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  • Question

    Northrop Grumman has requested a bailment agreement from the USAF to transfer the Global Hawk to them for modification. Is a bailment agreement appropriate ? Is it required? Does it differ from the traditional process of providing GFP via DD 1149 for contract performance? The acceptance of liability for the full value of the property under the standard bailment agreement appears to be inconsistent with the limitations of liability in the Ground & Flight Risk clause DFARS 252-228-7001. Please advise.


    Answer

    Property covered by a bailment agreement is not governed by FAR Part 45 --Government Property or the DFARS clauses associated with the inclusion of the Government Property clause at FAR 52.245-1.  Also, as you know, the Ground and Flight Risk clause at DFARS 252-228-7001 does not cover aircraft or other property that is covered by a bailment agreement.  A bailment agreement is not a requirement.  FAR and DFARS clauses are included in contracts to protect the Government’s interest, which includes use, stewardship responsibility, and liability provisions.  Therefore, it would be wise and prudent to provide the aircraft as Government-furnished property accountable to the contract.  Government property is furnished using a “Government-furnished property attachment” to solicitations and awards; not a DD Form 1149.  A link to the attachment can be found in the DFARS Procedures, Guidance, and Information (PGI) 245.103-72. 
     
    Bailment is used as part of the Spare Parts Breakout Program described in the DFARS PGI 217.7506.  PGI 217.7506 defines bailment as “The process whereby a part is loaned to a recipient with the agreement that the part will be returned at an appointed time.  The government retains legal title to such material even though the borrowing organization has possession during the stated period.”  Bailment is also used to provide military unique items to contractors when necessary for use in performing independent research and development.  Bailment agreements can be complex and must be thoughtfully written.  A bailment agreement should be written with the assistance of legal counsel to ensure the Government is protected.  A bailment agreement should address use, stewardship responsibilities, liability for loss, damage, and destruction of the property as well as other elements that protect the Government’s interest.

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