Does the contractor acquire title to residual inventory under an FPIF contract or may the Government, at its discretion, acquire title and off-set the amount of the contractor's incurred costs by the value of the residual inventory.
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Under Fixed-price contracts, the contractor generally has title to all property acquired under it. Why? Generally speaking the only item we want from the contractor is the end-item, or deliverable. We really don’t care about what they buy, costs involved, etc. – it’s a fixed-price contract!
So, unless otherwise negotiated and stipulated in the contract, the contractor owns all residual materials acquired for this fixed price effort.
If the Government wishes to buy any or all residual materials you would need to add a contract line item (CLIN) specifying what you’re buying and provide appropriate funding. The residual materials then become a deliverable under the contract and become property of the Government, like any other deliverable and tracked as such.