[Federal Register Volume 72, Number 237 (Tuesday, December 11, 2007)]
[Proposed Rules]
[Pages 70266-70269]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-23887]



41 CFR Part 102-39

[FMR Case 2007-102-1; Docket 2007-0001; Sequence 3]
RIN 3090-AI38

Federal Management Regulation; FMR Case 2007-102-1, Replacement 
of Personal Property Pursuant to the Exchange/Sale Authority

AGENCY:  Office of Governmentwide Policy, General Services 
Administration (GSA).

ACTION:  Proposed rule.


SUMMARY:  The General Services Administration is proposing to amend the 
Federal Management Regulation (FMR) by updating coverage on the 
replacement of personal property pursuant to the exchange/sale 
authority. The proposed changes were prompted by recommendations of the 
Federal Asset Management Evaluation (FAME) interagency working group 
led by GSA.

DATES:  Interested parties should submit comments in writing on or 
before January 10, 2008 to be considered in the formulation of a final 

ADDRESSES: Submit comments identified by FMR case 2007-102-1 by any of 
the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Search for any document by first selecting the proper document types 
and selecting ``General Services Administration'' as the agency of 
choice. At the ``Keyword'' prompt, type in the FMR case number (for 
example, FMR Case 2007-102-1) and click on the ``Submit'' button. You 
may also search for any document by clicking on the ``Advanced search/
document search'' tab at the top of the screen, selecting from the 
agency field ``General Services Administration'', and typing the FMR 
case number in the keyword field. Select the ``Submit'' button.
     Fax: 202-501-4067.
     Mail: General Services Administration, Regulatory 
Secretariat (VIR), 1800 F Street, NW., Room 4035, ATTN: Laurieann 
Duarte, Washington, DC 20405.
    Instructions: Please submit comments only and cite FMR case 2007-
102-1 in all correspondence related to this case. All comments received 
will be posted without change to http://www.regulations.gov, including 
any personal information provided.

FOR FURTHER INFORMATION CONTACT:  For clarification of content, contact 
Mr. Robert Holcombe, Office of

[[Page 70267]]

Governmentwide Policy, Office of Travel, Transportation, and Asset 
Management (MT), (202) 501-3828 or e-mail at [email protected]. 
For information pertaining to status or publication schedules contact 
the Regulatory Secretariat, 1800 F Street, NW, Room 4035, Washington, 
DC 20405, (202) 501-4755. Please cite FMR case 2007-102-1.


A. Background

    The regulations in this part were last substantively updated on 
September 21, 2001 (66 FR 48614). Early in fiscal year 2005, a project 
entitled Federal Asset Management Evaluation (FAME) was initiated to 
identify any and all areas of Federal personal property management 
needing improvement. An interagency working group, led by GSA, was 
formed to work on the FAME project. At the conclusion of the FAME 
project, the working group identified the exchange/sale authority as an 
area where changes should be made. A team of GSA Office of 
Governmentwide Policy employees has reviewed all of the provisions in 
this part and has recommended a number of changes intended to update, 
streamline, and clarify the part. The most significant changes include:
    1. Adding a new section that explains the exchange/sale authority 
by quoting relevant language from the statute (40 U.S.C. 503).
    2. Adding definitions for ``excess property'', ``surplus property 
''and ``Service Life Extension Program''.
    3. Revising the definitions for ``acquire'', ``replacement'', and 
    4. Adding a new section that addresses which provisions in this 
part are subject to deviation.
    5. Adding a new section that explains when agencies should consider 
using the exchange/sale authority.
    6. Revising the section that explains why the exchange/sale 
authority should be used.
    7. Amending the restrictions and prohibitions applicable to the 
exchange/sale of personal property, including the addition of language 
which: 1) states that under no circumstances will deviations be granted 
for FSC Class 1005, Guns through 30mm; and 2) clarifies the requirement 
for the exchange/sale of weapons for Department of Defense property in 
FSC Group 10, Weapons.
    8. Removing the requirement that the number of items acquired must 
equal the number of items exchanged or sold, as this is not a 
requirement imposed by 40 U.S.C. 503.
    9. Adding a new provision which clarifies that the exchange/sale 
authority can only be used to acquire property, not services.
    10. Revising the requirement for documentation of exchange/sale 
    11. Revising the accounting requirements applicable to the 
exchange/sale authority.
    12. Revising the annual reporting requirement.

B. Executive Order 12866

    This regulation is excepted from the definition of ``regulation'' 
or ``rule'' under Section 3(d)(3) of Executive Order 12866, Regulatory 
Planning and Review, dated September 30, 1993 and, therefore, was not 
subject to review under Section 6(b) of that Executive Order.

C. Regulatory Flexibility Act

    This proposed rule is not required to be published in the Federal 
Register for notice and comment as per the exemption specified in 5 
U.S.C. 553 (a)(2); therefore, the Regulatory Flexibility Act, 5 U.S.C. 
601, et seq., does not apply.

D. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the proposed 
changes to the FMR do not impose information collection requirements 
that require the approval of the Office of Management and Budget under 
44 U.S.C. 3501, et seq.

E. Small Business Regulatory Enforcement Fairness Act

    This proposed rule is exempt from Congressional review under 5 
U.S.C. 801 since it relates solely to agency management and personnel.

List of Subjects in 41 CFR Part 102-39

    Government property management, Reporting and recordkeeping 
requirements, and Government property.

    Dated: August 28, 2007.
Kevin Messner
Acting Associate Administrator.

    Editorial Note: This document was received at the Office of the 
Federal Register on December 5, 2007.

    For the reasons set forth in the preamble, GSA amends 41 CFR part 
102-39 as set forth below:


    1. The authority citation for 41 CFR part 102-39 is amended to read 
as follows:

    Authority:  40 U.S.C. 121(c); 40 U.S.C. 501; 40 U.S.C. 503

Sec.  102-39.50  [Removed]

    2. Remove Sec.  102-39.50.

Sec.  102-39.55  [Removed]

    3. Remove Sec.  102-39.55.

Sec. Sec.  102-39.5, 102-39.15, 102-39.25, 102-39.30, 102-39.35, 102-
39.40, 102-39.45, 102-39.60, 102-39.65, 102-39.70, 102-
39.75  [Redesignated]

    4. Redesignate Sec. Sec.  102-39.5, 102-39.15, 102-39.25, 102-
39.30, 102-39.35, 102-39.40, 102-39.45, 102-39.60, 102-39.65, 102-
39.70, 102-39.75 as follows:
    Old section New section
    102-39.5 102-39.15
    102-39.15 102-39.40
    102-39.25 102-39.30
    102-39.30 102-39.45
    102-39.35 102-39.50
    102-39.40 102-39.55
    102-39.45 102-39.60
    102-39.60 102-49.70
    102-39.65 102-39.75
    102-39.70 102-39.80
    102-39.75 102-39.85
    5. Add new Sec.  102-39.5 to read as follows:

Sec.  102-39.5  What is the exchange/sale authority?

    The exchange/sale authority is a statutory provision, (40 U.S.C. 
503), which states in part: ``In acquiring personal property, an 
executive agency may exchange or sell similar items and may apply the 
exchange allowance or proceeds of sale in whole or in part payment for 
the property acquired.''
    6. Amend Sec.  102-39.20 by revising the definitions of the terms 
``Acquire'', ``Replacement'', and ``Similar''; and, by alphabetically 
adding the terms and definitions ``Excess property'', ``Service Life 
Extension Program (SLEP)'', and ``Surplus property'' to read as 

Sec.  102-39.20  What definitions apply to this part?

* * * * *
    Acquire means to procure or otherwise obtain personal property, 
including by lease (sometimes known as rent).
* * * * *
    Excess property means any personal property under the control of 
any Federal agency that is no longer required for that agency's needs 

[[Page 70268]]

responsibilities, as determined by the agency head or designee.
* * * * *
    Replacement means the process of acquiring personal property to be 
used in place of personal property that is still needed but:
    (1) No longer adequately performs the tasks for which it is used; 
    (2) Does not meet the agency's need as well as the personal 
property to be acquired.
    Service Life Extension Program (SLEP) means the modification of a 
personal property item undertaken to extend the life of the item beyond 
what was previously planned. SLEPs extend capital asset life by 
retrofit, major modification, remanufacturing, betterment, or 
    Similar means the acquired item(s) and replaced item(s):
    (1) Are identical; or
    (2) Fall within a single Federal Supply Classification (FSC) Group 
of property (includes any and all forms of property within a single FSC 
Group); or
    (3) Are parts or containers for similar end items; or
    (4) Are designed or constructed for the same purpose (includes any 
and all forms of property regardless of the FSC Group to which they are 
    Surplus property means excess personal property not required for 
the needs of any Federal agency, as determined by GSA under part 102-37 
of this chapter.
    7. Add new Sec.  102-39.25 to Subpart A to read as follows:

Sec.  102-39.25  Which exchange/sale provisions are subject to 

    All of the provisions in this part are subject to deviation (upon 
presentation of adequate justification) except those mandated by 
statute. See the link on ``Exchange/Sale'' at www.gsa.gov/personalpropertypolicy for additional information on requesting 
deviations from this part.
    8. Revise newly redesignated Sec.  102-39.30 to read asfollows:

Sec.  102-39.30  How do I request a deviation from this part?

    See part 102-2 of this chapter (41 CFR part 102-2) to request a 
deviation from the requirements of this part.
    9. Add new Sec.  102-39.35 to Subpart B to read as follows:

Sec.  102-39.35  When should I consider using the exchange/sale 

    You should consider using the exchange/sale authority when 
replacing personal property.
    10. Amend newly redesignated Sec.  102-39.40 to read as follows:

Sec.  102-39.40  Why should I use the exchange/sale authority?

    You should use the exchange/sale authority to reduce the cost of 
replacement personal property. When you have personal property that is 
wearing out or obsolete and must be replaced, you should consider 
either exchanging or selling that property and using the exchange 
allowance or sales proceeds to offset the cost of the replacement 
personal property. Conversely, if you choose not to replace the 
property using the exchange/sale authority, you may declare it as 
excess and dispose of it through the normal disposal process as 
addressed in part 102-36 of this chapter. Keep in mind, however, that 
any net proceeds from the eventual sale of that property as surplus 
generally must be forwarded to the miscellaneous receipts account at 
the United States Treasury and thus would not be available to you. You 
may use the exchange/sale authority in the acquisition of personal 
property even if the contract is for services as long as the property 
acquired under the services contract is similar to the property 
exchanged or sold (e.g., for a SLEP, exchange allowances or sales 
proceeds would be available for replacement of similar items, but not 
for services).
    11. Amend newly redesignated Sec.  102-39.55 by revising the 
section heading to read as follows:

Sec.  102-39.55  When should I offer property I am exchanging or 
selling under the exchange/sale authority to other Federal agencies or 
State Agencies for Surplus Property (SASP)?

* * * * *
    12. Amend newly redesignated Sec.  102-39.60 by revising the 
section heading, the introductory text, paragraph (a), the note to 
paragraph (a), and paragraph (i) to read as follows:

Sec.  102-39.60  What restrictions and prohibitions apply to the 
exchange/sale of personal property?

    Unless a deviation is requested of and approved by GSA as addressed 
in part 102-2 of this chapter and the provisions of Sec. Sec.  102-
39.25 and 102-39.30, you must not use the exchange/sale authority for:
    (a) The following FSC groups of personal property:
    10 Weapons.
    11 Nuclear ordnance.
    12 Fire control equipment.
    14 Guided missiles.
    15 Aircraft and airframe structural components (except FSC Class 
1560 Airframe Structural Components).
    42 Firefighting, rescue, and safety equipment.
    44 Nuclear reactors (FSC Class 4470 only).
    51 Hand tools.
    54 Prefabricated structure and scaffolding (FSC Class 5410 
Prefabricated and Portable Buildings, FSC Class 5411 Rigid Wall 
Shelters, and FSC Class 5419 Collective Modular Support System only).
    68 Chemicals and chemical products, except medicinal chemicals.
    84 Clothing, individual equipment, and insignia.
    Note to Sec.  102-39.60(a): Under no circumstances will deviations 
be granted for FSC Class 1005, Guns through 30mm. Deviations are not 
required for Department of Defense (DoD) property in FSC Groups 10 (for 
classes other than FSC Class 1005), 12 and 14 for which the applicable 
DoD demilitarization requirements, and any other applicable regulations 
and statutes are met.
* * * * *
    (i) Flight Safety Critical Aircraft Parts (FSCAP) and Critical 
Safety Items (CSI) unless you meet the provisions of Sec.  102-33.370 
of this title.
* * * * *
    13. New Sec.  102-39.65 is added to Subpart B to read as follows:

Sec.  102-39.65  What conditions apply to the exchange/sale of personal 

    You may use the exchange/sale authority only if you meet all of the 
following conditions:
    (a) The property exchanged or sold is similar to the property 
    (b) The property exchanged or sold is not excess or surplus and you 
have a continuing need for similar property;
    (c) The property exchanged or sold was not acquired for the 
principal purpose of exchange or sale;
    (d) When replacing personal property, the exchange allowance or 
sales proceeds from the disposition of that property may only be used 
to offset the cost of the replacement property, not services; and
    (e) Except for transactions involving books and periodicals in your 
libraries, you document the basic facts associated with each exchange/
sale transaction. At a minimum, the documentation must include the 
type, amount, and value of the property to be replaced and the property 
to be acquired; the date of the transaction(s); the names of the 
parties involved; and a statement that the transactions comply with the 
requirements of this part 102-39.
    Note to Sec.  102-39.65: In acquiring items for historical 
preservation or display at Federal museums, you may exchange historic 
items in the museum property account without regard to the

[[Page 70269]]

FSC group, provided the exchange transaction is documented and 
certified by the head of your agency to be in the best interests of the 
Government and all other provisions of this part are met. The 
documentation must contain a determination that the item exchanged and 
the item acquired are historic items.
    14. Revise newly redesignated Sec.  102-39.80 to read as follows:

Sec.  102-39.80  What are the accounting requirements for exchange 
allowances or proceeds of sale?

    You must account for exchange allowances or proceeds of sale in 
accordance with the general finance and accounting rules applicable to 
you. Except as otherwise authorized by law, all exchange allowances or 
proceeds of sale under this part will be available during the fiscal 
year in which the property was sold and for one fiscal year thereafter 
for the purchase of replacement property. Any proceeds of sale not 
applied to replacement purchases during this time must be deposited in 
the United States Treasury as miscellaneous receipts.
    15. Amend newly redesignated Sec.  102-39.85 by adding paragraph 
(a)(3) to read as follows:

Sec.  102-39.85  What information am I required to report?

* * * * *
    (3) A list by Federal Supply Classification Group of property 
acquired under this part, to include:
    (i) Number of items acquired;
    (ii) Acquisition cost.
* * * * *
[FR Doc. E7-23887 Filed 12-10-07; 8:45 am]