[Federal Register Volume 69, Number 65 (Monday, April 5, 2004)]
[Rules and Regulations]
[Pages 17741-17763]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-7405]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1, 2, 8, 45, 49, 52, and 53

[FAC 2001-22; FAR Case 1995-013; Item I]
RIN 9000-AH60


Federal Acquisition Regulation; Government Property Disposal

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

ACTION: Final rule.

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

DATES: Effective Date: May 5, 2004.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat at (202) 501-4755 
for information pertaining to status or publication schedules. For 
clarification of content, contact Ms. Jeritta Parnell, Procurement 
Analyst, at (202) 501-4082. Please cite FAC 2001-22, FAR case 1995-013.

SUPPLEMENTARY INFORMATION:

A. Background

    DoD, GSA, and NASA published a proposed rule in the Federal 
Register at 65 FR 1438, January 10, 2000, to simplify the management 
and disposition of Government property in the possession of 
contractors. The FAR Council agreed to publish a final rule revising 
FAR Subpart 45.6, entitled Reporting, Reutilization, and Disposal. 
Comments on the other portions of the proposed Part 45 rewrite are 
still being evaluated.
    Forty-five respondents provided public comments. Nineteen of the 
forty-five respondents provided comments on the reporting, 
reutilization, and disposal of Government property provisions in the 
proposed rule, and those comments were considered in drafting the final 
rule. Consideration of these comments resulted in only minor changes to 
the rule. The streamlining of the disposal process and the reductions 
in reporting requirements made it imperative that we finalize this FAR 
subpart. The resolution of the significant categories of comments 
concerning reporting, reutilization, and disposal of Government 
property follows:

Summary of Comments Received/Disposition

PR: Proposed Rule; FR: Final Rule
    1. PR: 45.001, 52.245-2, and 52.245-7. FR: 45.601, 52.245-2(i), 
52.245-5(i). Recommend you revisit your definition of ``sensitive 
property'' and separate the different types of materials, similar to 
the separate inventory disposal schedules called for in 52.245-
2(g)(3)(B)(iii) and 52.245-7(g)(3)(B)(iii). Nonconcur. Under this final 
rule, the inventory disposal schedules do not separate the different 
types of materials.
    2. Allow contractors to return Government property to the 
Government and have the Government dispose of the property. Nonconcur. 
Government cost would be prohibitive if all property was returned 
(shipping, packing, crating & handling).
    3. PR: 45.506. FR: 45.603, 45.604-2. Do not allow unilateral 
abandonment by the Government on contractor premises. Nonconcur. 
Abandonment is consistent with current policy and to do otherwise would 
increase costs to the Government.
    4. FR: 45.605-1, 52.245-2(i)(8)(iii), 52.245-5(i)(8)(iii). Do not 
impose demilitarization on the contractor. Nonconcur. Items have to be 
demilitarized. It is more cost effective for the Government to require 
the contractor to perform or be responsible for demilitarization of the 
property on a reimbursable basis than ship the property to the 
Government and have the Government demilitarize the property. [VOL]*[/
VOL][NO]*[/NO][DATE]*[/DATE][RULES][RULE][PREAMB][AGENCY]*[/
AGENCY][SUBJECT]*[/SUBJECT][/PREAMB][SUPLINF][HED]*[/HED]?]?
    5. PR: 45.507-2(b)(1). FR: 45.606-3(b), 52.245-2(i)(8)(i), 52.245-
5(i)(8)(i). Disposition of scrap. Recommend changing to 30 days. 
Partially concur. We revised the timeframe for disposition instructions 
from 60 days to 45 days.
    6. PR: 52.245-2(g)(2)(i). FR: 45.602-1(c), 52.245-2(i)(2)(i), 
52.245-5(i)(2)(i). Delete. The cost burden of attempting to have 
vendors accept ``returned inventory'' far out-weighs the costs saved in 
this exercise. Nonconcur. Government experience has shown that property 
is returned both before and after being reported excess to plant 
clearance demonstrating cost recovery (it only applies to new 
property). This is the current FAR requirement.
    7. PR: 52.245-2(g)(4)(i). FR: 52.245-2(i)(4)(i), 52.245-5(i)(4)(i). 
Thirty days following the contractor's determination that a Government 
property item is no longer required for performance of the contract is 
too frequent. Nonconcur. We believe these timeframes are reasonable and 
will instill discipline to the process and is consistent with 
commercial practices. This is an effort to expedite the process and 
reduce costs.
    8. PR: 52.245-2(g)(5). FR: 52.245-2(i)(5), 52.245-5(i)(5). Quantity 
reductions found after inventory schedule has been submitted should not 
be grounds for rejecting an inventory schedule. Nonconcur. The 
contractor is expected to submit accurate inventory disposal schedules. 
Adjustment or rejections are based on the severity or number of errors 
on a particular schedule.
    9. PR: 52.245-2(g)(6). FR: 52.245-2(i)(6), 52.245-5(i)(6). The 
proposed statement reads; ``The Contractor shall provide the Plant 
Clearance Officer (PLCO) at least 10 working days advance written 
notice of its intent to remove a property item from an approved 
inventory disposal schedule.'' Delete timeframe. Revise statement to 
read: ``The Contractor shall provide the Plant Clearance Officer 
written notice of its intent to remove a property item from an approved 
inventory disposal schedule.'' Nonconcur. The property belongs to 
Government agencies. The time is needed to coordinate with the owning 
agency. It is a Government decision to delete property off the 
schedule.
    10. Several contractors questioned why or how the Government 
performed internal Government processes. Response. After reviewing 
these comments the Government decided the Government internal processes 
are appropriate as stated.

[[Page 17742]]

    11. PR: 45.507. FR: 45.606. Several comments addressed the 
requirement to screen scrap. Once scrap is reported, the Government 
makes the decision whether to screen, sell or abandon scrap. Not all 
scrap is screened.
    12. PR & FR: SF 1428. Several comments addressed making the use of 
electronic submission of inventory disposal schedules mandatory. Other 
comments addressed the difference in distribution of paper copies and 
electronic copies. Nonconcur. To allow flexibility, the Government 
provides for electronic or paper copy submission of inventory disposal 
schedules. The paper copy process requires separate inventory disposal 
schedules in order for the different agencies to screen the items.
    13. PR: 52.245-7(g)(9). FR: 45.604-4, 52.245-2(i)(9); 52.245-
5(i)(9). The proposed statement reads; ``The Contractor shall credit 
the net proceeds from a disposal of Government property in accordance 
with instructions received from the PLCO.'' Revise the statement to 
read: ``* * * PLCO or in the case of scrap, in accordance with the 
Contractor's approved Property procedures.'' Same as 52.245-2. 
Nonconcur. This is an internal Government decision. The Government 
needs to reserve the right to direct proceeds.
    14. PR: 52.245-2(g)(10). FR: 52.245(i)(10), 52.245-5(i)(10). The 
proposed statement reads ``The Contractor shall require a subcontractor 
that is using property accountable under this contract at a 
subcontractor-managed site to submit inventory disposal schedules to 
the Contractor in sufficient time for the Contractor to comply with the 
requirements of paragraph (g)(4) of this clause.'' Revise the statement 
to read: ``* * * to the Contractor as soon as reasonably possible.'' 
Same as 52.245-7. Nonconcur. Prime contractor should set limits to 
subcontractor, so that prime is in compliance.
    15. PR & FR. 49.108-4(a)(1)(ii)(B). 45.504 reference is 
inconsistent. Make it 45.602-4. Concur. Changed in final rule to 
45.602-3.
    16. PR: 45.001. FR: 2.101. Definition of ``plant clearance 
officer.'' The proposed definition fails to address that the plant 
clearance officer is a Government representative and is an authorized 
representative of the contracting officer. Concur. Made change.
    17. PR: 45.505-1. Placed within 45.5, the proposed language has no 
force or effect. Relocate the provisions at proposed 45.505-1 within 
the applicable contract clauses at 52.245-xx. Concur. Removed from 
45.505-1 and included in the appropriate provisions.
    18. PR: 45.507-2(a). FR: 52.245-2(i)(1)(i)(B), 52.245-
5(i)(1)(i)(B). This is not contractually binding. Relocate within the 
applicable clauses at 52.245. Concur. Coverage in clauses.
    19. PR: 45.001, 52.245-2, 52.245-7. Add definition of ``Export 
control and high risk property.'' Export controlled information means 
unclassified U.S. Government information if proposed for export by the 
private sector, would require a U.S. Department of Commerce or U.S. 
Department of State validated license, and which, if given uncontrolled 
release, could reasonably be expected to adversely affect U.S. national 
security or nuclear nonproliferation objectives. In suggesting the 
definition below it is recognized that the sensitive property 
definition is similar. Would suggest an incorporation of the two or 
additions of the portions of the high risk personal property definition 
that are not already included in the sensitive property definition. `` 
`High risk personal property' means property that, because of its 
potential impact on public health and safety, the environment, national 
security interests, or proliferation concerns, must be controlled and 
disposed of in other than the routine manner. The categories of high 
risk property are automatic data processing equipment, especially 
designed or prepared property, export controlled information, export 
controlled property, hazardous property, nuclear weapons components or 
weapon-like components, proliferation sensitive property, radioactive 
property, special nuclear material, and unclassified controlled nuclear 
information.'' Nonconcur. Subject is not referred to in text. 
Therefore, no definition is required.
    20. PR: 52.245-2(g)(8). FR: 52.245-2(i)(8), 52.245-5(i)(8). Include 
a requirement that the contractor be notified in the disposal 
instructions that the property may be subject to U.S. Export Control 
regulations. Should also be a part of subcontract terms and conditions. 
Nonconcur. The PLCO will notify the contractor concerning disposal 
instructions of property that is subject to U.S. Export Control 
regulations.
    21. PR: 45.506(c). FR: 45.604-2. Amend to permit agencies to 
abandon property that requires demilitarization if the contractor 
consents by adding; ``to perform all required demilitarization at its 
own expense is a condition for the abandonment of the property.'' 
Concur. See 52.245-2(i)(8) and 52.245-5(i)(8)(iii).
    22. FR: 45.606, 52.245-2(i)(1), 52.245-5(i)(1). Several contractors 
made comments relating to approved scrap procedures such as eliminating 
these procedures. Nonconcur. Not all contractors have approved scrap 
procedures.
    23. PR: 45.505-2, 52.245-2(g)(6), and 52.245-7(g)(6). FR: 45.602-1, 
52.245-2(i)(6), 52.245-5(i)(6). Replace (c) with: ``If, before final 
disposition, the contractor becomes aware that any items of contractor 
acquired property listed in the inventory schedules are usable on other 
work without financial loss, the contractor shall purchase the items or 
retain them at cost and amend the inventory schedules and claim 
accordingly. Upon notifying the plant clearance officer, the contractor 
may purchase or retain at cost any other items of property included in 
the inventory schedules. Withdrawal of any Government-furnished 
property is subject to the written approval of the plant clearance 
officer. If withdrawal is requested after screening has started, the 
plant clearance officer shall notify immediately the appropriate 
screening activity.'' Nonconcur. This is a contractor option before 
reporting property for disposal, after reporting it for disposal it is 
a Government action.
    24. PR: 45.507-1. FR: 45.606-1. Revise proposed statement to read: 
``Contractors may dispose of scrap left-over from the normal production 
process that has no further intrinsic value without Government approval 
provided the scrap does not contain precious metals, hazardous 
materials or wastes, nuclear materials, or classified materials; or 
requires demilitarization.'' Nonconcur. It is impracticable to list all 
items that could be included. See definition of scrap in 2.101.
    25. PR: 52.245-2(g). FR: 52.245-2(i). Change (g) to read: ``Except 
as provided in paragraphs (c)(8), (g)(1), (g)(2), and (g)(8) of this 
clause, the Contractor shall not dispose of Government property until 
authorized to do so by the Plant Clearance Officer.'' Concur. Clause 
updated.
    26. PR: 45.001. FR: 45.601. Recommend you delete this definition, 
Demilitarization, in its entirety and substitute in lieu thereof the 
definition of demilitarization found in the DoD Federal Acquisition 
Regulation Supplement. Nonconcur. The definition is more understandable 
and current.
    27. PR: 45.505-3. FR: 45.602-2. This section should be consistent 
with GSA's requirement at 41 CFR 102-36.250. Nonconcur. 41 CFR 102-
36.250 deals with excess property and is a different subject.

[[Page 17743]]

    28. PR: 45.505-4. FR: 45.602-3. Screening requirements should be 
consistent with the provisions as contained in 41 CFR 101-43.4801, 
which excludes items that cost under $5,000. Nonconcur. FPMR has been 
changed. A low acquisition cost is no longer an exception to screening.
    29. PR: 45.506. FR: 45.603. The Government should be able to 
abandon certain property items where there is not a good reason for the 
Government to retain title. 40 U.S.C. Sec. 483(h) does not require an 
item to be excess in order to be abandoned. This provision of the law 
provides for abandonment based upon commercial value or estimated cost 
of continued care and handling. Nonconcur. 40 U.S.C. Sec 483(h) (now 40 
U.S.C. 527) deals with excess property.
    30. PR: 45.507-2. FR: 45.606-2. The approved scrap procedure should 
facilitate the efficient disposition of scrap while requiring the 
contractor to provide the Plant Clearance Officer the necessary 
information to make reasonable determinations. Requiring the contract 
number for each item of scrap necessitates the generation of a 
different scrap list for each contract, causing excessive 
administrative burden on the Government and the contractor. The 
quantity of scrap is generally measured in short tons--most contractors 
do not have the equipment to weigh scrap. Nonconcur. Scrap 
reimbursement is allocable to specific contracts.
    31. PR: 52.245-2(g)(7). FR: 52.245-2(i)(7), 52.245-5(i)(7). Storage 
is a given requirement under the contract. When business conditions 
require the movement of stored items, this cost is merely a cost of 
doing business. These costs should always be allowable unless they are 
deemed unreasonable. Nonconcur. It is unreasonable to move property 
without prior approval of the Government after the property is 
submitted for disposal.
    32. PR: 52.245-2(h). FR: 52.245-2(j), 52.245-5(j). Should provide 
for a request for abandonment in an effort to reduce cost of 
dismantlement, movement, storage and administration. Nonconcur. The FAR 
does not prohibit the contractor from asking that property be 
considered for abandonment.
    33. Move property disposal into the FPMR. No need for the new SF 
1428, because of the SF 120. Remove revisions to 45.505-3. Make 45.506 
and 45.508-1 similar to 101-45.9. Nonconcur. It is not cost effective 
to change the current electronic processing systems just for 
convenience. The FAR allows for both electronic and paper forms to be 
used.
    34. PR: 52.245-2(g). FR: 52.245-5(i). This paragraph gives disposal 
authority to the PLCO. Clarify what authority the CO has or does not 
have to authorize disposal (including abandonment). Concur. Changed 
definition of plant clearance officer. The CO has the authority but 
must follow the statutory and regulatory requirements (screening).
    35. PR: 52.245-2(g)(2)(i). FR: 52.245-2(i)(2)(i). Address what must 
be done with proceeds if the fair market value of unused property 
returned to the supplier is higher than the original cost. Nonconcur. 
In the cases where the fair market value is higher than the original 
cost it will be addressed at the agency level because it creates an 
allocation issue rather than a regulatory issue.
    36. PR & FR SF 1428. Require adequately detailed or commercial 
descriptions on inventory schedules for excess property and revise 
schedule format to allow space for this. Nonconcur. Item 14 of the SF 
1428 requires description in sufficient detail.
    37. Prescribe the length of the agency screening period as a 
maximum time period. Concur. The time period is 20 days.
    38. PR: 45.506. FR: 45.603. Add language on abandonment of excess 
property or reference FPMR 101-45.900 to require a reviewing official 
for abandonment determinations, to require public notice and to define 
the circumstances when public notice is not required. Nonconcur. This 
is not a commercial practice and would add another layer of bureaucracy 
to the process with little added value.
    39. Abandonment in lieu of sale of surplus property should 
reference FPMR 101-44.7 for details of requirements for abandonment of 
surplus property in lieu of sale. Nonconcur. The specific requirements 
are stated in 45.603 and 45.604-2.
    40. Government involvement in disposal of other than scrap should 
be limited to assisting in the disposal process. Nonconcur. This is 
Government property and disposal must be at Government direction.
    41. Demilitarization. The proposed rewrite does not adequately 
address the longstanding issue of demilitarization. Perhaps this is 
more appropriate for a DFARS revision, but references to 
demilitarization in the FAR should be deleted until a final policy is 
in place within DoD. Nonconcur. Needs to be addressed not just for DoD, 
but also NASA, DOE, Coast Guard, etc.
    42. PR: 1.106. FR: 1.106, 45.605. Delete reference to SF 1424. See 
Part 53. SF 1424 is still being used. FAR 45.509 which is appropriately 
titled ``Inventory Disposal Reports.'' Concur. SF 1424 is still being 
used. Language at 1.106 was updated for OMB clearance purposes.
    43. PR: 45.505-1(a). FR: 45.602-1(c). Text states: Make reasonable 
efforts to return Government property that was acquired or produced by 
the contractor and is no longer needed for contract performance to the 
appropriate supplier or to use the property in performance of other 
contracts * * * 1036 no longer makes reference to restocking 
charges or other charges for returns. Needs to be added. This 
definition is not consistent with the definition for GP. Concur. Added 
restocking charge.
    44. PR: 45.505-2. FR: 45.602-1. Please consider slight reduction in 
some PLCO schedule acceptance times. Concur. It now reads 10 days.
    45. PR: 52.245-2(g)(7)(ii). FR: 52.245-2(i)(7)(ii). To ``If 
approval is granted, any costs incurred by the Contractor to transport 
or store the property shall not increase the price or fee of any 
Government contract.'' Add: ``, unless incurred due to the Government's 
failure to provide disposal instructions within 120 days of receipt of 
* * *'' Nonconcur. Covered in paragraph 52.245-2(g)(7)(i) (now 52.245-
2(i)(7)(i).
    46. PR: 45.505-4. FR: 45.602-3(b)(4). Paragraph 45.505-4(b)(4) 
addresses the screening of hazardous waste. This should read ``property 
contaminated with hazardous wastes.'' Waste of any kind should not be 
screened. If hazardous waste is a by-product of work performed on a 
contract, the contract should require its disposal in accordance with 
applicable Federal, State, and local laws. Nonconcur. Contractors must 
dispose of Government property in accordance with the new 45.602. The 
contractor is responsible for contractor-owned property and must 
dispose of it in accordance with applicable Federal, State, and local 
laws.
    47. PR: 45.506. FR: 45.603. Paragraph 45.506(a)(2) provides a cost 
based justification for using abandonment, destruction, or donation in 
lieu of sale. The justification, as written, does not take into account 
that there are costs associated with these disposal alternatives. The 
Defense Reutilization and Marketing Service has long recognized that 
fact and has developed an economy formula to address the costs of 
disposal alternatives. There are times when a net sale loss can be less 
costly to the Government than exercising a disposal alternative. 
Therefore, this paragraph should be rewritten to require consideration 
of the cost of disposal alternatives in the decision process. 
Nonconcur. The plant clearance officer already considers these costs in 
all disposal determinations.

[[Page 17744]]

    48. PR: 45.506(c). FR: 45.604-2. Paragraph (c) states: ``* * * 
property that requires demilitarization may be abandoned. * * *'' 
Property that requires demilitarization should not be abandoned unless 
the required demilitarization has been performed. Paragraph should 
read: ``* * * property that has been demilitarized may be abandoned.'' 
Concur in principle. See new paragraph 45.604-2.
    49. PR: 45.508. FR: 45.604-2. The title of this section is 
incorrect. Part of the disposal process involving surplus property has 
already occurred at this point. On the 42nd day of screening, property 
that has not been selected for transfer to another Federal agency 
becomes surplus property which then becomes available for donation to 
eligible donees * * *. This section addresses what is done to surplus 
property that survives donation screening. Therefore, the section 
should be titled ``Disposal of undonated surplus Government property.'' 
45.508(a), first sentence, should be written to read, ``this section 
addresses the disposal of Government property * * * that, * * * has not 
been reutilized, transferred, or donated to eligible donees (i.e., 
public airports, service educational activities, and State agencies for 
surplus property). The parenthetical phrase ``(hereafter referred to as 
surplus property)'' at the end of the sentence should be deleted. 
Concur. Corrected text, but not the title. ``Undonated'' was not added 
to the title because once an item has been donated it is no longer 
available for disposal.
    50. PR: 45.505-3. FR: 45.602-2. Clarify. Subparagraph (b) seems to 
indicate that donation of educationally useful property to schools and 
non-profit organizations can only be accomplished after all Federal 
agencies have declined the property. However, subparagraph (c) 
identifies other agency screening as lower in priority than donation to 
schools or non-profit organizations. Nonconcur. The order of priority 
of 45.602-2 is clear as written.
    The other comments concerning the other subparts of FAR Part 45 
were conflicting and a satisfactory resolution of those comments was 
not attained. Therefore, the other subparts of FAR Part 45 are not 
being revised by this final rule. This final rule amends the FAR by--
     Replacing five inventory disposal forms with 
one;
     Clearly delineating the responsibilities of the 
plant clearance officer;
     Decreasing the time for Government acceptance of 
inventory disposal schedules from 15 to 10 days;
     Decreasing the time for Government inventory 
verification from 30 days to 20 days;
     Decreasing agency and Federal screening time 
from 90 days to 46 days;
     Eliminating the Government requirement to screen 
most scrap;
     Allowing contractors with approved scrap 
procedures to submit scrap lists instead of inventory disposal 
schedules;
     Eliminating reporting of production scrap for 
contractors with approved scrap procedures;
     Authorizing contractors to dispose of production 
scrap without Government approval under most conditions; and
     Placing contractor responsibilities in clauses 
rather than the FAR text.
    Some terminology found in the FAR, while appearing in the Federal 
Property Management Regulation (FPMR) and Federal Management Regulation 
(FMR), may not have the same intended meaning or be used in the same 
manner (e.g., reutilization, disposal, disposition). For this reason, 
the Councils are committed to the future establishment of a separate 
case for the purpose of reviewing and resolving possible inconsistent 
uses of terminology between the FAR and the FMR.
    This is not a significant regulatory action and, therefore, was not 
subject to review under Section 6(b) of Executive Order 12866, 
Regulatory Planning and Review, dated September 30, 1993. This rule is 
not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

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

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

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

C. Paperwork Reduction Act

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

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

    Government procurement.

    Dated: March 26, 2004.
Laura Auletta,
Director, Acquisition Policy Division.

0
Therefore, DoD, GSA, and NASA amend 48 CFR parts 1, 2, 8, 45, 49, 52, 
and 53 as set forth below:
0
1. The authority citation for 48 CFR parts 1, 2, 8, 45, 49, 52, and 53 
is revised to read as follows:

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

PART 1--FEDERAL ACQUISITION REGULATIONS SYSTEM


1.106  [Amended]

0
2. Amend section 1.106 in the table following the introductory 
paragraph by--
0
a. Revising the OMB Control Number, ``9000-0015'' at entries for FAR 
segments SF 1428 and SF 1429, to read ``9000-0075''; and
0
b. Removing the FAR segment entries and their corresponding OMB Control 
Numbers at SF 1423, 1424, 1426, 1427, 1430, 1431, 1432, 1433, and 1434.

PART 2--DEFINITIONS OF WORDS AND TERMS

0
3. Amend section 2.101 in paragraph (b) by adding, in alphabetical 
order, the definitions ``Excess personal property,''

[[Page 17745]]

``Personal property,'' ``Plant clearance officer,'' ``Scrap,'' and 
``Termination inventory,'' to read as follows:


2.101  Definitions.

* * * * *
    (b) * * *
* * * * *
    Excess personal property means any personal property under the 
control of a Federal agency that the agency head determines is not 
required for its needs or for the discharge of its responsibilities.
* * * * *
    Personal property means property of any kind or interest in it 
except real property, records of the Federal Government, and naval 
vessels of the following categories:
    (1) Battleships;
    (2) Cruisers;
    (3) Aircraft carriers;
    (4) Destroyers; and
    (5) Submarines.
* * * * *
    Plant clearance officer means an authorized representative of the 
contracting officer appointed to disposition property accountable under 
Government contracts.
* * * * *
    Scrap means personal property that has no value except its basic 
metallic, mineral, or organic content.
* * * * *
    Termination inventory means any property purchased, supplied, 
manufactured, furnished, or otherwise acquired for the performance of a 
contract subsequently terminated and properly allocable to the 
terminated portion of the contract. It includes Government-furnished 
property. It does not include any facilities, material, special test 
equipment, or special tooling that are subject to a separate contract 
or to a special contract requirement governing their use or 
disposition.
* * * * *

PART 8--REQUIRED SOURCES OF SUPPLIES AND SERVICES


8.101  [Reserved]

0
4. Remove and reserve section 8.101.


8.104  [Amended]

0
5. Amend section 8.104 by removing ``Federal Property Management 
Regulations (41 CFR 101-43.312)'' and adding ``Federal Management 
Regulations (41 CFR 102-36.90)'' in its place.

PART 45--GOVERNMENT PROPERTY

0
6. Amend section 45.102 by revising paragraph (g) to read as follows:


45.102  Policy.

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


45.501  [Amended]

0
7. Amend section 45.501 by removing the definition ``Scrap.''

0
8. Revise Subpart 45.6 to read as follows:
Subpart 45.6--Reporting, Reutilization, and Disposal
Sec.
45.600 Scope of subpart.
45.601 Definitions.
45.602 Reutilization of Government property.
45.602-1 Inventory disposal schedules.
45.602-2 Reutilization priorities.
45.602-3 Screening.
45.602-4 Interagency property transfer costs.
45.603 Abandonment, destruction or donation of excess personal 
property.
45.604 Disposal of surplus property.
45.604-1 Disposal methods.
45.604-2 Abandonment, destruction, or donation of surplus property.
45.604-3 Sale of surplus property.
45.604-4 Proceeds from sales of surplus property.
45.605 Inventory disposal reports.
45.606 Disposal of scrap.
45.606-1 Contractor with an approved scrap procedure.
45.606-2 Contractor without an approved scrap procedure.
45.606-3 Procedures.

Subpart 45.6--Reporting, Reutilization, and Disposal


45.600  Scope of subpart.

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


45.601  Definitions.

    As used in this subpart--
    Common item means material that is common to the applicable 
Government contract and the contractor's other work.
    Demilitarization means rendering a product designated for 
demilitarization unusable for, and not restorable to, the purpose for 
which it was designed or is customarily used.
    Precious metals means silver, gold, platinum, palladium, iridium, 
osmium, rhodium, and ruthenium.
    Sensitive property means property potentially dangerous to the 
public safety or security if stolen, lost, or misplaced, or that shall 
be subject to exceptional physical security, protection, control, and 
accountability such as classified property, weapons, ammunition, 
explosives, controlled substances, radioactive materials, hazardous 
materials or wastes, or precious metals.
    Surplus property means excess personal property not required by any 
Federal agency as determined by the Administrator of General Services 
(GSA).


45.602  Reutilization of Government property.

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


45.602-1  Inventory disposal schedules.

    (a) Plant clearance officers should review and accept, or return 
for correction, inventory disposal schedules within 10 days following 
receipt from a contractor. Schedules that are completed in accordance 
with the instructions for Standard Form 1428 should be accepted.
    (b) Plant clearance officers shall--
    (1) Use Standard Form 1423 to verify, in accordance with agency 
procedures, accepted schedules within 20 days following acceptance;
    (2) Require a contractor to correct any discrepancies found during 
verification;
    (3) Require a contractor to correct any failure to complete 
predisposal requirements of the contract; and
    (4) Provide the contractor disposition instructions for property 
identified on an acceptable inventory disposal schedule within 120 
days. A failure to provide timely disposition instructions might 
entitle the contractor to an equitable adjustment.
    (c) Contractors shall obtain the plant clearance officer's approval 
to remove Government property from an inventory disposal schedule.
    (1) Plant clearance officers should approve removal when--
    (i) The contractor wishes to purchase a contractor-acquired or 
contractor-produced item at acquisition cost and credit the contract;

[[Page 17746]]

    (ii) The contractor is able to return unused property to the 
supplier at fair market value and credit the contract (less, if 
applicable, a reasonable restocking fee that is consistent with the 
supplier's customary practices);
    (iii) The Government has authorized the contractor to use the 
property on another Government contract; or
    (iv) The contractor has requested continued use of Government 
property, and the plant clearance officer has consulted with the 
appropriate program and technical personnel.
    (2) If the screening process (see 45.602-3) has not begun, the 
plant clearance officer shall adjust the schedule or return the 
schedule to the contractor for correction. If screening has begun, the 
plant clearance officer shall promptly notify the activity performing 
the screening that the items should be removed from the screening 
process.


45.602-2  Reutilization priorities.

    Plant clearance officers shall initiate reutilization actions using 
the highest priority method appropriate for the property. Authorized 
methods, listed in descending order from highest to lowest priority, 
are--
    (a) Reuse within the agency (see 45.603 for circumstances under 
which excess personal property may be abandoned, destroyed, or 
donated);
    (b) Transfer of educationally useful equipment, with GSA approval, 
to other Federal agencies that have expressed a need for the property;
    (c) Transfer of educationally useful equipment to schools and 
nonprofit organizations (see Executive Order 12999, Educational 
Technology: Ensuring Opportunity For All Children In The Next Century, 
April 17, 1996), and 15 U.S.C. 3710(i);
    (d) Reuse within the Federal Government; and
    (e) Donation to an eligible donee designated by GSA.


45.602-3  Screening.

    The screening period begins upon the plant clearance officer's 
acceptance of an inventory disposal schedule. The plant clearance 
officer shall determine whether standard or special screening is 
appropriate and initiate screening actions.
    (a) Standard screening. The standard screening period is 46 days.
    (1) First through twentieth day--Screening by the contracting 
agency. The contracting agency has 20 days to screen property reported 
on the inventory disposal schedule for: Other use within the agency; 
transfer of educationally useful equipment to other Federal agencies 
that have expressed a need for the property; and transfer of 
educationally useful equipment to schools and nonprofit organizations 
if a Federal agency has not expressed a need for the property. Excess 
personal property, meeting the conditions of 45.603, may be abandoned, 
destroyed, or donated to public bodies. No later than the 21st day, the 
plant clearance officer shall submit four copies of the revised 
schedules and Standard Form (SF) 120, Report of Excess Personal 
Property, or an electronic equivalent to GSA (see 41 CFR 102-36.215).
    (2) Twenty-first through forty-sixth day (21 days concurrent 
screening plus 5 days donation processing).--(i) Screening by other 
Federal agencies. GSA will normally honor requests for transfers of 
property on a first-come-first-served basis through the 41st day. When 
a request is honored, the GSA regional office shall promptly transmit 
to the plant clearance officer an approved transfer order that includes 
shipping instructions.
    (ii) Screening for possible donation. Screening for donation is 
also completed during days 21 through 41. Property is not available for 
allocation to donees until after the completion of screening. Days 42 
through 46 are reserved for GSA to make such allocation.
    (3) Screening period transfer request. If an agency receives an 
intra-agency transfer request during the screening periods described in 
paragraph (a)(2) of this subsection, the plant clearance officer shall 
request GSA approval to withdraw the item from the inventory disposal 
schedule.
    (b) Special screening requirements.--(1) Special tooling and 
special test equipment without commercial components. Agencies shall 
follow the procedures in paragraph (a) of this subsection. This 
property owned by the Department of Defense (DoD) or the National 
Aeronautics and Space Administration (NASA) may be screened for 
reutilization only within these agencies.
    (2) Special test equipment with commercial components.--(i) 
Agencies shall complete the screening required by paragraph (a) of this 
subsection. If an agency has no further need for the property and the 
contractor has not expressed an interest in using or acquiring the 
property by annotating the inventory disposal schedule, the plant 
clearance officer shall forward the inventory disposal schedule to the 
GSA regional office that serves the region in which the property is 
located.
    (ii) If the contractor has expressed an interest in using the 
property on another Government contract, the plant clearance officer 
shall contact the contracting officer for that contract. If the 
contracting officer concurs with the proposed use, the contracting 
officer for the contract under which the property is accountable shall 
transfer the property's accountability to that contract. If the 
contracting officer does not concur with the proposed use, the plant 
clearance officer shall deny the contractor's request and shall 
continue the screening process.
    (iii) If the property is contractor-acquired or -produced, and the 
contractor or subcontractor has expressed an interest in acquiring the 
property, and no other party expresses an interest during agency or GSA 
screening, the property may be sold to the contractor or subcontractor 
at acquisition cost.
    (3) Printing equipment. Agencies shall report all excess printing 
equipment to the Public Printer, Government Printing Office, North 
Capitol and H Streets, NW., Washington, DC 20401, after screening 
within the agency (see 44 U.S.C. 312). If the Public Printer does not 
express a need for the equipment within 21 days, the agency shall 
submit the report to GSA for further use and donation screening as 
described in paragraph (a) of this subsection.
    (4) Non-nuclear hazardous materials, hazardous wastes, and 
classified items. These items shall be screened in accordance with 
agency procedures. Report non-nuclear hazardous materials to GSA if the 
agency has no requirement for them.
    (5) Nuclear materials. The possession, use, and transfer of certain 
nuclear materials are subject to the regulatory controls of the Nuclear 
Regulatory Commission (NRC). Contracting activities shall screen excess 
nuclear materials in the following categories:
    (i) By-product material. Any radioactive material (except special 
nuclear material) yielded in or made radioactive by exposure to the 
radiation incident to producing or using special nuclear material.
    (ii) Source material. Uranium or thorium, or any combination 
thereof, in any physical or chemical form; or ores that contain by 
weight one-twentieth of 1 percent (0.05 percent) or more of uranium, 
thorium, or any combination thereof. Source material does not include 
special nuclear material.
    (iii) Special nuclear material. Plutonium, Uranium 233, Uranium 
enriched in the isotope 233 or in the isotope 235, any other material 
that the NRC determines to be special nuclear material (but not 
including source

[[Page 17747]]

material); or any material artificially enriched by any nuclear 
material.


45.602-4  Interagency property transfer costs.

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


45.603  Abandonment, destruction or donation of excess personal 
property.

    (a) Plant clearance officers may abandon, destroy, or donate to 
public bodies excess property that is not sensitive property and does 
not require demilitarization.
    (b) Plant clearance officers may abandon sensitive property that 
does not require demilitarization, with contractor consent, provided 
appropriate instructions are provided with respect to the proper care, 
handling, and disposal of the property.
    (c) The Government may donate excess personal property to eligible 
donees in lieu of abandonment if the Government will not bear any of 
the costs incident to a donation.
    (d)(1) Before abandoning, destroying, or donating excess personal 
property, the plant clearance officer shall determine in writing that 
the property does not constitute a danger to public health or welfare 
and--
    (i) The property has no residual monetary value; or
    (ii) The estimated cost to sell the property, including 
advertising, storage, and other costs associated with making the sale, 
is greater than the probable sale proceeds; and
    (2) A Government reviewing official shall approve all written 
determinations for abandonment and destruction actions.


45.604  Disposal of surplus property.


45.604-1  Disposal methods.

    (a) Except as provided in paragraphs (b) and (c) of this 
subsection, surplus property that has completed screening in accordance 
with 45.602-3(a) shall be sold in accordance with 45.604-3 or 
abandoned, destroyed, or donated to public bodies in accordance with 
45.604-2.
    (b) The following property that GSA has declared surplus or not 
required to be screened by GSA shall be disposed of in accordance with 
agency procedures:
    (1) Classified items.
    (2) Nonnuclear hazardous materials or hazardous wastes.
    (3) Property that contains precious metals or requires 
demilitarization.
    (4) Government property physically located outside the United 
States or its possessions (see 40 U.S.C. 701-705).
    (c) Nuclear materials (see 45.602-3(b)(5)) shall be disposed of in 
accordance with NRC or applicable state licenses, applicable Federal 
regulations, and agency regulations.


45.604-2  Abandonment, destruction, or donation of surplus property.

    (a) Plant clearance officers may abandon, destroy, or donate to 
public bodies surplus property that is not sensitive property, and does 
not require demilitarization.
    (b) Plant clearance officers may abandon sensitive property that 
does not require demilitarization, with contractor consent, provided 
appropriate instructions are provided with respect to the proper care, 
handling, and disposal of the property.
    (c) The Government may donate surplus property to eligible donees 
in lieu of abandonment if the Government will not bear any of the costs 
incident to donation.
    (d) Before abandoning, destroying, or donating surplus property, 
the plant clearance officer shall determine in writing that the 
property does not constitute a danger to public health or welfare and--
    (1) The property has no residual monetary value; or
    (2) The estimated cost to sell the property, including advertising, 
storage, and other costs associated with making the sale, is greater 
than the probable sale proceeds.


45.604-3  Sale of surplus property.

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


45.604-4  Proceeds from sales of surplus property.

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


45.605  Inventory disposal reports.

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


45.606  Disposal of scrap.


45.606-1  Contractor with an approved scrap procedure.

    (a) The contractor may dispose of scrap resulting from production 
or testing under this contract without Government approval. However, if 
the scrap requires demilitarization or is sensitive property, then the 
contractor shall submit the scrap on an inventory disposal schedule.
    (b) For scrap from other than production or testing, the contractor 
may prepare scrap lists in lieu of inventory disposal schedules 
(provided such lists are consistent with the approved scrap procedures) 
except that inventory disposal schedules shall be submitted for scrap 
aircraft or aircraft parts and scrap that--
    (1) Requires demilitarization;
    (2) Is a classified item;
    (3) Is generated from classified items;
    (4) Contains hazardous materials or hazardous wastes;
    (5) Contains precious metals; or
    (6) Is dangerous to the public health, safety, or welfare.


45.606-2  Contractor without an approved scrap procedure.

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


45.606-3  Procedures.

    (a) The plant clearance officer shall process inventory disposal 
schedules in accordance with 45.602-1.
    (b) The plant clearance officer shall--
    (1) Accept, reject, or return for correction scrap lists within 10 
days following receipt;
    (2) Accept scrap lists that are consistent with a contractor's 
approved scrap procedure, correctly identify the

[[Page 17748]]

contracts under which the scrap is accountable, and correctly identify 
the scrap's quantity and condition;
    (3) Use Standard Form 1423 to verify accepted scrap lists, in 
accordance with agency procedures;
    (4) Require a contractor to correct any discrepancies found during 
verification; and
    (5) Provide disposition instructions to the contractor within 45 
days following Government acceptance of a scrap list. If the plant 
clearance officer does not provide disposition instructions within that 
period, the contractor may dispose of scrap identified on a scrap list 
without further Government approval.

PART 49--TERMINATION OF CONTRACTS


49.001   [Amended]

0
9. Amend section 49.001 by adding, in alphabetical order, the 
definition ``Plant clearance period'', and removing the definition 
``Termination inventory'' to read as follows:


49.001  Definitions.

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

0
10. Amend section 49.108-3 by revising paragraph (b)(1) to read as 
follows:


49.108-3  Settlement procedure.

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

0
11. Amend section 49.108-4 by revising paragraphs (a)(1)(ii) and (b) to 
read as follows:


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

    (a)(1) * * *
    (ii) Any termination inventory included in determining the amount 
of the settlement will be disposed of as directed by the prime 
contractor, except that the disposition of the inventory shall not be 
subject to--
    (A) Review by the TCO under 49.108-3(c); or
    (B) The screening requirements in 45.602-3; and
* * * * *
    (b) Section 45.602 shall apply to disposal of completed end items 
allocable to the terminated subcontract. However, these items may be 
disposed of without review by the TCO under 49.108-3 and without 
screening under 45.602-3, if the items do not require demilitarization 
and the total amount (at the subcontract price) when added to the 
amount of the settlement does not exceed the amount authorized under 
this subsection.
* * * * *

0
12. Revise the section heading and text of 49.206-3 to read as follows:


49.206-3  Submission of inventory disposal schedules.

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

0
13. Revise the section heading and text of 49.303-2 to read as follows:


49.303-2  Submission of inventory disposal schedules.

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

0
14. Revise the section heading and text of 49.602-2 to read as follows:


49.602-2  Inventory forms.

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

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
15. Amend section 52.245-2 by revising the date of the clause and 
paragraphs (i) and (j) to read as follows:


52.245-2  Government Property (Fixed-Price Contracts).

* * * * *

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

* * * * *
    (i) Government property disposal. Except as provided in 
paragraphs (i)(1)(i), (i)(2), and (i)(8)(i) of this clause, the 
Contractor shall not dispose of Government property until authorized 
to do so by the Plant Clearance Officer.
    (1) Scrap (to which the Government has obtained title under 
paragraph (c) of this clause).--(i) Contractor with an approved 
scrap procedure.--(A) The Contractor may dispose of scrap resulting 
from production or testing under this contract without Government 
approval. However, if the scrap requires demilitarization or is 
sensitive property, the Contractor shall submit the scrap on an 
inventory disposal schedule.
    (B) For scrap from other than production or testing the 
Contractor may prepare scrap lists in lieu of inventory disposal 
schedules (provided such lists are consistent with the approved 
scrap procedures), except that inventory disposal schedules shall be 
submitted for scrap aircraft or aircraft parts and scrap that--
    (1) Requires demilitarization;
    (2) Is a classified item;
    (3) Is generated from classified items;
    (4) Contains hazardous materials or hazardous wastes;
    (5) Contains precious metals; or
    (6) Is dangerous to the public health, safety, or welfare.
    (ii) Contractor without an approved scrap procedure. The 
Contractor shall submit an inventory disposal schedule for all 
scrap.
    (2) Pre-disposal requirements. When the Contractor determines 
that a property item acquired or produced by the Contractor, to 
which the Government has obtained title under paragraph (c) of this 
clause, is no longer needed for performance of this contract, the 
Contractor, in the following order of priority:
    (i) May purchase the property at the acquisition cost.
    (ii) Shall make reasonable efforts to return unused property to 
the appropriate supplier at fair market value (less, if applicable, 
a reasonable restocking fee that is consistent with the supplier's 
customary practices).
    (iii) Shall list, on Standard Form 1428, Inventory Disposal 
Schedule, property that was not purchased under paragraph (i)(2)(i) 
of this clause, could not be returned to a

[[Page 17749]]

supplier, or could not be used in the performance of other 
Government contracts.
    (3) Inventory disposal schedules.--(i) The Contractor shall use 
Standard Form 1428, Inventory Disposal Schedule, to identify--
    (A) Government-furnished property that is no longer required for 
performance of this contract, provided the terms of another 
Government contract do not require the Government to furnish that 
property for performance of that contract; and
    (B) Property acquired or produced by the Contractor, to which 
the Government has obtained title under paragraph (c) of this 
clause, that is no longer required for performance of that contract.
    (ii) The Contractor may annotate inventory disposal schedules to 
identify property the Contractor wishes to purchase from the 
Government.
    (iii) Unless the Plant Clearance Officer has agreed otherwise, 
or the contract requires electronic submission of inventory disposal 
schedules, the Contractor shall prepare separate inventory disposal 
schedules for--
    (A) Special test equipment with commercial components;
    (B) Special test equipment without commercial components;
    (C) Printing equipment;
    (D) Computers, components thereof, peripheral equipment, and 
related equipment;
    (E) Precious Metals;
    (F) Nonnuclear hazardous materials or hazardous wastes; or
    (G) Nuclear materials or nuclear wastes.
    (iv) Property with the same description, condition code, and 
reporting location may be grouped in a single line item. The 
Contractor shall describe special test equipment in sufficient 
detail to permit an understanding of the special test equipment's 
intended use.
    (4) Submission requirements. The Contractor shall submit 
inventory disposal schedules to the Plant Clearance Officer no later 
than--
    (i) Thirty days following the Contractor's determination that a 
Government property item is no longer required for performance of 
the contract;
    (ii) Sixty days, or such longer period as may be approved by the 
Plant Clearance Officer, following completion of contract deliveries 
or performance; or
    (iii) One hundred twenty days, or such longer period as may be 
approved by the Plant Clearance Officer, following contract 
termination in whole or in part.
    (5) Corrections. The Plant Clearance Officer may require the 
Contractor to correct an inventory disposal schedule or may reject a 
schedule if the property identified on the schedule is not 
accountable under this contract or is not in the quantity or 
condition indicated.
    (6) Postsubmission adjustments. The Contractor shall provide the 
Plant Clearance Officer at least 10 working days advance written 
notice of its intent to remove a property item from an approved 
inventory disposal schedule. Unless the Plant Clearance Officer 
objects to the intended schedule adjustment within the notice 
period, the Contractor may make the adjustment upon expiration of 
the notice period.
    (7) Storage.--(i) The Contractor shall store the property 
identified on an inventory disposal schedule pending receipt of 
disposal instructions. The Government's failure to provide disposal 
instructions within 120 days following acceptance of an inventory 
disposal schedule might entitle the Contractor to an equitable 
adjustment for costs incurred to store such property on or after the 
121st day.
    (ii) The Contractor shall obtain the Plant Clearance Officer's 
approval to remove Government property from the premises at which 
the property is currently located prior to receipt of final 
disposition instructions. If approval is granted, any costs incurred 
by the Contractor to transport or store the property shall not 
increase the price or fee of any Government contract. The storage 
facility shall be appropriate for assuring the property's physical 
safety and suitability for use. Approval does not relieve the 
Contractor of any liability under this contract for such property.
    (8) Disposition instructions.--(i) If the Government does not 
provide disposition instructions to the Contractor within 45 days 
following acceptance of a scrap list, the Contractor may dispose of 
the listed scrap in accordance with the Contractor's approved scrap 
procedures.
    (ii) The Contractor shall prepare for shipment, deliver f.o.b. 
origin, or dispose of Government property as directed by the Plant 
Clearance Officer. The Contractor shall remove and destroy any 
markings identifying the property as Government property prior to 
disposing of the property.
    (iii) The Contracting Officer may require the Contractor to 
demilitarize the property prior to shipment or disposal. Any 
equitable adjustment incident to the Contracting Officer's direction 
to demilitarize Government property shall be made in accordance with 
paragraph (h) of this clause.
    (9) Disposal proceeds. The Contractor shall credit the net 
proceeds from the disposal of Government property to the price or 
cost of work covered by this contract or to the Government as the 
Contracting Officer directs.
    (10) Subcontractor inventory disposal schedules. The Contractor 
shall require a subcontractor that is using property accountable 
under this contract at a subcontractor-managed site to submit 
inventory disposal schedules to the Contractor in sufficient time 
for the Contractor to comply with the requirements of paragraph 
(i)(4) of this clause.
    (j) Abandonment of Government property.--(1) The Government will 
not abandon sensitive Government property without the Contractor's 
written consent.
    (2) The Government, upon notice to the Contractor, may abandon 
any nonsensitive Government property in place at which time all 
obligations of the Government regarding such abandoned property 
shall cease.
    (3) The Government has no obligation to restore or rehabilitate 
the Contractor's premises under any circumstances; however, if 
Government-furnished property is withdrawn or is unsuitable for the 
intended use, or if other Government property is substituted, then 
the equitable adjustment under paragraph (h) of this clause may 
properly include restoration or rehabilitation costs.
* * * * *

0
16. Amend section 52.245-5 by revising the date of the clause and 
paragraphs (i) and (j) to read as follows:


52.245-5  Government Property (Cost-Reimbursement, Time-and-Material, 
or Labor-Hour Contracts).

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

* * * * *
    (i) Government property disposal. Except as provided in 
paragraphs (i)(1)(i), (i)(2), and (i)(8)(i) of this clause, the 
Contractor shall not dispose of Government property until authorized 
to do so by the Plant Clearance Officer.
    (1) Scrap. (i) Contractor with an approved scrap procedure. (A) 
The Contractor may dispose of scrap resulting from production or 
testing under this contract without Government approval. However, if 
the scrap requires demilitarization or is sensitive property, the 
Contractor shall submit the scrap on an inventory disposal schedule.
    (B) For scrap from other than production or testing, the 
Contractor may prepare scrap lists in lieu of inventory disposal 
schedules (provided such lists are consistent with the approved 
scrap procedures), except that inventory disposal schedules shall be 
submitted for scrap aircraft or aircraft parts and scrap that--
    (1) Requires demilitarization;
    (2) Is a classified item;
    (3) Is generated from classified items;
    (4) Contains hazardous materials or hazardous wastes;
    (5) Contains precious metals; or
    (6) Is dangerous to the public health, safety, or welfare.
    (ii) Contractor without an approved scrap procedure. The 
Contractor shall submit an inventory disposal schedule for all 
scrap.
    (2) Pre-disposal requirements. When the Contractor determines 
that a property item acquired or produced by the Contractor, to 
which the Government has obtained title under paragraph (c) of this 
clause, is no longer needed for performance of this contract, the 
Contractor, in the following order of priority:
    (i) May purchase the property at the acquisition cost.
    (ii) Shall make reasonable efforts to return unused property to 
the appropriate supplier at fair market value (less, if applicable, 
a reasonable restocking fee that is consistent with the supplier's 
customary practices).
    (iii) Shall list, on Standard Form 1428, Inventory Disposal 
Schedule, property that was not purchased under paragraph (i)(2)(i) 
of this clause, could not be returned to a supplier, or could not be 
used in the performance of other Government contracts.
    (3) Inventory disposal schedules. (i) The Contractor shall use 
Standard Form 1428, Inventory Disposal Schedule, to identify--

[[Page 17750]]

    (A) Government-furnished property that is no longer required for 
performance of this contract, provided the terms of another 
Government contract do not require the Government to furnish that 
property for performance of that contract; and
    (B) Property acquired or produced by the Contractor, to which 
the Government has obtained title under paragraph (c) of this 
clause, that is no longer required for performance of that contract.
    (ii) The Contractor may annotate inventory disposal schedules to 
identify property the Contractor wishes to purchase from the 
Government.
    (iii) Unless the Plant Clearance Officer has agreed otherwise, 
or the contract requires electronic submission of inventory disposal 
schedules, the Contractor shall prepare separate inventory disposal 
schedules for--
    (A) Special test equipment with commercial components;
    (B) Special test equipment that does not contain commercial 
components;
    (C) Printing equipment;
    (D) Computers, components thereof, peripheral equipment, and 
related equipment;
    (E) Precious Metals;
    (F) Nonnuclear hazardous materials or hazardous wastes; or
    (G) Nuclear materials or nuclear wastes.
    (iv) Property with the same description, condition code, and 
reporting location may be grouped in a single line item. The 
Contractor shall describe special test equipment in sufficient 
detail to permit an understanding of the special test equipment's 
intended use.
    (4) Submission requirements. The Contractor shall submit 
inventory disposal schedules to the Plant Clearance Officer no later 
than--
    (i) Thirty days following the Contractor's determination that a 
Government property item is no longer required for performance of 
the contract;
    (ii) Sixty days, or such longer period as may be approved by the 
Plant Clearance Officer, following completion of contract deliveries 
or performance; or
    (iii) One hundred twenty days, or such longer period as may be 
approved by the Plant Clearance Officer, following contract 
termination in whole or in part.
    (5) Corrections. The Plant Clearance Officer may require the 
Contractor to correct an inventory disposal schedule or may reject a 
schedule if the property identified on the schedule is not 
accountable under this contract or is not in the quantity or 
condition indicated.
    (6) Postsubmission adjustments. The Contractor shall provide the 
Plant Clearance Officer at least 10 working days advance written 
notice of its intent to remove a property item from an approved 
inventory disposal schedule. Unless the Plant Clearance Officer 
objects to the intended schedule adjustment within the notice 
period, the Contractor may make the adjustment upon expiration of 
the notice period.
    (7) Storage. (i) The Contractor shall store the property 
identified on an inventory disposal schedule pending receipt of 
disposal instructions. The Government's failure to provide disposal 
instructions within 120 days following acceptance of an inventory 
disposal schedule, might entitle the Contractor to an equitable 
adjustment for costs incurred to store such property on or after the 
121st day.
    (ii) The Contractor shall obtain the Plant Clearance Officer's 
approval to remove Government property from the premises at which 
the property is currently located prior to receipt of final 
disposition instructions. If approval is granted, any costs incurred 
by the Contractor to transport or store the property shall not 
increase the price or fee of any Government contract. The storage 
facility must be appropriate for assuring the property's physical 
safety and suitability for use. Approval does not relieve the 
Contractor of any liability under this contract for such property.
    (8) Disposition instructions. (i) If the Government does not 
provide disposition instructions to the Contractor within 45 days 
following acceptance of a scrap list, the Contractor may dispose of 
the listed scrap in accordance with the Contractor's approved scrap 
procedures.
    (ii) The Contractor shall prepare for shipment, deliver f.o.b. 
origin, or dispose of Government property as directed by the Plant 
Clearance Officer. The Contractor shall remove and destroy any 
markings identifying the property as Government property prior to 
disposing of the property.
    (iii) The Contracting Officer may require the Contractor to 
demilitarize the property prior to shipment or disposal. Any 
equitable adjustment incident to the Contracting Officer's direction 
to demilitarize Government property shall be made in accordance with 
paragraph (h) of this clause.
    (9) Disposal proceeds. The Contractor shall credit the net 
proceeds from the disposal of Government property to the cost of 
work covered by this contract, or to the Government as directed by 
the Contracting Officer.
    (10) Subcontractor inventory disposal schedules. The Contractor 
shall require a subcontractor that is using property accountable 
under this contract at a subcontractor-managed site to submit 
inventory disposal schedules to the Contractor in sufficient time 
for the Contractor to comply with the requirements of paragraph 
(i)(4) of this clause.
    (j) Abandonment of Government property. (1) The Government will 
not abandon sensitive Government property without the Contractor's 
written consent;
    (2) The Government, upon notice to the Contractor, may abandon 
any nonsensitive Government property in place at which time all 
obligations of the Government regarding such abandoned property 
shall cease.
    (3) The Government has no obligation to restore or rehabilitate 
the Contractor's premises under any circumstances; however, if 
Government-furnished property is withdrawn or is unsuitable for the 
intended use, or if other Government property is substituted, then 
the equitable adjustment under paragraph (h) of this clause may 
properly include restoration or rehabilitation costs.
* * * * *

0
17. Amend section 52.245-17 by revising the date of the clause and 
paragraph (i)(2)(ii) to read as follows:


52.245-17  Special tooling.

* * * * *

Special Tooling (May 2004)

* * * * *
    (i) Lists of special tooling.
* * * * *
    (2) * * *
    (ii) Termination inventory. The Contractor shall submit these 
items on an SF 1428 or by computer list attached to an SF 1428 in 
accordance with FAR 45.602-1. Format and content of this submission 
will be as prescribed by paragraph (i)(3) of this clause, but will 
contain information as prescribed by FAR Subpart 45.6, in effect on 
the date of award of this contract.
* * * * *


52.249-2, 52.249-3, 52.249-6, 52.249-11  [Amended]

0
18. Revise the date of the clauses to read ``(May 2004)'' and remove 
``45.6'' and add ``49.001'' in the following sections:
0
a. Section 52.249-2(d).
0
b. Section 52.249-3(d).
0
c. Section 52.249-6(e).
0
d. Section 52.249-11(d).

PART 53--FORMS

0
19. Revise section 53.245 to read as follows:


53.245  Government property.

    The following forms are prescribed, as specified in this section, 
for use in reporting, reutilization, and disposal of Government 
property and in accounting for this property:
    (a) SF 120 (GSA), Report of Excess Personal Property, and SF 120-A 
(GSA), Continuation Sheet (Report of Excess Personal Property). See 
45.602-3 and 41 CFR 102-36.215.)
    (b) SF 126 (GSA), Report of Personal Property for Sale, and SF 126-
A (GSA), Report of Personal Property for Sale (Continuation Sheet). See 
FPMR 101-45.303 (41 CFR 101-45.303.))
    (c) SF 1423 (Rev. 5/04), Inventory Verification Survey. See 45.602-
1(b)(1) and 45.606-3.)
    (d) SF 1424 (Rev. 5/04), Inventory Disposal Report (See 45.605). SF 
1424 is authorized for local reproduction.
    (e) SF 1428 (Rev. 5/04), Inventory Disposal Schedule, and SF 1429 
(Rev. 5/04), Inventory Disposal Schedule--Continuation Sheet. (See 
45.602-1, 49.303-2, 52.245-2(i), 52.245-5(i), and 53.249(b).) SF's 1428 
and 1429 are authorized for local reproduction.

0
20. Amend section 53.249 by revising paragraphs (a)(3), (a)(5), and (b) 
to read as follows:

[[Page 17751]]

53.249  Termination of contracts.

    (a) * * *
    (3) SF 1436 (Rev. 5/04), Settlement Proposal (Total Cost Basis). 
(See 49.602-1(b).) Standard Form 1436 is authorized for local 
reproduction.
* * * * *
    (5) SF 1438 (Rev. 5/04), Settlement Proposal (Short Form). (See 
49.602-1(d).) Standard Form 1438 is authorized for local reproduction.
* * * * *
    (b) SF 1428 (Rev. 5/04), Inventory Disposal Schedule, and Standard 
Form 1429 (Rev. 5/04), Inventory Disposal Schedule--Continuation Sheet, 
shall be used to support termination settlement proposals listed in 
paragraph (a) of this section, as specified in 49.602-2.
BILLING CODE 6820-EP-P

[[Page 17752]]


0
21. Revise section 53.301-1423 to read as follows:


53.301-1423  Inventory Verification Survey.
[GRAPHIC] [TIFF OMITTED] TR05AP04.000


[[Page 17753]]



0
22. Revise section 53.301-1424 to read as follows:


53.301-1424  Inventory Disposal Report.
[GRAPHIC] [TIFF OMITTED] TR05AP04.001


[[Page 17754]]




53.301-1426  [Removed]

0
23. Remove section 53.301-1426, Inventory Schedule A (Metals in Mill 
Product Form).

0
24. Revise section 53.301-1428 to read as follows:


53.301-1428  Inventory Disposal Schedule.
[GRAPHIC] [TIFF OMITTED] TR05AP04.002


[[Page 17755]]


[GRAPHIC] [TIFF OMITTED] TR05AP04.003


[[Page 17756]]



0
25. Revise section 53.301-1429 to read as follows:


53.301-1429  Inventory Disposal Schedule--Continuation Sheet.
[GRAPHIC] [TIFF OMITTED] TR05AP04.004


[[Page 17757]]




53.301-1430 and 53.301-1431  [Removed]

0
26. Remove sections 53.301-1430, Inventory Schedule C (Work-in-
Process), and 53.301-1431, Inventory Schedule C--Continuation Sheet 
(Work-in-Process).


53.301-1432 and 53.301-1433  [Removed]

0
27. Remove sections 53.301-1432, Inventory Schedule D (Special Tooling 
and Special Test Equipment), and 53.301-1433, Inventory Schedule D--
Continuation Sheet (Special Tooling and Special Test Equipment).


53.301-1434  [Removed]

0
28. Remove section 53.301-1434, Termination Inventory Schedule E.

0
29. Revise section 53.301-1436 to read as follows:


53.301-1436  Settlement Proposal (Total Cost Basis).

[[Page 17758]]

[GRAPHIC] [TIFF OMITTED] TR05AP04.005


[[Page 17759]]


[GRAPHIC] [TIFF OMITTED] TR05AP04.006


[[Page 17760]]


[GRAPHIC] [TIFF OMITTED] TR05AP04.007


[[Page 17761]]


[GRAPHIC] [TIFF OMITTED] TR05AP04.008


[[Page 17762]]



0
30. Revise section 53.301-1438 to read as follows:


53.301-1438  Settlement Proposal (Short Form).
[GRAPHIC] [TIFF OMITTED] TR05AP04.009


[[Page 17763]]


[GRAPHIC] [TIFF OMITTED] TR05AP04.010

[FR Doc. 04-7405 Filed 4-2-04; 8:45 am]
BILLING CODE 6820-EP-C