[Federal Register Volume 70, Number 143 (Wednesday, July 27, 2005)]
[Rules and Regulations]
[Pages 43583-43586]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-14670]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 45 and 52

[FAC 2005-05; FAR Case 2002-015; Item V]
RIN 9000-AJ99


Federal Acquisition Regulation; Government Property Rental and 
Special Tooling

AGENCIES: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) have agreed on a final rule 
amending the Federal Acquisition Regulation (FAR) to incorporate a 
class deviation regarding use and charges, which has been applicable to 
the Department of Defense since 1998. This deviation is appropriate for 
application across the Federal Government. The change clarifies the 
basis for determining the rental charges for the use of Government 
property and is intended to promote the dual use of such property. The 
final rule specifically impacts contracting officers, property 
administrators, and contractors responsible for the management of 
Government property.

DATES: Effective Date: August 26, 2005.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat at (202) 501-4755 
for information pertaining to status or publication schedules. For 
clarification of content, contact Ms. Jeritta Parnell, Procurement 
Analyst, at (202) 501-4082. Please cite FAC 2005-05, FAR case 2002-015.

SUPPLEMENTARY INFORMATION:

A. Background

    DoD, GSA, and NASA published a proposed rule in the Federal 
Register at 69 FR 42544, July 15, 2004, to incorporate two Department 
of Defense class deviations, 98-O0010, Use and Charges, and 98-O0011, 
Special Tooling, into FAR Part 45 and make appropriate revisions to FAR 
52.245-9, Use and Charges, and FAR 52.245-17, Special Tooling. The 
final rule establishes, as the basis for rental charges, the time 
property is actually used for commercial purposes, rather than the time 
available for use; permits contractors to obtain property appraisals 
from independent appraisers; permits appraisal-based rentals for all 
property; and allows contracting officers to consider alternate bases 
for determining rentals. The final rule does not change the 
requirements for special tooling as originally proposed by the Councils 
because the Councils are now considering deleting the clause in its 
entirety rather than revising it based on comments received on the 
proposed rule. The Councils plan to solicit comments on the proposed 
deletion of the FAR clause at 52.245-17, Special Tooling, under another 
proposed rule.
    Four respondents provided public comments. Consideration of these 
comments resulted in only minor administrative changes to the proposed 
rule. The resolution of the comments follows:

Summary of Comments Received/Disposition

    1. Proposed Rule (PR): 52.245-9. Deviation to the clause at 52.245-
9 sets a fair and equitable method for applying a rent usage when 
Government property is used for commercial purposes or existing 
Government property is used for future contracts and equitable 
adjustment is needed to eliminate unfair competitive advantage.
    Concur.
    2. PR: 52.245-17. All respondents proposed the elimination of the 
special tooling clause.The Councils plan to solicit comments on the 
proposed deletion of the FAR clause at 52.245-17, Special Tooling, 
under another proposed rule.
    3. PR: 52.245-9(h). Amend paragraph (h) to strike ``person'' and 
replace it with ``contractor.'' Rationale is that a company would 
control their personnel through their administrative procedures when 
wrong is discovered and the Government may control the contractor in a 
like manner.
    Nonconcur. The legal basis for this citation, 18 U.S.C. 641, 
applies to an individual, as well as a corporate entity.
    4. PR: 52.245-9. It may make sense to provide a time frame where an 
immediate need for usage of property from another contract becomes 
imminent and use of the property would not interfere with the owning 
contract, and the ACO is not available for authorization, a period of 
48 hours, documented by the losing contract, would be allowed for 
transfer of tooling and use of such tooling be paid for at a higher 
rate than the proposed schedule. Tooling would be returned immediately 
if authorization were not received.

[[Page 43584]]

    Nonconcur. While there may be some instances where it would appear 
to be beneficial to allow contractors to make such a decision, other 
business and regulatory factors, including those associated with 
competition and appropriations law, must be considered before 
alternative use is allowed. This decision should be reserved to the 
Administrative Contracting Officer.
    5. PR: 45.106. Add at 45.106(h)(3), ``Contractors shall be 
encouraged to submit plans and enter into advance agreements to 
minimize unnecessary delays, administrative costs and possible legal 
exposure.'' Approved plans for use and charges of a contract, program, 
site, or entity would be beneficial to both the Government and the 
contractor in that the clause, as now written, will cause unnecessary 
delays, administrative cost and legal exposure. This type of plan would 
be similar to a site scrap plan as now provided for in FAR Part 45.
    Nonconcur. Approval of commercial use, as part of a general plan or 
agreement, limits the Government's ability to regulate that said use 
serves the best interests of the Government. It may also restrict the 
Government's right to recall that property when needed to satisfy what 
the Government determines to be a greater need, e.g., war fighting, 
civil defense, disaster assistance.
    6. PR: 45.306-5. Eliminate the policy at 45.306-5 for special 
tooling.
    The Councils plan to solicit comments on the proposed deletion of 
FAR 52.245-17, Special Tooling, and the related coverage at 45.306-5 
under another proposed rule.
    7. PR: 52.245-9(a). Change the definition of Government property to 
mean all ``real and personal'' property.
    Nonconcur. This change is unnecessary.
    8. PR: 52.245-9(c). Revise the exception of the use of Government 
property in this paragraph to be described as ``production'' material. 
Non-production material (expendable items) may be suitable for rental 
in some circumstances.
    Nonconcur. There is no FAR classification differentiating between 
production material and non-production expendables. Rather, when an 
item does not lose its identity or is not consumed during the 
production process, it should not be classified as material. The 
property is more appropriately classified as equipment, agency peculiar 
property, or another class of property dependent upon its nature and 
use.
    9. PR: 52.245-9(d)(2). Change estimated rental charge for ``other'' 
property to ``personal'' property.
    Nonconcur. This change is unnecessary.
    10. PR: 52.245-9(g). Request an additional requirement that the 
Government shall disclose any intent to revoke use authorization prior 
to agreeing to contractor use. A practice of full disclosure is 
necessary as part of good relations and business practices, otherwise 
contractors may acquire resources unnecessarily.
    Nonconcur. There are many reasons why the Government may choose to 
revoke a use agreement. Not all of these are known at the time of 
approval. Some may involve emergency conditions that could not be 
anticipated at the initiation of an agreement. Therefore, it is not in 
the Government's best interest to limit its options by tacitly agreeing 
that there is no intention to revoke use.
    11. PR: 52.245-9(h). Delete the section that states that 
unauthorized use of Government property can subject a person to 
consequences under 18 U.S.C. 641. There is no need to restate this law, 
or any other law, in a regulation. The contractor has an obligation to 
establish internal controls to prevent unauthorized use, and including 
a reference to the United States Code is unnecessary.
    Nonconcur. We believe that it is beneficial to advise those who use 
Government property of the ramifications of unauthorized use. The 
repetition of the legal authority has precedent in other parts of the 
FAR, particularly when criminal liability is the result of 
inappropriate action. See also Comment No. 3, above.
    This is not a significant regulatory action and, therefore, was not 
subject to review under Section 6(b) of Executive Order 12866, 
Regulatory Planning and Review, dated September 30, 1993. This rule is 
not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

    The Department of Defense, the General Services Administration, and 
the National Aeronautics and Space Administration certify that this 
final rule will not have a significant economic impact on a substantial 
number of small entities within the meaning of the Regulatory 
Flexibility Act, 5 U.S.C. 601, et seq., because the rule only clarifies 
FAR coverage to clarify the basis for determining rental charges for 
the use of Government property and is intended to promote the dual use 
of such property. Therefore, this rule will allow small businesses more 
flexibility in the use of Government property.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does apply; however, these changes to 
the FAR do not impose additional information collection requirements to 
the paperwork burden previously approved under OMB Control Number 9000-
0075.

List of Subjects in 48 CFR Parts 45 and 52

    Government procurement.

    Dated: July 20, 2005.
Julia B. Wise,
Director, Contract Policy Division.

0
Therefore, DoD, GSA, and NASA amend 48 CFR parts 45 and 52 as set forth 
below:
0
1. The authority citation for 48 CFR parts 45 and 52 is revised to read 
as follows:

    Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

PART 45--GOVERNMENT PROPERTY

0
2. Amend section 45.106 by adding paragraph (h) to read as follows:


45.106  Government property clauses.

* * * * *
    (h)(1) Insert the clause at 52.245-9, Use and Charges--
    (i) In fixed-price or labor-hour solicitations and contracts under 
which the Government will furnish property for performance of the 
contract;
    (ii) In all cost-reimbursement and time-and-materials solicitations 
and contracts; and
    (iii) In solicitations and contracts when a consolidated facilities 
contract or a facilities use contract is contemplated.
    (2) The contracting officer may modify the clause if an alternative 
rental methodology is used in accordance with 45.403.


45.302-6  [Amended]

0
3. Amend section 45.302-6 by removing paragraph (c); and redesignating 
paragraphs (d) and (e) as paragraphs (c) and (d), respectively.
0
4. Revise section 45.403 to read as follows:


45.403  Rental--Use and Charges clause.

    (a) The contracting officer shall charge contractors rent for using 
Government production and research property, except as prescribed in 
45.404 and 45.405. Rent shall be computed in accordance with the clause 
at 52.245-9, Use and Charges. If the agency head determines it to be in 
the Government's interest, an alternative method for computing rent may 
be used.

[[Page 43585]]

    (b) The contracting officer shall ensure the collection of any rent 
due the Government from the contractor.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
5. Revise section 52.245-9 to read as follows:


52.245-9  Use and Charges.

    As prescribed in 45.106(h), insert the following clause:

USE AND CHARGES (AUG 2005)

    (a) Definitions. As used in this clause:
    Acquisition cost means the acquisition cost recorded in the 
Contractor's property control system or, in the absence of such record, 
the value attributed by the Government to a Government property item 
for purposes of determining a reasonable rental charge.
    Government property means all property owned by or leased to the 
Government or acquired by the Government under the terms of the 
contract. It includes both Government-furnished property and 
contractor-acquired property as defined in FAR 45.101.
    Real property means land and rights in land, ground improvements, 
utility distribution systems, and buildings and other structures. It 
does not include foundations and other work necessary for installing 
special tooling, special test equipment, or equipment.
    Rental period means the calendar period during which Government 
property is made available for nongovernmental purposes.
    Rental time means the number of hours, to the nearest whole hour, 
rented property is actually used for nongovernmental purposes. It 
includes time to set up the property for such purposes, perform 
required maintenance, and restore the property to its condition prior 
to rental (less normal wear and tear).
    (b) Use of Government property. The Contractor may use the 
Government property without charge in the performance of--
    (1) Contracts with the Government that specifically authorize such 
use without charge;
    (2) Subcontracts of any tier under Government prime contracts if 
the Contracting Officer having cognizance of the prime contract--
    (i) Approves a subcontract specifically authorizing such use; or
    (ii) Otherwise authorizes such use in writing; and
    (3) Other work, if the Contracting Officer specifically authorizes 
in writing use without charge for such work.
    (c) Rental. If granted written permission by the Contracting 
Officer, or if it is specifically provided for in the Schedule, the 
Contractor may use the Government property (except material) for a 
rental fee for work other than that provided in paragraph (b) of this 
clause. Authorizing such use of the Government property does not waive 
any rights of the Government to terminate the Contractor's right to use 
the Government property. The rental fee shall be determined in 
accordance with the following paragraphs.
    (d) General. (1) Rental requests shall be submitted to the 
Administrative Contracting Officer (ACO), identify the property for 
which rental is requested, propose a rental period, and compute an 
estimated rental charge by using the Contractor's best estimate of 
rental time in the formulae described in paragraph (e) of this clause.
    (2) The Contractor shall not use Government property for 
nongovernmental purposes, including Independent Research and 
Development, until a rental charge for real property, or estimated 
rental charge for other property, is agreed upon. Rented property shall 
be used only on a non-interference basis.
    (e) Rental charge.--(1) Real property and associated fixtures. (i) 
The Contractor shall obtain, at its expense, a property appraisal from 
an independent licensed, accredited, or certified appraiser that 
computes a monthly, daily, or hourly rental rate for comparable 
commercial property. The appraisal may be used to compute rentals under 
this clause throughout its effective period or, if an effective period 
is not stated in the appraisal, for one year following the date the 
appraisal was performed. The Contractor shall submit the appraisal to 
the ACO at least 30 days prior to the date the property is needed for 
nongovernmental use. Except as provided in paragraph (e)(1)(iii) of 
this clause, the ACO shall use the appraisal rental rate to determine a 
reasonable rental charge.
    (ii) Rental charges shall be determined by multiplying the rental 
time by the appraisal rental rate expressed as a rate per hour. Monthly 
or daily appraisal rental rates shall be divided by 720 or 24, 
respectively, to determine an hourly rental rate.
    (iii) When the ACO believes the appraisal rental rate is 
unreasonable, the ACO shall promptly notify the Contractor. The parties 
may agree on an alternative means for computing a reasonable rental 
charge.
    (iv) The Contractor shall obtain, at its expense, additional 
property appraisals in the same manner as provided in paragraph 
(e)(1)(i) if the effective period has expired and the Contractor 
desires the continued use of property for nongovernmental use. The 
Contractor may obtain additional appraisals within the effective period 
of the current appraisal if the market prices decrease substantially.
    (2) Other Government property. The Contractor may elect to compute 
the rental charge using the appraisal method described in paragraph 
(e)(1) of this clause subject to the constraints therein or the 
following formula in which rental time shall be expressed in increments 
of not less than one hour with portions of hours rounded to the next 
higher hour: The rental charge is calculated by multiplying 2 percent 
of the acquisition cost by the hours of rental time, and dividing by 
720.
    (3) Alternative methodology. The Contractor may request 
consideration of an alternative basis for computing the rental charge 
if it considers the monthly rental rate or a time-based rental 
unreasonable or impractical.
    (f) Rental payments. (1) Rent is due 60 days following completion 
of the rental period or as otherwise specified in the contract. The 
Contractor shall compute the rental due, and furnish records or other 
supporting data in sufficient detail to permit the ACO to verify the 
rental time and computation. Payment shall be made by check payable to 
the Treasurer of the United States and sent to the contract 
administration office identified in this contract, unless otherwise 
specified by the Contracting Officer.
    (2) Interest will be charged if payment is not made by the date 
specified in paragraph (f)(1) of this clause. Interest will accrue at 
the ``Renegotiation Board Interest Rate'' (published in the Federal 
Register semiannually on or about January 1\st\ and July 1\st\) for the 
period in which the rent is due.
    (3) The Government's acceptance of any rental payment under this 
clause, in whole or in part, shall not be construed as a waiver or 
relinquishment of any rights it may have against the Contractor 
stemming from the Contractor's unauthorized use of Government property 
or any other failure to perform this contract according to its terms.
    (g) Use revocation. At any time during the rental period, the 
Government may revoke nongovernmental use authorization and require the 
Contractor, at the Contractor's expense, to return the property to the 
Government, restore the property to its pre-rental condition (less 
normal wear and tear), or both.
    (h) Unauthorized use. The unauthorized use of Government property 
can subject a person to fines,

[[Page 43586]]

imprisonment, or both, under 18 U.S.C. 641.
(End of clause)


52.245-10  [Amended]

0
6. Amend section 52.245-10 in the introductory paragraph by removing 
``45.302-6(d)'' and adding ``45.302-6(c)'' in its place.


52.245-11  [Amended]

0
7. Amend section 52.245-11 in the introductory paragraph by removing 
``45.302-6(e)(1)'' and adding ``45.302-6(d)(1)'' in its place.

[FR Doc. 05-14670 Filed 7-26-05; 8:45 am]
BILLING CODE 6820-EP-S