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  • Question

    Is it permissible for the government to enter into a SIBR III contract whereby they may sell back the delivered item to the contractor prior to disposal?

    Answer

    It would not be permissible for the government to enter into a SBIR III contract while agreeing to sell back the delivered item to the contractor by circumventing the prescribed disposal directives. Therefore, agreeing to the contractor’s proposed action is not advised.
     
    Having a federal government agency pay the contractor to manufacture and deliver an item(s) under a Small Business Innovation Research III contract, while agreeing to have the government receive $1.00 for transferring complete title and control of the same item(s) upon return to the manufacturer after evaluation does not constitute a ‘fair and reasonable’ business transaction.
     
    In this instance, where the title to the product/item(s) will transfer to the government at the time of delivery, then the item(s) is/are government property. They would be accountable under FAR 52.245-1 and would be subject to applicable government property disposal requirements in FAR part 45. Additional guidance can be found in DFARS part 245 and DFARS PGI 245.4. Additional Federal laws, regulations, as well as, DoD Manuals and Instructions such as DoDM 4160.21-V3, Change 1, 01/12/2018 would also apply.
     
    This answer is predicated on the following:
     
    1)  The delivered item meets the FAR 45.101 definition of ‘contractor-acquired property’.
    2)  The Government Property clause at FAR 52.245-1 is included in your contract.
    3)  Your SBIR III contract requires deliverable end item(s).
    4)  The contract obligates the government to pay a sum certain for the item(s).
    5)  The acquisition cost of the item(s) delivered is more than $1.00.
    6)  The government has title upon delivery and payment.
    7)  The government will then conduct an evaluation of the item(s).
    8)  The evaluation will be non-destructive in nature.
    9)  The government proposes to relinquish title and complete control of the item(s) after evaluations for the sum of  $1.00.


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