ACQUIRING PROPERTY

There are several ways to acquire property. The Contractor may obtain GFP through a transfer of property from an FAA office or another contract, or by securing excess property. The Contractor may be authorized to acquire property by purchasing it from GSA supply sources (this requires a special contract authorization) or from a private vendor, or may be required to lease or rent the property.

Regardless of how the Contractor acquires property, any use of accountable government property, under a FAA contract, must be authorized in writing by the Contracting Officer.

Accountable GFP or CAP, which has not been authorized by the Contracting Officer, in the possession of the Contractor must be reported to the Contracting Officer, and the Property Administrator.

The Contracting Officer will determine if it is appropriate to allow the Contractor to retain any unauthorized property. If the Contracting Officer grants authorization, the acquisition will be ratified and reflected in a contract modification.

The furnishing of government property will be coordinated by the Property Administrator. The Contractor must identify its needs to the Contracting Officer, who will coordinate with the Technical Officer. The clear definition of needs before property is provided, will facilitate the authorization process. The transaction must be authorized prior to the physical transfer of property to the Contractor. Upon receipt of property, the Contractor should inspect same for condition and compliance to stated need(s). Failure of compliance should be conveyed to the Contracting Officer at the earliest possible time.

If the Contractor has more than one contract with FAA and wants to have property transferred from one contract to another, a request should be coordinated with the Contracting Officer(s) who will coordinate with the Property Administrator(s). If the transfer is approved, the Contracting Officer will issue appropriate modification(s) to effect the transfer.

All transfers must be properly documented, on FAA Form 4650-12.

Surplus personal property may be donated through State agencies to non-profit tax-exempt activities such as medical institutions, hospitals, schools, universities etc. Refer to AMS T3.10.3.14, FAR Part 45.609 and/or FPMR 101-44.207.

Prior to authorizing the acquisition of CAP, there is a justification process and a determination of the method that is in the best interest of the Government. The documentation of this process and the analysis, called a Property Justification, is coordinated by the Technical Officer.

Property Justifications are required for all leased items, regardless of value. If accountable CAP has been authorized under your contract, the contract will specify whether the property is to be purchased, leased or rented. The AMS and/or FAR and FPMR contain detailed information about procurement requirements; they may assist you in developing adequate procedures.

GSA and Federal Supply Schedules should be considered as a first source of supply. If you are authorized to acquire property from a GSA supply source: FEDSTRIP (Federal Standard Requisitioning and Issue Procedures) or Customer Supply Centers, a contract clause, modification or letter of authorization from the Contracting Officer is required to authorize use of these supply sources.

FEDSTRIP and Customer Supply Centers are operated by GSA to serve the retail needs of federal agencies. Cost reimbursement contractors may also use these sources, if authorized. FEDSTRIP is used for ordering large quantities of items while Customer Supply Centers are intended for small quantity orders. If you are interested in using these first supply sources, contact your Property Administrator for details.

Contractors must submit consolidated reports that include subcontractor acquisitions. Subcontractor acquisitions of Contract property are subject to the same reporting and justification requirements as prime Contractors. The Contractor coordinates subcontractor transactions; subcontractors do not deal directly with the Property Administrator, except for subcontractors to the Small Business Administration, who are performing work directly for the FAA.

Upon receipt of accountable property, report the acquisitions on the Inventory Schedule/Report of Accountable Property. Submit the Report to the Property Administrator (a copy of this filing must also be attached to the voucher for same). The Contractor may obtain blank forms from its Property Administrator. Specific instructions for completion of this report, as well as a copy of the form itself, are located in Chapter 7 of this Guide.

Accountable property is non-expendable personal property with an acquisition cost of $1000 or more, AND with a useful life of two years or more and sensitive items regardless of acquisition value. All accountable property items acquired under the Contract must be reported, including such commodities as components, accessories, improvements and add-ons that exceed the accountable threshold as well as leased or rented items. Report design, labor and/or transportation costs, if applicable. These costs are included in the acquisition cost of the item.

If an overage, shortage or damage upon receipt of CAP is discovered, take action as appropriate, directly with the vendor or the supplier.

Upon receipt of accountable GFP, the Contractor should notify the Property Administrator by letter. This applies to unauthorized as well as authorized government property. If a FAA Form 4650-12 document is forwarded for signature, the form should be signed and returned to the Property Administrator. All correspondence should include the contract number, decal number(s), acquisition cost(s), item description(s), model number(s), serial number(s), condition code(s) and physical location(s) of the property. (Note: All transfers to subcontractors must be reported to the Property Administrator.)

If the Property Administrator forwards a FAA Form 4650-12 for signature, the Contractor should verify that all information recorded on the form is correct. Verify the condition of the property, and ensure that it will meet the requirements of the work to be performed. If there are any discrepancies noted, notify the Property Administrator, upon receipt. The Form 4650-12 must be signed and returned to the Property Administrator, upon receipt and completion of inspection.

In the event of an overage, shortage or damage noted upon receipt of GFP, or if property is unusable for any reason, the Contractor should provide a statement of the condition and apparent cause to the Property Administrator. If damage in shipment is determined, file the appropriate claim forms with the shipping company.

The acquisition of leased property must be reported as accountable property, if the acquisition cost of the leased item exceeds the accountable threshold (see Glossary) and, if the lease term exceeds two months. Chapter 7 in this Guide contains details about the specific information that is reported.

Notify the Contracting Officer in writing, with a copy to the Property Administrator at least 45 days before the termination of a lease arrangement, whether due to the expiration of the actual lease or the termination/expiration of the Contract. The Contracting Officer must be notified in writing, of any credits toward purchase of the item. (Note: This advance notice will allow the Government to determine whether to purchase the item or return it upon lease expiration, or to buy out the lease if it has not expired.)

Accountable items, acquired by a subcontractor must be reported by the Contractor, to the Property Administrator. Reimbursement to a subcontractor is coordinated and processed by the Contractor. Contractors are reimbursed by FAA for authorized subcontractor acquisitions. FAA communicates directly with the Contractor only, except for subcontracts with the Small Business Administration, under its Section 8(a) program.

Component parts, or other items, acquired for addition to a piece of property that has already been reported and decaled, must be reported as accountable property and included on the Inventory Schedule/Report of Accountable Property, if the component's price exceeds the accountable threshold. The Contractor must include the FAA decal number of the main unit, and indicate if the components will be added to that piece of property. The Contractor should record an entry for such costs as design, labor and transportation, if applicable. These costs are added to the acquisition value of the item.

If equipment, components or additional items are acquired individually and then assembled into one main unit, the Contractor must report the acquisition of accountable items individually, as they are purchased. The Contractor should include a statement on its Inventory Schedule/Report of Accountable Property that one major unit is being constructed. When the item has been completed, the Property Administrator should be notified, and this should be addressed in the Contractor’s report.

If the construction of prototype or special research equipment is authorized by the Contract, the Contractor should report the components to include: equipment, material and supplies, costs for design, and labor, along with the value. Special test equipment fabricated from materials that are government property should be recorded as government-owned upon fabrication. If equipment is fabricated from materials that are contractor-owned, the completed item should be recorded as government property when title passes to the Government.

The Contractor must obtain authorization from the Contracting Officer, and a modification or authorizing letter must be issued before installing government equipment. The Contractor should consider how the property can be removed at contract completion, prior to installation. The Contractor must provide a detailed report on the cost of removal and restoration, as well as a planned disposal method to the Contracting Officer. This Report should include costs for installation and/or set-up and associated transportation.

Contractors generally submit SF-1034 and/or SF-1035, Public Voucher for Purchases and Services Other than Personal, for reimbursement of costs incurred under contract performance. The Contractor must itemize acquisitions under the "Personal Property/Equipment" category of a voucher and not simply list them as "Other Direct Costs". The Property Administrator will receive a copy of the voucher from the FAA paying office and check the voucher entries to ensure that property acquisitions are reported and, under the proper category.

The Contractor should submit the original Inventory Schedule/Report of Accountable Property to the Property Administrator. A copy must be attached to the voucher, to support reimbursement claims. (Note: If a voucher, including costs for accountable personal property items, is submitted but fails to include a copy of the Inventory Schedule/Report, payment for the personal property items may be suspended by the Contracting Officer.

This section describes requirements for decals, sensitive items, precious metals, and special test equipment.

Decals are identifying tags designed by FAA to identify Agency property and to display the specific number assigned to a particular item, or to identify a specific class of property. FAA has a variety of decals to identify property classifications:

Bar code decals identify accountable property.

The Contractor should contact the Property Administrator if GFP is furnished without affixed decals. The Property Administrator will furnish decals for accountable CAP. The FAA decal numbers should be referenced in all correspondence, addressing specific property.

Some property items cannot be labeled. These include submersible items and those subject to chemical exposure and weather conditions. (Note: The Contractor may request metal decals for property that is exposed to the environment.) Other items cannot be labeled because the decal will not adhere to particular types of surface (pumps, some typewriters, for example). In such cases, the Contractor should make every effort to indelibly mark the item by painting or etching the decal number on it. Items that cannot be labeled or otherwise marked with the decal number, (i.e., platinum crucibles) are subject to appropriate additional controls. (Note: One option for recording the decal numbers is to attach the decal to the Inventory Report that shows receipt of the item. Stock cards may also be used, recording detailed information about the item.)

Sensitive items are property items that are highly desirable and easily converted to personal use. Special efforts must be made to control and protect such items. Sensitive items are classified as accountable property and must be reported. Contact the Property Administrator for more information. (Note: See Appendix C.)

When authorized, precious metals can be acquired directly or indirectly, as government-furnished or contractor-acquired personal property. Precious metals such as platinum, used in the composition of crucibles or evaporating dishes, for example, are commodities requiring sensitive item accountability as well as classification as precious metals. Keep records of the amount of precious metal comprising the commodity.

Some precious metals, such as gold and silver, may exist within the boards and wiring of certain computer and laboratory instruments. The Contractor must maintain a record of this information to assure appropriate recovery, if outright disposal is considered.

Special test equipment authorized as GFP or CAP, under the Contract, must be marked with a serial number and FAA decal number. If it is not feasible to mark the equipment, the Property Administrator must be notified in writing. Special test equipment components valued at $5000 or more and incorporated in a manner that makes removal and re-utilization feasible and economical must also be marked. Property identification should be legible, permanent, conspicuous, and tamper-proof, consisting of serial number and decal number. (Note: Off-the-shelf testing equipment is not classified as special test equipment (see Glossary)).

The Contractor is required to conduct a physical inventory of accountable government property and submit the Annual Inventory by September 23, annually, to the Property Administrator. The inventory must include accountable government property items acquired, furnished, rented and/or leased under the Contract. Personnel who conduct inventories should not be the same individuals who maintain the property records. All accountable government property in the Contractor possession must be reported, even if it has not been authorized by the Contracting Officer. (Note: Software has been classified by FAA as sensitive and is subject to reporting requirements.)

The minimum information that must be recorded follows:

FAA decal number Associated FAA decal numbers

Manufacturer's name Item description

Manufacturer's model number Acquisition date

Manufacturer's serial number Actual cost of item

The Contractor must submit a consolidated report of all accountable government property under the Contract, to include subcontractor inventory. Subcontractors must report their inventories to the prime Contractor.

The Annual Inventory Report must include a certification that all items are required for continued contract performance and are free from contamination. Property that is no longer usable or required must be reported and identified as such.

The Contractor’s Annual Inventory Report must reconcile the Contract’s property records. All overages or shortages discovered must be identified in the cover letter, and accompanied by back-up documentation described in the following paragraphs:

The Property Administrator will notify the Contracting Officer of all overages. The Contractor will be requested to provide information about how property was acquired and to justify a continued need. The Technical Officer may initiate the Property Justification process, if retention is approved by the Contracting Officer.

In the event an item(s) of Government Property cannot be located, the Contractor must submit a statement explaining all related circumstances, including the actions taken to locate the property. The Contractor may request relief of accountability for the item. If theft is suspected, the Contractor should report this to the local police. The Missing, Stolen and Damaged Property section of the Guide outlines the required content of Contractor statement.

The Contractor must promptly notify the Property Administrator, of any loss, damage to, or destruction of government property in its possession or control, or in the possession or control of a subcontractor. The Contractor is required to investigate the circumstances of each incident, and to ensure that measures are taken to prevent recurrence. The Contractor must report all known facts and circumstances, of the case, to include the following information:

Description of item(s) missing, stolen, damaged, or unreasonably consumed to include condition of the item before it was missing/stolen, FAA decal number (if applicable), manufacturer's name and model number

Any loss due to theft or suspected theft must be reported immediately to the local police and the Federal Bureau of Investigation (FBI). Check the U.S. Government listings in a local telephone directory for the phone number. Send a copy of the police report to the Property Administrator. The Contracting Officer will determine any liability for losses.

Contractor property records must identify all types and classes of government property (expendable supplies, materials, nonexpendable personal property/equipment and real property). These records must be safeguarded from tampering and/or destruction. Separate property records should be maintained for each Contract.

Contractor personal property records must ensure that the following areas of property administration are covered:

Acquisition Maintenance and calibration

Receiving Physical inventory

Identification/records Subcontract administration

Storage and movement Reporting

Property consumption Disposal

Utilization Contract completion

Contractor records must provide a complete, current, auditable record of all transactions. They must be accessible to authorized government personnel. Records are subject to review by the Government, as conditions warrant. Compliance reviews may take place at any reasonable time during Contract performance, completion, termination, or any time during the period the Contractor is required to retain such records. Records must be retained for the time period specified in AMS 3.10.3.10 or FAR 45.505, as applicable, or for any longer period specified in the Contract.

Contractor inventory records must provide the following information for every item of government property in your possession:

Item description Unit of measure

Unit price Contract number

Quantity received Location

Quantity issued Disposition

Quantity on hand Posting reference

Owned Leased

FAA decal number FAA decal number

Item description Item description

Manufacturer's name Manufacturer's name

Manufacturer's model Manufacturer's model

Manufacturer's serial number Manufacturer's serial number

Actual cost of item Monthly cost

Acquisition date Installation date

Contract number Credits accrued

Government-furnished or Contractor's current

Contractor-acquired order number

Associated FAA decal Expiration date

Numbers Acquisition price if purchased

Maintenance cost Buy-out price

Current location

Condition code

There is no requirement to record unit prices in the records maintained at secondary and subcontractor sites, provided that the records maintained at the Contractor’s primary site contain unit prices. The Contractor must furnish actual or estimated unit prices, on purchased equipment as the need arises. If the specific unit price cannot be obtained, reasonable estimates may be substituted.

Real property consists of buildings, grounds, improvements, structures, and features permanently installed in, or attached to, facilities. (Note: Personal property installed on non-government realty is treated like personal property, not real property and is subject to the controls for personal property outlined in this Guide.) Property control records for Real Property must contain the following basic information:

Item description Quantity

Unit price Unit of measure

Contract number Location

Manufacturer's name Date of transaction

Manufacturer's model number Disposition posting reference

Manufacturer's serial number Type of utilities attached to

Property control records for all government real property, including alterations, construction work and sites, must include an itemized record of the description, location, acquisition cost and disposition. These records must include maps, drawings, plans, specifications, and supplementary data. They must be complete and include original cost of the property, and improvements, changes and additions.

All costs incurred for new construction, assembly to the real property, expansions, extensions, conversions, additions, alterations and improvements, must be capitalized. (Note: FAA will record the cost as a capitalized asset. Costs for real property involving destruction of the facility or costs for ordinary maintenance or repair of the property are not capitalized.)

The Contractor must protect and preserve stored government property in order to prevent loss, damage and deterioration. The property should be clearly identified as government property and should not be intermingled with non-government property. (Note: Stored items requiring special handling, such as flammables or explosives, must be stored safely and be adequately protected.)

The Contractor must document the movement of government property, as property is moved from any Contractor site, for return to the FAA or delivery to another contractor or agency. The physical relocation of the government property must be documented in writing (see Form 4650-12) with copies provided to the Property Administrator and to the Contracting Officer. The Property Administrator must receive notification prior to the property being moved.

Trade-ins or exchanges, in a contractor’s inventory, may be authorized for outdated equipment, or in order to decrease the purchase cost of a new item. This type of transaction occurs rarely, and is authorized only when there is a definite advantage to the Government.

The Contractor must request Contracting Officer authorization to trade in, or exchange government property for identical items, or for newer state-of-the-art items that are similar. This request must be in writing, with a copy to the Property Administrator. The Property Administrator will coordinate with the Contracting Officer, who must grant approval for the trade-in or exchange.

If the trade-in is disallowed, and the Contractor has no further use for the item, it will be offered to FAA offices for use, or referred to other agencies through the routine excess process.

Contractor must report all government property, which is excess to its needs, to the Property Administrator. Property may be considered excess if it is no longer required for contract performance or is no longer in working order and repair is considered impractical. The Property Administrator will coordinate with the Contracting Officer to determine if the item is required on another contract or by the sponsoring program. If the property cannot be used elsewhere in he Department of Transportation, there is a series of steps that FAA must follow to dispose of the excess property. This is sometimes a lengthy process. As such, the Contractor may be required to store the excess property while disposal procedures are being carried out. (Note: The Contractor is responsible for the property as long as it has possession.)

The Property Administrator, in conjunction with FAA property management, will issue a SF-120 (Report of Excess Personal Property), an SF-126 (Report of Personal Property for Sale), or an SF-15 (Sale of Government Property) for government property, regardless of value, that is not required for further use by the Department of Transportation. The appropriate form will be executed and an informational copy forwarded to the Contractor’s designated representative. This individual's name normally appears on the forms as the contact person for anyone requesting additional information on the excess property. The Property Administrator will advise the Contractor representative of the steps that are involved and will issue final disposal instructions when release of the item is appropriate.

Copies of any correspondence or material received directly from GSA, should be forwarded to the Property Administrator.

The Contractor may not dispose of any item until the Contracting Officer's approval and complete written instructions from the Property Administrator have been received. (Note: Disposal options include transfer, donation, trade in, sale, abandonment, cannibalization, scrapping or destruction of the property.)

Once the Contractor has declared an item as excess, with the concurrence of the Contracting Officer, the Property Administrator will notify GSA of the excess item for transfer to another government agency/department or contractor. If the item cannot be transferred, it will be offered to state agencies in the GSA region, for donation. If the states are not interested in the item, it will then offered to the public for sale. If GSA is unable to dispose of the item, the Property Administrator is notified by GSA, that FAA is authorized to conduct a small lot sale or to abandon the item.

Excess property may be destroyed or abandoned by FAA only after every effort has been made to dispose of it by other authorized methods. FAA may elect to abandon property at a site under certain circumstances during the life of a contract or during close-out of the contract. (Note: Authorization for abandonment requires a written determination by the Contracting Officer.)

Once abandonment is authorized, the Contractor should remove all government markings from the item. The Contractor should prepare and submit, to the Property Administrator, a certification that the item is disposed of, and that it has been disposed of in a manner that does not endanger the health and safety of the public.

When the Property Administrator informs the Contractor that an item cannot be disposed of through GSA, the Contractor may be requested to identify any non-profit organizations, in the local community that are interested in the item. If the Contractor is a for-profit firm, the item must be donated to a third party, as previously described. (Note: Local organizations to consider include high schools, vocational schools, colleges or service organizations (such as Goodwill Industries, Salvation Army, or Volunteers of America.)

Organizations interested in excess property, must submit a letter stating their status as a non-profit organization, and stating how the item will be used. The letter should be forwarded directly to the Contracting Officer, by the requesting organization, with a copy to the Property Administrator. The property item must be free from contamination. It is the Contractor’s responsibility to provide this certification.

Cannibalization refers to either the alteration of a piece of government property that is generally obsolete due to age or technological advances, or reducing the equipment to parts, in order to obtain needed components. The Contractor is cannibalizing property when it removes serviceable parts from an item, rendering it unserviceable or reducing its value. The Contractor may not cannibalize government equipment unless it has received the Contracting Officer's approval and written instructions from the Property Administrator.

The descriptions of transfers and disposal actions contained in this Guide assume that the property involved is not contaminated. Any contamination of personal property/equipment must be immediately reported to both the Property Administrator and the Contracting Officer, along with a certification that items are hazard-free. The Contractor is normally expected to decontaminate all items so that they may be used again.

The following certification, signed by the Contractor or an authorized official, must accompany each copy of the excess declaration or final inventory, when shipment from the Contractor's facility will be required:

The Contractor is responsible for proper packing, crating, and handling property to ensure it reaches its destination in good condition, when shipment of government property is required. Shipments shall be made pursuant to the directions of the Contracting Officer or Property Administrator. The Contractor must advise the Property Administrator of the items shipped, date of shipment, number of crates or parcel's, carrier's name, and the waybill number immediately after carrier's pickup.

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