52.245-1
Government Property
If your contract includes FAR 52.245-1, you must run a documented, auditable property management system for all Government property in your control—or risk corrective action, loss of liability protection, and repayment for property losses.
Overview
- FAR 52.245-1, Government Property establishes the core rules for managing Government-owned property in a contractor’s possession, including Government-furnished property (GFP) and contractor-acquired property (CAP) to which title vests in the Government.
- Its purpose is to ensure contractors maintain effective internal controls, accurate records, proper use, and timely reporting from receipt through final disposition or relief of responsibility.
Key Rules
- Definitions and scope
- The clause defines critical property concepts such as GFP, CAP, contractor inventory, loss of Government property, sensitive property, equipment, material, and unit acquisition cost. These definitions determine what property is covered and how it must be managed.
- Property management system requirements
- Contractors must maintain an internal control system adequate to control, use, preserve, protect, repair, and maintain Government property. Significant system changes must be disclosed to the Property Administrator before implementation, and the clause must be flowed down to applicable subcontracts.
- Use, records, inventory, and reporting
- Government property may be used only as authorized under the contract. Contractors must create auditable property records, perform periodic and final physical inventories, manage shipment discrepancies, report excess property, and promptly investigate and report loss incidents with specified data elements.
- Title, liability, and Government oversight
- The clause explains when title vests in the Government, when contractors are relieved of stewardship responsibility, and when contractor liability applies, including willful misconduct, insurance-covered loss, or revoked assumption of risk due to inadequate property practices.
Responsibilities
- Contracting Officers: authorize nonstandard use, alterations, or cannibalization; consider equitable adjustments for GFP issues; direct corrective actions; and determine liability or relief.
- Contractors: establish compliant property systems, maintain records, conduct inventories, protect and maintain property, flow down requirements, and report discrepancies, losses, and closeout actions.
- Agencies/Property Administrators: review systems, access records and premises, evaluate adequacy, request corrective action plans, and grant relief of responsibility where appropriate.
Practical Implications
- This clause matters because Government property creates stewardship obligations that extend across the full contract lifecycle and into subcontract performance.
- In practice, contractors need disciplined receiving, tagging, recordkeeping, inventory, maintenance, and loss-reporting processes to avoid system findings, revoked risk protection, or financial liability.
- Common pitfalls include weak subcontractor oversight, incomplete property records, unauthorized commingling or use, delayed loss reporting, and failure to disclose significant system changes.