Even though this is contractor owned material, does the fact that they are sensitive and require demilitarization mean that they have to be submitted to Plant Clearance prior to being demilitarized and destroyed?
The Government Property Clause of FAR 52.245-1 (2012)
(And its predecessors) requires the contractor to take certain actions in regard to Government property – and yes, scrap may be Government Property.
Scrap is defined in FAR 2.101
Production Scrap is defined in FAR 52.245-1(a)
And the GP Clause at Paragraph (j)
includes discussion of scrap reporting under (j)(2)
Now, all of that background information is fine and good – but you throw a curve ball in your opening sentence. You state that the property is "Contractor-Owned Material." As such, the Government Property clause has no standing in regard to this matter. It is the Contractor’s property – not Government property. As such to answer your question
– No, the contractor DOES NOT submit its own property to the Plant Clearance Officer (PLCO) – for ANY reason.
We DO NOT tell the contractor what to do with its own property. And in the case of items that have classified or Demil requirements – there are Statutory and Regulatory requirements that the contractor must comply with, e.g., including but not limited to the Arms Export Control Act, and International Traffic in Arms Regulations (ITAR).
With that said, in this case, I would request the contractor discuss this matter with the Contracting Officer. Request clarification as to the implied direction given. You stated, "…being directed by the AF to take them to an offsite vendor for demilitarization and destruction per the AF procedure." [I would really like to know which Government representative gave this direction – but that is a different issue.]
If the Air Force is specifically DIRECTING the contractor to do this – it would have been better for the Air Force to include this requirement IN THE CONTRACT (Which you state it is not). As such, any direction given OUTSIDE the requirements of the contract, possibly a constructive change to the contract, may entitle the contractor to an equitable adjustment. And my concern grows even more with this property being the Contractor’s Property. So definitely this needs real clarification from the Contracting officer, with full understanding of the potential ramifications.