3 and without screening under 45.602-3, if the items do not require demilitarization and the total amount (at the subcontract price) when added to the amount of the settlement does not exceed the amount authorized under this subsection.

* * * * *

12. Revise the section heading and text of 49.206-3 to read as follows:

49.206-3

Submission of inventory disposal schedules.

Subject to the terms of the termination clause, and whenever termination inventory is involved, the contractor shall submit complete inventory disposal schedules to the TCO reflecting inventory that is allocable to the terminated portion of the contract. The inventory disposal schedules shall be submitted within 120 days from the effective date of termination unless otherwise extended by the TCO based on a written justification to support the extension. The inventory schedules shall be prepared on Standard Form 1428, Inventory Disposal Schedule.

13. Revise the section heading and text of 49.303-2 to read as follows:

49.303-2

Submission of inventory disposal schedules.

Subject to the terms of the termination clause, and whenever termination inventory is involved, the contractor shall submit complete inventory disposal schedules to the TCO reflecting inventory that is allocable to the terminated portion of the contract. The inventory disposal schedules shall be submitted within 120 days from the effective date of termination unless otherwise extended by the TCO based on a written justification to support the extension. The inventory disposal schedules shall be prepared on Standard Form 1428, Inventory Disposal Schedule.

14. Revise the section heading and text of 49.602-2 to read as follows:

49.602-2

Inventory forms.

Standard Form (SF) 1428, Inventory Disposal Schedule, and SF 1429, Inventory Disposal Schedule—Continuation Sheet, shall be used to support settlement proposals submitted on the forms specified in 49.602-1(b) and (d).

PART 52—SOLICITATION PROVISIONS AND CONTRACT CLAUSES

15. Amend section 52.245-2 by revising the date of the clause and paragraphs (i) and (j) to read as follows:

52.245-2

Government Property (Fixed-Price Contracts).

* * * * *

Government Property (Fixed-Price Contracts) (May 2004)

* * * * *

(i) Government property disposal. Except as provided in paragraphs (i)(1)(i), (i)(2), and (i)(8)(i) of this clause, the Contractor shall not dispose of Government property until authorized to do so by the Plant Clearance Officer.

(1) Scrap (to which the Government has obtained title under paragraph (c) of this clause).—(i) Contractor with an approved scrap procedure.—(A) The Contractor may dispose of scrap resulting from production or testing under this contract without Government approval. However, if the scrap requires demilitarization or is sensitive property, the Contractor shall submit the scrap on an inventory disposal schedule.

(B) For scrap from other than production or testing the Contractor may prepare scrap lists in lieu of inventory disposal schedules (provided such lists are consistent with the approved scrap procedures), except that inventory disposal schedules shall be submitted for scrap aircraft or aircraft parts and scrap that—

(1) Requires demilitarization;

(2) Is a classified item;

(3) Is generated from classified items;

(4) Contains hazardous materials or hazardous wastes;

(5) Contains precious metals; or

(6) Is dangerous to the public health, safety, or welfare.

(ii) Contractor without an approved scrap procedure. The Contractor shall submit an inventory disposal schedule for all scrap.

(2) Pre-disposal requirements. When the Contractor determines that a property item acquired or produced by the Contractor, to which the Government has obtained title under paragraph (c) of this clause, is no longer needed for performance of this contract, the Contractor, in the following order of priority:

(i) May purchase the property at the acquisition cost.

(ii) Shall make reasonable efforts to return unused property to the appropriate supplier at fair market value (less, if applicable, a reasonable restocking fee that is consistent with the supplier's customary practices).

(iii) Shall list, on Standard Form 1428, Inventory Disposal Schedule, property that was not purchased under paragraph (i)(2)(i) of this clause, could not be returned to a supplier, or could not be used in the performance of other Government contracts.

(3) Inventory disposal schedules.—(i) The Contractor shall use Standard Form 1428, Inventory Disposal Schedule, to identify—

(A) Government-furnished property that is no longer required for performance of this contract, provided the terms of another Government contract do not require the Government to furnish that property for performance of that contract; and

(B) Property acquired or produced by the Contractor, to which the Government has obtained title under paragraph (c) of this clause, that is no longer required for performance of that contract.

(ii) The Contractor may annotate inventory disposal schedules to identify property the Contractor wishes to purchase from the Government.

(iii) Unless the Plant Clearance Officer has agreed otherwise, or the contract requires electronic submission of inventory disposal schedules, the Contractor shall prepare separate inventory disposal schedules for—

(A) Special test equipment with commercial components;

(B) Special test equipment without commercial components;

(C) Printing equipment;

(D) Computers, components thereof, peripheral equipment, and related equipment;

(E) Precious Metals;

(F) Nonnuclear hazardous materials or hazardous wastes; or

(G) Nuclear materials or nuclear wastes.

(iv) Property with the same description, condition code, and reporting location may be grouped in a single line item. The Contractor shall describe special test equipment in sufficient detail to permit an understanding of the special test equipment's intended use.

(4) Submission requirements. The Contractor shall submit inventory disposal schedules to the Plant Clearance Officer no later than—

(i) Thirty days following the Contractor's determination that a Government property item is no longer required for performance of the contract;

(ii) Sixty days, or such longer period as may be approved by the Plant Clearance Officer, following completion of contract deliveries or performance; or

(iii) One hundred twenty days, or such longer period as may be approved by the Plant Clearance Officer, following contract termination in whole or in part.

(5) Corrections. The Plant Clearance Officer may require the Contractor to correct an inventory disposal schedule or may reject a schedule if the property identified on the schedule is not accountable under this contract or is not in the quantity or condition indicated.

(6) Postsubmission adjustments. The Contractor shall provide the Plant Clearance Officer at least 10 working days advance written notice of its intent to remove a property item 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.

(7) Storage.—(i) The Contractor shall store the property identified on an inventory disposal schedule pending receipt of disposal instructions. The Government's failure to provide disposal instructions within 120 days following acceptance of an inventory disposal schedule might entitle the Contractor to an equitable adjustment for costs incurred to store such property on or after the 121st day.

(ii) The Contractor shall obtain the Plant Clearance Officer's approval to remove Government property from the premises at which the property is currently located prior to receipt of final disposition instructions. If approval is granted, any costs incurred by the Contractor to transport or store the property shall not increase the price or fee of any Government contract. The storage facility shall be appropriate for assuring the property's physical safety and suitability for use. Approval does not relieve the Contractor of any liability under this contract for such property.

(8) Disposition instructions.—(i) If the Government does not provide disposition instructions to the Contractor within 45 days following acceptance of a scrap list, the Contractor may dispose of the listed scrap in accordance with the Contractor's approved scrap procedures.

(ii) The Contractor shall prepare for shipment, deliver f.o.b. origin, or dispose of Government property as directed by the Plant Clearance Officer. The Contractor shall remove and destroy any markings identifying the property as Government property prior to disposing of the property.

(iii) The Contracting Officer may require the Contractor to demilitarize the property prior to shipment or disposal. Any equitable adjustment incident to the Contracting Officer's direction to demilitarize Government property shall be made in accordance with paragraph (h) of this clause.

(9) Disposal proceeds. The Contractor shall credit the net proceeds from the disposal of Government property to the price or cost of work covered by this contract or to the Government as the Contracting Officer directs.

(10) Subcontractor inventory disposal schedules. The Contractor shall require a subcontractor that is using property accountable under this contract at a subcontractor-managed site to submit inventory disposal schedules to the Contractor in sufficient time for the Contractor to comply with the requirements of paragraph (i)(4) of this clause.

(j) Abandonment of Government property.—(1) The Government will not abandon sensitive Government property without the Contractor's written consent.

(2) The Government, upon notice to the Contractor, may abandon any nonsensitive Government property in place at which time all obligations of the Government regarding such abandoned property shall cease.

(3) The Government has no obligation to restore or rehabilitate the Contractor's premises under any circumstances; however, if Government-furnished property is withdrawn or is unsuitable for the intended use, or if other Government property is substituted, then the equitable adjustment under paragraph (h) of this clause may properly include restoration or rehabilitation costs.

* * * * *

16. Amend section 52.245-5 by revising the date of the clause and paragraphs (i) and (j) to read as follows:

52.245-5

Government Property (Cost-Reimbursement, Time-and-Material, or Labor-Hour Contracts).

Government Property (Cost-Reimbursement, Time-and-Material, or Labor-Hour Contracts) (May 2004)

* * * * *

(i) Government property disposal. Except as provided in paragraphs (i)(1)(i), (i)(2), and (i)(8)(i) of this clause, the Contractor shall not dispose of Government property until authorized to do so by the Plant Clearance Officer.

(1) Scrap. (i) Contractor with an approved scrap procedure. (A) The Contractor may dispose of scrap resulting from production or testing under this contract without Government approval. However, if the scrap requires demilitarization or is sensitive property, the Contractor shall submit the scrap on an inventory disposal schedule.

(B) For scrap from other than production or testing, the Contractor may prepare scrap lists in lieu of inventory disposal schedules (provided such lists are consistent with the approved scrap procedures), except that inventory disposal schedules shall be submitted for scrap aircraft or aircraft parts and scrap that—

(1) Requires demilitarization;

(2) Is a classified item;

(3) Is generated from classified items;

(4) Contains hazardous materials or hazardous wastes;

(5) Contains precious metals; or

(6) Is dangerous to the public health, safety, or welfare.

(ii) Contractor without an approved scrap procedure. The Contractor shall submit an inventory disposal schedule for all scrap.

(2) Pre-disposal requirements. When the Contractor determines that a property item acquired or produced by the Contractor, to which the Government has obtained title under paragraph (c) of this clause, is no longer needed for performance of this contract, the Contractor, in the following order of priority:

(i) May purchase the property at the acquisition cost.

(ii) Shall make reasonable efforts to return unused property to the appropriate supplier at fair market value (less, if applicable, a reasonable restocking fee that is consistent with the supplier's customary practices).

(iii) Shall list, on Standard Form 1428, Inventory Disposal Schedule, property that was not purchased under paragraph (i)(2)(i) of this clause, could not be returned to a supplier, or could not be used in the performance of other Government contracts.

(3) Inventory disposal schedules. (i) The Contractor shall use Standard Form 1428, Inventory Disposal Schedule, to identify—

(A) Government-furnished property that is no longer required for performance of this contract, provided the terms of another Government contract do not require the Government to furnish that property for performance of that contract; and

(B) Property acquired or produced by the Contractor, to which the Government has obtained title under paragraph (c) of this clause, that is no longer required for performance of that contract.

(ii) The Contractor may annotate inventory disposal schedules to identify property the Contractor wishes to purchase from the Government.

(iii) Unless the Plant Clearance Officer has agreed otherwise, or the contract requires electronic submission of inventory disposal schedules, the Contractor shall prepare separate inventory disposal schedules for—

(A) Special test equipment with commercial components;

(B) Special test equipment that does not contain commercial components;

(C) Printing equipment;

(D) Computers, components thereof, peripheral equipment, and related equipment;

(E) Precious Metals;

(F) Nonnuclear hazardous materials or hazardous wastes; or

(G) Nuclear materials or nuclear wastes.

(iv) Property with the same description, condition code, and reporting location may be grouped in a single line item. The Contractor shall describe special test equipment in sufficient detail to permit an understanding of the special test equipment's intended use.

(4) Submission requirements. The Contractor shall submit inventory disposal schedules to the Plant Clearance Officer no later than—

(i) Thirty days following the Contractor's determination that a Government property item is no longer required for performance of the contract;

(ii) Sixty days, or such longer period as may be approved by the Plant Clearance Officer, following completion of contract deliveries or performance; or

(iii) One hundred twenty days, or such longer period as may be approved by the Plant Clearance Officer, following contract termination in whole or in part.

(5) Corrections. The Plant Clearance Officer may require the Contractor to correct an inventory disposal schedule or may reject a schedule if the property identified on the schedule is not accountable under this contract or is not in the quantity or condition indicated.

(6) Postsubmission adjustments. The Contractor shall provide the Plant Clearance Officer at least 10 working days advance written notice of its intent to remove a property item 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.

(7) Storage. (i) The Contractor shall store the property identified on an inventory disposal schedule pending receipt of disposal instructions. The Government's failure to provide disposal instructions within 120 days following acceptance of an inventory disposal schedule, might entitle the Contractor to an equitable adjustment for costs incurred to store such property on or after the 121st day.

(ii) The Contractor shall obtain the Plant Clearance Officer's approval to remove Government property from the premises at which the property is currently located prior to receipt of final disposition instructions. If approval is granted, any costs incurred by the Contractor to transport or store the property shall not increase the price or fee of any Government contract. The storage facility must be appropriate for assuring the property's physical safety and suitability for use. Approval does not relieve the Contractor of any liability under this contract for such property.

(8) Disposition instructions. (i) If the Government does not provide disposition instructions to the Contractor within 45 days following acceptance of a scrap list, the Contractor may dispose of the listed scrap in accordance with the Contractor's approved scrap procedures.

(ii) The Contractor shall prepare for shipment, deliver f.o.b. origin, or dispose of Government property as directed by the Plant Clearance Officer. The Contractor shall remove and destroy any markings identifying the property as Government property prior to disposing of the property.

(iii) The Contracting Officer may require the Contractor to demilitarize the property prior to shipment or disposal. Any equitable adjustment incident to the Contracting Officer's direction to demilitarize Government property shall be made in accordance with paragraph (h) of this clause.

(9) Disposal proceeds. The Contractor shall credit the net proceeds from the disposal of Government property to the cost of work covered by this contract, or to the Government as directed by the Contracting Officer.

(10) Subcontractor inventory disposal schedules. The Contractor shall require a subcontractor that is using property accountable under this contract at a subcontractor-managed site to submit inventory disposal schedules to the Contractor in sufficient time for the Contractor to comply with the requirements of paragraph (i)(4) of this clause.

(j) Abandonment of Government property. (1) The Government will not abandon sensitive Government property without the Contractor's written consent;

(2) The Government, upon notice to the Contractor, may abandon any nonsensitive Government property in place at which time all obligations of the Government regarding such abandoned property shall cease.

(3) The Government has no obligation to restore or rehabilitate the Contractor's premises under any circumstances; however, if Government-furnished property is withdrawn or is unsuitable for the intended use, or if other Government property is substituted, then the equitable adjustment under paragraph (h) of this clause may properly include restoration or rehabilitation costs.

* * * * *

17. Amend section 52.245-17 by revising the date of the clause and paragraph (i)(2)(ii) to read as follows:

52.245-17

Special tooling.

* * * * *

Special Tooling (May 2004)

* * * * *

(i) Lists of special tooling.

* * * * *

(2) * * *

(ii) Termination inventory. The Contractor shall submit these items on an SF 1428 or by computer list attached to an SF 1428 in accordance with FAR 45.602-1. Format and content of this submission will be as prescribed by paragraph (i)(3) of this clause, but will contain information as prescribed by FAR Subpart 45.6, in effect on the date of award of this contract.

* * * * *

52.249-2, 52.249-3, 52.249-6, 52.249-11

[Amended]

18. Revise the date of the clauses to read “(May 2004)” and remove “45.6” and add “49.001” in the following sections:

a. Section 52.249-2(d).

b. Section 52.249-3(d).

c. Section 52.249-6(e).

d. Section 52.249-11(d).

PART 53—FORMS

19. Revise section 53.245 to read as follows:

53.245

Government property.

The following forms are prescribed, as specified in this section, for use in reporting, reutilization, and disposal of Government property and in accounting for this property:

(a) SF 120 (GSA), Report of Excess Personal Property, and SF 120-A (GSA), Continuation Sheet (Report of Excess Personal Property). See 45.602-3 and 41 CFR 102-36.215.)

(b) SF 126 (GSA), Report of Personal Property for Sale, and SF 126-A (GSA), Report of Personal Property for Sale (Continuation Sheet). See FPMR 101-45.303 (41 CFR 101-45.303.))

(c) SF 1423 (Rev. 5/04), Inventory Verification Survey. See 45.602-1(b)(1) and 45.606-3.)

(d) SF 1424 (Rev. 5/04), Inventory Disposal Report (See 45.605). SF 1424 is authorized for local reproduction.

(e) SF 1428 (Rev. 5/04), Inventory Disposal Schedule, and SF 1429 (Rev. 5/04), Inventory Disposal Schedule—Continuation Sheet. (See 45.602-1, 49.303-2, 52.245-2(i), 52.245-5(i), and 53.249(b).) SF's 1428 and 1429 are authorized for local reproduction.

20. Amend section 53.249 by revising paragraphs (a)(3), (a)(5), and (b) to read as follows:

53.249

Termination of contracts.

(a) * * *

(3) SF 1436 (Rev. 5/04), Settlement Proposal (Total Cost Basis). (See 49.602-1(b).) Standard Form 1436 is authorized for local reproduction.

* * * * *

(5) SF 1438 (Rev. 5/04), Settlement Proposal (Short Form). (See 49.602-1(d).) Standard Form 1438 is authorized for local reproduction.

* * * * *

(b) SF 1428 (Rev. 5/04), Inventory Disposal Schedule, and Standard Form 1429 (Rev. 5/04), Inventory Disposal Schedule—Continuation Sheet, shall be used to support termination settlement proposals listed in paragraph (a) of this section, as specified in 49.602-2.

21. Revise section 53.301-1423 to read as follows:

53.301-1423

Inventory Verification Survey.

22. Revise section 53.301-1424 to read as follows:

53.301-1424

Inventory Disposal Report.

53.301-1426

[Removed]

23. Remove section 53.301-1426, Inventory Schedule A (Metals in Mill Product Form).

24. Revise section 53.301-1428 to read as follows:

53.301-1428

Inventory Disposal Schedule.

25. Revise section 53.301-1429 to read as follows:

53.301-1429

Inventory Disposal Schedule—Continuation Sheet.

53.301-1430 and 53.301-1431 

[Removed]

26. Remove sections 53.301-1430, Inventory Schedule C (Work-in-Process), and 53.301-1431, Inventory Schedule C—Continuation Sheet (Work-in-Process).

53.301-1432 and 53.301-1433 

[Removed]

27. Remove sections 53.301-1432, Inventory Schedule D (Special Tooling and Special Test Equipment), and 53.301-1433, Inventory Schedule D—Continuation Sheet (Special Tooling and Special Test Equipment).

53.301-1434

[Removed]

28. Remove section 53.301-1434, Termination Inventory Schedule E.

29. Revise section 53.301-1436 to read as follows:

53.301-1436

Settlement Proposal (Total Cost Basis).

30. Revise section 53.301-1438 to read as follows:

53.301-1438

Settlement Proposal (Short Form).