The Code of Federal Regulations of the United States of America

prepared by the contractor, all of which serve to prescribe the techniques of property control. These procedures, methods, controls, and techniques comprise the contractor's property control system. If such property control system fulfills the basic requirements of the Manual, it shall be approved in accordance with the provisions of the manual, and the contractor shall not be required to prepare an additional composite manual solely to obtain the requisite approval.

(d) When a contractor has an established property audit unit, whose operations are considered to be adequate for safeguarding the interest of the Government, the contract administrator may advise the property administrator that the selective examination program of the property control system shall be reduced to a minimum.

(e) Individual item records of plant equipment, in accordance with paragraph 304.3 of the Manual, when priced at $100 or under are not required.

§ 1012.811 Pricing. [302] Separate unit prices shall be applied to items of special tooling fabricated by the contractor, provided, however, that when the costs of establishing or maintaining detailed itemized records for individual items of special tooling are considered to be excessive and not practicable in the light of all the circumstances, then it may be permissible to utilize "group pricing" for special tooling. Group pricing may be utilized for "work-inprocess."

§ 1012.812 Records to be maintained by Government personnel. [303] (a) The property administrator shall not be required to duplicate records maintained by other Government personnel, but will rely on such records, provided that, in connection with those records maintained by other Government personnel, the property administrator has determined that such records comply with the provisions of the Manual, and the personnel responsible for maintaining the records have been informed by the property administrator, in writing, of the requirements of the Manual.

(b) Deviations shall be processed and approved in acordance with § 1000.109 of this subchapter.

as are made under the circumstances set forth in paragraph 402.2 of the Manual, whereby the contract administrator has rendered a determination regarding the liability of the contractor. The property administrator shall not be required to maintain duplicate copies of such instrument or instruments as the contract administrator may issue under the provisions of paragraph 402.1 of the Manual, or such other instrument or instruments that are readily available in the files of the contractor or other Government personnel, such as plant clearance, quality control, and Auditor General personnel.

§ 1012.813 Records to be maintained by the contractor. [304] (a) The contract administrator may authorize the use of the simple item record in the following instances, provided, however, that the material so recorded is issued for immediate consumption, or the material is not entered in the costed inventory account as a matter of sound business practice.

(1) Subcontract or outside production items, only when such items are received and immediately issued direct to production on receipt thereof.

(2) Nonstock or special items. These items are considered to be those whose procurement cycle is irregular and infrequent.

(3) Items (such as maintenance and repair parts to plant equipment) which are procured and issued direct for installation, and no spoilage is involved.

(4) Items issued from contractor's inventory direct to production, maintenance, and so forth.

(b) The form of the property records maintained for plant equipment is optional on the part of the contractor, provided, however, that the minimum information and data required by the Manual is contained therein.

§ 1012.814 Numbering property accounts. [305] Property accounts shall be assigned the same number as that of the prime contract. However, to expedite and insure proper distribution of documents, each property account assigned to a single property administrator shall be assigned the identification number of the property administrator as a prefix to the contract number.

MISCELLANEOUS PROVISIONS

§ 1012.815 Identification. [401] (a) The method of marking and identifying

Government-owned special tooling shall be agreed to by the contractor and the contract administrator. The contractor will be responsible for determining whether or not the marking will damage the tooling or is otherwise impracticable. The contractor shall advise the contract administrator, in writing, of any such determination. [401.1 (b)]

(b) Plant equipment, other than that included within the Industrial Mobilization Program, shall be assigned an identification number and marked in accordance with a system of identification and marking as agreed to by the contractor and the contract administrator, provided that such system conforms to the requirements of the Manual. Numbers and tags will be permanent and will not be changed as long as the equipment remains under the control of the Air Force. When plant equipment is provided to contractors, and is marked and identified in substantial compliance with the requirements of the Manual, it shall not be required that such markings be changed or altered. [401.1 (c)] SUBPART IIMPLEMENTATION OF MANUAL FOR CONTROL OF GOVERNMENT PROPERTY IN POSSESSION OF NON-PROFIT RESEARCH AND DEVELOPMENT CONTRACTORS

SOURCE: 1012.901 to 1012.912 appear at 19 F. R. 1273, Mar. 6, 1954.

INTRODUCTION

§ 1012.901 Scope. [100] This subpart implements the Manual for Control of Government Property in the Possession of Non-profit Research and Development Contractors (Appendix C, Part 30, Subchapter A of this title) hereinafter referred to as the Manual. The number in parentheses after each section title and after certain paragraphs in the text indicates the number of the paragraph in the Manual which is being implemented.

§ 1012.902 Applicability. [102] (a) Contracts which provide that records of Government property be maintained in accordance with the requirements of WD Memo 35-6520-1 may be amended to provide that Government property shall be controlled in accordance with the provisions of the Manual.

(b) Compliance with the provisions of the Manual and this subchapter is mandatory on the part of the contractors and Air Force personnel, in connection with contracts, wherein the terms spe

cifically provide for the application of the provisions of the Manual.

(c) The policy of the Department of the Air Force is that maximum efficiency and economy of operation shall be obtained by the utilization of the contractor's property records as the official Government records in connection with those contracts executed prior to the effective date of Part 13 of this title, which required the Government to maintain property control records in accordance with WD Memo 35-6520-1. With respect to those contracts requiring compliance with WD Memo 35-6520-1, in the control of Government property. Government personnel are not required to comply with such provisions above and beyond the requirements of the Manual, although the contractor has a continuing obligation of compliance with the directive required and specified by its contract.

(d) The prime contractor is responsible for insuring, in all sub-contracts, that Government property provided to such subcontractors shall be protected, preserved, and maintained in accordance with sound industrial practice. GOVERNMENT ADMINISTRATIVE PROVISIONS

§ 1012.903 Designation of property administrator. [202] (a) Property administrators serve in the capacity of an authorized representative of the contracting officer, and will be designated in accordance with § 1000.406 of this subchapter.

(b) The contract administrator will not perform the duties of the property administrator without prior approval of the head of the procuring activity or his duly designated representative.

(d) Property administrators may be either civilian or military personnel, and shall be appointed on the basis of experience and qualification for the position.

(e) The property administrator shall not be required to post a bond unless Government property is in his care and custody and he is responsible for such property.

§ 1012.904 Duties and responsibilities of the property administrator. [203] (a) The property administrator shall be familiar with the functions of other Air

Force personnel who have a duty or responsibility in connection with Government property. These other Air Force activities include, but are not limited to, plant clearance (property disposal), quality control, and Auditor General.

(b) The property administrator shall advise the contract administrator in regard to any act of noncompliance by the contractor with regard to the contract requirements and all obligations imposed by the Manual. The contract administrator is responsible for directing the contractor to comply with the contract requirements and the provisions of the Manual.

(c) In maintaining surveillance over the contractor's system of property controls, the property administrator shall give due consideration to the contractor's system of internal controls, and he shall conduct such examinations as shall be necessary to determine the accuracy and completeness of the contractor's records, and adequately protect the interests of the Government. Exhaustive verification and time-consuming analysis shall not be performed in connection with those operations which are considered to be commercially sound. property administrator shall confer with the resident auditor, or other responsible audit office of the Auditor General, on accounting and audit matters, and he shall ascertain the extent to which the records, data, and reports of such audit activities can be utilized in determining the adequacy of the contractor's property controls. Ordinarily, it shall not be necessary for the property administrator to duplicate any examination or examinations made by the staff of the Auditor General.

The

(d) The property administrator shall utilize and rely on the assistance of Air Force personnel, such as plant clearance (property disposal), quality control, and Auditor General personnel, to ascertain whether the contractor is using property for the purposes authorized by the contract, and whether the contractor is exercising the necessary degree of care in the handling of the Government property.

(e) The property administrator shall perform only those examinations necessary to determine reasonableness of usage. Records of the contractor and records of other Air Force personnel, including, but not limited to, plant clear

ance (property disposal), quality control, and Auditor General personnel, shall be used at all times to the extent that the property administrator shall not prepare or maintain any records which are obtainable from the contractor or other Air Force personnel indicated above. Work papers shall be kept to a minimum.

(f) The property administrator shall perform his examination of the property records through the evaluation of the contractor's internal controls, and he shall conduct tests to determine whether the contractor's records properly reflect the status of Government property. In this connection, the property administrator will confer with Auditor General personnel to obtain information of any known deficiencies in the contractor's property control system. The property administrator shall review and consider the information and examinations of other Government personnel, and if he determines that such information and examination are adequate to comply with the requirements of the Manual and this subchapter, he shall not duplicate such examinations and the like, but will make appropriate reference thereto in his work papers.

§ 1012.905 Sources from which Government property may be furnished or acquired. [205] In accordance with the policy contained in Part 13 of this title, and the Manual, Government property shall be furnished to a contractor only when specifically provided for by the terms of a written contract. Any deviation from this policy shall be granted only by the prior written approval of the Director of Procurement and Production Engineering, Office, Deputy Chief of Staff, Materiel, Headquarters USAF. When the fact is disclosed that Government property is in the possession of the contractor without contractual coverage, the property administrator shall take immediate action to return the property to the shipping organization or obtain appropriate contractual coverage.

§ 1012.906 Contractor's records. [207] (a) The contractor is obligated by virtue of the provisions of the contract to maintain adequate property control records, which are designated and utilized as the official contract records. Force property personnel shall not maintain duplications of the official contract records or any part thereof. [207.1]

Air

(b) The authority to grant exceptions to the policy that the contractor's records shall be designated and used as the official contract records is delegated to the Commander, Air Research and Development Command, or his duly authorized representative: Provided, however, That such representative shall not be an individual below the level of Director or Deputy Director of Procurement, Office, Deputy Chief of Staff, Materiel, Air Research and Development Command. Such exceptions, however, may be authorized, in writing, only in unusual circumstances. Class or group exceptions are not authorized. Each exception authorized must relate to a specific contract, a specific invitation for bid, or specific request for proposals, and must be covered by an adequate provision in the contract clause. [207.1]

(c) Generally, contractors have established procedures, methods, and controls which may be described and set forth in various manuals, documents, memoranda, and the like, or which may be in the form of a written statement prepared by the contractor all of which serve to prescribe the techniques of property control. These procedures, methods, controls, and techniques comprise the contractor's property control system. If such property control system fulfills the basic requirements of the Manual, it shall be approved in accordance with the provisions of the Manual, and the contractor shall not be required to prepare an additional composite manual solely to obtain the requisite approval. [207.2]

(e) Individual item records of plant equipment, in accordance with paragraph 207.5 of the Manual, when priced at $100 or under, are not required.

(f) Separate unit prices shall be applied to items of special tooling fabricated by the contractor: Provided, however, That when the costs of establishing or maintaining detailed itemized records for individual items of special tooling are considered to be excessive and not practicable in the light of all the circumstances, then it may be permissible

to utilize "group pricing" for special tooling. Group pricing may be utilized for "work-in-process."

§ 1012.907 Identification and marking. [209] Plant equipment, other than that included within the Industrial Mobilization Program, shall be assigned an identification number and marked in accordance with a system of identification and marking as agreed to by the contractor and the contract administrator: Provided, That such system conforms to the requirements of the Manual. Numbers and tags will be permanent and will not be changed as long as the equipment remains under the control of the Air Force. When plant equipment is provided to contractors, and is marked and identified in substantial compliance with the requirements of the Manual, it shall not be required that such markings be changed or altered.

§ 1012.908 Physical inventories. [211] The contract administrator shall utilize, to the extent possible, the services of other technical Air Force personnel, such as plant clearance (property disposal) personnel, in connection with physical inventories.

§ 1012.909 Records to be maintained by Government personnel. [213] (a) The property administrator shall not be required to duplicate records maintained by other Government personnel but will rely on such records: Provided, That, in connection with those records maintained by other Government personnel, the property administrator has determined that such records comply with the provisions of the Manual, and the personnel responsible for maintaining the records have been informed by the property administrator, in writing, of the requirements of the Manual.

(b) Deviations shall be processed and approved in accordance with § 1000.109 of this subchapter. [213.1 (b) (xi)]

(c) The property administrator shall maintain for each contract a file containing copies of such determinations as are made under the circumstances set forth in paragraph 304 of the Manual, whereby the contract administrator has rendered a determination regarding the liability of the contractor. The property administrator shall not be required to maintain duplicate copies of such instrument or instruments as the contract administrator may issue under the provisions of paragraph 303 of the Manual,

or such other instrument or instruments that are readily available in the files of the contractor or other Government personnel, such as plant clearance, quality control, and Auditor General personnel.

§ 1012.910 Numbering property accounts. [214] Property accounts shall

be assigned the same number as that of the prime contract. However, to expedite and insure proper distribution of documents, each property account assigned to a single property administrator shall be assigned the identification number of the property administrator as a prefix to the contract number.

CONTRACTOR'S OBLIGATIONS

§ 1012.911 Contractor's responsibility. [303] See § 1012.902 (d) concerning the responsibility of the prime contractor with respect to provisions in subcontracts.

§ 1012.912 Identification and marking. [307] (a) The method of marking and identifying Government-owned special tooling shall be agreed to by the contractor and the contract administrator. The contractor will be responsible for determining whether the marking will damage the tooling or is otherwise impracticable. The contractor shall advise the contract administrator, in writing, of any such determination.

(b) Plant equipment, other than that included within the Industrial Mobilization Program, shall be assigned an identication number and marked in accordance with a system of identification and marking as agreed to by the contractor and the contract administrator: Provided, That such system conforms to the requirements of the Manual. Numbers and tags will be permanent and will not be changed as long as the equipment remains under the control of the Air Force. When plant equipment is provided to contractors, and is marked and identified in substantial compliance with the requirements of the Manual, it shall not be required that such markings be changed or altered.

Sec.

1013.103 Inspection under subcontracts. 1013.104 Contract clauses.

Subpart B-Acceptance

1013.201 Responsibility for acceptance. 1013.202 Inspection and acceptance markings.

AUTHORITY: §§ 1013.001 to 1013.202 issued under R. S. 161, sec. 202, 61 Stat. 500, as amended; 5 U. S. C. 22, 171a. Interpret or apply 62 Stat. 21; 41 U. S. C. 151-161.

SOURCE: §§ 1013.001 to 1013.202 appear at 18 F. R. 5449, Sept. 10, 1953.

§ 1013.001 Scope of part. This part implements the provisions of Part 14 of this title, and sets forth the procedures pertaining to the inspection of supplies and services by the Department of the Air Force. Nothing in this part will be construed as waiving compliance with Part 14 of this title.

§ 1013.002 General policy-(a) General. All supplies and services procured by the Air Force, including supplies which are procured in accordance with the provisions of Subpart A of Part 4 of this title, "Single Department Procurement," will be inspected and accepted in accordance with the provisions of this part. Inspection will be conducted only when a bonafide contract exists, or when there is reasonable assurance that the supplies inspected will be reserved for delivery on Air Force or other military contracts.

Conform

(b) Quality control policy. ance with contractual requirements of supplies presented to the Air Force will be determined on the basis of objective quality evidence. Such evidence will be obtained by the contractor and will be evaluated and verified by the Air Force quality control representative exercising surveillance over the contractor's facility. Evidence may also be obtained independently by Air Force quality control personnel. Product inspection by Air Force quality control personnel will be used to the extent necessary to verify evidence of quality submitted by the contractor, or it may be used to determine acceptability of supplies on an individual or lot basis. The amount of evidence obtained or verified through product inspection by Air Force quality control personnel will depend upon the nature and intended use of the product and the effectiveness of the contractor's control over quality.

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