[Federal Register: April 4, 2011 (Volume 76, Number 64)]
[Proposed Rules]
[Page 18497-18504]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04ap11-39]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 2, 31, 32, 45, 49, 52, and 53
[FAR Case 2010-009; Docket 2010-0009; Sequence 1]
RIN 9000-AL95
Federal Acquisition Regulation; Government Property
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Proposed rule.
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SUMMARY: DoD, GSA, and NASA are proposing to amend the Federal
Acquisition Regulation (FAR) to clarify reporting, reutilization, and
disposal of Government property and the contractor requirements under
the Government property clause.
DATES: Interested parties should submit written comments to the
Regulatory Secretariat at one of the addressees shown below on or
before June 3, 2011. to be considered in the formation of the final
rule.
ADDRESSES: Submit comments in response to FAR Case 2010-009 by any of
the following methods:
Regulations.gov: http://www.regulations.gov. Submit
comments via the Federal eRulemaking portal by inputting ``FAR Case
2010-009'' under the heading ``Enter Keyword or ID'' and selecting
``Search.'' Select the link ``Submit a Comment'' that corresponds with
``FAR Case 2010-009.'' Follow the instructions provided at the ``Submit
a Comment'' screen. Please include your name, company name (if any),
and ``FAR Case 2010-009'' on your attached document.
Fax: (202) 501-4067.
Mail: General Services Administration, Regulatory
Secretariat (MVCB), ATTN: Hada Flowers, 1275 First Street, NE., 7th
Floor, Washington, DC 20417.
Instructions: Please submit comments only and cite FAR Case 2010-
009, in all correspondence related to this case. All
[[Page 18498]]
comments received will be posted without change to http://
www.regulations.gov, including any personal and/or business
confidential information provided.
FOR FURTHER INFORMATION CONTACT: Ms. Jeritta Parnell, Procurement
Analyst, at (202) 501-4082, for clarification of content. For
information pertaining to status or publication schedules, contact the
Regulatory Secretariat at (202) 501-4755. Please cite FAR Case 2010-
009.
SUPPLEMENTARY INFORMATION:
I. Background
DoD, GSA, and NASA are proposing to amend the FAR to clarify
current FAR policy with respect to the proper disposition of contractor
inventory. However, a number of other changes were made, aimed at
enhancing the management of Government contract property in the hands
of contractors. The changes are the result of questions raised by
contractors and Government personnel, Government and industry
exchanges, and lessons learned. In addition, some comments from the
previous FAR Case 2008-011, published in the Federal Register at 75 FR
38675 on July 2, 2010), that were deemed to be outside the scope of
that case, are addressed in this case.
The revisions include the following:
1. Clarify that FAR part 45 and FAR 52.245-1 does not apply to
Government property incidental to the place of performance at a
Government site or installation. See FAR 45.000.
2. Add new definitions for ``loss of Government property'' and
``unit acquisition cost'' in FAR part 45 and FAR 52.245-1, delete the
definition of ``acquisition cost,'' and move the definition of
``surplus property'' from part 45 to part 2.
3. Update FAR subpart 45.6 to clarify and align with the Federal
Management Regulation; and
4. Revise language based on comments received in response to, but
outside the scope of, FAR Case 2008-011.
II. Executive Order 12866
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.
III. Regulatory Flexibility Act
The proposed changes may have a significant economic impact on a
substantial number of small entities within the meaning of the
Regulatory Flexibility Act 5 U.S.C. 601, et seq., because the rule
affects the method of managing some Government property in the hands of
contractors, particularly scrap. However, as the rule reduces the
burden on all businesses by removing the reporting of production scrap,
it should have a positive effect on small businesses. An Initial
Regulatory Flexibility Act (IRFA) analysis has been prepared and is
summarized as follows.
This Initial Regulatory Flexibility Analysis has been prepared
consistent with Section 603, Title 5, of the United States Code.
1. Description of the reasons why action by the agency is being
considered.
DoD, GSA, and NASA are proposing to revise FAR parts 45 and 52.
The focus of this effort is to clarify FAR subpart 45.6, Reporting,
Reutilization, and Disposal, and the contractor requirements under
the clause at FAR 52.245-1.
The revisions include technical corrections to align the FAR
with the requirements of the Federal Management Regulation (FMR).
For example, the new language is now consistent with current
property reutilization priorities, abandonment and destruction
determinations, and surplus sales policy. Moreover, the language has
been edited for clarity and placed in proper process sequence. Also
included is new and expanded policy language on the disposal of
scrap.
Notwithstanding the proposed rule's overall focus on FAR subpart
45.6 and the associated contractor requirements under FAR 52.245-1,
additional revisions include new language at FAR 45.104 for
contracting officers on depositing monies received from contractors
for property that is lost, damaged, destroyed or stolen.
In essence, the rule does not result in new requirements on
contractors; it clarifies existing policies and procedures. The rule
will simplify compliance for contractors and enable consistent
Government oversight.
2. Succinct statement of the objectives of, and legal basis,
for, the proposed rule.
Title 40 U.S.C. 524, Public Buildings, Property, and Works
requires, in part, that executive agencies account for Government
property, determine when such property is excess, and dispose of
excess Government property promptly. This proposed rule amends the
FAR to revise the policies for the disposition of contractor
inventory. The objective of this case is to substantially revise,
clarify, and improve current policy.
3. Description of, and, where feasible, estimate of the number
of small entities to which the proposed rule will apply.
It is estimated that approximately 5000 contractors have Federal
property in their possession. DoD has approximately 3000 contractors
with potential contract-property reporting requirements.
Approximately 60 percent of all DoD contractors are small
businesses. Given that property in the possession of contractors is
overwhelmingly DoD property, it is estimated the DoD ratio of small
business to total businesses having such property is a reasonable
approx-imation for all Government contractors. Therefore, it is
estimated that approximately 3000 small businesses have Government
property in their possession.
4. Description of projected reporting, recordkeeping, and other
compliance requirements of the proposed rule, including an estimate
of the classes of small entities which will be subject to the
requirement and the type of professional skills necessary for
preparation of the report of record.
FAR Case 2004-025 streamlined the requirements concerning
property management in FAR part 45. FAR Case 2008-011 continued that
philosophy. This new proposed rule seeks continuous improvement to
property management by streamlining and clarifying the policies for
the disposition of contractor inventory. DoD, GSA, and NASA believe
the rule will have a positive effect on small businesses in that it
further streamlines the process and reduces the paperwork burden.
It should be noted that these recommended changes are consistent
with the Office of the Under Secretary of Defense, Acquisition,
Technology and Logistics, recent statements emphasizing the need to
improve the productivity of the defense industry and remove
Government impediments to efficiency.
There are four reports currently required. These reports are
required to assure appropriate use and disposition of contract
property. These reports are--
SF 1423, Inventory Verification Survey.
SF 1424, Inventory Disposal Report.
SF 1428, Inventory Disposal Schedule.
SF 1429, Inventory Disposal Schedule Continuation Sheet.
All of these forms are available online and may be submitted by
the contractor using electronic means. It should be noted that DoD
no longer requires the use of the SF 1428 and 1429 forms and instead
DoD uses the web-enabled Plant Clearance Automated Reutilization and
Reporting System (PCARRS). NASA and other Federal agency contractors
use PCARRS when their contracts are delegated to DCMA for plant
clearance. Use of PCARRS reduces burden on small businesses as well
other businesses by providing an easily accessible web-based
reporting mechanism.
5. Identification, to the extent practicable, of all relevant
Federal rules that may duplicate, overlap, or conflict with the
proposed rule.
The Federal Property Management Regulation (FPMR) and the FMR
published by the General Services Administration provide property
management guidance to Government personnel. Some of the
requirements of the FMR are implemented by the FAR in regard to
contracts awarded to Federal contractors. The FPMR and FMR do not
duplicate, overlap, or conflict with the proposed rule.
6. Description of any significant alternatives to the proposed
rule which accomplish the stated objectives of applicable statues
and which minimize any significant economic impact of the proposed
rule on small entities.
There are no known alternatives to this proposed rule. However,
the proposed rule should not have a significant adverse economic
impact on a substantial number of
[[Page 18499]]
small entities. In fact, the current impact to both large and small
contractors will be reduced. For example, the current FAR requires
Government approval of contractor scrap procedures prior to allowing
the contractor to dispose of ordinary production scrap. In addition,
the current practice of requiring contractors (without approved
scrap procedures) to submit inventory schedules or scrap lists for
production scrap assumes that such practice is economically or
otherwise justified in all cases. This practice unnecessarily
burdens small contractors that generate only small amounts of scrap.
This proposed rule removes the requirement for Government
approvals of contractor scrap procedures and submitting inventory
schedules and scrap lists, thus easing the burden on large and small
contractors alike. It should be noted that contractor procedures
would still be required and evaluated by the agency responsible for
contract administration, as a normal part of contract property
administration. The new rule will also result in more consistent
levels of Government oversight, further easing the burden on small
entities.
The information required by the proposed rule has been reduced
to the minimum necessary to assure compliance with the Government's
statutory accountability requirements.
The Regulatory Secretariat will be submitting a copy of the IRFA to
the Chief Counsel for Advocacy of the Small Business Administration. A
copy of the IRFA may be obtained from the Regulatory Secretariat. DoD,
GSA, and NASA invite comments from small business concerns and other
interested parties on the expected impact of this rule on small
entities.
DoD, GSA, and NASA will also consider comments from small entities
concerning the existing regulations in subparts affected by this rule
in accordance with 5 U.S.C. 610. Interested parties must submit such
comments separately and should cite 5 U.S.C. 610 (FAR Case 2010-009) in
correspondence.
IV. Paperwork Reduction Act
The Paperwork Reduction Act (44 U.S.C. chapter 35) applies because
the proposed rule contains information collection requirements.
Accordingly, the Regulatory Secretariat will submit a request for
approval of a revised information collection requirement concerning
Government Property to the Office of Management and Budget.
Annual Reporting Burden:
Public reporting burden for this collection of information is
estimated to average .32 hours per response, including the time for
reviewing instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information.
The annual reporting burden is estimated as follows:
Respondents: 4,875.
Responses per respondent: 910.26.
Total annual responses: 4,437,518.
Preparation hours per response: .32.
Total response burden hours: 1,420,006.
V. Request for Comments Regarding Paperwork Burden
Submit comments, including suggestions for reducing this burden,
not later than June 3, 2011 to: FAR Desk Officer, OMB, Room 10102,
NEOB, Washington, DC 20503, and a copy to the General Services
Administration, Regulatory Secretariat (MVCB), ATTN: Hada Flowers, 1275
First Street, NE., 7th Floor, Washington, DC 20417.
Public comments are particularly invited on: Whether this
collection of information is necessary for the proper performance of
functions of the FAR, and will have practical utility; whether our
estimate of the public burden of this collection of information is
accurate, and based on valid assumptions and methodology; ways to
enhance the quality, utility, and clarity of the information to be
collected; and ways in which we can minimize the burden of the
collection of information on those who are to respond, through the use
of appropriate technological collection techniques or other forms of
information technology.
Requesters may obtain a copy of the supporting statement from the
General Services Administration, Regulatory Secretariat (MVCB), 1275
First Street, NE., 7th Floor, Washington, DC 20417. Please cite OMB
Control Number 9000-00XX, Government Property, in correspondence.
List of Subjects in 48 CFR Parts 2, 31, 32, 45, 49, 52, and 53
Government procurement.
Dated: March 24, 2011.
Millisa Gary,
Acting Director, Office of Governmentwide Acquisition Policy.
Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 2, 31,
32, 45, 49, 52, and 53 as set forth below:
1. The authority citation for 48 CFR parts 2, 31, 32, 45, 49, 52,
and 53 continues 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 2--DEFINITIONS OF WORDS AND TERMS
2. Amend section 2.101 in paragraph (b) by adding, in alphabetical
order, the definition ``Surplus property'' to read as follows:
2.101 Definitions.
* * * * *
(b) * * *
Surplus property means excess personal property not required by any
Federal agency as determined by the Administrator of the General
Services Administration (GSA). See 41 CFR 102-36.40.
* * * * *
PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES
3. Amend section 31.205-19 by revising paragraphs (e)(2)(iv)
introductory text, (e)(2)(iv)(A), and (e)(2)(iv)(C) to read as follows:
31.205-19 Insurance and indemnification.
* * * * *
(e) * * *
(2) * * *
(iv) Costs of insurance for the risk of loss of Government property
are allowable to the extent that--
(A) The contractor is liable for such loss;
* * * * *
(C) Such insurance does not cover loss of Government property that
results from willful misconduct or lack of good faith on the part of
any of the contractor's managerial personnel (as described in FAR
52.245-1(h)(1)(ii)).
* * * * *
PART 32--CONTRACT FINANCING
4. Amend section 32.503-16 by revising the first sentence of
paragraph (a) to read as follows:
32.503-16 Risk of loss.
(a) Under the Progress Payments clause, and except for normal
spoilage, the contractor bears the risk of loss of Government property
for property affected by the clause, even though title is vested in the
Government, unless the Government has expressly assumed this risk. * *
*
* * * * *
5. Amend section 32.1010 by revising the first sentence of
paragraph (a) to read as follows:
32.1010 Risk of loss.
(a) Under the clause at 52.232-32, Performance-Based Payments, and
except for normal spoilage, the contractor bears the risk of loss of
Government property, even though title is vested in the Government,
unless the Government has expressly assumed this risk. * * *
* * * * *
[[Page 18500]]
PART 45--GOVERNMENT PROPERTY
6. Revise section 45.000 to read as follows:
45.000 Scope of part.
(a) This part prescribes policies and procedures for providing
Government property to contractors; contractors' management and use of
Government property; and reporting, redistributing, and disposing of
contractor inventory.
(b) It does not apply to--
(1) Government property provided under any statutory leasing
authority, except as to non-Government use of property under 45.301(f);
(2) Property to which the Government has acquired a lien or title
solely because of partial, advance, progress, or performance based
payments;
(3) Disposal of real property;
(4) Software and intellectual property; or
(5) Government property that is incidental to the place of
performance, when the contract requires contractor personnel to be
located on a Government site or installation, and when the property
used by the contractor within the location remains accountable to the
Government. Items considered to be incidental to the place of
performance include, for example, office space, desks, chairs,
telephones, computers, and fax machines.
7. Amend section 45.101 by--
a. Removing the definition ``Acquisition cost'';
b. Adding in alphabetical order the definitions ``Loss of
Government property'', and ``Production scrap'';
c. Removing the definition ``Surplus property'' and
d. Adding in alphabetical order the definition ``Unit acquisition
cost''.
The added text reads as follows:
45.101 Definitions.
* * * * *
Loss of Government property means unintended, unforeseen or
accidental loss, damage, or destruction of Government property that
reduces the Government's expected economic benefits of the property.
Loss of Government property does not include purposeful destructive
testing, obsolescence, normal wear and tear, or manufacturing defects.
Loss of Government property includes, but is not limited to--
(1) Items that cannot be found after a reasonable search;
(2) Theft;
(3) Damage resulting in unexpected harm to property requiring
repair to restore the item to usable condition; or
(4) Destruction resulting from incidents that render the item
useless for its intended purpose or beyond economical repair.
* * * * *
Production scrap means material left over from the normal
production process that has only remelting or reprocessing value, e.g.,
textile and metal clippings, borings, and faulty castings and forgings.
* * * * *
Unit acquisition cost means--
(1) For Government-furnished property, the dollar value assigned by
the Government and identified in the contract; and
(2) For contractor-acquired property, the cost derived from the
contractor's records that reflect consistently applied generally
accepted accounting principles.
8. Amend section 45.102 by adding paragraph (e) to read as follows:
45.102 Policy.
* * * * *
(e) Government property, other than foundations and similar
improvements necessary for installing special tooling, special test
equipment, or equipment, shall not be installed or constructed on
contractor-owned real property in such fashion as to become
nonseverable, unless the head of the contracting activity determines
that such installation or construction is necessary and in the
Government's interest.
9. Amend section 45.104 by--
a. Revising the introductory text of paragraph (a);
b. Revising paragraph (b); and
c. Adding paragraphs (d) and (e).
The revised and added text reads as follows:
45.104 Responsibility and liability for Government property.
(a) Generally, contractors are not held liable for loss of
Government property under the following types of contracts:
* * * * *
(b) The contracting officer may revoke the Government's assumption
of risk when the property administrator determines that the
contractor's property management practices are noncompliant with
contract requirements.
* * * * *
(d) With respect to loss of Government property, the contracting
officer, in consultation with the property administrator, shall
determine--
(1) The extent, if any, of contractor liability based upon the
amount of damages corresponding to the associated lost property; and
(2) The appropriate form and method of Government recovery (may
include repair, replacement, or other restitution).
(e) Any monies received as financial restitution shall be credited
to the Treasury of the United States as miscellaneous receipts, unless
otherwise authorized by statute (31 U.S.C. 3302(b)).
10. Amend section 45.105, by revising the first sentence of the
introductory text of paragraph (b), and by revising paragraphs (b)(1)
and (d) to read as follows:
45.105 Contractors' property management system compliance.
* * * * *
(b) The property administrator shall notify the contractor in
writing when the contractor's property management system does not
comply with contractual requirements, shall request prompt correction
of deficiencies, and shall request from the contractor a corrective
action plan, including a schedule for correction of the deficiencies. *
* *
(1) Revocation of the Government's assumption of risk for loss of
Government property; and/or
* * * * *
(d) When the property administrator determines that a reported case
of loss of Government property is a risk assumed by the Government, the
property administrator shall notify the contractor in writing that they
are granted relief of stewardship responsibility and liability in
accordance with FAR clause 52.245-1(f)(1)(vii). Where the property
administrator determines that the risk of loss of Government property
is not assumed by the Government, the property administrator shall
request that the contracting officer hold the contractor responsible
and liable.
11. Amend section 45.107 by--
a. Revising paragraph (a)(1)(i);
b. Removing from paragraph (b) ``service contracts'' and adding
``fixed-price service contracts'' in its place; and
c. Removing from paragraph (d) ``acquisition cost'' and adding
``unit acquisition cost'' in its place.
The revised text reads as follows:
45.107 Contract clauses.
(a)(1) * * *
(i) All cost-reimbursement, time-and-material, and labor-hour type
solicitations and contracts; and, when property is expected to be
furnished for the labor-hour contracts.
* * * * *
12. Amend section 45.201 by--
a. Removing from paragraph (a)(1) ``tracking and/or'' and adding
``tracking and management, and/or'' in its place;
[[Page 18501]]
b. Removing from paragraph (a)(4) ``tracking); and'' and adding
``tracking and management); and'' in its place; and
c. Revising paragraph (c)(4).
The revised text reads as follows:
45.201 Solicitation.
* * * * *
(c) * * *
(4) A description of the offeror's property management system and
any customary commercial practices, voluntary consensus standards, or
industry leading practices and standards to be used by the offeror in
managing Government property.
* * * * *
45.202 [Amended]
13. Amend section 45.202 by removing from the first sentence of
paragraph (a) ``from the contractor'' and adding ``from an offeror or
contractor'' in its place.
14. Amend section 45.602-1 by--
a. Removing from paragraphs (b)(2) and (b)(3) ``Require a
contractor'' and adding ``Require the contractor'' in its place;
b. Removing from paragraph (b)(4) ``might entitle'' and adding
``may entitle'' in its place;
c. Revising the introductory text of paragraph (c) and the
introductory text of paragraph (c)(1);
d. Removing from paragraph (c)(1)(i) ``acquisition cost'' and
adding ``unit acquisition cost'' in its place; and
e. Revising paragraph (c)(1)(iv).
The revised text reads as follows:
45.602-1 Inventory disposal schedules.
* * * * *
(c) The contractor may request the plant clearance officer's
approval to remove the Government property from an inventory schedule.
(1) Plant clearance officers may approve removal of Government
property from an inventory schedule when--
* * * * *
(iv) The contractor has requested continued use of the Government
property, and the contracting officer has authorized its retention and
further use.
* * * * *
15. Amend section 45.602-2 by--
a. Revising the introductory text and paragraph (a);
b. Removing paragraph (b);
c. Redesignating paragraphs (c) and (d) as paragraphs (b) and (c),
respectively;
d. Removing from newly redesignated paragraph (b) ``April 17,
1996),'' and adding ``April 17, 1996, and 15 U.S.C. 3710(i);'' in its
place;
e. Revising newly redesignated paragraph (c);
f. Adding new paragraphs (d) and (e).
The revised and added text reads as follows:
45.602-2 Reutilization priorities.
Plant clearance officers shall initiate reutilization actions for
all property not meeting the abandonment or destruction criteria of
45.603(b). Authorized methods, listed in descending order from highest
to lowest priority, are--
(a) Reuse within the owning agency;
* * * * *
(c) Report to GSA for reuse within the Federal Government or
donation as surplus property;
(d) Dispose of the following property in accordance with agency
procedures without reporting to GSA:
(1) Property determined appropriate for abandonment or destruction
(see FMR 102-36.305, 41 CFR 102-36.305).
(2) Property furnished to nonappropriated fund activities property
(see FMR 102-36.165, 41 CFR 102-36.165).
(3) Foreign excess personal property (see FMR 102-36.380, 41 CFR
102-36.380).
(4) Scrap, except aircraft in scrap condition.
(5) Perishables, defined for the purposes of this section as any
personal property subject to spoilage or decay.
(6) Trading stamps and bonus goods.
(7) Hazardous waste or toxic and hazardous materials.
(8) Controlled substances.
(9) Property dangerous to public health and safety.
(10) Classified items or property determined to be sensitive for
reasons of national security; and
(e) Dispose of nuclear materials (see 45.603-3(b)(5)) in accordance
with the Nuclear Regulatory Commission (NRC), applicable state
licenses, applicable Federal regulations, and agency regulations.
16. Revise section 45.603 to read as follows:
45.603 Abandonment or destruction of personal property.
(a) When contractor inventory is processed through the
reutilization screening process prescribed in 45.602-2 without success,
and provided the property has no commercial value, does not require
demilitarization, and does not constitute a danger to public health or
welfare, plant clearance officers or other authorized officials may
without further approval--
(1) Direct the contractor to destroy the property;
(2) Abandon non-sensitive property at the contractor's or sub-
contractor's premises; or
(3) Abandon sensitive property at the contractor's or sub-
contractor's premises, with contractor consent.
(b) Provided a Government reviewing official at least one level
higher than the plant clearance officer or other agency authorized
official approves, plant clearance officers or other agency authorized
officials may authorize the abandonment, or order the destruction of
other contractor inventory at the contractor's or sub-contractor's
premises, in accordance with FMR 102-36-305 through 325 and consistent
with the following:
(1) The property is not considered sensitive, does not require
demilitarization, has no commercial value or reutilization, transfer or
donation potential, and does not constitute a danger to public health
or welfare.
(2) The estimated cost of continued care and handling of the
property (including advertising, storage and other costs associated
with making the sale), exceed the estimated proceeds from its sale.
(c) In lieu of abandonment or its authorized destruction, the plant
clearance officer or authorized official may authorize the donation of
property including unsold surplus property to public bodies, provided
that the property is not sensitive property, does not require
demilitarization, and it does not constitute a danger to public health
or welfare. The Government will not bear any of the costs incident to
such donations.
(d) Unless the property qualifies for one of the exceptions under
FMR 102-36.330 (41 CFR 102-36.330), the plant clearance officer or
requesting official will ensure prior public notice of such actions of
abandonment or destruction consistent with FMR 102-36.325 (41 CFR 102-
36.325).
17. Revise the section heading of 45.604 to read as follows:
45.604 Sale of surplus personal property.
* * * * *
18. Revise section 45.604-1 to read as follows:
45.604-1 Sales procedures.
Surplus personal property that has completed screening in
accordance with 45.602-3(a) shall be sold in accordance with the policy
for the sale of surplus personal property contained in the Federal
Management Regulation, at Part 102-38 (41 CFR part 102-38). Agencies
may specify implementing procedures.
45.604-2 [Removed]
19. Remove section 45.604-2.
[[Page 18502]]
45.604-3 and 45.604-4 [Redesignated as 45.604-2 and 45.604-3]
20A. Redesignate sections 45.604-3 and 45.604-4 as sections 45.604-
2 and 45.604-3, respectively.
20B. Revise the newly redesignated section 45.604-2 to read as
follows:
45.604-2 Use of GSA sponsored sales centers.
Agencies may use sales center services. Use of such centers for
sale of surplus property is authorized when in the best interest of the
Government, consistent with contract terms and conditions.
21. Add section 45.604-4 to read as follows:
45.604-4 Sale of property pursuant to the exchange/sale authority.
Agencies should consider the sale of property pursuant to the
exchange/sale authority in FMR 102-39 (41 CFR part 102-39) when
agencies are acquiring or plan to acquire similar products and other
requirements of the authority are satisfied.
22. Revise section 45.605 to read as follows:
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 and the crediting of any
related proceeds. The report shall identify any lost 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 provided to the
administrative contracting officer or, for termination inventory, to
the termination contracting officer, with a copy to the property
administrator.
23. Revise section 45.606-1 to read as follows:
45.606-1 Contractor scrap procedures.
(a) The property administrator should ensure that contractor scrap
disposal processes, methods and practices allow for effective,
efficient and proper disposition, and are properly documented in the
contractor's property management procedures.
(b) The property administrator should determine the extent to which
separate disposal processing or physical segregation for different
scrap types is or may be required as early as possible, preferably
during the solicitation phase. Such scrap may require physical
segregation, unique disposal processing or separate plant clearance
reporting. For example, the scope of work may create scrap--
(1) Consisting of sensitive items;
(2) Containing hazardous materials or wastes;
(3) Contaminated with hazardous materials or wastes;
(4) That is classified or otherwise controlled;
(5) Containing precious or strategic metals; or
(6) That is dangerous to public health or safety.
(c) Absent contract terms and conditions to the contrary, the
Government may abandon parts removed and replaced from property as a
result of normal maintenance actions, or removed from property as a
result of the repair, maintenance, overhaul, or modification process.
45.606-2 and 45.606-3 [Removed]
24. Remove sections 45.606-2 and 45.606-3.
PART 49--TERMINATION OF CONTRACTS
49.204 [Amended]
25. Amend section 49.204 by removing from paragraph (b)
``destroyed, lost, stolen, or'' and adding ``lost or'' in its place.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
26. Amend section 52.232-16 by revising the date of the clause, and
the last sentence of paragraph (e) to read as follows:
52.232-16 Progress Payments.
* * * * *
Progress Payments (Date)
* * * * *
(e) * * * The Contractor shall repay the Government an amount
equal to the unliquidated progress payments that are based on costs
allocable to property that is lost (see 45.101).
* * * * *
27. Amend section 52.232-32 by revising the date of the clause, and
the last sentence of paragraph (g) to read as follows:
52.232-32 Performance-Based Payments.
* * * * *
Performance-Based Payments (Date)
* * * * *
(g) * * * If any property is lost (see 45.101), the basis of
payment (the events or performance criteria) to which the property
is related shall be deemed to be not in compliance with the terms of
the contract and not payable (if the property is part of or needed
for performance), and the Contractor shall refund the related
performance-based payments in accordance with paragraph (d) of this
clause.
* * * * *
28. Amend section 52.245-1 by--
a. Revising the date of the clause;
b. Removing the definition ``Acquisition cost'' from paragraph (a);
c. Adding, in alphabetical order, the definitions, ``Loss of
Government property'', and ``Production scrap'' to paragraph (a);
d. Removing the definition ``Surplus property'' from paragraph (a);
e. Adding, in alphabetical order, the definition ``Unit acquisition
cost'' to paragraph (a);
f. Revising paragraph (b)(1);
g. Removing from paragraph (b)(2) ``, stolen, damaged, or
destroyed'';
h. Adding paragraph (b)(4);
i. Removing from paragraph (f)(1)(ii) ``property (document the
receipt)'' and adding ``property and document the receipt'' in its
place;
j. Revising paragraphs (f)(1)(iii)(A)(1), (f)(1)(iii)(A)(10),
(f)(1)(v)(A), (f)(1)(vi), and (f)(1)(vii);
k. Removing from paragraph (f)(1)(x) ``loss, theft, damage, or
destruction'' and adding ``loss of Government property'' in its place;
l. Removing from paragraph (f)(2) ``acquisitions'' and adding
``acquisitions, loss of Government property,'' in its place;
m. Removing paragraph (f)(3);
n. Removing from paragraph (h)(1) introductory text ``loss, theft,
damage or destruction to the'' and adding ``loss of'' in its place;
o. Revising paragraph (h)(1)(ii), (h)(1)(iii), (h)(2), and (h)(3);
p. Redesignating paragraph (h)(4) as paragraph (h)(5);
q. Adding new paragraph (h)(4);
r. Adding the words ``or authorizing official'' before the period
at the end of the introductory text of paragraph (j);
s. Removing paragraph (j)(1);
t. Redesignating paragraphs (j)(2) through (j)(10) as paragraphs
(j)(1) through (j)(9), respectively;
u. Revising newly redesignated paragraphs (j)(1)(i), (j)(1)(ii),
the introductory text of paragraph (j)(2)(i), (j)(2)(i)(A), (j)(2)(ii),
and (j)(2)(iii), (j)(2)(iv)(C), and (j)(3);
v. Removing from the first sentence of the newly redesignated
paragraph (j)(6)(ii) the word ``Government'';
w. Removing the newly redesignated paragraph (j)(7)(i);
x. Further redesignating newly redesignated paragraphs (j)(7)(ii)
and (j)(7)(iii) as (j)(7)(i) and (j)(7)(ii), respectively;
y. Removing from the newly redesignated paragraph (j)(9)
``paragraph
[[Page 18503]]
(j)(4)'' and adding ``paragraph (j)(3)'' in its place;
z. Removing from paragraphs (k)(1) and (k)(2) ``Government
property'', respectively, and adding ``property'' in its place;
aa. Redesignating paragraph (k)(3) as paragraph (k)(4); and adding
a new paragraph (k)(3);
bb. Removing from Alternate I ``(Aug 2010)'' and adding ``(Date)''
in its place; and removing from paragraph (h)(1) of Alternate I ``loss,
theft, damage, or destruction,'' and adding ``loss'' in its place; and
cc. Removing from Alternate II ``(June 2007)'' and adding
``(Date)'' in its place; and removing from the first and second
sentences of paragraph (e)(3) of Alternate II ``having an'' and adding
``having a unit'' in its place (two times).
The added and revised text reads as follows:
52.245-1 Government Property.
* * * * *
Government Property (Date)
(a) * * *
Loss of Government property means unintended, unforeseen or
accidental loss, damage or destruction to Government property that
reduces the Government's expected economic benefits of the property.
Loss of Government property does not include purposeful destructive
testing, obsolescence, normal wear and tear or manufacturing
defects. Loss of Government property includes, but is not limited
to--
(1) Items that cannot be found after a reasonable search;
(2) Theft;
(3) Damage resulting in unexpected harm to property requiring
repair to restore the item to usable condition; or
(4) Destruction resulting from incidents that render the item
useless for its intended purpose or beyond economical repair.
* * * * *
Production scrap means material left over from the normal
production process that has only remelting or reprocessing value,
e.g., textile and metal clippings, borings, and faulty castings and
forgings.
* * * * *
Unit acquisition cost means--(1) For Government-furnished
property, the dollar value assigned by the Government and identified
in the contract; and
(2) For contractor-acquired property, the cost derived from the
contractor's records that reflect consistently applied generally
accepted accounting principles.
* * * * *
(b) * * *
(1) The Contractor shall have a system to manage (control, use,
preserve, protect, repair and maintain) Government property in its
possession. The system shall be adequate to satisfy the requirements
of this clause. In doing so, the Contractor shall initiate and
maintain the processes, systems, procedures, records, and
methodologies necessary for effective control of Government
property. Prior to implementation, the Contractor shall disclose to
the Property Administrator any significant changes to their property
management system. The Contractor may employ customary commercial
practices, voluntary consensus standards and/or industry-leading
practices and standards that provide effective Government property
management that are necessary and appropriate for the performance of
this contract (except where inconsistent with law or regulation).
* * * * *
(4) The Contractor shall establish and maintain procedures
necessary to assess its property management system effectiveness,
and shall perform periodic internal reviews and audits. Significant
findings and/or results of such reviews and audits pertaining to
Government property shall be made available to the Property
Administrator.
* * * * *
(f) * * *
(1) * * *
(iii) * * *
(A) * * *
(1) The name, part number and description, National Stock Number
(if needed for additional item identification tracking and/or
disposition), and other data elements as required in accordance with
the terms and conditions of the contract.
* * * * *
(10) Date placed in service (if required in accordance with the
terms and conditions of the contract).
* * * * *
(v) * * *
(A) The Contractor shall award subcontracts that clearly
identify items to be provided or for fabricated items, the extent of
any restrictions or limitations. The Contractor shall ensure
appropriate flow down of contract terms and conditions (e.g., extent
of liability for loss of Government property.
* * * * *
(vi) Reports. The Contractor shall have a process to create and
provide reports of discrepancies, loss of Government property,
physical inventory results, audits and self-assessments, corrective
actions, and other property related reports as directed by the
Contracting Officer.
(vii) Relief of stewardship responsibility and liability. The
contractor shall have a process to enable the prompt recognition,
investigation, disclosure and reporting of loss of Government
property, including losses that occur at subcontractor or alternate
site locations.
(A) This process shall include the corrective actions necessary
to prevent recurrence.
(B) Unless otherwise directed by the Property Administrator, the
Contractor shall report, upon recognition of loss of Government
property, all such incidents of property loss, investigate and
promptly furnish to the property administrator a written narrative
of all incidents of such property loss as soon as the facts become
known or when requested by the Government. Such reports shall, at a
minimum, contain the following information:
(1) Date of incident (if known).
(2) The data elements required under paragraph (f)(1)(iii)(A) of
this clause.
(3) Quantity.
(4) Accountable contract number.
(5) A statement indicating current or future need.
(6) Unit acquisition cost, or if applicable, estimated sales
proceeds, estimated repair or replacement costs.
(7) All known interests in commingled material of which includes
Government material.
(8) Cause and corrective action taken or to be taken to prevent
recurrence.
(9) A statement that the Government will receive any
reimbursement covering the loss of Government property, in the event
the Contractor was or will be reimbursed or compensated.
(10) Copies of all supporting documentation.
(11) Last known location.
(12) A statement that the property did or did not contain
sensitive, hazardous or toxic material, and if so, that the
appropriate agencies were notified.
(C) Unless the contract provides otherwise, the Contractor shall
be relieved of stewardship responsibility and liability for property
when-
(1) Such property is consumed or expended, reasonably and
properly, or otherwise accounted for, in the performance of the
contract, including reasonable inventory adjustments of material as
determined by the Property Administrator;
(2) Property Administrator grants relief of responsibility and
liability for loss of Government property;
(3) Property is delivered or shipped from the Contractor's
plant, under Government instructions, except when shipment is to a
subcontractor or other location of the Contractor; or
(4) Property is disposed of in accordance with paragraphs (j)
and (k) of this clause.
* * * * *
(h) * * *
(1) * * *
(ii) Loss of Government property that is the result of willful
misconduct or lack of good faith on the part of the Contractor's
managerial personnel.
(iii) The Contracting Officer has, in writing, revoked the
Government's assumption of risk for loss of Government property due
to a determination under paragraph (g) of this clause that the
Contractor's property management practices are inadequate, and/or
present an undue risk to the Government, and the Contractor failed
to take timely corrective action. If the Contractor can establish by
clear and convincing evidence that the loss of Government property
occurred while the Contractor had adequate property management
practices or the loss did not result from the Contractor's failure
to maintain adequate property management practices, the Contractor
shall not be held liable.
(2) The Contractor shall take all reasonable actions necessary
to protect the property from further loss. The Contractor shall
[[Page 18504]]
separate the damaged and undamaged property, place all the affected
property in the best possible order, and take such other action as
the Property Administrator directs.
(3) The Contractor shall do nothing to prejudice the
Government's rights to recover against third parties for any loss of
Government property.
(4) The Contractor shall reimburse the Government for loss of
Government property, to the extent that the Contractor is
financially liable for such loss, as directed by the Contracting
Officer.
* * * * *
(j) * * *
(1) * * *
(i) If the Contractor determines that the property has the
potential to fulfill requirements under other contracts, the
Contractor, in consultation with the Property Administrator, shall
request that the Contracting Officer transfer the property to the
contract in question, or provide authorization for use, as
appropriate. In lieu of transferring the property, the Contracting
Officer may authorize the Contractor to credit the costs of
Contractor-acquired property (material only) to the losing contract,
and debit the gaining contract with the corresponding cost, when
such material is needed for use on another contract. Property no
longer needed shall be considered contractor inventory.
(ii) For any remaining Contractor-acquired property, the
Contractor may purchase the property at the unit acquisition cost if
desired or 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.)
(2) Inventory disposal schedules. (i) Provided the property was
not reutilized, transferred, or otherwise disposed of under
paragraph (j)(1) of this clause the Contractor, as directed by the
Plant Clearance Officer shall use Standard Form 1428, Inventory
Disposal Schedule or electronic equivalent, to identify and report--
(A) Government-furnished property that is no longer required for
performance of this contract;
* * * * *
(ii) The Contractor may annotate inventory disposal schedules to
identify property the Contractor wishes to purchase from the
Government, in the event that the property is offered for sale.
(iii) Separate inventory disposal schedules are required for
aircraft in any condition, flight safety critical aircraft parts,
and other items as directed by the Plant Clearance Officer.
(iv) * * *
(C) For precious metals in raw or bulk form, the type of metal
and estimated weight.
* * * * *
(3) Submission requirements. (i) The Contractor shall submit
inventory disposal schedules to the Plant Clearance Officer no later
than--
(A) 30 days following the Contractor's determination that a
property item is no longer required for performance of this
contract;
(B) 60 days, or such longer period as may be approved by the
Plant Clearance Officer, following completion of contract deliveries
or performance; or
(C) 120 days, or such longer period as may be approved by the
Termination Contracting Officer, following contract termination in
whole or in part.
(ii) Unless the Plant Clearance Officer determines otherwise,
the Contractor need not identify or report production scrap on
inventory disposal schedules, and may process and dispose of
production scrap in accordance with its own internal scrap
procedures. The processing and disposal of other types of
Government-owned scrap will be conducted in accordance with the
terms and conditions of the contract or Plant Clearance Officer
direction, as appropriate.
* * * * *
(k) * * *
(3) Absent contract terms and conditions to the contrary, the
Government may abandon parts removed and replaced from property as a
result of normal maintenance actions, or removed from property as a
result of the repair, maintenance, overhaul, or modification
process.
* * * * *
29. Amend section 52.245-2 by revising the date of the clause, and
paragraph (b) to read as follows:
52.245-2 Government Property Installation Operation Services.
* * * * *
Government Property Installation Operation Services (Date)
* * * * *
(b) The Government bears no responsibility for repair or
replacement of any lost Government property. If any or all of the
Government property is lost, or becomes no longer usable, the
Contractor shall be responsible for replacement of the property at
Contractor expense. The Contractor shall have title to all
replacement property and shall continue to be responsible for
contract performance.
* * * * *
30. Amend section 52.249-2 by revising the date of the clause, and
paragraph (h) to read as follows:
52.249-2 Termination for Convenience of the Government (Fixed-Price).
* * * * *
Termination for Convenience of the Government (Fixed-Price) (Date)
* * * * *
(h) Except for normal spoilage, and except to the extent that
the Government expressly assumed the risk of loss, the Contracting
Officer shall exclude from the amounts payable to the Contractor
under paragraph (g) of this clause, the fair value, as determined by
the Contracting Officer, for the loss of the Government property.
* * * * *
31. Amend section 52.249-3 by revising the date of the clause, and
paragraph (h) to read as follows:
52.249-3 Termination for Convenience of the Government (Dismantling,
Demolition, or Removal of Improvements).
* * * * *
Termination for Convenience of the Government (Dismantling, Demolition,
or Removal of Improvements) (Date)
* * * * *
(h) Except for normal spoilage, and except to the extent that
the Government expressly assumed the risk of loss, the Contracting
Officer shall exclude from the amounts payable to the Contractor
under paragraph (g) of this clause, the fair value, as determined by
the Contracting Officer, for the loss of the Government property.
* * * * *
32. Revise section 52.251-1 to read as follows:
52.251-1 Government Supply Sources.
As prescribed in 51.107, insert the following clause:
Government Supply Sources (Date)
The Contracting Officer may issue the Contractor an
authorization to use Government supply sources in the performance of
this contract. Title to all property acquired by the Contractor
under such an authorization shall vest in the Government. The
provisions of the clause entitled ``Government Property,'' at
52.245-1, shall apply to all property acquired under such
authorization.
(End of clause)
PART 53--FORMS
33. Amend section 53.245 by revising paragraph (c) to read as
follows:
53.245 Government property.
* * * * *
(c) SF 1423 (Rev. 5/2004), Inventory Verification Survey. (See
45.602-1(b)(1).)
* * * * *
[FR Doc. 2011-7436 Filed 4-1-11; 8:45 am]
BILLING CODE 6820-EP-P