The program I work on was classified and manufacturing facilities were specifically built for the program. Due to the highly classified nature of the program, the contractor only acquired what supported this program. Consequently, title was vested in the government within weeks of the CP contract award, but how was the title documented? A DD250 can convey title along with acceptance of the end item, but what if these are not end items? This is property that supported the design, development, assembly, testing and delivery of the end items. We need this hardware during sustainment for the spares and repair contracts. How do we take possession of the ST and STE on a FP contract when that property is contractor-owned? The FAR doesn't address this at all. Do we put the ST and STE on separate CLINs and make them deliverables as well?
Or, is the answer a second scenario? Since the contractor used their money to build or acquire the ST/STE on the fixed price LRIP and FRP contracts, does the price of the end item include the contractor's cost for the ST/STE? I would say, yes it does. So, if the cost of the ST/STE is apportioned across all of the deliverable end items wouldn't we also own the ST/STE at contract closeout? Again, I would say, yes. I believe the contractor will have to DD250 everything the government needs to retain for future use. Is this correct?
That’s quite a question you’ve asked! In fact, there are nine questions embedded in your “question.” Impressive!
However, you’re REALLY concerned and asking about TITLE!
And that involves a two word response and a question to you…
“It depends. What do your contracts say…?”
Absent specifics like contract types, dates, Government property clausal exclusion/inclusion and/or other specific contract direction relative to Special Tooling (ST) and Special Test Equipment (STE), many of your questions can neither be directly, nor more simply answered without writing a volume on all of the possible scenarios.
IF your contracts included Government property clauses they could include any or all of the at least five separate ones as follows:
PRE-JUNE 14 2007 CONTRACTS – may contain…
· 52.245-2 -- Government Property (Fixed-Price Contracts)
· 52.245-5 -- Government Property (Cost-Reimbursement, Time-and-Material, or Labor-Hour Contracts)
· 52.245-17 -- Special Tooling (Used only under Fixed Price Negotiated Contracts)
· 52.245-18 -- Special Test Equipment
POST-JUNE 14 2007 CONTRACTS – may contain…
· 52.245-1 -- Government Property (limited risk of loss)
IF you know the contract types AND WHICH clauses they contain relative to Government property; and IF you know whether the contracts contain any specific contract direction relative to ST and STE; THEN we can address ownership, title passage to the Government and the contractors Property Management System (PMS) responsibilities.
About the only generalization that can be safely made it this:
Ø Unless otherwise provided in the contract, the Government has title to ALL items a contractor purchases under a cost-type contract to which the contractor is ENTITLED TO REIMBURSEMENT (See the allowable cost and payment clause FAR 52.216-7) and is charged as a direct item of cost (See FAR Part 31).
Ø Unless otherwise provided in a fixed-price contract, the CONTRACTOR has title to all property acquired for use in the contract. The Government has title to only the deliverable end item(s) called out in the contract.
You must research and determine the specifics for each contracting situation, then read and understand what the appropriate clauses say and direct.
Having said that, you were a bit more specific relative to a fixed price contract situation where the ST/STE is (apparently) contractor-owned and the Government wishes to take title and possession of it.
Absent any other contract clause or language relating to ST/STE you would have to put the ST and STE on separate CLINs and make them deliverables.
As for the fixed price LRIP and FRP contract situation where you indicate the contractor used their own money to build or acquire the ST/STE, the ST/STE is theirs (again barring any other contract clause, agreement or language to the contrary). Since this is a fixed price contract and the only deliverables were the end items, it’s irrelevant whether the price of the end item includes the contractor's cost for the ST/STE. The ST/STE is TITLED IN THE CONTRACTOR since they paid for it. (This would not be the case under a cost reimbursement contract situation – the Government would have title to it.)
For addition information to support your research effort please review each of the previously answered Special Tooling and Special Test Equipment related contract Government property AAPs listed immediately below for applicability to your situation.
1. How to Acquire Special Tooling/Special Test Equipment (ST/STE) per the New FAR - https://dap.dau.mil/aap/pages/qdetails.aspx?cgiSubjectAreaID=8&cgiQuestionID=23119
2. Title for Non-deliverable Special Tooling with 52.245-17 after acceptance of Block Mod Change - https://dap.dau.mil/aap/pages/qdetails.aspx?cgiSubjectAreaID=5&cgiQuestionID=117103
3. What is the Fixed Price CLIN structure to acquire Special Tooling or Special Test Equipment? - https://dap.dau.mil/aap/pages/qdetails.aspx?cgiSubjectAreaID=28&cgiQuestionID=23964
4. Who has title to the property acquired for use on the contract except property identified as the deliverable under the Fix Price PO? - https://dap.dau.mil/aap/pages/qdetails.aspx?cgiSubjectAreaID=5&cgiQuestionID=118225
Feel free to resubmit a question once you have a better command of your ST/STE contracting situation.
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