Klara CM

A huge thanks to all of you for your feedback - it is sincerely appreciated. I have put 52.245-1 out of my mind. When our customer (2nd tier subcontractor) approved our CID and issued a FAR Part 12 PO for the hardware, 52.245-1 was no longer included in our contract. Key takeaway as a subcontractor - stick to to terms as they are written, referenced, included in the agreement. Thank you again!

Thanks @ji20874 for the response - my very simple response is I don't understand how this would be okay. I know I'm missing some key knowledge or understanding that makes this non-problematic -- I need the lightbulb moment. Our contract does not speak to tooling costs and there is not a specific milestone payment for tooling. There is nothing in the commercial contract terms which would transfer the title to anything over than the identified end items. I'm struggling to understand how Contractor Acquired Property is determined. 52.245-1 Government Property: "Contractor-acquired property means property acquired, fabricated, or otherwise provided by the Contractor for performing a contract, and to which the Government has title." 48 CFR § 45.402 - Title to contractor-acquired property: “(a) Title vests in the Government for all property acquired or fabricated by the contractor in accordance with the financing provisions or other specific requirements for passage of title in the contract. Under fixed-price type contracts, in the absence of financing provisions or other specific requirements for passage of title in the contract, the contractor retains title to all property acquired by the contractor for use on the contract, except for property identified as a deliverable end item. If a deliverable item is to be retained by the contractor for use after inspection and acceptance by the Government, it shall be made accountable to the contract through a contract modification listing the item as Government-furnished property.” I don't understand what the "financing provisions" are - do they need to be specific to special tooling, is the term "financing provisions" defined elsewhere? (1) Are the simple milestone payments (PO acceptance, LLTM order, Drawing Deliverable, Test Reports, Hardware) "financing provisions"? If so, does the "financing" need to be specifically tied to the fabrication of the mock assembly? (2) And, likely going too far down the rabbit hole, if the outcome changes on the CID and it's overturned by the CO 52.245-1 and 252.225-7013 come back (flowdowns which applied to "Commercial Items" were designated with an "*"). Being a few layers removed, we don't have visibility into any conversations re: commerciality discussions of our deliverable. Concerns with 52.245-1 would be addressed once title is understood, but what about 252.227-7013 and any private developments made using the materials sourced under this contract? Is the GPR risk there? I suspect the risk is limited to the materials as-they-were at completion of mock assembly and before we began additional, private R&D. In this event we would need to maintain very clear development logs/records to demonstrate private expense.

We are a 3rd tier subcontractor with a FFP PO to supply a commercial item under a defense prime contract; we asserted commerciality, to which our customer agreed. We have a handful of milestone payments. We utilized part of our tooling costs to build a mock assembly of a sub component. The cost of the mock assembly is not insignificant but it’s less than 1% of the total PO value. There is no line item for, or mention of this mock assembly in our proposal, the specification, or the resulting PO. FAR 52.245-1 was not included in the final commercial item PO, but it would have been flowed-down if the contractor found the end item to be non-commercial. The PO is still active and performance ongoing. An internal team would like to scrap the mock assembly and utilize components for an unrelated, non-Government experimental/R&D effort. I’m concerned with this idea. Can we simply scrap the material and use at our discretion? Are there no risks to the potential future IP developments made using this material? Am I wrong to be concerned? Thanks in advance!