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erty returned, or duly accounted for, to the Air Force when the special purpose is accomplished. Bailment does not include sale, donation, lease, the furnishing of property to a contractor under a facilities contract, nor the furnishing of Government-furnished property or Government-furnished aircraft equipment.

(b) "Expendable property" is that property which will lose its identity or be expended in the course of its use.

(c) "Bailment agreement" is an instrument which accomplishes the actual loan of the property, and contains all information concerning the individual loan, including an adequate description of the property; purpose of the loan; use to be made of the property; authorization for modifications which may be incorporated in the property; the place where the property is to be delivered and returned; the period of bailment; and so forth.

(d) "Government-furnished aircraft equipment" (GFAE) is that portion of Government-furnished property which under the terms of an Air Force airframe contract is procured by the Air Force and furnished direct to aircraft equipment or missile manufacturers for inclusion or incorporation in aircraft or missiles.

CROSS REFERENCE: For section of Armed Services Procurement Regulations which this section implements see § 13.101 of this title.

§ 1012.102 General policy. The policy of the Department of the Air Force is that Government property shall be furnished to contractors, including subcontractors, only when specifically provided for in the terms of a written contract, bailment agreement, or lease. Any deviation from this policy shall be granted only by the prior written approval of the Director, Procurement and Production Engineering, Deputy Chief of Staff, Materiel, Headquarters USAF.

CROSS REFERENCE: For section of Armed Services Procurement Regulations which this section implements see § 13.102 of this title.

§ 1012.103 Facilities. Subject to other procurement considerations (such as broadening the industrial base), the conservation of critical materials and the maximum utilization of existing facilities requires that, in the placing of supply contracts, preference should be given first to those contractors who have available existing buildings and facilities and secondly, to those contractors who require the least amount of additional

facilities for the performance of the work in the supply contract. When determination has been made that new facilities are essential, preference shall be given to those contractors who will themselves finance the acquisition of such facilities. As far as practicable, direct payment or direct reimbursement by the Government for the cost of new facilities shall be confined to facilities which themselves constitute a separate unit (on land which is owned or controlled by the Government); or which are readily removable or separable from the contractor's existing plant without unreasonable expense or loss of value. Therefore, to the extent feasible, buildings shall not be erected at the Government's expense on land owned by the contractor. If such location of facilities is not feasible, the nonseverable, nondisposable facilities will be furnished pursuant to provisions of § 13.406-1 of this title: Provided, however, That when feasible, the facilities contract will provide for a specified standby period subsequent to contract termination or expiration, and such other terms and conditions in the interest of the Government as may be obtainable under the circumstances.

CROSS REFERENCE: For section of Armed Services Procurement Regulations which this section implements see § 13.102-3 of this title.

SUBPART B-MATERIEL [RESERVED] [18 F. R. 3117, May 30, 1953] SUBPART C-SPECIAL TOOLING [RESERVED] [18 F. R. 3117, May 30, 1953]

SUBPART D-INDUSTRIAL FACILITIES SOURCE: §§ 1012.401 and 1012.402 appear at 18 F. R. 3117, May 30, 1953.

§ 1012.401 Award of supply contracts. (a) The proposals for the approval of the scope and magnitude of facilities shall be submitted to Headquarters USAF, for appropriate action. List No. 1, set forth in this section, consists of major items which are to be included in processing letters forwarded to Headquarters USAF in support of facility ex

Schedule

I. Land and land improvements. II. Buildings and building installations.. III. Machinery, equipment, and so forth. IV. Automotive and portable tools___ V. Installation of equipment cost.. Total_

pansion requests. The processing letter will precede the approval of facility expansion proposals, except in the following instances:

(1) Facility expansion proposals wherein the total expansion cost is less than $500,000, which do not include any real property transaction set forth in sec. 601, Pub. Law 155; 82d Cong. (sec. 601, 65 Stat. 366; 40 U. S. C. 551). InIcluded in this total cost are those items shown in Schedules I through V, List No. 1, set forth in this section.

(2) Facility expansion regardless of the amount wherein the facilities involved represent only machinery and equipment to be provided for Government-owned plants.

Fur

Where the exceptions mentioned in subparagraphs (1) and (2) of this paragraph apply, a processing letter need not precede the issuance of a procurement directive. But the request for the issuance of a procurement directive must contain at least the information described in paragraphs 1, 2, 3, and 6 of List No. 1 set forth in this section. thermore, where the exceptions above apply, the required processing letter will be forwarded to Headquarters USAF within 10 days after the receipt of the procurement directive, or if this is not possible, Headquarters USAF will be advised within the same 10 day period why such a procedure is impracticable. In any event, the request for the issuance of a procurement directive will contain, as a minimum, the information described in paragraphs 1, 2, 3, and 6 of List No.1. LIST NO. 1-INFORMATION FOR PROCESSING

LETTERS

1. State the name of contractor.

2. Give plant identification and location. State whether Government- or contractorowned plant.

3. Give justification for expansion. State present firm requirements for item involved, present capacity, peak rate to be established, and estimated date peak rate can be reached. If capacity peak exceeds production schedule requirement peak, state justification therefor, including estimated added cost involved. 4. Give a breakdown of costs in estimated round figures:

Amount

5. State general nature and scope of work in Schedules I and II and general character of facilities in III and IV.

6. State percentage of expansion required because of MDAP or Navy requirements. If a requirement does exist for MDAP or Navy, the applicable aircraft production schedule from which the requirements were computed will be identified. Cite the funds proposed for the expansion, and the basis for proration if other than Air Force funds are required. 7. State whether there will be separate consideration for use of the facilities and, if not, the effect on the competitive situation.

8. Provide certification that a reasonable search failed to disclose satisfactory existing facilities capable of the production for which authority to construct or expand is being requested, and that facilities being requested cannot be obtained elsewhere at less cost or in sufficient time to meet production requirements.

9. When a facilities proposal involves a real estate action, described in paragraphs a through e of section 601, P. L. 155; 82d Cong., provide Headquarters USAF with a draft of an Air Force real property transaction proposal for submission to the House and Senate Armed Services Committees for their approval. Appendix A, below, establishes the form for the submission of these proposals.

10. Furnish a statement to the effect that such factors (when applicable) as labor availability, power, water, transportation, and industrial dispersion have been considered as a part of this expansion proposal. APPENDIX A-DEPARTMENT OF THE AIR FORCE Submitted by the Under Secretary of the Air Force

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Estimated Cost:

Authorization Act:

Appropriation Act:

In brief narrative form:

PAR. 1. Justification and reasons for acquisition, with brief outline of project.

PAR. 2. More specific information, giving general description and type, present use, number of ownerships, valuation and basis thereof, assessed values and relationship to market value and tax losses, and the estimated loss of tax revenue to local communities by reason of Government acquisition. Give any background to acquisition.

PAR. 3. Any pertinent information on peculiar circumstances of acquisition, relation to local problems, roads, and so forth, power and utility relocation, and the like.

PAR. 4. Certification that presently no Government-owned or leased property is available, and a statement as to whether

property is to be acquired by the military agency or if procurement of space is a responsibility under GSA. Amount of initial alterations to leased property. (This paragraph applies only to leasing projects.)

PAR. 5. Approval of the committee for the acquisition herein outlined is respectfully requested.

(b) Minor expansion projects or continuing capital expenditures involving less than $100,000 need not be submitted to Headquarters USAF for processing. Action taken in matters of this category shall be reported in the Quarterly USAF Industrial Facilities Status Report, AF Form 365 (Reports Control Symbol AF 13).

CROSS REFERENCE: For section of Armed Services Procurement Regulations which this section implements see § 13.401 of this title.

§ 1012.402 Right of contractor to use. (a) No-charge use of facilities is applicable to subcontractors and suppliers as well as prime supply contractors.

(b) Facilities may be furnished to prime contractors and subcontractors (including suppliers) under a facilities contract containing a clause which permits the use of such facilities on a charge or no-charge basis, depending on the terms of the prime contract concerned. Thus, if the price or fee of the prime contract is contingent on the use of such facilities without charge, the facilities may be made available to the prime contractor on that basis. Where such facilities are furnished to a subcontractor or supplier, the use of such facilities on a no-charge basis is predicated on the authorization for such use contained in the prime contract and the negotiation of the subcontract or purchase order on the basis of such authorization. The purpose and effect of these provisions will be to permit the buyer for the prime supply contract to control the use of the property on (1) a charge basis and on (2) a no-charge basis, respectively.

(c) The buyer for the prime supply contract will be responsible for obtaining adequate consideration for the nocharge use of facilities by the using contractors or subcontractors (including suppliers) and also for insuring that the using contractors or subcontractors (including suppliers) are not accorded undue competitive advantage by such use.

(d) The responsibility for policing the use by a contractor of new facilities rests with the administrative contracting officer of the facilities contract. In the

determination of whether a no-charge use of facilities shall be authorized, consideration shall be given to the practicability of the administrative burden on the administrative contracting officer in policing such contracts and subcontracts.

CROSS REFERENCE: For section of Armed Services Procurement Regulations which this section implements see § 13.407 of this title.

SUBPART E-CONTRACT CLAUSES

§ 1012.501 Special tooling clause for fixed-price contracts. (a) The following clause may be used whenever the "special tooling" is described as an end item in the contract for administrative convenience in pricing and payment, but delivery to the Air Force for use by the Air Force is not intended:

SPECIAL TOOLING

(1) Same as § 13.504 (a) of this title. (2) Same as § 13.504 (b) of this title. (3) Same as § 13.504 (c) of this title. (4) Same as § 13.504 (d) of this title. (5) Same as § 13.504 (e) of this title. (6) Within 90 days after receipt of any list or notice under subparagraphs (3) or (4) of this paragraph, or such further period as may be agreed upon by the parties, the contracting officer shall furnish to the contractor:

(1) A list specifying the particular products, parts, or services for which the Government may require special tooling, with a request that the contractor deliver to the Government all usable items of special tooling which were used or designed for the manufacture or performance of any designated portion of such products, parts, or services, and which were on hand when production of such products or parts, or performance of such services, ceased; or

(11) An acceptance or rejection of any offer made by the contractor under subparagraph (5) of this paragraph, or a request for further negotiation relating thereto; or

(iii) Subject to the provisions of subparagraph (10) of this paragraph a direction to the contractor to sell, or to dispose of as scrap, for the account of the Government, any or all the special tooling covered by such list; or

(iv) A statement with respect to any or all the special tooling covered by such list that the Government has no further interest therein and waives its rights therein; or

(v) Any combination of the foregoing, as the circumstances warrant. The contractor shall promptly comply with any request by the contracting officer under this section to deliver any items of special tooling, and shall, subject to the provisions of subparagraph (10) of this paragraph:

(a) Immediately prepare such items for shipment by proper packaging, packing, and marking, in accordance with any instructions which may be issued by the contracting

officer, and shall promptly deliver such items to the Government, as directed by the contracting officer; or

(b) If a storage agreement has been entered into, prepare such items for storage in accordance therewith, as directed by the contracting officer. Any items of special tooling so delivered or stored shall be accompanied by operation sheets or other appropriate data necessary to show the manufacturing operations or processes for which such items were used or designed. If the contracting officer has requested further negotiations under subparagraph (6) (ii) of this paragraph, the contractor agrees that it will enter into such negotiations in good faith with the contracting officer. Any items of special tooling which are not disposed of by delivery to the Government under this section, or by acceptance of an offer of the contractor made under subparagraph (5) of this paragraph or of such offer as modified in the course of negotiations, shall be disposed of in the manner set forth in subparagraphs (6) (iii) or (iv) of this paragraph.

(7) Same as § 13.504 (g) of this title. (8) Same as § 13.504 (h) of this title. (9) Same as § 13.504 (i) of this title. (10) Same as § 13.504 (j) of this title. (11) Same as the second undesignated paragraph of § 13.504 (k) of this title.

(12) Title to all special tooling shall pass to and vest in the Government upon acquisition thereof by the contractor: Provided, however, That the, contractor's obligations, the Government's rights, and property control procedures relating there to shall apply as set forth in this clause. The provisions of this contract relating to "LiabilIty for Government-Furnished Property," and any other provision of this contract defining liability for Government shall be inapplicable to property to which the Government shall have acquired title solely by virtue of the provisions of this section. The provisions of this section shall not relieve the contractor from any risk of loss, or destruction, or damage to property to which title vests in the Government under the provisions hereof or be construed as enlarging upon the contractor's obligations as specified in this clause.

(b) Contracts which contain the clause provided by § 13.504 of this title may be amended in the above cited manner so as to provide that title to the tooling will vest in the Government immediately when it is deemed necessary for administrative reasons to establish the Government as owner of the tooling, prior to the occurrence of any of the events set forth in § 13.504 (c) or (d) of this title.

CROSS REFERENCE: For section of Armed Services Procurement Regulations which this section implements see § 13.504 of this title. [18 F. R. 3117, May 30, 1953]

SUBPART F-SALE OF PROPERTY

SOURCE: §§ 1012.601 and 1012.602 appear at 18 F. R. 3118, May 30, 1953.

This

§ 1012.601 Scope of subpart. subpart sets forth policies governing the sale of Government property to contractors, and implements Part 13 of this title, generally, rather than a specific part thereof.

§ 1012.602 Exchange or sale of personal property and application of proceeds to purchase of similar items. This section prescribes rules under which the Department of the Air Force may exchange or sell similar items and apply the exchange allowance or proceeds of sale in whole or in part payment for the property acquired.

(a) Scope. Exchange of personal property by the Department of the Air Force and the application of the exchange allowance or proceeds of sale of personal property to the acquisition of personal property by the Department of the Air Force under section 201 (c) of the Federal Property and Administrative Services Act of 1949 (63 Stat. 384; 40 U. S. C. 481 (c)), shall be made only in accordance with the provisions of this section.

(b) General authorization. Subject to the provisions of this section, the head of a procuring activity is hereby authorized, in acquiring personal property within the United States or elsewhere, to exchange or sell similar items and apply the exchange allowance or the proceeds of sale in such cases, in whole or in part payment for the property acquired. Any transactions executed under this authorization shall be evidenced in writing.

(c) Restrictions and limitations. (1) This section authorizes the application of exchange allowances or proceeds of sale in whole or part payment for personal property acquired only when:

(i) The item sold or exchanged are similar to the items acquired (see subparagraph (2) of this paragraph, for clarification of the word "similar"); and

(ii) The items acquired are to be used (whether or not intended for additional uses) in the performance of all or substantially all of the tasks or operations in which the items exchanged or sold would otherwise be used, but the items acquired need not be the same in number

nor used in the same location as the items sold or exchanged: Provided, That the limitation prescribed in this section shall not apply with respect to parts or containers: And provided further, That the detailed cross-identification between old and new items will not be required in the absence of specific requirements of law, but in the absence of such crossidentification, there shall be furnished to the General Accounting Office sufficient data to establish that the items acquired were similar to the items exchanged or sold, that any exchange allowances or proceeds of sale applied in whole or in part payment of property acquired were in fact available for such application, and that the transaction was otherwise in accordance with the provisions of this procedure; and

(iii) There has been at the time of transfer or sale an administrative determination to apply the exchange allowance or proceeds of sale in acquiring property in accordance with this section which determination shall support each schedule of collections covering such proceeds of sale; and

(iv) The transaction will foster the economical and efficient accomplishment of an approved program.

(v) The items to be sold or exchanged have been screened for utilization by other Government agencies through the Surplus Materials Division, Bureau of Supplies and Accounts, Department of the Navy, and the Naval Aviation Supply Office, in accordance with paragraph (e) of this section.

(2) Items shall be deemed "similar" for the purpose of this section when:

(i) They are substantially alike in all material aspects and characteristics, excluding, however, condition, year, model, size or capacity, and manufacturer; or

(ii) The head of a procuring activity, or his representative duly authorized for the purpose, finds, in writing, that they resemble each other in most material aspects and characteristics and are adaptable to the same or comparable uses, which finding shall support each purchase document covering property acquired pursuant thereto; or

(iii) They constitute parts of or for assembled items, or containers for items, which items are similar within the meaning of subparagraphs (1) or (2) of this paragraph.

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