45.402 Title to contractor-acquired property
Source: FAR 45.402 on acquisition.gov
FAR 45.402 defines when title to contractor-acquired property passes to the Government, depending on contract type and specific contract provisions, ensuring proper property accountability.
Overview
FAR 45.402 establishes when title (ownership) to property acquired or fabricated by a contractor passes to the Government, depending on contract type and specific contract provisions. It clarifies the rules for both fixed-price and cost-reimbursement (including time-and-material) contracts, ensuring proper accountability and compliance with contract terms regarding property ownership.
Key Rules
- Title Under Fixed-Price Contracts
- Unless the contract includes financing provisions or specific title-passage requirements, contractors retain title to property acquired for contract use, except for deliverable end items. If a deliverable is retained by the contractor after Government acceptance, it must be listed as Government-furnished property via contract modification.
- Title Under Cost-Type and Time-and-Material Contracts
- The Government obtains title to all property for which the contractor is entitled to reimbursement, as specified in FAR clause 52.245-1(e)(3).
Responsibilities
- Contracting Officers: Ensure contract clauses clearly specify title provisions and process modifications for deliverables retained by contractors.
- Contractors: Track and account for property acquired or fabricated under the contract, comply with title passage requirements, and request contract modifications when retaining deliverables.
- Agencies: Oversee property accountability and ensure compliance with title and property management requirements.
Practical Implications
- This section ensures clear ownership of contractor-acquired property, reducing disputes and improving property accountability. Contractors must pay close attention to contract clauses and ensure proper documentation and modifications for any property retained after acceptance. Failure to comply can result in property mismanagement or audit findings.
(a) Title vests in the Government for all property acquired or fabricated by the contractor in accordance with the financing provisions or other specific requirements for passage of title in the contract. Under fixed-price type contracts, in the absence of financing provisions or other specific requirements for passage of title in the contract, 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. If a deliverable item is to be retained by the contractor for use after inspection and acceptance by the Government, it shall be made accountable to the contract through a contract modification listing the item as Government-furnished property.
(b) Under 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.