Defense Federal Acquisition Regulations Supplement (DFARS) Part 245, Government Property, related clauses in DFARS 252, and related forms in DFARS 253.

DFARS Part 245 and Related

Clauses

Government Property

OMB Information Collection 0704-0246

SUBPART 245.1--general

(Revised August 19, 2011)

245.101 Definitions.

“Mapping, charting, and geodesy property,” as used in this subpart, is defined in the clause at 252.245-7000, Government-Furnished Mapping, Charting, and Geodesy Property.

245.102 Policy.

See the policy guidance at PGI 245.102-70 (DFARS/PGI view)

(1) Mapping, charting, and geodesy property. All Government-furnished mapping, charting, and geodesy (MC&G) property is under the control of the Director, National Geospatial Intelligence Agency.

(i) MC&G property shall not be duplicated, copied, or otherwise reproduced for purposes other than those necessary for contract performance.

(ii) Upon completion of contract performance, the contracting officer shall—

(A) Contact the Director, National Geospatial Intelligence Agency, 4600 Sangamore Road, Bethesda, MD 20816-5003, for disposition instructions;

(B) Direct the contractor to destroy or return all Government-furnished MC&G property not consumed during contract performance; and

(C) Specify the destination and means of shipment for property to be returned to the Government.

(2) Government supply sources. When a contractor will be responsible for preparing requisitioning documentation to acquire Government-furnished property from Government supply sources, include in the contract the requirement to prepare the documentation in accordance with DoD 4000.25-1-M, Military Standard Requisitioning and Issue Procedures (MILSTRIP). Copies are available from the address cited at PGI 251.102 (DFARS/PGI view).

(3) Acquisition and management of industrial resources. See Subpart 237.75 for policy relating to facilities projects.

(4) Government-furnished property identification.

(i) It is DoD policy that Government-furnished property be tagged, labeled, or marked based on DoD marking standards (MIL Standard 130) or other standards, when the requiring activity determines that such items are subject to serialized item management (serially-managed items).  The list of Government-furnished property subject to serialized item management will be identified in the contract in accordance with PGI 245.201-71 (DFARS/PGI view), GFP attachments to solicitations and awards.

(ii)  Exceptions.  The Contractor will not be required to tag, label, or mark—

(A) Government-furnished property that was previously tagged, labeled, or marked;

(B) Items, as determined by the head of the agency, that are to be used to support a contingency operation; or to facilitate defense against or recovery from nuclear, biological, chemical, or radiological attack;

(C) Items for which a determination and findings has been executed concluding that it is more cost effective for the Government requiring activity to assign, mark, and register the unique item identification after delivery of an item acquired from a small business concern or a commercial item acquired under FAR part 12 or part 8.

(1) The determination and findings shall be executed by—

(i) The Component Acquisition Executive for an Acquisition Category (ACAT) I program; or

(ii) The head of the contracting activity for all other programs.

(2) A copy of the executed determination and findings shall be provided to the DoD Unique Item Identification Policy Office at this address: OUSD(AT&L)DPAP/Program Development and Implementation, Room 3B855, 3060 Defense Pentagon, Washington, DC 20301-3060; or by facsimile to 703–602–6047.

(D) Items that are contractor-acquired property;

(E) Property under any statutory leasing authority;

(F) Property to which the Government has acquired a lien or title solely because of partial, advance, progress, or performance-based payments;

(G) Intellectual property or software; or

(H) Real property.

(5)  Reporting loss of Government property.  The Defense Contract Management Agency (DCMA) eTools software application is the DoD data repository for reporting loss of Government property in the possession of contractors.  The requirements and procedures for reporting loss of Government property to eTools are set forth in the clause at 252.245-7002, Reporting Loss of Government Property, prescribed at 245.107.

 

 

245.103 General.

(1) Follow the procedures at PGI 245.103-70 (DFARS/PGI view) for furnishing Government property to contractors.

(2) Follow the procedures at PGI 245.103-71 (DFARS/PGI view) for transferring Government property accountability.

245.104 Responsibility and liability for Government property. [DEVIATION]

 

See DoD Class Deviation 2010-O0003, Responsibility and Liability for Government Property, dated February 12, 2010.  This deviation is effective until incorporated into the DFARS or rescinded.

 

245.105 Contractor’s property management system compliance.

(a) Definitions—

(1) “Acceptable property management system” and “property management system” are defined in the clause at 252.245-7003, Contractor Property Management System Administration.

(2) “Significant deficiency” is defined in the clause at 252.245-7003, Contractor Property Management System Administration.

(b) Policy. The cognizant contracting officer, in consultation with the property administrator, shall—

(1) Determine the acceptability of the system and approve or disapprove the system; and

(2) Pursue correction of any deficiencies.

(c) In evaluating the acceptability of a contractor’s property management system, the contracting officer, in consultation with the property administrator, shall determine whether the contractor’s property management system complies with the system criteria for an acceptable property management system as prescribed in the clause at 252.245-7003, Contractor Property Management System Administration.

(d) Disposition of findings—

(1) Reporting of findings. The property administrator shall document findings and recommendations in a report to the contracting officer. If the property administrator identifies any significant property system deficiencies, the report shall describe the deficiencies in sufficient detail to allow the contracting officer to understand the deficiencies.

(2) Initial determination. (i) The contracting officer shall review findings and recommendations and, if there are no significant deficiencies, shall promptly notify the contractor, in writing, that the contractor’s property management system is acceptable and approved; or

(ii) If the contracting officer finds that there are one or more significant deficiencies (as defined in the clause at 252.245-7003, Contractor Property Management System Administration) due to the contractor’s failure to meet one or more of the property management system criteria in the clause at 252.245-7003, the contracting officer shall—

(A) Promptly make an initial written determination on any significant deficiencies and notify the contractor, in writing, providing a description of each significant deficiency in sufficient detail to allow the contractor to understand the deficiency;

(B) Request the contractor to respond, in writing, to the initial determination within 30 days and;

(C) Evaluate the contractor’s response to the initial determination, in consultation with the property administrator, and make a final determination.

(3) Final determination. (i) The contracting officer shall make a final determination and notify the contractor, in writing, that—

(A) The contractor's property management system is acceptable and approved, and no significant deficiencies remain, or

(B) Significant deficiencies remain. The notice shall identify any remaining significant deficiencies, and indicate the adequacy of any proposed or completed corrective action. The contracting officer shall—

(1) Request that the contractor, within 45 days of receipt of the final determination, either correct the deficiencies or submit an acceptable corrective action plan showing milestones and actions to eliminate the deficiencies;

(2) Disapprove the system in accordance with the clause at 252.245-7003, Contractor Property Management System Administration; and

(3) Withhold payments in accordance with the clause at 252.242-7005, Contractor Business Systems, if the clause is included in the contract.

(ii) Follow the procedures relating to monitoring a contractor's corrective action and the correction of significant deficiencies in PGI 245.105 (DFARS/PGI view).

(e) System approval. The contracting officer shall promptly approve a previously disapproved property management system and notify the contractor when the contracting officer determines, in consultation with the property administrator, that there are no remaining significant deficiencies.

(f) Contracting officer notifications. The cognizant contracting officer shall promptly distribute copies of a determination to approve a system, disapprove a system and withhold payments, or approve a previously disapproved system and release withheld payments to the auditor; payment office; affected contracting officers at the buying activities; and cognizant contracting officers in contract administration activities.

245.107 Contract clauses.

 

      (a)  Use the clause at 252.245-7000, Government-Furnished Mapping, Charting,

and Geodesy Property, in solicitations and contracts when mapping, charting, and geodesy property is to be furnished.

 

      (b)  Use the clause at 252.245–7001, Tagging, Labeling, and Marking of Government-Furnished Property, in solicitations and contracts that contain the clause at FAR 52.245-1, Government Property.

 

      (c)  Use the clause at 252.245–7002, Reporting Loss of Government Property, in solicitations and contracts that contain the clause at FAR 52.245–1, Government Property.

(d) Use the clause at 252.245-7003, Contractor Property Management System Administration, in solicitations and contracts containing the clause at FAR 52.245-1, Government Property.

(e) Use the clause at 252.245–7004, Reporting, Reutilization, and Disposal, in solicitations and contracts that contain the clause at FAR 52.245-1, Government Property.

SUBPART 245.2—SOLICITATION AND EVALUATION PROCEDURES

(Added January 20, 2011)

245.201 Solicitation.

245.201-70 Definitions.

See the definitions at PGI 245.201-70 (DFARS/PGI view).

245.201-71 GFP attachments to solicitations and awards.

See PGI 245.201-71 (DFARS/PGI view) for procedures for preparing GFP attachments to solicitations and awards.

245.201-72 Contracting office responsibilities.

See PGI 245.201-72 (DFARS/PGI view)for contracting office responsibilities.

245.201-73 Security classification.

Follow the procedures at PGI 245.201-73 (DFARS/PGI view) for security classification.

SUBPART 245.3—AUTHORIZING THE use and rental of government property

(Revised July 29, 2009)

245.302 Contracts with foreign governments or international organizations.

(1) General.

(i) Approval. A contractor may use Government property on work for foreign governments and international organizations only when approved in writing by the contracting officer having cognizance of the property. The contracting officer may grant approval, provided—

(A) The use will not interfere with foreseeable requirements of the United States;

(B) The work is undertaken as a DoD foreign military sale; or

(C) For a direct commercial sale, the foreign country or international organization would be authorized to contract with the department concerned under the Arms Export Control Act.

(ii) Use charges.

(A) The Use and Charges clause is applicable on direct commercial sales to foreign governments or international organizations.

(B) When a particular foreign government or international organization has funded the acquisition of property, do not assess the foreign government or international organization rental charges or nonrecurring recoupments for the use of such property.

(2) Special tooling and special test equipment.

(i) DoD normally recovers a fair share of nonrecurring costs of special tooling and special test equipment by including these costs in its calculation of the nonrecurring cost recoupment charge when major defense equipment is sold by foreign military sales or direct commercial sales to foreign governments or international organizations. “Major defense equipment” is defined in DoD Directive 2140.2, Recoupment of Nonrecurring Costs on Sales of U.S. Items, as any item of significant military equipment on the United States Munitions List having a nonrecurring research, development, test, and evaluation cost of more than $50 million or a total production cost of more than $200 million.

(ii) When the cost thresholds in paragraph (2)(i) of this section are not met, the contracting officer shall assess rental charges for use of special tooling and special test equipment pursuant to the Use and Charges clause if administratively practicable.

(3) Waivers.

(i) Rental charges for use of U.S. production and research property on commercial sales transactions to the Government of Canada are waived for all commercial contracts. This waiver is based on an understanding wherein the Government of Canada has agreed to waive its rental charges.

(ii) Requests for waiver or reduction of charges for the use of Government property on work for foreign governments or international organizations shall be submitted to the contracting officer, who shall refer the matter through contracting channels. In response to these requests, approvals may be granted only by the Director, Defense Security Cooperation Agency, for particular sales that are consistent with paragraph (1)(i)(C) of this section.

SUBPART 245.4

(Added January 20, 2011)

245.402  Title to contractor-acquired property.

 

245.402-70  Policy.

Review the guidance and follow the procedures at PGI 245.402-70 (DFARS/PGI view) with regard to recording and financial/accounting treatment of contractor-acquired property.

 

245.402-71  Delivery of contractor-acquired property.

Follow the procedures at PGI 245.402-71 (DFARS/PGI view)for the delivery of contractor-acquired property.

SUBPART 245.5—SUPPORT GOVERNMENT PROPERTY ADMINISTRATION

(Added August 19, 2011)

245.570 Storage at the Government's expense.

All storage contracts or agreements shall be separately priced and shall include all costs associated with the storage.

subpart 245.6--REPORTING, REUTILIZATION, AND DISPOSAL

(Revised August 19, 2011)

245.602 Reutilization of Government property.

245.602-1 Inventory disposal schedules.

For termination inventory, plant clearance officers shall verify inventory schedules, either directly or through appropriate technical personnel, to determine the following:

(a) Allocability.

(1) Review contract requirements, delivery schedules, bills of material, and other pertinent documents to determine whether schedules include property that—

(i) Is appropriate for use on the contract; or

(ii) Exceeds the quantity required for completion of the contract, but could be diverted to other commercial work or Government use.

(2) Review the contractor's—

(i) Recent purchases of similar material;

(ii) Plans for current and scheduled production;

(iii) Stock record entries; and

(iv) Bills of material for similar items.

(b) Quantity. Take measures to provide assurance that available inventory is in accordance with quantities listed on the inventory schedules. Quantities may be verified by actual item count, acceptance of labeled quantities in unopened/sealed packages, scale counts, or other appropriate methods.

(c) Condition. Ensure that the physical condition of the property is reasonably consistent with the Federal Condition Code supplied by the contractor.

245.602-3 Screening.

Property will be screened DoD-wide, including the contracting agency, requiring agency, and, as appropriate, the General Services Administration. The requiring agency shall have priority for retention of listed items. All required screening must be completed before any sale of contractor inventory, including contractor inventory in overseas locations (foreign excess personal property) can take place. Upon request of the prospective reutilization, transfer, donation, or sales customer, the plant clearance officer shall arrange for inspection of property at the contractor's plant in such a manner as to avoid interruption of the contractor's operations, and consistent with any security requirements.

245.602-70 Plant clearance procedures.

Follow the procedures at PGI 245.602-70 (DFARS/PGI view) for establishing and processing a plant clearance case.

245.604 Disposal of surplus property.

245.604-3 Sale of surplus property.

(a) Plant clearance officers shall determine a best value sales approach (formal or informal sales), to include due consideration for costs, risks, and benefits, e.g., potential sales proceeds.

(b) Informal bid procedures. The plant clearance officer may direct the contractor to issue informal invitations for bid (orally, telephonically, or by other informal media), provided—

(1) Maximum practical competition is obtained;

(2) Sources solicited are recorded; and

(3) Informal bids are confirmed in writing.

(c) Sale approval and award. Plant clearance officers shall—

(1) Evaluate bids to establish that the sale price is fair and reasonable, taking into consideration—

(i) Knowledge or tests of the market;

(ii) Current published prices for the property;

(iii) The nature, condition, quantity, and location of the property; and

(iv) Past sale history for like or similar items;

(2) Approve award to the responsible bidder whose bid is most advantageous to the Government. The plant clearance officer shall not approve award to any bidder who is an ineligible transferee, as defined in 252.245-7004, Reporting, Reutilization, and Disposal; and

(3) Notify the contractor of the bidder to whom an award will be made within five working days from receipt of bids.

(d) Noncompetitive sales.

(1) Noncompetitive sales include purchases or retention at less than cost by the contractor. Noncompetitive sales may be made when—

(i) The plant clearance officer determines that this method is essential to expeditious plant clearance; and

(ii) The Government's interests are adequately protected.

(2) Noncompetitive sales shall be at fair and reasonable prices, not less than those reasonably expected under competitive sales.

(3) Conditions justifying noncompetitive sales are—

(i) No acceptable bids are received under competitive sale;

(ii) Anticipated sales proceeds do not warrant competitive sale;

(iii) Specialized nature of the property would not create bidder interest;

(iv) Removal of the property would reduce its value or result in disproportionate handling expenses; or

(v) Such action is essential to the Government's interests.

(e) Plant clearance officers shall consider any special disposal requirements such as demilitarization or trade security control requirements in accordance with DoDM 4160.28-M, Defense Demilitarization Manual, and DoDI 2030.08, Implementation of Trade Security Controls, respectively (See PGI 245.6 (DFARS/PGI view)).

SUBPART 245.70--PLANT CLEARANCE FORMS

(Revised August 19, 2011)

 

 245.7001 Forms.
 245.7001-1 Standard Form 97, Certificate of Release of a Motor Vehicle (Agency Record Copy).
 245.7001-2 DD Form 1149, Requisition and Invoice Shipping Document.
 245.7001-3 DD Form 1348-1, DoD Single Line Item Release/Receipt Document.
 245.7001-4 DD Form 1640, Request for Plant Clearance.
 245.7001-5 DD Form 1641, Disposal Determination/Approval.
 245.7001-6 DD Form 1822, End Use Certificate.


245.7001 Forms.

Use the forms listed below in performance of plant clearance actions.

 

245.7001-1 Standard Form 97, Certificate of Release of a Motor Vehicle (Agency Record Copy).

Use for transfers, donations, and sales of motor vehicles. The contracting officer shall execute the SF 97 and furnish it to the purchaser.

 

245.7001-2 DD Form 1149, Requisition and Invoice Shipping Document.

Use for transfer and donation of contractor inventory.

 

245.7001-3 DD Form 1348-1, DoD Single Line Item Release/Receipt Document.

Use when authorized by the plant clearance officer.

 

245.7001-4 DD Form 1640, Request for Plant Clearance.

Use to request plant clearance assistance or transfer plant clearance.

 

245.7001-5 DD Form 1641, Disposal Determination/Approval.

Use to record rationale for the following disposal determinations:

 

(a) Downgrade useable property to scrap.

 

(b) Abandonment or destruction.

 

(c) Noncompetitive sale of surplus property.

 

(d) Other disposal actions.

 

245.7001-6 DD Form 1822, End Use Certificate.

Use when directed by the plant clearance officer.

SUBPART 245.71--plant clearance forms

(Deleted August 19, 2011)

 

subpart 245.72--special instructions

(Deleted August 19, 2011)

 

SUBPART 245.73--SALE OF SURPLUS CONTRACTOR INVENTORY

(Deleted August 19, 2011)

* * * * *

(Revised August 19, 2011)

 252.245-7000 Government-Furnished Mapping, Charting, and Geodesy Property.
 252.245-7001 Tagging, Labeling, and Marking of Government-Furnished Property.
 252.245-7002 Reporting Loss of Government Property.
 252.245-7003 Contractor Property Management System Administration.
 252.245-7004 Reporting, Reutilization, and Disposal.


252.245-7000 Government-Furnished Mapping, Charting, and Geodesy Property.

As prescribed in 245.107(a), use the following clause:

GOVERNMENT-FURNISHED MAPPING, CHARTING, AND GEODESY PROPERTY (DEC 1991)

 

      (a) Definition. “Mapping, charting, and geodesy (MC&G) property” means geodetic, geomagnetic, gravimetric, aeronautical, topographic, hydrographic, cultural, and toponymic data presented in the form of topographic, planimetric, relief, or thematic maps and graphics; nautical and aeronautical charts and publications; and in simulated, photographic, digital, or computerized formats.

 

      (b) The Contractor shall not duplicate, copy, or otherwise reproduce MC&G property for purposes other than those necessary for performance of the contract.

 

      (c) At the completion of performance of the contract, the Contractor, as directed by the Contracting Officer, shall either destroy or return to the Government all Government-furnished MC&G property not consumed in the performance of this contract.

(End of clause)

 

252.245-7001 Tagging, Labeling, and Marking of Government-Furnished Property.

As prescribed in 245.107(b), use the following clause:

 

TAGGING, LABELING, AND MARKING OF GOVERNMENT-FURNISHED PROPERTY (FEB 2011)

 

      (a)  Definitions.  As used in this clause—

 

      “Government-furnished property” is defined in the clause at FAR 52.245-1, Government Property.

 

      “Serially-managed item” means an item designated by DoD to be uniquely tracked, controlled, or managed in maintenance, repair, and/or supply systems by means of its serial number.

             

      (b)  The Contractor shall tag, label, or mark Government-furnished property items identified in the contract as subject to serialized item management (serially-managed items).

 

      (c)  The Contractor is not required to tag, label, or mark Government-furnished property previously tagged, labeled, or marked.

 

(End of clause)

 

252.245-7002 Reporting Loss of Government Property.

As prescribed in 245.107(c), use the following clause:

 

REPORTING LOSS OF GOVERNMENT PROPERTY (FEB 2011)

 

      (a)  Definitions.  As used in this clause—

 

      “Government property” is defined in the clause at FAR 52.245-1, Government Property.

 

      “Loss of Government property” means unintended, unforeseen, or accidental loss, damage, or destruction of Government property that reduces the Government’s expected economic benefits of the property.  Loss of Government property does not include purposeful destructive testing, obsolescence, normal wear and tear, or manufacturing defects.  Loss of Government property includes, but is not limited to—

 

              (1)  Items that cannot be found after a reasonable search;

 

              (2)  Theft; 

 

              (3)  Damage resulting in unexpected harm to property requiring repair to restore the item to usable condition; or

 

              (4)  Destruction resulting from incidents that render the item useless for its intended purpose or beyond economical repair.

 

      “Unit acquisition cost” means—

 

              (1)  For Government-furnished property, the dollar value assigned by the Government and identified in the contract; and 

 

              (2)  For Contractor-acquired property, the cost derived from the Contractor’s records that reflect consistently applied, generally acceptable accounting principles.

 

      (b)  Reporting loss of Government property.

 

              (1)  The Contractor shall use the Defense Contract Management Agency (DCMA) eTools software application for reporting loss of Government property.  Reporting value shall be at unit acquisition cost.  The eTools “LTDD of Government Property” toolset can be accessed from the DCMA home page External Web Access Management application at http://www.dcma.mil/aboutetools.cfm.

 

              (2)  Unless otherwise provided for in this contract, the requirements of paragraph (b)(1) of this clause do not apply to normal and reasonable inventory adjustments, i.e., losses of low-risk consumable material such as common hardware, as agreed to by the Contractor and the Government Property Administrator.  Such losses are typically a product of normal process variation.  The Contractor shall ensure that its property management system provides adequate management control measures, e.g., statistical process controls, as a means of managing such variation.

 

              (3)  The Contractor shall report losses of Government property outside normal process variation, e.g., losses due to—

 

                    (i)  Theft;

 

                    (ii)  Inadequate storage;

 

                    (iii)  Lack of physical security; or

 

                    (iv)  “Acts of God.”  

 

              (4)  This reporting requirement does not change any liability provisions or other reporting requirements that may exist under this contract.

 

(End of clause)

 

252.245-7003 Contractor Property Management System Administration.

As prescribed in 245.107, insert the following clause:

 

CONTRACTOR PROPERTY MANAGEMENT SYSTEM ADMINISTRATION (MAY 2011)

 

      (a)  Definitions.  As used in this clause—

 

“Acceptable property management system” means a property system that complies with the system criteria in paragraph (c) of this clause.

 

“Property management system” means the Contractor’s system or systems for managing and controlling Government property.

 

“Significant deficiency” means a shortcoming in the system that materially affects the ability of officials of the Department of Defense to rely upon information produced by the system that is needed for management purposes.

 

      (b)  General.  The Contractor shall establish and maintain an acceptable property management system. Failure to maintain an acceptable property management system, as defined in this clause, may result in disapproval of the system by the Contracting Officer and/or withholding of payments.

 

      (c)  System criteria.  The Contractor’s property management system shall be in accordance with paragraph (f) of the contract clause at Federal Acquisition Regulation 52.245-1.

 

      (d)  Significant deficiencies.  (1)  The Contracting Officer will provide an initial determination to the Contractor, in writing, of any significant deficiencies. The initial determination will describe the deficiency in sufficient detail to allow the Contractor to understand the deficiency.

 

              (2)  The Contractor shall respond within 30 days to a written initial determination from the Contracting Officer that identifies significant deficiencies in the Contractor's property management system. If the Contractor disagrees with the initial determination, the Contractor shall state, in writing, its rationale for disagreeing.

 

              (3)  The Contracting Officer will evaluate the Contractor's response and notify the Contractor, in writing, of the Contracting Officer’s final determination concerning—

 

                    (i)  Remaining significant deficiencies;

 

                    (ii)  The adequacy of any proposed or completed corrective action; and

 

                    (iii)  System disapproval, if the Contracting Officer determines that one or more significant deficiencies remain.

 

      (e)  If the Contractor receives the Contracting Officer’s final determination of significant deficiencies, the Contractor shall, within 45 days of receipt of the final determination, either correct the significant deficiencies or submit an acceptable corrective action plan showing milestones and actions to eliminate the significant deficiencies.

 

      (f)  Withholding payments.  If the Contracting Officer makes a final determination to disapprove the Contractor’s property management system, leading to a potential risk of harm to the Government, and the contract includes the clause at 252.242-7005, Contractor Business Systems, the Contracting Officer will withhold payments in accordance with that clause.

 

(End of clause)

 

252.245-7004 Reporting, Reutilization, and Disposal.

As prescribed in 245.107(e), use the following clause:

 

REPORTING, REUTILIZATION, AND DISPOSAL (AUG 2011)

 

      (a)  Definitions.  As used in this clause—

 

              (1)  “Demilitarization” means the act of eliminating the functional capabilities and inherent military design features from DoD personal property. Methods and degree range from removal and destruction of critical features to total destruction by cutting, tearing, crushing, mangling, shredding, melting, burning, etc.

 

              (2)  “Export-controlled items” means items subject to the Export Administration Regulations (EAR) (15 CFR parts 730-774) or the International Traffic in Arms Regulations [(ITAR)] (22 CFR parts 120-130). The term includes— 

 

                    (i)  “Defense items,” defined in the Arms Export Control Act, 22 U.S.C. 2778(j)(4)(A), as defense articles, defense services, and related technical data, etc.; and

 

                    (ii)  “Items,” defined in the EAR as “commodities,” “software,” and “technology,” terms that are also defined in the EAR, 15 CFR 772.1.

 

              (3)  “Ineligible transferees” means individuals, entities, or countries— 

 

                    (i)  Excluded from Federal programs by the General Services Administration as identified in the Excluded Parties Listing System (EPLS) (https://www.epls.gov/);

 

                    (ii)  Delinquent on obligations to the U.S. Government under surplus sales contracts;

 

                    (iii)  Designated by the Department of Defense as ineligible, debarred, or suspended from defense contracts; or

 

                    (iv)  Subject to denial, debarment, or other sanctions under export control laws and related laws and regulations, and orders administered by the Department of State, the Department of Commerce, the Department of Homeland Security, or the Department of the Treasury.

 

              (4)  “Scrap” means property that has no value except for its basic material content. For purposes of demilitarization, scrap is defined as recyclable waste and discarded materials derived from items that have been rendered useless beyond repair, rehabilitation, or restoration such that the item’s original identity, utility, form, fit, and function have been destroyed. Items can be classified as scrap if processed by cutting, tearing, crushing, mangling, shredding, or melting. Intact or recognizable components and parts are not “scrap.” 

 

              (5)  “Serviceable or usable property” means property with potential for reutilization or sale “as is” or with minor repairs or alterations.

 

      (b)  Inventory disposal schedules.  Unless disposition instructions are otherwise included in this contract, the Contractor shall complete SF 1428, Inventory Schedule B, within the Plant Clearance Automated Reutilization Screening System (PCARSS). Information on PCARSS can be obtained from the plant clearance officer and at http://www.dcma.mil/ITCSO/CBT/PCARSS/index.cfm.

 

              (1)  The SF 1428 shall contain the following:

 

                    (i)  If known, the applicable Federal Supply Code (FSC) for all items, except items in scrap condition.

 

                    (ii)  If known, the manufacturer name for all aircraft components under Federal Supply Group (FSG) 16 or 17 and FSCs 2620, 2810, 2915, 2925, 2935, 2945, 2995, 4920, 5821, 5826, 5841, 6340, and 6615.

 

                    (iii)  The manufacturer name, make, model number, model year, and serial number for all aircraft under FSCs 1510 and 1520.

 

                    (iv)  Appropriate Federal Condition Codes. See Appendix 2 of DoD 4000.25-2, Military Standard Transaction Reporting and Accounting Procedures manual, edition in effect as of the date of this contract. Information on Federal Condition Codes can be obtained at http://www.DLA.Mil/J-6/DLMSO/Elibrary/Manuals/Milstrap/AP2_Index.asp.

 

              (2)  If the schedules are acceptable, the plant clearance officer shall complete and send the Contractor a DD Form 1637, Notice of Acceptance of Inventory.

 

      (c)  Proceeds from sales of surplus property.  Unless otherwise provided in the contract, the proceeds of any sale, purchase, or retention shall be—

 

              (1)  Forwarded to the Contracting Officer;

 

              (2)  Credited to the Government as part of the settlement agreement;

 

              (3)  Credited to the price or cost of the contract; or

 

              (4)  Applied as otherwise directed by the Contracting Officer.

 

      (d)  Demilitarization, mutilation, and destruction.  If demilitarization, mutilation, or destruction of contractor inventory is required, the Contractor shall demilitarize, mutilate, or destroy contractor inventory, in accordance with the terms and conditions of the contract and consistent with Defense Demilitarization Manual, DoDM 4160.28-M, edition in effect as of the date of this contract. The plant clearance officer may authorize the purchaser to demilitarize, mutilate, or destroy as a condition of sale provided the property is not inherently dangerous to public health and safety.

 

      (e)  Classified Contractor inventory.  The Contractor shall dispose of classified contractor inventory in accordance with applicable security guides and regulations or as directed by the Contracting Officer.

 

      (f)  Inherently dangerous Contractor inventory.  Contractor inventory dangerous to public health or safety shall not be disposed of unless rendered innocuous or until adequate safeguards are provided.

 

      (g)  Contractor inventory located in foreign countries.  Consistent with contract terms and conditions, property disposition shall be in accordance with foreign and U.S. laws and regulations, including laws and regulations involving export controls, host nation requirements, Final Governing Standards, and Government-to-Government agreements. The Contractor's responsibility to comply with all applicable laws and regulations regarding export-controlled items exists independent of, and is not established or limited by, the information provided by this clause.

 

      (h)  Disposal of scrap. 

 

              (1)  Contractor with scrap procedures.

 

                    (i)  The Contractor shall include within its property management procedure, a process for the accountability and management of Government-owned scrap. The process shall, at a minimum, provide for the effective and efficient disposition of scrap, including sales to scrap dealers, so as to minimize costs, maximize sales proceeds, and, contain the necessary internal controls for mitigating the improper release of non-scrap property.

 

                    (ii)  The Contractor may commingle Government and contractor-owned scrap and provide routine disposal of scrap, with plant clearance officer concurrence, when determined to be effective and efficient.

 

              (2)  Scrap warranty.  The plant clearance officer may require the Contractor to secure from scrap buyers a DD Form 1639, Scrap Warranty.

 

      (i)  Sale of surplus Contractor inventory. 

 

              (1)  The Contractor shall conduct sales of contractor inventory (both useable property and scrap) in accordance with the requirements of this contract and plant clearance officer direction.

 

              (2)  Any sales contracts or other documents transferring title shall include the following statement:

 

      ``The Purchaser certifies that the property covered by this contract will be used in (name of country). In the event of resale or export by the Purchaser of any of the property, the Purchaser agrees to obtain the appropriate U.S. and foreign export or re-export license approval.  

 

      (j)  Restrictions on purchase or retention of Contractor inventory. 

 

              (1)  The Contractor may not knowingly sell the inventory to any person or that person's agent, employee, or household member if that person—

 

                    (i)  Is a civilian employee of the DoD or the U.S. Coast Guard;

 

                    (ii)  Is a member of the armed forces of the United States, including the U.S. Coast Guard; or

 

                    (iii)  Has any functional or supervisory responsibilities for or within the DoD’s property disposal/disposition or plant clearance programs or for the disposal of contractor inventory.

 

              (2)  The Contractor may conduct Internet-based sales, to include use of a third party.

 

              (3)  If the Contractor wishes to bid on the sale, the Contractor or its employees shall submit bids to the plant clearance officer prior to soliciting bids from other prospective bidders.

 

              (4)  The Contractor shall solicit a sufficient number of bidders to obtain adequate competition. Informal bid procedures shall be used, unless the plant clearance officer directs otherwise. The Contractor shall include in its invitation for bids, the sales terms and conditions provided by the plant clearance officer.

 

              (5)  The Contractor shall solicit bids at least 15 calendar days before bid opening to allow adequate opportunity to inspect the property and prepare bids.

 

              (6)  For large sales, the Contractor may use summary lists of items offered as bid sheets with detailed descriptions attached.

 

              (7)  In addition to mailing or delivering notice of the proposed sale to prospective bidders, the Contractor may (when the results are expected to justify the additional expense) display a notice of the proposed sale in appropriate public places, e.g., publish a sales notice on the Internet in appropriate trade journals or magazines and local newspapers.

 

              (8)  The plant clearance officer or representative will witness the bid opening. The Contractor shall submit, either electronically or manually, two copies of the bid abstract.

 

              (9)  The following terms and conditions shall be included in sales contracts involving the demilitarization, mutilation, or destruction of property:

 

                    (i)  Demilitarization, mutilation, or destruction on Contractor or subcontractor premises. Item(s) ______ require demilitarization, mutilation, or destruction by the Purchaser. Insert item number(s) and specific demilitarization, mutilation, or destruction requirements for item(s) shown in Defense Demilitarization Manual, DoDM 4160.28-M, edition in effect as of the date of this contract. Demilitarization shall be witnessed and verified by a Government representative using DRMS Form 145 or equivalent.

 

                    (ii)  Demilitarization, mutilation, or destruction off Contractor or subcontractor premises.

 

                           (A)  Item(s) ______ require demilitarization, mutilation, or destruction by the Purchaser. Insert item number(s) and specific demilitarization, mutilation, or destruction requirements for item(s) shown in Defense Demilitarization Manual, DoDM 4160.28-M, edition in effect as of the date of this contract. Demilitarization shall be witnessed and verified by a Government representative using DRMS Form 145 or equivalent.

 

                           (B)  Property requiring demilitarization shall not be removed, and title shall not pass to the Purchaser, until demilitarization has been accomplished and verified by a Government representative. Demilitarization will be accomplished as specified in the sales contract. Demilitarization shall be witnessed and verified by a Government representative using DRMS Form 145 or equivalent.

 

                           (C)  The Purchaser agrees to assume all costs incident to the demilitarization and to restore the working area to its present condition after removing the demilitarized property.

 

                    (iii)  Failure to demilitarize. If the Purchaser fails to demilitarize, mutilate, or destroy the property as specified in the contract, the Contractor may, upon giving 10 days written notice from date of mailing to the Purchaser–

 

                           (A)  Repossess, demilitarize, and return the property to the Purchaser, in which case the Purchaser hereby agrees to pay to the Contractor, prior to the return of the property, all costs incurred by the Contractor in repossessing, demilitarizing, and returning the property;

 

                           (B)  Repossess, demilitarize, and resell the property, and charge the defaulting Purchaser with all costs incurred by the Contractor. The Contractor shall deduct these costs from the purchase price and refund the balance of the purchase price, if any, to the Purchaser. In the event the costs exceed the purchase price, the defaulting Purchaser hereby agrees to pay these costs to the Contractor; or

 

                           (C)  Repossess and resell the property under similar terms and conditions. In the event this option is exercised, the Contractor shall charge the defaulting Purchaser with all costs incurred by the Contractor. The Contractor shall deduct these costs from the original purchase price and refund the balance of the purchase price, if any, to the defaulting Purchaser. Should the excess costs to the Contractor exceed the purchase price, the defaulting Purchaser hereby agrees to pay these costs to the Contractor.

 

(End of clause)

 

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