Overview
FAR 45.107 prescribes the specific contract clauses and alternates that contracting officers must insert into solicitations and contracts to govern the management, liability, and use of Government property. It establishes the mandatory application of these clauses based on contract type, the nature of the work, and the value of the property involved.
Key Rules
- Mandatory Inclusion of FAR 52.245-1: This primary "Government Property" clause is required for all cost-reimbursement, time-and-material, and labor-hour contracts (where property is expected), as well as fixed-price contracts where the Government provides property.
- Commercial Item Exception (Part 12): For commercial acquisitions, the clause is only required if the property exceeds the Simplified Acquisition Threshold (SAT) or if the contractor is directed to acquire property that will be titled to the Government.
- Alternate Clauses:
- Alternate I: Used to shift liability for property to the contractor in specific scenarios defined in FAR 45.104.
- Alternate II: Reserved for basic or applied research contracts with nonprofit institutions of higher education or nonprofit research organizations.
- Installation Operation Services (FAR 52.245-2): Required for fixed-price service contracts on Government installations when the Government provides initial provisioning but bears no responsibility for repair or replacement.
- Use and Charges (FAR 52.245-9): This clause must be included in every solicitation and contract that contains the primary FAR 52.245-1 clause.
- Small Purchase Repair Exception: Purchase orders for property repair do not require a property clause if the unit acquisition cost is at or below the SAT and no other Government property is provided.
Practical Implications
- Liability Management: Contractors must carefully review whether Alternate I is invoked, as it significantly changes their financial exposure regarding the loss, damage, or destruction of Government property.
- Administrative Oversight: Including FAR 52.245-9 ensures there is a mechanism for the Government to charge contractors for the unauthorized or "rented" use of Government property for non-contractual work.
- Threshold Awareness: For repair-specific purchase orders, the Simplified Acquisition Threshold (SAT) serves as a critical cutoff for determining whether formal property management clauses—and the associated reporting burdens—apply.