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Title Under the Progress Payment and Gov. Property Provisions


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FAR 52.245-1(2)(ii) says: "title to each item of equipment...acquired by the contractor for the Government under this contract shall pass to and vest in the Government when its use in performing this contract commences or when the Government has paid for it, whichever is earlier, whether or not title previously vested in the Government."

What exactly does title vesting in the Government mean?

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Basically, the item does not belong to the contractor but to the Government. See FAR 45.402.

One thing it means is a lot of paperwork. In the bad old days before the 2007 rewrite of FAR Part 45 and its implementing clauses, it would have been a lot more. If the contractor will use the property after Government inspection and acceptance, it requires a contract mod to list the item as GFP. Then the contractor must track the asset in its property accounting system, perform annual inventories, submit reports, etc.

Another thing to consider is possible state or local sales tax implications that require careful study.

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