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    Can we take the contractor up on his offer to essentially buy the old generators and the valueof those two geneartor be credited to the new contract that is for the purchase and installation of the two new generators. By the way, the old generators were purchased under another contract with another contractor in early 1990s.


    Answer

    The sale of old generators for credit toward new generators is permissible in accordance with FMR 102-39 "Replacement of Personal Property Pursuant to the Exchange/Sale Authority"—
     
    §102-39.5-What is the exchange/sale authority?
    The exchange/sale authority is a statutory provision, (40 U.S.C. 503), which states in part: "In acquiring personal property, an executive agency may exchange or sell similar items and may apply the exchange allowance or proceeds of sale in whole or in part payment for the property acquired."
     
    §102-39.35-When should I consider using the exchange/sale authority?
    You should consider using the exchange/sale authority when replacing personal property.
     
    §102-39.40-Why should I consider using the exchange/sale authority?
    You should consider using the exchange/sale authority to reduce the cost of replacement personal property. When you have personal property that is wearing out or obsolete and must be replaced, you should consider either exchanging or selling that property and using the exchange allowance or sales proceeds to offset the cost of the replacement personal property. Conversely, if you choose not to replace the property using the exchange/sale authority, you may declare it as excess and dispose of it through the normal disposal process as addressed in part 102-36 of this chapter. Keep in mind, however, that any net proceeds from the eventual sale of that property as surplus generally must be forwarded to the miscellaneous receipts account at the United States Treasury and thus would not be available to you. You may use the exchange/sale authority in the acquisition of personal property even if the acquisition is under a services contract, as long as the property acquired under the services contract is similar to the property exchanged or sold (e.g., for a SLEP, exchange allowances or sales proceeds would be available for replacement of similar items, but not for services).
     
    §102-39.45-When should I not use the exchange/sale authority?
    You should not use the exchange/sale authority if the exchange allowance or estimated sales proceeds for the property will be unreasonably low. You must either abandon or destroy such property, or declare the property excess, in accordance with part 102-36 of this chapter. Further, you must not use the exchange/sale authority if the transaction(s) would violate any other applicable statute or regulation.

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