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    Is it required to report Loss of "consumed" Government Property in accordance with the Property Clause and 252.245-7002, or, would the requirement for reporting damage to consumed items be covered elsewhere (written into the contract, Memorandums of Agreements, etc.).


    Given the contract includes FAR 52.245-1 Government Property, the limited risk of loss provision, and DFARS 252.245-7002 Reporting Loss of Government Property and the gun turret is Government-furnished property (GFP), yes the contractor is required to report the loss.  However, the contract special provisions may also include specific instruction relative to reporting requirements.  Since your question is hypothetical, I am providing a hypothetical answer based on the information that has been provided.  Since the basis of your question is consumption, I’ve included the definition of “material” for reference.

    “Material” means property that may be consumed or expended during the performance of a contract, component parts of a higher assembly, or items that lose their individual identity through incorporation into an end item. Material does not include equipment, special tooling, special test equipment or real property (reference FAR 52.245-1(a)).

    Since the gun turret has not lost its individual identity through incorporation into the tank and it is severable, presumably without substantial loss of value or damage, let’s focus on the fact that being a component part of a higher assembly is what makes it material.  From this perspective, the gun turret has been issued to the production area or shop floor as work-in-process (WIP) and subsequently installed onto the tank.  There was no action that you had to take as the property administrator at that point to relieve the contractor of responsibility.  Keep in mind that the damaged gun turret will have to be uninstalled if it needs to be replaced or possibly for repair.  This particular item can be returned to a state of not being “consumed” and returned to stock if necessary.

    It has already been established that the gun turret is Government property (GP).  Let’s take it a step further by examining title to items that have been incorporated into end items that are not owned by the Government.  Reference FAR 52.245-1(e) below.

    (e) Title to Government property.
    (1) All Government-furnished property and all property acquired by the Contractor, title to which vests in the Government under this paragraph (collectively referred to as “Government property”), is subject to the provisions of this clause. The Government shall retain title to all Government-furnished property. Title to Government property shall not be affected by its incorporation into or attachment to any property not owned by the Government, nor shall Government property become a fixture or lose its identity as personal property by being attached to any real property.
    (2) Title vests in the Government for all property acquired or fabricated by the Contractor in accordance with the financing provisions or other specific requirements for passage of title in the contract. Under fixed price type contracts, in the absence of financing provisions or other specific requirements for passage of title in the contract, the Contractor retains title to all property acquired by the Contractor for use on the contract, except for property identified as a deliverable end item. If a deliverable item is to be retained by the Contractor for use after inspection and acceptance by the Government, it shall be made accountable to the contract through a contract modification listing the item as Government-furnished property.

    We see that title to Government property (GP) is not affected by its incorporation or attachment (installation) to property that is not owned by the Government (e.g. the gun turret being installed onto the tank that is a deliverable end item). 

    With regard to reporting responsibilities, we need to review FAR 52.245-1(f)(1)(vii)(B) Relief of Stewardship Responsibility and Liability.  It states in part “Unless otherwise directed by the Property Administrator, the Contractor shall investigate and report to the Government all incidents of property loss as soon as the facts become known.”

    The inclusion of DFARS 252.245-7002 means that the contractor is required to report the loss of GP using the Defense Contract Management Agency (DCMA) eTools software application for reporting loss of Government property.

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