DFARS Part 245 - Government Property DOD DFARS

The DFARS – 2025
The Defense Federal Acquisition Regulation
Supplement
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THE DFARS – PART 245

DFARS PART 245
Government Property
SPEAKER: Karen Harbaugh
FIRM: Squire Patton Boggs
EMAIL: karen.harbaugh@squirepb.com
TODAYS SPEAKER + TOPIC

DFARS PART 245
Government Property
SPEAKER: Patrick Madrid
EMAIL: patrick.madrid@squirepb.com
TODAYS SPEAKER + TOPIC

The opinions expressed in today’s webinar and this slide
presentation are those of the presenters and do not
necessarily reflect the views of Squire Patton Boggs (US) LLP,
its clients, or any of its or their respective affiliates. This
presentation is for general information purposes and is not
intended to be and should not be taken as legal advice.
DFARS Part 245: Government Property

Part 45 – Government Property
52.245-1 – Government Property
52.245-2 – Government Property Installation Operation Services
52.245-9 – Use and Charges
Part 245 – Government Property
252.245-7000 – Government-Furnished Mapping, Charting, and Geodesy
Property
252.245-7003 – Contractor Property Management Administration
252.245-7005 – Management and Reporting of Government Property
PGI 245.1 – General
PGI 245.2 – Solicitation and Evaluation Procedures
PGI 245.4 – Title to Government Property
PGI 245.6 – Reporting, Reutilization, and Disposal

What is Government Property? (FAR 45.101, FAR 52.245-1)
All property owned or leased by the Government in two
categories:
• Government-furnished property; and
• Contractor-acquired property
Includes: material, equipment, special tooling, special test
equipment, and real property.
Does not include: intellectual property and software.

Property in the possession of, or directly acquired by, the
Government and subsequently furnished to the contractor for
performance of a contract.
• Includes (but is not limited to): Spares and property furnished for repair,
maintenance, overhaul, or modification.
• Also includes: Contractor-acquired property (CAP) if the CAP is a
deliverable under a cost contract when accepted by the Government for
continued use under the contract.
Government
Furnished Property
(GFP)

Property acquired, fabricated, or otherwise provided by the
contractor for performing a contract and to which the
Government has title.
Contractor-acquired
Property (CAP)

Subpart 45.4- Title to Government Property
• The Government retains title until properly disposed of.
• Property that is leased by the Government and subsequently
furnished to the contractor for use shall be considered GFP
under the clause 52.245-1, Government Property.
Government
Furnished Property
(GFP)

Subpart 45.4- Title to Government Property
• Title vests in the Government in accordance with contract requirements.
• Fixed-price contracts: the contractor retains title to all property acquired by
the contractor for use on the contract, except for property identified as a
deliverable end item.
• Cost type and time-and-material contracts: the Government acquires title
to all property to which the contractor is entitled to reimbursement, in
accordance with paragraph (e)(3) of clause 52.245-1.
Contractor-acquired
Property (CAP)

45.102(a)
• Contractors are ordinarily required to furnish all property
necessary to perform Government contracts
245.102-70(1)
• Contractors bring all the necessary property or the ability to
obtain it
• “[U]pon contract award, responsible contractors should have the
means to provide effective and efficient stewardship of
Government property.”

Accountability of Government Property Under the FAR
45.106 Transferring accountability
• Government property shall be transferred from one contract to
another only when firm requirements exist under the gaining
contract
• Such transfers shall be documented by modifications to both
gaining and losing contracts.
• Once transferred, all property shall be considered GFP to the
gaining contract.

Accountability of Government Property Under the DFARS (PGI)
245.102-70(2) Policy
• Government property (both GFP and CAP) must be contractually
accountable to a single contract and only one contract at a time
• Contract terms and conditions may allow Government property
to be used on other contracts (see FAR 52.245-9, Use and
Charges).
245.103-71 – Transferring accountability
• Use SF-30 to execute transfers of Government property
accountability between existing contracts (other forms are not
authorized)

Element 1:
In the
Government’s
best interest
Element 2:
Overall Benefit
Element 3:
Government
assumption of
risk
Element 4:
Requirements
cannot
otherwise be
met
PGI 245.103-70 – Furnishing Government property to
contractors.
• Project or program manager, or purchase request generator
decides whether or not to furnish property to contractors.
• Contracting officer (CO) shall ensure that each of the
requirements of FAR 45.102 are addressed and documented in
the contracting file

Element 1 – In the Government’s best interest
• Economy
• Standardization
• Security
• Expedite production
• Scarcity
• Maintain the industrial base
• Contract type

• Element 2 – Demonstrate that the overall benefit to the
acquisition significantly outweighs the increased cost of
administration (including disposal)
• All associated costs must be considered, including
costs of Government property removal and disposal,
and demilitarization and disposal of environmentally-
regulated property
• Costs must be less than what contractor might
otherwise incur, or the demonstrated benefit to
Government must outweigh additional costs.

• Element 3 – Demonstrate that providing the property does not
substantially increase the Government’s risk
• Risk must be discussed and documented (e.g. suitability of
use, timely delivery, and replacement of defective
Government property)
• Other risks may need to be considered, discussed, and
documented

• Element 4 – Government requirements cannot otherwise be
met
CO must document why the furnishing of Government property
is critical and significant to meeting acquisition plan objectives.

45.104 – Responsibility and Liability for Government
Property
Generally, contractors are not held liable for loss of Government
property under the following types of contracts:
• Cost-reimbursement contracts
• Time-and-material contracts
• Labor-hour contracts
• Fixed-price contracts awarded on the basis of submission of
certified cost or pricing data.
• * 245.104 - Negotiated fixed-price contracts
awarded on a basis other than submission of certified cost or
pricing data.

45.104 – Responsibility and Liability for Government
Property
CO may revoke the Government’s assumption of risk when the
property administrator determines that the contractor’s property
management practices are noncompliant with contract
requirements
• A prime contractor that provides Government property to a
subcontractor retains responsibility of the property to the
Government
• In the event of a loss - CO, in consultation with the property
administrator, determines extent of contractor liability based
upon the amount of damages and the appropriate form and
method of Government recovery

245.105 - Contractors property management system
compliance
• The cognizant CO (in consultation with the property
administrator):
• Determines the “acceptability” of the contractor’s property
management system and approves or disapproves the
system; and
• Pursues correction of any weaknesses or deficiencies
• System must comply with DFARS Clause 252.245-7003
(Contractor Property Management System Administration),
which references compliance with FAR 52.245-1

52.245-1(f)
• Contractor’s system must enable the following ten outcomes:
1. Acquisition of Property
2. Receipt of Government Property
3. Records of Government property
4. Physical inventory
5. Subcontractor control
6. Reports
7. Relief of stewardship responsibility and liability
8. Utilizing Government property
9. Maintenance
10.Property closeout

245.105(d) Contractor Property Management System
• Property administrator documents findings and recommendations in a
report to CO
• If the property administrator identifies any “materials weaknesses” in
contractor’s property management system the report shall describe them in
sufficient detail for the CO to comprehend
• Clause 252.245-7003(a) – Material weakness: a deficiency such that there
is a reasonable possibility that a material misstatement of such
information will not be prevented, or detected and corrected, on a timely
basis.

245.105(d) Contractor Property Management System
• CO’s Initial Determination
• CO reviews findings and, if no material weaknesses are reported,
shall “promptly” provide written notification to contractor that the
contractor’s property management system is acceptable and
approved; or
• CO notifies the contractor, in writing, and provides a description of
each material weakness in sufficient detail to allow the contractor
to understand the weakness
• Contractor – has 30 days to provide written response to initial
determination
• CO (in consultation with the property administrator) reviews
contractor’s response and makes a final determination

245.105(d), Contractor Property Management System
• CO makes a final determination and notifies contactor in writing
that:
• Contractor’s Property Management System is acceptable; or
• Material weaknesses remain
• Within 45 days contractor must correct the material weaknesses
or submit an acceptable corrective action plan showing milestones
and actions to eliminate the weaknesses
• Withholding Payments - If contract includes clause 252.242-7005
Contractor Business Systems

245.105 Contractors’ property management system
compliance
• CO (with assistance of the auditor) shall monitor the contractor's
progress in correcting material weaknesses and deficiencies.
• If the contractor fails to make adequate progress, the CO shall
take whatever action is necessary to ensure that the contractor
corrects the weaknesses and deficiencies.
• Withholding system approval
• Escalating issue to higher level management
• Recommending non-award of potential contracts
• Implementing or increasing payment withholdings (252.242-
7005)

Leftover or Excess Property
Subpart 45.6 – Reporting, Reutilization, and Disposal
• Reporting inventory excess
• Screening
• Reutilizing (transfer or donation)
• Abandoning or Destroying
• Sales of surplus personal property
• Inventory disposal reports
• Contractor scrap procedures

• 245.602-1 Inventory disposal schedules, Plant clearance officer shall verify
inventory schedules to determine:
• Allocability
• Quantity
• Condition
• 245.602-3 Screening
• Property will be screened DoD-wide, including the contracting agency,
requiring agency, and, as appropriate, the GSA.
• The requiring agency shall have priority for retention of listed items.

245.604-1 Sales procedures
• Plant clearance officers shall determine a best value sales approach, to
include due considerations for:
• Costs
• Risks; and
• Benefits (e.g., potential sales proceeds)
• Plant clearance officer may direct the contractor to issue information
invitations for bid
• Plant clearance officer shall evaluate bids and approve award
• Negotiated sales may be made in certain cases

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SPEAKER: Karen Harbaugh
EMAIL: karen.harbaugh@squirepb.com

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The DFARS – 2025
The Defense Federal Acquisition Regulation
Supplement
A Complimentary Webinar Series

DFARS Part 245 - Government Property DOD DFARS

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