FAR PART 45 – Government Property

FAR PART 45 Under this FAR, contractors are required to maintain property management systems that establish the contractor’s processes for receiving, safeguarding, and disposing of Government Property.

FAR PART 45 Sets forth Policy and Procedures for Providing Government Property (GP) Definitions peculiar to GP – 45.101 Policy on Providing – 45.102 Contractor PMS Compliance – 45.105 Contract Clauses for GP – 45.107 Solicitation & Evaluation Procedures re: GP – 45.2 Use and Rental of GP – 45.3 Title to GP – 45.4 Support Property Administration for GP – 45.5 Reporting, Reutilization and Disposal of GP – 45.6

What is Government Property? “all property owned or leased by the government…[and] includes both Government-furnished property and contractor-acquired property.” Real Property Equipment Special Tooling Special Test Equipment Repairables Material Side NOTE: Intellectual Property is NOT covered by this rule. One point of clarification – Government property does not include “items” the contractor leases – even if the Government pays for it in full or in part. When the contractor leases property, even though the Government may pay for that lease, either in part or in full, there is no transfer of title and the Government does not really care what the contractor does with the items. The contractor, the lessee, and the leasing company, the lessor, have a contractual relationship – and the Government is not involved with that issue.vii The leasing company retains title to the property – the English translation – if it is not REAL PROPERTY it is PERSONAL PROPERTY.

CONTRACT- ACQUIRED PROPERTY “property acquired, fabricated, or otherwise provided by the contractor for performing a contract, and to which the Government has title.”

GOVERNMENT- FURNISHED PROPERTY “property in the possession of, or directly acquired by, the Government and subsequently furnished to the contract for performance of a contract”.

PROPERTY RECORDS “the records created and maintained by the contractor in support of its stewardship responsibilities for the management of Government Property.” Such records are to be appropriately safeguarded and retained for four years These systems may be based on voluntary consensus standards or industry-leading practices and are overseen by and subject to approval of a property administrator, who represents the contracting agency and is an authorized representative of the CO.

45.105 Contractor’s Property Management System Compliance a) “The agency responsible for contract administration shall conduct an analysis of the contractor’s property management policies, procedures, practices, and system b) The property administrator shall notify the contractor in writing when the contractor’s property management system does not comply with contractual requirements, and shall request prompt correction of deficiencies…” Failure to take corrective action may result in: Revocation of the Government’s assumption of risk Other rights and remedies available to the Contracting Officer

Property Records – Contractor’s Responsibility “Contractors shall develop property management plans and systems, at the contract, program, site or entity level that reflect their efforts to obtain best value” Acquisition Receipt Records Physical Inventory Sub-contractor control Reports Utilization Maintenance Contract close-out

PROPERTY PLAN Description of System to Manage Property Outcomes Standards Implemented E2279-03 Standard Practice for Establishing the Guiding Principles of Property Management E2221-02 Standard Practice for Administrative Control of Property E2452-05 Standard Practice for Equipment Management Process Maturity (EMPM) Model Self Assessment Property Covered Company Property; Customer Property; All Property PMPs are to be Executive Level Documents where the contractor BRIEFLY describes its Property Management Processes

FAR 52.245-1 Applicability of the Property Clause All cost-reimbursement, time and material, and labor hour type solicitations and contracts All fixed-price solicitations and contracts when the Government will provide Government Property (e.g. FP contract awarded on the basis of submission of cost or pricing data) All Contracts or modifications awarded under FAR Part 12 procedures where Government Property that exceeds the simplified acquisition threshold – Note: Service contracts for repair are not excluded--they still require the property clause!

FAR 52.245-1 Alternate Clauses ALTERNATE I: used in contracts with adequate price competition, i.e., Fixed Price. Different liability provision. For such contracts, the contractor is liable for loss, damage, destruction, theft Contractor not responsible for normal wear and tear or consumption in performing the contract Government position is that it has already paid for any insurance required by the award – any additional coverage for loss, damage, destruction, or theft would require ALTERNATE II: used in contracts involving basic or applied research at non profit institutions of higher education or non profit organizations involved in scientific research Provides Vesting of TITLE to Contractor Acquired Property in the Non-Profit

FAR 52.245-2 Government Property Installations Operation Services Used in service contracts to be performed on a Government installation when Government- Furnished property will be provided This Clause provides for the initial provisioning of property; the Government is not responsible for repair or replacement Property provided “as-is” When Property is provided “as-is”: – Government makes no warranty regarding the suitability for use of the Government property specified in the contract – Must be carefully inspected prior to acceptance – May be rejected if unsuitable – Once accepted, contractor is 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

FAR 52.245-9 USE AND CHARGES Describes the amount of rent that will be charged for use of government property. Removes the term “equipment” and substitutes it with “plant equipment” Personal property of a capital nature, including equipment, machine tools, test equipment, furniture and vehicles. Special tooling and Special Test Equipment are not included

SOLICITATION REQUIREMENTS AND EVALUATION The contracting officer shall insert a listing of the Government property [available] to be offered in all solicitations where Government-furnished property is anticipated (see FAR 45.102). The solicitation shall describe the evaluation procedures to be followed, including rental charges or equivalents and other costs or savings to be evaluated, and shall require all offerors to submit the following information with their offers

SOLICITATION REQUIREMENTS AND EVALUATION FAR 45.201 – Solicitation The solicitation shall include…(c) (4) The voluntary consensus standard or industry leading practices and standards to be used in the management of Government property, or existing property management plans, methods, practices, or procedures for accounting for property. FAR 45.202 – Evaluation procedures The contracting officer shall ensure the offeror’s property management plans, methods, practices, or procedures for accounting for property are consistent with the requirements of the solicitation.

42.302(a)(26) through (30) (26) Perform property administration (see Part 45). (27) [Reserved] (28) Perform necessary screening, redistribution, and disposal of contractor inventory. (29) Issue contract modifications requiring the contractor to provide packing, crating, and handling services on excess Government property. When the ACO determines it to be in the Government’s interests, the services may be secured from a contractor other than the contractor in possession of the property. Discusses the Contract Administration Delegation: THERE ARE ACTIONS within FAR PART 45 that require the CO’s AUTHORITY

42.302(a)(26) through (30) (30) When contractors request Government property— (i) Evaluate the contractor’s requests for Government property and for changes to existing Government property and provide appropriate recommendations to the contracting officer; (ii) Ensure required screening of Government property before acquisition by the contractor; (iii) Approve use of Government property on a noninterference basis in accordance with the clause at 52.245-9, Use and Charges; (iv) Ensure payment by the contractor of any rental due; and (v) Ensure reporting of items no longer needed for Government production. Discusses the Contract Administration Delegation:

DISPOSAL OF GOVERNMENT PROPERTY Contractor, for GP, is required to: PREPARE FOR SHIPMENT DELIVER FOB ORIGIN Government MAY have to Pay for the Disposal of GP That May: Be Hazardous Require Demilitarization Exceed Contractually Authorized PROCESSING TIME (120 Days) (Yes, the Government may have to PAY!)

DO Ensure That The GP Clause Is In The Contract (When Applicable) DO Ensure the PROPER LISTING of GFP Furnished WITH Government Warranties Furnished “AS IS” Furnished under FAR 52.245-2 Do Contact The Appropriate Government Property Administrator If You Have Technical Questions About GP! DO Mod The Contract When Adding Or Decreasing GP