Overview
FAR Subpart 45.4 establishes the regulatory framework for determining legal ownership (title) of property used in the performance of government contracts. It distinguishes between property provided by the government (Government-furnished property) and property purchased or fabricated by the contractor (contractor-acquired property), detailing the specific conditions under which title vests in the Government.
Key Rules
- Government-Furnished Property (GFP): The Government maintains title to all GFP throughout the contract lifecycle until it is legally disposed of through authorized channels.
- Leased Property: Any property leased by the Government and subsequently provided to a contractor is officially categorized as GFP under the standard Government Property clause (52.245-1).
- Contractor-Acquired Property (CAP) - Fixed-Price Contracts:
- Title generally remains with the contractor unless the contract contains specific financing provisions (e.g., progress payments) or other requirements for title passage.
- Title to "deliverable end items" vests in the Government upon acceptance.
- CAP - Cost-Reimbursement/Time-and-Material Contracts: Title to all property for which the contractor is entitled to reimbursement vests in the Government automatically.
- Transition of Deliverables: If a contractor must retain a deliverable item for further use after the Government has accepted it, the item must be formally converted to GFP via a contract modification.
Responsibilities
- Contracting Officers: Responsible for executing contract modifications to list deliverable items as GFP if they are to be retained by the contractor for continued use.
- Contractors:
- Must distinguish between CAP and GFP for accounting and liability purposes.
- Must follow the requirements of clause 52.245-1 for all property where the Government holds title.
- Must ensure property acquired under cost-type contracts is properly identified as Government property.
- Government Property Administrators: Tasked with overseeing the contractor's property management system to ensure that title status is correctly tracked and that disposal follows regulation.
Practical Implications
- Audit Readiness: Under cost-type contracts, contractors must be aware that almost every piece of equipment or material purchased for the contract belongs to the Government. This necessitates rigorous tracking and prevents the contractor from "keeping" leftovers once the contract ends.
- Risk of Loss: Because title dictates who bears the ultimate risk and who is responsible for maintenance standards under 52.245-1, clear identification of title is critical during property loss investigations.
- Contract Conversions: When transitioning from a fixed-price to a cost-type contract (or vice versa), the status of the property on-site must be carefully audited, as the rules for title passage change significantly between these contract types.
- The "Modification" Trap: Contractors often mistakenly believe they can continue using a completed deliverable (like a specialized test rig) for the next phase of a project. Per 45.402(a), this is a compliance risk unless a formal contract modification is processed to classify that item as GFP.