On October 21, 2016, DoD issued a proposed rule (81 Fed. Reg. 73,002) that would amend the DFARS to expand the use of the FAR Government Property clause. This proposed rule is intended to strengthen the management and accountability of government-furnished property. It arose because the DoD identified a gap in the current process that prevents full accountability of government-furnished property as a result of an exception to the use of the clause at FAR 52.245-1, Government Property, as provided at FAR 45.107 (Contract Clauses). In particular, as it stands now, contracting officers do not need to include FAR clause 52.245-1 in purchase orders for property repairs if the unit acquisition cost of government property to be repaired does not exceed the simplified acquisition threshold ($150,000). DoD has identified this as a problem because exclusion of FAR clause 52.245-1 in purchase orders for property repairs where the government property falls below the simplified acquisition threshold may increase the risk of misuse or loss of such property, and can lead to disputes in ownership. This proposed rule aims to close the gap by requiring the inclusion of FAR clause 52.245-1 in all purchase orders, regardless of the unit acquisition cost of the items to be repaired.

Generally, this proposed rule would require companies to engage in enhanced record-keeping practices for lower-value government property. Defense officials would be required to include provisions in DoD contracts to track the whereabouts of items that fall below the simplified acquisition threshold. This proposed rule’s expanded record-keeping requirements would mirror customary commercial record-keeping practices. Namely, it is customary commercial practice to create receiving reports and keep records for incoming assets regardless of the source of such assets. The increase in record-keeping responsibility for contractors would mean enhanced compliance obligations for contractors.

Comments on this proposed rule should be submitted in writing on or before December 20, 2016.