[Federal Register Volume 62, Number 105 (Monday, June 2, 1997)]
[Proposed Rules]
[Pages 30186-30219]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-14250]



[[Page 30185]]

_______________________________________________________________________

Part V

Department of Defense

General Services Administration

National Aeronautics and Space Administration
_______________________________________________________________________



48 CFR Part 4, et al.



Federal Acquisition Regulation; Government Property; Proposed Rule

  Federal Register / Vol. 62, No. 105 / Monday, June 2, 1997 / Proposed 
Rules  

[[Page 30186]]



DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 4, 7, 8, 15, 16, 17, 22, 27, 28, 31, 32, 35, 42, 43, 
44, 45, 49, 51, 52, and 53 [FAR Case 95-013]

RIN 9000-AH60


Federal Acquisition Regulation; Government Property

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

ACTION: Proposed rule with request for comments.

-----------------------------------------------------------------------

SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council are proposing to amend the Federal 
Acquisition Regulation (FAR) to simplify procedures and eliminate 
requirements related to the management and disposition of Government 
property in the possession of contractors. This regulatory action was 
not subject to Office of Management and Budget review under Executive 
Order 12866, dated September 30, 1993. This is not a major rule under 5 
U.S.C. 804.

DATES: Comments on the proposed rule should be submitted in writing to 
the FAR Secretariat at the address shown below on or before August 1, 
1997 to be considered in the formulation of the final rule.

ADDRESSES: Interested parties should submit written comments to: 
General Services Administration, FAR Secretariat (MVR), 1800 F Street, 
NW, Room 4035, Washington, DC 20405.
    E-mail comments submitted over Internet should be addressed to: 
[email protected]. Please cite FAR case 95-013 in all 
correspondence related to this case.

FOR FURTHER INFORMATION CONTACT: Ms. Angelena Moy (703) 695-1097/1098 
(E-Mail: [email protected]), or Ms. Linda Klein at (202) 501-3775 for 
information about content or clarification. For information pertaining 
to status or publication schedules, contact the FAR Secretariat, Room 
4035, GS Building, Washington, DC 20405 on (202) 501-4755. Please cite 
FAR case 95-013.

SUPPLEMENTARY INFORMATION:

A. Background

    On September 16, 1994, the Director, Defense Procurement, published 
in the Federal Register a notice of public hearings and advance notice 
of rulemaking announcing an initiative to rewrite the Government 
property rules in Part 45 of the Federal Acquisition Regulation (FAR) 
and requesting public comments or suggestions. Approximately 500 
comments covering a broad range of property related topics were 
received from 22 entities. The Director, Defense Procurement, convened 
an interagency team to assess the comments and suggestions, recommend 
process improvements, identify overly burdensome Government 
requirements, and simplify the Government property rules. The team 
included representatives from the Departments of Defense, Energy, and 
Transportation, the Environmental Protection Agency, the National 
Institutes of Health, and the National Aeronautics and Space 
Administration. Additional public participation in the rulemaking 
process was obtained through a series of public meetings conducted 
between November 1994 and October 1996. Each meeting was publicized in 
the Federal Register and public suggestions or comments were invited. 
The team's work products also were posted on the Internet 
(www.acq.osd.mil/dp/mpi) to provide additional opportunities for 
Government and public sector participation.
    This proposed rule replaces FAR Part 45 and FAR 52.245 and makes 
conforming changes to FAR Parts 4, 7, 8, 15, 16, 17, 22, 27, 28, 31, 
32, 35, 42, 43, 44, 49, 51, 52, and 53. The significant changes to the 
existing rule are--
    1. Contractor requirements. Contractor requirements have been 
simplified, removed from FAR Part 45, and consolidated in the 
appropriate contract clauses at FAR 52.245.
    2. Definitions. Definitions are consolidated in FAR 52.245-3, 
Government Property Control (three unique definitions are used in FAR 
52.245-5, Rental Charges for Commercial Use), and the number of 
definitions is reduced.
    The following definitions are not used in the proposed contract 
clauses and are deleted:

Accessory item
Auxiliary item
Common item
Contractor acquired property
Contractor inventory
Custodial records
Discrepancies incident to shipment
Facilities
Facility contract
Government production and research property
Individual item record
Line item
Nonseverable and Utility distribution system
Plant clearance
Plant clearance period
Plant equipment
Public body
Reportable property
Reporting Activity
Salvage
Screening completion date
Serviceable or usable property
Stock record
Summary record
Surplus property
Surplus Release Date (SRD)

The terms ``Equipment,'' ``Low value property,'' ``Preventive 
maintenance,'' and ``Sensitive property'' are used in the proposed 
clauses and consequently defined. Although not used in a contract 
clause, a definition of ``Unique Federal property'' is added to clarify 
an entry on proposed SF 1422, ``U.S. Government Property in the Custody 
of Contractors.'' Other definitions have been modified to improve 
clarity and achieve consistency. The definition of ``termination 
inventory'' is modified and moved to FAR Part 49.
    3. Contract clauses. The number of property clauses is reduced from 
19 to 7. Most ``facilities'' clauses are eliminated. Facilities 
contracts are contracts for services (see FAR 37.101) and unique FAR 
coverage is, generally, unnecessary. FAR Subpart 45.4 of the proposed 
rule addresses the limited circumstances under which property 
management contracts might be appropriate. The corresponding contract 
clause is FAR 52.245-6.
    4. Process based property control system. The proposed rule moves 
toward a process-based, rather than a requirements-driven, system.
    5. Tracking, reporting, and inventorying low value property. 
Tracking, reporting, and inventorying property whose acquisition cost 
is $1,500 or less is not required until contract completion or 
termination. Contractors may report the loss, theft, or destruction of, 
or damage to, such property if the property is necessary for continued 
contract performance. Industry representatives estimated that 80 
percent of all property items have acquisition costs less than $1,500. 
Although some industry representatives expressed a preference for a 
higher threshold, the Government does not have and was not presented 
with any data to support an increased threshold. The collection of 
stratified data to permit a reasonable reassessment of the proposed 
threshold is one function of

[[Page 30187]]

the property report discussed in paragraph 7.
    6. Recordkeeping. The number of records contractors must maintain 
is reduced from 19 to 7, and the content of each record has been 
simplified and revised to reflect commercial practice more closely.
    7. Reports. The proposed rule includes a standard form for 
reporting property in a contractor's custody. An agency may require the 
use of equivalent forms when, in the agency's opinion, the standard 
form does not obtain information of a type or in a format necessary for 
the agency's financial or property management obligations.
    8. Special test equipment pre-acquisition screening. The 
requirement currently in FAR 52.245-18(b) to obtain the contracting 
officer's approval prior to fabricating or acquiring special test 
equipment is eliminated.
    9. Title. The clauses at FAR 52.216-7, 52.232-16, and 52.232-32 
have been modified to clarify that the Government obtains title to 
items acquired or fabricated by contractors only when the items' costs 
are allocable as direct costs to Government contracts.
    10. Right to title. The proposed rule contains a ``Special Tooling 
and Special Test Equipment--Right to Title'' clause that provides the 
Government the right, under fixed-price contracts, to take title to 
special tooling or special test equipment items that are not contract 
deliverables if the costs of the tooling or test equipment have been 
allocated as direct costs to a contract. The clause requires the 
Government to exercise that right within specified time periods and 
permits equitable price adjustments if a contractor is required to 
store property subsequent to the Governments assumption of title. Most 
of the recordkeeping requirements in the current ``Special tooling'' 
clause, FAR 52.245-17, are eliminated.
    11. Inventory schedules/Scrap lists. The five inventory schedules 
currently identified in FAR 45.606-5 are replaced by one inventory 
disposal schedule. The requirement to screen scrap for re-utilization 
outside the contracting agency is eliminated. Contractors that have 
Government approved scrap procedures may report scrap on scrap lists in 
lieu of inventory disposal schedules and dispose of the scrap without 
Government approval if the Government fails to provide disposition 
instructions within 60 days following receipt of an acceptable scrap 
list. Contractors similarly may dispose of scrap reported on an 
inventory disposal schedule if the Government fails to provide 
disposition instructions within 120 days following receipt of an 
acceptable inventory disposal schedule.
    12. Screening for disposal. The screening process has been 
simplified and screening times shortened. The screening of scrap is not 
required. The screening period for standard items is reduced from 90 to 
56 days, the limited screening category is eliminated, screening of 
special tooling is reduced from 60 to 25 days, the screening of special 
test equipment that contains general purpose components is reduced from 
90 to 56 days, and the screening period for special test equipment that 
does not contain general purpose components is reduced from 60 to 25 
days.
    13. Rental charges. ``Rental Charges for Commercial Use'' clause, 
FAR 52.245-5, replaces the ``Use and Charges'' clause at FAR 52.245-9. 
The new clause replicates commercial practice by permitting rental 
charges to be based upon appraisals, charges rent only for the time 
property is actually used for commercial purposes, and permits 
negotiation of alternate means for determining a reasonable rental 
charge. These changes should reduce contractor rental costs and 
facilitate the use of Government property for commercial purposes.

B. Regulatory Flexibility Act

    An Initial Regulatory Flexibility Analysis (IRFA) has been prepared 
and demonstrates that the rule will not have a significant economic 
impact on a substantial number of small entities within the meaning of 
the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. The IFRA is 
summarized as follows:

    Government contractors have identified the management and 
disposal of Government property in their possession as a significant 
cost driver. Title II of the Federal Property and Administrative 
Services Act of 1949, Public Law 152, as amended requires, in part, 
executive agencies to account for Government property, determine 
when such property is excess, and to dispose of excess Government 
property promptly. Generally, for Government property in the 
possession of contractors, the Government relies on the contractors' 
property management systems to keep the records and generate the 
reports needed to assure the Government's compliance with statutory 
requirements. It is estimated that approximately 4,450 small 
businesses have Government property in their possession. This 
proposed rule substantially 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, eliminating inventory and tracking requirements for 
Government property that has an acquisition cost of $1,500 or less, 
and replacing five inventory schedules with one inventory disposal 
schedule. The small business impact is estimated to be $14,036,842 
or $3,154 per small business Government contractor. That amount is 
not considered significant because the rule applies only to those 
small businesses who request Government property to perform a 
contract or create Government property during contract performance 
and contract prices compensate such contractors for their Government 
property management activities. The records and reports required by 
the proposed rule have been reduced to the minimum necessary to 
assure compliance with the Government's statutory accountability and 
disposal requirements.

    The IRFA has been submitted to the Chief Counsel for Advocacy of 
the Small Business Administration. A copy of the IRFA may be obtained 
from the FAR Secretariat. Comments are invited from small businesses 
and other interested parties. Comments from small entities concerning 
the affected FAR parts also will be considered in accordance with 
Section 610 of the Act. Such comments must be submitted separately and 
cite FAR Case 95-013 in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (Pub. L. 104-13) applies 
because the proposed rule imposes reporting or information collection 
requirements, or collections of information from offerors, contractors 
or members of the public which require the approval of the Office of 
Management and Budget (OMB) under 44 U.S.C. 3501, et seq. A request for 
review of the information collection requirements has been submitted to 
the Office of Management and Budget under Section 3507(d) of the Act.
    Review of the information collection requirements has been 
requested as a new clearance, ``FAR Part 45, Government Property,'' 
which will replace the present FAR requirements currently approved by 
the Office of Management and Budget (OMB) under OMB Control Number 
9000-0075.
    The information collection includes the requirements relating to 
FAR Part 45 and 52.245.
    a. FAR 52.245-3(f) and Alternate I, paragraph (f) to that clause, 
require contractors to maintain records of Government property.
    b. FAR 52.245-3(h) requires contractors to conduct property 
inventories. The frequency and method used are negotiable.
    c. FAR 52.245-1(f)(4) and Alternate I, paragraph (f)(7), FAR 
52.245-4(f)(7), and FAR 52.245-6(i)(6) require contractors to notify 
the Government promptly following the loss, theft, or destruction of, 
or damage to, Government property.
    d. FAR 52.245-1(f)(5) and Alternate I, paragraph (f)(8), FAR 
52.245-4(f)(8), and

[[Page 30188]]

FAR 52.245-6(i)(7) require contractors to notify the Government upon 
contract completion of low value property (<$1,500 per item) that has 
been lost, stolen, damaged, or destroyed.
    e. FAR 52.245-1(j)(3) and (j)(4), FAR 52.245-4(h)(1)(iii) and 
(h)(4), and FAR 52.245-6(j) and (j)(4) require contractors to report 
excess property on inventory disposal schedules.
    f. FAR 52.245-2(c) requires contractors that have fixed-price 
contracts to identify and report excess special tooling and special 
test equipment to which the Government has a contractual right to take 
title.
    g. FAR 52.245-3(g)(1) requires contractors to submit an annual 
report, by contract, of Government property in their possession.
    h. FAR 52.245-3(g)(2) and Alternate I, paragraph (g)(1), require 
contractors to report the receipt of Government property intended for 
other persons.
    The information will be used to control and account for Government-
owned property in the possession of contractors.
    Annual Reporting Burden: Public reporting burden for this 
collection of information is estimated to average .377 hours per 
response, including the time for reviewing instruction, searching 
existing data sources, gathering and maintaining the data needed, and 
completing and reviewing the collection of information.
    The annual reporting burden is estimated as follows: Respondents: 
6,850; Responses per respondent: 1,217; Total annual responses: 
8,339,472; Preparation hours per responses: .377; and Total response 
burden hours: 3,146,848.

D. Request for Comments Regarding Paperwork Burden

    Members of the public are invited to comment on the recordkeeping 
and information collection requirements and estimates set forth above. 
Please send comments to: Office of Information and Regulatory Affairs, 
Office of Management and Budget, Attention: Mr. Peter N. Weiss, FAR 
Desk Officer, New Executive Office Building, Room 10102, 725 17th 
Street, NW, Washington, DC 20503.
    Also send a copy of any comments to the FAR Secretariat at the 
address shown under ADDDRESSES. Please cite FAR Case 95-013--Government 
Property, in all correspondence related to this estimate.

List of Subjects in 48 CFR Parts 4, 7, 8, 15, 16, 17, 22, 27, 28, 
31, 32, 35, 42, 43, 44, 45, 49, 51, 52, and 53

    Government procurement.

    Dated: May 27, 1997.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.

    Therefore, it is proposed that 48 CFR Parts 4, 7, 8, 15, 16, 17, 
22, 27, 28, 31, 32, 35, 42, 43, 44, 45, 49, 51, 52, and 53 be amended 
as set forth below:
    1. The authority citation for 48 CFR Parts 4, 7, 8, 15, 16, 17, 22, 
27, 28, 31, 32, 35, 42, 43, 44, 49, 51, 52, and 53 continues to read as 
follows:

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

PART 4--ADMINISTRATIVE MATTERS


4.804-4  [Amended]

    2. Section 4.804-4 is amended in the introductory text of paragraph 
(b) by removing the word ``Facilities'' and inserting ``Property 
management'' in its place.

PART 7--ACQUISITION PLANNING

    3. Section 7.105(b)(14) is revised to read as follows:


7.105  Contents of written acquisition plans.

* * * * *
    (b) * * *
    (14) Government furnished property. Identify any property to be 
furnished to contractors and discuss any associated considerations, 
such as the property's availability and compliance with the 
requirements of 45.201.
* * * * *


7.501  [Amended]

    4. Section 7.501 is amended in the second sentence of paragraph (b) 
by removing ``facilities operations and maintenance'' and inserting 
``property management'' in its place.

PART 8--REQUIRED SOURCES OF SUPPLIES AND SERVICES

    5. Section 8.101 is revised to read as follows:


8.101  Definition.

    Excess personal property means any personal property (see 52.245-3) 
under the control of a Federal agency that the agency head or a 
designee determines is not required for its needs or for the discharge 
of its responsibilities.

PART 15--CONTRACTING BY NEGOTIATION

    6. Section 15.608 is amended by adding paragraph (a)(4) to read as 
follows:


15.608  Proposed evaluation.

    (a) * * *
    (4) Government property adjustment. Offerors who will use 
Government property to perform a contract have a price advantage 
relative to competitors who will use their own property or will acquire 
or fabricate property to perform that contract. When evaluating offers, 
that advantage must be eliminated to the extent practicable.
    (i) Adjust offers by applying a rental equivalent evaluation 
factor. The factor should be appropriate for the type and amount of 
property to be furnished to the contractor. To the extent practicable, 
use the rental guidelines in 52.245-5, ``Rental Charges for Commercial 
Use'' clause when determining the evaluation factor.
    (ii) It is not necessary to calculate a Government property 
adjustment when--
    (A) The solicitation requires the offerors to use specific 
Government furnished property items during contract performance;
    (B) It is apparent that the difference between the offer(s) most 
advantageous to the Government and the competing offer(s) is (are) so 
great that a rental adjustment will not affect source selection; or
    (C) The Government property is offered on an ``as is'' basis and 
the contract stipulates that the contractor's costs to transport the 
property and make it suitable for the contractor's intended use do not 
increase the contract price or fee.
* * * * *

PART 16--TYPES OF CONTRACTS


16.307  [Amended]

    7. Section 16.307 is amended--
    By adding a Note at the end of the section to read ``Note to 
section 16.307: This section does not apply to property management 
contracts (see 45.401-3).'';
    In the first sentence of paragraph (a)(1) by removing the 
parenthetical ``(other than a facilities contract)'';
    In paragraph (b) by removing the parenthetical ``(other than a 
facilities contract or a construction contract)'';
    In paragraph (d) by removing the parenthetical ``(other than a 
facilities contract)'';
    In paragraph (e)(1) by removing ``or a facilities contract''.
    In paragraph (f)(1) by removing the parenthetical ``(other than a 
facilities contract)'';
    By removing paragraph (g) and redesignating paragraph (i) as (g) 
and amending it by removing the last sentence; and
    By removing paragraph (h).

[[Page 30189]]

PART 17--SPECIAL CONTRACTING METHODS

    8. Section 17.603 is amended by revising paragraph (a)(5) to read 
as follows:


17.603  Limitations.

    (a) * * *
    (5) Functions that can more properly be accomplished in accordance 
with subpart 45.2, Furnishing Government Property.
* * * * *

PART 22--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS

    9. Section 22.407 is amended by revising paragraph (d) to read as 
follows:


22.407  Contract clauses.

* * * * *
    (d) The contracting officer shall insert the clause at 52.222-17, 
Labor Standards for Construction Work--Facilities Contracts, in 
solicitations and contracts for property management contracts (see 
subpart 45.4) that may require covered construction work (see 
22.402(b)) to be performed in the United States.

PART 27--PATENTS, DATA, AND COPYRIGHTS


27.409  [Amended]

    10. Section 27.409 is amended in the first sentence of paragraph 
(e) by removing the word ``facilities'' and inserting ``property'' in 
its place.

PART 28--BONDS AND INSURANCE

    11. Section 28.303 is revised to read as follows:


28.303  Insurance against loss of or damage to Government property.

    When the Government requires or approves insurance to cover loss, 
theft, or destruction of or damage to Government property (see 45.104, 
Risk of loss), it may be provided by specific insurance policies or by 
inclusion of the risks in the contractor's existing policies. The 
policies shall disclose the Government's interest in the property.

PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES


31.106  [Removed and Reserved]

    12. Section 31.106 is removed and reserved.


31.205-40  [Amended]

    13. Section 31.205-40 is amended in paragraph (a) by removing the 
citation ``45.101'' and inserting ``52.245-3'' in its place.

PART 32--CONTRACT FINANCING


32.403  [Amended]

    14. Section 32.403 is amended by removing and reserving paragraph 
(c).


32.407  [Amended]

    15. Section 32.407 is amended by removing and reserving paragraph 
(c).


32.503-15  [Removed and Reserved]

    16. Section 32.503-15 is removed and reserved.
    17. Section 32.705-2 is amended by revising paragraph (a); removing 
paragraph (b); and redesignating paragraph (c) as (b). The revised text 
reads as follows:


32.705-2  Clauses for limitation of cost or funds.

    (a) The contracting officer shall insert the clause at 52.232-20, 
Limitation of Cost, in solicitations and contracts (except property 
management contracts) if a fully funded cost-reimbursement contract is 
contemplated whether or not the contract provides for payment of a fee.
* * * * *

PART 35--RESEARCH AND DEVELOPMENT CONTRACTING

    18. Section 35.014 is revised to read as follows:


35.014  Title to tangible personal property.

    Use the clause at 52.245-4 with its Alternate I when contracting 
for basic or applied scientific research on a cost-reimbursement basis 
and it is in the Government's interest to provide nonprofit 
organizations whose primary purpose is the conduct of scientific 
research or nonprofit institutions of higher education title to 
equipment or other tangible personal property purchased for contract 
performance that has an acquisition cost of less than $5,000 per 
property item.

PART 42--CONTRACT ADMINISTRATION

    19. Section 42.302 is amended by revising paragraphs (a)(27), 
(a)(28), and (a)(30) to read as follows:


42.302  Contract administration functions.

    (a) * * *
    (27) Determine reasonable rentals for noninterference use of 
Government property for commercial purposes (see 52.245-1, 52.245-4, 
52.245-5, and 52.245-6).
    (28) Perform necessary screening, redistribution, and disposal of 
Government property.
* * * * *
    (30) For property management contracts--
    (i) Evaluate contractor requests for repair, or replacement of or 
changes to existing property and provide appropriate recommendations to 
the contracting officer; and
    (ii) Ensure payment by the contractor of any rental due.
* * * * *

PART 43--CONTRACT MODIFICATIONS


43.205  [Amended]

    20. Section 43.205 is amended by removing paragraph (b)(5) and 
redesignating paragraph (b)(6) as (b)(5).

PART 44--SUBCONTRACTING POLICIES AND PROCEDURES


44.101  [Amended]

    21. Section 44.101 is amended by removing the definition 
``Facilities''.
    22. Section 44.201-2 is amended by revising paragraph (a) to read 
as follows:


44.201-2  Cost-reimbursement and letter prime contracts.

    (a) Consent is required under cost-reimbursement and letter prime 
contracts for subcontracts that have experimental, developmental, or 
research work as one of their purposes.
* * * * *
    23. Section 44.202-2 is amended by revising paragraphs (a)(2) and 
(a)(10) to read as follows:


44.202-2  Considerations.

    (a) * * *
    (2) Is the subcontract for property that is available from 
Government sources (see 45.201)?
* * * * *
    (10) Has adequate consideration been obtained for any proposed 
subcontract that will involve the use of Government furnished property?
* * * * *
    24. Part 45 is revised to read as follows:

PART 45--GOVERNMENT PROPERTY

Subpart 45.0--Scope and Definitions

Sec.
45.000  Scope of part.
45.001  Definitions.

Subpart 45.1--General

45.101  Policy.
45.102  Contract clauses.
45.103  Contractor acquired or fabricated property.

[[Page 30190]]

45.104  Risk of loss.
45.105  Right to title, special tooling and special test equipment.

Subpart 45.2--Furnishing Government Property

45.201  Furnishing property for performance of a Government 
contract.
45.201-1  Criteria.
45.201-2  Additional restrictions.
45.201-3  Documentation requirements.
45.201-4  Competitive advantage.
45.201-5  Solicitation requirements.
45.201-6  Postaward requests for Government property.
45.201-7  Repair or replacement of Government property.
45.202  Property furnished for commercial purposes.

Subpart 45.3--Government Property Management

45.301  Property control systems.
45.301-1  Preaward considerations.
45.301-2  Reviews and approvals.
45.302  Government property records.
45.303  Property accountability.
45.303-1  Accountability.
45.303-2  Transferring accountability.
45.304  Property Disposal.
45.304-1  Government furnished property to be returned to the 
contracting activity.
45.304-2  Disposal priorities.
45.304-3  Inventory disposal schedules.
45.304-4  Scrap lists.
45.304-5  Screening.
45.304-6  Standard screening.
45.304-7  Special screening requirements.
45.304-8  Waiver of screening requirements.
45.304-9  Interagency property transfer costs.
45.304-10  Sale of surplus government property.
45.304-11  Proceeds from sales.
45.304-12  U.S. Government property in foreign countries.
45.304-13  Destruction or abandonment.

Subpart 45.4--Property Management Contracts

45.401  Contracting for property management.
45.401-1  General.
45.401-2  Contracts to preserve or maintain an essential industrial 
capability.
45.401-3  Consolidating property management.

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

Subpart 45.0--Scope and Definitions


45.000  Scope of part.

    This part prescribes policies for authorizing contractors to 
acquire property for the Government, furnishing Government property to 
contractors, contractors' use and management of Government property, 
and, except for real property, the disposal of Government property. It 
does not apply to--
    (a) Property leased under the provisions of 10 U.S.C. 2667, 
``Leases: nonexcess property''; or
    (b) Property to which the Government has obtained title, a lien, or 
other security interest solely as a result of financing arrangements 
under fixed-price contracts.


45.001  Definitions.

    As used in this Part--
    Contractor's managerial personnel means the contractor's directors, 
officers, and any of the contractor's managers, superintendents, or 
equivalent representatives who have supervision or direction of all or 
substantially all of the contractor's--
    (1) Business; or
    (2) Operations at a site connected with performance of this 
contract.
    Equipment means items whose use is not limited to, or with only 
minor modification would not be limited to, the development, 
production, or maintenance of a particular item or the performance of a 
particular service. The term includes, but is not limited to, automated 
data processing equipment, office equipment, construction equipment, 
hand tools, machine tools (other than special tooling), test equipment 
(other than special test equipment or components thereof), furniture, 
and vehicles.
    Government property means property the Government owns or leases.
    Government--furnished property means property provided by the 
Government to a contractor for performance of a contract.
    Low value property means equipment, special tooling, or special 
test equipment that has an acquisition cost of $1500 or less and is not 
sensitive property.
    Material means property to be consumed or expended to perform a 
service or produce a deliverable end item and property incorporated 
into or attached to an end item. The term includes assemblies, 
components, parts, raw and processed materials, and supplies that may 
be consumed in normal use in performing a contract. It does not include 
equipment, real property, special test equipment, special tooling, or 
unique Federal property.
    Nonprofit organization means a business entity organized and 
operated exclusively for charitable, scientific, or educational 
purposes, the net earnings of which do not inure to the benefit of any 
private shareholder or individual, that is exempt from Federal income 
taxation under section 501 of the Internal Revenue Code and does not 
conduct a substantial portion of its activities carrying on propaganda 
or otherwise attempting to influence legislation or participating in 
any political campaign on behalf of any candidate for public office.
    Personal property means property of any kind or interest in it 
except real property, battleships, cruisers, aircraft carriers, 
destroyers, submarines, and records of the Federal Government.
    Plant clearance officer means a person appointed to perform plant 
clearance functions.
    Precious metals means silver, gold, platinum, palladium, iridium, 
osmium, rhodium, and ruthenium.
    Preventive maintenance means regularly scheduled maintenance 
performed to sustain suitability for intended use and detect and 
correct minor deficiencies before they result in serious consequences.
    Property means real and personal property.
    Property administrator means a person appointed to perform 
Government property administration.
    Real property means land and rights in land, ground improvements, 
utility distribution systems, and buildings and other structures. It 
does not include foundations and other work necessary for installing 
special tooling, special test equipment, or equipment.
    Rental period means the calendar period during which Government 
property is made available for commercial purposes.
    Rental time means the number of hours, to the nearest whole hour, 
rented property is actually used for commercial purposes. It includes 
time to set up the property for such purposes, perform required 
maintenance, and restore the property to its condition prior to rental 
(less normal wear and tear).
    Scrap means personal property that has no value except its basic 
metallic, mineral, or organic content.
    Sensitive property means property potentially dangerous to the 
public safety or security if stolen, lost, or misplaced, or that must 
be subject to exceptional physical security, protection, control, and 
accountability such as classified property, weapons, ammunition, 
explosives, controlled substances, radioactive materials, hazardous 
materials or wastes, or precious metals.
    Special test equipment means a test unit or units designed, 
fabricated, or modified to accomplish special purpose testing, 
groupings of such items, general purpose items, or any combination 
thereof, that are interconnected and interdependent so as to become a 
new functional entity.
    Special tooling means items, such as jigs, dies, fixtures, molds, 
patterns, taps, gauges, or other equipment and manufacturing aids, 
which are of such

[[Page 30191]]

a specialized nature that without substantial modification or 
alteration their use is limited to the development, production, repair, 
or maintenance of particular supplies or components thereof, or to the 
performance of particular services.
    Unique Federal property means Government-owned personal property, 
or components thereof, that is specially designed to perform or support 
the mission of one or more Federal agencies and is not available to the 
public.
    Work in process means bench stock materials, complete or incomplete 
fabricated parts, subassemblies, assemblies, and similar items that are 
created during production of deliverable end items or are required to 
construct special tooling or special test equipment needed to produce 
deliverable end items.

Subpart 45.1--General


45.101  Policy.

    (a) Agencies shall not direct, require, or specify for contract 
performance the use of specific commercially available items or 
software that will become Government property under a contract unless 
the contract's stated purpose is the acquisition of such items.
    (b) Agencies shall not authorize contractors to acquire for the 
Government--
    (1) Property not required for performance of a contract or 
subcontract thereunder;
    (2) Real property, alterations thereof, or improvements thereto, 
unless the contract's purpose is the maintenance of an essential 
industry capability or the performance of alterations or improvements 
to real property that are necessary to maintain an essential industrial 
capability;
    (3) Commercially available items, equipment, or computer software 
unless the contract's stated purpose is the acquisition of such items 
(see 45.101(c) for nonprofit organizations).
    (c) Under contracts for basic or applied scientific research, 
contracting officers may authorize nonprofit organizations whose 
primary purpose is the conduct of scientific research or nonprofit 
institutions of higher education to acquire tangible personal property 
for the Government including commercially available items or equipment.
    (d) Except as provided in subpart 45.2, agencies shall not furnish 
Government property to contractors.
    (e) Under fixed-price or labor-hour contracts, agencies shall not 
exercise the Government's right to take title to special tooling or 
special test equipment unless the tooling or test equipment will be 
needed for follow-on competitive procurements, component break-out, or 
mobilization.


45.102  Contract clauses.

    (a)(1) Use the clause at 52.245-1, Government Furnished Property 
(Fixed-Price and Labor-Hour Contracts), in solicitations and contracts 
for supplies, services, or research and development to be awarded on a 
fixed-price competitive basis or competitive labor-hour contracts. Do 
not use the clause in contracts for commercial items or when Government 
property will not be furnished for contract performance.
    (2) Use the clause with its Alternate I when the contract price 
will not be based upon adequate price competition, the price is set by 
law or regulation, or, when it is in the Government's interests to do 
so, in fixed-price contracts for services to be performed primarily on 
real property owned or leased by the Government (see 45.104(b)).
    (b) Use the clause at 52.245-2, Special Tooling and Special Test 
Equipment--Right to Title (Fixed-Price Contracts), in fixed-price 
solicitations and contracts (other than sealed bids) for supplies, 
services, or research and development where the effort to be performed 
will require the contractor to acquire or fabricate special tooling or 
special test equipment.
    (c) Use the clause at 52.245-3, Government Property Control, in all 
solicitations and contracts that include the clause at 52.245-1, 
52.245-4, or 52.245-6. Use the clause at 52.245-3 with its Alternate I 
when the Government will maintain the Government's official property 
records (see 45.302(b)).
    (d) Use the clause at 52.245-4, Government Property (Cost-
Reimbursement and Time and Material Contracts), in all cost-
reimbursement or time-and-material contracts. Use the clause with its 
Alternate I in contracts for basic or applied scientific research to be 
conducted by nonprofit organizations whose primary purpose is the 
conduct of scientific research or nonprofit institutions of higher 
education (see 35.014).
    (e) Use the clause at 52.245-5, Rental Charges for Commercial Use, 
in all solicitations and contracts that include the clauses at 52.245-
1, 52.245-4, or 52.245-6, except when contracting under the Armament 
Retooling and Manufacturing Support Act of 1992. The clause is optional 
for such contracts.
    (f) The clause at 52.245-6, Government Property--Property 
Management Contracts, may be used in lieu of the clauses at 52.245-1 
and 52.245-4 when a contractor will be performing multiple Government 
contracts at a single location, and it is in the Government's interests 
to consolidate under one contract the management of and accountability 
for the Government property at that location.
    (g) Use the clause at 52.245-7, Liability for Government Property--
Demolition Services Contracts, in addition to the clauses prescribed at 
37.304 in solicitations and contracts for dismantling, demolition, or 
removal of improvements.
    (h) A Government property clause is not required in purchase orders 
for property repair when the total acquisition cost of the items to be 
repaired is less than $100,000 and such items are the only Government 
property furnished under the purchase order.
    (i) When contracting for services to be performed entirely on 
property owned or leased by the Government and the contracting officer 
determines in writing that it is in the Government's interests to have 
a contractor record, inventory, and immediately report loss, theft, or 
destruction of, or damage to, Government property regardless of the 
property's value, the clauses at 52.245-1, 52.245-1 with its Alternate 
I, 52.245-3, 52.245-4, and 52.245-6 may be modified to delete 
references to low value property.


45.103  Contractor acquired or fabricated property.

    (a) As defined in 52.245-3, the term ``equipment'' describes items 
whose use is not limited to the development, production, or maintenance 
of a particular item or the performance of a particular service. A 
contractor's contention that such equipment was acquired to perform a 
specific contract and is not needed for any other purpose does not 
alter the fact that such items are general purpose items that might not 
qualify for treatment as direct costs under the contractor's cost 
accounting practices and FAR 31.202.
    (b) For purposes of the clause at 52.245-3, Government Property 
Control, property acquired or fabricated by a contractor for 
performance of a Government contract becomes Government property under 
a fixed-price contract or labor-hour contract when the Government 
accepts deliverable property or, as provided in the clause at 52.245-2, 
Special Tooling and Special Test Equipment--Right to Title (Fixed-Price 
Contracts), takes title to property not scheduled for delivery. Under 
cost-reimbursement or time-and-material contracts, property acquired or 
fabricated by a contractor for

[[Page 30192]]

performance of its contract becomes Government property at the times 
specified in the clause at 52.216-7, Allowable Cost and Payment. 
Alternate I to the clause at 52.245-4, Government Property (Cost-
Reimbursement and Time-and-Material Contracts), and 35.014 describe the 
circumstances under which title to equipment or other tangible personal 
property may be vested in nonprofit organizations whose primary purpose 
is the conduct of scientific research or nonprofit institutions of 
higher education when such organizations are performing government 
contracts for basic or applied scientific research.
    (c) Property to which the Government obtains or takes title at a 
contractor or subcontractor managed facility is considered property in 
the contractor's possession until the property is placed on board a 
carrier's conveyance (F.O.B. Origin) or delivered at the specified 
F.O.B. destination point. The contractor is liable for loss, theft, or 
destruction of, or damage to, that property in accordance with the 
clause at 52.245-1 or 52.245-4. Property administrators should verify 
that the contractor enters such property into its Government property 
control system if required by the contract.
    (d) When property accepted by the Government or property to which 
the Government has taken title under the clause at 52.245-2 will be 
furnished to the contractor for performance of the contract under which 
acceptance occurred or title was obtained, or will be furnished to a 
contractor for performance of another Government contract, the 
receiving contract must be modified to identify the property as 
government furnished property. If the receiving contract does not 
contain the clause at 52.245-1 or 52.245-4, the modification should add 
the appropriate property clause, other clauses prescribed for use with 
that clause, and, notwithstanding any other provision of the receiving 
contract, specify that the property is furnished in accordance with the 
terms of the clauses added.


45.104  Risk of loss.

    (a) The contractor is liable for loss, theft, or destruction of, or 
damage to, Government property under competitively awarded labor-hour 
contracts and competitively awarded fixed-price contracts. Under other 
contract types, the contractor is liable for such loss, theft, 
destruction, or damage until it establishes a Government property 
control system and the system is approved by a Government property 
administrator. Except as provided in paragraphs (f)(3) and (f)(4) of 
Alternate I to 52.245-1, paragraphs (f)(2) and (f)(4) of the clause at 
52.245-4, or paragraph (i)(2) or (i)(3) of the clause at 52.245-6, the 
Government assumes such risks during any period in which the contractor 
maintains an approved system (see 52.245-3).
    (b) When contracting on a fixed-price competitive basis for 
services to be performed on real property owned or leased by the 
Government, contracting officers may use Alternate I to the clause at 
52.245-1 to limit a contractor's risks of damage to, or loss, theft, or 
destruction of, Government furnished property, provided such limitation 
would reduce significantly the costs of contract performance. Annotate 
the contract file with appropriate documentation.
    (c) Contracting officers shall require contractors to assume the 
risks of, and reimburse the Government for, damage to (except 
reasonable wear and tear) or loss, theft, or destruction of, Government 
property that occurs while the property is being used for commercial 
purposes. If the damaged, lost, stolen, or destroyed property is 
required for continued performance of a Government contract and cannot 
be repaired or replaced by the contractor without affecting scheduled 
deliveries, restitution should include schedule adjustments at no cost 
to the Government. Negotiate an equitable adjustment in price in lieu 
of repair or replacement when the property is not required for 
continued performance of a government contract.


45.105  Right to title, special tooling and special test equipment.

    (a) Under the clause at 52.245-2, Special Tooling and Special Test 
Equipment Right to Title (Fixed-Price Contracts), the Government has 
the right to take title to special tooling or special test equipment 
that is not deliverable under a contract if the tooling or test 
equipment costs were allocated to the contract as direct costs. The 
right must be exercised within 120 days following the contractor's 
notice that special tooling or special test equipment items are no 
longer required for contract performance unless the contractor and the 
Government have agreed to a different period.
    (b) The contractor is obligated to store the property at its 
expense during the notice period. Storage subsequent to an election of 
title is at Government expense.

Subpart 45.2--Furnishing Government Property


Sec. 45.201  Furnishing property for performance of a Government 
contract.


45.201-1  General.

    Subject to the additional restrictions and documentation 
requirements in 45.201-2 and 45.201-3, Government property other than 
commercial items (see 2.101) may be furnished for performance of a 
contract only when at least one of the criteria in paragraph (a) of 
this section is satisfied. Government-owned commercial items may be 
furnished to contractors only under the circumstances described in 
paragraph (b) of this section.
    (a) Criteria. (1) The Government is the sole source of property 
required to perform a contract;
    (2) The property's use will result in substantial measurable cost 
savings to the Government when compared to estimated costs of contract 
performance without such property (consider the Government's costs to 
activate property or maintain property in an active status when 
determining cost savings);
    (3) The Government must furnish the property to assure that items 
delivered under a contract are compatible with other Government items;
    (4) The property must be furnished to accomplish repairs to, or 
maintenance or reconditioning of, Government furnished property or 
items to be delivered under a contract and such repair, maintenance, or 
reconditioning is not the contractor's responsibility under the 
contract;
    (5) The property must be furnished to respond to an unusual and 
compelling urgency for supplies or services (see 6.302-2) or to support 
contingency contracting;
    (6) The Government property will be used as a standard;
    (7) Equipment in the Government's possession prior to award of a 
contract to be performed on real property owned or leased by the 
Government may be furnished for performance of that contract subject to 
the constraints in 45.201-1(b);
    (8) The property will be used on a contract for scientific research 
conducted by an institution of higher education or a nonprofit 
organization; or
    (9) Government furnished equipment or real property is needed for 
the retention or operation of an essential, Government-owned 
capability.
    (b) Commercial items. Government owned commercial items that are 
being furnished to contractors for performance of a Government contract 
may be furnished for performance of follow-on

[[Page 30193]]

contracts for the identical items or substantially similar services 
with the same or successor contractors until the commercial item is no 
longer suitable for intended use. Repairs to such property shall be 
authorized only to the extent necessary to complete current contract 
performance. If the item cannot be repaired, it may be replaced with 
another commercial item from existing Government-owned property. Do not 
authorize a contractor to acquire a commercial item as a replacement 
for irreparable Government furnished property if the replacement item 
will become Government property under any Government contract. For 
commercial computer software or commercial computer software 
documentation, the authority of this paragraph may be exercised only 
when the Government has a license in the software or documentation that 
permits release or disclosure to, and use by, third parties and the 
software or documentation is required to operate, maintain, or install 
other Government property furnished for performance of a Government 
contract.


45.201-2  Additional restrictions.

    (a) Material. (1) Prior to furnishing material for which the 
Government is the sole source, verify that only the type and quantity 
of material required for contract performance is furnished. Such 
quantity may include reasonable amounts for repairs or corrections to 
work in process, scrap, or spoilage provided the Government continues 
to be the only source for such material.
    (2) Except as provided in 45.201-1(a)(2), (4), or (5), do not 
furnish to contractors material customarily offered for sale in the 
commercial marketplace.
    (b) Equipment. Government-owned equipment that is not a commercial 
item (see 2.201) may be furnished to contractors only as provided in 
45.201-1(a)(4), (5), (7), (8), or (9).
    (c) Noncommercial computer software or computer software 
documentation. Do not furnish noncommercial computer software or 
noncommercial computer software documentation (see 52.227-14 or, for 
DoD, Defense Federal Acquisition Regulation Supplement (DFARS) 48 CFR 
252.227-7014) to contractors unless the Government is the software or 
documentation licensor or, prior to furnishing the software or 
documentation, the Government obtains a license in the software or 
documentation that permits release or disclosure to, or use by, third 
parties and the intended recipient has completed any use and 
nondisclosure agreement required by part 27 or (DFARS) 48 CFR part 227.


45.201-3  Documentation requirements.

    Decisions to furnish commercial items, real property, or equipment 
to contractors must be documented in the contract file. Contracting 
officers may make decisions based upon the criteria in 45.201-1(a)(3) 
through (6) and (8). Unless other approval levels are designated in 
agency supplements, approval is required by--
    (a) The contracting officer's first level supervisor when using the 
criterion in 45.201-1(a)(2);
    (b) The contracting officer's second level supervisor when using 
the criteria in 45.201-1(a)(1) or (7); or
    (c) The head of the contracting activity when using the criterion 
in 45.201-1(a)(9).


45.201-4  Competitive advantage.

    Offerors who will use Government property to perform a contract 
have a price advantage relative to competitors who will acquire, 
fabricate, or use their own property to perform that contract. When 
evaluating offers, that advantage must be eliminated to the extent 
practicable (see 15.608).


45.201-5  Solicitation and contract requirements.

    When Government property will be made available for contract 
performance--
    (a) Competitive solicitations shall--
    (1) List the available property by item name, national stock number 
(if the item has a national stock number), or other appropriate 
nomenclature; and, identify the quantity available;
    (2) Include, or offer to provide, real property maps, drawings, 
plans, or similar information in sufficient detail to enable an offeror 
to prepare its offer;
    (3) Separately identify property available on an ``as is'' basis 
and require the successful offeror to pay the cost of transporting such 
property to its facility;
    (4) Separately identify property the Government must reactivate, 
rehabilitate, or convert;
    (5) Identify the evaluation factors that will be applied to the 
price of offers that contemplate use of Government furnished property. 
The factors may be specified as a dollar amount, a formula, or any 
combination thereof;
    (6) Identify any special requirements for security, maintenance, 
liability, or property control; and
    (7) Require all offerors to submit with their offers the following 
information--
    (i) A list or description of all Government property the offeror or 
its subcontractors propose to use on a rent-free basis. The list shall 
include property offered for use in the solicitation and property 
already in possession of the offeror or its prospective subcontractors 
under other contracts;
    (ii) An identification of the contract or other instrument under 
which property already in the offeror's and its prospective 
subcontractors is accountable, and written permission from the 
cognizant contracting officer authorizing the property's use for 
performance of the proposed contract;
    (iii) The rental period, rental time, and time available for use 
(see 52.245-5) and offeror's estimated costs to acquire, fabricate, 
lease, or rent the property if it is not furnished by the Government; 
and
    (iv) A statement as to whether the offeror has an approved property 
control system, the date the system was last reviewed, and the name and 
address of the Government's property administrator who performed the 
last review.
    (b) Contracts shall--
    (1) List and identify (nomenclature, quantity, serial number, or 
other appropriate identifier, or, for real property, maps, drawings, 
plans or similar information) the Government property furnished for 
performance of the contract;
    (2) Separately identify property furnished ``as is'';
    (3) Identify any constraints on the period for, or amount of, use;
    (4) Identify any special requirements for security, maintenance, 
liability, or property control applicable to a particular Government 
furnished item;
    (5) Identify any Government furnished property that is to be 
returned directly to the contracting activity in lieu of initiating 
disposal action and specify the method and point of return; and
    (6) For fixed price construction contracts that contemplate 
furnishing property f.o.b. railroad cars or f.o.b. truck, specify the 
point of delivery and include appropriate terms and conditions if the 
Government or another person will install, prepare, or test the 
property.


45.201-6  Postaward requests for Government furnished property.

    Except as provided in 45.201-7, do not furnish Government property 
to contractors subsequent to contract award unless adequate 
consideration is received. If a contractor requests the use of property 
that is not accountable under your contract, do not authorize use until 
the contracting officer for the contract under which the property is 
accountable concurs with the proposed use. Modify each contract for 
which use is authorized to identify the conditions

[[Page 30194]]

for use and the applicable consideration.


45.201-7  Repair or replacement of Government furnished property.

    (a) Except for property furnished to a contractor on an ``as is'' 
basis, contracting officers may elect to repair or replace, direct the 
contractor to repair, or direct the contractor to dispose of Government 
furnished property that--
    (1) Is received by the contractor in a condition not suitable for 
its intended use;
    (2) Routine or preventative maintenance cannot maintain in a 
condition suitable for intended use; or
    (3) Is lost, stolen, destroyed, or damaged and the Government has 
assumed the risk of such loss, theft, destruction, or damage.
    (b) Consult with appropriate technical, logistics, program office, 
and property specialists, to determine whether the Government furnished 
property should be replaced, the appropriate method and type of 
replacement, or if the contractor should repair the property. If the 
Government does not elect to repair or replace Government furnished 
property that is needed for continued contract performance, the 
contractor might be entitled to an equitable adjustment under the 
clause at 52.245-1 or 52.245-4.


45.202  Authorizing the use of Government furnished property for 
commercial purposes.

    (a) This section does not apply to contracts subject to the 
Armament Retooling and Manufacturing Support Act of 1992.
    (b) Unless prohibited by law, contracting officers may authorize 
the contractor performing a contract under which Government property is 
accountable to use that property for commercial purposes on a 
noninterference basis if the Government receives an equitable rental 
for such use. The contractor shall be required to assume the risk of, 
and reimburse the Government for, any damage to, or loss, theft, or 
destruction of the property except damage resulting from wear and tear 
reasonable for the period the property was authorized for commercial 
use and to indemnify the Government against claims for injury to 
persons or damage to the contractor's or third parties property arising 
from the contractor's use or possession of the Government property for 
commercial purposes.
    (c) Authorization for commercial purposes must be reflected in a 
contract modification and specify--
    (1) The property is available ``as is'' without any representation 
as to suitability for intended use;
    (2) The time period during which the property may be used;
    (3) Any restrictions on, or conditions of, use; and
    (4) The rent or estimated rent the Government will receive.
    (d) Contracts that contain the clause at 52.245-9, Use and Charges, 
may be modified to replace that clause with the clause at 52.245-5, 
Rental Charges for Commercial Use, if adequate consideration is 
obtained.
    (e) The contracting officer shall not revoke an authorization to 
use Government property for commercial purposes unless the contractor 
fails to comply with the requirements in 52.245-5 or the Government has 
a compelling need that precludes continued availability for commercial 
use.

Subpart 45.3--Government Property Management


45.301  Property control systems.


45.301-1  Preaward considerations.

    (a) Contracting officers should consider whether an offeror's 
property management capabilities might affect source selection and 
structure appropriate evaluation criteria.
    (b) When property management capabilities will be evaluated, the 
cognizant property administrators should verify whether offerors have 
approved property control systems and make recommendations regarding 
the adequacy of offerors plans to establish an acceptable system.


45.301-2  Property control system reviews and approvals.

    (a) General. (1) Contractors are responsible for their 
subcontractors' compliance with the property control system 
requirements in 52.245-3. A contractor's system and processes must 
provide for the control of property in the possession of its 
subcontractors.
    (2) The periods for establishing a new system or submitting changes 
to an existing system should be extended only when the contractor 
demonstrates a reasonable need for an extension. When authorizing an 
extension, specify the new establishment or submission date(s).
    (3) The clause at 52.245-3 generally prohibits contractor personnel 
who maintain property records or who have custody of property from 
performing physical inventories. Property administrators may waive that 
prohibition if there is no information or prior contractor experience 
that suggests a waiver would adversely affect the Government's property 
interests.
    (b) New systems or systems not previously reviewed by the 
Government. Property administrators shall review new property control 
systems or existing contractor systems that have not been reviewed by a 
Government-employed property administrator as soon as practicable.
    (1) Promptly refer to the contracting officer a contractor's 
failure to establish a property control system that satisfies the 
requirements in 52.245-3.
    (2) Approve and not require changes to a contractor system or 
proposed system that satisfies all requirements in 52.245-3(b).
    (3) Require contractors to change proposed property control systems 
that do not satisfy all requirements in 52.245-3(b) only to the extent 
necessary for compliance with those requirements. Notify the contractor 
of the corrections required and specify the date(s) by which the 
corrections must be made. If a contractor fails to make required 
corrections within the time specified, issue the notice required by 
paragraph (f)(4) of Alternate I to 52.245-1, (f)(4) of 52.245-4, or 
(i)(3) of 52.245-6, and simultaneously notify the contracting officer.
    (c) Changes necessitated by contract award. The clause at 52.245-3 
requires a contractor that has a previously approved property control 
system to submit to the Government's property administrator within 90 
days following contract award changes to its property control system 
necessitated by award of a new contract.
    (1) Property administrators shall review contractor-proposed 
changes promptly following receipt to assure compliance with the 
contract's property control system requirements. Validate the systems' 
approval if the contractor proposed changes are sufficient to assure 
compliance with 52.245-3(b). Require other changes only if necessary 
for compliance. Notify the contractor of the corrections required, and 
specify the date(s) by which the corrections must be made.
    (2) If the contractor fails to make the required corrections within 
the time specified, issue the notice required by paragraph (f)(4) of 
Alternate I to 52.245-1, (f)(4) of 52.245-4, or (i)(3) of 52.245-6, and 
advise the contractor that its failure to correct its system or to have 
a subcontractor system corrected within the time specified might result 
in the contractor's assumption of liability for any damage to, or loss, 
theft, or destruction of, Government property that the Government would 
otherwise be liable for under those clauses.

[[Page 30195]]

Simultaneously notify the contracting officer.
    (d) Corrections following property control system reviews. When a 
property control system review discloses that a previously approved 
system no longer satisfies any requirement of 52.245-3(b), provide a 
correction notice to the contractor. Specify the corrections required 
to make the contractor's or a subcontractor's system compliant and 
specify the date for completing corrective action. If the contract 
includes the clause at 52.245-1 with its Alternate I, 52.245-4, or 
52.245-6, advise the contractor that its failure to correct its system 
or to have a subcontractor system corrected within the time specified 
might result in the contractor's assumption of liability for any damage 
to, or loss, theft, or destruction of, Government property that the 
Government would otherwise be liable for under those clauses.
    (e) Withdrawing system approval. The clause at 52.245-3 requires 
the administrative contracting officer's concurrence to withdraw 
approval of an approved property control system. Generally, approval 
should be withdrawn when a contractor fails to maintain a Government 
property control system that satisfies the requirements.


45.302  Government property records and reports.

    (a) Generally, it is in the Government's interests to have the 
contractor generate records and reports of Government property using 
the same practices the contractor uses for its own property. If the 
contractor's practices generate the property records, reports, and 
supporting information required by 52.245-3(e) and (f), do not require 
the contractor to modify its practices. When changes are necessary, 
require the contractor to make only the changes necessary to assure 
compliance with 52.245-3(e). Do not require contractors to use specific 
media for their records.
    (b) The property records maintained by a contractor are the 
Government's official property records. A contracting office may elect 
to establish and maintain the Government's property records and 
generate required property reports when the contracting office retains 
contract administration functions and the contracting officer considers 
Government record keeping and reports generation to be in the 
Government's interests. Circumstances under which such record keeping 
and reporting might be warranted are contracts with performance periods 
less than 6 months or when Government property will be furnished for 
performance of a contract to manage or operate for the Government, or 
perform services entirely at, activities such as installations, bases, 
or portions thereof, warehouses, libraries, stock rooms, mailrooms, or 
computer centers located entirely at real property owned or leased by 
the Government.
    (c) The contracting office shall process property reports in 
accordance with agency procedures.


45.303  Property accountability.


45.303-1  Accountability.

    (a) Government furnished property is accountable generally under 
the contract for which it was furnished (see 45.401-3).
    (b) Contractor acquired or fabricated property to which the 
Government has title under the clause at 52.245-2 or 52.216-7 is 
accountable under the contract for which the property was acquired or 
fabricated until the contracting officer directs a transfer of 
accountability, the property is placed aboard a carrier's conveyance 
(f.o.b. origin), or delivered at the specified f.o.b. destination 
point.
    (c) When Government property accountable under a contract, but not 
deliverable to the Government under that contract, is no longer needed 
for performance of the contract, the property should be entered into 
the disposal process (see 45.304) except when the property is--
    (1) Government furnished property identified in the contract for 
return directly to the contracting activity;
    (2) Government furnished property specifically and currently needed 
for the performance of other Government contracts;
    (3) Property to which the Government has title that is needed to 
preserve or maintain an essential industrial capability; or
    (4) Contractor acquired or fabricated property to which the 
Government has title that will be furnished to a contractor as 
Government furnished property for performance of a Government contract 
other than the contract under which the property was acquired or 
fabricated.


45.303-2  Transferring accountability.

    Property accountability may be transferred to other contracts only 
under the circumstances identified in 45.303-1(c).
    (a) Price adjustment. When a property item's accountability is 
transferred to a contract for performance of that contract, the price 
or estimated cost and fee of the receiving contract should be equitably 
reduced if the receiving contract's current price or estimated cost and 
fee was established without a requirement for the Government to furnish 
the property item as Government furnished property for that contract.
    (b) Special tooling or special test equipment. Accountability for a 
special tooling or special test equipment item to which the Government 
has obtained title under the clause at 52.245-2 or 52.216-7, may be 
transferred to another contract for performance of that contract 
provided that the property is identified as property furnished ``as 
is'' and the receiving contract's price or estimated cost and fee is 
adjusted in accordance with 45.303-2(a) and property records are 
adjusted in accordance with 45.303-2(d). Accountability instructions 
should be included in the assumption of title notice required by 
52.245-2.
    (c) Contractor acquired or fabricated property (other than special 
tooling or special test equipment). Accountability for property to 
which the Government has obtained title under the clause at 52.216-7 
may be transferred to another contract when the property is no longer 
needed for performance of the contract under which the property was 
acquired or fabricated provided the receiving contract's price or 
estimated cost and fee is adjusted in accordance with paragraph (a) of 
this section and property records are adjusted in accordance with 
paragraph (d) of this section.
    (d) Property records. All property accountability transfers must be 
reflected in the property control records for the contract from which 
accountability is transferred (the losing contract) and the contract to 
which accountability is transferred (the gaining contract). When a 
Government furnished property item's accountability is transferred, the 
respective contracting officers must modify the list of Government 
furnished property items contained in the losing and gaining contracts.


45.304  Property disposal.


45.304-1  Government furnished property to be returned to the 
contracting activity.

    When a contract requires the contractor to return Government 
furnished property directly to the contracting activity, the 
Government's property administrator should determine the property's 
condition as near to the return date as practicable and promptly notify 
the contracting officer if the property is not suitable for its 
intended use. The contracting officer promptly shall direct the 
contractor to take any necessary corrective action or, if corrective 
action is not practical,

[[Page 30196]]

negotiate an equitable adjustment and direct the contractor to add the 
property to an inventory disposal schedule, and promptly advise the 
Government's property administrator of the action directed.


45.304-2  Disposal priorities.

    The clause at 52.245-4 requires contractors to make reasonable 
efforts to return contractor acquired or fabricated Government property 
that is no longer needed for contract performance to the appropriate 
supplier or to use the property in performance of other contracts 
before including the property in an inventory disposal schedule. Plant 
clearance officers shall initiate action to dispose of scheduled 
property using the highest priority method appropriate for the 
property. Authorized methods, listed in descending order from highest 
to lowest priority, are--
    (a) Re-use within the Government.
    (b) Transfer of educationally useful Federal equipment to schools 
and nonprofit organizations (see Executive Order 12999).
    (c) Donation to other eligible donees.
    (d) Sale.
    (e) Donation to public bodies in lieu of abandonment.
    (f) Abandonment or destruction.


45.304-3  Inventory disposal schedules.

    (a) The plant clearance officer should review, accept, return for 
correction, or reject the contractor's inventory disposal schedules 
within 10 days following receipt. Plant clearance officers may reject a 
schedule entirely or in part, or require correction of the information 
contained in the schedule. Do not reject a schedule if--
    (1) The property's location, quantity and condition are correctly 
identified;
    (2) The property is accountable under the contract for which the 
schedule is submitted or, if submission follows a termination action, 
the property's costs are allocable to the contract as direct costs; and
    (3) The contractor, when the contract contains the clause at 
52.245-4, has completed the actions required by 52.245-4(h)(1)(i) and 
(ii).
    (b) Accepted schedules shall be verified within 20 days following 
receipt. Plant clearance officers shall require the contractor to 
correct any discrepancies found during verification.
    (c) Scrap identified on an inventory disposal schedule may be 
disposed of upon verification of the schedule. Screening is not 
required. Classified items may be disposed of following agency 
screening (see 45.304-6).
    (d) Contractors must obtain the plant clearance officer's approval 
to remove a Government property item from an inventory disposal 
schedule. Removal should be approved when the contractor has found a 
buyer for a contractor acquired or fabricated item at full acquisition 
cost, the contractor has found a use for such property on another 
Government contract, or the contractor has justified continued use of a 
Government furnished property item. Consult with appropriate program 
and technical personnel to determine whether the contractor's rationale 
for retaining a Government furnished property item is valid. If the 
screening process (45.304-5) has not begun, correct the schedule or 
return the schedule to the contractor for correction. If screening has 
begun, promptly notify the activity performing the screening and 
identify the items that should be removed from the screening process.


45.304-4  Scrap lists.

    (a) Contractors that have Government-approved scrap procedures may 
submit scrap lists in lieu of inventory disposal schedules to identify 
property the contractor recommends disposing of as scrap. Review scrap 
lists within 10 days following receipt. Generally, the plant clearance 
officer should verify and accept scrap lists that are consistent with a 
contractor's Government approved scrap procedures, correctly identify 
the contracts under which the property is accountable, and correctly 
identify the property's quantity and condition. Reject or require 
correction of scrap lists that contain property that must be 
demilitarized prior to disposal, classified items, scrap generated from 
classified items, scrap that contains hazardous materials or precious 
metals, or items that are dangerous to the public health, safety, or 
welfare. Require contractors to submit inventory disposal schedules for 
such items.
    (b) Scrap identified on a scrap list may be disposed of promptly 
following the plant clearance officer's verification of the list. 
Provide disposition instructions to the contractor within 60 days 
following receipt of an acceptable scrap list. If disposition 
instructions are not provided within that period, the clauses at 
52.245-1, 52.245-4, and 52.245-6 permit a contractor to dispose of 
scrap identified on a scrap list.


45.304-5  Screening.

    (a) Except as provided in 45.304-3(c) and 45.304-4(b), Government 
property that is no longer required for performance of a particular 
contract shall not be disposed of until the agency owning the property 
has determined that there is no other reasonably foreseeable use for 
the property within the agency, a school or community based educational 
organization has not expressed an interest in an item of educationally 
useful Federal equipment, and the General Services Administration (GSA) 
has determined that no other Federal Agency has a use for the property.
    (b) Screening periods for property listed on an inventory disposal 
schedule begin upon the plant clearance officer's acceptance of the 
schedule. The plant clearance officer shall determine the appropriate 
screening method for excess property (see 45.304-6 for standard 
screening and 45.304-7 for special screening requirements), initiate 
screening, and assure accomplishment of transfer and donation. Plant 
clearance officers shall not extend the times for agency screening 
without the prior approval of the GSA.


45.304-6  Standard screening.

    The standard screening period is 56 days.
    (a) 1st through 20th day--screening by the contracting agency. The 
contracting agency has 20 days to screen excess property for other use 
within the agency. Plant clearance officers shall delete from the 
disposal schedules any items for which other intraagency use is 
identified, prepare revised schedules, and, no later than the 21st day, 
submit four copies of the revised schedules and Standard Form (SF) 120, 
Report of Excess Personal Property, or an electronic equivalent to the 
GSA. Enter the date of the 56th day as the surplus release date and 
screening completion date.
    (b) 21st through 41st day--screening by all Federal agencies. (1) 
GSA will honor requests for transfers of property on a ``first-come 
first-served'' basis through the 41st day. The GSA regional office 
shall promptly transmit to the plant clearance officer the approved 
orders and shipping instructions for property to be transferred.
    (2) If the plant clearance officer receives a request to transfer a 
property item, he or she shall promptly request GSA approval to 
withdraw the item from the inventory disposal schedule.
    (c) 42nd through 56th day--GSA screening for possible donation. 
During this period, GSA shall screen property not identified for 
Federal re-utilization for possible donation to eligible donees.


45.304-7  Special screening requirements.

    (a) Special tooling and special test equipment that does not 
contain general purpose components. Screen these items for re-
utilization within the agency. Except for the Department of

[[Page 30197]]

Defense, if the agency has no further use for the tooling or test 
equipment, forward the inventory disposal schedule to the GSA regional 
office that serves the region in which the property is located.
    (b) Special test equipment with general purpose components. (1) The 
clauses at 52.245-1, 52.245-4, and 52.245-6 permit a contractor to 
identify special test equipment, or general purpose components thereof, 
the contractor can use in performance of other Government contracts or 
to identify such equipment or components it wants to acquire from the 
Government for other purposes.
    (2) Complete the agency screening required by 45.304-6(a). If the 
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, forward the inventory disposal 
schedule to the GSA regional office that serves the region in which the 
property is located. If the contractor has expressed an interest in 
using the property on another Government contract, contact the 
appropriate contracting officer for that contract. If he or she concurs 
with the proposed use, transfer the property's accountability to that 
contract. Deny the contractor's request if the contracting officer does 
not concur with the proposed use and resume the screening process. If 
the contractor has expressed an interest in acquiring the property, and 
no other party has expressed an interest during agency or GSA 
screening, see 45.304-10.
    (c) Printing equipment. 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 has no requirement for the 
equipment, submit the report to the General Services Administration for 
further use and donation screening.
    (d) Automatic data processing equipment (ADPE). Schools and 
community based educational organizations shall have priority for ADPE 
that is educationally useful. Dispose of ADPE that will not be 
transferred to a school or community based educational organization in 
accordance with agency procedures.
    (e) Non-nuclear hazardous materials. Process these items in 
accordance with agency procedures.
    (f) Nuclear materials. (1) The possession, use, and transfer of 
certain nuclear materials are subject to the regulatory controls of the 
Nuclear Regulatory Commission (NRC). The materials are defined as--
    (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 which 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, and 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.
    (2) Contracting activities shall screen listings of excess nuclear 
material in the categories described in paragraph (b)(1) of this 
section. If there are no other agency requirements for the material, 
the material shall be disposed of in accordance with the NRC or 
applicable state licenses, and applicable Federal and agency 
regulations.


45.304-8  Waiver of screening requirements.

    Agency heads or their designees may waive agency screening 
requirements when it is clearly in the Government's interests to do so. 
When circumstances suggest a waiver of GSA screening requirements would 
be in the Government's interests, submit the agency's justification for 
the waiver to the Administrator, General Services Administration, at 
least 10 days prior to implementing the waiver. The waiver shall be 
effective unless the GSA takes exception to the waiver request within 
the 10-day period. Notify the contract administration office when 
implementing a waiver.


45.304-9  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 41 CFR 101-43.309-3 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.


45.304-10  Sale of surplus Government property.

    Policy and procedures for such sales, except sales of Department of 
Defense property, are contained in the Federal Property Management 
Regulations (FPMR) 41 CFR part 101-45.


45.304-11  Proceeds from sales.

    Proceeds of any sale are to be credited to the Treasury of the 
United States as miscellaneous receipts, except where the contract or 
any subcontract thereunder authorizes the proceeds to be credited to 
the price or cost of the work (40 U.S.C. 485(a) and (e)).


45.304-12  U.S. Government property in foreign countries.

    Sell or dispose of such property in accordance with agency 
procedures (see 40 U.S.C. 511-514).


45.304-13  Destruction or abandonment.

    (a) Surplus property may be destroyed or abandoned only after a 
reasonable effort has been made to dispose of it by other authorized 
methods. Before authorizing destruction or abandonment, the plant 
clearance officer shall determine in writing that--
    (1) The property has no commercial value and no value to the 
Government; or
    (2) The estimated cost to sell the property is greater than the 
probable sale proceeds; and
    (3) The property does not constitute a danger to public health, 
safety, or welfare.
    (b) Surplus property for which a determination has been made under 
45.304-13 may be donated to public bodies in lieu of abandonment or 
destruction. All costs incident to donation shall be borne by the 
donee.
    (c) Agencies shall not abandon hazardous Government property on a 
contractor's premises without the contractor's written consent.

Subpart 45.4--Property Management Contracts


45.401  Contracting for property management.


45.401-1  General.

    (a) Contracts for the storage of Government property, the operation 
or management of real property owned or leased by the Government, the 
operation or management of a Government activity for the Government 
(e.g., warehouses, libraries, stock rooms, computer centers, etc., that 
are located on real property owned or leased by the Government) or

[[Page 30198]]

the preservation of an essential industrial capability, are contracts 
for services.
    (b) Follow the guidelines in parts 37 and 45 to acquire such 
services. Except as provided in 45.401-3, in addition to the clauses 
prescribed for use with part 37, include either 52.245-1 or 52.245-4 
and 52.245-3 in solicitations and contracts for such services. See 
45.102 for applicability criteria and other provisions or clauses that 
might be required. As required by 52.245-1 or 52.245-4, all Government 
property to be furnished for performance of such contracts must be 
identified in the contract. See 45.201 for restrictions applicable to 
furnishing certain types of property. The contract must identify any 
constraints on the property's use, special handling or maintenance 
requirements, and applicable security considerations. See 45.401-3 for 
property management contracts.
    (c) When a contractor will be required to maintain the Government's 
property, solicitations shall require offerors to propose maintenance 
plans. Contracting officers should consult with cognizant property 
administrators to assure that proposed maintenance plans are acceptable 
and conduct negotiations with offerors in the competitive range when 
necessary. At the minimum, the maintenance to be performed must be 
sufficient to assure the property's suitability for intended use or, 
under property management contracts, assure that property used by the 
contractor is returned to the Government in the same or better 
condition than the property's condition prior to contractor use, less 
normal wear and tear. Include an offeror's acceptable plan, or 
negotiated modification thereof, in the contract performance 
requirements.


45.401-2  Contracts to preserve or maintain an essential industrial 
capability.

    Follow the guidelines in 45.401-1. If the contractor is authorized 
to use property that is part of an essential industrial capability for 
performance of--
    (a) A Government contract at another location, transfer the 
property's accountability to that contract.
    (b) A nonfederal contract, charge an appropriate rent.


45.401-3  Property management contracts.

    (a) Contracting officers may consider awarding a contract to 
consolidate management of and accountability for Government-owned or -
leased real or personal property at a specified location provided the 
potential property management contractor also is performing 
simultaneously multiple Government supply or service contracts at the 
specified location. The term ``specified location'' includes 
Government-owned contractor operated activities and essential 
industrial facilities maintained or operated by a contractor for the 
Government. Generally, the contractor performs the property management 
services required by the clauses at 52.245-3 and 52.245-6 at no direct 
cost to the Government. In consideration of that performance, the 
contractor is authorized to use, on a rent-free basis and without 
further approval, the property accountable under the property 
management contract in performance of the contracting agency's 
contracts and may use such property in performance of other Government 
contracts if authorized by the contracting officer. During such use, 
the property remains accountable under the property management 
contract.
    (b) A property management contract must clearly identify the 
property accountable under the contract, the specific location at which 
the contractor is authorized to use the property, and include the 
clauses at 52.245-6 (in lieu of the clauses at 52.245-1 or 52.245-4), 
52.245-3, and any applicable clauses prescribed for use when 
contracting under part 37.
    (c) Charge an appropriate rental using the guidelines in 52.245-5 
when property accountable under property management contracts is 
authorized for commercial use.

PART 49--TERMINATION OF CONTRACTS

    25. Section 49.001 is amended by revising the definition 
``Termination inventory'' to read as follows:


49.001  Definitions.

* * * * *
    Termination inventory includes parts, work in process, completed 
work, supplies, other material produced or acquired for the work 
terminated, completed or partially completed plans, drawings, or 
information, property that would have been delivered to the Government 
if the contract had been completed, and Government furnished property.
* * * * *


49.105  [Amended]

    26. Section 49.105 is amended in the introductory text of paragraph 
(b)(4) by removing ``(see subpart 45.6)''.
    27. Section 49.108-3 is amended 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 part 45 or, for contracts awarded on 
or after (TBD), the disposal procedures in 52.245-4; and
* * * * *
    28. Section 49.108-4 is amended by revising paragraphs (a)(1)(ii) 
and (b) to read as follows:


49.108-4  Authorization for subcontract settlements without approval or 
ratification.

    (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 45.304; and
* * * * *
    (b) Section 45.304 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 45.304, if the total amount (at the subcontract price) 
when added to the amount of the settlement does not exceed the amount 
authorized under this subsection.
* * * * *


49.202  [Amended]

    29. Section 49.202 is amended in paragraph (b)(3)(iii) by removing 
the word ``facilities'' and inserting ``property'' in its place.


49.204  [Amended]

    30. Section 49.204 is amended in paragraph (a) by removing the 
words ``materials sold that have'' and inserting in their place 
``property sold that has''.
    31. Section 49.206-3 is revised to read as follows:


49.206-3  Submission of inventory 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 20 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 (see 45.302).

[[Page 30199]]

    32. Section 49.303-2 is revised to read as follows:


49.303-2  Submission of inventory 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 
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 (see 45.302).
    33. Section 49.505 is amended by revising paragraphs (a) and (c), 
and the last sentence of paragraph (d) to read as follows:


49.505  Other termination clauses.

    (a) Property management. The contracting officer shall insert the 
clause at 52.249-11, Termination of Use--Property Management Contracts, 
in property management contracts.
* * * * *
    (c) Failure to perform. The contracting officer shall insert the 
clause at 52.249-13, Failure to Perform, in property management 
contracts, except such contracts with nonprofit educational 
institutions.
    (d) * * * The contracting officer shall also insert the clause in 
time-and-material contracts, labor-hour contracts, and property 
management contracts.
* * * * *
    34. Section 49.602-2 is revised to read as follows:


49.602-2  Inventory forms.

    Standard Forms 1428, Inventory Disposal Schedule, and 1429, 
Inventory Disposal Schedule--Continuation Sheet, shall be used to 
support settlement proposals submitted on the forms specified in 
49.602-1(a), (b), and (c) (see 45.302).

PART 51--USE OF GOVERNMENT SOURCES BY CONTRACTORS

    35. Section 51.106 is revised to read as follows:


51.106  Title.

    (a) Title to all property acquired by the contractor under the 
contracting officer's authorization shall vest in the parties as 
provided in the contract.
    (b) When contracting with educational institutions and the 
Government Property clause at 52.245-4, Alternate I is used, agencies 
may provide higher thresholds, if appropriate.
    36. Section 51.107 is revised to read as follows:


51.107  Contract clause.

    The contracting officer shall insert the clause at 52.251-1, 
Government Supply Sources, in solicitations and contracts when the 
contracting officer may authorize the contractor to acquire supplies 
from a Government supply source.


51.200  [Amended]

    37. Section 51.200 is amended at the end of the second sentence by 
removing ``(see 45.304).''

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    38. Section 52.216-7 is amended by revising the date of the clause; 
in paragraph (b)(3) by revising ``paragraph (g)'' and ``paragraph (d)'' 
to read ``paragraph (h)'' and ``paragraph (e)'', respectively; 
redesignating paragraphs (c) through (h) as (d) through (i) 
respectively; adding a new paragraph (c); and in newly designated 
paragraph (i)(1) by revising ``paragraph (d)(4)'' to read ``paragraph 
(e)(4)''. The revised text reads as follows:


52.216-7  Allowable Cost and Payment.

* * * * *

Allowable Cost and Payment (Date)

* * * * *
    (c) Title. (1) Title to property acquired or produced by the 
Contractor for performance of this contract, the costs of which are 
allocable to this contract as direct costs, shall vest in the 
Government. For property acquired or produced prior to execution of 
this contract, vestiture occurs upon execution of the contract. 
Otherwise, vestiture occurs when the property is or should have been 
allocable or properly chargeable to this contract under sound and 
generally accepted accounting principles and practices.
    (2) Property to which the Government has obtained title solely 
under this clause is not ``Government furnished property.''
* * * * *


52.216-11  [Amended]

    39. Section 52.216-11 is amended in the first sentence of the 
introductory paragraph of the section by removing ``or a facilities 
contract.''


52.216-12  [Amended]

    40. Section 52.216-12 is amended in the first sentence of the 
introductory paragraph of the section by removing ``(other than a 
facilities contract)''.


52.216-13 and 52.216-14  [Removed and Reserved]

    41. Sections 52.216-13 and 52.216-14 are removed and reserved.


52.222-17  Labor Standards for Construction Work-Property Management 
Contracts.

    42. Section 52.222-17 section and clause headings are revised to 
read as set forth above; and the date of the clause is revised.
    43. Section 52.232-16 is amended by revising the date of the clause 
and paragraphs (d), (e), and (h) of the clause to read as follows:


52.232-16  Progress Payments.

* * * * *

Progress Payments (Date)

* * * * *
    (d) Title. (1) Title to property acquired or produced by the 
Contractor for performance of this contract, the costs of which are 
allocable to this contract as direct costs, shall vest in the 
Government. For property acquired or produced prior to execution of 
this contract, vestiture occurs upon execution of the contract. 
Otherwise, vestiture occurs when the property is or should have been 
allocable or properly chargeable to this contract under sound and 
generally accepted accounting principles and practices. Except as 
provided in 52.245-2, upon liquidation of all progress payments, the 
Contractor shall have title to property acquired or fabricated for 
this contract that is not required to be delivered to the Government
    (2) Property to which the Government has obtained title solely 
under this clause is not ``Government furnished property.''
    (3) Except for Government furnished property, the Contractor may 
sell scrap resulting from performance of this contract without 
requesting the Contracting Officer's approval. The proceeds shall be 
credited against the costs of performance.
    (4) The Contractor shall not acquire for its own use property to 
which title is vested in the Government under this clause or, except 
as provided in paragraph (3) of this clause, dispose of such 
property unless authorized to do so by the Contracting Officer. The 
Contractor shall (i) exclude the allocable costs of the property 
from the costs of contract performance, and (ii) repay to the 
Government any amount of unliquidated progress payments allocable to 
the property.
    (e) Risk of loss. The Contractor is liable for loss, theft, or 
destruction of, or damage to, property acquired or produced for 
performance of this contract unless the Government has expressly 
assumed such risks, taken title to the property under 52.245-2, or 
accepted the property. The Contractor shall repay the Government an 
amount equal to the unliquidated progress payments that are based on 
costs allocable to property that is damaged, lost, stolen, or 
destroyed.
* * * * *
    (h) Special terms regarding default. If this contract is 
terminated under the Default clause--
    (1) The Contractor shall, on demand, repay to the Government the 
amount of unliquidated progress payments.
    (2) Upon full liquidation of progress payments, the Contractor 
shall have title to

[[Page 30200]]

all property acquired or fabricated for performance of this contract 
except such property required to be delivered to the Government 
under the Default clause or property to which the Government has 
taken title under 52.245-2.
* * * * *


52.232-21  [Removed and Reserved]

    44. Section 52.232-21 is removed and reserved.
    45. Section 52.232-32 is amended by revising the date of the clause 
and paragraphs (f), (g), and (j) to read as follows:


52.232-32 Performance-Based Payments.

* * * * *

Performance-Based Payments (Date)

    (f) Title. (1) Title to property acquired or produced by the 
contractor for performance of this contract, the costs of which are 
allocable to this contract as direct costs, shall vest in the 
Government. For property acquired or produced prior to execution of 
this contract, vestiture occurs upon execution of the contract. 
Otherwise, vestiture occurs when the property is or should have been 
allocable or properly chargeable to this contract under sound and 
generally accepted accounting principles and practices. Except as 
provided in 52.245-2, upon liquidation of all progress payments the 
contractor shall have title to property acquired or fabricated for 
this contract that is not required to be delivered to the 
Government.
    (2) Property to which the Government has obtained title solely 
under this clause is not ``Government furnished property.''
    (3) Except for Government furnished property, the Contractor may 
sell scrap resulting from performance of this contract without 
requesting the Contracting Officer's approval. The proceeds shall be 
credited against the costs of performance.
    (4) The Contractor shall not acquire for its own use property to 
which title is vested in the Government under this clause or, except 
as provided in paragraph (3) of this clause, dispose of such 
property unless authorized to do so by the contracting officer. The 
Contractor shall (i) exclude the allocable costs of the property 
from the costs of contract performance, and (ii) repay to the 
Government any amount of unliquidated progress payments allocable to 
the property.
    (g) Risk of loss. The Contractor is liable for loss, theft, or 
destruction of, or damage to, property acquired or produced for 
performance of this contract unless the Government has expressly 
assumed such risks, taken title to the property under 52.245-2, or 
accepted the property. The Contractor shall repay the Government an 
amount equal to the unliquidated progress payments that are based on 
costs allocable to property that is damaged, lost, stolen, or 
destroyed.
* * * * *
    (j) Special terms regarding default. If this contract is 
terminated under the Default clause--
    (1) The Contractor shall, on demand, repay to the Government the 
amount of unliquidated progress payments.
    (2) Upon full liquidation of progress payments, the Contractor 
shall have title to all property acquired or fabricated for 
performance of this contract except such property required to be 
delivered to the Government under the Default clause or property to 
which the Government has taken title under 52.245-2.
* * * * *


52.243-2  [Amended]

    46. Section 52.243-2 is amended by removing Alternate IV and 
renumbering Alternate V as Alternate IV of the clause.
    47. Section 52.243-4 is amended by revising the date of the clause 
and paragraph (a)(3) of the clause to read as follows:


52.243-4  Changes.

* * * * *

Changes (Date)

    (a) * * *
    (3) In the Government property or services furnished for contract 
performance; or
* * * * *


52.244-2  [Amended]

    47-A. Section 52.244-2 is amended by removing paragraph (a)(4) of 
the clause.
    48. Sections 52.245-1 through 52.245-7 are revised to read as 
follows:


52.245-1  Government Furnished Property (Fixed-Price and Labor-Hour 
Contracts).

    As prescribed in 45.102(a), insert the following clause:

Government Furnished Property (Fixed-Price and Labor-Hour Contracts) 
(Date)

    (a) Definitions. The ``Government Property Control'' clause of 
this contract, 52.245-3, defines certain terms used in Section 
52.245. When a term defined in 52.245-3 is used in this clause, it 
has the same meaning as when used in 52.245-3.
    (b) Property furnished for performance of this contract. (1) The 
Government furnished property identified in this contract may be 
used for performance of the contract on a rent-free basis. The 
Contractor shall not use such property on any other Government 
contracts or for commercial purposes without the Contracting 
Officer's prior approval. Unless otherwise permitted by law, 
commercial use shall be on a rental basis. The terms and conditions 
of the ``Rental Charges for Commercial Use'' clause of this contract 
shall apply to each rental.
    (2) The Contractor shall not improve or make structural 
alterations to real property owned or leased by the Government and 
made available for performance of this contract unless expressly 
authorized to do so in writing by the Contracting Officer. Title to 
such improvements or alterations shall vest in the Government if the 
property is accountable under this contract or will be determined by 
the terms of the contract under which the real property is 
accountable.
    (3) The Government retains title to Government furnished 
property including Government furnished property that is 
incorporated into or attached to any property it does not own. 
Government furnished property does not become a fixture or lose its 
identity as personal property by being attached to real property.
    (4) The Government shall, when requested by the Contractor, 
provide information reasonably required for the property's intended 
use to the extent the Government has the right to release or 
disclose the information.
    (5) If the Contractor commingles Contractor acquired or 
fabricated material with Government furnished material, the 
provisions of paragraph (c) of this clause regarding suitability for 
intended use shall not apply to the commingled Government furnished 
material. Notwithstanding any other provision of this contract, the 
Contractor shall be responsible for any failure to comply with 
contract requirements attributable to material that was commingled.
    (c) Suitability for intended use. The contract delivery or 
performance dates are based upon the expectation that Government 
furnished property will be suitable for its intended use, except 
property furnished ``as is'' (see paragraph (d)), and delivered to 
the Contractor at the times stated in the contract or, if not so 
stated, in sufficient time to enable the Contractor to meet the 
contract's delivery or performance dates.
    (1) The Contractor shall notify the Contracting Officer promptly 
following receipt of Government furnished property that is not 
suitable for its intended use and take corrective action or dispose 
of the property as directed by the Contracting Officer. The contract 
shall be equitably adjusted in accordance with paragraph (g) of this 
clause.
    (2) The Contractor may request an equitable adjustment in price, 
schedule, or both when Government furnished property is not 
delivered to the Contractor by the required time and such untimely 
delivery has affected contract performance. Any adjustment shall be 
made in accordance with paragraph (g) of this clause.
    (d) Property furnished as is. (1) Offerors and the Contractor 
are responsible for assuring that Government property made available 
on an ``as is'' basis is suitable for the offerors' or Contractor's 
purposes. Such property is furnished F.O.B. at the location 
specified in the solicitation or contract. The cost of transporting, 
installing, modifying, repairing, or otherwise making such property 
suitable for the Contractor's intended use shall be at the 
Contractor's expense. Modifications to property furnished ``as is'' 
require the Contracting Officer's prior written approval.
    (2) Special tooling or special test equipment is furnished ``as 
is'' for performance of this contract if the Contractor acquired or 
fabricated and the Government took title to such tooling or test 
equipment under this or a prior contract.
    (3) The Government makes no warranty whatsoever with respect to 
property furnished ``as is'' except that the property will be in the 
same condition when placed

[[Page 30201]]

at the specified F.O.B. location as when inspected by the Contractor 
or, if not inspected by the Contractor, as of the last date 
identified in the solicitation or contract for Contractor 
inspection. The Contractor is responsible for verifying that the 
property's condition has not changed during that period. If the 
Contractor determines the property's condition has changed and such 
change will adversely affect the Contractor, the Contractor shall 
immediately notify the Contracting Officer and identify the changed 
condition. If the Contracting Officer concurs that the property's 
condition has changed, he or she may restore the property or 
substitute other Government property at no change in contract price 
(or target price or ceiling amount); permit the Contractor to 
restore the property subject to an equitable adjustment; or, decline 
to provide the property subject to an equitable adjustment in price, 
schedule, or both. The foregoing provisions for adjustment are the 
exclusive remedies available to the Contractor. The Government has 
no liability for changes in the property's condition discovered 
after removal from the specified F.O.B. location.
    (4) Repairs to or modifications of property furnished ``as is'' 
do not affect the Government's title to such property.
    (e) Changes in Government furnished property. (1) The 
contracting Officer may increase, decrease, or substitute other 
Government property for the property furnished or to be furnished 
for performance of this contract or require use of Government 
furnished property in lieu of Contractor property.
    (2) Except as provided in paragraph (e)(4), any increase in the 
amount of property furnished for performance of this contract shall 
result in an equitable reduction in contract price and appropriate 
adjustment of the contract delivery or performance dates.
    (3) The Contractor may request an equitable adjustment in 
contract price in accordance with paragraph (g) of this clause for a 
decrease in or substitution for the property identified in the 
contract or withdrawal of authority to use property accountable 
under another contract in performance of this contract, provided 
such decrease, substitution, or withdrawal increases the costs of 
contract performance.
    (4) If the Contracting Officer directs the Contractor to use 
Government furnished property in lieu of Contractor property in 
performance of this contract, any adjustment to the contract price 
or terms resulting from such direction shall be made in accordance 
with the ``Changes'' clause of this contract.
    (f) Risk of loss. (1) Except as provided in paragraph (f)(3), 
the Contractor is liable for any loss, theft, or destruction of, or 
damage to, Government furnished property accountable under this 
contract.
    (2) Contractor responsible repairs to, or replacements of, 
Government furnished property shall be accomplished at no change in 
contract price (or target price or ceiling amount).
    (3) The Contractor is not liable for--
    (i) Government furnished property properly consumed in 
performing this contract; or
    (ii) Loss, theft, or destruction of, or damage to, Government 
furnished property when the Contractor is providing services 
performed entirely on real property owned or leased by the 
Government and the Contractor does not control the use of, or access 
to, the Government furnished property.
    (4) Except as provided in paragraph (f)(5) of this clause, the 
Contractor shall notify the Government's property administrator in 
writing promptly following the loss, theft, or destruction of, or 
damage to, Government furnished property. Such notice shall 
identify--
    (i) Lost, stolen, destroyed, or damaged Government property by 
description, contract number, national stock number (if known), and 
either part number or identification number;
    (ii) The date a loss or theft was discovered or damage or 
destruction occurred and, if known, the circumstances;
    (iii) Each property item's acquisition cost;
    (iv) The contracts affected;
    (v) All known interests in commingled property of which the 
Government property is a part; and
    (vi) The insurance, if any, covering any part of or interest in 
such commingled property.
    (5) The Contractor is not required to provide notice of loss, 
theft, or destruction of, or damage to, low value property which the 
Contractor does not need for continued performance of this contract 
until contract completion or termination. Such notice shall include 
the contract number and each such property item's acquisition cost, 
description, national stock number (if known), and either its part 
number or identification number.
    (6) The Contractor shall take all reasonable action to protect 
damaged Government furnished property from further damage and to 
physically separate such property from all other property.
    (7) The Contracting Officer may replace, direct the Contractor 
to repair or replace, or direct the Contractor to take other 
appropriate action regarding lost, stolen, damaged, or destroyed 
Government furnished property for which the Government has 
specifically assumed such risks in this contract. When lost, 
damaged, stolen, or destroyed Government furnished property is 
replaced by the Government or the Contractor, the replacement 
property shall be entered into the property control system as a 
Government furnished property item. Any equitable adjustment 
incident to such direction shall be determined in accordance with 
paragraph (g) of this clause.
    (g) Equitable adjustments. (1) Equitable adjustments shall be 
the Contractor's exclusive remedy for Government actions under this 
clause and shall be made in accordance with the procedures of the 
Changes clause. The Government shall not be liable to suit for 
breach of contract for--
    (i) Any delay in delivery of Government furnished property;
    (ii) Delivery of Government furnished property in a condition 
not suitable for its intended use;
    (iii) An increase or decrease in, or substitution of, Government 
furnished property; or
    (iv) Failure to repair or replace Government furnished property 
when the Government is responsible for repair or replacement.
    (2) An equitable adjustment for Government furnished property 
that is not in a condition suitable for intended use or the 
withdrawal or substitution of Government furnished property may 
include an amount for the restoration and rehabilitation of the 
contractor's premises caused by such condition, withdrawal, or 
substitution.
    (h) Maintenance Responsibilities. (1) The contractor is 
responsible for the maintenance of Government furnished property 
accountable under this contract, including such property stored at a 
Contractor-managed site. The Contractor shall perform all 
maintenance, including preventive maintenance, necessary to assure 
that Government furnished property remains suitable for its intended 
use unless the Contracting Officer specifically relieves the 
contractor of its maintenance responsibility for a particular item 
or class of items. If routine and preventive maintenance are not 
sufficient to sustain a property item's suitability for intended 
use, the Contractor shall notify the Contracting Officer promptly 
and request direction regarding repair or replacement.
    (2) The Contractor shall notify promptly the Government's 
property administrator of the need for any replacement of, or major 
repair or rehabilitation to, Government furnished property 
discovered during its maintenance activities and shall not effect 
such repair, replacement, or rehabilitation unless authorized to do 
so by the Contracting Officer.
    (i) Return of Government furnished property. If this contract 
requires Government furnished property to be returned directly to 
the Government and not entered into the property disposal process--
    (1) The Contractor shall notify the Contract Administration 
Office of its intent to return such property at least 10 working 
days prior to return. Notices shall identify the contracts under 
which the items are accountable and provide each item's name, 
description, and national stock number, if known, or part number or 
identification number.
    (2) The property shall be returned to the Government in a 
condition suitable for its intended use except--
    (i) Lost, stolen, or destroyed property that the Government has 
determined will not be replaced;
    (ii) Damaged property that the Government has determined will 
not be repaired;
    (iii) Property consumed in performance of this contract;
    (iv) Property attached to, incorporated into, or delivered with, 
a deliverable end item; or
    (v) Property furnished as is shall be returned in equal or 
better condition than when furnished to the Contractor.
    (j) Disposal of Government furnished property--(1) Inventory 
disposal schedules. Except as provided in paragraph (i) or (j)(2), 
the Contractor shall identify Government furnished property no 
longer required for performance of this contract using Standard Form 
1428, Inventory Disposal Schedule. Unless the plant clearance 
officer has agreed to a different submission basis, or the contract 
requires inventory disposal

[[Page 30202]]

schedules to be submitted electronically, the Contractor shall 
prepare separate inventory disposal schedules for: special test 
equipment with general purpose components; special test equipment 
that does not contain general purpose components; printing 
equipment; automatic data processing equipment; nonnuclear hazardous 
materials; and, nuclear materials. Property with the same 
description, condition code, and reporting location may be grouped 
in a single line item. Special test equipment shall be described in 
sufficient detail to permit an understanding of the special test 
equipment's intended use. The Contractor may annotate the schedule 
to identify test equipment the Contractor wishes to purchase from 
the Government or general purpose components thereof the Contractor 
wishes to purchase or use in the performance of other Government 
contracts.
    (2) Scrap lists. Contractors that have Government approved scrap 
procedures may prepare scrap lists (provided such lists are 
consistent with the approved scrap procedures) in lieu of inventory 
disposal schedules except for scrap that--
    (i) Requires demilitarization;
    (ii) Is a classified item;
    (iii) Is generated from classified items;
    (iv) Contains hazardous materials; or
    (v) Is dangerous to the public health, safety, or welfare.
    (3) Corrections. If the plant clearance officer finds that 
property identified on an inventory disposal schedule or scrap list 
is not accountable under this contract or is not in the quantity or 
condition indicated on the inventory disposal schedule or scrap 
list, he or she may require the Contractor to correct the inventory 
disposal schedule or scrap list, may reject such schedules or lists 
at any time, or may require submission of an inventory control 
schedule in lieu of a scrap list.
    (4) Submission requirements. Inventory disposal schedules or 
scrap lists shall be submitted to the plant clearance officer for 
approval no later than--
    (i) Thirty (30) days following the Contractor's determination 
that a Government furnished property item is no longer required for 
performance of the contract;
    (ii) Sixty (60) days following completion of contract deliveries 
or performance or such longer period as may be approved by the plant 
clearance officer; or
    (iii) One hundred twenty (120) days following contract 
termination in whole or in part or such longer period as may be 
approved by the Contracting Officer.
    (5) Inventory Schedule Adjustments. The Contractor shall provide 
the plant clearance officer at least 10 working days' advance 
written notice of its intent to remove a Government furnished 
property item, including an item identified as scrap, from an 
approved inventory disposal schedule. Unless the plant clearance 
officer objects to the intended schedule adjustment within the 
notice period, the Contractor may make the adjustment upon 
expiration of the notice period.
    (6) Storage. The Contractor shall store the Government furnished 
property identified in an inventory disposal schedule pending 
receipt of disposal instructions. If the Government fails to provide 
disposal instructions within 120 days following receipt of an 
acceptable inventory disposal schedule, the Contractor might be 
entitled to an equitable adjustment for costs incurred to store such 
property on or after the 121st day following receipt of an 
acceptable schedule.
    (7) Disposal. Except as provided in paragraph (j)(7)(i), 
Government furnished property shall not be disposed of until the 
Contractor has been authorized to do so by the plant clearance 
officer.
    (i) If the Government does not provide disposition instructions 
to the Contractor within 60 days following receipt of an acceptable 
scrap list, the Contractor may dispose of the listed scrap.
    (ii) The Contractor shall prepare for shipment, deliver f.o.b. 
origin, or dispose of Government furnished property as directed by 
the plant clearance officer. The Contractor shall remove and destroy 
any markings identifying the property as Government property when 
the plant clearance officer directs disposal by sale or donation, 
notifies the Contractor that the Government has abandoned the 
property, or directs the Contractor to scrap the property.
    (iii) The net proceeds from a disposal action of scrapped 
Government furnished property shall be credited to the contract 
under which the Government furnished property was accountable or, 
when scrapped Government furnished property is not segregable from 
other scrap, to an appropriate overhead account. The Contractor 
shall credit the net proceeds of other disposal actions in 
accordance with instructions provided by the plant clearance 
officer.
    (iv) The Contracting Officer may require the Contractor to 
demilitarize the property prior to shipment or disposal. Any 
adjustment in contract price incident to the Contracting Officer's 
direction to demilitarize Government furnished property shall be 
made in accordance with paragraph (g) of this clause.
    (8) Contractor removal of property. The Contractor must obtain 
the plant clearance officer's approval to remove Government 
furnished property from its premises prior to receipt of final 
disposition instructions. If approval is granted, the Contractor 
shall transport and store the property at Contractor expense. The 
storage facility must be appropriate for assuring the property's 
physical safety and suitability for use. Approval does not relieve 
the Contractor of liability for loss, theft, or destruction of, or 
damage to, such property.
    (9) Subcontractor inventory disposal schedules. When the 
Contractor permits a subcontractor or supplier to use at a 
subcontractor or supplier managed site Government property furnished 
to the Contractor for performance of this contract, the Contractor 
shall require the subcontractor or supplier to submit inventory 
disposal schedules or scrap lists to the Contractor in sufficient 
time for the Contractor to comply with the requirements of paragraph 
(j)(4) of this clause.
    (k) Abandonment and restoration of contractor's premises.
    (1) The Government shall not abandon Government furnished 
property that is or contains a hazardous material at a Contractor-
owned location without the Contractor's written concurrence. The 
Contractor may request an equitable adjustment in contract price, 
target price or ceiling amount incident to such agreement.
    (2) The Government, upon notice to the Contractor, may abandon 
any nonhazardous Government property in place at which time all 
obligations of the Government regarding such abandoned property 
shall cease. The Government has no obligation to restore or 
rehabilitate the Contractor's premises under any circumstances and, 
except as provided in paragraphs (g)(2) and (k)(1), has no liability 
for such restoration or rehabilitation.
    (l) Overseas contracts. In a contract performed outside the 
United States of America, its territories, or possessions, the words 
``Government'' and ``Government furnished'' (wherever they appear in 
this clause) shall be construed as ``United States Government'' and 
``United States Government furnished,'' respectively.

(End of clause)

    Alternate I (Date). As prescribed in 45.102(a), substitute the 
following paragraph (f) for paragraph (f) of the basic clause:
    (f) Limited risk of loss. (1) The Contractor's liability for 
loss, theft, or destruction of, or damage to, Government furnished 
property accountable under this contract shall be limited if the 
Contractor maintains a property control system that satisfies the 
requirements of the Government Property Control clause of this 
contract (hereinafter referred to as an approved system).
    (2) When the Contractor maintains an approved system, the 
Contractor shall not be liable for loss, theft, or destruction of, 
or damage to, Government property accountable under this contract 
except loss, theft, destruction, or damage for which the Contractor 
is expressly responsible under the terms of this contract or loss, 
theft, destruction, or damage that results from--
    (i) A risk expressly required to be insured under this contract 
but only to the extent of the insurance required to be purchased and 
maintained, or to the extent of insurance actually purchased and 
maintained, whichever is greater;
    (ii) A risk that is in fact covered by insurance or for which 
the Contractor is otherwise reimbursed, but only to the extent of 
such insurance or reimbursement; or
    (iii) Willful misconduct or lack of good faith on the part of 
the Contractor's managerial personnel.
    (3) Following notice from the Government's property 
administrator to one of the Contractor's managerial personnel that 
the Contractor's or a subcontractor's property control system is not 
in compliance with the requirements of the Government Property 
Control clause of this contract, the Contractor's failure to correct 
its system or to have a subcontractor's system corrected within the 
dates specified by the Government's property administrator, or such 
other mutually agreed dates, shall be considered willful misconduct 
or lack of good faith on the part of the Contractor's managerial 
personnel. The Contractor shall

[[Page 30203]]

be liable for any loss, theft, or destruction of, or damage to, the 
Government furnished property accountable under this contract except 
such loss, theft, destruction, or damage that the Contractor can 
establish by clear and convincing evidence--
    (i) Did not result from the Contractor's failure to maintain an 
approved system; or
    (ii) Occurred while an approved system was maintained by the 
Contractor.
    (4) Except as provided in (f)(3)(i) and (f)(3)(ii), the 
Contractor shall be liable for loss, theft, or destruction of, or 
damage to, Government furnished property accountable under this 
contract immediately upon notice by certified mail that the 
Government has withdrawn approval of the Contractor's Government 
property control system.
    (5) The Contractor is not liable for Government property 
properly consumed in performing this contract. The Contractor shall 
have no liability for loss, theft, or destruction of, or damage to 
Government property furnished for performance of services entirely 
on real property owned or leased by the Government when the 
Contractor does not control the use of, or access to, such property.
    (6) The Contractor's transfer of Government furnished property 
to the possession and control of a subcontractor, does not affect 
the Contractor's liability for loss, theft, or destruction of, or 
damage to, that property.
    (7) Except as provided in paragraph (f)(8) of this clause, the 
Contractor shall notify the Government's property administrator in 
writing promptly following the loss, theft, or destruction of, or 
damage to, Government furnished property. Such notice shall 
identify--
    (i) Lost, stolen, destroyed, or damaged Government property by 
description, contract number, national stock number (if known), and 
either part number or identification number;
    (ii) The date a loss or theft was discovered or damage or 
destruction occurred and, if known, the circumstances;
    (iii) Each property item's acquisition cost;
    (iv) The contracts affected;
    (v) All known interests in commingled property of which the 
Government furnished property is a part; and
    (vi) The insurance, if any, covering any part of or interest in 
such commingled property.
    (8) The Contractor is not required to provide notice of loss, 
theft, or destruction of, or damage to, low value property which the 
Contractor does not need for continued performance of this contract 
until contract completion or termination. Such notice shall include 
the information required by paragraph (f)(7) of this clause.
    (9) The Contractor shall take all reasonable action to protect 
damaged Government furnished property from further damage and to 
physically separate such property from all other property.
    (10) The Contractor shall repair, renovate, or take such other 
action with respect to lost, stolen, damaged, or destroyed 
Government furnished property as the Contracting Officer directs and 
adjust the property records accordingly. When such repair, 
renovation, or action is not the Contractor's responsibility under 
this contract, the Contractor shall be entitled to an equitable 
price adjustment, in accordance with paragraph (g) of this clause. 
Contractor responsible repairs to, or replacements of, Government 
furnished property shall be accomplished at no change in contract 
price.
    (11) The Contractor shall not include in any price to the 
Government, any charge or reserve for insurance (including any self-
insurance fund or reserve) covering loss, theft, or destruction of, 
or damage to, Government furnished property except to the extent the 
Government might have expressly required the Contractor to carry 
such insurance under another provision of this contract.
    (12) If the Contractor is reimbursed or otherwise compensated 
for any loss, theft, or destruction of, or damage to, Government 
furnished property, the Contractor shall use the proceeds to repair, 
renovate, or replace such property or equitably reimburse the 
Government, as directed by the Contracting Officer and adjust the 
property records accordingly.
    (13) The Contractor shall do nothing to prejudice the 
Government's rights to recover against third parties for any loss, 
theft, or destruction of, or damage to, Government furnished 
property. When requested by the Contracting Officer, the Contractor 
shall, at Government expense, furnish to the Government all 
reasonable assistance and cooperation (including the prosecution of 
suit and the execution of instruments of assignment in favor of the 
Government) in obtaining recovery.


52.245-2  Special Tooling and Special Test Equipment--Right to Title 
(Fixed-Price Contracts).

    As prescribed in 45.102(b), insert the following clause:

Special Tooling and Special Test Equipment--Right to Title (Fixed-Price 
Contracts) (Date)

    (a) Definitions. The ``Government Property Control'' clause of 
this contract, 52.245-3, defines certain terms used in Section 
52.245. When a term defined in 52.245-3 is used in this clause, it 
has the same meaning as when used in 52.245-3.
    (b) Right to title. The Government has the right to take title 
to special tooling or special test equipment items that are not 
required to be delivered under this contract if the costs of such 
items are allocable to this contract as direct costs. That right 
ends upon expiration of the time period, in paragraph (e) of this 
clause. Except as provided in paragraph (f), the Government obtains 
title under this clause at no change in contract price, target 
price, or ceiling amount.
    (c) Reports. (1) The Contractor shall submit to the Contracting 
Officer a report identifying special tooling and special test 
equipment to which the Government has the right to obtain title 
under paragraph (b) of this clause as soon as practicable during 
contract performance but not later than the earlier of--
    (i) 90 days prior to completion of scheduled deliveries (other 
than technical data) under this contract;
    (ii) 30 days following the Contractor's determination that a 
right to title tooling or test equipment item is no longer required 
for contract performance.
    (2) The reports shall identify, for each such tooling or test 
equipment item or groups of identical items, the items or group's--
    (i) Nomenclature;
    (ii) Quantity;
    (iii) Acquisition cost;
    (iv) Contract number;
    (v) Part number(s) made or tested; and
    (vi) Identification number.
    (d) Storage. The Contractor shall store at its expense special 
tooling or special test equipment identified in a report required by 
paragraph (c) of this clause until the Government notifies the 
Contractor that it has taken title to a special tooling or test 
equipment item or until expiration of the Government notice period. 
Items shall be stored in a manner sufficient to preserve capability 
and provide protection from damage. If the Government requires items 
to be stored subsequent to the Government's assumption of title, the 
Contractor might be entitled to a price adjustment as provided in 
paragraph (f) of this clause.
    (e) Assumption of title. (1) The Government must notify the 
Contractor that it is taking title to a special tooling or special 
test equipment item or items within 120 days, or such other period 
mutually agreed upon, following receipt of a Special Tooling/Special 
Test Equipment report or other written notice from the Contractor 
identifying special tooling or special test equipment items that are 
no longer required for performance of this contract.
    (2) The Government's notice may be written or electronic, shall 
identify the special tooling or special test equipment item(s), and 
may, in any combination--
    (i) Provide packing, packaging, marking, and shipping 
instructions;
    (ii) Direct the Contractor to prepare the property for storage 
at the Contractor's facility or a Government facility; or
    (iii) Provide instructions when accountability is to be 
transferred to another contract.
    (3) The Contractor's storage obligations are not diminished if 
the Government notice period, or any extension thereof, extends 
beyond the date contract deliveries are completed.
    (f) Price adjustment. The contract price may be equitably 
adjusted for costs incurred by the Contractor to store, prepare for 
storage, package, pack, or mark for shipment, the special tooling or 
special test equipment to which the Government has taken title. Any 
adjustment in contract price shall be made in accordance with the 
procedures of the ``Changes'' clause of this contract and only to 
the extent the Contracting Officer's actions under paragraph (e) of 
this clause required the Contractor to incur costs that it would not 
have incurred under customary commercial practices.
    (g) Risk of loss. The Contractor is responsible for any loss, 
theft, or destruction of, or damage to, special tooling or special 
test equipment to which the Government has taken title under this 
clause during the period commencing upon the Government's

[[Page 30204]]

delivery of the notice required by paragraph (e) of this clause and 
ending upon placement aboard a carrier's conveyance (f.o.b. origin) 
or delivery at the specified f.o.b. destination point.
    (h) Flow down. The Contractor shall insert this or a 
substantially similar clause in all contracts and similar 
instruments with its first-tier subcontractors or suppliers, other 
than subcontractors or suppliers of commercial items, that will 
fabricate or acquire special tooling or special test equipment for 
performance of this contract.

(End of clause)


52.245-3  Government Property Control.

    As prescribed in 45.102(c), insert the following clause:

Government Property Control (Date)

    (a) Definitions. As used in this clause--
    Contractor's managerial personnel means the Contractor's 
directors, officers, and any of the Contractor's managers, 
superintendents, or equivalent representatives who have supervision 
or direction of all or substantially all of the contractor's--
    (1) Business; or
    (2) Operations at a site connected with performance of this 
contract.
    Equipment means items whose use is not limited to, or with only 
minor modification would not be limited to, the development, 
production, or maintenance of a particular item or the performance 
of a particular service. The term includes, but is not limited to, 
automated data processing equipment, office equipment, construction 
equipment, hand tools, machine tools (other than special tooling), 
test equipment (other than special test equipment or components 
thereof), furniture, and vehicles.
    Government property means property the Government owns or 
leases.
    Government-furnished property means property provided by the 
Government to a Contractor for performance of a contract.
    Low-value property means equipment, special tooling, or special 
test equipment that has an acquisition cost of $1500 or less and is 
not sensitive property.
    Material means property to be consumed or expended to perform a 
service or produce a deliverable end item and property incorporated 
into or attached to an end item. The term includes assemblies, 
components, parts, raw and processed materials, and supplies that 
may be consumed in normal use in performing a contract. It does not 
include equipment, real property, special test equipment, special 
tooling, or unique Federal property.
    Nonprofit organization means a business entity organized and 
operated exclusively for charitable, scientific, or educational 
purposes, the net earnings of which do not inure to the benefit of 
any private shareholder or individual, that is exempt from Federal 
income taxation under section 501 of the Internal Revenue Code and 
does not conduct a substantial portion of its activities carrying on 
propaganda or otherwise attempting to influence legislation or 
participating in any political campaign on behalf of any candidate 
for public office.
    Personal property means property of any kind or interest in it 
except real property, battleships, cruisers, aircraft carriers, 
destroyers, submarines, and records of the Federal Government.
    Plant clearance officer means a person appointed to perform 
plant clearance functions.
    Precious metals means silver, gold, platinum, palladium, 
iridium, osmium, rhodium, and ruthenium.
    Preventive maintenance means regularly scheduled maintenance 
performed to sustain suitability for intended use and detect and 
correct minor deficiencies before they result in serious 
consequences.
    Property means real and personal property.
    Property administrator means a person appointed to perform 
Government property administration.
    Real property means land and rights in land, ground 
improvements, utility distribution systems, and buildings and other 
structures. It does not include foundations and other work necessary 
for installing special tooling, special test equipment, or 
equipment.
    Scrap means personal property that has no value except its basic 
metallic, mineral, or organic content.
    Sensitive property means property potentially dangerous to the 
public safety or security if stolen, lost, or misplaced, or that 
must be subject to exceptional physical security, protection, 
control, and accountability such as classified property, weapons, 
ammunition, explosives, controlled substances, radioactive 
materials, hazardous materials or wastes, or precious metals.
    Special test equipment means a test unit or units designed, 
fabricated, or modified to accomplish special purpose testing, 
groupings of such items, general purpose items, or any combination 
thereof, that are interconnected and interdependent so as to become 
a new functional entity.
    Special tooling means items, such as jigs, dies, fixtures, 
molds, patterns, taps, gauges, or other equipment and manufacturing 
aids, which are of such a specialized nature that without 
substantial modification or alteration their use is limited to the 
development, production, repair, or maintenance of particular 
supplies or components thereof, or to the performance of particular 
services.
    Unique Federal property means Government-owned personal 
property, or components thereof, that is specially designed to 
perform or support the mission of one or more Federal agencies and 
is not available to the public.
    Work in process means bench stock materials, complete or 
incomplete fabricated parts, subassemblies, assemblies, and similar 
items that are created during production of deliverable end items or 
are required to construct special tooling or special test equipment 
needed to produce deliverable end items.
    (b) General. (1) This clause is applicable to Government 
furnished property; property stored by the Contractor at the 
Government's direction including property to which the Government 
has taken title under 52.245-2; and, under cost-type or time-and-
material contracts, property acquired or fabricated by a Contractor 
to which the Government has obtained title under the clause at 
52.216-7.
    (2) The Contractor is responsible for the maintenance, 
protection, and preservation of Government property in its or its 
subcontractors' possession. The Contractor shall account for such 
property as required by this contract.
    (3) If the Contractor does not have a property control system 
that is approved by the Government's property administrator, it 
shall establish a system that satisfies the requirements of this 
clause within 90 days following contract award (or such other 
mutually agreeable period). Notwithstanding any other provision of 
this contract regarding liability for loss, theft, or destruction 
of, or damage to, Government property in the Contractor's or its 
subcontractors' possession, the Contractor shall be liable for such 
loss, theft, destruction, or damage until its system is approved by 
the Government's property administrator. The Contractor shall 
maintain its system during the period Government property is in its 
or its subcontractors' possession.
    (4) The Contractor should use its existing property control 
system or a modification thereof when the existing or modified 
system satisfies the requirements of this clause.
    (c) Control System Requirements. The property control system 
shall include written processes for--
    (1) Assessing the system's efficiency and effectiveness, 
recommending corrective action or general improvements, and 
implementing appropriate changes;
    (2) Obtaining approval of property actions from the responsible 
Government representative no later than the time specified in this 
contract (when such approval is required by this contract) and 
appropriately documenting such approval;
    (3) Inspecting property acquired by the Contractor or furnished 
by the Government for performance of this contract upon receipt;
    (4) Identifying Government property received by the Contractor 
that was intended for other persons or discrepancies between the 
type, quantity, or condition of Government furnished property 
shipped to and actually received by the Contractor and initiating 
corrective action;
    (5) Promptly entering all Government property into the property 
control system;
    (6) Assuring that Government property is properly classified 
(see paragraph (f)(2)(viii));
    (7) Assuring Government property is used only as authorized by 
the Contracting Officer;
    (8) Controlling the distribution and return of pilferable 
property;
    (9) Scheduling and monitoring Government property maintenance to 
assure timely performance and recording of all maintenance actions;
    (10) Accurately recording by type and quantity Government 
material consumed during contract performance;
    (11) Performing, reporting, and recording all inventories 
required by this contract;
    (12) Identifying and reporting lost, damaged, or destroyed 
government property and generating corrective action 
recommendations;
    (13) Maintaining special security for classified or sensitive 
property commensurate with the property's security classification, 
special handling requirements, or both;

[[Page 30205]]

    (14) Accurately preparing and timely submitting the records and 
reports required by this contract;
    (15) Assuring subcontractors have adequate procedures for the 
control and protection of Government property;
    (16) Justifying the continued need for Government property to 
perform this contract;
    (17) Moving and storing Government property in a manner 
commensurate with the property's handling and storage requirements; 
and
    (18) Disposing of Government property in accordance with the 
requirements of this contract.
    (d) Access. The Government shall have access, at all reasonable 
times, to the premises at which any Government property is located 
and to the Contractor's Government property records and supporting 
information.
    (e) Property control system submission, review, and approval. 
(1) Except as provided in paragraph (d)(2) of this clause, offerors 
shall submit their written property control systems and processes 
with their offer if--
    (i) The offeror does not have an existing property control 
system or its existing system has not been approved by a Government 
property administrator;
    (ii) The offeror's property control system last was approved, or 
approval validated, more than 2 years prior to the date of its 
offer;
    (iii) A Government property administrator has requested 
corrections to the offeror's system or procedures and such 
corrections have not been made; or
    (iv) Approval of the system has been withdrawn.
    (2) The submission requirements in paragraph (d)(1) do not apply 
to offerors that have a Government property system that has been 
approved or validated by the Government no more than 2 years prior 
to the time for submission of offers. Such offerors are required 
only to submit to the Government's property administrator, within 90 
days following contract award, changes required to conform the 
system with requirements in this contract. The submission date may 
be extended by the Government's property administrator if he or she 
determines that an extension is warranted.
    (3) The Government's property administrator shall review the 
Contractor's system for conformance with contract requirements and 
approve or require corrections to the system and its implementing 
procedures. The Contractor shall accomplish the required corrections 
at no change in price or fee.
    (4) The Government may review the Contractor's previously 
approved system or require the Contractor to review a 
subcontractor's system to assure compliance with contract 
requirements. The Government's property administrator may validate 
approval of, require corrections to, or with the administrative 
contracting officer's concurrence, withdraw approval of the 
Contractor's system or require the Contractor to have a 
subcontractor's system corrected. The Contractor shall implement 
corrections required by the Government's property administrator by 
the date specified by the property administrator or such other date 
agreed upon at no change in price or fee. The Contractor's failure 
to implement corrections in a timely manner might result in the 
system's approval being withdrawn.
    (5) The Contractor shall make available to the Government's 
property administrator all records and related information 
reasonably required to verify that the Contractor's or a 
subcontractor's Government property control system conforms to 
contract requirements. Any disagreement as to the amount or type of 
information required for such verification shall be referred to the 
administrative contracting officer for resolution.
    (f) Property records and supporting information--(1) General. 
(i) The Contractor shall establish or maintain a property record 
that is current and complete for each Government property item in 
its or its subcontractors' possession. Identical items may be 
consolidated in a single property record if the consolidated record 
provides the information required by this clause. The Contractor 
shall identify useable components permanently removed from 
Government property as Government property items, enter such items 
into its property control system, and establish and maintain 
appropriate property records. Property records created by a 
subcontractor that has an approved property system may be used in 
lieu of creating new records.
    (ii) Contractors that use a Material Requirements Planning, 
Manufacturing Resource Planning, Material Management Accounting 
System, or similar systems may use those systems to generate the 
records for material items.
    (iii) If the Contractor has an approved property control system, 
its documents evidencing receipt and issue shall be the property 
control records for Government material issued for immediate 
consumption.
    (iv) When the Government is responsible for the replacement of a 
property item under this contract and has elected--
    (A) To replace or have the Contractor replace the item, the 
Contractor shall annotate appropriately the property record for the 
item being replaced, close that record, and create a new property 
record for the replacement item; or
    (B) Not to replace or have the Contractor replace the item, the 
Contractor shall close the property record for that item.
    (v) The Contractor shall provide the acquisition cost for each 
Government property item that was acquired or fabricated by the 
Contractor during performance of this contract. Estimated costs may 
be provided when the actual costs are not known.
    (vi) The Government shall provide the acquisition cost for 
Government furnished property within 30 days following delivery of 
the property to the Contractor. The Contractor shall notify the 
Government's property administrator promptly if the acquisition cost 
information is not received within that period.
    (vii) Property records are not required for work in process.
    (2) Standard information. Each property control record shall 
contain the following information--
    (i) The item's name, description, property classification, and 
National Stock Number (if the item has a national stock number). The 
National Stock Number for property controlled by documents 
evidencing receipt and issue is not required until property 
disposal.
    (ii) Contract number or equivalent code designation.
    (iii) Quantity received or fabricated, issued, and on hand.
    (iv) The date of the most recent physical inventory or other 
posting reference.
    (v) Acquisition cost.
    (vi) Current location. (For low value property, identify the 
initial location only.)
    (vii) The most recent transaction date.
    (viii) The property's classification. (Use only one of the 
following for each property item: Land, Buildings, Other Real 
Property, Equipment, Special Test Equipment, Special Tooling, Unique 
Federal Property, or Material.)
    (3) Additional Information--(i) Special tooling and special test 
equipment records. The Contractor shall provide the information 
required by paragraph (f)(2) for each general purpose test equipment 
item that is a removable or reusable component of Government-owned 
special test equipment if removal and reuse is economically 
feasible.
    (ii) Equipment records. Each record shall include the 
manufacturer's name, Commercial and Government Entity (CAGE) code or 
equivalent information, serial number and model or part number.
    (iii) Real property records. (A) Records are not required for 
portable buildings or facilities specifically acquired or 
constructed for tests that will result in the destruction of such 
buildings or facilities.
    (B) Real property records must be itemized, indexed, and contain 
a description of the property, its location, original acquisition 
cost, a description of property alterations made or construction 
work performed by the Contractor, including an identification of the 
construction sites supporting such alterations or construction, and 
separately identify the cost of such alterations or construction. 
Supporting documentation shall include maps, drawings, plans, 
specifications, and, if necessary, supplementary data needed to 
completely describe and value the property.
    (C) Costs incurred by the Government or the Contractor, to 
acquire, construct, alter, or improve Government-owned or -leased 
real property, including additions, expansions, extensions, or 
conversions thereof, shall be added to the property's acquisition 
cost if they increase the value, life, utility, capability, or 
serviceability of the property.
    (D) The Government's real property records shall be modified and 
annotated with a statement of the pertinent facts when property is 
sold, transferred, donated, destroyed, abandoned by the Government 
in place, or condemned.
    (iv) Records of maintenance actions. The property records for 
items requiring maintenance shall contain the maintenance schedule, 
the dates maintenance actions were performed, and identify any 
deficiencies discovered.
    (v) Scrap records. (A) The Contractor's scrap records shall 
provide the--

[[Page 30206]]

    (1) Contract number or equivalent code designation from which 
the scrap was derived;
    (2) Scrap classification by material content; and
    (3) Disposition and disposition dates.
    (B) When Contractor and Government-owned property of the same 
stock or classification are used to produce an item or any component 
thereof and property scrapped during such production cannot be 
identified as Contractor or Government-owned property, the 
Government property scrap records shall reflect a proportional, 
equitable share of such scrap.
    (vi) Property returned under warranty. The Contractor shall 
establish a separate property record for each item returned for 
correction under a warranty and maintain the records on a contract-
by-contract basis. The records shall identify the date received, the 
contract number under which the item was returned, the corrective 
action performed, and the date the item is returned to the 
Government. Once a property record has been established, identical 
items received for corrective action shall be added to the 
established record and the information required by this paragraph 
maintained for each item.
    (vii) Sensitive property. Property records shall legibly and 
conspicuously identify sensitive property.
    (g) Reports--(1) Government Property. The Contractor shall 
report all Government property accountable under this contract that 
is in its or its subcontractors' possession as of September 30 of 
each calendar year or upon completion of all property disposal 
actions under this contract, whichever is sooner. The report shall 
be prepared using SF 1422 (or an agency equivalent furnished by the 
Contracting Officer) and submitted to the Government's property 
administrator no later than October 31 of each calendar year.
    (2) Misdirected government property. The Contractor shall submit 
a written report to the Government's property administrator 
immediately following receipt of Government property intended for 
another person or Government property not required for performance 
of a Government contract and request disposition instructions. To 
the extent practical, the report shall identify the shipment's 
content, intended recipient, carrier that made delivery, the 
Government activity from which the shipment originated, and the 
shipment's current location.
    (3) Late Government Furnished Property. The Contractor shall 
report to the Contracting Officer, with a concurrent copy to the 
Government's property administrator, a failure to receive Government 
furnished property at the time stated in the contract or, when a 
time is not stated, in sufficient time to enable the Contractor to 
meet the contract's delivery or performance dates. Each report shall 
forward the Contractor's estimate of the extent to which such 
failure has affected or might affect contract performance.
    (h) Physical inventories.--(1) Periodic. Except for low value 
property and work in process, the Contractor shall periodically 
physically inventory all Government property in its possession. The 
Contractor, with the approval of the property administrator, shall 
establish the method, frequency, and procedures for such inventories 
to assure the existence and location of such property are accurately 
established and the records and reports required by this clause are 
complete and accurate. For purposes of this clause, electronic, 
optical, electro-magnetic, or similar inventory systems approved by 
the Government's property administrator satisfy the requirement for 
physical inventories.
    (2) Contract termination or completion inventories. The 
Contractor shall inventory all property furnished by the Government 
or acquired or fabricated by the Contractor for performance of this 
contract immediately following a notice of termination or partial 
termination of this contract or upon completion of deliveries or 
performance under the contract except property that is authorized 
for use on a follow-on or other Government contract. Such property 
does not have to be inventoried if the Contractor has notified the 
property administrator that record balances have been transferred to 
the receiving contract.
    (3) Restriction. The Contractor personnel who perform physical 
inventories shall not be the same individuals who maintain the 
property records required by this contract or have custody of the 
property unless authorized to do so by the property administrator.
    (i) Markings--(1) Contractor acquired or fabricated property--
(i) Cost-type contracts. The Contractor shall legibly and 
conspicuously mark Contractor acquired or fabricated property other 
than material with the phrase ``U.S. Government Property'' (or a 
similar phrase that conveys Government ownership), and a control 
number that links the property to the property records maintained by 
the Contractor, as soon as practicable following the Government's 
assumption of title to the property.
    (ii) Fixed price type contracts. This paragraph applies only to 
special tooling or special test equipment to which the Government 
has taken title under 52.245-2. The Contractor shall affix the 
markings identified in paragraph (i)(1)(i) to such tooling or test 
equipment as soon as practicable following receipt of the 
Government's notice that it has taken title to a special tooling or 
special test equipment item.
    (2) Government furnished property. Promptly following receipt of 
Government furnished property, the Contractor shall determine 
whether the property bears a Government ownership marking, mark 
unmarked property with the markings identified in paragraph 
(i)(1)(i), and replace any control numbers affixed by others with 
the Contractor's control number.
    (j) Overseas contracts. In a contract performed outside the 
United States of America, its territories, or possessions, the words 
``Government'' and ``Government furnished'', (as used in this 
clause, mean ``United States Government'' and ``United States 
Government furnished,'' respectively.)

(End of clause)

    Alternate I (Date) As prescribed in 45.102(c), replace 
paragraphs (f) and (g) of the basic clause with the following:
    (f) Property Records. The Contractor shall establish a separate 
property record for each Government property item returned for 
correction under a warranty and maintain the records on a contract-
by-contract basis. The records shall identify the item's name, 
description, property classification, and national stock number (if 
the item has a national stock number), the date received, the 
contract number under which the item was returned, the corrective 
action performed, and the date the item is returned to the 
Government. Once a property record has been established, identical 
items received for corrective action shall be added to the 
established record and the information required by this paragraph 
maintained for each item.
    (g) Reports--(1) Misdirected government property. The Contractor 
shall submit a written report to the Government's property 
administrator, immediately following receipt of Government property 
intended for another person or Government property not required for 
performance of a Government contract and request disposition 
instructions. To the extent practical, the report shall identify the 
shipment's content, intended recipient, carrier that made delivery, 
the government activity from which the shipment originated, and the 
shipment's current location.
    (2) Late Government Furnished Property. The Contractor shall 
report to the Contracting Officer, with a concurrent copy to the 
Government's property administrator, a failure to receive Government 
furnished property at the time stated in the contract or, when a 
time is not stated, in sufficient time to enable the contractor to 
meet the contract's delivery or performance dates. Each report shall 
forward the Contractor's estimate of the extent to which such 
failure has affected or might affect contract performance.


52.245-4  Government Property (Cost Reimbursement and Time and Material 
Contracts).

    As prescribed in 45.102(d), insert the following clause:

Government Property (Cost Reimbursement and Time and Material 
Contracts) (Date)

    (a) Definitions. The ``Government Property Control'' clause of 
this contract, 52.245-3, defines certain terms used in Section 
52.245. When a term defined in 52.245-3 is used in this clause, it 
has the same meaning as when used in 52.245-3.
    (b) General. (1) Except as provided in paragraph (c) of this 
clause, the Contractor shall use its own property to perform this 
contract.
    (2) The Contractor shall not acquire equipment or real property 
for the Government unless--
    (i) The equipment or real property is specified as a deliverable 
end item under this contract; or
    (ii) The Contractor is a nonprofit organization whose primary 
purpose is the conduct of scientific research, or a nonprofit 
institution of higher education, that is performing a Government 
contract for basic or applied scientific research and has obtained 
the Contracting Officer's approval to acquire tangible personal 
property for the

[[Page 30207]]

Government prior to the acquisition of such property.
    (3) The Contractor shall not use Government property, including 
property furnished by the Government for performance of this 
contract, on any other Government contract or for any commercial 
purpose without the Contracting Officer's prior approval. Unless 
otherwise permitted by law, commercial use shall be on a rental 
basis. The terms and conditions of the ``Rental Charges for 
Commercial Use'' clause of this contract shall apply to each rental.
    (4) If the Contractor commingles Contractor acquired or 
fabricated material with Government furnished material, the 
provisions of paragraph (c)(3) of this clause regarding suitability 
for intended use shall not apply to the commingled Government 
furnished material. Notwithstanding any other provision of this 
contract, the Contractor shall be responsible for any failure to 
comply with contract requirements attributable to material that was 
commingled.
    (c) Property furnished for performance of this contract--(1) 
Title. (i) The Government retains title to Government furnished 
property, including Government furnished property that is 
incorporated into or attached to any property it does not own. 
Government furnished property does not become a fixture or lose its 
identity as personal property by being attached to real property.
    (ii) The Contractor shall not improve or make structural 
alterations to real property furnished for performance of this 
contract unless expressly authorized to do so in writing by the 
Contracting Officer. Title to such improvements or alterations shall 
vest in the Government if the property is accountable under this 
contract or will be determined by the terms of the contract under 
which the real property is accountable.
    (2) Rent free basis. The Government furnished property 
identified in this contract may be used for performance of the 
contract on a rent-free basis. The Government shall, when requested 
by the Contractor, provide information reasonably required for the 
intended use of such property to the extent the Government has the 
right to release or disclose the information.
    (3) Suitability for intended use. (i) The contract delivery or 
performance dates are based upon the expectation that Government 
furnished property will be suitable for its intended use, except 
property furnished ``as is'' (see paragraph (c)(4)), and delivered 
to the Contractor at the times stated in the contract or, if not so 
stated, in sufficient time to enable the contractor to meet the 
contract's delivery or performance dates.
    (ii) The Contractor shall notify the Contracting Officer 
promptly following the Contractor's identification of Government 
furnished property that is not suitable for its intended use and 
take corrective action or dispose of the property as directed by the 
Contracting Officer. The contract shall be equitably adjusted in 
accordance with paragraph (e) of this clause.
    (iii) The Contractor may request an equitable adjustment when 
Government furnished property is not delivered to the Contractor by 
the required time and such untimely delivery has affected contract 
performance. Any adjustment shall be made in accordance with 
paragraph (e) of this clause.
    (4) Property furnished ``as is''. (i) Offerors and Contractors 
are responsible for assuring that Government furnished property made 
available on an ``as is'' basis is suitable for the offerors' or 
Contractor's purposes. Such property is furnished F.O.B. at the 
location specified in the solicitation or contract. The cost of 
transporting, installing, modifying, repairing, or otherwise making 
such property suitable for the Contractor's intended use shall be at 
the Contractor's expense. Modifications to property furnished ``as 
is'' require the Contracting Officer's prior written approval.
    (ii) Special tooling or special test equipment is furnished ``as 
is'' for performance of this contract if the Contractor acquired or 
fabricated and the Government took title to such tooling or test 
equipment under this or a prior contract.
    (iii) The Government makes no warranty whatsoever with respect 
to property furnished ``as is'' except that the property will be in 
the same condition when placed at the specified F.O.B. location as 
when inspected by the Contractor or, if not inspected by the 
Contractor, as of the last date identified in the solicitation or 
contract for Contractor inspection. The Contractor is responsible 
for verifying that the property's condition has not changed during 
that period. If the Contractor determines the property's condition 
has changed and such change will adversely affect the Contractor, 
the Contractor shall immediately notify the Contracting Officer and 
identify the changed condition. If the Contracting Officer concurs 
that the property's condition has changed, he or she may restore the 
property or substitute other Government property at no change in the 
contract's cost or fee; permit the Contractor to restore the 
property subject to an equitable adjustment; or, decline to provide 
the property subject to an equitable adjustment. The foregoing 
provisions for adjustment are the exclusive remedies available to 
the Contractor. The Government has no liability for changes in the 
property's condition discovered after removal from the specified 
F.O.B. location.
    (iv) Repairs to or modifications of property furnished ``as is'' 
do not affect the Government's title to such property.
    (5) Return of government furnished property. If this contract 
requires Government furnished property to be returned directly to 
the Government and not entered into the property disposal process--
    (i) The Contractor shall notify the Contract Administration 
Office of its intent to return such property at least 10 working 
days prior to return. Notices shall identify the contracts under 
which the items are accountable and provide each item's name, 
description, and national stock number, if known, or part number or 
identification number.
    (ii) The property shall be returned to the Government in a 
condition suitable for its intended use except--
    (A) Lost, stolen, or destroyed property that the Government has 
determined will not be replaced;
    (B) Damaged property that the Government has determined will not 
be repaired;
    (C) Property consumed in performance of this contract;
    (D) Property attached to, incorporated into, or delivered with, 
a deliverable end item; or
    (E) Property furnished ``as is'' shall be returned in equal or 
better condition than when furnished to the Contractor.
    (6) Changes in Government furnished property. (i) The 
Contracting Officer may increase, decrease, or substitute other 
Government property for the property furnished or to be furnished 
for performance of this contract or require use of Government 
furnished property in lieu of Contractor property.
    (ii) Except as provided in paragraph (c)(6)(iv), any increase in 
the amount of property furnished for performance of this contract 
shall result in an equitable reduction in contract cost and fee and 
appropriate adjustment of the contract delivery or performance 
dates.
    (iii) The Contractor may request an equitable adjustment in 
accordance with paragraph (e) of this clause for a decrease in or 
substitution for the property identified in the contract or 
withdrawal of authority to use property accountable under another 
contract in performance of this contract provided such decrease, 
substitution, or withdrawal increases the costs of contract 
performance.
    (iv) If the Contracting Officer directs the Contractor to use 
Government furnished property in lieu of Contractor property in 
performance of this contract, any adjustment to the contract terms 
and conditions shall be made in accordance with the ``Changes'' 
clause of this contract.
    (d) Title to contractor acquired or fabricated property. The 
clause at 52.216-7 provides the Government title to property 
acquired or fabricated by the Contractor for performance of this 
contract if the costs to acquire or fabricate the property are 
allocable to this contract as direct costs.
    (e) Equitable adjustments. (1) Equitable adjustments shall be 
the Contractor's exclusive remedy for Government actions under this 
clause and shall be made in accordance with the procedures of the 
Changes clause. The Government shall not be liable to suit for 
breach of contract for--
    (i) Any delay in delivery of Government furnished property;
    (ii) Delivery of Government furnished property in a condition 
not suitable for its intended use;
    (iii) A decrease in or substitution of Government furnished 
property; or
    (iv) Failure to repair or replace Government property when the 
Government is responsible for repair or replacement.
    (2) An equitable adjustment for Government furnished property 
that is not in a condition suitable for intended use or the 
withdrawal or substitution of Government furnished property may 
include an amount for the restoration and rehabilitation of the 
Contractor's premises caused by such condition, withdrawal, or 
substitution.
    (f) Limited risk of loss. (1) The Contractor's liability for 
loss, theft, or destruction of, or damage to, Government property 
accountable under this contract shall be limited if the Contractor 
maintains a property control system that satisfies the requirements 
of the

[[Page 30208]]

Government Property Control clause of this contract (hereinafter 
referred to as an approved system).
    (2) When the Contractor maintains an approved system, the 
Contractor shall not be liable for loss, theft, or destruction of, 
or damage to, Government property accountable under this contract 
except loss, theft, destruction, or damage for which the Contractor 
is expressly responsible under the terms of this contract or loss, 
theft, destruction, or damage that results from--
    (i) A risk expressly required to be insured under this contract 
but only to the extent of the insurance required to be purchased and 
maintained, or to the extent of insurance actually purchased and 
maintained, whichever is greater;
    (ii) A risk that is, in fact, covered by insurance or for which 
the Contractor is otherwise reimbursed, but only to the extent of 
such insurance or reimbursement; or
    (iii) Willful misconduct or lack of good faith on the part of 
the Contractor's managerial personnel.
    (3) Following notice from the Government's property 
administrator to one of the Contractor's managerial personnel that 
the Contractor's or a subcontractor's property control system is not 
in compliance with the requirements of the Government Property 
Control clause of this contract, the Contractor's failure to correct 
its system or to have a subcontractor's system corrected within the 
dates specified by the Government's property administrator, or such 
other mutually agreed dates, shall be considered willful misconduct 
or lack of good faith on the part of the Contractor's managerial 
personnel. The Contractor shall be liable for any loss, theft, or 
destruction of, or damage to, the Government property in its 
possession except such loss, theft, destruction, or damage that the 
Contractor can establish by clear and convincing evidence--
    (i) Did not result from the Contractor's failure to maintain an 
approved system; or
    (ii) Occurred while an approved system was maintained by the 
Contractor.
    (4) Except as provided in (f)(3)(i) and (ii), the Contractor 
shall be liable for loss, theft, or destruction of, or damage to, 
Government furnished property in its possession immediately upon 
notice by certified mail that the Government has withdrawn approval 
of the Contractor's Government property control system.
    (5) The Contractor is not liable for Government property 
properly consumed in performing this contract. The Contractor shall 
have no liability for loss, theft, or destruction of, or damage to 
Government property furnished for performance of services entirely 
on real property owned or leased by the Government when the 
Contractor does not control the use of, or access to, such property.
    (6) The Contractor's transfer of Government property to the 
possession and control of a subcontractor does not affect the 
Contractor's liability for loss, theft, or destruction of, or damage 
to, that property.
    (7) Except as provided in paragraph (f)(8) of this clause, the 
Contractor shall notify the Government's property administrator in 
writing promptly following the loss, theft, or destruction of, or 
damage to, Government property. Such notice shall identify--
    (i) Lost, stolen, destroyed, or damaged Government property by 
description, contract number, national stock number (if known), and 
either part number or identification number;
    (ii) The date a loss or theft was discovered or damage or 
destruction occurred and, if known, the circumstances;
    (iii) Each property item's acquisition cost;
    (iv) The contracts affected;
    (v) All known interests in commingled property of which the 
Government property is a part; and
    (vi) The insurance, if any, covering any part of or interest in 
such commingled property.
    (8) The Contractor is not required to provide notice of loss, 
theft, or destruction of, or damage to, low value property which the 
Contractor does not need for continued performance of this contract 
until contract completion or termination. Such notice shall include 
the information required by paragraph (f)(7) of this clause.
    (9) The Contractor shall take all reasonable action to protect 
damaged Government property from further damage and to physically 
separate such property from all other property.
    (10) The Contractor shall repair, renovate, or take such other 
action with respect to lost, stolen, damaged, or destroyed 
Government property as the Contracting Officer directs and adjust 
the property records accordingly. When such repair, renovation, or 
action is not the Contractor's responsibility under this contract, 
the Contractor shall be entitled to an equitable price adjustment in 
accordance with paragraph (e) of this clause. Contractor responsible 
repairs to or replacements of Government property shall be 
accomplished at no change in cost or fee.
    (11) The Contractor shall not include in the contract cost, fee, 
or any adjustment thereof, any charge or reserve for insurance 
(including any self-insurance fund or reserve) covering loss, theft, 
or destruction of, or damage to, Government property except to the 
extent the Government might have expressly required the Contractor 
to carry such insurance under another provision of this contract.
    (12) In the event the Contractor is reimbursed or otherwise 
compensated for any loss, theft, or destruction of, or damage to, 
Government property, the Contractor shall use the proceeds to 
repair, renovate, or replace such property or equitably reimburse 
the Government, as directed by the Contracting Officer, and adjust 
the property records accordingly.
    (13) The Contractor shall do nothing to prejudice the 
Government's rights to recover against third parties for any loss, 
theft, or destruction of, or damage to, Government property. When 
requested by the Contracting Officer, the Contractor shall, at 
Government expense, furnish to the Government all reasonable 
assistance and cooperation (including the prosecution of suit and 
the execution of instruments of assignment in favor of the 
Government) in obtaining recovery.
    (g) Maintenance Responsibilities. (1) The Contractor is 
responsible for the maintenance of Government property in its 
possession, including Government property stored at a Contractor 
managed site. The Contractor shall perform all maintenance, 
including preventive maintenance, necessary to assure that such 
property remains suitable for its intended use unless the 
Contracting Officer specifically relieves the Contractor of its 
maintenance responsibility for a particular item or class of items. 
If routine and preventive maintenance are not sufficient to sustain 
a property item's suitability for intended use, the Contractor shall 
notify the Contracting Officer promptly and request direction 
regarding repair or replacement.
    (2) The Contractor shall notify promptly the Government's 
property administrator of the need for any replacement or 
rehabilitation of, or major repair to, Government property 
discovered during its maintenance activities and shall not effect 
such repair, replacement, or rehabilitation unless authorized to do 
so by the Contracting Officer.
    (h) Disposal of Government property--(1) Predisposal 
requirements. Upon determining that it no longer needs a Government 
property item or items for contract performance, the Contractor 
shall, in order of precedence--
    (i) Make reasonable efforts to return unused property acquired 
for performance of this contract to the appropriate supplier at 
acquisition cost (less, if applicable, a reasonable restocking fee 
that is consistent with the supplier's customary practices) and 
credit the contract estimated or target cost with the proceeds of 
such returns;
    (ii) Make reasonable efforts to use property acquired or 
fabricated for performance of this contract in performance of other 
Government or nongovernmental contracts and credit the contract 
estimated or target cost by the property's acquisition cost; or
    (iii) Prepare, and submit to the Government's plant clearance 
officer, Inventory Disposal Schedules in accordance with paragraphs 
(h)(2) through (h)(4) of this clause.
    (2) Inventory disposal schedules. Except as provided in 
paragraph (h)(3) of this clause, the Contractor shall identify 
Government property no longer required for performance of this 
contract using Standard Form 1428, ``Inventory Disposal Schedule.'' 
Unless the plant clearance officer has agreed to a different 
submission basis or the contract requires inventory disposal 
schedules to be submitted electronically, the Contractor shall 
prepare separate inventory disposal schedules for: special test 
equipment with general purpose components; special test equipment 
that does not contain general purpose components; printing 
equipment; automatic data processing equipment; nonnuclear hazardous 
materials; and, nuclear materials. Property with the same 
description, condition code, and reporting location may be grouped 
in a single line item. Special test equipment shall be described in 
sufficient detail to permit an understanding of the special test 
equipment's intended use. The Contractor may annotate the schedule 
to identify test equipment the Contractor wishes

[[Page 30209]]

to purchase from the Government or general purpose components 
thereof that the Contractor wishes to purchase or use in the 
performance of other Government contracts.
    (3) Scrap lists. Contractors that have Government-approved scrap 
procedures may prepare scrap lists (provided the lists are 
consistent with the approved scrap procedures), in lieu of inventory 
disposal schedules, except for scrap that--
    (i) Requires demilitarization;
    (ii) Is a classified item;
    (iii) Is generated from classified items;
    (iv) Contains hazardous materials; or
    (v) Is dangerous to the public health, safety, or welfare.
    (4) Corrections. If the plant clearance officer finds that 
property identified on an inventory disposal schedule or scrap list 
is not accountable under this contract, or is not in the quantity or 
condition indicated on the inventory disposal schedule or scrap 
list, he or she may require the Contractor to correct the inventory 
disposal schedule or list, may reject such schedules or lists at any 
time, or may require submission of an inventory disposal schedule in 
lieu of a scrap list.
    (5) Submission requirements. Inventory disposal schedules or 
scrap lists shall be submitted to the plant clearance officer no 
later than--
    (i) Thirty (30) days following the Contractor's determination 
that a Government property item is no longer required for 
performance of the contract;
    (ii) Sixty (60) days following completion of contract deliveries 
or performance or such longer period as may be approved by the plant 
clearance officer; or
    (iii) One hundred twenty (120) days following contract 
termination in whole or in part or such longer period as may be 
approved by the Contracting Officer.
    (6) Inventory schedule adjustments. The Contractor shall provide 
the plant clearance officer at least 10 working days advance written 
notice of its intent to remove a property item, including an item 
identified as scrap, from an approved inventory disposal schedule. 
Unless the plant clearance officer objects to the intended schedule 
adjustment within the notice period, the Contractor may make the 
adjustment upon expiration of the notice period.
    (7) Storage. The Contractor shall store the property identified 
in an inventory disposal schedule pending receipt of disposal 
instructions. If the Government fails to provide disposal 
instructions within 120 days following receipt of an acceptable 
inventory disposal schedule, the Contractor might be entitled to an 
equitable adjustment for costs incurred to store such property on or 
after the 121st day following receipt of an acceptable schedule.
    (8) Disposal. Except as provided in (h)(8)(i), Government 
property may not be disposed of until the Contractor has been 
authorized to do so by the plant clearance officer.
    (i) If the Government does not provide disposition instructions 
to the Contractor within 60 days following receipt of an acceptable 
scrap list, the Contractor may dispose of the listed scrap.
    (ii) The Contractor shall prepare for shipment, deliver f.o.b. 
origin, or dispose of Government property as directed by the plant 
clearance officer. The Contractor shall remove and destroy any 
markings identifying the property as Government property when the 
plant clearance officer directs disposal by sale or donation, 
notifies the Contractor that the Government has abandoned the 
property, or directs the Contractor to scrap the property.
    (iii) The Contractor shall credit the net proceeds from a 
disposal of scrapped Government property to the contract under which 
the Government property is accountable or, when scrapped Government 
furnished property is not segregable from other scrap, to an 
appropriate overhead account. The Contractor shall credit the net 
proceeds of other disposal actions in accordance with instructions 
provided by the plant clearance officer.
    (iv) The Contracting Officer may require the Contractor to 
demilitarize the property prior to shipment or disposal. Any 
equitable adjustment incident to the Contracting Officer's direction 
to demilitarize Government property shall be made in accordance with 
paragraph (e) of this clause.
    (9) Contractor removal of property. The Contractor must obtain 
the plant clearance officer's approval to remove Government property 
from its premises prior to receipt of final disposition 
instructions. If approval is granted, the Contractor shall transport 
and store the property at Contractor expense. The storage facility 
must be appropriate for assuring the property's physical safety and 
suitability for use. Approval does not relieve the Contractor of 
responsibility for such property.
    (10) Subcontractor inventory disposal schedules. When the 
Contractor permits a subcontractor or supplier to use at a 
subcontractor or supplier managed site Government property furnished 
to the Contractor for performance of this contract, the Contractor 
shall require the subcontractor or supplier to submit inventory 
disposal schedules or scrap lists to the contractor in sufficient 
time for the Contractor to comply with the requirements of paragraph 
(h)(5) of this clause.
    (i) Abandonment and restoration of contractor's premises. (1) 
The Government shall not abandon at a Contractor-owned location 
Government property that is or contains a hazardous material without 
the Contractor's written concurrence. The Contractor may request an 
equitable adjustment incident to such agreement.
    (2) The Government, upon notice to the Contractor, may abandon 
any nonhazardous Government property in place at which time all 
obligations of the Government regarding such abandoned property 
shall cease. Except as provided in paragraphs (e)(2) and (i)(1), the 
Government has no obligation to restore or rehabilitate the 
Contractor's premises under any circumstances.
    (j) Overseas contracts. In a contract performed outside the 
United States of America, its territories, or possessions, the words 
``Government'' and ``Government furnished'' (wherever they appear in 
this clause) shall be construed as ``United States Government'' and 
``United States Government furnished,'' respectively.

(End of clause)

    Alternate I (Date). As prescribed in 45.102(d), renumber the 
text of paragraph (d) as subparagraph (d)(1) and add subparagraph 
(2) to paragraph (d) of the basic clause:
    (d) Title to Contractor acquired or fabricated property. (2) 
Title to equipment or other tangible personal property (both 
hereinafter referred to as tangible property) purchased with 
Government funds provided for the conduct of basic or applied 
research vests with the Government unless otherwise specified in 
this contract. With the Contracting Officer's approval prior to 
purchase, the Contractor shall have title to each such tangible 
property item having an acquisition cost less than $5,000. The 
Contractor shall furnish the Contracting Officer a list of all 
purchased tangible property within 10 days following the end of the 
calendar quarter during which the contractor receives the property. 
The Contractor agrees that it will not allocate depreciation or 
amortization costs for such tangible property to any existing or 
future Government contract and such tangible property may be used by 
the Government or its subcontractors without charge in performance 
of any Government contract or subcontract thereunder. As a condition 
for obtaining title to tangible property under this clause, the 
Contractor, by signing this contract, agrees that--
    ``No person in the United States shall on the ground of race, 
color, or national origin, be excluded from participation in, be 
denied the benefits of, or be otherwise subjected to discrimination 
under this contemplated financial assistance (title to equipment or 
other tangible personal property).''


52.245-5  Rental Charges for Commercial Use.

    As prescribed in 45.102(c), insert the following clause:

Rental Charges for Commercial Use (Date)

    (a) Definitions. As used in this clause--
    Base cost means the acquisition cost recorded in the 
Contractor's property control system or, in the absence of such 
record, the value attributed by the Government to a Government 
property item for purposes of determining a reasonable rental 
charge.
    Government property means property owned or leased by the 
Government.
    Real property means land and rights in land, ground 
improvements, utility distribution systems, and buildings and other 
structures. It does not include foundations and other work necessary 
for installing special tooling, special test equipment, or 
equipment.
    Rental period means the calendar period during which Government 
property is made available for commercial purposes.
    Rental time means the number of hours, to the nearest whole 
hour, rented property is actually used for commercial purposes. It 
includes time to set up the property for such purposes, perform 
required maintenance, and restore the property to its condition 
prior to rental (less normal wear and tear).
    (b) General--(1) Rental requests must be submitted to the 
administrative contracting officer, identify the property for which 
rental

[[Page 30210]]

is requested, propose a rental period, and calculate an estimated 
rental charge by using the Contractor's best estimate of rental time 
in the formulae described in paragraph (c) of this clause.
    (2) The Contractor shall not use Government property for 
commercial purposes, including Independent Research and Development, 
until a rental charge for real property, or estimated rental charge 
for other property, is agreed upon. Rented property shall be used 
only on a noninterference basis.
    (c) Rental charge--(1) Real property and associated fixtures. 
(i) The Contractor shall obtain, at its expense, a property 
appraisal from an independent licensed, accredited, or certified 
appraiser that computes a monthly, daily, or hourly rental rate for 
comparable commercial property. The appraisal may be used to compute 
rentals under this clause throughout its effective period or, if an 
effective period is not stated in the appraisal, for 1 year 
following the date the appraisal was performed. The Contractor shall 
submit the appraisal to the administrative contracting officer at 
least 30 days prior to the date the property is needed for 
commercial use. Except as provided in paragraph (c)(1)(iii) of this 
clause, the administrative contracting officer shall use the 
appraisal rental rate to determine a reasonable rental charge.
    (ii) Rental charges shall be determined by multiplying the 
rental time by the appraisal rental rate expressed as a rate per 
hour. Monthly or daily appraisal rental rates shall be divided by 
720 or 24, respectively, to determine an hourly rental rate.
    (iii) When the administrative contracting officer has reason to 
believe the appraisal rental rate is not reasonable, he or she shall 
promptly notify the Contractor and provide his or her rationale. The 
parties may agree on an alternate means for computing a reasonable 
rental charge.
    (2) Other Government property. The Contractor may elect to 
calculate the final rental charge using the appraisal method 
described in paragraph (c)(1) of this clause subject to the 
constraints therein or the following formula in which rental time 
shall be expressed in increments of not less than 1 hour with 
portions of hours rounded to the next higher hour--
[GRAPHIC] [TIFF OMITTED] TP02JN97.141

    (3) Alternate methodology. The Contractor may request 
consideration of an alternate basis for computing the rental charge 
if it considers the monthly rental rate or a time based rental 
unreasonable or impractical.
    (d) Rental payments. (1) Rent is due at the time and place 
specified by the Contracting Officer. If a time is not specified, 
the rental is due 60 days following completion of the rental period. 
The Contractor shall calculate the rental due, and furnish records 
or other supporting data in sufficient detail to permit the 
administrative contracting officer to verify the rental time and 
computation. Unless otherwise permitted by law, payment shall be 
made by check payable to the Treasurer of the United States and sent 
to the contract administration office identified in this contract or 
by electronic funds transfer to that office.
    (2) Interest will be charged if payment is not made by the 
specified payment date or, in the absence of a specified date, the 
61st day following completion of the rental period. Interest will 
accrue at the ``Renegotiation Board Interest Rate'' (published in 
the Federal Register semiannually on or about January 1st and July 
1st) for the period in which the rent is due.
    (3) The Government's acceptance of any rental payment under this 
clause, in whole or in part, shall not be construed as a waiver or 
relinquishment of any rights it may have against the Contractor 
stemming from the Contractors unauthorized use of Government 
property or any other failure to perform this contract according to 
its terms.
    (e) Use revocation. At any time during the rental period, the 
Government may revoke commercial use authorization and require the 
Contractor, at the Contractor's expense, to return the property to 
the Government, restore the property to its pre-rental condition 
(less normal wear and tear), or both.
    (f) Unauthorized use. The unauthorized use of Government 
property can subject a person to fines, imprisonment, or both, under 
18 U.S.C. 641.

(End of clause)


52.245-6  Government Property--Property Management Contracts.

    As prescribed in 45.102(e), insert the following clause:

Government Property--Property Management Contracts (Date)

    (a) Definitions. The ``Government Property Control'' clause of 
this contract, 52.245-3, defines certain terms used in Section 
52.245. When a term defined in 52.245-3 is used in this clause, it 
has the same meaning as when used in 52.245-3.
    (b) Authorized use. In consideration of the Contractors 
expenditures to manage and maintain the Government property 
identified in this contract, the Contractor is authorized to use and 
to have its subcontractors use such property without charge for 
performance of the contracting agency's contracts at the location 
specified in this contract (hereinafter referred to as the specified 
location).
    (1) Costs incurred by the Contractor to manage or maintain 
Government property at the specified location shall not be allocated 
as direct costs to this or any other Government contract.
    (2) If the Contractor elects to use inactive property stored at 
the specified location or property specially preserved at that 
location, the costs to make such property ready for Contractor use 
and to return the property to its stored or preserved condition 
shall be entirely at Contractor expense.
    (c) Use restrictions. (1) The property identified in this 
contract is available for use by the Contractor on an ``as is'' 
basis. The Government makes no warranty, express or implied, 
regarding the property's condition or fitness for use for any 
purpose. If authorized by the Contracting Officer to make such 
property suitable for the Contractor's intended use, the Contractor 
shall bear the cost of modifying, repairing, or otherwise altering 
the property. Such modifications, repairs, or alterations do not 
affect the Government's title in the property.
    (2) The Contractor shall not--
    (i) Acquire or fabricate property for the Government under this 
contract except as provided in paragraph (h)(3), (h)(4), or (i)(9) 
of this clause.
    (ii) Improve or make structural alterations to real property 
identified in this contract unless expressly authorized to do so in 
writing by the Contracting Officer. Title to such improvements or 
alterations shall vest in the Government.
    (iii) Except for property maintenance actions required by this 
contract, modify, repair, or alter the property identified in this 
contract in any manner without the Contracting Officer's prior 
written approval.
    (3) The Contractor shall not use the property identified in this 
contract to perform contracts for another Government agency, use 
such property at a location other than the specified location, or 
use such property for commercial purposes without the Contracting 
Officer's written authorization.
    (4) If the Contracting Officer authorizes use of the property 
identified in this contract for commercial purposes, the Contractor 
shall pay a rental determined by the ``Rental Charges for Commercial 
Use'' clause of this contract. The terms and conditions of that 
clause shall apply to each rental. Other consideration may be 
negotiated when permitted by law. The Contractor shall return the 
property to the Government in the same or better condition (less 
normal wear and tear) than when commercial use was authorized.
    (d) Accountability and liability. The property identified in 
this contract is accountable under this contract notwithstanding an 
authorized use for performance of other Government contracts. Except 
as provided in paragraph (c)(4), liability for loss, theft, or 
damage to, or destruction of, the identified property occurring 
during an authorized use shall be determined by this clause.
    (e) Title. (1) The Government has and retains title to the 
Government property identified in this contract.
    (2) Title to property or components thereof replaced by the 
Contractor, when

[[Page 30211]]

replacement is ordered by the Government or is the Contractor's 
responsibility under the contract's maintenance requirements, shall 
pass to and vest in the Government upon the Contractor's receipt or 
fabrication of the replacement item or component.
    (3) The Contractor shall keep the Government's property free and 
clear of all liens and encumbrances.
    (4) The Contractor may, at its expense and with the prior 
written approval of the Contracting Officer, arrange or rearrange 
Government property at the specified location or install Contractor-
owned equipment or other personal property at the specified location 
provided such property is readily removable, removal will not damage 
the Government property, and its installation or removal will not 
diminish the Government's ability to use the property for 
governmental purposes. Title to contractor-owned personal property 
installed at the specified location shall remain in the Contractor 
even though the Contractor property may be attached to real property 
owned by the Government unless the Contracting Officer determines 
that it is so permanently attached that removal would cause 
substantial damage to Government property.
    (f) Property adjustments. (1) The Contracting Officer may 
decrease or substitute other Government property for the property 
identified in this contract. The Contractor shall not be entitled to 
any adjustment in the terms and conditions of this contract incident 
to such decrease or substitution. If a decrease or substitution 
affects real property or equipment that has been authorized for use 
in performance of another Government contract at the specified 
location, the Contractor might be entitled to an equitable 
adjustment under the affected contract.
    (2) The Government reserves the right to position additional 
property at the specified location. Such property is not subject to 
the provisions of this contract. If the parties agree to modify the 
contract to include such additional property, the Contractor might 
be entitled to an equitable adjustment.
    (g) Equitable adjustments. Equitable adjustments under this 
contract shall be the Contractor's exclusive remedy for Government 
actions under this clause and shall be made in accordance with the 
procedures of the Changes clause. The Government shall not be liable 
to suit for breach of contract for--
    (1) An increase or decrease in, or substitution of other 
Government property for, the property specified in this contract; or
    (2) Failure to repair or replace Government property when the 
Government is responsible for repair or replacement.
    (h) Maintenance requirements. (1) The Contractor is responsible 
for establishing and maintaining a program for the protection, 
preservation, maintenance (including preventative maintenance), and 
repair of the Government property identified in this contract. At a 
minimum, the program shall assure that property--
    (i) Authorized for use in the performance of Government 
contracts is returned to the Government in the same (less normal 
wear and tear) or better condition than when authorized for use; and
    (ii) Is stored or preserved for the Government as required by 
this contract or, in the absence of a contractual requirement, sound 
industrial practice.
    (2) The Contractor shall submit with its response to the 
solicitation for this contract, or at the time specified by the 
Contracting Officer, a written proposed maintenance management plan. 
The plan shall include the Contractor's recommended maintenance 
requirements, recommended property condition codes, proposed 
procedures for scheduling maintenance to be performed and recording 
maintenance accomplished, and proposed procedures for the prompt 
disclosure and reporting to the Government of any property repair or 
rehabilitation that is not the Contractor's responsibility under 
this contract. Subject to approval by the Contracting Officer, the 
proposed program will be incorporated into the contract as the 
contract's maintenance requirements.
    (3) If the maintenance required by this contract proves 
insufficient to sustain a property item in a condition comparable to 
the property's condition at the time Contractor use was authorized, 
the Contractor shall notify the Contracting Officer promptly and 
request direction regarding repair or replacement. The Government 
has no obligation to repair or replace, or have the Contractor 
repair or replace, such property. Repairs or replacements made by 
the Contractor without the Contracting Officer's authorization are 
made entirely at Contractor expense.
    (4) The Contractor shall notify promptly the Government's 
property administrator of the need for any replacement or 
rehabilitation of, or major repair to, Government property 
discovered during its maintenance activities and shall not effect 
such repair, replacement, or rehabilitation unless authorized to do 
so by the Contracting Officer.
    (i) Limited risk of loss. (1) The Contractor's liability for 
loss, theft, or destruction of, or damage to, Government property 
accountable under this contract shall be limited if the Contractor 
maintains a property control system that satisfies the requirements 
of the Government Property Control clause of this contract 
(hereinafter referred to as an approved system).
    (2) When the Contractor maintains an approved system, the 
Contractor shall not be liable for loss, theft, or destruction of, 
or damage to, Government property accountable under this contract 
except loss, theft, destruction, or damage for which the Contractor 
is expressly responsible under the terms of this contract or loss, 
theft, destruction, or damage that results from--
    (i) A risk expressly required to be insured under this contract 
but only to the extent of the insurance required to be purchased and 
maintained, or to the extent of insurance actually purchased and 
maintained, whichever is greater;
    (ii) A risk that is, in fact, covered by insurance or for which 
the Contractor is otherwise reimbursed, but only to the extent of 
such insurance or reimbursement; or
    (iii) Willful misconduct or lack of good faith on the part of 
the Contractor's managerial personnel.
    (3) Following notice from the Government's property 
administrator to one of the Contractor's managerial personnel that 
the Contractor's or a subcontractor's property control system is not 
in compliance with the requirements of the Government Property 
Control clause of this contract, the Contractor's failure to correct 
its system or to have a subcontractor's system corrected within the 
dates specified by the Government's property administrator, or such 
other mutually agreed dates, shall be considered willful misconduct 
or lack of good faith on the part of the Contractor's managerial 
personnel. The Contractor shall be liable for any loss, theft, or 
destruction of, or damage to, the Government property accountable 
under this contract except such loss, theft, destruction, or damage 
that the Contractor can establish by clear and convincing evidence--
    (i) Did not result from the Contractor's failure to maintain an 
approved system; or
    (ii) Occurred while an approved system was maintained by the 
Contractor.
    (4) Except as provided in (i)(3)(i) and (i)(3)(ii), the 
Contractor shall be liable for loss, theft, or destruction of, or 
damage to, the property identified in this contract immediately upon 
notice by certified mail that the Government has withdrawn approval 
of the Contractor's Government property control system.
    (5) The Contractor's transfer of Government property identified 
in this contract to the possession or control of a subcontractor, 
does not affect the Contractor's liability for loss, theft, or 
destruction of, or damage to, that property.
    (6) Except as provided in paragraph (i)(7) of this clause, the 
Contractor shall notify the Government's property administrator in 
writing promptly following the loss, theft, or destruction of, or 
damage to, Government property. Such notice shall identify--
    (i) Lost, stolen, destroyed, or damaged Government property by 
description, contract number, national stock number (if known), and 
either part number or identification number;
    (ii) The date a loss or theft was discovered or damage or 
destruction occurred and, if known, the circumstances.
    (iii) Each property item's acquisition cost;
    (iv) The contracts affected;
    (v) All known interests in commingled property of which the 
Government property is a part; and
    (vi) The insurance, if any, covering any part of or interest in 
such commingled property.
    (7) The Contractor is not required to provide notice of loss, 
theft, or destruction of, or damage to, low value property which the 
Contractor does not need for continued performance of a Government 
supply contract at the specified location until that contract is 
completed or terminated. Such notice shall include the information 
required by paragraph (i)(6) of this clause.
    (8) The Contractor shall take all reasonable action to protect 
damaged Government property from further damage and to

[[Page 30212]]

physically separate damaged Government property from all other 
property.
    (9) The Contractor shall repair, renovate, or take such other 
action with respect to lost, stolen, damaged, or destroyed 
Government property as the Contracting Officer directs and adjust 
the property records accordingly. When such repair, renovation, or 
action is not the Contractor's responsibility under this contract, 
the Contractor shall be entitled to an equitable price adjustment in 
accordance with paragraph (g) of this clause. Contractor responsible 
repairs to, or replacements of, Government property shall be 
accomplished at no change in the cost or price of any Government 
contract.
    (10) The Contractor shall not include in the cost or price of 
any Government contract, or any adjustment thereof, any charge or 
reserve for insurance (including any self-insurance fund or reserve) 
covering loss, theft, or destruction of, or damage to the Government 
property identified in this contract, except to the extent the 
Government might have expressly required the Contractor to carry 
such insurance under another provision of this contract.
    (11) If the Contractor is reimbursed or otherwise compensated 
for any loss, theft, or destruction of, or damage to, Government 
property, the Contractor shall use the proceeds to repair, renovate, 
or replace such property or equitably reimburse the Government, as 
directed by the Contracting Officer, and adjust the property records 
accordingly.
    (12) The Contractor shall do nothing to prejudice the 
Government's rights to recover against third parties for any loss, 
theft, or destruction of, or damage to, Government property. When 
requested by the Contracting Officer, the Contractor shall, at 
Government expense, furnish to the Government all reasonable 
assistance and cooperation (including the prosecution of suit and 
the execution of instruments of assignment in favor of the 
Government) in obtaining recovery.
    (j) Disposal of Government property. The Contractor shall not 
dispose of Government property, including Government property the 
Contractor has identified as scrap, or remove Government property 
from the specified location, until the Contractor has been 
authorized to do so by the plant clearance officer.
    (1) The Contractor shall submit Standard Form 1428, Inventory 
Disposal Schedule, to the plant clearance officer within 30 days (or 
such longer period authorized by the plant clearance officer) 
following--
    (i) Destruction of a Government property item identified in this 
contract;
    (ii) Damage to a property item that cannot be economically 
repaired;
    (iii) Notice from the Contracting Officer that the Government 
will not repair an item for which repair is the Government's 
responsibility under this contract; or
    (iv) The Contractors determination that property it has been 
using to perform other contracts is no longer required for the 
performance of those contracts.
    (2) Unless the plant clearance officer has agreed to a different 
submission basis or the contract requires inventory disposal 
schedules to be submitted electronically, the Contractor shall 
prepare separate inventory disposal schedules for: Special test 
equipment with general purpose components; special test equipment 
that does not contain general purpose components; printing 
equipment; automatic data processing equipment; nonnuclear hazardous 
materials; and, nuclear materials. Property with the same 
description, condition code, and reporting location may be grouped 
in a single line item. Special test equipment shall be described in 
sufficient detail to permit an understanding of the special test 
equipment's intended use. The Contractor may annotate the schedule 
to identify test equipment the Contractor wishes to purchase from 
the Government or general purpose components thereof the Contractor 
wishes to purchase or use in the performance of other Government 
contracts.
    (3) Contractors that have Government-approved scrap procedures 
may prepare scrap lists (provided such lists are consistent with the 
approved scrap procedures) in lieu of inventory disposal schedules 
except for scrap that--
    (i) Requires demilitarization;
    (ii) Is a classified item;
    (iii) Is generated from classified items;
    (iv) Contains hazardous materials; or
    (v) Is dangerous to the public health, safety, or welfare.
    (4) If the plant clearance officer finds that property 
identified on an inventory disposal schedule or scrap list is not 
accountable under this contract or is not in the quantity or 
condition indicated on the inventory disposal schedule or scrap 
list, he or she may require the Contractor to correct the inventory 
disposal schedule or scrap list, may reject such schedules or lists 
at any time, or may require submission of an inventory disposal 
schedule in lieu of a scrap list.
    (5) As directed by the plant clearance officer, the Contractor 
shall--
    (i) Preserve, protect, or store the property identified on an 
inventory disposal schedule pending receipt of disposal 
instructions;
    (ii) Prepare for shipment, deliver f.o.b. origin, or dispose of 
Government property as directed by the plant clearance officer;
    (iii) Remove and destroy any markings identifying the property 
as Government property when the plant clearance officer directs 
disposal by sale or donation, or directs the Contractor to scrap the 
property; and
    (iv) Credit the proceeds from a disposal action in accordance 
with instructions provided by the plant clearance officer.
    (6) When the Contractor permits a subcontractor or supplier to 
use property identified in this contract, the Contractor shall 
require the subcontractor or supplier to submit inventory disposal 
schedules or scrap lists to the Contractor in sufficient time for 
the Contractor to comply with the requirements of paragraph (j)(1) 
of this clause.
    (7) 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 (g) of this clause.
    (k) Overseas contracts. In a contract performed outside the 
United States of America, its territories, or possessions, the words 
``Government'' and ``Government property'', as used in this clause, 
mean ``United States Government'' and ``United States Government 
property'', respectively.

(End of clause)


52.245-7  Liability for Government Property Demolition Services 
Contracts.

    As prescribed in 45.102(g), insert the following clause:

Liability for Government Property--Demolition Services Contracts (Date)

    Except for reasonable wear and tear incident to the removal and 
delivery of property to the Government, the Contractor assumes the 
risks of and is liable for any loss or destruction of or damage to 
property--
    (a) Required to be delivered to the Government; and
    (b) Title to which is vested in the Contractor but that under 
the Termination clauses of this contract is revested in the 
Government upon notice of termination.

(End of clause)


52.245-8 through 52.245-19  [Removed]

    49. Sections 52.245-8 through 52.245-19 are removed.


52.246-18  [Amended]

    50. Section 52.246-18 is amended by revising the date of the 
clause; and in the first sentence of paragraph (b)(3) by removing the 
word ``facilities'' and inserting ``Government property'' in its place.
    51. Section 52.249-2 is amended by revising the date of the clause 
and paragraphs (b)(2) and (d) to read as follows:


52.249-2  Termination for Convenience of the Government (Fixed-Price).

* * * * *

Termination for Convenience of the Government (Fixed-Price) (Date)

* * * * *
    (b)* * *
    (2) Place no further subcontracts or orders (referred to as 
subcontracts in this clause) for materials, other property, or 
services, except as necessary to complete the continued portion of 
the contract.
* * * * *
    (d) If the Government fails to provide disposal instructions 
within 120 days following receipt of an acceptable termination 
inventory schedule, the Contractor might be entitled to an equitable 
adjustment for costs incurred to store such property on or after the 
121st day following receipt of an acceptable schedule.
* * * * *
    52. Section 52.249-3 is amended by revising the date of the clause 
and paragraphs (b)(2) and (d) to read as follows:

[[Page 30213]]

52.249-3  Termination for Convenience of the Government (Dismantling, 
Demolition, or Removal of Improvements).

* * * * *

Termination for Convenience of the Government (Dismantling, Demolition, 
or Removal of Improvements) (Date)

* * * * *
    (b)* * *
    (2) Place no further subcontracts or orders (referred to as 
subcontracts in this clause) for materials, other property, or 
services, except as necessary to complete the continued portion of 
the contract.
* * * * *
    (d) If the Government fails to provide disposal instructions 
within 120 days following receipt of an acceptable termination 
inventory schedule, the Contractor might be entitled to an equitable 
adjustment for costs incurred to store such property on or after the 
121st day following receipt of an acceptable schedule.
* * * * *
    53. Section 52.249-6 is amended by revising the date of the clause 
and paragraph (e) to read as follows:


52.249-6  Termination (Cost-Reimbursement).

* * * * *

Termination (Cost-Reimbursement) (Date)

* * * * *
    (e) If the Government fails to provide disposal instructions 
within 120 days following receipt of an acceptable termination 
inventory schedule, the Contractor might be entitled to an equitable 
adjustment for costs incurred to store such property on or after the 
121st day following receipt of an acceptable schedule.
* * * * *
    54. Section 52.249-11 is revised to read as follows:


52.249-11  Termination of Use--Property Management Contracts.

    As prescribed in 49.505(a), insert the following clause:

Termination of Use--Property Management Contracts (Date)

    (a) Termination. The Contracting Officer may, by notice to the 
Contractor at any time, completely or partially terminate the 
Contractor's authority to use, or have its subcontractors use, the 
Government property identified in this contract. Such termination 
shall be effective at 12:00 a.m. of the 15th day following the date 
of the termination notice, unless the notice specifies an earlier 
date.
    (b) Contract requirements. (1) The Contractor is not required to 
manage and maintain the Government property identified in this 
contract following a complete termination of the authority to use 
such property. If the Contracting Officer requires the Contractor to 
manage or maintain the property subsequent to a notice of complete 
termination, the contract shall be equitably adjusted.
    (2) Following a partial termination under paragraph (a) of this 
clause, the Contractor is required to manage and maintain the 
property for which use is still authorized.
    (c) Price adjustments. (1) The Contractor shall not be entitled 
to any adjustment under this contract incident to a complete or 
partial termination of its authority to use, or have its 
subcontractors use, the Government property identified in this 
contract.
    (2) Except as provided in 52.249-13, Failure to Perform, a 
termination under paragraph (a) of this clause might entitle the 
Contractor to an equitable adjustment in the price (or estimated 
cost and fee) of contracts being performed at the specified location 
if the costs of performance under such contracts are increased by 
the termination. Adjustments shall be determined by the terms of the 
affected contracts. Such adjustments shall be the Contractor's 
exclusive remedy for Government actions under this clause. The 
Government shall not be liable to the Contractor for damages or loss 
of profits because of any termination or notice of termination under 
this clause.

(End of clause)

    55. Section 52.249-13 is amended by revising the introductory 
paragraph to read as follows:


52.249-13  Failure to Perform.

    As prescribed in 49.505(c), insert the following clause in property 
management contracts, except such contracts with nonprofit educational 
institutions:
* * * * *
    56. Section 52.249-14 is amended by revising the second and fourth 
sentences of the introductory paragraph to read as follows:


52.249-14  Excusable Delays.

    * * * Also insert the clause in time-and-material contracts, labor-
hour contracts, and property management contracts. * * * When used in 
property management contracts, substitute the words ``Termination of 
Use--Property Management Contracts'' for ``termination'' in the last 
sentence of the clause.
* * * * *
    57. Section 52.251-1 is amended by revising the clause to read as 
follows:


52.251-1  Government Supply Sources.

* * * * *

Government Supply Sources (Date)

    (a) The Contracting Officer may authorize the Contractor to use 
Government supply sources in the performance of this contract. Such 
property is not ``Government furnished property''.
    (b) Title to property acquired by the Contractor under paragraph 
(a) of this clause shall vest for--
    (1) Fixed-price contracts, as provided in the contract financing 
provisions and the clause at 52.245-2.
    (2) Cost-type contracts, as provided in the clause at 52.245-4.
    (3) Property management contracts, in the Government immediately 
upon the Contractor's acquisition of the property.

(End of clause)

PART 53--FORMS

    58. Section 53.245 is revised to read as follows:


53.245  Government property.

    The following forms are prescribed, as specified in this section, 
for use in reporting, redistribution, 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 
45.304-6.)
    (b) SF 126 (GSA), Report of Personal Property for Sale, and SF 126-
A (GSA), Report of Personal Property for Sale (Continuation Sheet). 
(See 45.304-10.)
    (c) SF 1422 (6/97), U.S. Government Property in the Custody of 
Contractors. (See 52.245-3(g)(1).) SF 1422 is authorized for local 
reproduction and a copy is furnished for this purpose in Part 53 of the 
looseleaf edition of the FAR.
    (d) SF 1423 (REV. 12/88), Inventory Verification Survey. (See 
45.304-2(b).)
    (e) SF 1424 (REV. 7/89), Inventory Disposal Report. SF 1424 is 
authorized for local reproduction and a copy is furnished for this 
purpose in Part 53 of the looseleaf edition of the FAR.
    (f) SF 1428 (REV. 6/97), Inventory Disposal Schedule, and SF 1429 
(REV. 6/97), Inventory Disposal Schedule Continuation Sheet. (See 
52.245-1(j), 52.245-4(h), and 52.245-6(j).) Standard Form 1428 and 
Standard Form 1429 are authorized for local reproduction and copies are 
furnished for this purpose in Part 53 of the looseleaf edition of the 
FAR.
    59. Section 53.249 is amended by revising paragraph (b) to read as 
follows:


53.249  Termination of contracts.

* * * * *
    (b) Standard Forms 1428, Inventory Disposal Schedule, and 1429, 
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.
    60. Section 53.301-1422 is added to read as follows:


53.301-1422  U.S. Government Property in the Custody of Contractors.

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53.301-1426, 53.301-1427, and 53.301-1430 through 53.301-
1434  [Removed]

    61. Sections 53.301-1426, 53.301-1427, and 53.301-1430 through 
53.301-1434 are removed.
    62. Sections 53.301-1428 and 53.301-1429 are revised to read as 
follows:


53.301-1428  Inventory Disposal Schedule. 
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53.301-1429  Inventory Disposal Schedule-Continuation Sheet. 
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[FR Doc. 97-14250 Filed 5-30-97; 8:45 am]
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