Disposal Requirements for Government Property

IND 105 Contract Property Fundamentals TLO #13 Disposal Requirements for Government Property

IND 105 Contract Property Fundamentals The Learning Objectives for Lesson 13 are: TLO 13-Given an incident of excess Government property explain the requirements for disposal. ELO 1-Define excess personal property. ELO 2-Determine who is responsible for declaring excess. ELO 3-Identify disposition requirements under the contract. ELO 4-Describe the contract disposal priorities. ELO 5-Describe the disposal priorities for the contractor for Government property under FAR 52-245-1. ELO 6-Explain the contractor and the Government actions that are required for disposal of contract Government Property. ELO 7-Describe the contractor s responsibility for disposal of Government property using FAR 52-245-1(j) when the PCARSS e-tool is not on contract.

IND 105 Contract Property Fundamentals The Learning Objectives for Lesson 13: (cont) ELO 8-Describe the contractor s responsibility for disposal of Government property using FAR 52-245-1(j) when the PCARSS e- tool is on contract. ELO 9-Define PCARSS e-tool under DFARS 252.245-7004. ELO 10-Explain the requirements for using PCARSS e-tools by the contractor. ELO 11-Explain inventory verification process. ELO 12-Explain inventory verification process for termination inventory ELO 13-Identify condition codes. ELO 14-Explain standard screening. ELO 15-Explain special screening. ELO 16-Explain the method for vehicle transfers and disposition.

IND 105 Contract Property Fundamentals TLO #13 When should the Contractor dispose of Government Property? The Contractor shall utilize, consume, move, and store Government Property only as authorized under this contract. The Contractor shall promptly disclose and report Government property in its possession that is excess to contract performance. FAR 52.245-1(f)(viii) Utilizing Government property

Excess personal property means any personal property under the control of a Federal agency that the agency head determines is not required for its needs or for the discharge of its responsibilities (FAR 2.101) Take another look at the definition for personal property below: Personal property (FAR 2.101) means property of any kind or interest in it except real property, records of the Federal Government, and naval vessels of the following categories: (1) Battleships; (2) Cruisers; (3) Aircraft carriers; (4) Destroyers; and (5) Submarines.

The Contractor is responsible for declaring the Government property excess to the needs of the contract. When the Contractor discovers excess property in their possession, what are they required to do? 52.245-1(j) Contractor inventory disposal. Except as otherwise provided for in this contract, the Contractor shall not dispose of Contractor inventory until authorized to do so by the Plant Clearance Officer or authorizing official. Who is the Plant Clearance Officer? (next slide)

Plant clearance officer means an authorized representative of the contracting officer, appointed in accordance with agency procedures, responsible for screening, redistributing, and disposing of contractor inventory from a contractor s plant or work site. The term Contractor s plant includes, but is not limited to, Government-owned contractor-operated plants, Federal installations, and Federal and non-federal industrial operations, as may be required under the scope of the contract.

Disposition Requirements In order to dispose of Contract Government Property correctly the Contractor must follow the requirements stated in the contract. The standard contract requirement is for the Contractor to comply with the Government Property Clause at FAR 52.245-1(j). The contract may include other requirements for property disposal. If the owning agency wants to include specific requirements for the disposal of Government property then the CO must include them in the contract. They must comply with statutory and regulatory requirements. In order for the Contractor to use DLA Disposition Services (DRMO) then this requirement must be clearly stated in the contract.

Contract Disposal Priorities The priority for disposing of Contract Government Property is to comply with the requirements of the contract. When the contract includes the Government Property Clause (FAR 52.245-1) then the Contractor must dispose of Government Property as authorized by the Plant Clearance Officer or other authorizing official. If the contract specifically states that the Contractor is to use DLA Disposition Services (DRMO) then the Contractor must contact that organization for specific disposition instructions.

The Contractor must follow these disposal priorities when FAR 52.245-1 is included in the contract: FAR 52.245-1(f) (1) Predisposal requirements: If the Contractor determines that the property has the potential to fulfill requirements under other Government contracts, the Contractor shall request the CO transfer the property to the Government contract in question, or provide authorization for use. For Material only, the CO may authorize the Contractor to credit the costs of CAP to the losing contract, and debit the gaining contract with the corresponding cost, when it is needed for use on another contract. Property no longer needed shall be considered contractor inventory (definition includes GFP, CAP, and other property that the Government is obligated or has the option to take over under any type of contract).

For any remaining CAP, Contractor may purchase the property at the unit acquisition cost; Make reasonable efforts to return unused property to the appropriate supplier at fair market value; Less, if applicable when restocking fee is charged that is consistent with the supplier s customary practices. Transfer property to other contracts NOTICE: A restocking fee of 10% will be charged on all returns. Material only: debit/credit contracts Contractor can purchase property at unit acquisition cost Return unused property to supplier

Inventory Disposal Schedules are to be used for property that cannot be disposed under Predisposal Requirements. FAR 52.245-1(j)(2) Inventory Disposal Schedules (i) The Contractor shall use SF 1428 Inventory Disposal Schedule or the electronic equivalent (PCARSS) to identify and report: (A) GFP that is no longer required for performance of this contract; (B) CAP to which the Government has obtained title under FAR 52.245-1(e) which is no longer required for contract performance. (C) Termination Inventory

(ii) The Contractor may indicate on Inventory Schedules the property it wishes to purchase from the Government, if offered for sale; (iii) Separate inventory disposal schedules are required for aircraft in any condition, flight safety critical aircraft parts, and other items as directed by the PLCO. (iv) The Contractor is required to provide the information required by FAR 52.245-1(f) Records along with: (A) Additional information to help understand the property s intended use; (B) For work-in-progress the estimated % of completion; (C) Precious Metals in raw or bulk: the type of metal & estimated weight; (D) Hazardous material or contaminated property: the type of hazardous material (E) Metal in mill product form: the form, shape, treatment, hardness, temper, specification (commercial vs Government) & dimensions (thick, width, & length)

(3) Submission Requirements (i) The Contractor shall submit inventory disposal schedules to the PLCO no later than- (A) 30 days following the Contractor s determination that a GP item is no longer required for performance under this contract; (B) 60 days, or such longer period as may be approved by the PLCO, following completion of contract deliveries or performance; or (C) 120 days, or such longer period as may be approved by the TCO, following contract termination in whole or in part.

(ii) The Contractor need not identify or report production scrap on inventory disposal schedules unless the PLCO determines otherwise, and may process & dispose of production scrap IAW its own internal procedures. Other types of Government-owned scrap will be processed & disposed of IAW the contract & direction from the PLCO

(4) Corrections: The PLCO may- (i) Reject the schedule for cause (errors & inaccurate); and (ii) Require the Contractor to correct an inventory disposal schedule. (5) Post Submission Requirements: The Contractor shall notify the PLCO at least 10 working days in advance of its intent to remove an item from an approved inventory disposal schedule. The Contractor may make the necessary adjustments with PLCO approval.

(6) Storage (i) Contractor shall store the property identified on an inventory disposal schedule pending receipt of disposal instructions. The Contractor may be entitled to an equitable adjustment for costs that are incurred on or after the 121 st day; (ii) The Contractor shall obtain the PLCO s approval to remove property from the premises where the property is currently located prior to receipt of final disposition instructions. Costs incurred by the Contractor to transport/store property shall not increase the price/fee of contract. Approval does not relieve the Contractor of liability for the property.

(7) Disposition Instructions (i) The Contractor shall prepare for shipment, deliver FOB origin, or dispose of Contractor inventory as directed by the PLCO. Government markings shall be removed or destroyed, unless otherwise directed; (ii) The CO may require the Contractor to DEMIL the property. The Contractor may be entitled to an equitable adjustment per paragraph (i) (8) Disposal Proceeds: As directed by the CO, the Contractor shall credit the net proceeds from the disposal of Contractor inventory to the contract, or to the US Treasury (miscellaneous receipts). (9) Subcontractor Inventory Disposal Schedules: Subcontractors shall submit inventory disposal to the Contractor IAW FAR 52.245-1(j)(3)

52.245-1(k) Abandonment of Government Property (1) The Government shall not abandon sensitive property or termination inventory without the Contractor s written consent. (2) The Government, upon notice to the Contractor, may abandon any non-sensitive property in place. (3) The Government may abandon replacement parts from property resulting from normal maintenance, repair, overhaul, or modifications. (4) The Government has no obligation to restore or rehabilitate the Contractor s premises under any circumstances. However, the Contractor may be entitled to an equitable adjustment for restoration or rehabilitation costs for GFP that is withdrawn, substituted, or is unsuitable for the intended use.

When the PCARSS e-tool IS NOT on the contract the Contractor is responsible for disposing of Government Property as follows: In accordance with contract provisions IAW The Government Property Clause (FAR 52.245-1) if it is in the contract As directed by the PLCO or other authorizing official Property is to be listed on SF 1428 Inventory Disposal Schedule If the DLA Disposition Services is included in the contract, the Contractor shall follow their disposition instructions

When the PCARSS e-tool IS on the contract the Contractor is responsible for disposing of Government Property as follows: It must be in accordance with contract provisions The Government Property Clause (FAR 52.245-1) As directed by the PLCO or other authorizing official Property is to be listed on PCARSS (electronic reporting)

252.245-7004 Reporting, Reutilization, and Disposal. As prescribed in 245.107(e), use the following clause: REPORTING, REUTILIZATION, AND DISPOSAL (AUG 2011) (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). PCARSS is the electronic internet web based system (e-tool) for disposing of Contractor Inventory that is excess to the needs of the contract.

The requirements for using PCARSS can be obtained from the plant clearance officer and at http://www.dcma.mil/itcso/cbt/pcarss/index.cfm. The requirement must be specified in the contract (see DFARS 252.245-7004 and other contract requirements) The Contractor is required to submit an electronic inventory schedule (PCARSS) in lieu of Standard Form SF 1428

(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.

Inventory Verification 45.602-1 Inventory Disposal Schedules. (b) Plant clearance officers shall (1) Use Standard Form 1423 to verify, in accordance with agency procedures, accepted schedules within 20 days following acceptance; (2) Require the contractor to correct any discrepancies found during verification; (3) Require the contractor to correct any failure to complete predisposal requirements of the contract; and (4) Provide the contractor disposition instructions for property identified on an acceptable inventory disposal schedule within 120 days. A failure to provide timely disposition instructions may entitle the contractor to an equitable adjustment.

PLANT CLEARANCE OFFICER PREPARES & SENDS SF 1423 PLANT CLEARANCE OFFICER PREPARES & SENDS SF 1423

PLANT CLEARANCE OFFICER LISTS THE INVENTORY DISPOSAL SCHEDULES

Section II is a verification of the TECHNICAL issues surrounding the Contractor Inventory. QUANTITY, DESCRIPTION, SEGREGATION,TAGGED, CONDITION CODES, CLASSIFICATION, SCRAP or other VALUE, APP,DEMIL, and COMMON ITEMS.

SECTION III deals ONLY with TERMINATION INVENTORY

These items need be verified by a qualified individual

The PLCO is responsible for making sure verification is done The PLCO shall assure that the following items are identified during inventory verification: hazardous material; items requiring demilitarization; items containing precious metals; and industrial diamonds, including swarf. Findings shall be noted on SF 1423, Inventory Verification Survey.

Condition Codes On SF 1428, Inventory Disposal Schedule, the Contractor is required to list the property that was not used in the performance of a contract. The SF 1428 requires the Contractor to assign the condition code for the property. A description of the condition codes is included on the back of SF 1428.

There are five (5) FAR Condition Codes:1, 4, 7, plus X and S The lower the number the better the condition of the listed item. Code 1 Property which is in new condition or unused condition and can be used immediately without modifications or repairs Code 4 Property which shows some wear, but can be used without significant repair Code 7 Property which is unusable in its current condition but can be economically repaired

Code X Property has some value in excess of its basic material content, but repair or rehabilitation is impractical and/or uneconomical Code S Property that has no value except for its basic material content The CONTRACTOR is responsible for properly assigning condition codes but it is subject to review by a Government representative, e.g., Plant Clearance Officer or Quality Assurance Representative.

45.602-3 Screening. The screening period begins upon the plant clearance officer s acceptance of an inventory disposal schedule. The plant clearance officer shall determine whether standard or special screening is appropriate and initiate screening actions.

(a) Standard screening. The standard screening period is 46 days. (1) First through twentieth day Screening by the contracting agency. The contracting agency has 20 days to screen property reported on the inventory disposal schedule for: other use within the agency; transfer of educationally useful equipment to other Federal agencies that have expressed a need for the property; and transfer of educationally useful equipment to schools and nonprofit organizations if a Federal agency has not expressed a need for the property. Excess personal property, meeting the conditions of 45.603, may be abandoned, destroyed, or donated to public bodies. No later than the 21 st day, the plant clearance officer shall submit four copies of the revised schedules and Standard Form (SF) 120, Report of Excess Personal Property, or an electronic equivalent to GSA (see 41 CFR 102-36.215).

(2) Twenty-first through forty-sixth day (21 days concurrent screening plus 5 days donation processing).-- (i) Screening by other Federal agencies. GSA will normally honor requests for transfers of property on a first-come-first-served basis through the 41 st day. When a request is honored, the GSA regional office shall promptly transmit to the plant clearance officer an approved transfer order that includes shipping instructions. (ii) Screening for possible donation. Screening for donation is also completed during days 21 through 41. Property is not available for allocation to donees until after the completion of screening. Days 42 through 46 are reserved for GSA to make such allocation.

(3) Screening period transfer request. If an agency receives an intraagency transfer request during the screening periods described in paragraph (a)(2) of this subsection, the plant clearance officer shall request GSA approval to withdraw the item from the inventory disposal schedule.

(b) Special screening requirements.-- (1) Special tooling and special test equipment without commercial components. Agencies shall follow the procedures in paragraph (a) of this subsection. This property owned by the Department of Defense (DoD) or the National Aeronautics and Space Administration (NASA) may be screened for reutilization only within these agencies.

(2) Special test equipment with commercial components.-- (i) Agencies shall complete the screening required by paragraph (a) of this subsection. If an agency has no further need for the property and the contractor has not expressed an interest in using or acquiring the property by annotating the inventory disposal schedule, the plant clearance officer shall forward the inventory disposal schedule to the GSA regional office that serves the region in which the property is located.

(ii) If the contractor has expressed an interest in using the property on another Government contract, the PLCO shall contact the CO for that contract. If the CO concurs with the proposed use, the CO for the contract under which the property is accountable shall transfer the property s accountability to that contract. If the CO does not concur with the proposed use, the PLCO shall deny the contractor s request and shall continue the screening process.

(iii) If the property is contractor-acquired or produced, and the contractor or subcontractor has expressed an interest in acquiring the property, and no other party expresses an interest during agency or GSA screening, the property may be sold to the contractor at acquisition cost.

(3) Printing equipment. Agencies shall report all excess printing equipment to the Public Printer, Government Printing Office, 732 North Capitol Street, NW., Washington, DC 20401, after screening within the agency (see 44 U.S.C. 312). If the Public Printer does not express a need for the equipment within 21 days, the agency shall submit the report to GSA for further use and donation screening as described in paragraph (a) of this subsection.

(4) Non-nuclear hazardous materials, hazardous wastes, and classified items. These items shall be screened in accordance with agency procedures. Report non-nuclear hazardous materials to GSA if the agency has no requirement for them. (5) Nuclear materials. The possession, use and transfer of certain nuclear materials are subject to the regulatory controls of the Nuclear Regulatory Commission (NRC). Contracting activities shall screen excess nuclear materials in the following categories: (next slide)

(i) By-product material. Any radioactive material (except special nuclear material) yielded in or made radioactive by exposure to the radiation incident to producing or using special nuclear material. (ii) Source material. Uranium or thorium, or any combination thereof, in any physical or chemical form; or ores that contain by weight onetwentieth of 1 percent (0.05 percent) or more of uranium, thorium, or any combination thereof. Source material does not include special nuclear material. (iii) Special nuclear material. Plutonium, Uranium 233, Uranium enriched in the isotope 233 or in the isotope 235, any other material that the NRC determines to be special nuclear material (but not including source material); or any material artificially enriched by any nuclear material.

Vehicle Transfer and Disposition Check the contract for any Special Disposal Requirements, i.e., Army, Navy, AF supplements to the FAR. If no direction is provided in the contract and vehicles are Government Property then they are reported by the Contractor and undergo disposal screening by PLCO Report on SF 1428 Inventory Disposal Schedules or PCARSS NOTE: If the vehicles are leased by the Contractor they are NOT Government Property. Disposal of these items will be determined by the leasing arrangement between the Contractor and the leasing entity.

Transfer of motor vehicles Please Note: The requirements in DFARS 245.7101-1 Standard Form 97, Certificate of Release of a Motor Vehicle (Agency Record Copy) was deleted 19 Aug 2011. DFARS 245.7101-1 required the CO to execute Standard Form 97, Certificate of Release of a Motor Vehicle (Agency Record Copy) and furnish it to the purchaser. It was used for transfers, donations, and sales of motor vehicles.