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According to FAR 45.000(b)(5), computers used incidental to performance of work at an installation are not considered Government Furnished Property (GFP). However, with the COVID aspect and teleworking, under a CPFF contract / task order when a Defense Contractor removes the Government provided laptop from the installation (with permission and issuance of a Property Pass from the Navy/Gov't) for use with teleworking at home (or elsewhere) and that laptop is stolen or damaged through no fault of the Defense Contractor, is the risk of loss on the Contractor, or the Government?

Property Pass states, in part, 

"...I understand that I am personally responsible for the property identified above, and that I may be held pecuniarily liable for its loss or damage, unless otherwise relieved of responsibility by Financial Liability Officer and/or Approving Authority recommendation..."

Under 45.000(b)(5), the incidental aspect for computers appears to be solely applicable while on-base, not off-base. If the laptop was considered "incidental" from the onset under FAR 45.000 (b)(5) and thus not GFP, but no risk of loss to the Defense Contractor, why wouldn't that continue even when the laptop is taken off-base and used with teleworking (notwithstanding any language in the Property Pass)? In other words, if incidental while on-base, why not incidental off-base, and thus risk of loss remains with the Government?

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My first thought is that you have gone directly to the FAR for guidance but leaves the question unanswered as to what the contract provides with regard to such "removal" and risk of loss?   And by contract I mean both the parent CPFF contract and/or the task order.

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1 hour ago, Guest108830 said:

with permission and issuance of a Property Pass from the Navy/Gov't)

Who signed the "pass", a representative of the contractor or the individual who used the laptop?   You may have a situation where the individual is liable, but not the contractor.

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I've heard a few discussions concerning this topic since COVID-19 teleworking began.  What does the contract say?  If the PC was incidental, then it technically should have stayed on post.  I'm assuming the contractor was liable for the incidental GP?  Not sure a local unit "Property Pass" takes precedence over the FAR unless it was addressed in the contract.  I know one organization in the USAF did a waiver to allow contractors to take PC's off base as and still keep them as "incidental".  Either way.....good question for legal.

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10 minutes ago, BowtechDan said:

the contract.

The contract is between the government and contractor.  The "pass" may constitute a separate bailment agreement between the government and the individual.  We don't know all the facts and regulations that might apply in this situation.

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  • 2 weeks later...

FAR 52.237-2 Protection of Government Building, Equipment and Vegetation is also present in the Cost Reimbursable Task Order. I would assume if the Laptop was provided by the Gov't for use on base, but due to Corona Virus, allowed to be taken off-base, that if damage / loss occurred on-base, the Contractor would be liable to the Gov't under FAR 52.237-2. The fact the laptop is moveable and taken off-base should not upset that determination. The laptop was not declared Government Furnished Property and therefore not added to the contract as part of GFP listing.

I'm concluding the risk of loss is on the Contractor to repair / replace the laptop unless the Gov't added such as GFP via modification under the contract / Task Order.  If such were added as GFP, the risk of loss should then be reversed and placed upon the Gov't pursuant to FAR 52.245-1 ( h ) ( 1 ). 

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18 hours ago, Guest108830 said:

The laptop was not declared Government Furnished Property and therefore not added to the contract as part of GFP listing.

The definition of Government-furnished property has nothing to do with whether or not an item is on a list.  I think the laptop is GFP.

When I used to provide laptops for contractor employees, I always included a contract clause to offset para. (h)(1) of the contract clause at FAR 52.245-1, Government Property.  That clause clearly put liability for loss on the contractor.  I think loss of the laptop is covered by FAR 52.245-1 rather than 52.237-2.

But this may all be irrelevant -- the contractor employee assumed liability when signing the property pass -- the property pass may be outside the contract relationship -- but if within, then it may act under para. (h)(1) of FAR 52.245-1 to shift liability to the contractor.

 

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I would send the contractor a letter about the loss of the laptop by one of its employees and ask for a check. I wouldn't spend even one minute worrying about whether it was government-furnished property or what clause to invoke. I doubt that the contractor would, either. How much could a government laptop be worth? The contractor would have to be stupid to refuse to pay.

And I wouldn't consult bleeping legal, either.

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6 hours ago, Guest108830 said:

I'm concluding the risk of loss is on the Contractor to repair / replace the laptop unless the Gov't added such as GFP via modification under the contract / Task Order.  If such were added as GFP, the risk of loss should then be reversed and placed upon the Gov't pursuant to FAR 52.245-1 ( h ) ( 1 ). 

If FAR 52.245-1 was included in the contract, I don't see how the contractor is liable for "laptop is stolen or damaged through no fault of the Defense Contractor," as you say in the facts, unless liable through one of the listed exceptions in (h). Vern has suggested a practical solution which would save both parties the trouble of investigating (1) whether it matters if the laptop was formally added to the contract as GFP (2) the impact of the "Pass" (3) contractor's insurance (4) contractor good faith (5) contractor property management practices. That solution should require a change notice that establishes the incurred contractor cost to be unallowable.   

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On 2/3/2021 at 6:32 AM, Guest108830 said:

According to FAR 45.000(b)(5), computers used incidental to performance of work at an installation are not considered Government Furnished Property (GFP).

And then:

On 2/3/2021 at 6:32 AM, Guest108830 said:

Under 45.000(b)(5), the incidental aspect for computers appears to be solely applicable while on-base, not off-base. If the laptop was considered "incidental" from the onset under FAR 45.000 (b)(5) and thus not GFP, but no risk of loss to the Defense Contractor, why wouldn't that continue even when the laptop is taken off-base and used with teleworking (notwithstanding any language in the Property Pass)? In other words, if incidental while on-base, why not incidental off-base, and thus risk of loss remains with the Government?

That's almost metaphysical reasoning. The exact words of FAR 45.000(b)(5) are:

Quote

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.

Well, let's get metaphysical: A laptop is not incidental to place. Its very purpose is to be carried about and used from place to place. The whole idea of a laptop is to not be incidental to place, other than one's lap, wherever it happens to be. That's why the contractor's employee asked for permission to take it home. Thus, a laptop, while a computer, it is not a "computer" in the context of FAR 45.000(b)(5).

As for the laptop's status as listed government-furnished property, I'd cite the property pass.

Case closed. Send the contractor a letter: Dear Contractor, One of your people asked permission to take a laptop home, Serial No... . We granted permission in order to be cooperative and facilitate your company's performance under the contract. Your employee _________________ has informed us that the laptop is lost. Our property department says its residual value (or replacement value) is $500. Please send me a check made out to the United States Treasury for $500.

/s/ Contracting Officer

If the contract is cost-reimbursement, time-and-materials, or fixed-price incentive, add a sentence saying that the cost of reimbursing the government will be unallowable for payment purposes.

I would consider it to be beneath a contracting officer's dignity to seek legal review of such a letter. I doubt that the contractor would blink an eye before cutting a check.

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45.000 ( b ) ( 5 ) also states "fax machine." The correct terminology should be "facsimile machine" but for one reason or another the Government decided to use the vernacular, but almost everyone knows what's it's pertaining to. While not impossible to place a desktop computer on your lap, it's just a bit more cumbersome. A laptop is a computer, just like a smart phone is also a computer - it runs off of bits and bytes.

Asking the Contractor to write a check without blinking an eye is somewhat antithetical. The contractors I'm familiar with would most certainly question this approach, especially a small business on a $5 million CPFF (base and 4 one year options). Such a loss goes direct to the bottom line as an unbillable against the contract. Not to mention the value of the contents being compromised in the laptop as well. 

Determining risk of loss under a Cost Reimbursable contract / task order appears paramount in determining not only who pays but also, whether insurance is allowable to cover such pursuant to FAR 31.205-19 ( e ) ( 2 ) ( iv ) ( A ).  If risk of loss is on the Contractor for a stolen laptop off-base, then any insurance to cover such should also be allowable. And if the Laptop is indicated as GFP (within PIEE System) and added to the contract via a mod as such, then risk of loss is on the Government pursuant to 52.245-1 ( h ) ( 1 ), and any insurance secured to protect against such would appear to be unallowable, pursuant to FAR 31.205-19 ( e ) ( 2 ) ( iv ) ( A ). In other words, it appears more than just the cost of the laptop at issue.

Seems this is more of a case by case basis where some KO's would classify the laptop such as GFP, while others would not. And in doing so, so goes risk of loss, along with allowability of certain insurance costs. Thanks for all the responses. 

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@Guest108830 You may have posted just to spur conversation. If so, it was a good thing. But if you are serious about this matter I must say that you have tried to make a mountain out of a molehill.

I am a small business contractor, and I tell you that if one of my employees had borrowed a government laptop and lost it, I wouldn't have waited for a letter from the CO. I'd have called him or her and asked how much to send. It's called customer relations. Any contractor, small or otherwise, with a 5 million CPFF contract, would be an absolute idiot, a jackass in fact, to argue with a CO about paying for a laptop that one of its employees had borrowed and lost.

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13 minutes ago, Guest108830 said:

Determining risk of loss under a Cost Reimbursable contract / task order appears paramount in determining not only who pays but also, whether insurance is allowable to cover such pursuant to FAR 31.205-19 ( e ) ( 2 ) ( iv ) ( A ).  If risk of loss is on the Contractor for a stolen laptop off-base, then any insurance to cover such should also be allowable. And if the Laptop is indicated as GFP (within PIEE System) and added to the contract via a mod as such, then risk of loss is on the Government pursuant to 52.245-1 ( h ) ( 1 ), and any insurance secured to protect against such would appear to be unallowable, pursuant to FAR 31.205-19 ( e ) ( 2 ) ( iv ) ( A ). In other words, it appears more than just the cost of the laptop at issue.

Bureaucratic claptrap. You asked about a laptop, not a spacecraft.

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I'm more than a bit hesitant to weigh-in here, mostly because Vern doesn't need any white knights to come to his rescue. That said ....

Contractors buy laptops all the time. Prices for new laptops range from $500 up to maybe $3,000 for top-end computers. I don't know how much the government is paying for its bulk purchases of laptops from Dell or whomever, but I would be shocked if the price for a new laptop were outside that corridor. No contractor I know, small business or not, would hesitate a moment to write a check to cover the loss of a government-provided laptop. Most contractors I know would be terrified that they were going to be called negligent for the employee's loss of the laptop

(See the link I posted on February 3rd. Do you have any idea how much that lost laptop cost the contractor? Hint: Double-digit millions; possibly triple digits. Not to mention the $4.9 billion class-action suits (plural) filed against both TRICARE and the contractor. Not the same situation, I know. But still: a single lost laptop.)

Vern is correct. Tell the contractor how much to write the check for, tell them the expense associated with the payment is unallowable as either a direct or indirect cost, and close the file. The contractor will be grateful. If the contractor pushes back at all (which I would find difficult to believe), then send the contractor's representative that link to the story of the lost laptop. That should end the discussion quickly. 

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I didn't mean to be hard on Guest108830. My point is that not all transactions in a business relationship are handled formally and pursuant to some contract clause. Many day to day matters are handled informally, with a phone call or an email. I think the loss of an ordinary laptop is one of those kinds of matters and, having been a CO on some large (in the day) CPFF contracts, that's how I would have handled the matter in question. In my experience, contractors would have appreciated informality in such a matter.

Now, a lost spacecraft or Predator drone would be another thing entirely.

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