Knowing that FAR 52.245-1 (k) abandonment of non-sensitive Government property held at a contractor is allowable, is there contractual or other language or direction the prevents or directs the Contractor making a request for abandonment.
Is it in the best interest of the Government to allow the Contractor to ask for abandonment vice making a contractors offer to purchase the property?
Or should the cognizant PLCO at the time of plant clearance submission counter with a request for contractor offer of payment based on the acquisition value of the property and condition listed within the case?
Your questions have multiple answers – and one of them is quite simple… Contractors can ask for anything they want. Pragmatically, it is your responsibility as a Government employee, in a position that carries a certificate of appointment, to ensure that YOUR actions are in accordance with the regulatory requirements. So, on to the technical answers…
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Disposition of Government contract property is governed first and foremost by specific contractual direction relative to Government contract property disposition. Lacking any direction there, then by the Government property clause, 52.245-1, paragraph (j), Contractor inventory disposal and, if this is a DoD contract by DFARS 252.245-7004, Reporting, Reutilization, and Disposal. Abandonment is specifically addressed at 52.245-1(k). There is guidance for you at FAR 45.603 which we will discuss later.
There are two distinct sections to FAR 52.245-1(j) as follows:
· (j)(1) - Predisposal requirements
· (j)(2) - Inventory disposal schedules
In subparagraph (j)(1), the contractor is obligated to communicate with the contracting officer in consultation with the Property Administration (NOT the Plant Clearance Officer (PLCO)) relative to further use of Government property in their possession as follows:
“(i) If the Contractor determines that the property has the potential to fulfill requirements under other contracts, the Contractor, in consultation with the Property Administrator, shall request that the Contracting Officer transfer the property to the contract in question, or provide authorization for use, as appropriate.”
The balance of subparagraph (i) as well as all of subparagraph (ii) deal exclusively with the treatment of Government property, material classification, exclusively. Then, only relative to the transfer of such material and associated cost to a successor contract, purchase of such material at cost, or a return to vendor minus any reasonable restocking fees.
In essence, this “predisposal requirements” phase requires the contractor to actively consider what is excess Government contract property and in consultation with the PA, offer a few, limited number of options for its disposal to the cognizant contracting officer.
Once these have been considered and either effectuated or dismissed, disposal of excess Government contract property is now controlled (by law, as codified in the Federal Management Regulation) via contractor submission on “inventory schedules” as outlined under subparagraph (j)(2); or if required, electronically as required by DFARS 252.245-7004.
The contractor and the Plant Clearance Officer (or authorizing official acting in place of an assigned PLCO) then follow the required FAR/DFARS guidance. The PLCO or authorizing official are further guided by FAR Subpart 45.6 -- Reporting, Reutilization, and Disposal and DFARS SUBPART 245.6--Reporting, Reutilization, and Disposal, in the orderly disposition processing of excess/surplus Government contract property. However, particular attention should be paid to FAR subparagraph 45.603 – Abandonment or Destruction Personal Property.
Keep in mind that reutilization or maximum recovery of residual value for the agency is paramount in the disposal process.
With this all this as a backdrop, let’s return to your questions…
A contractor is certainly free to send written communications to the cognizant contracting officer on any subject they choose.
If, prior to submission of inventory disposal schedules the contractor wishes to make a written request or plea to the cognizant contracting officer for abandonment of Government contract property to them, it’s certainly within their rights to do so…
However, on several levels abandonment of Government property to such a requesting contractor would be both imprudent and inadvisable.
First - while the disposition process (on the inventory disposal schedule) does permits a contractor the opportunity to offer to buy certain excess items of Government contract property, the PLCO or authorizing official simply does not have the authority to entertain a written “invitation” to “abandon” such property without due process as outlined in (j)(2). Therefore…,
Second - …it would more than likely be illegal given that the disposition process as outlined in the FAR is driven by the FMR and the law.
Third - abandonment is a step of last resort to minimize further Government/agency cost of disposal where all other means of sale or recovery of value have first been considered and exhausted. Note what FAR Part 45.603 states, below:
45.603 – Abandonment or Destruction Personal Property.
(a) When contractor inventory is processed through the reutilization screening process prescribed in 45.602-2 without success, and provided the property has no commercial value, does not require demilitarization, and does not constitute a danger to public health or welfare, plant clearance officers or other authorized officials may without further approval—
(1) Direct the contractor to destroy the property;
(2) Abandon non-sensitive property at the contractor’s or subcontractor’s premises; or
(3) Abandon sensitive property at the contractor’s or subcontractor’s premises, with contractor consent.
(b) Provided a Government reviewing official at least one level higher than the plant clearance officer or other agency authorized official approves, plant clearance officers or other agency authorized officials may authorize the abandonment, or order the destruction of other contractor inventory at the contractor’s or subcontractor’s premises, in accordance with FMR 102-36.305 through 325 (41 CFR 102-36.305-325) and consistent with the following:
(1) The property is not considered sensitive, does not require demilitarization, has no commercial value or reutilization, transfer or donation potential, and does not constitute a danger to public health or welfare.
(2) The estimated cost of continued care and handling of the property (including advertising, storage and other costs associated with making the sale), exceed the estimated proceeds from its sale.
(c) In lieu of abandonment or its authorized destruction, the plant clearance officer or authorized official may authorize the donation of property including unsold surplus property to public bodies, provided that the property is not sensitive property, does not require demilitarization, and it does not constitute a danger to public health or welfare. The Government will not bear any of the costs incident to such donations.
(d) Unless the property qualifies for one of the exceptions under FMR 102-36.330 (41 CFR 102-36.330), the plant clearance officer or requesting official will ensure prior public notice of such actions of abandonment or destruction consistent with FMR 102-36.325 (41 CFR 102-36.325).
Bottom line – very little good can come from this “abandonment” “opportunity” and should therefore be avoided for any/all reasons provided.