[Federal Register Volume 63, Number 24 (Thursday, February 5, 1998)]
[Rules and Regulations]
[Pages 5892-5895]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-2583]


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GENERAL SERVICES ADMINISTRATION

41 CFR Part 101-46

[FPMR Amendment H-197]
RIN 3090-AG50


Replacement of Personal Property Pursuant to the Exchange/Sale 
Authority

AGENCY: Office of Governmentwide Policy, GSA.

ACTION: Final rule.

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SUMMARY: 41 CFR 101-46 is revised to enhance executive agencies' 
understanding of the exchange/sale authority and to provide those 
agencies with greater flexibility and opportunity to use that 
authority.

EFFECTIVE DATE: February 5, 1998.

FOR FURTHER INFORMATION CONTACT: Martha Caswell, Director, Personal 
Property Management Policy Division (202-501-3828).

SUPPLEMENTARY INFORMATION:

A. Background

    The following questions and answers have been developed to explain 
the purpose and intended use of the exchange/sale authority, and to 
explain the changes to the exchange/sale regulations promulgated by 
this final rule:
    What is the exchange/sale authority?
    An authority provided by Section 201(c) of the Federal Property and 
Administrative Services Act of 1949, as amended, under which executive 
agencies ``may exchange or sell similar items and may apply the 
exchange allowance or proceeds of sale in such cases in whole or in 
part payment for the property acquired''.
    When should executive agencies use the exchange/sale authority?
    When replacing personal property. An example would be the need of 
an executive agency to replace outdated scientific equipment. Why 
should executive agencies use the exchange/sale authority?
    To reduce the agencies' need for additional funding for the 
acquisition of replacement personal property. If an agency has personal 
property that needs to be replaced, it can exchange or sell that 
property and apply the exchange

[[Page 5893]]

allowance or sales proceeds to the acquisition of similar replacement 
property. Using the exchange/sale authority also enables agencies to 
avoid the costs (e.g., administrative and storage) associated with 
holding the property and processing it through the normal disposal 
cycle, i.e., reutilization by other Federal agencies, donation to 
eligible non-Federal public or non-profit organizations, sale to the 
public, or abandonment or destruction. By contrast, if the holding 
agency does not use the exchange/sale authority but instead reports the 
property to be replaced as excess, any sales proceeds are forwarded to 
the miscellaneous receipts account at the United States Treasury and 
are not available to the agency disposing of the property.
    What effect will these changes have on other Federal personal 
property disposal programs?
    This is unknown. The effect will depend on the extent to which 
executive agencies increase their use of the exchange/sale authority.
    Why have changes been made to the exchange/sale regulations?
    The regulations have not been subjected to a comprehensive review 
and revision for over thirty years. The regulations are now being 
updated to reflect shrinking agency budgets and to increase their 
usefulness and effectiveness.
    Who recommended the changes?
    An interagency team led by GSA. In the course of its work, the team 
consulted with various customers and stakeholders, including 
representatives from the Office of Management and Budget, the House of 
Representatives Committee on Government Reform and Oversight, and the 
National Association of State Agencies for Surplus Property.
    What changes have been made?
    Changes have been made to incorporate plain language principles, 
reduce restrictions and limitations on use of the authority, streamline 
the narrative, define key terms, update organizational references, 
delete outdated regulatory references, and specify minimal 
documentation requirements.
    B. The General Services Administration (GSA) has determined that 
this rule is not a significant regulatory action for the purposes of 
Executive Order 12866 of September 30, 1993.

C. Regulatory Flexibility Act

    This rule is not required to be published in the Federal Register 
for public comment. Therefore, the Regulatory Flexibility Act does not 
apply.

D. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the proposed 
revisions do not impose recordkeeping or information collection 
requirements, or the collection of information from offerors, 
contractors, or members of the public which require the approval of OMB 
under 44 U.S.C. 3501-3520. This rule also is exempt from Congressional 
review prescribed under 5 U.S.C. 801 since it relates solely to agency 
management and personnel. This rule is written in a ``plain language'' 
style.
    What is the ``plain language'' style of regulation writing?
    The ``plain language'' style of regulation writing is a new, 
simpler to read and understand, question and answer regulatory format.
    How does the plain language style of regulation writing affect 
employees?
    A question and its answer combine to establish a rule. The employee 
and the agency must follow the language contained in both the question 
and its answer.

List of Subjects in 41 CFR Part 101-46

    Government property management.

    Therefore, 41 CFR part 101-46 is revised as set forth below:

PART 101-46--REPLACEMENT OF PERSONAL PROPERTY PURSUANT TO THE 
EXCHANGE/SALE AUTHORITY

Sec.
101-46.000  Why should executive agencies use the exchange/sale 
authority?
101-46.001  What is prescribed by this part?
101-46.002  What are the definitions of some of the key terms used 
in this part?
101-46.002-1  Acquire.
101-46.002-2  Combat material.
101-46.002-3  Exchange.
101-46.002-4  Exchange/sale.
101-46.002-5  Executive agency.
101-46.002-6  Federal agency.
101-46.002-7  Historic item.
101-46.002-8  Replacement.
101-46.002-9  Similar.
101-46.003  How do you request deviations from this part, and who 
can approve them?

Subpart 101-46.1--[Reserved]

Subpart 101-46.2--Exchange or Sale Determination

101-46.200  How do you determine whether to do an exchange or a 
sale?
101-46.201  When must you make a reimbursable transfer to another 
Federal agency?
101-46.202  To what other organizations may you make a reimbursable 
transfer?
101-46.203  What are the conditions for a reimbursable transfer?
101-46.204  What prohibitions and necessary conditions apply to the 
exchange/sale of personal property?
101-46.205  What special exceptions apply to the exchange/sale 
authority?

Subpart 101-46.3--Exchange/Sale Methods

101-46.300  What are the exchange methods?
101-46.301  What are the sales methods?
101-46.302  What are the accounting requirements for the proceeds of 
sale?

    Authority: Sec. 205(c), 63 Stat. 390 (40 U.S.C. 486(c)).


Sec. 101-46.000  Why should executive agencies use the exchange/sale 
authority?

    To reduce the agencies' need for additional funding for the 
acquisition of replacement personal property. If an agency has personal 
property that needs to be replaced, it can exchange or sell that 
property and apply the exchange allowance or sales proceeds to the 
acquisition of similar replacement property. Using the exchange/sale 
authority also enables agencies to avoid the costs (e.g., 
administrative and storage) associated with holding the property and 
processing it through the normal disposal cycle, i.e., reutilization by 
other Federal agencies, donation to eligible non-Federal public or non-
profit organizations, sale to the public, or abandonment or 
destruction. By contrast, if the holding agency does not use the 
exchange/sale authority but instead reports the property to be replaced 
as excess, any sales proceeds are forwarded to the miscellaneous 
receipts account at the United States Treasury and are not available to 
the agency disposing of the property.


Sec. 101-46.001  What is prescribed by this part?

    Provisions for use by you (an executive agency) when using the 
exchange/sale authority of section 201(c) of the Federal Property and 
Administrative Services Act of 1949, 63 Stat. 384, as amended (40 
U.S.C. 481(c)). This part applies to all personal property owned by 
executive agencies worldwide. For the exchange/sale of aircraft parts 
and hazardous materials, you must meet the requirements in this part 
and in parts 101-37 and 101-42 of this chapter, respectively.


Sec. 101-46.002  What are the definitions of some of the key terms used 
in this part?


Sec. 101-46.002-1  Acquire.

    To procure or otherwise obtain personal property, including by 
lease.


Sec. 101-46.002-2  Combat material.

    Arms, ammunition, and implements of war listed in the U.S. 
munitions list (22 CFR part 121).

[[Page 5894]]

Sec. 101-46.002-3  Exchange.

    To replace personal property by trade or trade-in with the supplier 
of the replacement property.


Sec. 101-46.002-4  Exchange/sale.

    To exchange or sell non-excess, non-surplus personal property and 
apply the exchange allowance or proceeds of sale in whole or in part 
payment for the acquisition of similar property.


Sec. 101-46.002-5  Executive agency.

    Any executive department or independent establishment in the 
executive branch of the Government, including any wholly owned 
Government corporation.


Sec. 101-46.002-6  Federal agency.

    Any executive agency or any establishment in the legislative or 
judicial branch of the Government (except the Senate, the House of 
Representatives, and the Architect of the Capitol and any activities 
under his/her direction).


Sec. 101-46.002-7  Historic item.

    Property having added value for display purposes because its 
historical significance is greater than its fair market value for 
continued use. Items that are commonly available and remain in use for 
their intended purpose, such as military aircraft still in use by 
active or reserve units, are not historic items.


Sec. 101-46.002-8  Replacement.

    The process of acquiring property to be used in place of property 
which is still needed but will no longer adequately perform all the 
tasks for which it is used.


Sec. 101-46.002-9  Similar.

    Where the acquired item and replaced item:
    (a) Are identical; or
    (b) Are designed and constructed for the same purpose; or
    (c) Both constitute parts or containers for identical or similar 
end items; or
    (d) Both fall within a single Federal Supply Classification (FSC) 
group of property that is eligible for handling under the exchange/sale 
authority.


Sec. 101-46.003  How do you request deviations from this part, and who 
can approve them?

    (a) General provisions for deviations from the Federal Property 
Management Regulations are found in Sec. 101-1.110 of this chapter. 
Provisions for deviations from the regulations in this part are 
presented in this section.
    (b) To request deviations from this part, you must submit a 
complete written justification to the General Services Administration 
(GSA), Office of Governmentwide Policy, Office of Transportation and 
Personal Property (MT), Washington, DC 20405. Only the Administrator of 
General Services (or designee) may grant deviations. Although the 
Administrator can approve deviations from most of the provisions in 
this part, he/she cannot approve deviations from provisions that are 
mandated by statute, i.e., the requirement at 101-46.204(b)(1) that the 
property exchanged or sold is similar to the property acquired, and the 
requirement at 101-46.204(b)(2) that the property exchanged or sold is 
not excess or surplus.

Subpart 101-46.1--[Reserved]

Subpart 101-46.2--Exchange or Sale Determination


Sec. 101-46.200  How do you determine whether to do an exchange or a 
sale?

    (a) You must determine which method--exchange or sale--will provide 
the greater return for the Government. When estimating the return under 
each method, consider all administrative and overhead costs.
    (b) If the exchange allowance or estimated sales proceeds for 
property would be unreasonably low, you should process the property 
according to the regulations in Part 101-43 (Utilization of Personal 
Property) or Subpart 101-45.9 (Abandonment or Destruction of Personal 
Property) of this subchapter, as applicable.


Sec. 101-46.201  When must you make a reimbursable transfer to another 
Federal agency?

    If you have property to replace which is eligible for exchange/
sale, you should, to the maximum extent practicable, first solicit 
Federal agencies known to use or distribute such property and, if an 
agency wants it, arrange for a reimbursable transfer. Property that 
meets the replacement standards prescribed in subpart 101-25.4 of this 
chapter is not subject to this requirement.


Sec. 101-46.202  To what other organizations may you make a 
reimbursable transfer?

    The Senate, the House of Representatives, the Architect of the 
Capitol and any activities under the Architect's direction, the 
District of Columbia, and mixed-ownership Government corporations.


Sec. 101-46.203  What are the conditions for a reimbursable transfer?

    When transferring property, you must:
    (a) Do so under terms mutually agreeable to you and the recipient; 
and
    (b) Not require reimbursement of an amount greater than the 
estimated fair market value of the transferred property; and
    (c) Apply the transfer proceeds in whole or part payment for 
property acquired to replace the transferred property.


Sec. 101-46.204  What prohibitions and necessary conditions apply to 
the exchange/sale of personal property?

    (a) You must not use the exchange/sale authority for:
    (1) The following FSC groups of personal property:

10  Weapons.
11  Nuclear ordnance.
12  Fire control equipment.
14  Guided missiles.
15  Aircraft and airframe structural components, except FSC class 
1560 Airframe Structural Components.
42  Firefighting, rescue, and safety equipment.
44  Nuclear reactors (FSC class 4472 only).
51  Hand tools.
54  Prefabricated structure and scaffolding.
68  Chemicals and chemical products, except medicinal chemicals.
71  Furniture.
84  Clothing, individual equipment, and insignia.

    (2) Materials in the National Defense Stockpile (50 U.S.C. 98-98h) 
or the Defense Production Act inventory (50 U.S.C. App. 2093).
    (3) Nuclear Regulatory Commission-controlled materials unless you 
meet the requirements of Sec. 101-42.1102-4 of this subchapter.
    (4) Controlled substances, unless you meet the requirements of 
Sec. 101-42.1102-3 of this subchapter.
    (5) Scrap materials, except in the case of scrap gold for fine 
gold.
    (6) Property which was originally acquired as excess or forfeited 
property or from another source other than new procurement, unless such 
property has been in official use by the acquiring agency for at least 
1 year. You may exchange or sell forfeited property in official use for 
less than 1 year if the head of your agency determines that a 
continuing valid requirement exists, but the specific item in use no 
longer meets that requirement, and that exchange or sale meets all 
other requirements of this part.
    (7) Property that is dangerous to public health or safety without 
first rendering such property innocuous or providing for adequate 
safeguards as part of the exchange/sale.
    (8) Combat material without demilitarizing it in accordance with 
applicable regulations.
    (9) Flight Safety Critical Aircraft Parts unless you meet the 
provisions of Sec. 101-37.610 of this chapter.

[[Page 5895]]

    (10) Acquisition of unauthorized replacement property.
    (11) Acquisition of replacement property which violates:
    (i) Any restriction on procurement of a commodity or commodities; 
or
    (ii) Any replacement policy or standard prescribed by the 
President, the Congress, or the Administrator of General Services; or
    (iii) Any contractual obligation.
    (b) You may use the exchange/sale authority only if you meet all of 
the following conditions:
    (1) The property exchanged or sold is similar to the property 
acquired; and
    (2) The property exchanged or sold is not excess or surplus, and 
the property acquired is needed for approved programs; and
    (3) The number of items acquired must equal the number of items 
exchanged or sold unless:
    (i) The item(s) acquired perform all or substantially all of the 
tasks for which the item(s) exchanged or sold would otherwise be used; 
or
    (ii) The item(s) acquired and the item(s) exchanged or sold meet 
the test for similarity specified at Sec. 101-46.002-9(iii) in that 
they are a part(s) or container(s) for identical or similar end items; 
and
    (4) The property exchanged or sold was not acquired for the 
principal purpose of exchange or sale; and
    (5) You document at the time of exchange or sale (or at the time of 
acquisition if it precedes the sale):
    (i) That the exchange allowance or sale proceeds will be applied to 
the acquisition of replacement property; and
    (ii) For any property exchanged or sold under this part, the 
pertinent Federal Supply Classification (FSC) Group, the number of 
items, the original acquisition cost, the exchange allowance or sales 
proceeds (as applicable), and the source from which the property was 
originally acquired i.e., new procurement, excess, forfeiture, or 
another source other than new procurement. These data, aggregated at 
the agency level, may be requested by GSA to evaluate use of the 
exchange/sale authority.


Sec. 101-46.205  What special exceptions apply to the exchange/sale 
authority?

    (a) You may exchange books and periodicals in your libraries for 
other books and periodicals, without monetary appraisal or detailed 
listing or reporting.
    (b) In acquiring items for historical preservation or display at 
Federal museums, you may exchange historic items in the museum property 
account without regard to the FSC group or the requirement in Sec. 101-
46.204(b)(3), provided the exchange transaction is documented and 
certified by the head of your agency to be in the best interests of the 
Government and all other provisions of this part are met. The 
documentation must contain a determination that the item exchanged and 
the item acquired are historic items.

Subpart 101-46.3--Exchange/Sale Methods


Sec. 101-46.300  What are the exchange methods?

    Exchange of property may be accomplished by either of the following 
two methods:
    (a) The supplier (e.g., a Government agency, commercial or private 
organization, or an individual) delivers the replacement property to 
one of your organizational units and removes the property being 
replaced from that same organizational unit. This is the normal manner 
of exchange.
    (b) The supplier delivers the replacement property to one of your 
organizational units and removes the property being replaced from a 
different organizational unit.


Sec. 101-46.301  What are the sales methods?

    (a) You must use the methods, terms, and conditions of sale, and 
the forms prescribed in Sec. 101-45.304 of this subchapter in the sale 
of property being replaced, except that the provisions of Sec. 101-
45.304-2(a) of this subchapter regarding negotiated sales are not 
applicable. Section 3709, Revised Statutes (41 U.S.C. 5), specifies the 
following conditions under which property being replaced can be sold by 
negotiation, subject to obtaining such competition as is feasible:
    (1) The reasonable value involved in the contract does not exceed 
$500, or
    (2) Otherwise authorized by law.
    (b) You may sell property being replaced by negotiation at fixed 
prices in accordance with the provisions of Sec. 101-45.304-2(b) of 
this subchapter.


Sec. 101-46.302  What are the accounting requirements for the proceeds 
of sale?

    Except as otherwise authorized by law, you must account for 
proceeds from sales of personal property disposed of under this part in 
accordance with the General Accounting Office Policy and Procedures 
Manual for Guidance of Federal Agencies, Title 7, Fiscal Procedures, 
Section 5.5D.

    Dated: January 27, 1998.
David J. Barram,
Administrator of General Services.
[FR Doc. 98-2583 Filed 2-4-98; 8:45 am]
BILLING CODE 6820-24-P