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OPERATING STATUS

FULLY OPERATIONAL

Question
Is all material removed from the vehicle considered government property? Any material removed from the vehicle that requires overhaul/reset, should it be treated as government property and would it DCMA be required to provide disposition instructions? If the material cannot be overhauled or reset, would it need to be processed through PCARSS for disposition (unless of course there is language in the contract that would state otherwise)?
Answer
Yes, all material removed from the vehicle is considered Government property. FAR 52.245-1(e) – Government Property –Title to Government property informs us that the Government retains title to Government-furnished property (GFP). Just because the material is no longer installed does not mean the Government automatically abandons the property. We will revisit abandonment later.
Whether the DCMA Plant Clearance Officer (PLCO) is required to provide disposition instructions for the material removed from the vehicle is dependent upon the condition of the material and whether the Contractor’s property management system includes scrap procedures as required. It comes down to whether the material removed from the vehicles meets the definition of “serviceable or useable property” as defined by DFARS 252.245-7004 or “production scrap” as defined in FAR 52.245-1.
“Serviceable or usable property” means property with potential for reutilization or sale “as is” or with minor repairs or alterations.
“Production scrap” means unusable material resulting from production, engineering, operations and maintenance, repair, and research and development contract activities. Production scrap may have value when re-melted or reprocessed, e.g., textile and metal clippings, borings, and faulty castings and forgings.
If the material is serviceable or usable then the Contractor must identify the items on an inventory disposal schedule and submit it to the PLCO for disposition instructions. If the material is production scrap and the Contractor has a scrap procedure in place, there is no requirement to report the material to the PLCO. You may process the material in accordance with your organization’s internal scrap procedure as stated in FAR 52.245-1(j)(3)(ii). Paragraph (k) of the Government property clause states the Government may abandon parts removed and replaced from property as a result of normal maintenance actions, or removed from property as a result of the repair, maintenance, overhaul, or modification process unless the terms and conditions of the contract state otherwise. If the material is sensitive, Contractor written consent is needed to do so. If the material is nonsensitive, the Government can abandon it in place. Remember, FAR 52.245-1(l) requires all communication under the Government property clause to be in writing. Lastly, keep in mind that there are items of material that may require demilitarization that must be witnessed by a Government representative.

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