Should the widgets that have been delivered in place be reported as contractor inventory to be audited by the property administrator? Are they considered GFP or CAP at this point?
Question 1: “Should the widgets that have been delivered in place be reported as contractor inventory to be audited by the property administrator?
Open full Question Details
No, the Property Administrator is only cognizant over property that has been delegated to him/her. Property located at a contractor’s facility with no accountable contract is no longer under the oversight of a Property Administrator; however, the Property Administrator must still ensure that the contractor is following the contract requirements to report excess contract property to the Plant Clearance Officer. The moment the deliverable has been inspected and accepted (shipped-in-place), it is no longer accountable to a contract and the asset becomes the responsibility of the owning agency. I would like to point out and confirm as you mention in your background a very important and commonly misunderstood fact: the contractor is fully liable for assets that they retain on their premises and are not accountable to a contract. Too often contractors play the role of the “Nice Guy” and retain assets on their premises after final inspection and acceptance with no follow on accountable contract; however, this is not a good business practice since it leaves the contractor fully liable for loss in addition increases risk on behalf of the Government.
Contracting Officers do not have the authority to deliberately store assets at contractor’s facilities without contractual purpose. FAR 45.103 (a) (6) states: Agencies shall require contractors to justify retaining Government property not needed for contract performance and to declare property as excess when no longer needed for contract performance. The FAR does not give Contracting Officers the authority to provide Government assets to a contractor without some type of contractual document or binding agreement. FAR 45 definition of “Provide means to furnish, as in Government-furnished property, or to acquire, as in contractor-acquired property.”
Allowing a contractor to retain Government assets without an accountable contract places both the Government and contractor at risk. This can become a very serious matter if the subject items are sensitive, classified or are critical in nature since there is no contractual requirement to maintain, care, protect, etc. The question to ask is who is paying for the care, storage and upkeep of these items?
Question 2: Are they considered GFP or CAP at this point?
No, they are not considered GFP or CAP. Government Property, which is not accountable to a contract and remains at a contractor’s facility, such as Ship-In-Place Government Assets, do not become GFP or CAP unless provided as GFP after delivery and acceptance. They are simply Government Owned “Contractor Inventory”. Only if the assets were transferred to another contract would they become GFP. Contractor Acquired Property would not apply in this situation since the “ship in place” items are/were the deliverables of the contract. In this case the property in question are the subject of the contract or what the Government contracted to have built, tested, etc.
FAR 52.245-1 Definitions:
“Contractor-acquired property” means property acquired, fabricated, or otherwise provided by the Contractor for performing a contract, and to which the Government has title.
“Contractor inventory” means—
(1) 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;
(2) Any property that the Government is obligated or has the option to take over under any type of contract, e.g., as a result either of any changes in the specifications or plans thereunder or of the termination of the contract (or subcontract thereunder), before completion of the work, for the convenience or at the option of the Government; and
(3) Government-furnished property that exceeds the amounts needed to complete full performance under the entire contract.