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clude in their settlement proposals as "other costs" the transportation, handling, and restocking charges with respect to the property so returned.

§1-8.502-3 Cost-reimbursement type contracts.

Under cost-reimbursement type contracts, the contractor's right to purchase or retain contractor-acquired property at cost or to return such property to supplies shall be subject to the approval of the contracting officer after adjustment of previously reimbursed costs for such property.

§ 1-8.503 Inventory schedules.

§ 1-8.503-1 Submission of inventory schedules.

(a) Inventory schedules shall be submitted in the form prescribed by the procuring agency (see § 1-8.803 for suggested formats of forms), but shall include a certificate substantially as contained in the inventory schedules set forth in §§ 1-8.803-1, 1-8.803-3, 18.803-5, and 1-8.803-7, or, if appropriate, substantially as contained in the inventory schedule set forth in § 18.803-9.

(b) As promptly as possible after receipt of a notice of termination, the prime contractor is required to submit inventory schedules to the contracting officer covering all items of termination inventory, including Governmentfurnished property; but, except where title to materials purchased by the contractor is vested in the Government, termination inventory purchased or retained at cost or returned to suppliers, pursuant to § 1-8.502, shall not be listed. Inventory schedules may be submitted prior to submission of the settlement proposal. Submission shall not be delayed in order to supply complete cost data on items of work in process where such data is not readily available. Partial schedules may be submitted from time to time when they cover substantial portions of a particular property classification in the termination inventory. Each schedule submitted shall be designated by the contractor as "partial" or "final."

§ 1-8.503-2 Separate schedules.

Separate sets of schedules shall be submitted (a) for contractor-acquired property, and (b) for Government-furnished property. Within each of those categories schedules shall be submitted for each property classification prescribed by the procuring agency.

§ 1-8.503-3 Inventory descriptions.

A commercial description, adequate for screening and disposal purposes, of each item having commercial value shall be included in the inventory schedules. Where any items of termination inventory bear a Government identification number, such number shall be listed on the inventory schedules. In the case of other items, the contractor shall furnish a description sufficient to enable the contracting officer to determine the proper disposition thereof. The contractor shall consult the contracting officer when in doubt as to the extent of description required. The contractor need not itemize material believed to be scrap or salvage if (a) such material is physically segregated in the contractor's plant, and (b) the contractor submits a statement describing the material generally, setting forth its approximate cost, and giving such other information as may be necessary for the contracting officer to determine whether the material is scrap or salvage. If the material is determined by the contracting officer to be scrap or salvage (see § 1-8.504), the contractor may make a single descriptive entry on an inventory schedule covering such material and indicating its approximate total cost.

§ 1-8.503-4 Inventory schedule certificate.

The certificate on the inventory schedules prescribed by the procuring agency (see § 1-8.503-1(a)) shall be executed by the contractor on each schedule submitted. The certificate, among other things, tenders to the Government title to the property listed therein, unless the Government already has title thereto.

§ 1-8.503-5 Common items.

Except for property delivery of which has been required by the Gov

ernment and except for Governmentfurnished property, the contractor's inventory schedules shall not include any common items (as defined in § 18.101(b)) which are reasonably usable on other work of the contractor without loss to him. (See § 1-15.205-42(a).)

§ 1-8.503-6 Withdrawals from inventory schedules.

If at any time prior to final disposition any items of contractor-acquired property listed in the contractor's inventory schedules become reasonably usable on other work of the contractor without loss to him and that fact is known to the contractor, the contractor is required to purchase or retain such items at cost in accordance with § 1-8.502-1 or § 1-8.502-3, whichever is applicable, and to amend his inventory schedules and his settlement proposal accordingly. Upon notification to the contracting officer, the contractor may similarly purchase or retain at cost any other items of property included in his inventory schedules. Withdrawal of Government-furnished property included in inventory schedules is subject to approval by the contracting officer.

§ 1-8.503-7 Rejection and correction of inadequate schedules.

(a) General. Contracting officers shall cause to be verified, to the extent practicable, the physical count and condition of inventories, including Government-furnished property, listed on the contractor's inventory schedules. If any inventory schedule submitted by a contractor is found to be inadequate, the contractor shall be promptly notified and required to correct or supplement the schedule as to the items which are deficient. Inventory schedules shall not be rejected if the information contained therein is adequate for disposal purposes, even if complete cost data on work in process are not available. Rejection of an inventory schedule shall be limited where possible to specific items thereon and shall not necessarily render the entire schedule unacceptable.

(b) Effect on plant clearance period. (1) Where only individual items on the inventory schedules covering all items of a particular property classifi

cation are in need of correction or amplification, the inventory schedules as submitted shall be considered acceptable for purposes of starting the final phase of a plant clearance period (see § 1-8.101(k)). However, where the inadequacy of an inventory schedule requires the return of the entire schedule to the contractor for correction or revision, the final phase of the plant clearance period as to the property classification covered thereby shall not begin until acceptable final schedules covering that property classification have been submitted.

(2) The contracting officer shall, within 15 days after receipt of the final schedule, advise the contractor of any deficiencies apparent in the inventory schedule, or the schedules shall be deemed acceptable for purposes of starting the final phase of a plant clearance period. However, should substantial errors develop which were not apparent from the inventory schedules previously deemed acceptable, the final phase of a plant clearance period shall not be deemed to have commenced until corrected schedules have been submitted, unless the contracting officer determines that no unwarranted delay in disposal operations was occasioned thereby.

§ 1-8.504 Scrap and salvage.

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Promptly after the submission of inventory schedules by the contractor, the contracting officer shall review, or cause to be reviewed, the contractor's treatment of any items of termination inventory as scrap or salvage (see § 18.503-3). The review shall include a careful examination of the inventory schedules and in appropriate cases physical inspection of the property involved. Prior to determining that such items are scrap or salvage, the contracting officer shall obtain such approvals as may be required by agency procedures. If the contracting officer determines that any of the materials listed by the contractor as scrap or salvage are serviceable or usable materials, the contractor shall, in accordance with such determination, submit revised inventory schedules (see § 18.503-7). Property which is determined

to be scrap and which, by other Government regulations, is required to be segregated by alloy or otherwise, shall be so segregated by the contractor. Property determined to be scrap or salvage may, with the approval of the contracting officer, be delivered to a Government agency, sold, or otherwise disposed of by the contractor in accordance with the provisions of § 18.505, § 1-8.507, § 1-8.508, or § 1-8.509. In appropriate cases, when approved by the contracting officer, such sales may be consolidated with the contractor's sales of scrap and salvage generated from his other work and, in such cases, the scrap warranty required by § 1-8.504-2 may be waived in the discretion of the contracting officer.

§1-8.504-2 Scrap warranty.

(a) If any termination inventory is sold as scrap, a scrap warranty, substantially as set forth in § 1-8.805, shall be obtained.

(b) Releases from liability under scrap warranties may be granted on behalf of the Government by the contracting officer if, as consideration for the release, the Government is paid the difference between (1) the price for which the material was sold as scrap, and (2) an amount, approved by the contracting officer, not less than that which the material would bring if it were sold at a fair and reasonable price for purposes other than use as scrap. Such releases shall be granted by the Government and the consideration paid to the Government, even though the contract containing the warranty was not made direct with the Government.

(c) In the event of resale of any material subject to a scrap warranty, the seller is required to obtain an appropriate scrap warranty from the purchaser thereof. Upon tender of the warranty to the Government, the seller shall be released by the Government from liability under his own warranty.

§ 1-8.505 Screening of property.

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§ 1-8.507-4 Proceeds of sale.

Proceeds of any sale are to be covered into the Treasury as miscellaneous receipts except where the contract or any subcontract thereunder authorizes the proceeds to be credited to the price or cost of the work covered by such contract or subcontract (40 U.S.C. 485 (a) and (e)). The clauses set forth in §§ 1-8.701, 1-8.702, 1-8.703, and 1-8.704-1 include provision for the proceeds of sale to be applied in reduction of any payments to be made to the contractor under the contract, or otherwise credited to the price or cost of the work covered by the contract, or paid in such manner as the contracting officer may direct. A similar provision is included in the clause, set forth in § 1-8.706, suggested for use by a contractor in making subcontracts.

Property included in the contractor's inventory schedules shall be screened as required by Part 101-43 of the Federal Property Management Regulations, and as required by

§ 1-8.507-5 Applicability of antitrust laws. Whenever any termination inventory which has or may cost the Government $3,000,000 or more (or any patents, processes, techniques, or inventions, irrespective of cost) is to be sold or otherwise disposed of to private interests, the agency concerned shall promptly notify the Attorney General and the Administrator of General Services of the proposed disposal and the probable terms or conditions thereof and shall include in the notification the information required by § 101-45.310 of the Federal Property Management Regulations. Disposition shall not be made until the agency has received advice from the Attorney General as to whether, so far as he can determine, the proposed disposition would tend to create or maintain a situation inconsistent with the antitrust laws.

[30 FR 16111, Dec. 28, 1965]

§ 1-8.507-6 Foreign contractor inventory.

The sale or other disposition of contractor inventory located in foreign countries shall be made in accordance with agency procedures established to implement Title IV, Federal Property and Administrative Services Act of 1949 (40 U.S.C. 511-514).

§ 1-8.508 Donations.

After utilization screening is completed but prior to being offered for sale or otherwise disposed of in accordance with § 1-8.507, termination inventory may be donated for authorized purposes in accordance with the provisions of Part 101-44 of the Federal Property Management Regulations, and with agency procedures.

[30 FR 16111, Dec. 28, 1965]

§ 1-8.509 Destruction or abandonment.

(a) Termination inventory which is Government-furnished property or contractor-acquired property and which is not otherwise disposed of under this Part 1-8 may, in accordance with General Services Administration and agency regulations, be destroyed or abandoned; provided that the contracting officer has determined that it has no commercial value and no value

to the Government, or that the estimated cost of its care and handling is greater than the probable sale price, or that because of its nature it constitutes a danger to public health, safety, or welfare. Any such determination shall be subject to review in accordance with § 1-8.512.

(b) Termination inventory which has been classified for security reasons, and which is not required for the Government's needs, shall, unless such classification is removed or changed by proper authority, be disposed of in accordance with applicable security regulations.

(c) No termination inventory shall be abandoned on the contractor's premises without the contractor's consent.

§ 1-8.510 Special machinery, tooling, and equipment.

Except as otherwise provided in the contract, if the settlement is to include any item of cost on account of special machinery and equipment, or special tooling, the contracting officer shall take appropriate steps to protect the Government's interest by:

(a) Requiring transfer of title to such property to the Government;

(b) Requiring the inclusion of such property in the contractor's inventory schedules, to be treated in the same manner as termination inventory; or

(c) In the event of purchase or retention by the contractor, making an equitable adjustment of the costs to be included in the settlement for such property, which adjustment shall take into account the rate of amortization thereon, the possible use thereof on other work of the contractor, the ultimate disposal value thereof, and any rights to be retained by the Government.

§ 1-8.511 Removal and storage.

§ 1-8.511-1 Special storage at the expense and risk of the contractor.

At any time during the plant clearance period, the contractor may, upon written notice to the contracting officer, store any items of termination inventory, not previously disposed of, in a warehouse or other storage location on or off his own premises, unless oth

erwise directed by the contracting officer within 10 days of the receipt by the contracting officer of such notice. Such storage shall in no way modify the responsibility of the contractor with respect to such property. The expense of such storage, including any removal incident thereto, shall be borne by the contractor, unless the contracting officer determines that such removal or storage is for the convenience of the Government.

§ 1-8.511-2 Storage at the expense and risk of the Government.

At any time after expiration of the plant clearance period, the contractor may submit to the contracting officer a list, certified as to quantity and quality, of any items of termination inventory not previously disposed of, exclusive of items the disposition of which has been directed or authorized by the contracting officer, and may request the Government to remove such items or enter into a storage agreement covering them. Not later than 15 days thereafter, the Government shall accept title to such items and remove them or enter into a written storage agreement covering the same; however, the list submitted shall be subject to verification by the contracting officer at the time of removal of the items or, if the items are stored, within 45 days from the date of submission of the list. Any adjustment necessary to correct the list as submitted shall be made prior to final settlement.

§ 1-8.512 Review of property disposal.

Property disposal matters shall be reviewed by a reviewing authority within the agency as provided in Parts 101-44 and 101-45 of the Federal Property Management Regulations, and as may be further provided in agency procedures.

[30 FR 16111, Dec. 28, 1965]

§ 1-8.513 Subcontractor termination inventory.

§ 1-8.513-1 General policy.

(a) The prime contractor and each subcontractor are primarily responsible for the disposition of the termination inventory of their respective next lower tier subcontractors, but all such

disposals shall be subject to review by the contracting officer as provided in § 1-8.208-3(c) (but see § 1-8.208-4). The policies and provisions set forth in §§ 1-8.501, 1-8.502, 1-8.505, 1-8.506, 18.508, 1-8.509, and 1-8.512 shall be applicable in the case of subcontractors. Any rights which the prime contractor has or acquires in the termination inventory of his first tier or lower tier subcontractors shall, to the extent directed by the contracting officer, be exercised for the benefit of the Government, in accordance with the provisions of the contract between the Government and the prime contractor.

(b) Subcontractors in all tiers shall prepare inventory schedules in accordance with the requirements of this Part 1-8. Normally, disposition instructions for termination inventory, except serviceable or usable property, will be furnished by the next higher tier subcontractor or the prime contractor, as the case may be. Each subcontractor may submit his next lower tier subcontractors' inventory schedules of serviceable or usable property directly to the contracting officer for review and disposition instructions, unless otherwise directed by the contracting officer. In the interest of expediting disposition of termination inventory, the cognizant contracting officer shall permit such direct submission, unless he determines that the submission of inventory schedules through all intermediate tiers of subcontractors is necessary in the best interest of the Government. When such a determination is made, it must be in writing and a copy submitted to the head of the procuring activity concerned for review.

§ 1-8.513-2 Inventory schedules.

With respect to termination inventory for which their subcontractors claim reimbursement, the prime contractor and each higher tier subcontractor shall obtain information substantially equivalent to that called for by § 1-8.503. In any event, full information on the condition and usability of such inventory shall be furnished, and certificates similar to those contained on the formats in § 1-8.803 shall be obtained from the subcontractor. For this purpose, forms similar to the

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