49.109-3
Government property
Contractors must accurately account for all Government property before contract termination settlements, or risk payment deductions or reserved Government rights.
Overview
FAR 49.109-3 addresses the handling of Government property in the context of contract termination settlements. Before a settlement agreement is finalized, the Termination Contracting Officer (TCO) must verify the accuracy of the contractor's Government property records for the terminated contract. If an audit reveals that the contractor cannot account for certain Government property, the TCO must either reserve the Government's rights regarding that property in the settlement agreement or deduct the value of the unaccounted property from the contractor's settlement payment. This ensures the Government's interests are protected and that contractors are held accountable for all Government-furnished or acquired property.
Key Rules
- Verification of Government Property Accounts
- The TCO must confirm the accuracy of the contractor's Government property records before executing a settlement agreement.
- Audit and Unaccounted Property
- If an audit finds property that cannot be accounted for, the TCO must address this in the settlement agreement by reserving rights or making deductions.
Responsibilities
- Contracting Officers: Must verify property records and address any discrepancies in the settlement agreement.
- Contractors: Must maintain accurate records and be able to account for all Government property.
- Agencies: Ensure oversight of property accountability and settlement integrity.
Practical Implications
- This section exists to protect Government assets and ensure contractors are accountable for property.
- It impacts the settlement process by potentially reducing payments if property is missing or unaccounted for.
- Common pitfalls include inadequate property records or failure to resolve discrepancies before settlement.