Overview
FAR Subpart 45.6 outlines the policies and procedures for managing "contractor inventory"—Government property that is no longer required for the performance of a contract or that remains after a contract termination. It establishes a standardized process for reporting this inventory, attempting to reuse it within the federal government, and ultimately disposing of it through sale, donation, abandonment, or destruction.
Key Rules
- Inventory Disposal Schedules: Contractors must report excess property using inventory disposal schedules (typically Standard Form 1428). Plant Clearance Officers (PLCOs) have 10 days to accept or return these schedules and must provide final disposition instructions within 120 days.
- Reutilization Priorities: Property must be processed through a specific hierarchy: 1) Reuse within the owning agency, 2) Transfer to schools/nonprofits (educational equipment), 3) GSA regional screening for other Federal agencies/donation, and 4) Sale or abandonment.
- Screening Periods: Standard screening typically lasts 46 days. The first 20 days are reserved for the owning agency, followed by 21 days for other Federal agencies and donation screening, and a final 5 days for GSA allocation.
- Equitable Adjustments: If the Government fails to provide disposition instructions within the mandated 120-day window, the contractor may be entitled to an equitable adjustment for costs incurred (e.g., storage or maintenance).
- Scrap and Abandonment: Property with no commercial value or that would cost more to sell than the expected proceeds can be abandoned or destroyed, provided it is not sensitive or dangerous to public health.
- Proceeds of Sale: Generally, proceeds from the sale of surplus property must be credited to the U.S. Treasury as miscellaneous receipts, unless the contract specifically allows the proceeds to be credited to the cost of the work.
Responsibilities
- Plant Clearance Officer (PLCO): The primary official responsible for reviewing disposal schedules, initiating screening, providing disposition instructions, and verifying that the contractor has completed predisposal requirements.
- Contractor: Responsible for identifying excess property, submitting accurate disposal schedules, correcting discrepancies, and executing disposition instructions (e.g., shipping, destroying, or selling).
- Property Administrator: Works with the PLCO to ensure the contractor’s scrap disposal processes are effective and properly documented in their property management system.
- General Services Administration (GSA): Manages the broader Federal screening process and oversees the donation and sale of surplus property across the government.
- Receiving Agency: When property is transferred between agencies, the receiving agency is responsible for all packing, crating, and transportation costs.
Practical Implications
- Operational Efficiency: Contractors should proactively identify excess property to avoid unnecessary storage costs and potential liability. Efficient use of the "buy-back" provision allows contractors to purchase inventory at acquisition cost, which can simplify the process if the contractor has a commercial use for the items.
- Risk of Delay: The 120-day deadline for disposition instructions is a critical "ticking clock" for the Government. Contracting Officers must ensure PLCOs are responsive, as delays can lead to claims for equitable adjustments by the contractor.
- Scrap Management: Not all "waste" is equal. Contractors must have robust procedures for segregating scrap, especially if it contains hazardous materials, precious metals, or sensitive technology, as these require specialized disposal paths under 45.606.
- Cost Savings: Reutilization is a primary goal. By successfully transferring equipment to other programs or agencies, the Government avoids the cost of new procurement, making this subpart a key tool for federal resource conservation.