Overview
This section prescribes the specific contract clauses required for dismantling, demolition, or removal of improvements based on whether the government or the contractor is making payment and who retains title to the resulting property.
Key Rules
- Clause 52.237-4 (Payment by Government to Contractor): Mandatory when the Government pays the contractor for services, regardless of whether the contractor also receives title to some property.
- Alternate I: Use this version if the Government intends to retain all material resulting from the work.
- Clause 52.237-5 (Payment by Contractor to Government): Mandatory when the contractor receives title to the property and the value of that property exceeds the cost of work, resulting in a net payment due to the Government.
- Clause 52.237-6 (Incremental Payment by Contractor to Government): Used when a net payment is due to the Government, but the Contracting Officer determines that staged payments and incremental transfers of title are advantageous.
- Small Business Consideration: Incremental payment structures (52.237-6) are specifically encouraged to increase competition or facilitate participation by small business concerns who may lack the capital for a single upfront payment.
Practical Implications
- Contracting officers must perform a financial assessment of the salvage value of a project before solicitation to determine which payment clause (Government-to-Contractor or vice versa) is appropriate.
- The choice of clause directly impacts project cash flow and property risk, as title transfer is often tied to the specific payment milestones outlined in these clauses.