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    Can we use the components in a rent free status on Contract B without violating the cannibalization definition in 52.245-1? Does the rent free use triumph the cannibalization?


    According to FAR 52.245-1 “Cannibalize” means to remove parts from Government property for use or for installation on other Government property.
    FAR 52.245-1 (c) Use of Government property.
    (1) The Contractor shall use Government property, either furnished or acquired under this contract, only for performing this contract, unless otherwise provided for in this contract or approved by the Contracting Officer.
    (2) Modifications or alterations of Government property are prohibited, unless they are—
    (i) Reasonable and necessary due to the scope of work under this contract or its terms and conditions;
    (ii) Required for normal maintenance; or
    (iii) Otherwise authorized by the Contracting Officer.
    (3) The Contractor shall not cannibalize Government property unless otherwise provided for in this contract or approved by the Contracting Officer.

    In this situation it is important to understand the contract terms and conditions.  The Government Property must be used as specifically authorized in the contract according to
    FAR 52.245-1 paragraph (c) “or approved by the Contracting Officer.”  Using Government Property in a “rent free” status is normally addressed in FAR 52.245-9-Use and Charges-but that information was not mentioned in the question.  Also, no mention was made of the specific terms and conditions of the contract related to this situation or if the Contracting Officer provided authorization or clarification.    
    Whenever contractors need clarification concerning the contract terms and conditions then the rules of contracting dictate that they go to the Contracting Officer.  Since I do not have access to the contract(s), modifications, special terms and conditions, any correspondence between the contractor and Government, the Contractor’s Property Management System, and other items that would impact the contractor’s performance regarding Government Property I urge you to contact your Contracting Officer, Contract Administration Office, or legal counsel in order to obtain information that is most appropriate for your situation.

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