[Accounting for Government Property Furnished Under Fixed Price Contracts]
[From the U.S. Government Publishing Office, www.gpo.gov]

ACCOUNTING FOR
GOVERNMENT PROPERTY
FURNISHED UNDER FIXED
PRICE CONTRACTS
IVAR DEPARTMENT
1 JUNE 1944
Document Reserve
NON-CIRCULATING
M
WAR DEPARTMENT TECHNICAL MANUAL
NTSU LIBRARY
WA R DEPARTMENT TECHNICAL MANUAL
T M 1 4 - 9 1 1
ACCOUNTING FOR
GOVERNMENT PROPERTY
FURNISHED UNDER FIXED
PRICE CONTRACTS
WA R DEPARTMENT •	1 J V N E 1 9 4 4
United States Government Printing Office Washington : 1944
TM14-911
1 Jura 44
WAR DEPARTMENT, Washington 25, D. C., 1 June 1944.
TM 14-911, Accounting for Government Property Furnished Under Fixed Price Contracts, is published for the information and guidance of all concerned.
[A. G. 300.5 (27 Apr 44).]
By order of the Secretary of War :
G. C. MARSHALL,
Chief of Staff.
Officiai.:
J. A. ULIO,
Udafor General,
The Adjutant General.
Distribution :
As prescribed in paragraph 9a, FM 21-6: Armies (5) ; Corps (5) ; Dept (5); Gen & Sp Sv Sch (Except Fin Sch (5); Sv C (Except overseas) (100) ; T of Opns (5).
For explanation of symbols, see FM 21-6.
For sale by the Superintendent of Documents, U. S. Government Printing Office Washington 25, D. C. - Price 10 cents
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TM 14—911
CONTENTS
Paragraphs Page
Section I. General________________________________________ 1-16	1
II.	Accountability and responsibility_____________17-25	4
III.	Classification of property__________________  26-33	6
IV.	Receiving and inspection_____________________ 34-37	8
V.	Contractor’s receipt_________________________ 38-39	9
VI.	Accounting for property______________________ 40-52	10
VII.	Numbering and registering vouchers__________ 53-60	12
VHI. Marking property for identification______________61-66	13
IX.	Control of scrap_____________________________ 67-75	14
X.	Relief from accountability___________________ 76-85	15
XI.	Procedures for reporting losses_______________86-91	19
XII.	Selective check of property records--------- 92-94	20
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FOREWORD
Changes to this manual will be supplied on a page basis, and will be published as required. As change pages are received they will be inserted in their proper places, and the replaced pages destroyed.
Each page of the manual bears a date in its upper inside corner. This date is the date of the publication. Pages which represent changes will carry the date of the change. For example, “C-l,” “C-2,” and so on.
Paragraphs are numbered consecutively throughout the manual. Paragraphs carrying decimal suffixes indicate newly added material; for example, a paragraph numbered 12.1 represents the first main paragraph following paragraph 12.
Pages are numbered consecutively throughout the manual. If new pages are added within the manual, the added pages will carry alphabetical suffixes—“A,” “B,” “C,” and so on. For example, if a new page is added between 11 and 12, the page will be numbered 11-A. A second additional page in the same place would be numbered 11-B, and so on.
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SECTION I
GENERAL
1.	The purpose of this manual is to provide a uniform system of accounting for Government property furnished to contractors under War Department fixed price contracts. The manual is applicable to all Government property furnished to fixed price prime contractors and their subcontractors under existing and future War Department contracts except as provided in paragraphs 2 and 3. The procedures set forth in this manual apply also to property leased to contractors for use on Government work.
2.	The provisions of this manual are not applicable to—
a.	Government property in the possession of contractors for repair, cleaning, renovation, or storage.
b.	Government property involved in the performance of contracts for boxing, crating, packaging, and similar services where the work is conducted at War Department installations.
c.	Government property under training contracts as described in Circular No. 346, War Department, 1943.
d.	Government property furnished to contractors under contracts administered by the service commands of the Army Service Forces.
3.	Certain fixed price contracts authorize the making of partial payments (as distinguished from advance payments) on work in process and materials acquired by the contractors for work under these contracts. Under these contract provisions (see pars. 330 and 331 of Procurement Regulations) title to all property against which any partial payment is made vests in the Government upon the making of the payment. The provisions of this manual will not apply in such circumstances; and property accountability will not be established unless and until the Government, in exercising its contract rights, takes possession of the materials and the work in process. Accountability, where required, will be established on the basis of physical inventories of such materials and work in process as are specified by the contracting officer.
4.	Pursuant to the provisions of section VII, Circular No. 224, War Department, 1944, AR 35-6520, 35-6560, 35-6620, 35-6640, 35-6680, 35-6700, and 35-6720, as amended, are not applicable, except as indicated in paragraphs 79 and 81, to property within the scope of this manual set forth in preceding paragraphs.
5.	Terms used throughout the manual are defined as follows:
a. “Contract,” unless otherwise specifically stated, refers to and includes prime fixed price contracts and subcontracts thereunder and to agreements for the lease of Government property to firms or individuals for use on Government work; “contractor” refers to and includes the prime contractor and subcontractor under such contracts and the lessee under such lease agreements.
&.	“Government property” refers only to property owned by the Government and administered by the War Department.
c.	“Furnished to” refers to and includes all methods whereby Government property comes into the possession or control of contractors pursuant to the terms of their contracts.
d.	“Shipping document,” includes War Department Shipping Document, Vendor’s Shipping Document, and Shipping Ticket, whichever is in use at the installation concerned.
e.	“Contracting officer” includes the officer so designated, his successors, or his authorized representatives.
/. “Accountable property officer” refers to the officer or civilian property agent (par. 7), charged with maintaining required property accounting records.
g. “Accountability” means the requirement for maintaining records of Government property as prescribed in this manual.
A. “Responsibility,” in respect to Government property, means a charge for the care, safekeeping, and proper use of such property; responsibility, in case of misuse, loss, damage or destruction, may involve pecuniary liability.
i. “Technical service” includes the Materiel Command, the Air Transport Command, and
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the Air Service Command of the Army Air Forces; the term “chiefs of the technical services” includes the commanding generals of the above mentioned commands.
6.	An accountable property officer must be designated for each prime contract under which Government property is to be furnished to the contractor. The designation of more than one accountable property officer for the prime contract, or a separate accountable property officer for a subcontract, may be authorized by chiefs of techmeal services where property connected with a contract is located within the territorial limits of different procurement districts, or similar agencies, and where special property accounting problems of the technical services so require. Except where accountable property officers specifically have been designated for subcontracts, the accountable property officer for a prime contract will be charged with the duty of maintaining property accounting records for Government property connected with all subcontracts of the prime contract nn-der which Government property is furnished to the subcontractor. In all cases the contractor will be appropriately notified of the official station of the accountable property officer designated for his contract and of any change in such station.
7.	The chiefs of technical services are authorized to designate civilians as property agents to assume and maintain accountability for Government property furnished to contractors provided bond is furnished by the civilians as prescribed in AR 35-220 before entering on such duty.
8.	Where a contractor is working under more than one contract with the same technical service, the same person may be designated as accountable property officer for all contracts involved. In such cases, with the approval of the chief of the procurement district or similar agency, a common set of property records may be maintained for all the contracts.
9.	Where a contractor is engaged simultaneously upon work under contracts with more than one technical service and where conditions warrant, the same person may be designated as accountable property officer for all the contracts. Requests for authority to make such an arrangement will be forwarded through channels to the Fiscal Director, Headquarters, Army Service
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Forees. In all cases of this nature, a separate set of property records must be maintained for each technical service.
10.	The provisions of paragraphs 8 and 9 shall apply also where the contractor is engaged upon work under fixed price and cost-plus-a-fixed-fee contracts, except that in no case will a common set of property records for a fixed price and a cost-plus-a-fixed-fee contract be authorized.
11.	In every case where a property account initially is established, a copy of the letter or order appointing the accountable property officer will be forwarded by the authority making the appointment to the fiscal director of the service command in which the new account is located. The letter ©r order will contain the following information:
a.	Name of the account.
b.	Name, grade, branch, and serial number of the accountable property officer.
c.	Official mailing address of the accountable property officer.
It is not necessary to supply this information for each contract, but only when the designation or appointment involves the establishment of a new or separate property account.
12.	It is recognized that in many cases the property account of an accountable property officer as described in paragraph 6 may include records of Government property other than that furnished to contractors. In such cases, the accountable property officer is authorized to treat the records relating to Government property furnished to contractors as a separate section of his account, and to establish and maintain property voucher number series for this section separate and distinct from series for other Government property for which he is accountable. The provisions of this manual apply only to property accounts or sections thereof covering Government property furnished to contractor^
13.	The accountable property officer will be furnished a copy of the contract by the contracting officer, and he will familiarize himself with its provisions relating to property matters. Normally the following information with respect to property to be furnished to the contractor should be available to the accountable property officer:
. a. Schedule showing quantities and description of facilities (machinery, equipment, tools, and manufacturing aids).
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l>. Schedule of components to be incorporated in the product or work contracted for showing quantities required per specifications or, where established, unit or total quantity allowances which provide for anticipated spoilage or waste.
c.	Statement of quantities of components authorized for use in test or pilot lots.
d.	Statement of quantities of end items to be produced under the contract.
If this information is not set forth in the contract, the accountable property officer will request it from the contracting officer.
14.	In carrying out his duties, the accountable property officer will be obliged, in many cases, to delegate certain duties to assistants. Where circumstances warrant it, an accountable property officer may authorize such assistants to sign property vouchers and papers for and in the name of the accountable property officer, providing that the authority in each case is given in writing. One copy of this authority will be given to the authorized assistant, one copy retained by the accountable property officer, and one copy given to the interested contractor. When required by AR 35-1040, a copy
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accompanied by the authenticated specimen signatures of the assistant will be forwarded to the disbursing officer concerned. The accountable property officer is charged with supervision of his assistants to the extent necessary to insure that the duties assigned are executed in a manner which adequately protects the interests of the Government.
15.	Problems arising in the interpretation of provisions of this manual, or those which cannot be solved by reference to it, should be referred to the chief of the technical service concerned. Deviations from procedures prescribed in this manual will be authorized only upon the specific approval of the Fiscal Director, Headquarters, Army Service Forces.
16.	When contracts under which Government property is furnished to War Department contractors have been completed and the related property records have been audited and cleared, the records and papers may be stored as prescribed by the chiefs of the technical services. Such records will not be destroyed without prior approval of the Fiscal Director, Headquarters, Army Service Forces.
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SECTION II ACCOUNTABILITY AND RESPONSIBILITY
17.	Government property usually is furnished to a contractor by one of the following methods:
a. Direct purchase by the contractor for the account of the Government (for example, purchases under facilities provisions of contracts).
Z>. Shipment from a War Department installation or another contractor’s plant.
18.	Accountability for property purchased by a contractor for the account of the Government will inhere in the designated accountable property officer for the contract involved upon inspection and acceptance of the property on behalf of the Government. Where documents evidencing Government inspection and acceptance are not required to be approved by the accountable property officer prior to reimbursement of the contractor, the accountable property officer, by review of the copies of Public Voucher Standard Form No. 1034 in the contracting officer’s files, will determine that he has been advised of all such property paid for by the Government under the contract.
19.	Accountability for Government property shipped to the contractor’s plant from a War Department installation or another contractor’s plant (regardless of the type of contract involved at the shipping plant) will inhere in the designated accountable property officer upon delivery of the property to the carrier by the shipping installation or plant; and the receiving accountable property officer must initiate and follow to conclusion necessary action with respect to any discrepancies in shipments. The accountable property officer will determine either by contact with the contractor or Government representative stationed at the contractor’s plant or by review of schedules of property to be furnished under the contract, that he has been furnished copies of shipping documents for all such property. When shipping documents are missing, he will take action to secure copies.
20.	The contractor has responsibility for Government property furnished to him. In general,
the extent of his responsibility and the consequent standard of care to be exercised by him are governed by the terms of his contract. The contractor’s liability, if any, for loss, damage, wear, or excessive use or consumption of property in a given instance will necessarily depend upon all the circumstances surrounding the particular case and must be considered and determined in accordance with and pursuant to the provisions of the applicable contract. In no event will a report of survey be necessary to determine the liability of a contractor. (See par. 80.)
21.	It is recognized that except in unusual circumstances an accountable property officer is not charged with and, in practice, is unable to exercise control over Government property furnished to contractors. Accordingly, an accountable property officer does not have responsibility for Government property furnished to a contractor unless in addition to his duty of accountability for the property he has also been charged specifically with its care and safekeeping. Likewise, an accountable property officer in the absence of collusion on his part would not be pecuniarily liable in the event of improper care, handling, disposition, or use of Government property by a contractor.
22.	Relief of an accountable property officer from accountability will be effected in accordance with the provisions of Section X.
23.	It is the administrative function of the chiefs of the respective technical services to prescribe the duties of contracting officers or other Government personnel with respect to measures to be taken by contractors for the protection of Government property and precautions against its careless use or mishandling (See letter, War Department, AG 461 (7 Dec 43) OB-P-SPFCK-MB-A 14 December 1943, subject, “Administrative duties with respect to care and handling of Government property in hands of contractors.”
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24.	Contracting officers as such do not have responsibility for Government property furnished to contractors. A contracting officer who fails to carry out the duties prescribed in this manual as well as any other administrative duties with respect to the contractor’s care and handling of Government property which may be placed upon him (see par. 23) may, in ap
propriate cases, be subjected to disciplinary action for dereliction of duty.
25.	In the event an accountable property officer is unable to obtain within a reasonable period of time the necessary action of a contracting officer as prescribed in this manual, the accountable property officer is authorized to report such occurrence to higher authority.
590736’—44----2
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SECTION III
CLASSIFICATION OF PROPERTY
26.	All Government property furnished to contractors, for purposes of this manual, will be treated according to property classifications prescribed in this section.
27.	Class “A”-—plant and grounds. This classification includes land, buildings, structures, roads, bridges, culverts, sidewalks, railroad tracks, utility systems, and utility plants. Fixtures, appliances, and equipment such as lighting fixtures, fans, radiators, and so forth, which have been permanently incorporated in or attached to buildings or structures, will become a part of the specific building or structure involved and will be accounted for on class “A” property records (see sec. VI). Instances where class “A” property is furnished to contractors will be infrequent.
28.	Class “B”—catalogued property. This classification consists of all the larger units of property, other than that falling in class “A”, which may easily be traced. This class includes such items as machines, motors, locomotives, cranes, tractors, automobiles, furnaces, platform scales, and so forth. It also will include all equipment, appliances, instruments and tools for use in manufacturing, operating, construction and laboratory activities, which are not placed in class “C—1” in accordance with the provisions of paragraph 30. Master inspection gauges, in all cases, will be classified as class “B” property.
29.	Class “C”—noncatalogued property. This classification includes all raw materials, parts, components, assemblies, subassemblies, and manufacturing, operating, maintenance, construction, and laboratory supplies. In general, Class “C” will include all equipment, tools, and other property, for which it is not practicable to account by individual pieces, or which will be consumed or will be incorporated in or attached to other property in manufacture, repair, maintenance, construction, or operation. Class “C” property will be subdivided into “C-l” and “C-2” classifications
in accordance with the provisions of paragraphs 30 and 3L
30.	Class “C-l ” property. The following types of tools, equipment, and other property, within the limitations indicated, will be considered as Class “C-l” property:
a.	All special tooling equipment and special production gauges. This will include tooling equipment and production gauges designed for and limited to use in production of the particular product (end item) contracted for. Examples of tooling equipment which in most cases may be considered as “special” are templets, jigs, patterns, fixtures, and punching, forming and drawing dies, and tools.
b.	Standard tooling equipment and standard production gauges where the cost of each tool or gauge, or set of tools or gauges, is $50 or less. Standard tooling equipment will include items which are designed for broad use in machining or other manufacturing operations. Examples are cutting, grinding, drilling, and polishing tools.
c.	Items of property as detailed below where the unit price does not exceed $25:
(1)	Portable power and hand tools such as hammers, drills, and wrenches.
(2)	Laboratory equipment such as beakers, balance scales, and testing devices.
31.	Class “C—2” property. This classification includes all raw materials, parts, components, assemblies and subassemblies, and manufacturing, operating, maintenance, construction and laboratory supplies. Class “C-2” will include all property which will be consumed or which will be incorporated in other property in manufacture, repair, maintenance, construction, or operation.
32.	Where the classification of property is dependent upon its dollar cost, the costs may vary as between individual lots because of quantity discounts or price changes. Costs of the first lot received will govern in classifying lots subsequently received. Any cash discounts
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and transportation charges involved will be disregarded in determination of costs for purposes of classification. In the event unit costs or prices are not available, engineering estimates may be used in determining classification.
33.	Where any part of the contractor’s property records are used in lieu of maintaining a duplicate set of Government records (sec. VI), the contractor’s routines should provide for classifying all Government property received by him for use on his contract. This may be accomplished by placing on receiving docu
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ments the symbol “B” or “C-l”, as the case may be, opposite those items of property which are determined to be Class “B” or “C-l” property. This marking must be shown on copies of receiving documents intended for the accountable property officer’s files as well as those to be retained by the contractor for property accounting purposes. All other items listed on receiving documents and not so marked will be considered as Class “C-2” property. Classification of property as determined by the contractor will be reviewed by the accountable property officer and will be subject to his final approval.
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SECTION IV
RECEIVING AND INSPECTION
34.	In connection with the receipt of property-purchased by the contractor for Government account which will involve the accomplishment of Public Voucher Standard Form No. 1034 by the contracting officer, the preparation of W. D., Q,. M. C. Form No. 431 (Receiving Report) is not mandatory since this form is not required as supporting evidence for the Public Voucher. The chiefs of the technical services may prescribe the necessary receiving report forms for use in their respective services. Where such , forms have not been prescribed, the contractor’s receiving report may be used in lieu of a Government form provided:
a.	Such receiving report, in the opinion of the contracting officer, is suitable in form.
b.	Sufficient copies of the receiving report are made available to meet the Government’s needs in its administrative audit, the maintenance of property records, and other requirements as may be established by the contracting officer.
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35.	Where Public Voucher Standard Form No. 1034 covering property purchased by the contractor for Government account is accomplished by the contracting officer, disbursing officers will not require the submission of copies of individual receiving reports related thereto. In all such cases, contracting officers must furnish currently to the disbursing officer, a memorandum copy of each such public voucher without
attachments. Disbursing officers will transmit these copies to the fiscal director of the interested service command.
36.	Contract provisions regarding the procurement or manufacture of facilities for Government account generally have provided for inspection of such facilities by the contracting officer as a prerequisite to reimbursement of the contractor. This function will be performed as soon as practicable after receipt or manufacture of the facilities by the contractor and in a manner which will insure adequate protection of the Government’s interests.
37.	War Department instructions require that when Government property is shipped to a War Department contractor for use on his contract, the shipping officer, in addition to furnishing a copy of the shipping document to the accountable property officer for the contract, will forward a minimum of two copies to the contractor and instruct him to acknowledge receipt of the property on one copy and furnish it to the designated accountable property officer for the contract. The contractor will retain the other copy. When copies of shipping documents have not been received, the accountable property officer should request that acknowledgment of receipt of the property be furnished on the contractor’s reaeiving report, tally, or equivalent form.
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SECTION V
CONTRACTOR’S RECEIPT
38.	In all cases where Government property is furnished to a contractor, the accountable property officer must obtain from the contractor a written acknowledgment of receipt of the property. In this connection, the accountable property officer will—
a.	Obtain a written statement from the contractor listing the names of persons authorized to receive and accept Government property for the contractor.
b.	Determine by review that receiving reports, shipping documents, or other authorized lists of the property are appropriately receipted. It is imperative that these receipts be obtained since they represent the Govern
ment’s basic records with respect to Government property furnished to contractors.
39.	If a prime contractor has furnished a receipt for Government property shipped to a subcontractor it will not be necessary for the accountable property officer for the prime contract to secure acknowledgment of receipt from the subcontractor. Shipments from a prime contract to a subcontract for which a separate accountable property officer has been designated will require a transfer of accountability (see par. 77a). The accountable property officer for the subcontract will comply with the provisions of paragraph 38.
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SECTION VI ACCOUNTING FOR PROPERTY
40.	The prime duty of an accountable property officer is to maintain records of Government property furnished to contractors. The records will be maintained in the manner prescribed in this manual and the records must be kept in such condition that, at any stage of completion of work under a contract, adequate information will be readily available for use in determining the contractor’s liability, if any, for the loss, damage, destruction, or excessive use of Government property. When requested by the contracting officer or other Government representatives designated by the chief of the technical service concerned, the accountable property officer will submit any information shown in his property records. He will also render assistance in obtaining any additional information required with respect to property.
41.	In instances where class “A” property is furnished to a contractor, card records, O. C. E. Forms Nos. 432 to 438, inclusive, will be prepared from the information obtained from the contract and from whatever plans and specifications are available.
42.	Certain contracts provide that the contractor will be reimbursed by the Government for the cost of specified modification, or rearrangement, of contractor-owned plant or facilities necessary for commencement of work under the contract, and also for the cost of installing Government furnished facilities. To provide information in a form necessary to effect satisfactory settlement under such contracts, accountable property officers and contracting officers will make a joint review of the Government property involved to determine, so far as possible, those items which may have salable or utility value to the Government either in their original state or as salvage. Detailed records will be established for items of Government property having salable or utility value, and only descriptive summary records will be prepared for items of no apparent salable or utility value. With respect to projects under contracts which have provided the Gov
ernment with only a lien or other nontitle interest, descriptive summary records of the property should be prepared. For the purpose of this manual, property described in this paragraph will be designated as class “B,” but no marking of the property for identification will be required.
43.	Except as provided in paragraphs 44 and 45, catalogued property (class “B”) will be accounted for by individual item. Item control is facilitated by property identification numbers (sec. VIII) which normally will be placed on all items of this class of property. Records of class “B” property to be maintained by the accountable property officer will include, as a minimum, the following information :
Name and description; accessories; motors and control apparatus (par. 44); size or capacity; manufacturer’s serial number (if available); assigned property identification number; date received; property voucher number; location (plant site); and cost showing, where practicable, a segregation of freight and installation.
Identical items of this class of property may be summarized for record purposes on one card or other suitable form. Records will be maintained and filed in a manner permitting prompt location and identification of each item of class “B” property.
44.	In lieu of preparing individual records of motors and control apparatus attached to or installed in other property, such items may be recorded on records of the property to which they are attached. Manufacturer’s serial numbers appearing on motors will not be required to be recorded.
45.	Where equipment within a building or operating unit is interconnected in a continuous manufacturing process, such equipment may, for property accounting purposes, be grouped as one unit and one catalogued property record
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prepared in lieu of individual records for each, article contained in the unit. If this procedure is followed, a general lay-out drawing of the unit must be filed in support of and cross referenced to the catalogued property record.
46.	Accountable property officers are authorized to record manufacturing aids and machine tools classified as “C-l” property on the records of class “B” property with which they are associated. Where this is impractical, individual or summary records will be established for class “C-l” items. Although their detail will vary with the individual situation, records of class “C-l” property, as a minmum, should reflect quantities furnished to the contractor, returns or transfers, items lost or worn out in fabrication or assembly supported by the contracting officer’s findings (see par. 80), and balances on hand.
47.	With respect to materials or components (Class “C-2” property) furnished to contractors, accountable property officers will maintain on W. D. Form No. 27, or improvised forms which will accomplish the same purpose, the following information for each item:
a.	Quantities shipped to the contractor.
b.	Material credits representing quantities diverted to other contracts, adjustments approved by the contracting officer (see par. 80), defective items returned or scrapped, quantities rendered unserviceable or consumed in authorized testing operations, quantities returned at contract completion, etc.
c.	End items produced.
d.	Statement of quantities of components required or allowed for completion of the work. (See par. 13.)
e.	Record of scrap returned to the Government when the contract provides for returning it.
48.	With the approval of the chief of the technical service, accountable property officers are authorized to use the contractor’s records for class “C-2” property in lieu of maintaining a
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duplicate set of Government records for the property provided that—
a.	The contractor’s records are adequate to protect the interests of the Government.
b.	The contractor agrees in writing that such records will at all times be subject to review and examination by Government representatives and, further, that the records will not be disposed of until such action is approved by the contracting officer.
c.	A selective check of the contractor’s records, as outlined in section XII, is made by the acountable property officer.
49.	Approval of action described in paragraph 48 should be limited to those cases where the expense of stationing an accountable property officer at the plant or providing for frequent visits by him to the plant for the purpose of checking contractor maintained records would be less than the cost of maintaining the records by Government personnel.
50.	Use of the contractor’s records for classes “B” and “C-l” property in lieu of maintaining a duplicate set of Government records will be permitted only upon specific authorization of the Fiscal Director, Headquarters, Army Service Forces. Requests for this authority will be forwarded through channels by the accountable property officer.
51.	The contractor’s property records, when used in lieu of Government maintained records under the provisions of paragraphs 48, 49, and 50, will be subject to audit by service command property auditors in the same manner as Government maintained property records.
52.	To expedite the final settlement of contracts, contractors should be required to obtain the approval of the contracting officer prior to the removal of any class “B” property from the plant site, and currently to notify the contracting officer, through the accountable property officer, of each case of loss of class “B” property and abnormal losses or usage of class “C-l” and class “C-2” property.
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SECTION VII
NUMBERING AND REGISTERING VOUCHERS
53.	The purpose of assigning property voucher numbers and maintaining voucher registers is to provide—
a. A record of all documents through which property is taken up on or dropped from the property account.
&. Control over the subsequent use of such documents.
c. A system for assuring that data shown on the documents are posted to the detailed records.
54. Except as provided in paragraph 57, each receiving report, shipping document, written advice of the contracting officer, Report of Survey, or other document through which property is taken up on or dropped from the property account will be assigned a property voucher number in consecutive order. These numbers will be used as posting references for entries to the property account. Ordinarily a single series of numbers will be used. However, where such action will facilitate the processing of documents, accountable property officers are authorized to establish separate series of property voucher numbers as follows:
a.	Debit vouchers. (1) One series for documents covering Government property received from a War Department installation or contractor’s plant.
(2)	One series for all other documents through which property is taken up on the property account.
b.	Credit vouchers. (1) One series for documents covering completed products (end items) produced under contracts.
(2)	One series for all other documents through which property is dropped from the property account.
55.	Where more than one series of property voucher numbers is established, an identifying prefix or suffix will be included in each series in order to distinguish clearly each particular document. It will not be necessary to establish new series at the beginning of each fiscal year.
56.	A register of property vouchers for each series of voucher numbers will be maintained on W. D., Q. M. C. Form No. 480 or its equivalent. Vouchers will be recorded in the register in numerical order showing—
a.	Date.
b.	Description, such as receiving report, shipping document, and so forth.
c.	Contract number.
d.	Document number assigned by the originator.
e.	Class of property (if desired).
The procedures will provide for proper notation upon the register of the accomplishment of posting of data on the vouchers to the property records and for the prompt investigation of vouchers not so completed.
57.	Where documents evidencing receipt and acceptance of end items containing class “C-2” property are controlled by means of consecutive shipment numbers under the contract, the assignment of property voucher numbers to and the registration of such credit documents is not required.
58.	In exceptional cases where it can be demonstrated that other procedures provide the same degree of control over documents as would be accomplished by the registration required in paragraph 56, such procedures, with respect to debit vouchers for class “C-2” property furnished to a contractor, may be authorized by the Fiscal Director, Headquarters, Army Service Forces.
59.	When use of the contractor’s property records in lieu of maintaining a duplicate set of Government records has been authorized (sec. VI), the accountable property officer may establish a separate voucher number series and register for the contract.
60.	Property vouchers will be filed in numerical sequence by register numbers or by contracts.
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SECTION VIII MARKING PROPERTY FOR IDENTIFICATION
61.	All Government-owned machinery, tools and equipment furnished to contractors will be marked, where practicable, with the letters “U. S.” or other Government ownership designation such as the name or abbreviation of the technical service, procurement district, or station. Property should be marked before it is placed in use, preferably at the time of or prior to receipt (see par. 65). Markings will be placed on property in such a way that they will not be easily obliterated.
62.	To facilitate current control, final inventory, and ultimate disposition of class “B” property, a property identification number will be assigned to and included in the marking of each article under the supervision of the accountable property officer. Identification numbers need not be restricted to a single series for a given property account provided the numbers used in marking are supplemented by distinctive numerical or letter symbols to preclude duplication.
63.	Motors and control apparatus which are or will be installed in or attached to other class “B” property need not be assigned an individual property identification number.
Marking with the letters “U. S.” or other Government ownership designation will be sufficient.
64.	Assigned property identification numbers hereafter will be shown on all applicable receiving reports, or shipping documents, which become vouchers to the property account.
65.	The assignment of identification numbers in advance of receipt of property will facilitate both the work of tagging and recording the property. In instances where the contractor purchases property for Government account, the contractor, where practicable, should provide for the assignment of identification numbers at the time purchase orders are placed. Appropriate identification tags for affixing to property prior to shipment will be supplied when required.
66.	Marking property may be accomplished by etching, stamping, or attaching metal or plastic tags. Except in unusual cases, the work of marking property will be done by the contractor and it will be subjected to check by the accountable property officer. (See par. 94.)
13
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1 Jun 44
SECTION IX
CONTROL OF SCRAP
67.	“Scrap” includes the following which originate from Government furnished property:
a.	Cutting and processing waste, such as chips, cuttings, borings, turnings, short ends, circles, offal, trimmings, clippings, and remnants.
b.	Spoiled partially manufactured materials, parts, and assemblies, including parts and assemblies damaged in handling or installation.
c.	Damaged and obsolete supplies, packing materials, and containers, small tools, and special equipment originally classified as noncatalogued property.
68.	The provisions of this section are not applicable where the terms of the contract provide for the retention by the contractor of the scrap produced with due allowance for its value in prices to be billed by the contractor.
69.	Except for the provisions of paragraphs 74 and 75 this section shall not apply to contracts under which Government property is furnished to contractors when—
a.	Adequate data are available, based on experience under similar contracts, to determine the reasonableness of the quantities of scrap resulting from operations under the contract involved, and further provided, that the Government’s procedures include computations based on such data and provisions for proper recovery of the scrap by the Government.
b.	The value of scrap resulting from operations under the contract is insignificant.
70.	The contracting officer will assure himself that the contractor’s procedures regarding the physical control of scrap and the related accounting records conform to good commercial practice and are adequate to protect the interests of the Government.
71.	The contractor’s procedures must include the following:
a.	Appropriate inspection and study to determine the possibility of reworking or converting the scrap resulting from operations under the contract.
b.	Storing the scrap as produced, under adequate protection.
c.	Recording the scrap on accounting records, as it is produced at the contractor’s plant or reported by a subcontractor, to provide an accounting control over weights or other units of measure.
d.	Sorting of scrap, including segregation of the various analyses of metals where involved, to prevent contamination.
72.	In addition to satisfying himself that the contractor’s established procedures are adequate, the contracting officer will assure himself by actual observation and frequent review that procedures are effectively being carried out to protect the interests of the Government.
73.	The relative value of scrap produced on the contract, together with local circumstances, will govern the extent of safeguards to be provided to insure protection of the Government’s interests. In some instances provisions should be made by the contracting officer for requiring Government employees to verify weights of scrap as produced and to report the weights to the accountable property officer for use in ascertaining that equitable recovery by the Government is made.
74.	Contractors will be required to report scrap accumulations to the accountable property officer at the intervals and in the manner prescribed by the contracting officer.
75.	The disposition of scrap will be reflected on the accountable property officer’s records of Government property furnished to contractors.
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1 Jun 44
TM 14-911
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SECTION X RELIEF FROM ACCOUNTABILITY
76.	Relief of an accountable property officer from accountability for property furnished to contractors may be accomplished by one of the following methods:
a.	Transfer of accountability to another accountable property officer.
b.	Government acceptance of completed products (end items) containing class “C-2” property.
c.	Adjustment of discrepancies in shipments received.
d.	Written advice of the contracting officer.
e.	Report of Survey.
/. Sale of property.
g. Transfer of nonrepairable property to salvage officers. Each of the above methods is described in paragraphs below.
77.	Transfer of accountability.
a.	Where Government property is shipped to another contractor or War Department installation, transfer of accountability, where necessary, will be accomplished by means of shipping documents. For shipments to contractors, a minimum of four copies of the shipping document will be necessary. One copy will be sent to the receiving accountable property officer, one will be retained by the shipping officer, and two copies will be sent to the receiving contractor. The receiving contractor will be instructed to sign and forward one copy to the receiving accountable property officer. With respect to shipments to other than contractors, a minimum of two copies will be necessary. One copy will be forwarded to the receiving officer, and the other will be retained by the shipping officer. When accountability for property in an unserviceable condition is to be transferred to another accountable property officer the accountable shipping officer must list the property on a separate shipping document and include the following statement on it:
The property listed hereon is in an unserviceable condition. Appropriate inspection by those concerned with determination of
responsibility for its condition has been made.
(Signed) -------------------------------------
Accountable shipping officer.
b.	When an accountable property officer is relieved from such duty by appropriate authority, transfer to his successor of accountability for Government property in the possession or control of contractors and which is included in the property account will be effected by the execution of the following certificates:
--------------i	,	 (Place)---------------------(Date)
I certify that to the best of my knowledge and belief records of Government property furnished to contractors under contracts for which I have been designated the accountable property officer have been established and that such records reflect a true accounting of all Government property so furnished. These records, which constitute (a part of*) the property account of___________________________and account-
designation of account)
ability for the property involved, have been transferred on this date to______________________
(Name of successor) pursuant to______________________________
(Order directing transfer)
(Signed) ________________________________
Officer transferring accountability
•Delete if not appropriate.
I certify that I have this date accepted the records and assumed the accountability for property as described above for which my predecessor was accountable.
(Signed) ________________________________
Officer receiving accountability
Approved:
Commanding
Three copies of the certificate of transfer will be made. One copy will be retained by the officer who is relieved of the accountability, one will be filed with the property records, and one copy, together with a copy of the orders directing the transfer, will be sent immediately to the fiscal director of the service command concerned.
15
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78.	Government acceptance of completed products. Through the contracting officer or appropriate channels, accountable property officers will request Government inspectors to furnish them with a copy of every document evidencing acceptance by the Government of end items produced under the contract. These documents will serve as vouchers for relief from accountability for class “C-2” items involved. (See par. 47.) In some instances, the records of end items produced and shipped by the contractor are compiled by Government personnel in other sections or branches at the same location as the accountable property officer. In such cases accountable property officers are authorized to rely upon these records in lieu of maintaining a duplicate set.
79.	Adjustment of discrepancies in shipments received.
a.	Discrepancies in quantities or evidences of damage disclosed upon the receipt of Government property from a War Department installation or contractor’s plant will require action prescribed in AR 35-6640, section IV, Circular 147, War Department, 1943, and subsequent amendments.
b.	The instructions outlined in a above do not apply to instances of discrepancies disclosed upon the receipt of property purchased direct by the contractor for the account of the Government. The burden of adjusting such discrepancies with vendors rests with the contractor.
80.	Written advice of the contracting officer. Any question as to the contractor’s liability for loss, damage, destruction, wear, or excessive use or consumption of Government property will be determined in accordance with the applicable terms and provisions of the contract. Ordinarily this will involve a dispute concerning questions of fact to be determined by the contracting officer under the appropriate contract clause (par. 326, Procurement Regulations). Report of Survey procedure will not be used to determine the contractor’s liability. Relief from accountability for Government property involved will be accomplished as prescribed in this paragraph.
a.	When class “B” and class “C-l” property is lost or destroyed while in the contractor’s possession or control, the contracting officer will require that such occurrences be reported to him as they become known. The contracting officer will advise the interested accountable
1 Jun 44
property officer in writing of the items and amount of loss involved, his findings regarding the contractor’s liability, the amount of liability assumed by the contractor, if any, together with a brief statement of the facts surrounding the loss.
b.	Contracts under which Government-owned facilities are furnished to a War Department contractor for use on work under the contract, have provided, in general, that the contractor will keep the facilities in good operating condition and repair, and that he will make repairs and replacements to the extent the necessity for repairs and replacements is due to wear and tear resulting from operations. When Class “B” or Class “C-l” property in the possession of a contractor is to be returned to the Government by the contractor because it is no longer needed or because it is unsuitable for further use, the contracting officer will advise the accountable property officer in writing of his findings with respect to the contractor’s liability, if any, under the applicable contract provisions.
c.	Due to the nature and volume of class “C-2” property, an exact determination of individual losses or instances of excessive consumption of such property normally cannot be made until quantities in the possession or control of contractors are determined by physical count. Inventories will be taken as frequently as practicable and in the manner prescribed by the contracting officer. When the results of these inventories are furnished to the accountable property officer, he will prepare a statement with respect to each such item substantially as follows:
Total quantity of the class “C-2” item furnished to the contractor. xxx
Less: Material credits (see par.
47).	xxx
Z-----
xxx
Less: Product of number of end items accepted times unit allowance where such has been established by the contract or, where unit allowance has not been estab-1 i s h e d : Calculation of quantity of the class “C-2” item included in end items accepted based on established requirements (see par. 13).	xxx
r-----
xxx
16
1 Jun 44
Less: Quantity of the class “C-
2” items in the Contractor’s possession per count.	xxx
I-----
Balance for adjustment.	xxx
[/—=
Memorandum: (where available) Quantity of scrap produced to date.	xxx
/-----
d.	Where the statements as described in c above indicate unadjusted balances, they will be submitted to the contracting officer who will advise the accountable property officer in writing of the quantity and value of the article to be adjusted, his findings regarding the contractor’s liability, the amount of liability assumed by the contractor, if any, together with a brief statement in support of his findings.
e.	Where losses, instances of destruction, or damage beyond repair, of definite lots of class “C-2” property occur in other than manufacturing operations while such property is in the possession or control of a contractor, the contracting officer will advise the accountable property officer of his findings in the manner prescribed in d above.
/. Except as provided in paragraph 81, the contracting officer’s written advice of his findings will serve as an acceptable credit voucher provided:
(1) Such advice is supported by or appropriately cross referenced to shipping documents (par. 77) or lists (par. 83) covering the disposition of any unserviceable property involved.
(2) In instances where the contractor is held liable for losses, such advice is supported by evidence that the appropriate Government office has received notification to effect collection.
g. An extra copy of the contracting officer’s written advice to the accountable property officer regarding questions of contractor’s liability for property as prescribed in this paragraph in all cases will be prepared and held by the contracting officer for the service command property auditors.
81.	Report of Survey. The Report of Survey procedure, as provided in AR 35-6640, will be followed in all instances of property lost or destroyed (except when the contractor assumes the liability) where the accountable property officer is unable to exhibit an acknowledgment of receipt by the contractor of the property involved. Any question as to the contractor’s
TM14-911
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liability in such cases will be referred to the contracting officer for action as prescribed in paragraph 80 and his written findings will be attached as an exhibit to the Report of Survey.
82.	Sale of property. When, under the terms of the contract or Procurement Regulation No. 7, a sale of property is made, a copy of the document upon which shipment or transfer was accomplished, together with a copy of the finance officer’s receipt for the proceeds of the sale, will serve as an acceptable credit voucher for recording by the accountable property officer.
83.	Transfer of nonrepairable property to salvage officers. When nonrepairable property is turned over to a salvage officer pursuant to the provisions of Section IV, Procurement Regulation No. 7, the certified lists of the property required by this regulation will serve as an acceptable credit voucher. In such circumstances where there is any question of a contractor’s liability for condition of the property, the written advice of the contracting officer must also be obtained. (See par. 80.)
84.	Relief of the designated accountable property officer from accountability at contract termination or completion for class “B” or “C-l” property will involve the following requirements :
a. A physical inventory of the property.
&. A comparison of the inventory with the accountable property officer’s records to determine existing shortages and a report of all shortages to the contracting officer.
c.	Where necessary, a joint inspection of the property by the contractor and contracting officer to determine its condition.
d.	A written advice of the contracting officer in accordance with paragraph 80 as to the contractor’s liability, if any, for the condition or shortages of property.
e.	The authorized transfer, sale, or other disposition of the property listed in the inventory.
85.	Relief of the designated accountable property officer from accountability at contract termination or completion for class “C-2” property will involve the following requirements:
a.	A physical inventory of the quantities of each item remaining in the possession or control of the contractor.
b.	The preparation by the accountable property officer of statements of consumption as
17
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SET
prescribed in paragraph 80c and submission to the contracting officer where required. (See par. 80