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    How does FAR 52.245-1 apply to inadvertant loss or damage by the Contractor to foreign government property furnished to the Contractor in the performance of a FMS contract ? Does ownership of the property ( foreign country vs USG) have any relevance in the appilcation of this FAR clause.


    Answer

    Wow – you certainly do throw a lot of variables into this/these equation/questions.  With that said – I have to break this down into simpler components. 
     
     
    So here goes with an attempt to answer the multiple scenarios presented.
     
    1.  A.  “How does FAR 52.245-1 apply to inadvertent loss or damage by the Contractor to foreign government property furnished to the Contractor in the performance of a FMS contract?”
      i.  Well, technically, it doesn’t!  FAR 52.245-1 is for use with UNITED STATES FEDERAL CONTRACTS – your question deals with “Foreign Government Property.”  With that said, I would expect that the issue of “LOSS” would have been addressed in the contract between the Foreign Government and the Contractor.
      ii.  Now, if this was a Foreign Military Sale (FMS) THROUGH the United States Government (Department of Defense generally) – then the Federal Acquisition Terms and Conditions MAY apply.  But take heed here – the Foreign Government MAY have required DIFFERENT liability/loss provisions than the US Government (USG) in its contracting actions.  Bottom line – you really need to “read the contract.”
    B.  “Does ownership of the property ( foreign country vs USG) have any relevance in the application of this FAR clause.” 
      i.  As stated above – it really depends.  But let me make it simple.  If this was UNITED STATES Government Property (GP), provided under the Contract, for use on Foreign Military Sales – where the US Government was the contracting agent – then the FAR GP clause (FAR 52.245-1) WOULD APPLY! Why?  We, the USG are writing and awarding and administering the contract.  As such, the FAR mandates the use of the FAR 52.245-1 in all contracts that have GP and meet the criteria set forth in FAR 45.107.
      ii.  If it was a direct FMS sale – Contractor to Foreign Government – and the property was owned by the Foreign Government – that Government would have the responsibility of inserting appropriate clauses/requirements dealing with the issue of loss.
     
    2.  Your second question really gets to the crux of the matter, “In FMS contracting, the Contractor will often have access to foreign government property in the performance of the FMS contract. Does the above property clause protect the Contractor for inadvertent loss or damage to foreign government property ?”  In this case I would want to ensure two things:
      i.  That USE of this property was AUTHORIZED – either Government of the USG, or Foreign Owned Property.  FAR 45.302 provides a very parsimonious statement regarding this use.  It states, “Requests by, or for the benefit of, foreign Governments or international organizations to use Government property shall be processed in accordance with agency procedures.”
      ii.  That takes us over to the Department of Defense FAR Supplement (DFARS) 245.302.  It provides more detailed guidance regarding USE.
    a.  As such, I think we can extrapolate this information to the issue of loss.  If it is the US Government doing the contracting and it is US Government Property being used – YES, the FAR GP clause would apply – IF THE USE WAS AUTHORIZED
    b.  If this property was property of the Foreign Government – then you would need to “READ THE CONTRACT” for the specifics regarding THAT property.
     
    Lastly, and I have to throw this in – as I have seen it happen – if that US Government Property was used on the FMS WITHOUT AUTHORIZATION – then you have a problem with “Unauthorized Use” with discussion of the Penalties under FAR 52.245-9 (h) which references 18 USC 641.
     

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