NAVY ACQUISITION PROCEDURES SUPPLEMENT
GOVERNMENT PROPERTY
5245.104 Review and correction of contractors' property control systems.
5245.104(90) Management Control and Accounting for Government Property (GP) in the Custody of Contractors.
(a) Purpose. The physical and financial accounting requirements placed on the contractor do not relieve the Government from accounting for and reporting the value of GP. Until such time as the DoD accounting system for GP is developed and operational, the DoN will account for GP in the custody of contractors by using DD Forms 1662 as the source documents for input to the DoN accounting systems. The property administration procedures should enable Navy Property Administrators to independently certify the accuracy and reliability of the value of GP reported by contractors on their annual reports of "DoD Property in the Custody of Contractors" (DD Form 1662).
SUBPART 5245.3-PROVIDING GOVERNMENT PROPERTY TO CONTRACTORS
5245.302 Providing facilities.
(a)(4) The requirement for a determination and findings (D&F) applies to new facilities or existing facilities, and to extending the authorized period of use. The D&F requirement does not apply to contracts awarded under the A-76 Commercial Activities Program. The D&F must be made by both a contracting official at least one level above the contracting officer and the program manager. These two officials are the agency head's designees for issuing the D&F.
5245.302-1 (DFARS 245.302-1) Policy
(a)(4)(A)(S-90) ABM and the Commandant of the Marine Corps may approve facility projects not exceeding $3 million at any one location during one fiscal year. The Chief of Naval Research, the Commanders, Naval Systems Commands, and Director, Strategic Systems Program may approve facility projects (including research and development) that do not exceed $2 million at any one location during one fiscal year.
(S-90) DoN implementation. Decisions to provide GP shall be fully documented in the contract file. Any decision to provide readily available commercial items as GP requires detailed analysis and written justification supporting the decision and approved by the commander of the requiring activity, or a designated representative as being in the best interest of the Government.
5245.306 Providing special tooling.
(90) Acquiring special tooling. Contracting officers should obtain written verification from a qualified technical evaluator that contractor-proposed special tooling is properly classified. If general purpose plant equipment is improperly fabricated or acquired as special tooling, such equipment should be reclassified as facilities, direct cost should be disallowed, and any inappropriate profit should be recouped.
5245.311 Providing Government property by transfer.
(1) Policy. Government property shall not be transferred between contracts unless approval for retention is obtained, adequate consideration is received and proper identification is maintained.
(2) Contracts may not authorize the transfer of property from one contract to another without specific identification of the type, quantity and acquisition cost of the property which is authorized for transfer to the current contract.
SUBPART 5245.4-CONTRACTOR USE AND RENTAL OF
GOVERNMENT PROPERTY
5245.403 Rental-Use and Charges clause.
(a) The CCO is the agency head's designee for making the required determination.
5245.405 (DFARS 245.405) Contracts with foreign governments or international organizations.
(3)(ii) Submit requests to the Director, Defense Security Assistance Agency (DSAA) via ABM.
5245.407 (DFARS 245.407) Non-Government use of plant equipment.
(a)(ii) HCAs are delegated approval authority. As noted at DFARS 245.407(a)(ii), any redelegation requires the approval of the Office of the Deputy Under Secretary of Defense (Industrial Affairs and Installations).
SUBPART 5245.5-MANAGEMENT OF GOVERNMENT PROPERTY IN THE
POSSESSION OF CONTRACTORS
5245.505 Records and reports of Government property.
5245.505-14 Reports of Government property.
(c)(S-90) Property Administrators will forward all DD Forms 1662 reporting Government property to the Office of the Assistant Secretary of the Navy (Research, Development and Acquisition) Acquisition and Business Management - Policy & Resources (GP) [abbr. OASN(RDA)ABM - PR (GP)], 2211 South Clark Place, Arlington, VA 22202-3738, not later than 15 November each year for input into the DoD Contract Property Management System. Block 20 of the DD 1662 must be fully and legibly completed.
(d)(S-91) The DD Forms 1662, Line 17, column e, "Balance End of Period" should reflect the acquisition cost of all GFM in the warehouse and in production on 30 September of the reporting year.
5245.508 Physical inventories.
5245.508-1 Inventories upon termination or completion.
(a) General. Under DoN contracts, the property administrator may not waive the requirement for a physical inventory upon contract completion except to the extent provided in subparagraph (b) below. At least 60 days prior to contract completion (i.e., the date when all items are scheduled for delivery to the government), the contractor should submit the following to the property administrator:
(i) A listing of all government property required to support contractual follow-on requirements or other known requirements, including spares and mobilization readiness requirements. This listing shall identify the category, quantity, and acquisition cost of such property, i.e., IPE, OPE, ST, STE, military property, and material.
(ii) Justification for retention of any Government property not currently in use (see FAR 45.102).
(iii) Upon receipt of the required contract submission, the property administrator shall:
(A) Review and verify the contractor's stated government property requirements with the assistance, as required, from other technical specialists.
(B) Forward a copy of the contractor's follow-on or other related contract requirements list and retention justification statement, together with appropriate findings and recommendation, to the cognizant contracting officer.
(b) Exception. When it is anticipated that government property will be required for use on follow-on or other related contracts under major ongoing DoN programs, the property administrator may authorize the contractor to use a recent physical inventory, i.e., one conducted within the previous 12 months, or a sampling-type inventory to meet the physical inventory requirement provided that:
(i) The contractor has conducted previous physical inventories in accordance with the type and frequency approved by the property administrator;
(ii) The contractor's inventory plan provides for use of valid sampling techniques;
(iii) Experience has established the adequacy of the contractor's property inventory and accounting controls; and
(iv) The degree of discrepancies disclosed during previous physical inventories does not exceed the risk the government is willing to accept, e.g., 10 percent (or a 90 percent confidence level).
(90) Final decisions with respect to transfer of government property to follow-on or other contracts should be made by the cognizant contracting officer within 90 days after the receipt of the contractor's list and justification statement. If transfer approval or other disposition instructions are not received by the property administrator at the end of 90 days, the property administrator should issue follow-up correspondence which states, "Your failure to respond within 30 days of the date of this follow-on inquiry will be interpreted to mean the government property in question should be disposed of in accordance with FAR/DFARS/NAPS 45.603/245.603."
(91) The automatic transfer by the contractor of record balances of government property to follow-on or other related contracts in lieu of preparing an inventory list upon contract completion is prohibited.
SUBPART 5245.6-REPORTING, REDISTRIBUTION, AND DISPOSAL
OF CONTRACTOR INVENTORY
The priorities identified at FAR 45.603 are applicable only to contractor-acquired material. These priorities have no applicability to special tooling, special test equipment, facilities, or military property.
(a) DD Form 1640, Request for Plant Clearance, should be used to initiate referral actions, applicable to subcontractors outside the assigned area of the CAO cognizant of the prime contractor.
5245.608 Screening of contractor inventory.
(b) To accomplish the screening requirements within the prescribed time periods, the following procedures should be employed:
(1) Upon receipt of inventory schedules in acceptable form, the plant clearance office should provide an original to the requiring activity and copies to DoN inventory managers, the contracting activity, and Naval activities other than inventory managers who have potential requirements for the property.
(2) Provide retention and redistribution requirements of the owning Commands, Offices and Bureaus (requiring activities), inventory managers, contracting activities and other Naval activities directly to the reporting office during this period.
5245.608-5 Special items screening.
(a) Special test equipment with standard components. Notwithstanding the provision of FAR 45.608-5(a), the final approval for contractor retention of standard components of special test equipment (STE) or for the transfer of industrial plant equipment items, which are components of STE, shall be made by the contracting officer in lieu of the ACO.
5245.612-3 Special storage at the Government's expense.
(a) Prior to authorizing retention of items in storage the contracting officer should ensure that a retention plan has been developed. Retention plans will include the justification for storage, a detailed description of the property to be stored, storage costs, location, planned period of storage, and source of funds for storage.
(d)(S-90) The use of "no-costs" or no direct cost storage agreements is prohibited.
SUBPART 5245.70-APPOINTMENT OF PROPERTY ADMINISTRATORS AND
PLANT CLEARANCE OFFICERS
5245.7002 (DFARS 245.7002) Duties and responsibilities of plant clearance officers.
A copy of the written appointment shall be furnished to the Headquarters Command of the CAO.
SUBPART 5245.73-SALE OF SURPLUS CONTRACTOR INVENTORY
5245.7302 (DFARS 245.7302) Competitive Sales.
5245.7302-5 (DFARS 245.7302-5) Mailing lists.
(c)(S-90) Sales invitations should be furnished to the supplier, the producer of each item being sold, and the:
(1) Contractor or subcontractor;
(2) Accountable contractor, if other than (2) above;
(3) Reporting activity; and
(4) Headquarters Command of the CAO.