As it relates only to CAP under predisposal requirements, is it only the contractor that can purchase the property at acquisition cost or can another company conduct the purchase (the contractor doesn't want or need the item, but knows of other companies that will purchase the item).
Sorry, but only the contractor may purchase “contractor inventory” which FAR 45.101 defines as:
“Any property acquired by and in the possession of a contractor or subcontractor under a contract for which title is vested in the Government and which exceeds the amounts needed to complete full performance under the entire contract”
Why is that you ask?
First off – While we look to the Federal Acquisition Regulation (FAR) and in particular the FAR clause at 52.245-1(j), for disposition direction, the disposition of ALL Government property is ultimately governed and regulated under the Federal Management Regulation.
To your credit you correctly noted the following that:
· There are pre-disposal options at FAR 52.245-1(j)(1)(i) & (ii) (that a contractor’s property management system should address and appropriately exercise before submission of inventory disposal schedules noted at 52.245-1(j)(2))
· One of the pre-disposal options is that “Contractor may purchase the property at the unit acquisition cost if desired…”
Critically, note that the ability to “purchase” is limited to the contractor holding the contract and no one else.
Why is that you may wonder?
The disposition of Government property is a controlled process and that prior to submission of inventory schedules no one possesses the regulatory authority to sell it!
The disposition of personal property via sale is covered under the FMR, Subchapter B, Part 102-38. Here’s what it says:
§102-38.40—Who may sell personal property?
An executive agency may sell personal property (including on behalf of another agency when so requested) only if it is a designated Sales Center (SC), or if the agency has received a waiver from the eFAS Planning Office. An SC may engage contractor support to sell personal property. Only a duly authorized agency official may execute the sale award documents and bind the United States.
So – who’s authorized to sell surplus (after appropriate screening) Government property?
· IF the contractor’s disposal system required under FAR 52.245-1(j) is being used for disposition,
THEN sale of surplus CAP (only after appropriate screening) is done by the contractor under the authority of the designated Plant Clearance Officer (PLCO) or designated authorizing official in accordance with the FMR, FAR and DFARS as noted below:
o FMR, Subchapter B, Part 102-38
o FAR 52.245-1 Government Property
o DFARS 252.245-7004 Reporting, Reutilization, and Disposal
o DFARS 245.604-3 Sale of surplus property
· IF the contract directs use of DLA Disposition Services (formerly DRMO) in lieu of the use of the contractors disposal system required under FAR 52.245-1(j),
THEN only they may conduct a sale of Government personal property in accordance with the FMR, DFARS and agency guidance.
The bottom line is that by regulation, the purchase of excess contractor inventory (CAP – Material) is restricted to the contractor prior to submission of inventory disposal schedules. In contrast the authorized sale of surplus Government contract property only occurs after the excess property is listed on inventory disposal schedules (or turned in to DLA Disposition Services) appropriate screening has taken place and a determination made that it is truly surplus to the needs of the Government.
Now that we’ve laid that issue to rest, it was another thing you said in your background statement that troubles me and may represent potentially broader, deeper issues involving the contractor’s property management system (PMS) and these processes/outcomes:
· Disposition - FAR 52.245-1(j)
· Acquisition of Property - FAR 52.245-1(f)(1)(i)
· Utilizing Government property (consume, move & store) - FAR 52.245-1(f)(1)(viii)
What was it you said that raises this concern?
“By this apparent strict wording, the purchase of the property can only be made by the contractor, and if the contractor is aware of another company that would buy it, the contractor would have to purchase the item and then sell it, a seemingly cumbersome and inefficient manner of conducting transactions.”
Your statement seemingly indicates a possible circumvention, corruption and abuse of the disposition process. Let’s be clear – a contractor should not be seeking buyers and routinely purchasing excess contractor inventory (CAP – Material) solely to resell it to another contractor as part of the pre-disposal process as it then begs the question of a PMS that may permit/encourage over-acquisition of CAP-Material and weak consumption controls.
Be reminded that when directed by the PLCO or designated authorizing official the contractor may/will be required to conduct sale of surplus Government property if that is their disposition action determination after declaration of excess, proper listing and submittal on inventory disposal schedules, appropriate screening and determination of surplus
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