[Federal Register: December 3, 2010 (Volume 75, Number 232)]
[Proposed Rules]               
[Page 75444-75448]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03de10-16]                         

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 201, 245, and 252

 RIN Number 0750-AG38

 
Defense Federal Acquisition Regulation Supplement; Government 
Property (DFARS Case 2009-D008)

AGENCY: Defense Acquisition Regulations System, Department of Defense 
(DoD).

ACTION: Proposed rule with request for comments.

-----------------------------------------------------------------------

SUMMARY: DoD is proposing to amend the Defense Federal Acquisition 
Regulation Supplement (DFARS) to revise DFARS part 245, Government 
Property, to reflect the recent revisions to FAR part 45, Government 
Property.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before February 1, 2011, to be considered 
in the formation of the final rule.

ADDRESSES: Submit comments identified by DFARS Case 2009-D008, using 
any of the following methods:
    [cir] Regulations.gov: http://www.regulations.gov.
    Submit comments via the Internet. Follow the instructions provided 
at the ``Submit a Comment'' screen. Please include ``DFARS Case 2009-
D008''.
    [cir] E-mail: dfars@osd.mil. Include DFARS Case 2009-D008 in the 
subject line of the message.
    [cir] Fax: 703-602-0350.
    [cir] Mail: Defense Acquisition Regulations System, Attn: Ms. Mary 
Overstreet, OUSD(AT&L) DPAP/DARS, Room 3B855, 3060 Defense Pentagon, 
Washington, DC 20301-3060. Please cite DFARS Case 2009-D008.
    Comments received generally will be posted without change, 
including any personal information provided. Please check http://
www.regulations.gov approximately two to three days after electronic 
submission to verify posting--allow 30 days for posting of comments 
submitted by mail.

FOR FURTHER INFORMATION CONTACT: Ms. Mary Overstreet, 703-602-0311.

SUPPLEMENTARY INFORMATION:

I. Background

    This rule proposes to update and reorganize DFARS subparts 245.6 
and 245.7 for consistency with FAR changes published at 72 FR 27364 on 
May 15, 2007, that address management of Government property in the 
possession of contractors, as well as the related

[[Page 75445]]

DFARS changes published at 74 FR 37645 on July 29, under DFARS Case 
2007-D020. Minor related changes are proposed in part 201 and subparts 
245.1 and 245.5. The rule also proposes to add a new property disposal 
clause at 252.245-70XX, Reporting, Reutilization, and Disposal. The 
following table summarizes the proposed rule revisions.

------------------------------------------------------------------------
          DFARS Citation                 Changes made by this rule
------------------------------------------------------------------------
201.670..........................  Updated and relocated from 245.70.
245.107-70.......................  Redesignated as 245.107 and added
                                    reference to DFARS clause 252.245-
                                    70XX.
245.5............................  Added subpart to address support of
                                    Government property administration.
245.570..........................  Updated and relocated from 245.612.
245.6............................  Renamed subpart as Reporting,
                                    Reutilization and Disposal.
245.601..........................  Deleted section and relocated updated
                                    definitions under DFARS clause
                                    252.245-70XX.
245.602..........................  Added section to address
                                    reutilization of Government
                                    property.
245.602-1........................  Added subsection, updated, and
                                    relocated from 245.606-3 and
                                    245.7201.
245.602-3........................  Added subsection, updated, and
                                    relocated from 245.608-1 and 245.608-
                                    2.
245.602-70.......................  Added subsection to address plant
                                    clearance procedures.
245.603..........................  Deleted section heading.
245.603-70.......................  Deleted subsection.
245.603-71.......................  Deleted subsection. Updated and
                                    relocated requirements under DFARS
                                    clause 252.245-70XX.
245.604..........................  Updated and relocated policy under
                                    DFARS clause 252.245-70XX. Renamed
                                    section as ``Disposal of surplus
                                    property'' to conform to FAR.
245.604-3........................  Updated and relocated from 245.73.
245.606..........................  Deleted section.
245.606-3........................  Deleted subsection. Updated and
                                    relocated to 245.602-1.
245.606-5........................  Deleted subsection. Updated and
                                    relocated under DFARS clause 252.245-
                                    70XX.
245.606-70.......................  Deleted subsection.
245.607..........................  Deleted section heading.
245.607-1........................  Deleted subsection. Updated and
                                    relocated subsection under DFARS
                                    clause 252.245-70XX.
245.607-2........................  Deleted subsection.
245.607-70.......................  Deleted subsection. Updated and
                                    relocated subsection under DFARS
                                    clause 252.245-70XX.
245.608..........................  Deleted section heading.
245.608-1........................  Deleted subsection. Updated and
                                    relocated to 245.602-3.
245.608-2........................  Deleted subsection. Updated and
                                    relocated to 245.602-3.
245.608-5........................  Deleted subsection.
245.608-7........................  Deleted subsection.
245.608-70.......................  Deleted subsection.
245.608-71.......................  Deleted subsection.
245.608-72.......................  Deleted subsection.
245.609..........................  Deleted section.
245.610..........................  Deleted section. Updated and
                                    relocated under DFARS clause 252.245-
                                    70XX.
245.612..........................  Deleted section. Updated and
                                    relocated in 245.570.
245.613..........................  Deleted section.
245.70...........................  Deleted subpart. Updated and
                                    relocated to 201.670.
245.71...........................  Deleted subpart. Updated and
                                    relocated to 245.70.
245.72...........................  Deleted subpart. Updated and
                                    relocated to 245.602-1 and DFARS
                                    Procedures, Guidance, and
                                    Information.
245.73...........................  Deleted subpart. Updated and
                                    relocated to 245.604-3.
252.245-7000.....................  Added reference to 245.107.
252.245-70XX.....................  Added clause.
------------------------------------------------------------------------

II. Executive Order 12866

    This is not a significant regulatory action and, therefore, is not 
subject to review under section 6(b) of Executive Order 12866, 
Regulatory Planning and Review, dated September 30, 1993. This is not a 
major rule under 5 U.S.C. 804.

III. Regulatory Flexibility Act

    DoD does not expect this proposed rule to have a significant 
economic impact on a substantial number of small entities within the 
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., 
because the proposed rule imposes no new requirements on small 
businesses. It makes no significant change to DoD policy regarding the 
management of Government property in the possession of contractors. 
Therefore, DoD has not performed an initial regulatory flexibility 
analysis. DoD invites comments from small businesses and other 
interested parties on the expected impact of this rule on small 
entities.
    DoD also will consider comments from small entities concerning the 
affected DFARS subparts in accordance with 5 U.S.C. 610. Such comments 
should be submitted separately and should cite DFARS Case 2009-D008.

IV. Paperwork Reduction Act

    The information collection requirements of the Defense Federal 
Acquisition Regulation Supplement (DFARS) part 245, Government 
Property, related clauses in DFARS part 252, and related forms in DFARS 
part 253, have been approved by the Office of Management and Budget 
(OMB) under OMB Control Number 0704-0246. No new information collection 
requirements are imposed by this proposed rule.

List of Subjects in 48 CFR Parts 201, 245, and 252

    Government procurement.

Ynette R. Shelkin,
Editor, Defense Acquisition Regulations System.
    Therefore, DoD proposes to amend 48 CFR parts 201, 245, and 252 as 
follows:
    1. The authority citation for 48 CFR parts 201, 245, and 252 
continues to read as follows:

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

PART 201--FEDERAL ACQUISITION REGULATIONS SYSTEM

    2. Add section 201.670 to read as follows:

[[Page 75446]]

201.670  Appointment of property administrators and plant clearance 
officers.

    (a) The head of a contracting activity shall appoint or terminate 
(in writing) property administrators and plant clearance officers.
    (b) In appointing qualified property administrators and plant 
clearance officers, the appointment authority shall consider 
experience, training, education, business acumen, judgment, character, 
and ethics.

PART 245--GOVERNMENT PROPERTY


245.107-70  [Redesignated as 245.107]

    3. Redesignate section 245.107-70 as 245.107 and revise to read as 
follows:


245.107  Contract clauses.

    (a) Use the clause at 252.245-7000, Government-Furnished Mapping, 
Charting, and Geodesy Property, in solicitations and contracts when 
mapping, charting, and geodesy property is to be furnished.
    (b) Use the clause at 252.245-70XX, Reporting, Reutilization and 
Disposal, in solicitations and contracts that contain the clause at--
    (1) FAR 52.245-1, Government Property; or
    (2) FAR 52.245-2, Government Property Installation Operation 
Services.
    4. Add subpart 245.5 to read as follows:
Sec.
Subpart 245.5--Support Government Property Administration


245.570  Storage at the Government's expense.

    All storage contracts or agreements shall be separately priced and 
shall include all costs associated with the storage.
    5. Revise subpart 245.6 to read as follows:

Subpart 245.6--Reporting, Reutilization, and Disposal

Sec.
245.602 Reutilization of Government property.
245.602-1 Inventory disposal schedules.
245.602-3 Screening.
245.602-70 Plant clearance procedures.
245.604 Disposal of surplus property.
245.604-3 Sale of surplus property.

Subpart 245.6--Reporting, Reutilization, and Disposal


245.602  Reutilization of Government property.


245.602-1  Inventory disposal schedules.

    Plant clearance officers shall verify inventory schedules to 
determine the following:
    (1) Allocability.
    (i) Review contract requirements, delivery schedules, bills of 
material, and other pertinent documents to determine whether schedules 
include property that--
    (A) Is appropriate for use on the contract; or
    (B) Exceeds the quantity required for completion of the contract, 
but could be diverted to other commercial work or Government use.
    (ii) Review the contractor's--
    (A) Recent purchases of similar material;
    (B) Plans for current and scheduled production;
    (C) Stock record entries; and
    (D) Bills of material for similar items.
    (2) Quantity. While a complete physical count of each item may not 
be required, take adequate measures to provide reasonable assurance 
that available inventory is in accordance with quantities listed on the 
inventory schedules.
    (3) Condition. Ensure the inventory condition matches that shown on 
the inventory schedules.


245.602-3  Screening.

    Property will be screened DoD-wide, including the contracting 
agency, requiring agency and, as appropriate, the General Services 
Administration. The requiring agency shall have priority for retention 
of listed items. All required screening must be completed before any 
surplus contractor inventory sale can take place. The plant clearance 
officer shall arrange for inspection of property at the contractor's 
plant if requested by a prospective transferee, in such a manner as to 
avoid interruption of the contractor's operations.


245.602-70  Plant clearance procedures.

    Follow the procedures at PGI 245.602-70 for establishing and 
processing a plant clearance case.


245.604  Disposal of surplus property.


245.604-3  Sale of surplus property.

    Plant clearance officers shall use the following procedures for the 
sale of surplus property:
    (1) Informal bid procedures. The plant clearance officer may direct 
the contractor to issue informal invitations for bid (orally, 
telephonically, or by other informal media), provided--
    (i) Maximum practical competition is maintained;
    (ii) Sources solicited are recorded; and
    (iii) Informal bids are confirmed in writing.
    (2) Sale approval and award.
    (i) Evaluate bids to establish that the sale price is fair and 
reasonable, taking into consideration--
    (A) Knowledge or tests of the market;
    (B) Current published prices for the property;
    (C) The nature, condition, quantity, and location of the property; 
and
    (D) Past sale history for like or similar items.
    (ii) Approve award to the responsible bidder whose bid is most 
advantageous to the Government. The plant clearance officer shall not 
approve award to any bidder who is not eligible to enter into a 
contract with DoD due to inclusion on the Excluded Parties List System. 
If a compelling reason exists to award to a bidder on the excluded 
list, the plant clearance officer shall request approval from the 
contracting officer.
    (iii) Notify the contractor of the bidder to whom an award will be 
made within five working days from receipt of bids.
    (3) Noncompetitive sales.
    (i) Noncompetitive sales include purchases or retention at less 
than cost by the contractor. Noncompetitive sales may be made when--
    (A) The contracting department/agency or the plant clearance 
officer determines that this method is essential to expeditious plant 
clearance; and
    (B) The Government's interests are adequately protected.
    (ii) Noncompetitive sales shall be at fair and reasonable prices, 
not less than those reasonably expected under competitive sales.
    (iii) Conditions justifying non-competitive sales are--
    (A) No acceptable bids are received under competitive sale;
    (B) Anticipated proceeds do not warrant competitive sale;
    (C) Specialized nature of the property would not create bidder 
interest;
    (D) Removal of the property would reduce its value or result in 
disproportionate handling expenses; or
    (E) Such action is essential to the Government's interests.

Subpart 245.70--[Removed]

    6. Subpart 245.70 is removed.
    7. Redesignate subpart 245.71 as 245.70, and revise to read as 
follows:

Subpart 245.70--Plant Clearance Forms

Sec.
245.7001 Forms.
245.7001-1 Standard Form 97, Certificate of Release of a Motor 
Vehicle (Agency Record Copy).
245.7001-2 DD Form 1149, Requisition and Invoice Shipping Document.
245.7001-3 DD Form 1348-1, DoD Single Line Item Release/Receipt 
Document.

[[Page 75447]]

245.7001-4 DD Form 1640, Request for Plant Clearance.
245.7001-5 DD Form 1641, Disposal Determination/Approval.
245.7001-6 Defense Logistics Agency Form 1822, End Use Certificate.

Subpart 245.70--Plant Clearance Forms


245.7001  Forms.

    Use the forms listed below in performance of plant clearance 
actions.


245.7001-1  Standard Form 97, Certificate of Release of a Motor Vehicle 
(Agency Record Copy).

    Use for transfers, donations, and sales of motor vehicles. The 
contracting officer shall execute the SF 97 and furnish it to the 
purchaser.


245.7001-2  DD Form 1149, Requisition and Invoice Shipping Document.

    Use for transfer and donation of contractor inventory.


245.7001-3  DD Form 1348-1, DoD Single Line Item Release/Receip 
Document.

    Use when authorized by the plant clearance officer.


245.7001-4  DD Form 1640, Request for Plant Clearance.

    Use to request plant clearance assistance or transfer plant 
clearance.


245.7001-5  DD Form 1641, Disposal Determination/Approval.

    Use to record rationale for the following disposal determinations:
    (a) Downgrade useable property to scrap.
    (b) Abandonment or destruction.
    (c) Noncompetitive sale of surplus property.


245.7001-6  Defense Logistics Agency Form 1822, End Use Certificate.

    Use when directed by the plant clearance officer.

Subpart 245.72--[Removed]

    8. Subpart 245.72 is removed.

Subpart 245.73--[Removed]

    9. Subpart 245.73 is removed.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    10. Revise the introductory text of section 252.245-7000 to read as 
follows:


252.245-7000  Government-Furnished Mapping, Charting, and Geodesy 
Property.

    As prescribed in 245.107(a), use the following clause:
* * * * *
    11. Add section 252.245-70XX to read as follows:


252.245-70XX  Reporting, Reutilization and Disposal.

    As prescribed in 245.107(b), use the following clause:

REPORTING, REUTILIZATION AND DISPOSAL (DATE)

    (a) Definitions. As used in this clause--
    (1) Commerce Control List Item (CCLI) means commodities and 
associated technical data (including software) subject to export 
controls by the Department of Commerce. (14 CFR 772)
    (2) Demilitarization means the act of eliminating the functional 
capabilities and inherent military design features from DoD personal 
property. Methods and degree range from removal and destruction of 
critical features to total destruction by cutting, tearing, 
crushing, mangling, shredding, melting, burning, etc.
    (3) Munitions List Items (MLI) means commodities and associated 
technical data (including software) contained in the U.S. Munitions 
List (USML) that are subject to export controls by the Department of 
State. (22 CFR 121)
    (4) Scrap means property that has no value except for its basic 
material content. For purposes of demilitarization, scrap is defined 
as recyclable waste and discarded materials derived from items that 
have been rendered useless beyond repair, rehabilitation, or 
restoration such that the item's original identity, utility, form, 
fit and function have been destroyed. Items can be classified as 
scrap if processed by cutting, tearing, crushing, mangling, 
shredding, or melting. Intact or recognizable MLI or CCLI 
components, and parts are not ``scrap.''
    (5) Serviceable or usable property means property with potential 
for reutilization or sale ``as is'' or with minor repairs or 
alterations; in Federal Condition Codes: A1, A2, A4, A5, B1, and B4.
    (b) Inventory disposal schedules.
    (1) The Contractor shall complete SF 1428, Inventory Schedule B, 
within the Plant Clearance Automated Reutilization Screening System 
(PCARSS). Information on PCARSS can be obtained from the plant 
clearance officer and at http://www.dcma.mil/ITCSO/CBT/PCARSS/
index.cfm. Instructions for completing the form are provided on the 
reverse side of the form.
    (i) SF 1428 shall contain the following supply condition codes 
together with disposal codes 1 through 9, X, and S (e.g., A1, F7, 
SS):
    (A) A--New, used, repaired, or reconditioned property; 
serviceable and issuable to all customers without limitations or 
restrictions; includes material with remaining shelf life of more 
than six months.
    (B) B--New, used, repaired, or reconditioned property; 
serviceable and issuable or for its intended purpose but restricted 
from issue to specific units, activities, or geographical areas 
because of its limited usefulness or short service-life expectancy; 
includes material and remaining shelf life of three to six months.
    (C) F--Economically reparable property which requires repair, 
overhaul or reconditioning; includes reparable items which are 
radioactively contaminated.
    (D) H--Property which has been determined to be unserviceable 
and does not meet repair criteria.
    (E) S--Property that has no value except for its basic material 
content.
    (ii) The item description on the SF 1428 shall contain the 
following:
    (A) The applicable Federal Supply Code (FSC) for all items, 
except items in scrap condition.
    (B) The manufacturer name for all aircraft components under 
Federal Supply Group (FSG) 16 or 17 and FSCs 2620, 2810, 2915, 2925, 
2935, 2945, 2995, 4920, 5821, 5826, 5841, 6340, and 6615.
    (C) The manufacturer name, make, model number, model year and 
serial number for all aircraft under FSCs 1510 and 1520.
    (iii) If the schedules are acceptable, the plant clearance 
officer shall complete and send the Contractor a DD Form 1637, 
Notice of Acceptance of Inventory.
    (c) Proceeds from sales of surplus property.
    (1) Unless otherwise provided in the contract, the proceeds of 
any sale, purchase, or retention shall be--
    (i) Credited to the Government as part of the settlement 
agreement;
    (ii) Credited to the price or cost of the contract;
    (iii) Applied as otherwise directed by the Contracting Officer; 
or
    (iv) Forwarded to the plant clearance officer.
    (d) Contractor inventory in foreign countries.
    The Contracting Officer may allow the contractor to dispose of 
inventory in foreign countries provided that--
    (1) The proposed purchaser's name is not on the list of Parties 
Excluded from Procurement Programs;
    (2) The sales contract or other document forbids exports by 
purchasers and subpurchasers to Communist areas (FAR 25.702) or 
other prohibited destinations; and
    (3) Sale or other disposition of foreign inventory by the 
contractor, including sale to foreign governments, requires that the 
sales contract or other document transferring title include the 
following certificate:
    ``The Purchaser certifies that the property covered by this 
contract will be used in (name of country). In the event of resale 
or export by the Purchaser of any of the property acquired at a 
price in excess of U.S. $1,000 or equivalent in other currency at 
the official exchange rate, the Purchaser agrees to obtain the 
approval of (name and address of Contracting Officer).''
    (e) Restrictions on purchase or retention of contractor 
inventory.
    (1) Contractors may not knowingly sell the inventory to any 
person or that person's agent, employee, or household member if that 
person--
    (i) Is a civilian employee of the DoD or the U.S. Coast Guard;
    (ii) Is a member of the armed forces of the United States, 
including the U.S. Coast Guard; or
    (iii) Has any functional or supervisory responsibilities for or 
within the Defense Reutilization and Marketing Program, or for the 
disposal of contractor inventory.
    (2) The Contractor may conduct internet-based sales, to include 
use of a third-party.

[[Page 75448]]

    (f) Demilitarization. Demilitarization of contractor inventory 
may be required to prevent the property (both serviceable and 
unserviceable) from being used for its originally intended purpose, 
or prevent the release of inherent design information that could be 
used against the United States. The Contractor shall demilitarize 
contractor inventory possessing offensive or defense 
characteristics, and not required within DoD, in accordance with the 
terms and conditions of the contract and consistent with Defense 
Demilitarization Manual, DoD 4160.21-M-1, edition in effect as of 
the date of this contract. The plant clearance officer may authorize 
the purchaser to perform the demilitarization provided the property 
is not inherently dangerous to public health and safety.
    (g) Classified contractor inventory. The Contractor shall 
dispose of classified contractor inventory in accordance with 
applicable security guides and regulations or as directed by the 
contracting officer.
    (h) Inherently dangerous inventory. Contractor inventory 
dangerous to public health or safety shall not be donated or 
otherwise disposed of unless rendered innocuous or until adequate 
safeguards are provided.
    (i) Compliance with export control requirements. The Contractor 
is responsible for complying with export control laws and 
regulations. This includes ensuring necessary and appropriate 
reviews of potential surplus sales buyers of MLI and CCLI.
    (j) Disposal of scrap.
    (1) Contractor with an approved scrap procedure.
    (i) The Contractor shall submit for approval to the property 
administrator a procedure for the untability and management of 
scrap. The procedure shall, at a minimum, provide for the effective 
and efficient disposition of scrap so as to minimize costs and 
maximize sales proceeds; and contain the necessary internal controls 
for mitigating the improper release of non-scrap property. 
Government- and contractor-owned scrap may be commingled, with plant 
clearance officer concurrence, when determined to be effective and 
efficient.
    (ii) Once approved by the property administrator, the plant 
clearance officer may authorize routine disposal of scrap.
    (2) The property administrator may waive the requirement for an 
approved scrap procedure if the amount of scrap produced or to be 
produced is minimal and poses little risk.
    (3) Scrap warranty.
    (i) The Contractor shall require all buyers of scrap to sign a 
DD Form 1639, Scrap Warranty.
    (ii) The Contracting Officer may release the Contractor from the 
terms of the scrap warranty in return for consideration paid to the 
Government. The consideration will represent the difference 
between--
    (A) The sale price of the scrap; and
    (B) A fair and reasonable price for the material if it had been 
sold for purposes other than scrap.
    (iii) The Contractor shall pay the consideration to the 
Government and the Government may execute the release even though 
the contract containing the warranty was not made directly with the 
Government.
    (iv) If the scrap is resold to a second buyer, the first buyer 
shall obtain a scrap warranty from the second buyer. Upon receipt of 
the second buyer's scrap warranty, the Government will release the 
first buyer from liability under the original warranty.
    (k) Disposal of contractor inventory for NATO cooperative 
projects.
    (1) North Atlantic Treaty Organization (NATO) cooperative 
project agreements may include disposal provisions of jointly 
acquired property without regard to any applicable disposal laws of 
the United States.
    (2) Disposal of such property includes transfer of U.S. 
interests in the property to one of the other governments 
participating in the agreements, or the sale of the property.
    (3) Payment for the transfer or sale of any U.S. interest shall 
be made in accordance with the terms of the project agreement.
    (l) Sale of surplus contractor inventory.
    (1) The Contractor or its employees shall submit their bids to 
the plant clearance officer prior to soliciting bids from other 
prospective bidders.
    (2) The Contractor shall solicit a sufficient number of bidders 
to obtain adequate competition and use formal invitations for bid, 
unless the plant clearance officer approves use of informal bid 
procedures. The Contractor shall include in its invitation for bids, 
the sales terms and conditions provided by the plant clearance 
officer.
    (3) The Contractor shall solicit bids at least 15 calendar days 
before bid opening to allow adequate opportunity to inspect property 
and prepare bids.
    (4) For large sales, the Contractor may use summary lists of 
items offered as bid sheets with detailed descriptions attached.
    (5) In addition to mailing or delivering notice of the proposed 
sale to prospective bidders, the Contractor may (when the results 
are expected to justify the additional expense) display a notice of 
the proposed sale in appropriate public places, e.g., publish a 
sales notice in appropriate trade journals or magazines and local 
newspapers.
    (6) When the acquisition cost of the property to be sold at one 
time, in one place, is $250,000 or more, the Contractor shall send a 
notice of the proposed sale to FedBizOpps (http://www.fbo.gov).
    (7) The plant clearance officer or representative will witness 
the bid opening. Within two working days after bid opening, the 
Contractor will submit to the plant clearance officer, either 
electronically or manually, two copies of the bid abstract.
    (8) When demilitarization of property is required, whether on or 
off contractor or Government premises, the sales contract must 
include the following provisions:
    (i) Demilitarization. Item(s) -------- require demilitarization 
by the Purchaser. Insert item number(s) and specific 
demilitarization requirements for item(s) shown in Defense 
Demilitarization Manual, DoD 4160.21-M-1, edition in effect as of 
the date of this contract.
    (ii) Demilitarization on Government or non-Government premises. 
Property requiring demilitarization shall be demilitarized by the 
Purchaser under the supervision of qualified Department of Defense 
personnel. Property requiring demilitarization shall not be removed, 
and title shall not pass to the Purchaser, until demilitarization 
has been accomplished and verified by a Government representative. 
Demilitarization will be accomplished as specified in the contract. 
The Purchaser agrees to assume all costs incident to the 
demilitarization and to restore the working area to its present 
condition after removing the demilitarized property.
    (iii) Failure to demilitarize. If the Purchaser fails to 
demilitarize the property as specified in the contract, the 
Contractor may, upon giving ten days written notice from date of 
mailing to the Purchaser--
    (A) Repossess, demilitarize, and return the property to the 
Purchaser. The Purchaser hereby agrees to pay to the Contractor, 
prior to the return of the property, all costs incurred by the 
Contractor in repossessing, demilitarizing, and returning the 
property to the Purchaser.
    (B) Repossess, demilitarize, and resell the property, and charge 
the defaulting Purchaser with all excess costs incurred by the 
Contractor. The Contractor shall deduct these costs from the 
purchase price and refund the balance of the purchase price, if any, 
to the Purchaser. In the event the excess costs exceed the purchase 
price, the defaulting Purchaser hereby agrees to pay these excess 
costs to the Contractor.
    (C) Repossess and resell the property under similar terms and 
conditions. In the event this option is exercised, the Contractor 
shall charge the defaulting Purchaser with all excess costs incurred 
by the Contractor. The Contractor shall deduct these excess costs 
from the original purchase price and refund the balance of the 
purchase price, if any, to the defaulting Purchaser. Should the 
excess costs to the Contractor exceed the purchase price, the 
defaulting Purchaser hereby agrees to pay these excess costs to the 
Contractor.


(End of clause)

[FR Doc. 2010-30285 Filed 12-2-10; 8:45 am]
BILLING CODE 5001-08-P