[Federal Register Volume 65, Number 6 (Monday, January 10, 2000)]
[Proposed Rules]
[Pages 1438-1481]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-115]



[[Page 1437]]



Part II

Department of Defense

General Services Administration

National Aeronautics and Space Administration
_______________________________________________________________________



48 CFR Parts 1, 2, 4 et al.



Federal Acquisition Regulation; Government Property; Proposed Rules

  Federal Register / Vol. 65, No. 6 / Monday, January 10, 2000 / 
Proposed Rules  

[[Page 1438]]



DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1, 2, 4, 7, 8, 15, 16, 17, 22, 27, 28, 31, 32, 35, 37, 
42, 43, 44, 45, 49, 51, 52, and 53

[FAR Case 1995-013]
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.

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

SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) are proposing to amend the 
Federal Acquisition Regulation (FAR) to simplify procedures, reduce 
recordkeeping, and eliminate requirements related to the management and 
disposition of Government property in the possession of contractors. In 
addition, this proposed rule provides contractors the option of 
managing Government property under a standard process based system or 
managing Government property using the same business practices the 
contractors use to manage their own property. Contractors may use 
either system at a particular site (primary location at which a 
contract will be performed) but must use only one system at that site. 
Contractors that elect to use their property management practices to 
manage the Government's property in lieu of the standard processes must 
accept increased liability for property losses.
    Based on the significant changes made to this rule from an earlier 
proposed rule, the Councils have agreed to republish the rule as a 
proposed rule and provide an opportunity for the public to comment on 
the changes.

DATES: Interested parties should submit comments in writing on or 
before March 10, 2000 to be considered in the formulation of a final 
rule.

ADDRESSES: Interested parties should submit written comments to: 
General Services Administration, FAR Secretariat (MVRS), 1800 F Street, 
NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405. Address e-
mail comments submitted via the Internet to: [email protected].
    Please submit comments only and cite FAR case 1995-013 in all 
correspondence related to this case.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS 
Building, Washington, DC, 20405, at (202) 501-4755 for information 
pertaining to status or publication schedules. For clarification of 
content, Ms. Angelena Moy at (703) 695-1097/1098 (e-mail: 
[email protected]), or Ms. Linda Klein, at (202) 501-3775. Please cite 
FAR case 1995-013.

SUPPLEMENTARY INFORMATION:

A. Background

    On June 2, 1997, the Civilian Agency Acquisition Council and the 
Defense Acquisition Regulations Council (Councils) published a proposed 
rule to simplify the management and disposition of Government property 
in the possession of contractors (see 62 FR 30186). As a result of 
public comments received on that rule and comments received during and 
in response to public meetings conducted on February 18, 1998, and May 
18, 1999, the Councils have revised and restructured the rule.
    An interagency team (Department of Defense, Environmental 
Protection Agency, General Services Administration, and the National 
Aeronautics and Space Administration) analyzed each comment received in 
response to the June 2, 1997, proposed rule and the public meetings 
conducted on February 18, 1998, and May 18, 1999. Because this proposed 
rule significantly changes the June 1997 proposed rule, a summary of 
the comments received and recommended disposition is not included with 
this rule.
    Based upon comments received in response to this proposed rule, and 
other information that might become available during the public comment 
period, the final rule might contain only the standard Government 
property and Government property administration clauses and related 
material discussed in this proposed rule, only the alternate Government 
property and Government property administration clauses and related 
material discussed in this rule, or both the standard and alternate 
Government property and Government property administration clauses and 
related material. The Councils are particularly interested in public 
comment on whether the final rule should contain only the standard 
Government property and Government property administrative clauses and 
related material discussed in this proposed rule, only the alternate 
Government property and Government property administration clauses and 
related material discussed in this proposed rule, or both the standard 
and alternate Government property and Government property 
administration clauses and related material.
    This rule was not subject to Office of Management and Budget review 
under Section 6(b) of Executive Order 12866, Regulatory Planning and 
Review, dated September 30, 1993. This rule is not a major rule under 5 
U.S.C. 804 because it continues the re-engineering of the Government 
property management processes and procedures and is not expected to 
affect significantly the profitability of contractors who have 
Government property in their possession.

B. Regulatory Flexibility Act

    The Initial Regulatory Flexibility Analysis (IRFA) submitted to the 
Chief Counsel for Advocacy of the Small Business Administration is 
applicable to this revised proposed rule. A summary of the analysis was 
published in the Federal Register on June 2, 1997.

C. Paperwork Reduction Act

    The Paperwork Reduction Act (Pub. L. 104-13) applies because the 
proposed rule contains information collection requirements. The Office 
of Management and Budget (OMB) approved the information collection 
requirements contained in the proposed rule dated June 2, 1997, under 
OMB Clearance Number 9000-0151. In response to public comments on the 
proposed rule, this revised proposed rule eliminates one additional 
notification requirement, replaces three of the reports identified in 
the proposed rule with notices, and simplifies the information 
collection requirements for the annual report of Government property in 
the possession of contractors. These changes slightly reduce the 
proposed rule's estimated information collection hours. The Councils 
will recalculate the paperwork burden using the latest labor and 
overhead rates when this proposed rule is finalized. It is estimated 
that this rule, when final, will reduce the public paperwork associated 
with Government property management by approximately 3,147,000 hours 
per year.

List of Subjects in 48 CFR Parts 1, 2, 4, 7, 8, 15, 16, 17, 22, 27, 
28, 31, 32, 35, 37, 42, 43, 44, 45, 49, 51, 52, and 53

    Government procurement.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.
    Therefore, DoD, GSA, and NASA propose that 48 CFR parts 1, 2, 4, 7, 
8,

[[Page 1439]]

15, 16, 17, 22, 27, 28, 31, 32, 35, 37, 42, 43, 44, 45, 49, 51, 52, and 
53 be amended as set forth below:
    1. The authority citation for 48 CFR parts 1, 2, 4, 7, 8, 15, 16, 
17, 22, 27, 28, 31, 32, 35, 37, 42, 43, 44, 45, 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 1--FEDERAL ACQUISITION REGULATIONS SYSTEM

    2. Amend section 1.106 in the table following the introductory 
paragraph by--
    a. Revising the OMB Control Number at entries for FAR segments 45, 
SF 1428, and SF 1429 to read ``9000-0151'';
    b. Removing the FAR segment entries and their corresponding OMB 
Control Numbers at 52.216-13, 52.232-21, 52.245-2, 52.245-3, 52.245-5, 
52.245-7, 52.245-8, 52.245-9, 52.245-10, 52.245-11, 52.245-16, 52.245-
17, 52.245-18, SF 1423, SF 1424, SF 1426, SF 1427, SF 1430, SF 1432, 
and SF 1434; and
    c. Adding entries to read as follows:


1.106  OMB approval under the Paperwork Reduction Act.

* * * * *

------------------------------------------------------------------------
                                                             OMB control
                        FAR segment                              No.
------------------------------------------------------------------------
 
              *         *         *         *     *
52.245-1...................................................    9000-0151
52.245-2...................................................    9000-0151
52.245-3...................................................    9000-0151
52.245-4...................................................    9000-0151
52.245-5...................................................    9000-0151
52.245-6...................................................    9000-0151
52.245-7...................................................    9000-0151
52.245-8...................................................    9000-0151
 
              *         *         *         *     *
SF 1450....................................................    9000-0151
 
              *         *         *         *     *
------------------------------------------------------------------------

PART 2--DEFINITIONS OF WORDS AND TERMS

    3. Amend section 2.101 by revising the definition ``Supplies''; and 
by adding, in alphabetical order, the definitions ``Property'', ``Real 
property'', and ``Personal property'' to read as follows:


2.101  Definitions.

* * * * *
    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.
* * * * *
    Property means real and personal property.
    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.
    Supplies means all property except land or interest in land. It 
includes (but is not limited to) public works and buildings; ships, 
floating equipment, and vessels of every character, type, and 
description, together with parts and accessories; aircraft and aircraft 
parts, accessories, and equipment; machine tools; and the alteration or 
installation of any of the foregoing.
* * * * *

PART 4--ADMINISTRATIVE MATTERS

    4. Amend section 4.703 by revising the first sentence of paragraph 
(b)(3) to read as follows:


4.703  Policy.

* * * * *
    (b) * * *
    (3) The contractor does not meet the original due date for 
submission of final indirect cost rate proposals specified in paragraph 
(e)(2) of the clause at 52.216-7, Allowable Cost and Payment. * * *
* * * * *
    5. Amend section 4.804-4 by revising paragraph (b) to read as 
follows:


4.804-4  Physically completed contracts.

* * * * *
    (b) Rental, use, and storage agreements are considered physically 
complete when the performance period stipulated in the agreement 
expires.

PART 7--ACQUISITION PLANNING

    6. Amend section 7.105 by revising paragraph (b)(14) 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 at 45.201.
* * * * *


7.501  [Amended]

    7. Amend section 7.501 in the second sentence of paragraph (b) by 
removing ``facilities operations and maintenance,'' and adding 
``property management,'' in its place.

PART 8--REQUIRED SOURCES OF SUPPLIES AND SERVICES

    8. Revise section 8.101 to read as follows:


8.101  Definition.

    Excess personal property means any personal property (see 2.101) 
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

    9. Amend section 15.305 by redesignating paragraphs ``(a)(3)'' and 
``(a)(4)'' as ``(a)(4)'' and ``(a)(5)'', respectively, and by adding a 
new paragraph (a)(3) to read as follows:


15.305  Proposal evaluation.

* * * * *
    (a) * * *
    (3) Government property adjustment. Offerors who will use 
Government property to perform a contract usually 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) Contracting officers must adjust offers by applying a rental 
adjustment determined, to the extent practicable, using the rental 
guidelines in the clause at 52.245-6, Rental Charges for Commercial 
Use.
    (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; or
    (B) It is apparent that the difference between the offer or offers 
most advantageous to the Government and competing offers is so great 
that a rental adjustment will not affect source selection.
* * * * *

PART 16--TYPES OF CONTRACTS


16.307  [Amended]

    10. Amend section 16.307--
    a. In the first sentence of paragraph (a)(1) by removing the 
parenthetical ``(other than a facilities contract)'';
    b. In paragraph (b) by removing from the parenthetical the words 
``a facilities contract or'';
    c. In paragraph (d) by removing ``(other than a facilities 
contract)'';
    d. In paragraph (e)(1) by removing ``or a facilities contract'';

[[Page 1440]]

    e. In paragraph (f)(1) by removing ``(other than a facilities 
contract)'';
    f. By removing paragraphs (g) and (h); and
    g. By redesignating paragraph ``(i)'' as paragraph ``(g)'', and 
amending it by removing the last sentence.

PART 17--SPECIAL CONTRACTING METHODS

    11. Amend section 17.603 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


22.400  [Amended]

    12. Amend section 22.400 by removing the parenthetical ``(See 
definition of Construction in section 22.401.)''.


22.405  [Amended]

    13. Amend section 22.405, in the first sentence, by removing 
``Facilities Contracts'' and adding ``Government-Furnished Real 
Property'' in its place.
    14. Amend section 22.407 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--Government-Furnished Real 
Property, when the Government will furnish real property for 
performance of a contract and the Government is not certain at the time 
of contract award that it 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]

    15. Amend section 27.409 in the first sentence of paragraph (e) by 
removing the word ``facilities'' and adding ``property'' in its place.

PART 28--BONDS AND INSURANCE

    16. Revise section 28.303 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, 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]

    17. Remove and reserve sections 31.106 through 31.106-3.


31.205-40  [Amended]

    18. Amend section 31.205-40 in paragraph (a) by removing the 
citation ``45.101'' and inserting ``45.001'' in its place.

PART 32--CONTRACT FINANCING


32.403  [Amended]

    19. Amend section 32.403 by removing and reserving paragraph (c).


32.407  [Amended]

    20. Amend section 32.407 by removing and reserving paragraph (c).


32.503-15  [Removed and Reserved]

    21. Remove and reserve section 32.503-15.


32.704  [Amended]

    22. Amend section 32.704 in the introductory text of paragraph 
(a)(1) by removing ``52.232-21, Limitation of Cost (Facilities);''.
    23. Amend section 32.705-2 by revising paragraph (a); by removing 
paragraph (b); and by redesignating paragraph (c) as paragraph (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 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

    24. Revise the section heading and text of 35.014 to read as 
follows:


35.014  Title to tangible personal property.

    The provisions of 31 U.S.C. 6306 for vesting title to equipment and 
other tangible property in nonprofit organizations whose primary 
purpose is the conduct of scientific research or nonprofit institutions 
of higher education are implemented through Alternate II to the clause 
at 52.245-2, Government Property, and Alternate II to the clause at 
52.245-7, Government Property--Alternate Procedures. It is generally in 
the Government's interests to vest title with such contractors unless 
an agency head has provided otherwise or the property can be used for 
follow-on contracts to be performed on real property owned or leased by 
the Government.

PART 37--SERVICE CONTRACTING

    25. Amend section 37.101 by revising paragraph (e) of the 
definition ``Service contract'' to read as follows:


37.101  Definitions.

* * * * *
    Service Contract * * *
* * * * *
    (e) Operation of Government-owned equipment, real property, and 
systems.
* * * * *

PART 42--CONTRACT ADMINISTRATION AND AUDIT SERVICES

    26. Amend section 42.302 by revising paragraphs (a)(26), (a)(27), 
and (a)(28), and by removing and reserving (a)(30) to read as follows:


42.302  Contract administration functions.

    (a) * * *
    (26) Perform property administration (see part 45), including 
review and approval of contractor property management systems, 
assessment of contractor processes for the acquisition or fabrication 
of property under cost-reimbursement contracts, and the management and 
disposal of Government property.
    (27) Determine reasonable rentals for noninterference use of 
Government property for commercial purposes (see 52.245-2, 52.245-6, 
and 52.245-7).
    (28) Perform necessary screening, redistribution, and disposal of 
Government property.
* * * * *
    (30) [Reserved]
* * * * *


42.705-1  [Amended]

    27. Amend section 42.705-1 in the first sentence of paragraph 
(b)(1) by removing ``or 52.216-13''.


42.708  [Amended]

    28. Amend section 42.708 in paragraph (b) by removing ``or 52.216-
13''.

[[Page 1441]]

42.709-6  [Amended]

    29. Amend section 42.709-6 by removing ``52.216-13,''.

PART 43--CONTRACT MODIFICATIONS


43.205  [Amended]

    30. Amend section 43.205 by removing paragraph (b)(5); by 
redesignating paragraph ``(b)(6)'' as ``(b)(5)'', and amending it by 
removing ``Alternate V'' and adding ``Alternate IV'' in its place.

PART 44--SUBCONTRACTING POLICIES AND PROCEDURES


44.101  [Amended]

    31. Amend section 44.101 by removing the definition ``Facilities''.
    32. Amend section 44.202-2 by revising paragraph (a)(2); by 
removing paragraph (a)(10); and by redesignating paragraphs (a)(11) 
through (a)(13) as (a)(10) through (a)(12), respectively. The revised 
text reads as follows:


44.202-2  Considerations.

    (a) * * *
    (2) Is the subcontract for property identified in the solicitation 
as property the Government will furnish for contract performance?
* * * * *
    33. Revise part 45 to read as follows:

PART 45--GOVERNMENT PROPERTY IN THE POSSESSION OF CONTRACTORS

Sec.
45.000  Scope of part.
45.001  Definitions.

Subpart 45.1--General

45.101  Property management procedures.
45.102  Policy.

Subpart 45.2--Furnishing Government Property

45.201  Furnishing property for performance of a Government 
contract.
45.201-1  Criteria for furnishing Government property.
45.201-2  Restrictions on furnishing Government property.
45.201-3  Documentation and approval requirements.
45.202  Competitive advantage.
45.203  Solicitation and contract requirements.
45.204  Postaward requests for Government property.
45.205  Repair or replacement of Government-furnished property.
45.205-1  Maintenance.
45.205-2  Property losses.
45.206  Government-furnished property to be returned to a Government 
activity.
45.207  Solicitation provision and contract clauses.
45.207-1  Solicitation provision.
45.207-2  Contract clauses.

Subpart 45.3--Contractor-Acquired or Produced Property

45.301  General.
45.302  Fixed-price and labor-hour contracts.
45.303  Cost-reimbursement and time-and-materials contracts.
45.304  Contract clause.

Subpart 45.4--Liability for Property Losses

45.400  General.
45.401  Liability for property losses--contracts that include the 
clause at 52.245-2, Government Property.
45.401-1  Government liability.
45.401-2  Contractor liability.
45.402  Liability for property losses--contracts that include the 
clause at 52.245-7, Government Property--Alternate Procedures.
45.402-1  Government liability.
45.402-2  Contractor liability.
45.403  Post delivery considerations.
45.404  Contract clause.

Subpart 45.5--Government Property Management

45.501  Preaward considerations.
45.502  Standard and alternate property management systems.
45.502-1  Property management under the clause at 52.245-5, 
Government Property Administration.
45.502-2  Property management under the clause at 52.245-8, 
Government Property Administration--Alternate Procedures.
45.503  Government property records and reports.
45.504  Property accountability.
45.504-1  Accountability.
45.504-2  Transferring accountability to other contracts.
45.505  Reutilization, transfer, and donation of Government 
property.
45.505-1  Contractor actions.
45.505-2  Inventory disposal schedules.
45.505-3  Reutilization priorities.
45.505-4  Screening.
45.505-5  Waiver of screening requirements.
45.505-6  Interagency property transfer costs.
45.506  Abandonment, destruction, or donation of excess agency 
property.
45.507  Disposal of scrap.
45.507-1  Production scrap.
45.507-2  Other scrap.
45.508  Disposal of surplus Government property.
45.508-1  Abandonment, destruction, or donation of surplus property 
in lieu of sale.
45.508-2  Sale of surplus property.
45.508-3  Proceeds from sales.
45.509  Inventory Disposal Reports.
45.510  Contract clause.

Subpart 45.6--Authorizing the Use of Government Property for Commercial 
Purposes

45.601  Policy.
45.602  Contract clause.


45.000  Scope of part.

    This part prescribes policies for 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--
    Commercial purpose means any purpose other than performance of a 
U.S. Government contract or subcontract thereunder.
    Contractor's managerial personnel means the contractor's directors, 
officers, and any of the contractor's managers, superintendents, or 
equivalent representatives who have supervision or direction of all or 
substantially all of the contractor's business or operations at a site 
connected with performance of a Government contract.
    Demilitarization means rendering a product unusable for, and not 
restorable to, the purpose for which it was designed or is customarily 
used.
    Equipment means nonexpendable, tangible personal property. The term 
does not include property that satisfies the definition in this part of 
material, unique Federal property, special tooling, or special test 
equipment.
    Expendable property means property that is customarily consumed 
during design, manufacture, or testing of a product or performance of a 
service.
    General purpose equipment means items that can be used, or with 
only minor modification could be used, to develop, produce, test, or 
maintain more than one type of item or perform more than one type of 
service.
    Government-furnished property means Government property that a 
contracting officer authorizes a contractor to use for performance of a 
Government contract.
    Government property means property the Government owns or leases.
    Low value property means equipment, special tooling, or special 
test equipment that has an acquisition cost less than $5,000 and is not 
sensitive property.
    Material means expendable property and property incorporated into 
or attached to an item deliverable under a contract.
    Natural disaster means a sudden and unusual natural occurrence 
causing catastrophic damage, including floods, hurricanes, tornadoes, 
cyclones,

[[Page 1442]]

atmospheric electrical storms, tidal waves, avalanches, mudslides, 
landslides, volcanic eruptions, earthquakes, and other similar perils. 
The term does not include fire or explosion, unless directly or 
indirectly caused by a covered peril.
    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 (see 2.101).
    Plant clearance officer means a person appointed to disposition 
property accountable under Government contracts.
    Precious metals means silver, gold, platinum, palladium, iridium, 
osmium, rhodium, and ruthenium.
    Property (see 2.101).
    Property administrator means a person appointed to perform property 
administration for the Government.
    Real property (see 2.101).
    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--
    (1) Test equipment designed specifically to conduct testing 
required by a Government contract provided such equipment cannot be 
used for other purposes;
    (2) General purpose test equipment or modifications thereof that 
are interconnected and interdependent to form a new functional entity 
that can only be used to perform testing required by a contract while 
so interconnected and interdependent; or
    (3) Any combination of specifically designed, general purpose, or 
modified general purpose test equipment that are so interconnected and 
interdependent to form a new functional entity that can only be used to 
perform special purpose testing required by a contract while so 
interconnected and interdependent.
    Special tooling means items, such as jigs, dies, fixtures, molds, 
patterns, taps, gauges, or other equipment and manufacturing aids, that 
are of such a specialized nature that without substantial modification 
or alteration their use is limited to the development, production, 
repair, or maintenance of particular supplies or components thereof, or 
to the performance of particular services.
    Unique Federal property means Government-owned personal property, 
or components thereof, that is specially designed to perform or support 
the mission of one or more Federal agencies and is not available to the 
public. The term does not include property that is incorporated into or 
attached to an item deliverable under a contract.
    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, or are otherwise needed for design or testing 
required by a contract.

Subpart 45.1--General


45.101  Property management procedures.

    (a) The Government permits offerors to elect to manage Government 
property under a standard, process based system or, alternatively, to 
manage Government property using the same business practices the 
contractors use to manage their own property. The solicitation 
provision at 52.245-1, Government Property Availability and Information 
Required from Offerors, is used for the election. See the clause at 
52.245-5, Government Property Administration, for the standard, process 
based system, and the clause at 52.245-8, Government Property 
Administration--Alternate Procedures, if the election is to use the 
contractor's own business practices. Subparts 45.4 and 45.5 provide 
guidance regarding contractors' property liability and property 
management responsibilities.
    (b) It is in the Government's interest to have a contractor use a 
single property management system at each location at which the 
contractor will perform Government contracts. Therefore, contracting 
officers should not question a contractor's election to use the 
alternate property management procedures if the contractor's election 
is consistent with the contractor's practices at a particular location. 
If the contractor's election is not consistent, the contracting officer 
should advise the contractor of the inconsistency and request the 
contractor to withdraw the election or agree to include the elective 
procedures in all contracts being performed at that location at no 
increase in the price or fee of such contracts.


45.102  Policy.

    (a) Agencies must not--
    (1) Furnish Government property to contractors except as provided 
in subpart 45.2;
    (2) Specify, direct, or require for contract performance the use of 
specific (e.g., brand name, brand name or equal, part number, or 
similar identifier) commercial items that will become Government 
property under a contract unless the contract's stated purpose is the 
acquisition of such items;
    (3) Acquire commercial items or general purpose equipment for the 
sole purpose of subsequently furnishing such items as Government-
furnished property to any contractor unless the commercial items are 
components of deliverable items; or
    (4) Authorize contractors to acquire for the Government--
    (i) Property not required for performance of a contract or 
subcontract thereunder;
    (ii) Real property, alterations thereof, or improvements thereto, 
unless the contract's primary purpose is the maintenance of an 
essential industry capability or the contract requires the performance 
of alterations or improvements to real property; or
    (iii) General purpose equipment, unless the contract's stated 
purpose is the acquisition of the equipment (see paragraph (b) of this 
section for nonprofit organizations).
    (b) 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 commercial items.

[[Page 1443]]

Subpart 45.2--Furnishing Government Property


45.201  Furnishing property for performance of a Government contract.

    Government property may be furnished for performance of a 
Government contract, subject to the restrictions in 45.201-2, only when 
at least one of the criteria in 45.201-1 and the corresponding 
documentation and approval requirements in 45.201-3 are satisfied.


45.201-1  Criteria for furnishing Government property.

    The criteria for furnishing Government property are:
    (a) The Government is the sole source of property required to 
perform a contract.
    (b) The property will be incorporated into or attached to a 
deliverable end item.
    (c) 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 of ownership 
when determining cost savings).
    (d) The Government must furnish the property to assure that items 
delivered under a contract are compatible with other Government items.
    (e) 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.
    (f) 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.
    (g) The property will be used on a contract for scientific research 
conducted by an institution of higher education or a nonprofit 
organization.
    (h) Government-furnished equipment or real property is needed for 
the retention or operation of an essential Government-owned capability.


45.201-2  Restrictions on furnishing Government property.

    The restrictions on furnishing Government property are:
    (a) Government-owned material may be furnished to contractors only 
under the criteria in 45.201-1(a), (b), (c), (f), or (g). The quantity 
furnished may include reasonable amounts for repairs or corrections to 
work in process, scrap, or spoilage.
    (b) Government-owned equipment may be furnished to contractors only 
under the criteria in 45.201-1 (c), (f), (g), or (h).
    (c) Contracting officers may furnish commercial computer software 
or commercial computer software documentation to contractors 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.
    (d) Contracting officers must not furnish noncommercial computer 
software or noncommercial computer software documentation (software or 
documentation that does not satisfy the requirements in 2.101 for 
commercial items) 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 an agency supplement.


45.201-3  Documentation and approval requirements.

    Decisions to furnish property to contractors must be documented in 
the contract file. Contracting officers may make decisions based upon 
the criteria in 45.201-1(b) and (d) through (g). Unless otherwise 
designated in agency regulations, approval is required by--
    (a) The contracting officer's first level supervisor when using the 
criterion in 45.201-1(c);
    (b) The contracting officer's second level supervisor when using 
the criterion in 45.201-1(a); or
    (c) The head of the contracting activity when using the criterion 
in 45.201-1(h).


45.202  Competitive advantage.

    Offerors who will use Government property to perform a contract 
usually 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 15.305(a)(3)).


45.203  Solicitation and contract requirements.

    When the Government will make property available for contract 
performance--
    (a) Competitive solicitations must--
    (1) List the available property by item name, national stock number 
(if the item has a national stock number), or other appropriate 
nomenclature; identify the quantity available; and, when known, 
identify the date the property was acquired;
    (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;
    (4) Separately identify property the Government will reactivate, 
rehabilitate, or convert;
    (5) Identify the adjustment that will be applied to the cost or 
price of offers that contemplate use of Government-furnished property. 
The adjustment may be specified as a dollar amount, a formula, or any 
combination thereof; and
    (6) Identify any special requirements for security, maintenance, 
liability, or property administration.
    (b) Contracts must--
    (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) Provide that costs incurred by the contractor to transport ``as 
is'' property to its place of business or to modify or otherwise make 
such property suitable for the contractor's use must not result in an 
increase in contract price or fee;
    (4) Identify any constraints on the period for, or amount of, use;
    (5) Identify any special requirements for security, maintenance, 
liability, or property control applicable to a particular Government-
furnished item;
    (6) Identify any Government-furnished property that is to be 
returned directly to a Government activity in lieu of initiating 
disposal action and specify the method and point of return;
    (7) 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; and
    (8) To the extent known, identify the Government-furnished 
property's acquisition cost and acquisition date.


45.204  Postaward requests for Government property.

    (a) Contracting officers must not furnish Government property to

[[Page 1444]]

contractors subsequent to contract award unless adequate consideration 
is received. If a contractor requests the use of property that is 
accountable under another contract, the contracting officer for the 
contract under which the property is accountable must authorize the 
proposed use, and the contracting officer responsible for the contract 
under which the property's use has been requested must agree with such 
use. Modify each contract for which use is authorized to identify the 
conditions for use and the applicable consideration.
    (b)(1) The clause at 52.245-2, Government Property, authorizes a 
contractor to use Government property accountable under a contract in 
performance of all Government contracts at the same location if--
    (i) The Contracting officer has agreed to such use; or
    (ii) The contractor requests the use of the property and the 
contracting officer does not object within 30 days following receipt of 
the contractor's request.
    (2) Generally, the contracting officer should not object unless--
    (i) The program manager for the contract under which the property 
is accountable, or his designee, advises that the requested use of the 
property will have an adverse affect on the property's capability to 
perform that contract or on program budgets; or
    (ii) A contracting officer responsible for a contract on which use 
has been requested (an affected contracting officer) advises that the 
pricing structure of that contract would be affected or the property is 
not suitable for use under that contract.
    (3) If the program manager (or designee) or an affected contracting 
officer objects to the requested use, the contracting officer must 
advise the contractor of the Government's objection within 30 days 
following receipt of the contractor's request.
    (4) The contracting officer may negotiate with the contractor to 
remove the Government's objections by rescoping the contractor's 
proposal or obtaining other consideration acceptable to the program 
manager (or designee) and the affected contracting officers.


45.205  Repair or replacement of Government-furnished property.


45.205-1  Maintenance.

    Contractors are required to maintain Government property in a 
condition suitable for intended use. The Government property clauses at 
52.245-2, Government Property, and 52.245-7, Government Property--
Alternate Procedures, require contractors to notify the Government when 
the maintenance actions required by those clauses do not sustain the 
property's suitability for use and request direction regarding repair, 
rehabilitation, or replacement of the property.
    (a) Contracting officers may elect to--
    (1) Repair or replace the property;
    (2) Substitute other property for the property requiring additional 
maintenance;
    (3) Authorize the contractor to repair, rehabilitate, or replace 
the property;
    (4) Authorize the contractor to dispose of the property; or
    (5) Negotiate an equitable adjustment.
    (b) Contracting officers should not authorize the repair, 
rehabilitation, or replacement of Government-furnished property, 
including property furnished ``as is'', or make a repair, 
rehabilitation, or replacement unless--
    (1) The property is required for continued performance of the 
contract under which the property is accountable;
    (2) The Government is obligated contractually to provide the 
property for performance of another contract; or
    (3) The property is needed for work to be performed by the 
Government at a Government installation.
    (c) Contracting officers must 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 or rehabilitate 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.


45.205-2  Property losses.

    (a) Property losses for which the Government is liable. Generally, 
the Government is responsible for property losses under contracts that 
include the Government property clause at 52.245-2. The Government is 
also liable for certain property losses under contracts that contain 
the Government property clause at 52.245-7. Follow the guidance in 
45.205-1(a) and (b) to remedy a property loss for which the Government 
is liable.
    (b) Property losses for which the contractor is liable. When a 
contractor is liable for a property loss under the Government property 
clauses at 52.245-2 or 52.245-7, the contracting officer may authorize 
the contractor to repair or replace the property at no change in 
contract price or fee if the property is needed for continued 
performance of the contract or negotiate an equitable reduction in 
contract price or fee if the property is not needed for continued 
contract performance.


45.206  Government-furnished property to be returned to a Government 
activity.

    When a contract requires the contractor to return Government-
furnished property directly to a Government activity (in lieu of 
entering the property into the disposal process), the property 
administrator should determine the property's condition as near to the 
return date as practicable and must promptly notify the contracting 
officer if the property is not suitable for its intended use. The 
contracting officer promptly must direct the contractor to take any 
necessary corrective action or negotiate an equitable adjustment 
incident to the contractor's failure to sustain the property's 
suitability for intended use. When corrective action is not practical, 
the contracting officer must direct the contractor to dispose of the 
property (see 45.505-3) and promptly advise the property administrator 
of the action directed.


45.207  Solicitation provision and contract clauses.


45.207-1  Solicitation provision.

    (a) Insert the provision at 52.245-1, Government Property 
Availability and Information Required from Offerors, when soliciting 
offers from more than one source, regardless of contract type, and the 
Government contemplates furnishing property for performance of the 
resulting contract.


45.207-2  Contract clauses.

    (a) Except as provided in 45.207-2(d), insert the clause at 52.245-
2, Government Property, in--
    (1) All cost-reimbursement and time-and-materials solicitations and 
contracts for supplies, services, or research and development;
    (2) Fixed-price or labor-hour solicitations and contracts for 
supplies, services, or research and development under which the 
Government will furnish property for performance of the contract;
    (3) Contract modifications or orders for property repair under 
fixed-price or labor-hour contracts that do not include that clause 
when--(i) The aggregate acquisition cost of the property to be repaired 
exceeds or is reasonably anticipated to exceed $100,000; or
    (ii) The Government will furnish property for performance of the 
repairs.
    (b) Insert the clause with its Alternate I in solicitations and 
contracts that contemplate fixed-price awards based upon adequate price 
competition or

[[Page 1445]]

when the contract price is set by law or regulation.
    (c) Insert the clause with its Alternate II in cost-reimbursement 
or time-and-materials solicitations and contracts for basic or applied 
scientific research to be conducted by nonprofit organizations whose 
primary purpose is the conduct of scientific research or by nonprofit 
institutions of higher education (see 35.014).
    (d) Insert the clause at 52.245-7, Government Property--Alternate 
Procedures, when an offeror has elected to use that clause in the 
solicitation provision at 52.245-1, Government Property Availability 
and Information required from Offerors.
    (1) Insert the clause with its Alternate I in contracts for 
services to be performed primarily on real property owned or leased by 
the Government and the contractor will not control access to or use of 
the property furnished for performance of the contract.
    (2) Insert the clause with its Alternate II in cost-reimbursement 
or time-and-materials solicitations and contracts for basic or applied 
scientific research to be conducted by nonprofit organizations whose 
primary purpose is the conduct of scientific research or by nonprofit 
institutions of higher education (see 35.014).

Subpart 45.3--Contractor-Acquired or Produced Property


45.301  General.

    A contractor's contention that property was acquired to perform a 
specific contract and is not needed for any other purpose does not 
alter the fact that the property might not qualify for treatment as a 
direct cost under the contractor's cost accounting practices and 
31.202.


45.302  Fixed-price and labor-hour contracts.

    (a) Property acquired or produced by the contractor for performance 
of a fixed-price or labor-hour contract is not Government-furnished 
property and is not subject to the clause at 52.245-5, Government 
Property Administration, or the clause at 52.245-8, Government Property 
Administration--Alternate Procedures, except--
    (1) Delivered property accepted by the Government that the 
Government has directed the contractor to store; or
    (2) Special tooling and special test equipment the contractor is 
required to store during the Government notice period under the clause 
at 52.245-3, Delivery--Special Tooling and Special Test Equipment 
(Fixed-Price Contracts) (see paragraphs (b) and (d) of this section).
    (b)(1) The clause at 52.245-3, Delivery--Special Tooling and 
Special Test Equipment (Fixed-Price Contracts), requires a contractor 
to notify the Government if the contractor has acquired or produced 
special tooling or special test equipment that is not required to be 
delivered under the contract. The contractor's notice is required not 
later than the earlier of--
    (i) 30 days following the contractor's determination that such 
special tooling or special test equipment is no longer required for 
contract performance; or
    (ii) 120 days prior to completion of scheduled deliveries (other 
than technical data) under the contract.
    (2) The Government has 120 days following receipt of the 
contractor's notice (or such other period mutually agreed upon) to 
notify the contractor that the Government requires delivery of any of 
the items identified in the contractor's notice. The Government's 
notice must identify the special tooling or special test equipment 
item(s) to be delivered, and must--
    (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.
    (c) The contractor is obligated to store the property during the 
notice period at no change in price. Storage subsequent to the 
Government's delivery notice might entitle the contractor to an 
equitable adjustment.
    (d) Prior to furnishing any property delivered to the Government 
under the clause at 52.245-3 to a contractor for performance of a 
Government contract, including the contract under which delivery 
occurred, the contracting officer responsible for the receiving 
contract must modify that contract to identify the property as 
Government-furnished property. If the receiving contract does not 
contain either the clause at 52.245-2 or the clause at 52.245-7, the 
modification must add whichever of those clauses is appropriate for the 
location at which the receiving contract is performed and other clauses 
prescribed for use with the added clause. Notwithstanding any other 
provision of the receiving contract, the modification must specify that 
the property is furnished in accordance with the terms of the added 
clauses.
    (e) Contracting officers must not exercise the Government's right 
to require delivery of special tooling or special test equipment items 
unless the items are needed for follow-on competitive procurements, 
component breakout, mobilization, or to establish a Government repair 
or maintenance capability.


45.303  Cost-reimbursement and time-and-materials contracts.

    (a) Property acquired or produced by a contractor for performance 
of a cost-reimbursement and time-and-materials contract is subject to 
the clause at 52.245-5, Government Property Administration, or the 
clause at 52.245-8, Government Property Administration--Alternate 
Procedures, at the time the property's costs are properly allocable to 
a contract as direct costs except--
    (1) Special tooling items, or special test equipment items to which 
the contractor has title under the clause at 52.216-7, Allowable Cost 
and Payment; and
    (2) Property to which title has been vested in the contractor under 
Alternate II to the clause at 52.245-2, Government Property, or 
Alternate I to the clause at 52.245-7, Government Property--Alternate 
Procedures (See 35.014).
    (b) If a person responsible for establishing requirements has 
determined that the Government requires delivery of certain low value 
(less than $5,000 acquisition cost) special tooling items or low value 
special test equipment items that do not contain general purpose test 
units, such items must be identified as deliverable items under the 
contract.
    (c) Property acquired or produced under a cost-reimbursement 
contract is not property furnished for the performance of that 
contract. If the contracting officer elects to furnish that property to 
the contractor for performance of the contract under which the property 
was acquired or produced, or to a contractor for performance of another 
Government contract, the contracting officer must modify the receiving 
contract to identify the property as Government-furnished property and, 
if necessary, include the appropriate contract clauses. The 
modification must specify that the property is furnished in accordance 
with the terms of the clauses added.
    (d) To avoid unnecessary maintenance and storage costs, contractors 
are required to enter into the disposal process property no longer 
required for contract performance. Contracting officers must not 
authorize the repair, rehabilitation, or replacement of property no 
longer needed for performance of a cost-reimbursement or time-and-
materials contract, except special tooling or special test equipment

[[Page 1446]]

items described in 45.303(b) that diligent exercise of the contractor's 
contractual maintenance responsibilities cannot sustain in a condition 
suitable for intended use.


45.304  Contract clause.

    Insert the clause at 52.245-3, Delivery--Special Tooling and 
Special Test Equipment (Fixed-Price Contracts), in fixed-price 
solicitations and contracts for supplies, services, or research and 
development where the effort to be performed will require the 
contractor to acquire or produce special tooling or special test 
equipment.

Subpart 45.4--Liability for Property Losses


45.400  General.

    (a) As used in this subpart, the terms loss and losses include the 
physical loss of, the theft of, or the destruction of Government 
property, and damage to Government property.
    (b) The clauses at 52.245-2, Government Property, and 52.245-7, 
Government Property--Alternate Procedures, identify the conditions 
under which either the Government or the contractor is liable for a 
property loss. See 45.401 for guidance on contracts that include the 
clause at 52.245-2 and 45.402 for contracts that include the clause at 
52.245-7.


45.401  Liability for property losses--contracts that include the 
clause at 52.245-2, Government Property.


45.401-1  Government liability.

    (a) The Government is liable for property losses that occur while 
the contractor is maintaining a property management system that 
satisfies contract requirements, except losses or any portion thereof--
    (1) For which the contractor expressly is liable under the terms of 
a contract; or
    (2) Are identified in 45.401-2.
    (b) The Government's liability for a property loss is reduced by 
the amount of any reimbursement the contractor receives from a third 
party. Contracting officers may direct the contractor to use the 
reimbursement proceeds to repair, rehabilitate, or replace the property 
or may equitably adjust the contract. Repair, rehabilitation, or 
replacement should be considered only when the property is needed for 
continued performance of the contract, there is a known need for the 
property at a Government repair activity, or the Government is 
contractually obligated to furnish the property for performance of 
another contract.


45.401-2  Contractor liability.

    (a) The contractor is liable for losses that--
    (1) Occur at a time when the contractor has not established a 
property management system that satisfies the requirements of this 
contract;
    (2) Occur on or after the date of a written or electronic notice 
from the property administrator that the Government has withdrawn 
approval of the contractor's property management system, unless the 
contractor can establish by clear and convincing evidence that a loss 
did not result from the contractor's failure to maintain an approved 
system;
    (3) Occur on or after the first calendar day following the 
contractor's failure to correct a property system deficiency within the 
time specified by the property administrator or such other mutually 
agreed upon time for correction;
    (4) Result from the contractor's failure to take reasonable and 
prudent steps to avoid losses resulting from acts of war, civil 
insurrection, or natural disasters; or (5) Result from the willful 
misconduct or lack of good faith on the part of the contractor's 
managerial personnel.
    (b) The contractor's liability for a loss that results from a risk 
expressly required to be insured under this contract is limited to the 
extent of the insurance required to be purchased and maintained, or to 
the extent of the insurance actually purchased and maintained, 
whichever is greater.
    (c) The contractor's transfer of Government property to the 
possession and control of a subcontractor does not affect the 
contractor's liability for property losses.


45.402  Liability for property losses--contracts that include the 
clause at 52.245-7, Government Property-- Alternate Procedures.


45.402-1  Government liability.

    (a) The Government is liable for losses to Government property--
    (1) Caused by acts of war, civil insurrection, or natural 
disasters, regardless of property value, except a loss or portion 
thereof caused by or attributable to the contractor's or a 
subcontractor's failure to take reasonable and prudent steps to avoid 
or reduce such losses; and (2) Losses to Government property items that 
have an acquisition cost greater than $1,000,000 per item, except a 
loss or portion thereof caused by willful misconduct or lack of good 
faith on the part of the contractor's or a subcontractor's managerial 
personnel.
    (b) The Government's liability for a property loss is reduced by 
the amount of any reimbursement the contractor receives from a third 
party. Contracting officers may direct the contractor to use the 
reimbursement proceeds to repair, rehabilitate, or replace the property 
or may equitably adjust the contract. Repair, rehabilitation, or 
replacement should be considered only when the property is needed for 
continued performance of the contract, there is a known need for the 
property at a Government repair activity, or the Government is 
contractually obligated to furnish the property for performance of 
another contract.


45.402-2  Contractor liability.

    The contractor is liable for all losses of property accountable 
under the contract, except losses for which the Government is liable 
under 45.402-1. The contractor's transfer of Government property to the 
possession and control of a subcontractor does not affect the 
contractor's liability for property losses.


45.403  Post delivery considerations.

    Contractors are liable for losses to property delivered to or 
accepted by the Government at a contractor or subcontractor managed 
location until the property is placed on board a carrier's conveyance 
(see appropriate f.o.b. clauses at 52.247-29 through 52.247-33).


45.404  Contract clause.

    Insert the clause at 52.245-4, 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.

Subpart 45.5--Government Property Management


45.501  Preaward considerations.

    (a) Contracting officers should consider whether an offeror's 
property management capabilities might affect source selection and must 
structure appropriate evaluation criteria.
    (b) When property management capabilities will be evaluated, the 
official responsible for source selection should obtain and consider 
the cognizant property administrator's advice regarding the adequacy of 
offerors' plans to establish acceptable property management systems 
under contracts that contain the clause at 52.245-5, Government 
Property Administration, or the adequacy of offerors' plans to 
establish acceptable systems of property management practices under the 
clause at 52.245-8,

[[Page 1447]]

Government Property Administration--Alternate Procedures.


45.502  Standard and alternate property management systems.

    Contractors are required to have a property management system that 
performs the processes identified in the clause at 52.245-5, Government 
Property Administration, unless they have elected to use the clause at 
52.245-8, Government Property Administration--Alternate Procedures. See 
45.502-1 for guidance regarding property management under contracts 
that include the clause at 52.245-2, Government Property, or 45.502-2 
for guidance regarding the clause at 52.245-8, Government Property 
Administration--Alternate Procedures.


45.502-1  Property management under the clause at 52.245-5, Government 
Property Administration.

    (a) General. (1) A contractor's property management 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, the property administrator must specify the new 
establishment or submission date(s).
    (b) Property management system reviews and approvals--(1) New 
systems or systems not previously reviewed by the Government. Property 
administrators must--
    (i) Review new property management systems or existing systems that 
have not been reviewed by a property administrator as soon as 
practicable;
    (ii) Approve a system if the system's processes are sufficient to 
assure compliance with contract requirements;
    (iii) Require contractors to correct systems that do not include 
all processes identified in 52.245-5(c) or that include processes that 
are not sufficient to assure compliance with contract requirements. 
Notify the contractor of the corrections required and specify the 
date(s) by which the corrections must be made; and
    (iv) Promptly refer to the contracting officer a contractor's 
failure to establish a property control system that satisfies the 
requirements in the clause at 52.245-5.
    (2) Changes to previously approved systems. Contractors that have a 
Government-approved property management system are required to submit 
to the cognizant property administrator within 90 days following 
contract award any changes to that system that are required to conform 
the system to the contract's requirements. Property administrators 
must--
    (i) Review the proposed changes within 90 days following receipt;
    (ii) Validate the system's approval if the contractor-proposed 
changes are sufficient to assure contract compliance;
    (iii) Require the contractor to make changes only to the extent 
necessary for contract compliance;
    (iv) Notify the contractor of the corrections required and specify 
the date(s) by which the corrections must be made. The notice must 
advise the contractor that the contractor's failure to correct its 
system within the time specified might result in the contractor's 
assumption of liability for property losses that the Government might 
otherwise be liable for under the contract's Government Property 
clause; and
    (v) Notify the contracting officer immediately following issuance 
of a notice under paragraph (b)(2)(iv) of this section.
    (3) Corrections following property control system reviews. Property 
administrators must provide a correction notice to a contractor 
promptly following a control system review that discloses a previously 
approved system no longer satisfies one or more requirements for an 
approved system. The notice must specify the corrections required to 
make the system compliant and the date for completing corrective 
action. The notice must advise the contractor that the contractor's 
failure to correct its system within the time specified might result in 
the contractor's assumption of liability for property losses that the 
Government otherwise would be liable for under those clauses.
    (c) Withdrawing system approval. The administrative contracting 
officer's concurrence is required prior to withdrawing approval of an 
approved property management system. Generally, approval should be 
withdrawn only when a contractor fails to maintain a Government 
property control system that satisfies contract requirements.


45.502-2  Property management under the clause at 52.245-8, Government 
Property Administration-- Alternate Procedures.

    (a) The Government will rely upon a contractor's use of sound 
business practices to maintain, protect, preserve, control, and account 
for Government property.
    (b) The property administrator must notify the contracting officer 
responsible for contract administration promptly if experience under a 
contract indicates that the contractor's property management practices 
are not sufficient to maintain, protect, preserve, or control the 
Government's property as required by the contract.
    (c) The contracting officer responsible for contract administration 
may require the contractor to correct the property system deficiencies, 
may negotiate an equitable reduction in contract price in lieu of 
correction, or may negotiate other appropriate corrective action. The 
procuring contracting officer should be consulted prior to implementing 
any corrective action.


45.503  Government property records and reports.

    (a) Generally, it is in the Government's interests to have a 
contractor generate records and reports of Government property using 
the same practices the contractor uses for its own property. 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 recordkeeping and reports generation to be in the 
Government's interests. The circumstances under which Government 
recordkeeping and reporting might be warranted are--
    (1) Contract performance periods less than 6 months; or
    (2) When Government property will be furnished for a contract for 
services to be performed entirely at real property owned or leased by 
the Government such as the management or operation of installations, 
bases, or portions thereof, warehouses, libraries, stock rooms, 
mailrooms, or computer centers.
    (b) The contracting office responsible for contract administration 
must process property reports in accordance with agency procedures.


45.504  Property accountability.


45.504-1  Accountability.

    (a) Government-furnished property is accountable under the contract 
for which it was furnished.
    (b) Property acquired or produced by a contractor to which the 
Government has title is accountable under the contract for which the 
property was acquired or produced until the contracting officer directs 
a transfer of accountability, the property is placed aboard a carrier's 
conveyance (f.o.b. origin), or is delivered at the specified f.o.b. 
destination point.

[[Page 1448]]

45.504-2  Transferring accountability to other contracts.

    (a) Contract modification. Accountability transfers should be made 
only when the property is currently needed for the performance of 
another Government contract or is needed to preserve or maintain an 
essential industrial capability. All transfers must be reflected in a 
contract modification.
    (b) Special consideration for special tooling or special test 
equipment. Accountability for a special tooling or special test 
equipment item acquired or produced by a contractor to which the 
Government has title, may be transferred to another contract with that 
contractor provided the property is identified as property furnished 
``as is,'' the receiving contract's price or estimated cost and fee is 
adjusted in accordance with paragraph (c) of this subsection, and 
property records are adjusted in accordance with paragraph (d) of this 
subsection. Accountability instructions should be included in the 
notice required by paragraph (d) of the clause at 52.245-3, Delivery--
Special Tooling and Special Test Equipment (Fixed-Price Contracts).
    (c) Price adjustment. When a property item's accountability is 
transferred to another 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 item for that 
contract.
    (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.


45.505  Reutilization, transfer, and donation of Government property.

    This section is applicable to the reutilization, transfer, and 
donation of Government property that is not required for continued 
performance of a Government contract. It does not apply to scrap (see 
45.507).


45.505-1  Contractor actions.

    Contractors are required to--
    (a) Make reasonable efforts to return Government property that was 
acquired or produced by the contractor and is no longer needed for 
contract performance to the appropriate supplier or to use the property 
in performance of other contracts; and
    (b) List property that could not be returned to a supplier or used 
in the performance of other Government contracts on Standard Form 1428, 
Inventory Disposal Schedule.


45.505-2  Inventory disposal schedules.

    (a) Plant clearance officers should review and accept, or return 
for correction, inventory disposal schedules or scrap lists within 10 
days following receipt. Schedules or lists that are completed in 
accordance with the instructions for Standard Form 1428 should be 
accepted.
    (b) Plant clearance officers must--
    (1) Use Standard Form 1423 to verify accepted schedules within 20 
days following acceptance.
    (2) Require a contractor to correct any discrepancies found during 
verification or a contractor's failure to complete the actions 
described in subsection 45.505-1.
    (3) Provide the contractor disposition instructions for property 
identified on an acceptable inventory disposal schedule within 120 days 
following receipt of the schedule. A failure to provide timely 
disposition instructions might entitle the contractor to an equitable 
adjustment.
    (c) 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 produced item at full acquisition 
cost, the Government has authorized the contractor to use the property 
on another Government contract, or the contractor has justified 
continued use of a Government-furnished property item. Plant clearance 
officers must 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 
(see 45.505-4, 45.505-5, and 45.505-6) has not begun, the plant 
clearance officer must adjust the schedule or return the schedule to 
the contractor for correction. If screening has begun, the plant 
clearance officer must promptly notify the activity performing the 
screening and must identify the items that should be removed from the 
screening process.


45.505-3  Reutilization priorities.

    Plant clearance officers must initiate reutilization actions using 
the highest priority method appropriate for the property. Authorized 
methods, listed in descending order from highest to lowest priority, 
are--
    (a) Reuse within the agency (see 45.506 for circumstances under 
which excess agency property may be abandoned, destroyed, or donated);
    (b) Transfer of educationally useful equipment to schools and 
nonprofit organizations for educational and research activities 
(provided no other Federal agency has expressed a need for the property 
prior to screening by other Federal agencies) or report such property 
to the General Services Administration (see Executive Order 12999);
    (c) Reuse within the Government; and
    (d) Donation to an eligible donee designated by the GSA.


45.505-4  Screening.

    The screening periods begin upon the plant clearance officer's 
acceptance of an inventory disposal schedule. The plant clearance 
officer must determine whether standard or special screening is 
appropriate and initiate screening actions.
    (a) Standard screening. The standard screening period is 56 days.
    (1) 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 must delete from an 
inventory disposal schedule any items for which other intra-agency 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 
GSA (see 41 CFR 101-43.4901-120-1, Instructions for Preparing SF 120). 
Enter the date of the 42nd day as the automatic surplus release date 
and the date of the 56th day as the screening completion date.
    (2) 21st through 41st day--screening by other Federal agencies. GSA 
will normally honor requests for transfers of property on a first-come-
first-served basis through the 41st day. When a request is honored, the 
GSA regional office must promptly transmit to the plant clearance 
officer an approved transfer order that includes shipping instructions.
    (3) 42nd through 56th day--GSA screening for possible donation. 
During this period, GSA must screen property that has not been 
transferred to schools or nonprofit organizations or has not been 
identified for Federal reutilization for possible donation to eligible 
donees.
    (4) Screening period transfer request. If an agency receives an 
intra-agency

[[Page 1449]]

transfer request during the screening periods described in paragraphs 
(a)(2) or (a)(3) of this subsection, the plant clearance officer must 
request GSA approval to withdraw the item from the inventory disposal 
schedule.
    (b) Special screening requirements--(1) Special tooling. Agencies 
must follow the procedures at 45.505-4(a). Special tooling owned by the 
Department of Defense (DoD) or the National Aeronautics and Space 
Administration (NASA) may be screened for reutilization within the 
agency only.
    (2) Special test equipment. (i) Agencies must complete the 
screening required by 45.505-4(a). If an agency has no further need for 
the property and the contractor has not expressed an interest in using 
or acquiring the property by annotating the inventory disposal 
schedule, the plant clearance officer must forward the inventory 
disposal schedule to the GSA regional office that serves the region in 
which the property is located.
    (ii) If the contractor has expressed an interest in using the 
property on another Government contract, the plant clearance officer 
must contact the contracting officer for that contract. If the 
contracting officer concurs with the proposed use, the contracting 
officer for the contract under which the property is accountable must 
transfer the property's accountability to that contract. If the 
contracting officer does not concur with the proposed use, the plant 
clearance officer must deny the contractor's request and must resume 
the screening process.
    (iii) If the contractor has expressed an interest in acquiring the 
property, and no other party expresses an interest during agency or GSA 
screening, the property may be sold to the contractor.
    (3) Printing equipment. Agencies must report all excess printing 
equipment to the Public Printer, Government Printing Office, North 
Capitol and H Streets, NW, Washington, DC 20401, after screening within 
the agency (see 44 U.S.C. 312). If the Public Printer does not express 
a need for the equipment within 21 days, the agency must submit the 
report to GSA for further use and donation screening.
    (4) Nonnuclear hazardous materials, hazardous wastes, and 
classified items. These items must be screened in accordance with 
agency procedures.
    (5) Nuclear materials. The possession, use, and transfer of certain 
nuclear materials are subject to the regulatory controls of the Nuclear 
Regulatory Commission (NRC). Contracting activities must screen excess 
nuclear materials in the following categories:
    (i) By-product material. Any radioactive material (except special 
nuclear material) yielded in or made radioactive by exposure to the 
radiation incident to producing or using special nuclear material.
    (ii) Source material. Uranium or thorium, or any combination 
thereof, in any physical or chemical form; or ores that contain by 
weight one-twentieth of 1 percent (0.05 percent) or more of uranium, 
thorium, or any combination thereof. Source material does not include 
special nuclear material.
    (iii) Special nuclear material. Plutonium, Uranium 233, Uranium 
enriched in the isotope 233 or in the isotope 235, 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.


45.505-5  Waiver of screening requirements.

    Agency heads 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, the agency must submit the justification for 
the waiver to the General Services Administration, Office of 
Governmentwide Policy, Office of Transportation and Personal Property 
(MT), 1800 F Street NW, Washington, DC 20405, at least 10 days prior to 
implementing the waiver. The waiver will be effective unless GSA takes 
exception within 10 days of receipt. The agency must notify the 
contract administration office when implementing a waiver.


45.505-6  Interagency property transfer costs.

    Agencies whose property is transferred to other agencies must 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 must 
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 must process 
appropriate contract modifications. To accelerate plant clearance, the 
receiving agency must promptly furnish funding data, and transfer or 
shipping documents to the contract administration office.


45.506  Abandonment, destruction, or donation of excess agency 
property.

    (a) Agencies may abandon, destroy, or donate to public bodies 
excess property that does not contain precious metals, hazardous 
materials or wastes, is not sensitive or classified property, and does 
not require demilitarization if the plant clearance officer determines 
in writing that--
    (1) The property has no residual monetary value; or
    (2) The estimated cost to sell the property, including advertising, 
storage and other costs associated with making the sale, is greater 
than the probable sale proceeds.
    (b) Plant clearance officers must assure that the Government does 
not bear any of the costs incident to a donation.
    (c) Property that contains hazardous materials or wastes, sensitive 
property, and property that requires demilitarization may be abandoned 
at a contractor's premises if the contractor consents.


45.507  Disposal of scrap.


45.507-1  Production scrap.

    Contractors may dispose of scrap left over from the normal 
production process that has only remelting or reprocessing value (such 
as textile and metal clippings, borings, and faulty castings or 
forgings) without Government approval, provided the scrap does not 
contain precious metals, hazardous materials or wastes, nuclear 
materials, or classified materials; or does not require 
demilitarization.


45.507-2  Other scrap.

    (a) Except as provided in 45.507-2(b), contractors must list scrap 
that is not production scrap on inventory disposal schedules and submit 
the schedules to the plant clearance officer. The plant clearance 
officer must process the schedules as described in 45.505-2.
    (b) Under contracts that contain the clause at 52.245-2, Government 
Property, contractor's that have Government approved scrap procedures 
may submit scrap lists in lieu of inventory disposal schedules.
    (1) The plant clearance officer must review scrap lists within 10 
days following receipt. Generally, the plant clearance officer should 
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. The plant clearance officers must 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 clause

[[Page 1450]]

at 52.245-2 permits a contractor to dispose of scrap identified on a 
scrap list without further Government approval.
    (2) The plant clearance officer must 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 hazardous wastes, precious 
metals, or items that are dangerous to the public health, safety, or 
welfare and require contractors to submit inventory disposal schedules 
for such items.
    (c) Under contracts that contain the clause at 52.245-7, Government 
Property--Alternate Procedures, the plant clearance officer should 
consider favorably a contractor request to negotiate expedited 
nonproduction scrap disposal procedures when the contractor's 
experience under other Government contracts or the contractor's 
business practices indicate that the contractor will adequately protect 
the Government's interests.


45.508  Disposal of surplus Government property.

    (a) Applicability. This section addresses the disposal of 
Government property in the possession of contractors that, after 
applicable screening, has not been reutilized or transferred (hereafter 
referred to as surplus property). It does not apply to the abandonment, 
destruction, or donation of excess agency property (see 45.506) or to 
the disposal of production scrap (see 45.507-1).
    (b) Disposal priorities. Except as provided in paragraphs (c) and 
(d) of this section, surplus property must be sold in accordance with 
45.508-2 or abandoned, destroyed or donated to public bodies in 
accordance with 45.508-1.
    (c) Disposal using agency procedures. The surplus property 
identified in this paragraph must be disposed of in accordance with 
agency procedures:
    (1) Classified items.
    (2) Nonnuclear hazardous materials or hazardous wastes.
    (3) Property that contains precious metals or requires 
demilitarization.
    (4) Government property physically located outside the United 
States or its possessions (see 40 U.S.C. 511-514).
    (d) Disposal of Nuclear materials. Nuclear materials (see 45.505-
4(b)(5)) must be disposed of in accordance with NRC or applicable state 
licenses, applicable Federal regulations, and agency regulations.


45.508-1  Abandonment, destruction, or donation of surplus property in 
lieu of sale.

    (a) Except as provided in paragraph (c) of this subsection, 
agencies may abandon, destroy, or donate surplus property, if the plant 
clearance officer determines in writing that the property does not 
constitute a danger to public health, safety, or welfare and--
    (1) The property has no residual monetary value; or
    (2) The estimated cost to sell the property, including advertising, 
storage and other costs associated with making the sale, is greater 
than the probable sale proceeds.
    (b) All costs incident to a donation must be borne by the donee.
    (c) Property that contains hazardous materials or wastes, sensitive 
property, or property that requires demilitarization, may be abandoned 
at a contractor's premises if the contractor consents.


45.508-2  Sale of surplus property.

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


45.508-3  Proceeds from sales.

    Except for contracts that authorize proceeds from sales to be 
credited to the price or cost of the work (40 U.S.C. 485(a) and (e)), 
all sale proceeds are to be credited to the Treasury of the United 
States as miscellaneous receipts.


45.509  Inventory Disposal Reports.

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


45.510  Contract clauses.

    (a) Insert the clause 52.245-5, Government Property Administration, 
in solicitations and contracts that include the clause at 52.245-2, 
Government Property. If required for agency financial management or 
reporting purposes, agencies may modify paragraphs (f)(1)(vi) and 
(f)(2)(i) of the clause at 52.245-5 to specify different dollar 
thresholds.
    (b) Insert the clause at 52.245-5 with its Alternate I when the 
Government will maintain the Government's official property records.
    (c) The clause at 52.245-5 and its Alternate I may be modified to 
delete references to low-value property 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 inventory all property and 
immediately notify the Government of a property loss regardless of the 
property's value.
    (d) Insert the clause at 52.245-8, Government Property 
Administration--Alternate Procedures, in solicitations and contracts 
that include the clause at 52.245-7, Government Property--Alternate 
Procedures.
    (e) Insert the clause at 52.245-8 with its Alternate I when the 
Government will maintain the Government's official property records.
    (f) The clause at 52.245-8 and its Alternate I may be modified to 
delete references to low-value property 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 inventory all property and 
immediately notify the Government of a property loss regardless of the 
property's value.

Subpart 45.6--Authorizing the Use of Government Property for 
Commercial Purposes


45.601  Policy.

    (a) 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.
    (b) An authorization for use for commercial purposes must be 
reflected in a contract modification and must specify--
    (1) The property is available ``as is'' without any representation 
as to suitability for intended use;
    (2) The rental time and rental 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.
    (c) Contracting officers must require contractors to assume the 
liability for

[[Page 1451]]

property losses that occur while the property is being used for 
commercial purposes and to indemnify the Government against claims for 
injury to persons or damage to the contractor's or a third party's 
property that arise from the contractor's use or possession of the 
Government property for commercial purposes.
    (d) If 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, 
an equitable adjustment should be negotiated that includes schedule 
adjustments at no cost to the Government. Negotiate an equitable 
reduction in price or fee in lieu of repair or replacement when the 
property is not required for continued performance of a Government 
contract.
    (e) The contracting officer must not revoke an authorization to use 
Government property for commercial purposes unless the contractor fails 
to comply with the terms and conditions governing such use or the 
Government has a compelling need that precludes continued availability 
for commercial purposes.


45.602  Contract clause.

    Insert the clause at 52.245-6, Rental Charges for Commercial Use, 
in solicitations and contracts that include the clause at 52.245-2, 
Government Property, or the clause at 52.245-7, Government Property--
Alternate Procedures. The contracting officer must also insert the 
clause at 52.245-6 when the clause at 52.245-2 or 52.245-7 is inserted 
in a contract subsequent to contract award.

PART 49--TERMINATION OF CONTRACTS

    35. Amend section 49.001 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]

    36. Amend section 49.105 in the introductory text of paragraph 
(b)(4) by removing ``(see subpart 45.6)''.
    37. Amend section 49.108-3 by revising paragraph (b)(1) to read as 
follows:


49.108-3  Settlement procedure.

* * * * *
    (b) * * *
    (1) All subcontractor termination inventory be disposed of and 
accounted for in accordance with the procedures contained in paragraph 
(g) of the clause at 52.245-2, Government Property; and
* * * * *
    38. Amend section 49.108-4 by revising paragraphs (a)(1)(ii) and 
(b) to read as follows:


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

    (a)(1) * * *
    (ii) Any termination inventory included in determining the amount 
of the settlement will be disposed of as directed by the prime 
contractor, except that the disposition of the inventory shall not be 
subject to--
    (A) Review by the TCO under 49.108-3(c); or
    (B) The screening requirements in 45.504; and
* * * * *
    (b) Section 45.504 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 45.504, if the items do not require demilitarization 
and the total amount (at the subcontract price) when added to the 
amount of the settlement does not exceed the amount authorized under 
this subsection.
* * * * *


49.202  [Amended]

    39. Amend section 49.202 in paragraph (b)(3)(iii) by removing 
``materials, facilities,'' and adding ``property'' in its place.


49.204  [Amended]

    40. Amend section 49.204 in paragraph (a) by removing the words 
``materials sold that have'' and adding ``property sold that has'' in 
its place.
    41. Revise the section heading and text of 49.206-3 to read as 
follows:


49.206-3  Submission of inventory disposal schedules.

    Subject to the terms of the termination clause, and whenever 
termination inventory is involved, the contractor shall submit complete 
inventory disposal schedules to the TCO reflecting inventory that is 
allocable to the terminated portion of the contract. The inventory 
disposal schedules shall be submitted within 120 days from the 
effective date of termination unless otherwise extended by the TCO 
based on a written justification to support the extension. The 
inventory schedules shall be prepared on SF 1428.
    42. Revise the section heading and text of 49.303-2 to read as 
follows:


49.303-2  Submission of inventory disposal schedules.

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


49.505  [Amended]

    43. Amend section 49.505 by removing paragraphs (a) and (c); and by 
redesignating paragraphs ``(b)'', ``(d)'', and ``(e)'' as ``(a)'', 
``(b)'', and ``(c)'', respectively.
    44. Revise the section heading and text of 49.602-2 to read as 
follows:


49.602-2  Inventory forms.

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

PART 51--USE OF GOVERNMENT SOURCES BY CONTRACTORS

    45. Revise section 51.106 to read as follows:


51.106  Title.

    Title to all property acquired by the contractor under the 
contracting officer's authorization shall vest in the parties as 
provided in the contract.
    46. Revise section 51.107 to read as follows:


51.107  Contract clause.

    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 or services from a Government supply 
source.

[[Page 1452]]

51.200  [Amended]

    47. Amend section 51.200 at the end of the second sentence by 
removing ``(see 45.304)''.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    48. Amend section 52.216-7 by revising the date of the clause; in 
paragraph (b)(3) by removing ``paragraph (g)'' and ``paragraph (d)'' 
and adding in their places ``paragraph (h)'' and ``paragraph (e)'', 
respectively; by redesignating paragraphs (c) through (h) as (d) 
through (i), respectively, and adding a new paragraph (c); and in newly 
designated paragraph (i)(1) by revising ``paragraph (d)(4)'' to read 
``paragraph (e)(4)''. The new paragraph (c) reads as follows:


52.216-7  Allowable Cost and Payment.

* * * * *

ALLOWABLE COST AND PAYMENT (DATE)

* * * * *
    (c) Title--(1) Government title. Except as provided in paragraph 
(c)(3) of this clause, title to all 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 when the cost of the property is or should have been 
allocable or properly chargeable to this contract under sound and 
generally accepted accounting principles and practices.
    (2) Relationship to Government-furnished property. Property to 
which the Government has obtained title solely under this clause is 
not ``Government-furnished property.''
    (3) Contractor title. The Contractor shall have title to special 
test equipment items that do not contain general purpose test 
equipment and special tooling items, provided such items--
    (i) Were acquired or produced for this contract;
    (ii) Have an acquisition cost less than $5,000 that was 
allocated to this contract as direct cost; and
    (iii) Are not identified in the contract as deliverable items.
    (4) Lien. By execution of this contract, the Contractor grants 
to the Government a security lien paramount to any other on the 
property to which the Contractor has title under paragraph (c)(3) of 
this clause. During performance of this contract, the Contractor 
shall not offer or provide such property as collateral for any 
purpose and shall not encumber in any manner title to that property.
* * * * *


52.216-11  [Amended]

    49. Amend section 52.216-11 in the first sentence of the 
introductory paragraph by removing ``or a facilities contract''.


52.216-12  [Amended]

    50. Amend section 52.216-12 in the first sentence of the 
introductory paragraph by removing the parenthetical ``(other than a 
facilities contract)''.


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

    51. Remove and reserve sections 52.216-13 and 52.216-14.


52.222-17  Labor Standards for Construction Work--Government-Furnished 
Real Property.

    52. Revise the section heading of 52.222-17 and the clause heading 
to read as follows:
* * * * *

LABOR STANDARDS FOR CONSTRUCTION WORK--GOVERNMENT-FURNISHED REAL 
PROPERTY (FEB 1988)

* * * * *
    53. Amend section 52.232-16 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 all property acquired or produced by the 
Contractor for performance of this contract, the costs of which are 
allocable to this contract, shall vest in the Government when the 
property is or should have been allocable or properly chargeable to 
this contract under sound and generally accepted accounting 
principles and practices. Upon liquidation of all progress payments, 
the Contractor shall have title to property acquired or produced 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) The procedures for the disposal of Government-furnished 
property that is scrap are contained in the Government Property 
clause, 52.245-2, Government Property, of this contract. The 
Contractor may sell all other scrap resulting from production or 
testing under this contract without Government approval if the scrap 
does not contain precious metals, hazardous materials or wastes, 
nuclear materials, classified materials, or does not require 
demilitarization. The proceeds shall be credited against the costs 
of performance.
    (4) The Contractor shall not use property to which title is 
vested in the Government under this clause to perform other 
contracts, transfer the property to another contract or dispose of 
the property unless authorized to do so by the Contracting Officer 
or paragraph (d)(3) of this clause. When transfer or disposal is 
authorized, 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) Liability. 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 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 of this contract--
    (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 produced for 
performance of this contract, except such property required to be 
delivered to the Government under the Default clause of this 
contract or the clause at 52.245-3, Delivery--Special Tooling and 
Special Test Equipment (Fixed-Price Contracts), if applicable and 
included in the contract.
* * * * *


52.232-21  [Removed and Reserved]

    54. Remove and reserve section 52.232-21.
    55. Amend section 52.232-32 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 all property acquired or produced by the 
Contractor for performance of this contract, the costs of which are 
allocable to this contract, shall vest in the Government when the 
property is or should have been allocable or properly chargeable to 
this contract under sound and generally accepted accounting 
principles and practices. Except as provided in the clause at 
52.245-3, Delivery--Special Tooling and Special Test Equipment 
(Fixed-Price Contracts), upon liquidation of all performance-based 
payments, the Contractor shall have title to property acquired or 
produced 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) The procedures for the disposal of Government-furnished 
property that is scrap are contained in the clause 52.245-2, 
Government Property, of this contract. The Contractor may sell all 
other scrap resulting from production or testing under this contract 
without Government approval provided that--
    (i) Any significant reduction in the value of the property to 
which the Government has

[[Page 1453]]

title under this clause is reported to the Contracting Officer; and
    (ii) The scrap does not contain precious metals, hazardous 
materials or wastes, nuclear materials, classified materials, or 
does not require demilitarization. The proceeds shall be credited 
against the costs of performance.
    (4) The Contractor shall not use property to which title is 
vested in the Government under this clause to perform other 
contacts, transfer the property to another contract, or dispose of 
the property unless authorized to do so by the Contracting Officer 
or paragraph (d)(3) of this clause.
    (g) Liability. 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 or accepted the property.
* * * * *
    (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 performance-based payments; and
    (2) Upon full liquidation of performance-based payments, the 
Contractor shall have title to all property acquired or produced for 
performance of this contract except such property required to be 
delivered to the Government under the Default clause or the clause 
at 52.245-3.
* * * * *


52.243-2  [Amended]

    56. Amend section 52.243-2 by removing Alternate IV and 
redesignating ``Alternate V'' as ``Alternate IV'' of the clause.
    57. Amend section 52.243-4 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
* * * * *
    58. Revise sections 52.245-1 through 52.245-8 to read as follows:


52.245-1  Government Property Availability and Information required 
from Offerors.

    As prescribed in 45.207-1(a), insert the following solicitation 
provision:

GOVERNMENT PROPERTY AVAILABILITY AND INFORMATION REQUIRED FROM OFFERORS 
(DATE)

    (a) Definitions.
    Government-furnished property means Government property that a 
Contracting Officer authorizes a Contractor to use for performance 
of a Government contract.
    Government property means property the Government owns or 
leases.
    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.
    Property means real and personal property.
    Property administrator means a person appointed to perform 
property administration for 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.
    Special test equipment means--
    (1) Test equipment designed specifically to conduct testing 
required by a Government contract provided such equipment cannot be 
used for other purposes;
    (2) General purpose test equipment or modifications thereof that 
are interconnected and interdependent to form a new functional 
entity that can only be used to perform testing required by a 
contract while so interconnected and interdependent; or
    (3) Any combination of specifically designed, general purpose, 
or modified general purpose test equipment that is so interconnected 
and interdependent to form a new functional entity that can only be 
used to perform special purpose testing required by a contract while 
so interconnected and interdependent.
    Special tooling means items such as jigs, dies, fixtures, molds, 
patterns, taps, gauges, or other equipment and manufacturing aids, 
that are of such a specialized nature that without substantial 
modification or alteration their use is limited to the development, 
production, repair, or maintenance of particular supplies or 
components thereof, or to the performance of particular services.
    (b) Property available for contract performance. (1) The 
property listed below, or in an attachment to this provision, is 
available for performance of the contract contemplated by this 
solicitation and is in a condition suitable for use.
    (2) The property listed below, or in an attachment to this 
provision, is available for use on an ``as is'' basis.
    (i) Offerors are responsible for assuring that Government 
property made available on an ``as is'' basis is suitable for the 
offerors' purposes. Such property will be furnished f.o.b. at the 
location specified in the solicitation or contract. Costs incurred 
to transport, install, modify, or otherwise make such property 
suitable for the successful offeror's intended use and any cost 
incurred to return such property to the Government shall not 
increase the price or fee of any Government contract. Amendments to 
property furnished ``as is'' require the Contracting Officer's prior 
written approval.
    (ii) 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 offeror or, if not inspected by the offeror, as of 
the last date for inspection specified in the solicitation. The 
offeror is responsible for verifying that the property's condition 
has not changed during that period and shall notify the Contracting 
Officer promptly identifying any changed condition that will 
adversely affect the offeror. If the Contracting Officer concurs 
that the property's condition has changed, the Contracting Officer 
may restore the property, substitute other Government property, or 
withdraw the property's availability. A substitution or withdrawal 
shall be reflected in a modification to the solicitation. The 
Government has no liability for changes in the property's condition 
discovered after removal from the specified f.o.b. location.
    (iii) Special tooling or special test equipment will be 
furnished ``as is'' if the successful offeror acquired or produced 
the tooling and test equipment and the Government obtained title to 
the tooling or test equipment under a Government contract.
    (c) Government title. The Government retains title to any 
property furnished for performance of the contract contemplated by 
this solicitation. Contractor repairs to or modifications of that 
property do not affect the Government's title to the property.
    (d) Property administration considerations. The successful 
offeror will be responsible for the care, maintenance, and 
preservation of Government property accountable under a contract 
resulting from this solicitation, including property the successful 
offeror permits a subcontractor to use for performance of that 
contract.
    (1) The clauses at 52.245-2, Government Property, and 52.245-5, 
Government Property Administration, will be included in a contract 
resulting from this solicitation unless a successful offeror elects 
to use, by inserting the offeror's name on the line provided in 
paragraph (d)(3) of this provision, the clauses at 52.245-7, 
Government Property--Alternate Procedures, and 52.245-8, Government 
Property Administration--Alternate Procedures. Generally, under the 
Government Property clause at 52-245-2, the Government is liable for 
loss, theft, or destruction of, or damage to, the Government 
property accountable under the contract (hereinafter referred to as 
property losses), and the Contractor must maintain a Government 
property management system that includes the processes specified in 
the Government Property Administration clause at 52.245-5. The 
clause at 52.245-7 generally makes a successful offeror responsible 
for property losses and the clause at 52.245-8 generally permits a 
successful offeror(s) to manage Government property using the same 
procedures that are used to manage the offeror's property.
    (2) An offeror should make the election in paragraph (d)(3) of 
this provision only if the election is consistent with the offeror's 
property management practices under other Government contracts 
performed or to be performed at the location at which the contract 
resulting from this solicitation will be performed.
    (3) Alternate Clause Election. The offeror, 
____________________, elects to have the clauses at 52.245-7, 
Government Property--Alternate Procedures, and 52.245-8, Government 
Property Administration--Alternate Procedures, included in a 
contract

[[Page 1454]]

resulting from this solicitation in lieu of the corresponding 
clauses at 52.245-2 and 52.245-5.
    (e) Information required from all offerors. Offers shall--
    (1) List or describe all Government property the offeror or its 
potential subcontractors propose to use on a rent-free basis, 
including--
    (i) Property offered for use in this solicitation; and
    (ii) Property already in possession of the offeror or its 
prospective subcontractors under other contracts.
    (2) Identify the contracts or other instruments under which the 
property listed or described in paragraph (d)(1) is accountable; and
    (3) Identify the estimated period during which the property will 
be used, the estimated hours of use within that period, and the 
offeror's estimated costs to acquire, produce, lease, or rent the 
property if it is not furnished by the Government.
    (f) Additional information required from offerors that do not 
make the election available in paragraph (d)(3) of this provision. 
(1) The offeror shall state--
    (i) Whether the offeror has an approved property management 
system;
    (ii) The date the system was last reviewed; and
    (iii) The name and address of the Property Administrator who 
performed the last review.
    (2) Offers shall include a proposed Government property 
management system if--
    (i) The offeror does not have a property system that has been 
approved by a Property Administrator;
    (ii) The offeror's property system was last approved or 
validated by a Property Administrator more than 2 years prior to the 
date of this offer;
    (iii) A Property Administrator has requested corrections to the 
offeror's system and such corrections have not been made; or
    (iv) Approval of the offeror's system has been withdrawn.
    (3) Offerors should propose and use an existing property 
management system or a modification thereof when the existing or 
modified system satisfies the requirements of the Government 
Property and Government Property Administration clauses identified 
in this solicitation.
    (4) A successful offeror whose property system has been approved 
or validated by the Government no more than 2 years prior to the 
date of its offer is required only to submit to the Property 
Administrator, within 90 days following contract award, the changes 
required to conform the system to the requirements of the successful 
offeror's contract.
    (5) As provided in the clause at 52.245-5, Government Property 
Administration, the Property Administrator might require a 
successful offeror to make changes to a proposed or previously 
approved system if deemed necessary for contract compliance.
    (g) Liability for loss, theft, damage, or destruction. (Not 
applicable when the election in paragraph (d)(3) of this provision 
is made.) Notwithstanding any other provision of this solicitation 
regarding liability for loss, theft, or destruction of, or damage to 
Government property, the successful offeror shall be liable for such 
loss, theft, destruction, or damage until its Government property 
system is approved by the Property Administrator.
    (h) Overseas contracts. In a contract to be performed outside 
the United States, its territories, or possessions, the words 
``Government'' and ``Government-furnished'', as used in this 
provision, mean ``United States Government'' and ``United States 
Government-furnished,'' respectively.

(End of provision)

    Alternate I (Date). As prescribed in 45.207-1(b), replace 
paragraphs (b) through (g) of the basic clause with the following 
paragraphs (b) through (d) and renumber paragraph (h) of the basic 
clause as paragraph (e).
    (b) Property administration considerations. The successful 
offeror will be responsible for the care, maintenance, and 
preservation of Government property accountable under a contract 
resulting from this solicitation, including property the successful 
offeror permits a subcontractor to use for performance of that 
contract.
    (1) The clauses at 52.245-2, Government Property, and 52.245-5, 
Government Property Administration, will be included in a contract 
resulting from this solicitation unless a successful offeror elects 
to use, by inserting the offeror's name on the line provided in 
paragraph (b)(3) of this provision, the clauses at 52.245-7, 
Government Property--Alternate Procedures, and 52.245-8, Government 
Property Administration--Alternate Procedures. Generally, under the 
Government Property clause at 52-245-2, the Government is liable for 
loss, theft, or destruction of, or damage to, the Government 
property accountable under the contract (hereinafter referred to as 
property losses), and the Contractor must maintain a Government 
property management system that includes the processes specified in 
the Government Property Administration clause at 52.245-5. The 
clause at 52.245-7 generally makes a successful offeror responsible 
for property losses and the clause at 52.245-8 generally permits a 
successful offeror to manage Government property using the same 
procedures that are used to manage the offeror's property.
    (2) An offeror should make the election in paragraph (b)(3) of 
this provision only if the election is consistent with the offeror's 
property management practices under other Government contracts 
performed or to be performed at the location at which the contract 
resulting from this solicitation will be performed.
    (3) Alternate Clause Election The offeror, ____________________, 
elects to have the clauses at 52.245-7, Government Property--
Alternate Procedures and 52.245-8, Government Property 
Administration-- Alternate Procedures, included in a contract 
resulting from this solicitation in lieu of the corresponding 
clauses at 52.245-2 and 52.245-5.
    (c) Information required from offerors that do not make the 
election available in paragraph (b)(3) of this provision. (1) The 
offeror shall state whether the offeror has an approved property 
management system, the date the system was last reviewed, and the 
name and address of the Property Administrator who performed the 
last review.
    (2) Offers shall include a proposed Government property 
management system if--
    (i) The offeror does not have a property system that has been 
approved by a Property Administrator;
    (ii) The offeror's property system was last approved or 
validated by a Property Administrator more than 2 years prior to the 
date of this offer;
    (iii) A Property Administrator has requested corrections to the 
offeror's system and such corrections have not been made; or
    (iv) Approval of the offeror's system has been withdrawn.
    (3) Offerors should propose and use an existing property 
management system or a modification thereof when the existing or 
modified system satisfies the requirements of the Government 
Property and Government Property Administration clauses identified 
in this solicitation.
    (4) A successful offeror whose property system has been approved 
or validated by the Government no more than 2 years prior to the 
date of its offer is required only to submit to the Property 
Administrator, within 90 days following contract award, the changes 
required to conform the system to the requirements of the successful 
offeror's contract.
    (5) As provided in the clause at 52.245-5, Government Property 
Administration, the Property Administrator might require a 
successful offeror to make changes to a proposed or previously 
approved system if deemed necessary for contract compliance.
    (d) Liability for loss, theft, damage, or destruction. (Not 
applicable when the election in paragraph (b)(3) of this provision 
is made.) Notwithstanding any other provision of this solicitation 
regarding liability for loss, theft, or destruction of, or damage to 
Government property, the successful offeror shall be liable for such 
loss, theft, destruction, or damage until its Government property 
system is approved by the Property Administrator.


52.245-2  Government Property.

    As prescribed in 45.207-2, insert the following clause:

GOVERNMENT PROPERTY (DATE)

    (a) Definitions. As used in this clause--
    Commercial purpose means any purpose other than performance of a 
U.S. Government contract or subcontract thereunder.
    Contractor's managerial personnel means the Contractor's 
directors, officers, and any of the Contractor's managers, 
superintendents, or equivalent representatives who have supervision 
or direction of all or substantially all of the Contractor's 
business or the Contractor's operations at a site connected with 
performance of a Government contract.
    Demilitarization means rendering a product unusable for, and not 
restorable to, the purpose for which it was designed or is 
customarily used.

[[Page 1455]]

    Equipment means nonexpendable, tangible personal property. The 
term does not include property that satisfies the definition in this 
clause of material, unique Federal property, special tooling, or 
special test equipment.
    Expendable property means property that is customarily consumed 
during design, manufacture, or testing of a product or performance 
of a service.
    General purpose equipment means equipment items that can be 
used, or with only minor modification could be used, to develop, 
produce, test, or maintain more than one type of item or perform 
more than one type of service.
    Government-furnished property means Government property that a 
Contracting Officer authorizes a Contractor to use for performance 
of a Government contract.
    Government property means property the Government owns or 
leases.
    Low value property means equipment, special tooling, or special 
test equipment that has an acquisition cost less than $5,000 and is 
not sensitive property.
    Material means expendable property and property incorporated 
into or attached to an end item.
    Natural disaster means a sudden and unusual natural occurrence 
causing catastrophic damage, including floods, hurricanes, 
tornadoes, cyclones, atmospheric electrical storms, tidal waves, 
avalanches, mudslides, landslides, volcanic eruptions, earthquakes, 
and other similar perils. The term does not include fire or 
explosion, unless directly or indirectly caused by a covered peril.
    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 Government.
    Plant clearance officer means a person appointed to disposition 
property accountable under Government contracts.
    Precious metals means silver, gold, platinum, palladium, 
iridium, osmium, rhodium, and ruthenium.
    Property means real and personal property.
    Property administrator means a person appointed to perform 
property administration for 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).
    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--
    (1) Test equipment designed specifically to conduct testing 
required by a Government contract, provided such equipment cannot be 
used for other purposes;
    (2) General purpose test equipment, or modifications thereof, 
that are interconnected and interdependent to form a new functional 
entity that can only be used to perform testing required by a 
contract while so interconnected and interdependent; or
    (3) Any combination of specifically designed, general purpose, 
or modified general purpose test equipment that is so interconnected 
and interdependent to form a new functional entity that can only be 
used to perform special purpose testing required by a contract while 
so interconnected and interdependent.
    Special tooling means items such as jigs, dies, fixtures, molds, 
patterns, taps, gauges, or other equipment and manufacturing aids, 
that are of such a specialized nature that without substantial 
modification or alteration their use is limited to the development, 
production, repair, or maintenance of particular supplies or 
components thereof, or to the performance of particular services.
    Unique Federal property means Government-owned personal 
property, or components thereof, that is specially designed to 
perform or support the mission of one or more Federal agencies and 
is not available to the public. The term does not include property 
that is incorporated into or attached to an item deliverable under a 
contract.
    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, or are otherwise 
needed for design or testing required by a contract.
    (b) General. (1) This clause is applicable to Government-
furnished property; Government property stored by the Contractor at 
the Government's direction; items accepted by the Government at 
origin that are in the Contractor's possession; and under cost-
reimbursement or time-and-materials contracts, property acquired or 
produced by a Contractor to which the Government has title under the 
Allowable Cost and Payment clause of this contract. For purposes of 
this clause, such property and items are collectively referred to as 
``Government property.'' The clause does not apply to 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.
    (2) Except as provided in paragraph (c) of this clause, the 
Contractor shall use its own property to perform this contract.
    (3) The Contractor is responsible for the maintenance, 
protection, and preservation of Government property accountable 
under this contract, including property in the possession of a 
subcontractor, and shall account for such property as required by 
this contract.
    (4) The Contractor shall not--
    (i) Use Government property 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; or
    (ii) Permit a subcontractor or supplier to use property 
furnished for the performance of this contract unless the Contractor 
has verified that the subcontractor or supplier has a property 
management system that has been approved by the cognizant Property 
Administrator.
    (5) If this contract is a cost-reimbursement or time-and-
materials contract, the Contractor shall not acquire general purpose 
equipment to which the Government will have title under the clause 
at 52.216-7, Allowable Cost and Payment, or real property for 
performance of this contract unless the general purpose equipment or 
real property is specified as a deliverable end item.
    (6) If this contract is a fixed-price or labor-hour contract, 
property acquired or produced by the Contractor for performance of 
the contract is not Government-furnished property. Property 
identified as a deliverable item becomes Government property upon 
acceptance by the Government.
    (c) Government-furnished property. The property identified in 
this contract as Government-furnished property is furnished to the 
Contractor on a rent-free basis for performance of this contract.
    (1) Title. The Government retains title to Government-furnished 
property, including Government-furnished property that is 
incorporated into or attached to any property owned by the 
Contractor. Government-furnished property does not become a fixture 
or lose its identity as personal property by being attached to real 
property.
    (2) Suitability for intended use. (i) Government-furnished 
property, other than property furnished ``as is'', shall be in a 
condition suitable for the property's intended use at the time the 
property is furnished to the Contractor. 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.
    (ii) The contract delivery or performance dates are based upon 
the expectation that Government-furnished property, except

[[Page 1456]]

property furnished ``as is'', will be suitable for its intended use 
and delivered to the Contractor at the times stated in the contract. 
If a time is not stated, the property shall be furnished in 
sufficient time to enable the Contractor to meet the contract's 
delivery or performance dates.
    (iii) If Government-furnished property is received in a 
condition not suitable for its intended use, the Contractor shall 
notify the Contracting Officer as soon as the unsuitability is known 
and shall take corrective action or dispose of the property as 
directed by the Contracting Officer. The contract shall be equitably 
adjusted in accordance with paragraph (c)(7) of this clause.
    (iv) 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.
    (v) If the Contractor commingles Contractor-acquired or produced 
material with Government-furnished material, the provisions 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.
    (3) Authorized use. The Contractor may request, in writing, the 
Contracting Officer to authorize use of the property furnished for 
performance of this contract to perform other Government contracts 
at the same location. Rent-free use is authorized if the Contracting 
Officer does not object to such use, either in whole or in part, 
within 30 days following confirmed receipt of the Contractor's 
request. Costs incurred by the Contractor to relocate, modify, or 
adapt the property for performance of other Government contracts or 
to restore the property to a condition suitable for intended use 
under this contract shall not increase the price or fee of any 
Government contract.
    (4) Real property restrictions. The Contractor shall not improve 
or make structural alterations to real property furnished for 
performance of this contract unless the contract specifically 
identifies the alterations or improvements as work to be performed 
under the contract or unless expressly authorized to do so in 
writing by the Contracting Officer. Title to improvements or 
alterations to Government-furnished real property shall vest in the 
Government.
    (5) Property furnished ``as is''. (i) The Contractor is 
responsible for assuring that Government property furnished on an 
``as is'' basis is suitable for the Contractor's purposes. Such 
property is furnished f.o.b. at the location specified in the 
solicitation or contract. Costs incurred by the Contractor to 
transport, install, modify, or otherwise make such property suitable 
for the Contractor's intended use and any cost incurred to return 
such property to the Government shall not increase the price or fee 
of any Government contract. 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 
produced, and the Government obtained title to, such tooling or test 
equipment under this or another Government 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 notify the Contracting Officer promptly and 
identify the changed condition. If the Contracting Officer concurs 
that the property's condition has changed, the Contracting Officer 
may restore the property or substitute other Government property at 
no change in the contract's price 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.
    (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) Any increase in the amount of property furnished for 
performance of this contract shall result in an equitable reduction 
in contract price or fee and appropriate adjustment of the contract 
delivery or performance dates.
    (iii) The Contractor may request an equitable adjustment 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 contract costs or 
schedule.
    (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 shall 
be made in accordance with paragraph (c)(7) of this clause.
    (7) Equitable adjustments. Equitable adjustments shall be the 
Contractor's exclusive remedy for Government actions under this 
clause and shall be made in accordance with the procedures of the 
Changes clause of this contract.
    (i) Equitable adjustments may include an amount for the 
restoration and rehabilitation of the Contractor's premises caused 
by Government-furnished property that is not in a condition suitable 
for intended use, the withdrawal or substitution of Government-
furnished property, or the Government's abandonment of hazardous 
property (see paragraph (h)(1) of this clause).
    (ii) The Government shall not be liable for breach of contract 
for--
    (A) Any delay in delivery of Government-furnished property;
    (B) Delivery of Government-furnished property in a condition not 
suitable for its intended use;
    (C) An increase or decrease in, or substitution of, Government-
furnished property; or
    (D) Failure to repair or replace Government-furnished property.
    (8) Return of Government-furnished property. If this contract 
requires Government-furnished property to be returned directly to a 
Government activity--
    (i) The property, including property furnished ``as is'', shall 
be returned to the Government in the same condition, less normal 
wear and tear, or better condition than when furnished to the 
Contractor except--
    (A) Lost, stolen, or destroyed property that the Government has 
determined will not be replaced; and
    (B) Damaged property that the Government has elected not to have 
repaired or replaced.
    (ii) The Contractor shall notify the contract administration 
office of its intent to return Government-furnished property at 
least 10 working days prior to return. Notices shall identify the 
contracts under which the items are accountable and shall provide 
each item's name, description, national stock number (if known), and 
part number or identification number.
    (d) Property loss liability. As used in this clause, the terms 
loss and losses include, either individually or in any combination, 
the physical misplacement of, the theft of, the destruction of, or 
damage to, Government property accountable under this contract.
    (1) Limited liability. (i) The Contractor is not liable for 
property losses that occur while the Contractor is maintaining a 
property management system that satisfies the requirements of this 
contract, except losses for which the Contractor expressly is liable 
under the terms of this contract.
    (ii) The Contractor's liability for a loss that results from a 
risk expressly required to be insured under this contract is limited 
to the extent of the insurance required to be purchased and 
maintained, or to the extent of the insurance actually purchased and 
maintained, whichever is greater.
    (2) Full liability. The Contractor is liable for all property 
losses that--
    (i) Occur at a time when the Contractor has not established a 
property management system that satisfies the requirements of this 
contract;
    (ii) Occur on or after the date of a written or electronic 
notice from the Property Administrator that the Government has 
withdrawn approval of the Contractor's property management system, 
unless the Contractor can establish by clear and convincing evidence 
that a loss did not result

[[Page 1457]]

from the Contractor's failure to maintain an approved system;
    (iii) Occur on or after the first calendar day following the 
Contractor's failure to correct a property system deficiency by the 
date specified by the Property Administrator for such correction or 
such other mutually agreed upon date for correction;
    (iv) Result from the Contractor's failure to take reasonable and 
prudent steps to avoid losses resulting from acts of war, civil 
insurrection, or natural disasters; or (v) Result from the willful 
misconduct or lack of good faith on the part of the Contractor's 
managerial personnel.
    (3) Property in the possession of subcontractors or suppliers. 
The Contractor's transfer of Government property to a subcontractor 
or supplier does not affect the Contractor's liability for property 
losses.
    (4) Contractor required actions following a property loss. The 
Contractor shall--
    (i) Take all reasonable action to protect damaged Government 
property from further damage and to physically separate such 
property from all other property;
    (ii) Notify the Contracting Officer as required by the 
Government Property Administration clause of this contract (52.245-
5(f)(4));
    (iii) Not repair, replace, or substitute other property, for the 
property suffering a loss unless authorized to do so by the 
Contracting Officer; and
    (iv) Do nothing to prejudice the Government's rights to recover 
against third parties for any property loss. When requested by the 
Contracting Officer, furnish to the Government at Government expense 
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.
    (5) Insurance charges or reserves. The Contractor shall not 
include in the contract price or fee, or any adjustment thereof, any 
charge or reserve for insurance (including any self-insurance fund 
or reserve) covering Government property losses, except to the 
extent this contract expressly requires the Contractor to carry such 
insurance.
    (e) Property loss remedies. (1) Following receipt of a property 
loss notification from the Contractor, the Contracting Officer may--
    (i) Replace or substitute other property for the Government 
property suffering a loss;
    (ii) Authorize the Contractor to repair, or replace the property 
or take other appropriate action; or
    (iii) Negotiate an equitable adjustment in lieu of repair or 
replacement when the Government is liable for the property loss.
    (2) The Contracting Officer's authorization to remedy a loss for 
which the Contractor is liable under this clause shall not increase 
the contract price or fee.
    (3) The Contractor may request an equitable adjustment to remedy 
a loss for which the Government is liable under this clause.
    (4) The extent of the Government's liability for a property loss 
shall be reduced by the amount of any reimbursement the Contractor 
receives for that loss from a source other than the Government. The 
Contractor shall use any reimbursement for a property loss from a 
source other than the Government to repair, rehabilitate, or replace 
the property that suffered a loss, or equitably reimburse the 
Government, as directed by the Contracting Officer.
    (f) Government property maintenance. The contract price or fee 
includes an amount for performance of the maintenance actions 
required by paragraphs (f)(1) and (f)(2) of this clause. If 
maintenance of stored items is required, the Contractor might be 
entitled to an equitable adjustment.
    (1) Government-furnished property. The Contractor shall maintain 
Government-furnished property in a condition suitable for its 
intended use. The Contractor shall--
    (i) Maintain real property, special tooling, and special test 
equipment in accordance with the specific maintenance instructions 
contained in this contract. If maintenance instructions are not 
specified, the Contractor shall use sound business practices to 
maintain that property.
    (ii) Maintain unique Federal property as specified in this 
contract, or if not specified, agency instructions for the 
maintenance of such property.
    (iii) Preserve, protect, and care for material and general 
purpose equipment in accordance with the property manufacturer's 
standards of care for such items, or when the manufacturer has not 
released standards of care, the Contractor's standard business 
practices for comparable Contractor-owned material and equipment.
    (iv) Promptly notify the contract administration office when the 
maintenance actions required by paragraphs (f)(1)(i) through 
(f)(1)(iii) are not sufficient to sustain a Government-furnished 
property item's suitability for its intended use and request 
direction regarding repair, rehabilitation, or replacement. The 
Contractor shall not repair, rehabilitate, or replace such items 
unless authorized to do so by the Contracting Officer.
    (2) Property to which the Government obtains title under a cost-
reimbursement or time-and-materials contract. The Contractor shall 
maintain property to which the Government obtains title under a 
cost-reimbursement or time-and-materials contract in a condition 
suitable for the property's intended use until the Contractor 
determines the property is no longer needed for continued 
performance of this contract. Promptly following that determination, 
the Contractor shall enter the items into the property disposal 
process.
    (3) Additional maintenance actions. When the Contractor's 
diligent performance of the maintenance actions required by 
paragraphs (f)(1) and (f)(2) of this clause is not sufficient to 
sustain a Government-furnished property item's suitability for its 
intended use, the Contracting Officer may--
    (i) Replace or substitute other property for such property;
    (ii) Direct the Contractor to repair, rehabilitate, or replace 
the property;
    (iii) Direct the Contractor to take other appropriate action; or
    (iv) Negotiate an equitable adjustment in lieu of repair, 
replacement, or other action.
    (4) Equitable adjustment. The Contractor may request an 
equitable adjustment for performance of a property repair, 
rehabilitation, or replacement directed by the Contracting Officer 
pursuant to paragraph (f)(3) of this clause.
    (5) Stored Government property. The Contractor shall store 
Government property only if specifically directed to do so by the 
Contracting Officer. Stored property shall be maintained in 
accordance with instructions provided by the Contracting Officer. 
Except as provided in the clause 52.245-3, Delivery--Special Tooling 
and Special Test Equipment, of this contract, and paragraph (g)(7) 
of this clause, the price or fee of the contract does not include an 
amount for such maintenance.
    (g) Government property disposal. Except as provided in 
paragraphs (c)(8), (g)(2), and (g)(8) of this clause, the Contractor 
shall not dispose of Government property until authorized to do so 
by the Plant Clearance Officer.
    (1) Scrap--(i) Production Scrap. Contractors may dispose of 
scrap resulting from production or testing under this contract 
without Government approval if the scrap does not require 
demilitarization or does not contain precious metals, hazardous 
materials or wastes, nuclear materials or classified materials.
    (ii) Scrap lists. Contractors that have Government-approved 
scrap procedures may prepare scrap lists in lieu of inventory 
disposal schedules (provided such lists are consistent with the 
approved scrap procedures) except for scrap that--
    (A) Requires demilitarization;
    (B) Is a classified item;
    (C) Is generated from classified items;
    (D) Contains hazardous materials or hazardous wastes;
    (E) Contains precious metals; or
    (F) Is dangerous to the public health, safety, or welfare.
    (iii) Other scrap. The Contractor shall use an inventory 
disposal schedule to identify scrap that is not production scrap or 
is not reportable on a scrap list.

[[Page 1458]]

    (2) Pre-disposal requirements. When the Contractor determines 
that a property item acquired or produced by the Contractor is no 
longer needed for performance of this contract, the Contractor 
shall--
    (i) Make reasonable efforts to return unused property to the 
appropriate supplier at fair market value (less, if applicable, a 
reasonable restocking fee that is consistent with the supplier's 
customary practices) and credit the price or estimated cost of this 
contract with the proceeds of such returns; and
    (ii) List property that could not be returned to a supplier or 
used in the performance of other Government contracts on Standard 
Form 1428, Inventory Disposal Schedule.
    (3) Inventory disposal schedules. (i) The Contractor shall use 
Standard Form 1428, Inventory Disposal Schedule, to identify--
    (A) Government-furnished property that is no longer required for 
performance of this contract, provided the terms of another 
Government contract do not require the Government to furnish that 
property for performance of that contract; and
    (B) Property acquired or produced by the Contractor, to which 
the Government has obtained title under a cost-reimbursement or 
time-and-materials contract, that is no longer required for 
performance of that contract.
    (ii) The Contractor may annotate inventory disposal schedules to 
identify property the Contractor wishes to purchase from the 
Government.
    (iii) Unless the Plant Clearance Officer has agreed otherwise, 
or the contract requires electronic submission of inventory disposal 
schedules, the Contractor shall prepare separate inventory disposal 
schedules for--
    (A) Special test equipment with general purpose components;
    (B) Special test equipment that does not contain general purpose 
components;
    (C) Printing equipment;
    (D) Computers, components thereof, peripheral equipment, and 
related equipment;
    (E) Precious Metals;
    (F) Nonnuclear hazardous materials or hazardous wastes; or
    (G) Nuclear materials or nuclear wastes.
    (iv) Property with the same description, condition code, and 
reporting location may be grouped in a single line item. Special 
test equipment shall be described in sufficient detail to permit an 
understanding of the special test equipment's intended use.
    (4) Submission requirements. Inventory disposal schedules shall 
be submitted to the Plant Clearance Officer no later than--
    (i) Thirty days following the Contractor's determination that a 
Government property item is no longer required for performance of 
the contract;
    (ii) Sixty days, or such longer period as may be approved by the 
Plant Clearance Officer, following completion of contract deliveries 
or performance; or
    (iii) One hundred twenty days, or such longer period as may be 
approved by the Plant Clearance Officer, following contract 
termination in whole or in part.
    (5) Corrections. The Plant Clearance Officer may require the 
Contractor to correct an inventory disposal schedule or may reject a 
schedule if the property identified on the schedule is not 
accountable under this contract or is not in the quantity or 
condition indicated.
    (6) Postsubmission adjustments. The Contractor shall provide the 
Plant Clearance Officer at least 10 working days advance written 
notice of its intent to remove a property item from an approved 
inventory disposal schedule. Unless the Plant Clearance Officer 
objects to the intended schedule adjustment within the notice 
period, the Contractor may make the adjustment upon expiration of 
the notice period.
    (7) Storage. (i) The Contractor shall store the property 
identified on an inventory disposal schedule pending receipt of 
disposal instructions. The Government's failure to provide disposal 
instructions within 120 days following receipt of an acceptable 
inventory disposal schedule, might entitle the Contractor to an 
equitable adjustment for costs incurred to store such property on or 
after the 121st day following receipt of an acceptable schedule.
    (ii) The Contractor must obtain the Plant Clearance Officer's 
approval to remove Government property from the premises at which 
the property is currently located prior to receipt of final 
disposition instructions. If approval is granted, any costs incurred 
by the Contractor to transport or store the property shall not 
increase the price or fee of any Government contract. The storage 
facility must be appropriate for assuring the property's physical 
safety and suitability for use. Approval does not relieve the 
Contractor of any liability under this contract for such property.
    (8) Disposition instructions. (i) If the Government does not 
provide disposition instructions to the Contractor within 60 days 
following receipt of an acceptable scrap list, the Contractor may 
dispose of the listed scrap in accordance with the Contractor's 
Government-approved scrap procedures.
    (ii) The Contractor shall prepare for shipment, deliver f.o.b. 
origin, or dispose of Government property as directed by the Plant 
Clearance Officer. The Contractor shall remove and destroy any 
markings identifying the property as Government property prior to 
disposing of the property.
    (iii) The Contracting Officer may require the Contractor to 
demilitarize the property prior to shipment or disposal. Any 
equitable adjustment incident to the Contracting Officer's direction 
to demilitarize Government property shall be made in accordance with 
paragraph (c)(7) of this clause.
    (9) Disposal proceeds. The Contractor shall credit the net 
proceeds from the disposal of Government property in accordance with 
instructions received from the Plant Clearance Officer.
    (10) Subcontractor inventory disposal schedules. The Contractor 
shall require a subcontractor that is using property accountable 
under this contract at a subcontractor-managed site to submit 
inventory disposal schedules to the Contractor in sufficient time 
for the Contractor to comply with the requirements of paragraph 
(g)(4) of this clause.
    (h) Abandonment of Government property at a Contractor-owned 
location. (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-furnished property in place at which 
time all obligations of the Government regarding such abandoned 
property shall cease. Except as provided in paragraph (c)(7)(i) of 
this clause, the Government has no obligation to restore or 
rehabilitate the Contractor's premises under any circumstances.
    (i) Overseas contracts. In a contract performed outside the 
United States, 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 45.207-2(b), replace 
paragraph (d)(1) of the basic clause with the following paragraph 
(d)(1), remove paragraph (d)(2), renumber paragraphs (d)(3), (d)(4), 
and (d)(5) as (d)(2), (d)(3), and (d)(4), respectively, and modify 
the references to ``Government property'' in the renumbered 
paragraphs (d)(2), (d)(3), and (d)(4) to read ``Government-furnished 
property'':
    (d)(1) The Contractor is liable for Government-furnished 
property losses, except losses resulting from acts of war, civil 
insurrection, or natural disasters, provided the Contractor has 
taken reasonable and prudent steps to avoid or mitigate such losses.
    Alternate II (Date). As prescribed in 45.207-2(c), replace 
paragraph (b) of the basic clause with the following paragraph (b) 
and add the following paragraph (j) to the basic clause:
    (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 is responsible for the maintenance, 
protection, and preservation of Government property accountable 
under this contract that is in the Contractor's or its 
subcontractors' possession and shall account for such property as 
required by this contract.
    (3) Property acquired or produced by the Contractor for 
performance of this contract that the Government obtains title to 
under the clause at 52.216-7, Allowable Cost and Payment, is 
Government property accountable under this contract.
    (j) Title to Contractor-acquired or produced property, nonprofit 
organizations or nonprofit institutions. (1) Notwithstanding any 
other provision of this contract regarding title to property 
acquired or produced by a Contractor, the Contractor shall have 
title to equipment and other tangible property purchased with 
Government funds provided for the conduct of basic or applied 
research under this contract, if--

[[Page 1459]]

    (i) The Contracting officer has agreed, prior to the 
Contractor's purchase of such property, that the Contractor shall 
have title to that property; and
    (ii) The Contractor has agreed that depreciation or amortization 
costs for such property shall not be allocated to any existing or 
future Government contract and that such property may be used by the 
Government or its subcontractors without charge in performance of 
any Government contract or subcontract thereunder.
    (2) As a condition for obtaining title to 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) (41 U.S.C. 2000d).


52.245-3  Delivery--Special Tooling and Special Test Equipment (Fixed-
Price Contracts)

    As prescribed in 45.305, insert the following clause:

DELIVERY--SPECIAL TOOLING AND SPECIAL TEST EQUIPMENT (FIXED-PRICE 
CONTRACTS) (DATE)

    (a) Definitions. When a term defined in the clause at 52.245-2, 
Government Property, is used in this clause, the term has the same 
meaning as when used in 52.245-2.
    (b) Contractor notice. (1) The Contractor shall notify the 
Contracting Officer of special tooling or special test equipment 
acquired or produced by the Contractor for performance of this 
contract that is not scheduled for delivery under the contract, as 
soon as practicable during contract performance but not later than 
the earlier of--
    (i) One hundred twenty days prior to completion of scheduled 
deliveries (other than technical data) under this contract; or
    (ii) Thirty days following the Contractor's determination that 
such special tooling or special test equipment is no longer required 
for contract performance.
    (2) For each special tooling or special test equipment item, or 
groups of identical items, the Contractor's notice shall identify 
the item's or group's--
    (i) Nomenclature;
    (ii) Quantity;
    (iii) Acquisition cost (by item);
    (iv) Part number(s) with which the special tooling or special 
test equipment is used; and
    (v) Identification number.
    (c) Storage. The Contractor shall store the special tooling or 
special test equipment identified in the Contractor's notice at no 
change in contract price (or target price and ceiling amount) until 
expiration of the Government notice period or until the Government 
notifies the Contractor that delivery of a special tooling or test 
equipment item or items is required, whichever occurs first. 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 delivery notice, the 
Contractor might be entitled to an equitable adjustment as provided 
in paragraph (f) of this clause.
    (d) Government notice. (1) The Government must notify the 
Contractor in writing within 120 days, or such other period mutually 
agreed upon, following receipt of the notice required by paragraph 
(b) of this clause that delivery of a special tooling or special 
test equipment item or items is required.
    (2) The Government's notice shall identify the special tooling 
or special test equipment item(s), and shall--
    (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.
    (e) Repair or rehabilitation. The Contracting Officer may 
require the Contractor to repair or rehabilitate the special tooling 
or special test equipment identified in the Government's notice to 
the extent necessary to return an item to a condition suitable for 
its intended use at no change in price.
    (f) Equitable adjustment. The contract may be equitably adjusted 
for costs incurred by the Contractor to prepare the tooling or test 
equipment for storage or shipment. Equitable adjustments 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 (d) of this clause required the Contractor to incur 
costs that it would not have incurred under customary commercial 
practices.
    (g) Liability. The Contractor is liable for any loss, theft, or 
destruction of, or damage to, special tooling or special test 
equipment delivered to the Government under this clause during the 
period commencing upon the Government's acceptance of the items 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)


Sec. 52.245-4  Liability for Government Property (Demolition Services 
Contracts).

    As prescribed in 45.403, 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 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 reverts to the Government 
upon notice of termination.

(End of clause)


Sec. 52.245-5  Government Property Administration.

    As prescribed in 45.510(a), insert the following clause:

GOVERNMENT PROPERTY ADMINISTRATION (DATE)

    (a) Definitions. When a term defined in the clause at 52.245-2, 
Government Property, is used in this clause, the term has the same 
meaning as when used in 52.245-2.
    (b) General. (1) This clause is applicable to Government-
furnished property; Government property stored by the Contractor at 
the Government's direction; and, under cost-reimbursement or time-
and-materials contracts, property acquired or produced by a 
Contractor to which the Government has title under the Allowable 
Cost and Payment clause of this contract.
    (2) If the Contractor does not have a property management system 
that has been approved by the Property Administrator, the Contractor 
shall submit a proposed system to the Property Administrator within 
90 days following contract award (or such other mutually agreed to 
period).
    Notwithstanding any other provision of this contract regarding 
liability for Government property losses, the Contractor shall be 
liable for such losses until its property management system is 
approved by the Property Administrator. The system shall be 
maintained during the period Government property is accountable 
under this contract.
    (3) The Contractor should use an existing property management 
system or a modification thereof when the existing or modified 
system satisfies the requirements of this contract.
    (c) Property system requirements. The property management system 
shall include written processes to assure compliance with contract 
requirements and to provide for system assessment. At a minimum, the 
system shall contain processes for--
    (1) Assessing the system's efficiency and effectiveness, 
recommending corrective action or general improvements, and 
implementing appropriate changes;
    (2) Inspecting property acquired by the Contractor or furnished 
by the Government for performance of this contract upon receipt;
    (3) Promptly entering all Government property into the property 
management system;
    (4) Assuring Government property is used only as authorized by 
the Contracting Officer;
    (5) Controlling the distribution and return of pilferable 
property;
    (6) Scheduling and monitoring Government property maintenance to 
assure timely performance and recording of all maintenance actions;
    (7) Accurately recording by type and quantity Government 
material consumed during contract performance;
    (8) Performing, reporting, and recording all inventories 
required by this contract;

[[Page 1460]]

    (9) Assuring subcontractors have adequate procedures for the 
control and protection of Government property;
    (10) Justifying the continued need for Government property to 
perform this contract;
    (11) Moving and storing Government property in a manner 
commensurate with the property's handling and storage requirements; 
and
    (12) Disposing of Government property in accordance with the 
requirements of this contract.
    (d) Property Management system review and approval. (1) A 
Contractor whose property management system has been approved or 
validated by the Government no more than 2 years prior to the date 
of its offer is required only to submit to the Property 
Administrator, within 90 days following contract award, the changes 
required to conform the system to requirements in this contract. The 
submission date may be extended by the Property Administrator if an 
extension is in the Government's interests.
    (2) The Property Administrator shall review the Contractor's 
proposed or modified system within 90 days following receipt and may 
approve or require corrections to the system. The Contractor shall 
accomplish the required corrections at no change in price or fee.
    (3) The Property Administrator may review the Contractor's 
system at any time during contract performance to assure compliance 
with contract requirements. The Property Administrator may validate 
approval of, require corrections to, or, with the Administrative 
Contracting Officer's concurrence, withdraw approval of the 
Contractor's system. The Contractor shall implement corrections 
required by the 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 Contractor's assumption of 
liability for property losses for which the Government might 
otherwise be liable.
    (4) The Contractor shall make available to the Property 
Administrator all records and related information reasonably 
required to verify that the Contractor's Government property 
management 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.
    (e) Records and supporting information--(1) Property records. 
(i) Except as provided in paragraph (e)(1)(ii) of this clause, the 
Contractor shall establish or maintain and keep current a property 
record for each Government property item accountable under this 
contract. 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 and establish and maintain appropriate property records. 
Property records created by a subcontractor that has a property 
management system that has been approved by a Property Administrator 
may be used in lieu of creating new records.
    (ii) Property records are not required for work in process or 
for property specifically acquired or constructed for tests that 
will destroy the property.
    (iii) Contractors that use a material requirements planning 
system, manufacturing resource planning system, material management 
accounting system, or an enterprise resource planning system, may 
use the records generated by those systems as the records for 
material items provided such records otherwise satisfy the 
requirements in paragraph (e)(2) of this clause.
    (iv) The Contractor shall close a Government property item's 
record when the item is replaced and create a new property record 
for the replacement item if that item is Government property.
    (v) The Contractor shall enter the property's acquisition cost 
into the record for each Government property item that was acquired 
or produced by the Contractor during performance of this contract. 
For each item having an acquisition cost of ______________ (insert 
the agency capitalization threshold amount) or more, the Contractor 
also shall enter the date the item was acquired or produced.
    (vi) The Contractor shall notify the Contracting Officer 
promptly if the contract does not identify a Government-furnished 
property item's nomenclature or acquisition cost.
    (vii) Property records shall legibly and conspicuously identify 
sensitive property.
    (viii) The property records for items requiring maintenance 
shall identify the dates maintenance actions (including calibration 
if required) were performed and any deficiencies discovered. The 
maintenance information may be kept separately if the Contractor has 
a direct link between the information and the affected property 
records.
    (2) Standard information. Except as provided in paragraphs 
(e)(4) and (e)(5) of this clause, each property control record shall 
contain the following information:
    (i) The item's name, description, and national stock number. If 
the item does not have a national stock number and the item's 
acquisition cost is ____________________ (insert the agency 
capitalization threshold amount) or more, enter the four digit 
federal supply classification code.
    (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 and, for items having an acquisition cost 
of ______________ (insert the agency capitalization threshold 
amount) or more, the date the items were acquired or produced.
    (vi) Current location (for low value property, identify the 
initial location only).
    (vii) 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. In addition to the information 
required by paragraph (e)(2) of this clause, the property records 
for--
    (i) Special tooling and special test equipment shall identify 
each part number with which a special tool or special test equipment 
item is used;
    (ii) Special test equipment that includes general purpose 
equipment shall include the information required by paragraph (e)(2) 
of this clause for each removable or reusable general purpose 
component if removal and reuse is economically feasible;
    (iii) Equipment shall include the manufacturer's name, serial 
number, and model or part number; and
    (iv) Scrap shall identify the material content, contract from 
which the scrap was derived, and the scrap's disposition and 
disposition date(s).
    (4) Real property. (i) Real property records must 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 
must 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.
    (ii) 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.
    (iii) A real property record shall be annotated with a statement 
of the pertinent facts when the property is sold, transferred, 
donated, destroyed, abandoned by the Government, or condemned.
    (5) Property returned under warranty. The Contractor shall 
establish a 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, 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.
    (f) Reports and notices--(1) Annual Government property report. 
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. 
Unless otherwise stated in this contract, the report shall be 
prepared using Standard Form 1450, U.S. Government Property in the 
Possession of Contractors, and submitted to the Property 
Administrator no later than October 31 of each calendar year.
    (2) Misdirected Government property. The Contractor shall notify 
the Property Administrator in writing immediately following receipt 
of Government property

[[Page 1461]]

intended for another person or Government property not required for 
performance of a Government contract with the Contractor and shall 
request disposition instructions. To the extent practical, the 
Contractor 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 
notify promptly the Contracting Officer of 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 notice shall forward the Contractor's estimate of the extent to 
which such failure has affected or might affect contract 
performance.
    (4) Property losses. Except as provided in paragraph (f)(5) of 
this clause, the Contractor shall notify the Property Administrator 
in writing promptly upon learning that a Government property loss 
has occurred. The notice shall identify the property by item and 
include--
    (i) The item's description, contract number, national stock 
number (if known), and either part number or identification number;
    (ii) The date a physical loss or theft was discovered or damage 
or destruction occurred and, if known, the circumstances;
    (iii) The 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 
the property.
    (5) Low value property losses. The Contractor is not required to 
provide a property loss notice for low value property until contract 
completion or termination, except low value property that the 
Contractor needs for continued performance of this contract or low 
value Government-furnished property that the Government is 
contractually obligated to provide to the Contractor for performance 
of another contract. Notice of such loss shall be provided in 
accordance with paragraph (f)(4) of this clause.
    (g) Inventories. The Contractor shall assure that the location 
of each Government property item is accurately established and the 
records and reports required by this clause are complete and 
accurate.
    (1) Contract termination inventories. The Contractor shall 
inventory all property accountable under this contract immediately 
following a notice of termination or partial termination of the 
contract. Electronic, optical, electro-magnetic, or similar systems 
may be used.
    (2) Contract completion inventory. Promptly following completion 
of deliveries or performance under the contract, the Contractor 
shall inventory all Government property accountable under this 
contract that the Government is not contractually obligated to 
furnish to the Contractor for performance of another Government 
contract.
    (h) Markings--(1) Contractor-acquired or produced property 
(other than material). As soon as practicable following the 
assumption of title to property acquired or produced for performance 
of a cost-reimbursement or time-and-materials contract, the 
Contractor shall legibly and conspicuously mark such property 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.
    (2) Government-furnished property (other than material). 
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 (g)(1) of this clause, and replace any 
control numbers affixed by other Contractors with the Contractor's 
control number.
    (3) Exceptions. (i) The Contractor is not required to mark 
Government-furnished or Contractor-acquired or produced material.
    (ii) In lieu of the requirements in paragraph (h)(1) or (h)(2) 
of this clause, the Contractor shall contact promptly the Property 
Administrator for alternate instructions when marking would damage a 
property item or the Contractor considers a physical marking to be 
impractical.
    (i) Overseas contracts. In a contract performed outside the 
United States, its territories, or possessions, the words 
``Government'' and ``Government-furnished'', as used in this clause, 
mean ``United States Government'' and ``United States Government-
furnished,'' respectively.

(End of clause)

    Alternate I (Date) As prescribed in 45.510(b), substitute the 
following paragraphs (e) and (f) for paragraphs (e) and (f) of the 
basic clause:
    (e) Property records. The Contractor shall establish a property 
record for each Government property item returned for correction 
under a warranty and shall maintain the records on a contract-by-
contract basis. The records shall identify the item's name, 
description, property classification, national stock number, the 
date received and the date the item is returned to the Government. 
For items having an acquisition cost greater than __ (insert the 
agency capitalization threshold), the Contractor shall enter the 
item's four-digit federal supply classification code. 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.
    (f) Notices--(1) Misdirected Government property. The Contractor 
shall notify the Property Administrator, promptly following receipt 
of Government property intended for another person or Government 
property not required for performance of a Government contract, and 
shall request disposition instructions. To the extent practical, the 
Contractor 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 
notify promptly the Contracting Officer of 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 notice shall forward the Contractor's estimate of the extent to 
which such failure has affected or might affect contract 
performance.
    (3) Property losses. Except as provided in paragraph (f)(4) of 
this clause, the Contractor shall notify the Property Administrator 
in writing promptly upon learning that a Government property loss 
has occurred. The notice shall identify the property by item and 
include--
    (i) The item's description, contract number, national stock 
number (if known), and either part number or identification number;
    (ii) The date a physical loss or theft was discovered or damage 
or destruction occurred and, if known, the circumstances;
    (iii) The 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 
the property.
    (4) Low value property losses. The Contractor is not required to 
provide a property loss notice for low value property until contract 
completion or termination, except low value property that the 
Contractor needs for continued performance of this contract or low 
value Government-furnished property that the Government is 
contractually obligated to provide to the Contractor for performance 
of another contract. The notice shall contain the information 
required by paragraph (f)(3) of this clause.


52.245-6  Rental Charges for Commercial Use.

    As prescribed in 45.602 insert the following clause:

RENTAL CHARGES FOR COMMERCIAL USE (DATE)

    (a) Definitions. (1) When a term defined in the clause at 
52.245-2, Government Property, is used in this clause, the term has 
the same meaning as when used in 52.245-2.
    (2) 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.
    (b) General. (1) Rental requests must be submitted to the 
Administrative Contracting Officer, identify the property for which 
rental 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.

[[Page 1462]]

    (c) Rental charge--(1) Real property and associated fixtures. 
(i) The Contractor shall obtain, at no cost to the Government, 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, the 
Administrative Contracting Officer shall promptly notify the 
Contractor and provide the 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:
    Rental charge = (Rental time in hours) (.02 per month) (Base 
cost) 720 hours per month
    (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 an office designated by the Administrative Contracting Officer to 
receive rental payments 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 Contractor's unauthorized use of Government 
property or any other failure to perform this contract according to 
its terms.
    (e) Liability for loss, theft, damage, or destruction. When 
Government property is used for commercial purposes, the Contractor 
shall be liable for, and shall reimburse the Government for, any 
damage to or loss, theft, or destruction of such property except 
damage resulting from wear and tear reasonable for the period during 
which use for commercial purposes was authorized. The Contractor 
shall indemnify the Government against claims for injury to persons 
or damage to the Contractor's or a third party's property arising 
from the Contractor's use or possession of the Government property 
for commercial purposes.
    (f) Use revocation. (1) At any time during the rental period, 
the Government may revoke commercial use authorization. When 
practical, the Government may provide the reason of revocation in a 
reasonable period of time prior to such revocation.
    (2) Promptly following a use revocation, the Contractor shall 
restore the property to its pre-rental condition (less normal wear 
and tear) and return the property to the Government. Such return and 
restoration shall be accomplished at no cost to the Government.
    (g) 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)


52.245-7  Government Property--Alternate Procedures.

    As prescribed in 45.207-2(d), insert the following clause:

GOVERNMENT PROPERTY--ALTERNATE PROCEDURES (DATE)

    (a) Definitions. As used in this clause--
    Commercial purpose means any purpose other than performance of a 
U.S. Government contract or subcontract thereunder.
    Contractor's managerial personnel means the Contractor's 
directors, officers, and any of the Contractor's managers, 
superintendents, or equivalent representatives who have supervision 
or direction of all or substantially all of the Contractor's 
business or the Contractor's operations at a site connected with 
performance of a Government contract.
    Demilitarization means rendering a product unusable for, and not 
restorable to, the purpose for which it was designed or is 
customarily used.
    Equipment means nonexpendable, tangible personal property. The 
term does not include property that satisfies the definition in this 
clause of material, unique Federal property, special tooling, or 
special test equipment.
    Expendable property means property that is customarily consumed 
during design, manufacture, or testing of a product or performance 
of a service.
    General purpose equipment means equipment items that can be 
used, or with only minor modification could be used, to develop, 
produce, test, or maintain more than one type of item or perform 
more than one type of service.
    Government-furnished property means Government property that a 
Contracting Officer authorizes a Contractor to use for performance 
of a Government contract.
    Government property means property the Government owns or 
leases.
    Low value property means equipment, special tooling, or special 
test equipment that has an acquisition cost less than $5,000 and is 
not sensitive property.
    Material means expendable property and property incorporated 
into or attached to an end item.
    Natural disaster means a sudden and unusual natural occurrence 
causing catastrophic damage, including floods, hurricanes, 
tornadoes, cyclones, atmospheric electrical storms, tidal waves, 
avalanches, mudslides, landslides, volcanic eruptions, earthquakes, 
and other similar perils. The term does not include fire or 
explosion, unless directly or indirectly caused by a covered peril.
    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 Government.
    Plant clearance officer means a person appointed to disposition 
property accountable under Government contracts.
    Precious metals means silver, gold, platinum, palladium, 
iridium, osmium, rhodium, and ruthenium.
    Property means real and personal property.
    Property administrator means a person appointed to perform 
property administration for 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).
    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

[[Page 1463]]

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--
    (1) Test equipment designed specifically to conduct testing 
required by a Government contract, provided such equipment cannot be 
used for other purposes;
    (2) General purpose test equipment or modifications thereof that 
are interconnected and interdependent to form a new functional 
entity that can only be used to perform testing required by a 
contract while so interconnected and interdependent; or
    (3) Any combination of specifically designed, general purpose, 
or modified general purpose test equipment that is so interconnected 
and interdependent to form a new functional entity that can only be 
used to perform special purpose testing required by a contract while 
so interconnected and interdependent.
    Special tooling means items such as jigs, dies, fixtures, molds, 
patterns, taps, gauges, or other equipment and manufacturing aids, 
that are of such a specialized nature that without substantial 
modification or alteration their use is limited to the development, 
production, repair, or maintenance of particular supplies or 
components thereof, or to the performance of particular services.
    Unique Federal property means Government-owned personal 
property, or components thereof, that is specially designed to 
perform or support the mission of one or more Federal agencies and 
is not available to the public. The term does not include property 
that is incorporated into or attached to an item deliverable under a 
contract.
    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, or are otherwise 
needed for design or testing required by a contract.
    (b) General. (1) This clause is applicable to Government-
furnished property; Government property stored by the Contractor at 
the Government's direction; items accepted by the Government at 
origin that are in the Contractor's possession; and under cost-
reimbursement or time-and-materials contracts, property acquired or 
produced by a Contractor to which the Government has title under the 
clause 52.216-7, Allowable Cost and Payment, of this contract. For 
purposes of this clause, such property and items are collectively 
referred to as ``Government property.'' The clause does not apply to 
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.
    (2) Except as provided in paragraph (c) of this clause, the 
Contractor shall use its own property to perform this contract.
    (3) The Contractor is responsible for the maintenance, 
protection, and preservation of Government property accountable 
under this contract, including property in the possession of a 
subcontractor, and shall account for such property as required by 
this contract.
    (4) The Contractor shall not use Government property 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.
    (5) If this contract is a cost-reimbursement or time-and-
materials contract, the Contractor shall not acquire general purpose 
equipment to which the Government will have title under the clause 
at 52.216-7, Allowable Cost and Payment, or real property for 
performance of this contract, unless the general purpose equipment 
or real property is specified as a deliverable end item.
    (6) If this contract is a fixed-price or labor-hour contract, 
property acquired or produced by the Contractor for performance of 
the contract is not Government property. Property identified as a 
deliverable item becomes Government property upon acceptance by the 
Government.
    (c) Government-furnished property. The property identified in 
this contract as Government-furnished property is furnished to the 
Contractor on a rent-free basis for performance of this contract. 
The Contractor shall use sound business practices to protect, 
maintain, and account for the property and shall repair, replace, 
and dispose of the property in accordance with this clause.
    (1) Title. The Government retains title to Government-furnished 
property including Government-furnished property that is 
incorporated into or attached to any property owned by the 
Contractor. Government-furnished property does not become a fixture 
or lose its identity as personal property by being attached to real 
property.
    (2) Suitability for intended use. (i) Government-furnished 
property, other than property furnished ``as is'', shall be in a 
condition suitable for the property's intended use at the time the 
property is furnished to the Contractor. 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.
    (ii) The contract delivery or performance dates are based upon 
the expectation that Government-furnished property, except property 
furnished ``as is'', will be suitable for its intended use and 
delivered to the Contractor at the times stated in the contract. If 
a time is not stated, the property shall be furnished in sufficient 
time to enable the Contractor to meet the contract's delivery or 
performance dates.
    (iii) If Government-furnished property is received in a 
condition not suitable for its intended use, the Contractor shall 
notify the Contracting Officer as soon as the unsuitability is known 
and shall take corrective action or dispose of the property as 
directed by the Contracting Officer. The contract shall be equitably 
adjusted in accordance with paragraph (c)(7) of this clause.
    (iv) 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.
    (v) If the Contractor commingles Contractor acquired or produced 
material with Government-furnished material, the provisions 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.
    (3) Authorized use. The Contractor may request, in writing, the 
Contracting Officer to authorize use of the property furnished for 
performance of this contract to perform other Government contracts 
at the same location. Rent-free use is authorized if the Contracting 
Officer does not object to such use, either in whole or in part, 
within 30 days following confirmed receipt of the Contractor's 
request. Costs incurred by the Contractor to relocate, modify, or 
adapt the property for performance of other Government contracts or 
to restore the property to a condition suitable for intended use 
under this contract shall not increase the price or fee of any 
Government contract.
    (4) Real Property restrictions. The Contractor shall not improve 
or make structural alterations to real property furnished for 
performance of this contract, unless the contract specifically 
identifies the alterations or improvements as work to be performed 
under the contract or unless expressly authorized to do so in 
writing by the Contracting Officer. Title to improvements or 
alterations to Government-furnished real property shall vest in the 
Government.
    (5) Property furnished ``as is''. (i) The Contractor is 
responsible for assuring that Government property furnished on an 
``as is'' basis is suitable for the Contractor's purposes. Such 
property is furnished f.o.b. at the location specified in the 
solicitation or contract. Costs incurred by the Contractor to 
transport, install, modify, or otherwise make such property suitable 
for the Contractor's intended use and any cost incurred to return 
such property to the Government shall not increase the price or fee 
of any Government contract. 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 
produced, and the Government obtained title to, such tooling or test 
equipment under this or another Government 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

[[Page 1464]]

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 notify the Contracting 
Officer promptly and identify the changed condition. If the 
Contracting Officer concurs that the property's condition has 
changed, the Contracting Officer may restore the property or 
substitute other Government property at no change in the contract's 
price 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.
    (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) Any increase in the amount of property furnished for 
performance of this contract shall result in an equitable reduction 
in contract price or fee and appropriate adjustment of the contract 
delivery or performance dates.
    (iii) The Contractor may request an equitable adjustment 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 contract costs or 
schedule.
    (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 shall 
be made in accordance with paragraph (c)(7) of this clause.
    (7) Equitable adjustments. Equitable adjustments shall be the 
Contractor's exclusive remedy for Government actions under this 
clause and shall be made in accordance with the procedures of the 
Changes clause of this contract.
    (i) Equitable adjustments may include an amount for the 
restoration and rehabilitation of the Contractor's premises caused 
by Government-furnished property that is not in a condition suitable 
for intended use, the withdrawal or substitution of Government-
furnished property, or the Government's abandonment of hazardous 
property (see paragraph (h)(1) of this clause).
    (ii) The Government shall not be liable for breach of contract 
for--
    (A) Any delay in delivery of Government-furnished property;
    (B) Delivery of Government-furnished property in a condition not 
suitable for its intended use;
    (C) An increase or decrease in, or substitution of, Government-
furnished property; or
    (D) Failure to repair or replace Government-furnished property.
    (8) Return of Government-furnished property. If this contract 
requires Government-furnished property to be returned directly to a 
Government activity--
    (i) The property, including property furnished ``as is'', shall 
be returned to the Government in the same condition, less normal 
wear and tear, or better condition than when furnished to the 
Contractor except--
    (A) Lost, stolen, or destroyed property that the Government has 
determined will not be replaced; and
    (B) Damaged property that the Government has elected not to have 
repaired or replaced.
    (ii) The Contractor shall notify the contract administration 
office of its intent to return Government-furnished property at 
least 10 working days prior to return. Notices shall identify the 
contracts under which the items are accountable and shall provide 
each item's name, description, national stock number (if known), and 
part number or identification number.
    (d) Property loss liability. As used in this clause, the terms 
loss and losses include, either individually or in any combination, 
physical misplacement of, theft of, destruction of, or damage to, 
Government property accountable under this contract.
    (1) Contractor liability. The Contractor is liable for property 
losses, except losses for which the Government is liable under 
paragraph (d)(2) of this clause.
    (2) Government liability. The Government is liable for losses--
    (i) Caused by acts of war, civil insurrection, or natural 
disasters, regardless of property value, except a loss or portion 
thereof caused by or attributable to the Contractor's or a 
subcontractor's failure to take reasonable and prudent steps to 
avoid or reduce such losses; and
    (ii) To Government property items that have an acquisition cost 
greater than $1,000,000 per item, except a loss or portion thereof 
caused by willful misconduct or lack of good faith on the part of 
the Contractor's or a subcontractor's managerial personnel.
    (3) Reduced Government liability. The Government's liability for 
a property loss shall be reduced by the amount of any reimbursement 
the Contractor receives from a third party for the loss.
    (4) Property in the possession of a subcontractor. The 
Contractor's transfer of Government property to the possession and 
control of a subcontractor does not affect the Contractor's 
liability for property losses.
    (5) Contractor required actions following a property loss. The 
Contractor shall--
    (i) Take all reasonable action to protect damaged Government 
property from further damage and to physically separate such 
property from all other property;
    (ii) Notify the Contracting Officer as required by the 
Government Property Administration--Alternate Procedures clause of 
this contract (52.245-8(e)(4));
    (iii) Not repair, replace, or otherwise remedy a loss for which 
the Government is liable under paragraph (d)(2) of this clause, 
unless authorized to do so by the Contracting Officer; and
    (iv) Do nothing to prejudice the Government's rights to recover 
against third parties for any Government property loss. 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.
    (6) Insurance charges or reserves. Unless expressly required by 
this contract, the Contractor shall not include in the contract 
price, fee, or any adjustment thereof, any charge or reserve for 
insurance (including any self-insurance fund or reserve) covering 
losses for which the Government is liable under paragraph (d)(2) of 
this clause.
    (e) Property loss remedies. Following notification that a 
property loss has occurred--
    (1) If the Government is liable for the loss, the Contracting 
Officer may--
    (i) Elect to repair, replace, substitute other property for such 
property, or negotiate an equitable adjustment in lieu of repair, 
replacement, or substitution; or
    (ii) Authorize the Contractor to repair or replace the property 
or take other appropriate action. If authorized, the Contractor may 
request an equitable adjustment.
    (2) If the Contractor is liable for the loss, the Contracting 
Officer may--
    (i) Authorize the Contractor to repair or replace the property 
or take other appropriate action at no change in price or fee; or
    (ii) Elect to receive an equitable reduction in contract price 
or fee in lieu of requiring the Contractor to remedy the loss.
    (3) The Contractor shall use any reimbursement for a property 
loss from a source other than the Government to repair, or replace 
the property that suffered a loss, or equitably reimburse the 
Government, as directed by the Contracting Officer.
    (f) Government property maintenance. The contract price or fee 
includes an amount for performance of the maintenance actions 
required by paragraphs (f)(1) and (f)(2) of this clause.
    (1) Government-furnished property. The Contractor shall maintain 
Government-furnished property in a condition suitable for its 
intended use. The Contractor shall--
    (i) Use sound business practices to maintain real property, 
special tooling, and special test equipment;
    (ii) Maintain unique Federal property as specified in this 
contract, or if not specified, agency instructions for the 
maintenance of such property;
    (iii) Preserve, protect, and care for material and general 
purpose equipment in accordance with the property manufacturer's 
standards of care for such items, or when the manufacturer has not 
released standards of care, the Contractor's standard business 
practices for comparable Contractor-owned material and equipment; 
and
    (iv) Promptly notify the contract administration office when the 
maintenance actions required by paragraphs (e)(1)(i) through 
(e)(1)(iii) are not sufficient to sustain a Government-furnished 
property item's suitability for its intended use and request 
direction regarding repair, rehabilitation, or

[[Page 1465]]

replacement. The Contractor shall not repair, rehabilitate, or 
replace such items unless authorized to do so by the Contracting 
Officer.
    (2) Property to which the Government obtains title under a cost-
reimbursement or time-and-materials contract. The Contractor shall 
maintain property to which the Government obtains title under a 
cost-reimbursement or time-and-materials contract in a condition 
suitable for the property's intended use until the Contractor 
determines the property is no longer needed for continued 
performance of this contract. Promptly following that determination, 
the Contractor shall enter the items into the property disposal 
process.
    (3) Additional maintenance actions. When the Contractor's 
diligent performance of the maintenance actions required by 
paragraph (f)(1) and (f)(2) of this clause is not sufficient to 
sustain a Government-furnished property item's suitability for its 
intended use, the Contracting Officer may--
    (i) Repair, rehabilitate, replace, or substitute other property 
for the property requiring additional maintenance; or
    (ii) Authorize the Contractor to repair, rehabilitate, or 
replace, the property.
    (4) Equitable adjustment. The Contractor may request an 
equitable adjustment for property repair, rehabilitation, or 
replacement authorized by the Contracting Officer.
    (5) Stored Government property. The Contractor shall store 
Government property only if specifically directed to do so by the 
Contracting Officer. Stored property shall be maintained in 
accordance with instructions provided by the Contracting Officer. 
Except as provided in the clause 52.245-3, Delivery--Special Tooling 
and Special Test Equipment, of this contract and paragraph (g)(7) of 
this clause, the price or fee of the contract does not include an 
amount for such maintenance.
    (g) Government property disposal. Except as provided in 
paragraphs (c)(8), (g)(1), and (g)(2) of this clause, the Contractor 
shall not dispose of Government property until authorized to do so 
by the Plant Clearance Officer.
    (1) Scrap. (i) Contractors may dispose of scrap that results 
from production or testing under this contract without Government 
approval if the scrap does not contain precious metals, hazardous 
materials or wastes, nuclear materials, classified materials, or 
does not require demilitarization. All other scrap must be disposed 
of in accordance with paragraphs (g)(3) through (g)(8) of this 
clause.
    (ii) The Contractor and the Plant Clearance Officer may agree to 
expedited scrap procedures for nonproduction scrap without 
consideration by either party.
    (2) Predisposal requirements. When the Contractor determines 
that a property item acquired or produced by the Contractor is no 
longer needed for performance of this contract, the Contractor 
shall--
    (i) Make reasonable efforts to return unused property 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 price or estimated cost of this 
contract with the proceeds of such returns; and
    (ii) List property that could not be returned to a supplier or 
used in the performance of other Government contracts on Standard 
Form 1428, Inventory Disposal Schedule.
    (3) Inventory disposal schedules. (i) The Contractor shall use 
Standard Form 1428, Inventory Disposal Schedule, to identify--
    (A) Government-furnished property that is no longer required for 
performance of this contract provided the terms of another 
Government contract do not require the Government to furnish that 
property for performance of that contract; and
    (B) Property acquired or produced by the Contractor, to which 
the Government has obtained title under cost-reimbursement or time-
and-materials contracts, that is no longer required for performance 
of that contract.
    (ii) The Contractor may annotate inventory disposal schedules to 
identify property the Contractor wishes to purchase from the 
Government.
    (iii) Unless the Plant Clearance Officer has agreed otherwise, 
or the contract requires electronic submission of inventory disposal 
schedules, the Contractor shall prepare separate inventory disposal 
schedules for--
    (A) Special test equipment with general purpose components;
    (B) Special test equipment that does not contain general purpose 
components;
    (C) Printing equipment;
    (D) Computers, components thereof, peripheral equipment, and 
related equipment;
    (E) Precious metals;
    (F) Nonnuclear hazardous materials or hazardous wastes; or
    (G) Nuclear materials or nuclear wastes;
    (iv) Property with the same description, condition code, and 
reporting location may be grouped in a single line item. Special 
test equipment shall be described in sufficient detail to permit an 
understanding of the special test equipment's intended use.
    (4) Submission requirements. Inventory disposal schedules shall 
be submitted to the Plant Clearance Officer no later than--
    (i) Thirty days following the Contractor's determination that a 
Government property item is no longer required for performance of 
the contract;
    (ii) Sixty days, or such longer period as may be approved by the 
Plant Clearance Officer, following completion of contract deliveries 
or performance; or
    (iii) One hundred twenty days, or such longer period as may be 
approved by the Plant Clearance Officer, following contract 
termination in whole or in part.
    (5) Corrections. The Plant Clearance Officer may require the 
Contractor to correct an inventory disposal schedule or may reject a 
schedule if the property identified on the schedule is not 
accountable under this contract or is not in the quantity or 
condition indicated.
    (6) Postsubmission adjustments. The Contractor shall provide the 
Plant Clearance Officer at least 10 working days advance written 
notice of its intent to remove a property item from an approved 
inventory disposal schedule. Unless the Plant Clearance Officer 
objects to the intended schedule adjustment within the notice 
period, the Contractor may make the adjustment upon expiration of 
the notice period.
    (7) Storage. (i) The Contractor shall store the property 
identified on an inventory disposal schedule pending receipt of 
disposal instructions. The Government's failure to provide disposal 
instructions within 120 days following receipt of an acceptable 
inventory disposal schedule, might entitle the Contractor to an 
equitable adjustment for costs incurred to store such property on or 
after the 121st day following receipt of an acceptable schedule.
    (ii) The Contractor must obtain the Plant Clearance Officer's 
approval to remove Government property from the premises at which 
the property is currently located prior to receipt of final 
disposition instructions. If approval is granted, any costs incurred 
by the Contractor to transport or store the property shall not 
increase the price or fee of any Government contract. The storage 
facility must be appropriate for assuring the property's physical 
safety and suitability for use. Approval does not relieve the 
Contractor of any liability under this contract for such property.
    (8) Disposition instructions. (i) The Contractor shall prepare 
for shipment, deliver f.o.b. origin, or dispose of Government 
property as directed by the Plant Clearance Officer. The Contractor 
shall remove and destroy any markings identifying the property as 
Government property prior to disposing of the property.
    (ii) 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 (c)(7) of this clause.
    (9) Disposal proceeds. The Contractor shall credit the net 
proceeds from a disposal of Government property in accordance with 
instructions received from the Plant Clearance Officer.
    (10) Subcontractor inventory disposal schedules. The Contractor 
shall require a subcontractor that is using property accountable 
under this contract at a subcontractor-managed site to submit 
inventory disposal schedules to the Contractor in sufficient time 
for the Contractor to comply with the requirements of paragraph 
(g)(4) of this clause.
    (h) Abandonment of Government property at a Contractor-owned 
location. (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-furnished property in place at which 
time all obligations of the Government regarding such abandoned 
property shall cease. Except as provided in paragraph

[[Page 1466]]

(c)(7)(i) of this clause, the Government has no obligation to 
restore or rehabilitate the Contractor's premises under any 
circumstances.
    (i) Overseas contracts. In a contract performed outside the 
United States, 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 45.207-2(d)(1), replace 
paragraph (d)(1) of the basic clause with the following paragraph 
(d)(1) and modify the references to ``Government property'' in 
paragraphs (d)(2), (d)(3), and (d)(4) to read ``Government-furnished 
property'':
    (d)(1) Contractor liability. Except as provided in paragraph 
(d)(2) of this clause, the Contractor is liable for losses to 
Government-furnished property during the times the property is in 
the Contractor's possession.
    Alternate II (Date). As prescribed in 45.207-2(d)(2), replace 
paragraph (b) of the basic clause with the following paragraph (b) 
and add the following paragraph (j) to the basic clause:
    (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 is responsible for the maintenance, 
protection, and preservation of Government property accountable 
under this contract that is in the Contractor's or its 
subcontractors' possession and shall account for such property as 
required by this contract.
    (3) Property acquired or produced by the Contractor for 
performance of this contract that the Government obtains title to 
under the clause at 52.216-7, Allowable Cost and Payment, is 
Government property accountable under this contract.
    (j) Title to Contractor-acquired or produced property, nonprofit 
organizations or nonprofit institutions. (1) Notwithstanding any 
other provision of this contract regarding title to property 
acquired or produced by a Contractor, the Contractor shall have 
title to equipment and other tangible property purchased with 
Government funds provided for the conduct of basic or applied 
research under this contract, if--
    (i) The Contracting officer has agreed, prior to the 
Contractor's purchase of such property, that the Contractor shall 
have title to that property; and
    (ii) The Contractor has agreed that depreciation or amortization 
costs for such property shall not be allocated to any existing or 
future Government contract and that such property may be used by the 
Government or its subcontractors without charge in performance of 
any Government contract or subcontract thereunder.
    (2) As a condition for obtaining title to 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) (41 U.S.C. 2000d).


52.245-8  Government Property Administration--Alternate Procedures.

    As prescribed in 45.510(d), insert the following clause:

GOVERNMENT PROPERTY ADMINISTRATION--ALTERNATE PROCEDURES (DATE)

    (a) Definitions. When a term defined in the clause at 52.245-7, 
Government Property--Alternate Procedures, is used in this clause, 
the term has the same meaning as when used in 52.245-7.
    (b) Applicability. This clause is applicable to Government-
furnished property; Government property stored by the Contractor at 
the Government's direction; and under cost-reimbursement or time-
and-materials contracts, property acquired or produced by a 
Contractor to which the Government has title under the Allowable 
Cost and Payment clause of this contract.
    (c) Access. The Government shall have access, at all reasonable 
times, to all premises at which Government property accountable 
under this contract is located and to applicable property records 
and supporting information.
    (d) Records and supporting information--(1) Property records. 
(i) Except as provided in paragraph (d)(1)(ii) of this clause, the 
Contractor shall establish or maintain and keep current a property 
record for each Government property item accountable under this 
contract that is in the Contractor's 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 and establish and maintain appropriate property records. 
Property records created by a subcontractor that uses sound business 
practices to control, maintain, and account for property may be used 
in lieu of creating new records.
    (ii) Property records are not required for work in process or 
for property specifically acquired or constructed for tests that 
will destroy the property.
    (iii) Contractors that use a material requirements planning 
system, manufacturing resource planning system, material management 
accounting system, or an enterprise resource planning system, may 
use the records generated by those systems as the records for 
material items provided such records otherwise satisfy the 
requirements in paragraph (d)(2) of this clause.
    (iv) The Contractor shall close a Government property item's 
record when the item is replaced and create a new property record 
for the replacement item if that item is Government property.
    (v) The Contractor shall enter the property's acquisition cost 
into the record for each Government property item that was acquired 
or produced by the Contractor during performance of this contract. 
For each item having an acquisition cost of ______ (insert the 
agency capitalization threshold amount) or more, the Contractor also 
shall enter the date the item was acquired or produced.
    (vi) The Contractor shall notify the Contracting Officer 
promptly if the contract does not identify a Government-furnished 
property item's nomenclature or acquisition cost.
    (vii) Property records shall legibly and conspicuously identify 
sensitive property.
    (viii) The property records for items requiring maintenance 
shall identify the dates maintenance actions (including calibration 
if required) were performed and any deficiencies discovered. The 
maintenance information may be kept separately if the Contractor has 
a direct link between the information and the affected property 
records.
    (2) Standard information. Except as provided in paragraphs 
(d)(4) and (d)(5) of this clause, each property control record shall 
contain the following information--
    (i) The item's name, description, and national stock number. If 
the item does not have a national stock number and the item's 
acquisition cost is ______ (insert the agency capitalization 
threshold amount) or more, enter the four digit federal supply 
classification code;
    (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 and, for items having an acquisition cost 
of ______ (insert the agency capitalization threshold amount) or 
more, the date the items were acquired or produced;
    (vi) Current location (for low value property, identify the 
initial location only); and
    (vii) 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. In addition to the information 
required by paragraph (d)(2) of this clause, the property records 
for--
    (i) Special tooling and special test equipment shall identify 
each part number with which a special tool or special test equipment 
item is used;
    (ii) Special test equipment that includes general purpose 
equipment shall include the information required by paragraph (f)(2) 
of this clause for each removable or reusable general purpose 
component if removal and reuse is economically feasible;
    (iii) Equipment shall include the manufacturer's name, serial 
number, and model or part number; and
    (iv) Scrap shall identify the material content, contract from 
which the scrap was derived, and the scrap's disposition and 
disposition date(s).
    (4) Real property. (i) Real property records must 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

[[Page 1467]]

construction sites supporting such alterations or construction, and 
must 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.
    (ii) 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.
    (iii) A real property record shall be annotated with a statement 
of the pertinent facts when the property is sold, transferred, 
donated, destroyed, abandoned by the Government, or condemned.
    (5) Property returned under warranty. The Contractor shall 
establish a 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, 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.
    (e) Reports and notices--(1) Annual Government property report. 
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. 
Unless otherwise stated in this contract, the report shall be 
prepared using Standard Form 1450, U.S. Government Property in the 
Possession of Contractors, and submitted to the Property 
Administrator no later than October 31 of each calendar year.
    (2) Misdirected Government property. The Contractor shall notify 
the Property Administrator in writing immediately following receipt 
of Government property intended for another person or Government 
property not required for performance of a Government contract with 
the Contractor and shall request disposition instructions. To the 
extent practical, the Contractor 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 
notify promptly the Contracting Officer of 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 notice shall forward the Contractor's estimate of the extent to 
which such failure has affected or might affect contract 
performance.
    (4) Property losses. Except as provided in paragraph (e)(5) of 
this clause, the Contractor shall notify the Property Administrator 
in writing promptly upon learning that a Government-furnished 
property loss has occurred. The notice shall identify the property 
by item and include--
    (i) The item's description, contract number, national stock 
number (if known), and either part number or identification number;
    (ii) The date the physical loss or theft was discovered or 
damage or destruction occurred and, if known, the circumstances;
    (iii) The 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 
the property.
    (5) Low value Government-furnished property losses. The 
Contractor is not required to provide a property loss notice for low 
value Government-furnished property until contract completion or 
termination, except low value Government-furnished property that the 
Contractor needs for continued performance of this contract or low 
value Government-furnished property that the Government is 
contractually obligated to provide to the Contractor for performance 
of another contract. The notice shall contain the information 
required by paragraph (e)(4) of this clause.
    (f) Inventories. The Contractor shall assure that the location 
of each Government property item is accurately established and the 
records and reports required by this clause are complete and 
accurate.
    (1) Contract termination inventories. The Contractor shall 
inventory all property accountable under this contract immediately 
following a notice of termination or partial termination of the 
contract. Electronic, optical, electro-magnetic, or similar systems 
may be used.
    (2) Contract completion inventory. Promptly following completion 
of deliveries or performance under the contract, the Contractor 
shall inventory all Government property accountable under this 
contract that the Government is not contractually obligated to 
furnish to the Contractor for performance of another Government 
contract.
    (g) Markings--(1) Contractor-acquired or produced property 
(other than material). As soon as practicable following the 
Government's assumption of title to property acquired or produced 
for performance of a cost-reimbursement or time-and-materials 
contract, the Contractor shall legibly and conspicuously mark such 
property 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.
    (2) Government-furnished property (other than material). 
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 (g)(1) of this clause, and replace any 
control numbers affixed by other Contractors with the Contractor's 
control number.
    (3) Exceptions. (i) The Contractor is not required to mark 
Government-furnished or Contractor-acquired or produced material.
    (ii) In lieu of the requirements in paragraph (g)(1) or (g)(2) 
of this clause, the Contractor shall contact promptly the Property 
Administrator for alternate instructions when marking would damage a 
property item or the Contractor considers a physical marking to be 
impractical.
    (h) Overseas contracts. In a contract performed outside the 
United States, its territories, or possessions, the words 
``Government'' and ``Government-furnished'', as used in this clause, 
mean ``United States Government'' and ``United States Government-
furnished,'' respectively.

(End of clause)

    Alternate I (Date) As prescribed in 45.510(b), substitute the 
following paragraphs (d) and (e) for paragraphs (d) and (e) of the 
basic clause:
    (d) Property records. The Contractor shall establish a property 
record for each Government property item returned for correction 
under a warranty and shall maintain the records on a contract-by-
contract basis. The records shall identify the item's name, 
description, property classification, 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. For items having an acquisition cost 
greater than____________________ (insert the agency capitalization 
threshold), the Contractor shall enter the item's four-digit federal 
supply classification code. 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.
    (e) Notices--(1) Misdirected Government property. The Contractor 
shall notify the Property Administrator, promptly following receipt 
of Government property intended for another person or Government 
property not required for performance of a Government contract, and 
shall request disposition instructions. To the extent practical, the 
Contractor 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 
notify promptly the Contracting Officer of 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 notice shall forward the Contractor's estimate of the extent to 
which such failure has affected or might affect contract 
performance.
    (3) Government-furnished property losses. Except as provided in 
paragraph (e)(4) of this clause, the Contractor shall notify the 
Property Administrator in writing promptly upon learning that a 
Government-furnished property loss has occurred. The notice shall 
identify the property by item and include--
    (i) The item's description, contract number, national stock 
number, if known, and either part number or identification number;
    (ii) The date the physical loss or theft was discovered or 
damage or destruction occurred and, if known, the circumstances;
    (iii) The item's acquisition cost;

[[Page 1468]]

    (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.
    (4) Low value Government-furnished property losses. The 
Contractor is not required to provide a property loss notice for low 
value Government-furnished property until contract completion or 
termination, except low value Government-furnished property that the 
Contractor needs for continued performance of this contract or low 
value Government-furnished property that the Government is 
contractually obligated to furnish to the Contractor for performance 
of another Government contract. The notice shall contain the 
information required by paragraph (e)(3) of this clause.


52.245-9 through 52.245-19  [Removed]

    59. Remove sections 52.245-9 through 52.245-19.


52.246-18  [Amended]

    60. Amend section 52.246-18 by revising the date of the clause; and 
in the first sentence of paragraph (b)(3) by removing the word 
``facilities'' and adding ``Government property'' in its place.
    61. Amend section 52.249-2 by revising the date of the clause and 
paragraph (b)(2); by removing paragraph (d); and by redesignating 
paragraphs ``(e)'' through ``(n)'' as ``(d)'' through ``(m)'', 
respectively. The revised text reads 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), except as necessary to complete the 
continued portion of the contract.
* * * * *
    62. Amend section 52.249-3 by revising the date of the clause and 
paragraph (b)(2); by removing paragraph (d); and by redesignating 
paragraphs ``(e)'' through ``(n)'' as ``(d)'' through ``(m)'', 
respectively. The revised text reads as follows:


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), except as necessary to complete the 
continued portion of the contract.
* * * * *


52.249-6  [Amended]

    63. Amend section 52.249-6 by revising the date of the clause; by 
removing paragraph (e); and by redesignating paragraphs ``(f)'' through 
``(n)'' as ``(e)'' through ``(m)'', respectively.


52.249-11  [Removed and Reserved]

    64. Remove and reserve section 52.249-11.


52.249-13  [Removed and Reserved]

    65. Remove and reserve section 52.249-13.
    66. Amend section 52.249-14 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-materials contracts and 
labor-hour contracts. * * * When used in construction contracts, 
substitute the words ``completion time'' for ``delivery schedule'' in 
the last sentence of the clause.
* * * * *
    67. Amend section 52.251-1 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 Delivery--Special Tooling and Special Test 
Equipment (Fixed-Price Contracts) clause of this contract.
    (2) Cost-type contracts, as provided in the Allowable Cost and 
Payment clause of this contract.

(End of clause)

PART 53--FORMS

    68. Revise section 53.245 to read as follows:


53.245  Government property.

    The following forms are prescribed, as specified in this section 
for use in reporting, 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 
45.504-5(a) and 41 CFR 101-43.)
    (b) SF 126 (GSA), Report of Personal Property for Sale, and SF 126-
A (GSA), Report of Personal Property for Sale (Continuation Sheet).
    (c) SF 1423 (Rev. DATE), Inventory Verification Survey. (See 
45.304-3(b).)
    (d) 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.
    (e) SF 1428 (Rev. DATE), Inventory Disposal Schedule, and SF 1429 
(Rev. DATE), Inventory Disposal Schedule-Continuation Sheet. (See 
52.245-2(g)(2) and 52.245-7(g)(2).) SF 1428 and SF 1429 are authorized 
for local reproduction and copies are furnished for this purpose in 
part 53 of the looseleaf edition of the FAR.
    (f) SF 1450 (DATE), U.S. Government Property in the Possession of 
Contractors. (See 52.245-6(g)(1).) SF 1450 is authorized for local 
reproduction and a copy is furnished for this purpose in part 53 of the 
looseleaf edition of the FAR.
    69. Amend section 53.249 by revising paragraph (b) to read as 
follows:


53.249  Termination of contracts.

* * * * *
    (b) Standard Form 1428 (Rev. DATE), Inventory Disposal Schedule, 
and Standard Form 1429 (Rev. DATE), Inventory Disposal Schedule--
Continuation Sheet, must be used to support termination settlement 
proposals listed in paragraph (a) of this section, as specified in 
49.602-2.

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


53.301-1423  Inventory Verification Survey.
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[[Page 1470]]


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


Sec. 43.301-1424  Inventory Disposal Report.
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[[Page 1471]]


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


53.301-1428  Inventory Disposal Schedule.
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[[Page 1472]]

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[[Page 1473]]

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


53.301-1429  Inventory Disposal Schedule--Continuation Sheet.
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[[Page 1474]]


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


53.301-1436  Settlement Proposal (Total Cost Basis).
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[[Page 1475]]

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[[Page 1476]]

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[[Page 1477]]

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[[Page 1478]]

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


53.301-1438  Settlement Proposal (Short Form).
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[[Page 1479]]

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[[Page 1480]]

    76. Add section 53.301-1450 to read as follows:


53.301-1450  U.S. Government Property in the Possesssion of 
Contractors.
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[[Page 1481]]

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[FR Doc. 00-115 Filed 1-7-00; 8:45 am]
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