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FAR 52.245-1 (AUG 2010) - Leased property = Gov Property?

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There is a new clause at FAR 52.245-1, Government Property, just issued in AUG 2010, see it here https://www.acquisition.gov/far/current/html/52_245.html. I would post the farsite link, but for some reason I cannot access farsite right now.

Anyways, this new clause defines Government property as "means all property owned or leased by the Government. Government property includes both Government-furnished and Contractor-acquired property. Government property includes material, equipment, special tooling, special test equipment, and real property. Government properyt does not include intellectual property and software."

It also defines Contractor-acquired property as "means property acquired, fabricated, or otherwise provided by the Contractor for performing a contract, and to which the Government has title."

Why did the FAR Council decide to make "leased" property = Government property? Seems to me, the only way that would make sense is if they further specified that what they meant was "leased-to-own" property would be Government property. For a simple lease, with no mechanism for passing title to the Government, I can't fathom how such leased property could be considered Government property. Thoughts?

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I don't think you are reading the definitions correctly. "Government property" includes property leased by the Government. "Contractor-acquired property", a subset of "Government property", does not include property leased by the Government. Property leased by the Government and subsequently provided to a contractor is "Government-furnished property", which is defined as:

?Government-furnished property? means property in the possession of, or directly acquired by, the Government and subsequently furnished to the contractor for performance of a contract. Government-furnished property includes, but is not limited to, spares and property furnished for repair, maintenance, overhaul, or modification. Government-furnished property also includes contractor-acquired property if the contractor-acquired property is a deliverable under a cost contract when accepted by the Government for continued use under the contract.

Property leased by a contractor is not "Government property."

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OK. What if the government contracts with ABC for a "services-only" contract, say for IT infrastructure services. However, this contract also calls for ABC to provide all necessary hardware , such as computer workstations, printers, etc., for federal employees to use in their daily work. ABC either owns the hardware or leases it from a third party supplier, then provides it to the government. Title to the hardware never passes to the government, but the government has, in effect, "leased" the hardware from ABC Inc. So instead of the government leasing the hardware from say XYZ Inc. and then furnishing it to ABC Inc. to use in performance of the ABC Inc. contract, the government is in fact leasing the hardware from ABC Inc. for ABC Inc. to have in performance of its contract. Therefore, the hardware is "Government leased property" which means it is "Government property" -- which I find strange. Can you help me sort this out?

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Here's a simple example. The government can either purchase or lease motor vehicles. Either is considered government property.

If the government has lease for motor vehicles, a simple lease, not a lease-to-own where title passes to the government, then isn't that property "contractor-owned property," not "government property"?

If the government provides those leased motor vehicles to another prime contractor under a different contract, then those motor vehicles are "government furnished equipment," right? And so they would be considered "government property."

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I must be missing the point. The clause defines "government property" for purposes of the clause. How does defining it to include leased property create unanticipated contractor obligations?

BTW, the definition of government property to include government property that is leased was in the prior (Jun 07) version of the clause.

So far as the interaction between leased contractor-acquired property and title, remember that title can take several forms. Title doesn't necessarily mean total ownership to the exclusion of all others forever. It just means (1) an interest superior to the contractor; and (2) the contractor will treat leased government property the same way it would treat owned government property.

I would look closely para (e). I see no obligation for a contractor to acquire a greater interest in property than is required under the contract. If the deliverable under the contract is leased property, then the title the government is acquiring is the lease.

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"Why did the FAR Council decide to make "leased" property = Government property? Seems to me, the only way that would make sense is if they further specified that what they meant was "leased-to-own" property would be Government property. For a simple lease, with no mechanism for passing title to the Government, I can't fathom how such leased property could be considered Government property. Thoughts?"

gov2310, I think you are missing the point of that part of the definition. I believe property leased by the Gov't is to be considered Gov't property largely for the purpose of liability. E.g., if a contractor providing admin. support on a fixed-price basis totally breaks a photocopier that the Government is leasing from say Ricoh, then the regs. want the contractor to be liable for destroying that property. It is not a mater relating to title, etc.

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OK. What if the government contracts with ABC for a "services-only" contract, say for IT infrastructure services. However, this contract also calls for ABC to provide all necessary hardware , such as computer workstations, printers, etc., for federal employees to use in their daily work. ABC either owns the hardware or leases it from a third party supplier, then provides it to the government. Title to the hardware never passes to the government, but the government has, in effect, "leased" the hardware from ABC Inc. So instead of the government leasing the hardware from say XYZ Inc. and then furnishing it to ABC Inc. to use in performance of the ABC Inc. contract, the government is in fact leasing the hardware from ABC Inc. for ABC Inc. to have in performance of its contract. Therefore, the hardware is "Government leased property" which means it is "Government property" -- which I find strange. Can you help me sort this out?

In your example, ABC is leasing the property from XYZ to perform a Government contract. That doesn't mean that the Government is leasing the property.

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If the government has lease for motor vehicles, a simple lease, not a lease-to-own where title passes to the government, then isn't that property "contractor-owned property," not "government property"?

If the government provides those leased motor vehicles to another prime contractor under a different contract, then those motor vehicles are "government furnished equipment," right? And so they would be considered "government property."

The motor vehicles would be "government property." "Contractor-owned property" is not defined. However, "government property" includes property that is not owned by the Government (i.e., property that is leased).

If the Government provided those vehicles to another contractor under a different contract, they would be "government-furnished property", a subset of "government property."

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"Why did the FAR Council decide to make "leased" property = Government property? Seems to me, the only way that would make sense is if they further specified that what they meant was "leased-to-own" property would be Government property. For a simple lease, with no mechanism for passing title to the Government, I can't fathom how such leased property could be considered Government property. Thoughts?"

gov2310, I think you are missing the point of that part of the definition. I believe property leased by the Gov't is to be considered Gov't property largely for the purpose of liability. E.g., if a contractor providing admin. support on a fixed-price basis totally breaks a photocopier that the Government is leasing from say Ricoh, then the regs. want the contractor to be liable for destroying that property. It is not a mater relating to title, etc.

But that scenario assumes the KTR willfully of negligently destroyed that property (the photocopier). What about if there is a fire, through no fault of the KTR nor the agency, and the photocopier is destroyed in the fire? IAW FAR 52.245-1(h), the KTR is not liable for replacing the photocopier. So who is? The agency? The contractor from whom the agency leased the photocopier? What if it is one and the same contractor: the agency leased the photocopier from the KTR, the agency employees use the photocopier, then there was an accidental fire, who is liable for replacing the photocopier? It looks like FAR 52.245-1(h) is saying, liability does not fall with the KTR. Am I missing something?

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There is a new clause at FAR 52.245-1, Government Property, just issued in AUG 2010, see it here https://www.acquisition.gov/far/current/html/52_245.html. I would post the farsite link, but for some reason I cannot access farsite right now.

Anyways, this new clause defines Government property as "means all property owned or leased by the Government. Government property includes both Government-furnished and Contractor-acquired property. Government property includes material, equipment, special tooling, special test equipment, and real property. Government properyt does not include intellectual property and software."

It also defines Contractor-acquired property as "means property acquired, fabricated, or otherwise provided by the Contractor for performing a contract, and to which the Government has title."

Why did the FAR Council decide to make "leased" property = Government property? Seems to me, the only way that would make sense is if they further specified that what they meant was "leased-to-own" property would be Government property. For a simple lease, with no mechanism for passing title to the Government, I can't fathom how such leased property could be considered Government property. Thoughts?

Yeah, I have a thought. The definition of "government properly" in the procurement regulations has included leased property since at least 1951. Here is the definition from the Armed Services Procurement Regulation of 1951, as published in the Federal Register on May 10, 1951:

? 412.101-2 Government property. The term "Government property" means all property owned by or leased to the Government, or acquired by the Government under the terms of a contract, except that property to which the Government has acquired a lien or title solely as a result of partial, advance or progress payments shall not for the purposes of this part be classified as Government property.

Here is the definition of "contractor acquired property" from the same regulation:

"Contractor-acquired property" is property procured or otherwise provided by the contractor for the performance of a contract, pursuant to the terms of which title is vested in the Government.

Why do you think that the FAR councils just came up with the idea of including leased property as government property? And why do you think the inclusion is problematical? The purpose of the definition is to say what the term means when used in the clause. it just tells the contractor what the clause means by "government property." It does not mean leased property is government property in any larger sense.

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Yeah, I have a thought. The definition of "government properly" in the procurement regulations has included leased property since at least 1951. Here is the definition from the Armed Services Procurement Regulation of 1951, as published in the Federal Register on May 10, 1951:

Here is the definition of "contractor acquired property" from the same regulation:

Why do you think that the FAR councils just came up with the idea of including leased property as government property? And why do you think the inclusion is problematical?

There is case law that says the government has no duty to "protect" a KTR's personal property. And if that personal property is destroyed/damaged while residing on government property or it is in the government's profession, the government has no duty to reimburse/compensate the KTR, unless the contract expressly states otherwise.

So if a leased photocopier is destroyed by a fire, and the fire was not caused by the government, even if the fire was not caused by the lessor who owns the photocopier, the lessor cannot look to the government to get reimbursed/compensated for the cost of replacing the photocopier. And further, the lessor is still require to perform its contract with teh government and provide a new photocopier promptly. This is all assuming the contract at hand is one that was executed/awarded prior to the FAR 52.245-1 clause being created, and I do have a such a contract. So that contract does not include FAR clause 52.245-1 or any language addressing who is responsible for replacing destroyed/damaged equipment that is being leased under the contract.

Here is the case law:

The Armed Services Board of Contract Appeals (ASBCA) addressed a similar situation in Home Entertainment, Inc., ASBCA No. 50791, 99-1 BCA ? 30,147. In Home Entertainment, the appellant alleged that damages arose to its property from floods due to faulty piping in the ceiling of its concessionaire space on federal property. The Board held that it has no jurisdiction over a tort independent of the contract for which no violation of a contract duty is shown, and it cited several other ASBCA cases as precedent. See Donlin M. Rumley, ASBCA No. 46460, 94-3 BCA ? 27,113 at 135,129-135,130 (contract did not require Government to protect or insure contractor?s machines against damage; contractor could point to no implied contractual obligation to transform his tort claim into a contract claim); Asphaltos Panameos, S.A., ASBCA No. 39425, 91-1 BCA ? 23,315 (no express or implied Government duty to protect private vehicle of contractor?s employee from Government helicopter not involved in the contract); Alfred Bronder, ASBCA No. 29938, 86-3 BCA ? 19,102 at 96,558-96,559 (no contractual duty to protect or insure contractor?s property from fire damage and Board has no jurisdiction over such claim, which ?sounds in tort?).

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Why are you quoting that summary of case law to me? What does that have to do with the issue at hand or my questions to you?

I'm trying to figure out who would be responsible for the cost of replacing destroyed equipment that is owned by a KTR, leased to an agency, "housed" on government property, then destroyed/damaged from an accident that is not the fault of the KTR nor the agency? And is the answer different if the contract is old, meaning it does not include FAR 52.245-1, v. if the contract is newer and does include FAR 52.245-1.

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OK. Here's suppose I lease equipment for use in Afghanistan and, under contract modification, charge the USG the lease expense under my CPFF prime contract. Why wouldn't the lease equipment be considered to be GP under the definition in FAR 52.245-1?

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Here's the definition:

?Government property? means all property owned or leased by the Government. Government property includes both Government-furnished and Contractor-acquired property. Government property includes material, equipment, special tooling, special test equipment, and real property. Government property does not include intellectual property and software.

Property leased by a contractor is not owned or leased by the Government.

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