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Government Contract Property Receipt and Issue System

ACON 032
Alternate Definition

“Government property” means all property owned or leased by the Government. Government property includes both Government-furnished property and contractor-acquired property. Government property includes material, equipment, special tooling, special test equipment, and real property. Government property does not include intellectual property and software.
“Contractor-acquired property” means property acquired, fabricated, or otherwise provided by the contractor for performing a contract and to which the Government has title.
“Government-furnished property” means property in the possession of, or directly acquired by, the Government and subsequently furnished to the contractor for performance of a contract. Government-furnished property includes, but is not limited to, spares and property furnished for repair, maintenance, overhaul, or modification. Government-furnished property also includes contractor-acquired property if the contractor-acquired property is a deliverable under a cost contract when accepted by the Government for continued use under the contract.
“Material” means property that may be consumed or expended during the performance of a contract, component parts of a higher assembly, or items that lose their individual identity through incorporation into an end-item. Material does not include equipment, special tooling, and special test equipment or real property.
“Receipt and Issue System” is an alternate method of recordkeeping used instead of perpetual inventory records.

General Information

The Government Property clause at Federal Acquisition Regulation (FAR) 52.245-1 requires contractors to create and maintain formal records of all Government property accountable to the contract, including Government-furnished property (GFP) and Contractor-acquired property (CAP). The records shall enable a complete, current, auditable record of all transactions. Unless otherwise approved by the property administrator, the records shall include the name, part number and description, National Stock Number (if needed for additional item identification tracking and/or disposition) and other data elements as necessary and required in accordance with the terms and conditions of the contract. The records shall also include the following:


  • Quantity received (or fabricated), issued, and balance-on-hand;
  • Unit acquisition cost;
  • Unique-item identifier or equivalent (if available and necessary for individual item tracking);
  • Unit of measure;
  • Accountable contract number or equivalent code designation;
  • Location;
  • Disposition;
  • Posting reference and date of transaction; and
  • Date placed in service (if required in accordance with the terms and conditions of the contract).


However, the Government Property clause also states that with the approval of the property administrator contractors may, in lieu of formal property records, use a receipt and issue system that consists of files of appropriately cross-referenced documents evidencing receipt, issue, and use of material that is issued for immediate consumption. The documentation may consist of purchase requisitions, purchase orders, receiving documents, and issue slips. For example, use of material may be evidenced by the supporting documents that generated the purchasing requisition such as blueprints, drawings, bills of material, etc. The contractor’s written property management procedure should specify the process and documentation to be used. Three key things to remember are (1) use of a receipt and issue system only applies to material and (2) approval is on a contract basis and (3) there should be some clear benefit to the Government.


Prior to approving the use of a receipt and issue system it is important for the property administrator to verify that approval is not in conflict with other terms and conditions of the contract, such as the Material Management and Accounting System (MMAS) clause at Department of Defense Federal Acquisition Regulation Supplement (DFARS) 252.242-7004. Approval of a receipt and issue system forgoes the requirement for the contractor to maintain formal records, which contradicts the requirements of the MMAS clause.


DFARS 252.242-7004(d) System criteria. The MMAS shall have adequate internal controls to ensure system and data integrity, and shall—


(4) Provide audit trails and maintain records (manual and those in machine- readable form) necessary to evaluate system logic and to verify through transaction testing that the system is operating as desired.


As a final thought, property administrators should always consult their agencies for policies and instructions regarding the approval of receipt and issue systems.