45.104
Responsibility and liability for Government property
Contractors are generally not liable for loss of Government property under most contract types, but poor property management or noncompliance can result in revoked protections and financial liability.
Overview
FAR 45.104 outlines the responsibility and liability of contractors for Government property provided under federal contracts. It clarifies when contractors are generally not held liable for loss of Government property, details the circumstances under which the Government may revoke its assumption of risk, and establishes the process for determining contractor liability and restitution in the event of property loss. The section also addresses the responsibilities of prime contractors when Government property is provided to subcontractors and specifies how financial restitution must be handled.
Key Rules
- Contractor Liability Exceptions
- Contractors are generally not liable for loss of Government property under cost-reimbursement, time-and-material, labor-hour, and certain fixed-price contracts.
- Revocation of Government Risk Assumption
- The contracting officer can revoke the Government’s assumption of risk if the contractor’s property management practices are found noncompliant.
- Prime Contractor Responsibility
- Prime contractors remain responsible for Government property provided to subcontractors.
- Determining Liability and Recovery
- The contracting officer, with the property administrator, determines the extent of contractor liability and the method of Government recovery (repair, replacement, or restitution).
- Disposition of Restitution
- Any financial restitution received must be credited to the U.S. Treasury unless otherwise authorized by statute.
Responsibilities
- Contracting Officers: Assess contractor liability, consult with property administrators, and determine recovery methods.
- Contractors: Maintain compliant property management practices and remain responsible for property provided to subcontractors.
- Agencies: Oversee contractor compliance and ensure proper handling of restitution funds.
Practical Implications
- This section protects contractors from liability in most contract types but enforces accountability for poor property management. Prime contractors must monitor subcontractors’ use of Government property. Failure to comply can result in revoked protections and financial liability. Proper documentation and property management are essential to avoid penalties and ensure compliance.