IND 205 Lesson 10 Disposal of Government Property

IND 205 Lesson #10 Disposal of Government Property 1

IND 205 Lesson #10 Disposal of Contractor Inventory TLO-10: Explain the contractual and regulatory requirements for disposing of Contract Government Property ELOs: 1. Define contract disposal terms. 2. Identify the person who is authorized to direct the Contractor to dispose of Contractor inventory. 3. Explain the contractual and regulatory requirements for the disposal of Contract Government Property. 4. Explain disposal priority. 5. Explain the requirements for using inventory disposal schedules 6. Explain the requirement for performing a Plant Clearance Inventory Verification. 2

IND 205 Lesson #10 Disposal of Government Property ELOs: 7. Describe the potential storage requirements for property identified on an inventory disposal schedule. 8. Determine where the net proceeds should be credited from the disposal of Contractor inventory. 9. Determine the Government’s authority to abandon contractor inventory on the contractor’s premises. 10. Explain when the government is prohibited from abandoning contractor inventory on the contractor’s premises. 11. Compare the disposal requirements for Government Property under FAR 52. 245 -1 with the disposal requirements of the DLA Disposition Services 3

Contractor Inventory “Contractor inventory” means— (1) Any property acquired by and in the possession of a Contractor or subcontractor under a contract for which title is vested in the Government and which exceeds the amounts needed to complete full performance under the entire contract; (2) Any property that the Government is obligated or has the option to take over under any type of contract, e. g. , as a result either of any changes in the specifications or plans thereunder or of the termination of the contract (or subcontract thereunder), before completion of the work, for the convenience or at the option of the Government; and (3) Government-furnished property that exceeds the amounts needed to complete full performance under the entire contract. FAR 52. 245 -1) 4

Plant Clearance Officer “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. FAR 2. 101 5

Property Disposal 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. FAR 2. 101 6

SUBPART 245. 6 --REPORTING, REUTILIZATION, AND DISPOSAL 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 7 of the contract, but could be diverted to other

SUBPART 245. 6 --REPORTING, REUTILIZATION, AND DISPOSAL (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 8 Condition Code supplied by the contractor.

IND 205 Lesson #10 Disposal of Government Property Disposal Requirements for Government Property The Contractor shall promptly disclose and report Government property in its possession that is excess to contract performance. FAR 52. 245 -1(f)(viii). The contractor must define and explain the meaning of “promptly” in its written Property Management System Procedures and provide a means by which it can be measured objectively. 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 FAR 52. 245 -1(j). 9

Property Disposal • “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 • “Personal property” means property of any kind or interest in it except real property, records of the Federal Government, FAR 2. 101 and naval vessels of the following categories: – – – (1) Battleships; (2) Cruisers; (3) Aircraft carriers; (4) Destroyers; and (5) Submarines. 10

Property Disposal 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. The Contractor is responsible for declaring the Government property excess to the needs of the contract. Their Property Management System must include written procedures for disposal. 11

Property Disposal 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 then this requirement must be clearly stated in the contract 12

Property Disposal 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 then the Contractor must contact that organization for specific disposition instructions. 13

Predisposal Requirements FAR 52. 245 -1(j)(1) Predisposal requirements (i) If the Contractor determines that the property has the potential to fulfill requirements under other contracts, the Contractor, in consultation with the Property Administrator, shall request that the Contracting Officer transfer the property to the contract in question, or provide authorization for use, as appropriate. In lieu of transferring the property, the Contracting Officer may authorize the Contractor to credit the costs of Contractor-acquired property (material only) to the losing contract with the corresponding cost, when such material is needed for use on another contract. Property no longer needed shall be considered contractor inventory 14

Predisposal Requirements FAR 52. 245 -1(j)(1) Predisposal requirements (cont) (ii) For any remaining Contractor-acquired property, the Contractor may purchase the property at the unit acquisition cost if desired or make reasonable efforts to return unused property to the appropriate supplier at fair market value (less, if applicable, a reasonable restocking fee that is consistent with the supplier’s customary practices. ) 15

Inventory Disposal Schedules (2) Inventory disposal schedules. (i) Absent separate contract terms and conditions for property disposition, and provided the property was not reutilized, transferred, or otherwise disposed of, the Contractor, as directed by the Plant Clearance Officer or authorizing official, shall use Standard Form 1428, Inventory Disposal Schedule or electronic equivalent, to identify and report— (A) Government-furnished property that is no longer required for performance of this contract; (B) Contractor-acquired property, to which the Government has obtained title under paragraph (e) of this clause, which is no longer required for performance of that contract; and (C) Termination inventory. 16

Inventory Disposal Schedules (ii) The Contractor may annotate inventory disposal schedules to identify property the Contractor wishes to purchase from the Government, in the event that the property is 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 Plant Clearance Officer (iv) The Contractor shall provide the information required by FAR 52. 245 -1(f)(1)(iii) along with the following: (A) Any additional; information that may facilitate understanding of the property’s intended use. (B) For work-in-progress, the estimated percentage of completion. (C) For precious metals in raw or bulk form, the type of metal and estimated weight. (D) For hazardous material or property contaminated with hazardous material, the type of hazardous material. (E) For metals in mill product form, the form, shape, treatment, hardness, temper, specification (commercial or Government) and dimensions 17 (thickness, width and length).

Inventory Disposal Schedules (v) Property with the same description, condition code, and reporting location may be grouped in a single line item. (vi) Scrap should be reported by “lot” along with metal content, estimated weight and estimated value. 18

Inventory Disposal Schedules (3) Submission requirements. (i) The Contractor shall submit inventory disposal schedules to the Plant Clearance Officer no later than— (A) 30 days following the Contractor's determination that a property item is no longer required for performance of this contract; (B) 60 days, or such longer period as may be approved by the Plant Clearance Officer, following completion of contract deliveries or performance; or (C) 120 days, or such longer period as may be approved by the Termination Contracting Officer, following contract termination in whole or in part. 19

Inventory Disposal Schedules (ii) Unless the Plant Clearance Officer determines otherwise, the Contractor need not identify or report production scrap on inventory disposal schedules, and may process and dispose of production scrap in accordance with its own internal scrap procedures. The processing and disposal of other types of Government-owned scrap will be conducted in accordance with the terms and conditions of the contract or Plant Clearance Officer direction, as appropriate. 20

Inventory Disposal Schedules (4) Corrections. The Plant Clearance Officer may— (i) Reject a schedule for cause (e. g. , contains errors, determined to be inaccurate); and (ii) Require the Contractor to correct an inventory disposal schedule. (5) Post submission adjustments. The Contractor shall notify the Plant Clearance Officer at least 10 working days in advance of its intent to remove an item from an approved inventory disposal schedule. Upon approval of the Plant Clearance Officer, or upon expiration of the notice period, the Contractor may make the necessary adjustments to the 21 inventory schedule

Storage (6) Storage i. The Contractor shall store the property identified on an inventory disposal schedule pending receipt of disposal instructions. The Government's failure to furnish disposal instructions within 120 days following acceptance of an inventory disposal schedule may entitle the Contractor to an equitable adjustment for costs incurred to store such property on or after the 121 st day. ii. The Contractor shall obtain the Plant Clearance Officer's approval to remove Government property from the premises where the property is currently located prior to receipt of final disposition instructions. If approval is granted, any costs incurred by the Contractor to transport or store the property shall not increase the price or fee of any Government contract. The storage area shall be appropriate for assuring the 22

Disposition Instructions (7) Disposition instructions (i) The Contractor shall prepare for shipment, deliver f. o. b. origin, or dispose of Contractor inventory as directed by the Plant Clearance Officer. Unless otherwise directed by the Contracting Officer or by the Plant Clearance Officer, the Contractor shall remove and destroy any markings identifying the property as U. S. Government-owned property prior to its disposal. (ii) The Contracting Officer may require the Contractor to demilitarize the property prior to shipment or disposal. In such cases, the Contractor may be entitled to an equitable adjustment under paragraph (i) of this clause. 23

Abandonment of GP (8) Disposal proceeds. As directed by the Contracting Officer, the Contractor shall credit the net proceeds from the disposal of Contractor inventory to the contract, or to the Treasury of the United States as miscellaneous receipts. (9) Subcontractor inventory disposal schedules. The Contractor shall require its Subcontractors to submit inventory disposal schedules to the Contractor in accordance with the requirements of paragraph (j)(3) of this clause. 24

Abandonment of GP (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, at which time all obligations of the Government regarding such property shall cease. 25

Abandonment of GP (3) Absent contract terms and conditions to the contrary, the Government may abandon parts removed and replaced from property as a result of normal maintenance actions, or removed from property as a result of the repair, maintenance, overhaul, or modification process. (4) The Government has no obligation to restore or rehabilitate the Contractor's premises under any circumstances; however, if Government-furnished property is withdrawn or is unsuitable for the intended use, or if other Government property is substituted, then the equitable adjustment under paragraph (i) of this clause may properly include restoration or rehabilitation costs. 26

Contract vs Green Government Property • Contract Government Property is normally disposed of in accordance with contract requirements and FAR 52. 245 -1 unless DLA Disposition Services is authorized. • “Green” Government Property is not provided under a contract. This property is provided from the Government to the Government and is normally furnished as military property or property that supports a military requirement. Since this type of property is not provided under a contract it is not subject to the terms and conditions of a contract or the Government Property Clause. It is typically provided to a Property Book Officer via a hand receipt and is managed according to the owning organization’s requirements or regulations (ex. Army, Navy, Air Force). In general, DLA Disposition Services will dispose of this type of property. 27

Property Disposal • 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 28

Property Disposal • 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) 29

Property Disposal 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 (etool) for disposing of Contractor Inventory that is excess to the needs of the contract. 30

GROUP EXERCISE #1 – Disposal of Contractor Inventory Your professor will provide each team with selected items of contractor inventory or property that must be dispositioned 1. Determine if the property can be disposed of via the Predisposal Requirements provided in the Government Property Clause at FAR 52. 245 -1. Discuss the reasons why this method may or may not be used and include the regulatory authorization. 2. If the property cannot be disposed of via the Predisposal Requirements then your team is to prepare Inventory Disposal Schedules (SF 1428) for these items. 3. Fill out the SF 1428 (available online) and include all the pertinent information that is required for the type of property that has been submitted to you for Plant Clearance. 4. Determine if there any special disposal requirements for this property. 5. Describe the type of Screening that is required for this property. 6. Does the Government have the authority to abandon this property? Why or why not? 31 7. Compare the contract disposal requirements with DLA Disposition

Screening 245. 602 -3 Screening Property will be screened Do. D-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. 32

Property Disposal • 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 33

GROUP EXERCISE #2 – Disposal of Hazardous Waste Each team will re-read analyze the court case: Dickerson, Inc. v. Floyd C. Holloway: United States District Court, M. D. Florida, Jacksonville Division. As a minimum, your analysis will include the following: 1. Provide a brief overview of this court case. Identify the parties involved (individuals and/or organizations). Describe the business or organizations involved including the type of business. 2. Explain the events (historical background)that led to this court case. 3. What were the contractual requirements? 4. What was the court’s decision? 5. What is the significance of the court’s decision? 6. Provide comments, opinions, views on this case from your team. 34 7. Post your analysis on the student drive.

IND 205 Lesson #10 Disposal of Government Property TLO-10: Explain the contractual and regulatory requirements for disposing of Contract Government Property ELOs: 1. Define contract disposal terms. 2. Identify the person who is authorized to direct the Contractor to dispose of Contractor inventory. 3. Explain the contractual and regulatory requirements for the disposal of Contract Government Property. 4. Explain disposal priority. 5. Explain the requirements for using inventory disposal schedules 6. Explain the requirement for performing a Plant Clearance Inventory Verification. 35

IND 205 Lesson #10 Disposal of Government Property ELOs: 7. Describe the potential storage requirements for property identified on an inventory disposal schedule. 8. Determine where the net proceeds should be credited from the disposal of Contractor inventory. 9. Determine the Government’s authority to abandon contractor inventory on the contractor’s premises. 10. Explain when the government is prohibited from abandoning contractor inventory on the contractor’s premises. 11. Compare the disposal requirements for Government Property under FAR 52. 245 -1 with the disposal requirements of the DLA Disposition Services 36