fer Document containing the terms and conditions provided for in this section and signed by the authorized representative of the applicant must accompany the institution's or organization's application.

(2) Title to the aircraft or vessel shall pass from the United States of America to the donee when the Aircraft Conditional Transfer Document or Vessel Conditional Transfer Document is executed by the Department of Health, Education, and Welfare and is delivered to the donee.

(3) The donee of aircraft shall apply to the Federal Aviation Agency for registration of the aircraft within 30 days of the receipt of the fully executed Aircraft Conditional Transfer Document, and the donee's application for registration shall include a fully executed copy of the Aircraft Conditional Transfer Document. The donee of a vessel shall obtain documentation of the vessel under the applicable laws of the United States and the applicable laws of the several states and will at all times maintain such documentation, and shall, within 60 days of the receipt of the fully executed Vessel Conditional Transfer Document, record said document with the Collector of Customs at the port of documentation of the vessel.

(4) The aircraft or vessel, together with all engines, appurtenances, and accessories attached thereto and installed therein, hereinafter referred to in this section as the "aircraft or vessel property," shall be placed in use for the purpose stated no later than 12 months after acquisition thereof.

(5) In the event the donee of aircraft property does not apply to the Federal Aviation Agency for registration of the aircraft property, or in the event the donee of vessel property does not record the Vessel Conditional Transfer Document with the Collector of Customs at the port of documentation of the vessel property, or in the event the aircraft or vessel property is not placed in use within 12 months of receipt, the donee in the case of aircraft property, within 30 days after the date on which application for registration should have been made, or in the case of vessel property, within 30 days after the date on which the Vessel Conditional Transfer Document should have been recorded, or within 30 days after the expiration of the 12-month period, shall notify the Department of Health, Education, and

Welfare, in the case of aircraft or vessel property donated for public health or educational purposes, or the Office of Civil Defense, Department of the Army. in the case of aircraft or vessel property donated for civil defense purposes, in writing, through the State Agency. Title and right to the possession of the aircraft property on which application for registration has not been made within 30 days, or to the vessel property on which the Vessel Conditional Transfer Document has not been recorded within 60 days, or aircraft or vessel property which has not been placed in use within 12 months, shall at the option of the Department of Health, Education, and Welfare, in the case of aircraft or vessel property donated for public health or educational purposes, or the Office of Civil Defense, Department of the Army, in the case of aircraft or vessel property donated for civil defense purposes, revert to the United States of America. Upon demand, the donee shall, as directed by the Department of Health. Education, and Welfare, or its designee, in the case of aircraft or vessel property donated for public health or educational purposes, or the Office of Civil Defense, Department of the Army, or its designee, in the case of aircraft or vessel property donated for civil defense purposes, release the aircraft or vessel property to such agency or person as may be designated, sell the aircraft or vessel property, or otherwise dispose of the aircraft or vessel property. Any sale shall be for the benefit and account of the United States of America.

(6) There shall be a period of restriction which will expire after the aircraft or vessel property has been used for the purpose stated for a period of 10 years The period of restriction for combat aircraft is perpetual.

(7) During the period of restriction the aircraft or vessel property shall be used only for the purpose stated.

(8) During the period of restriction the donee shall make reports to the State Agency on the use, condition and location of the aircraft or vessel property and on other pertinent matters as may be required from time to time by such State Agency, or the Department of Health, Education, and Welfare, in the case of aircraft or vessel property donated for public health or educational purposes, or the Office of Civil Defense, Department of the Army, in the case of

aircraft or vessel property donated for civil defense purposes.

(9) During the period of restriction, the donee shall not sell, trade, lease, lend, bail, cannibalize or disassemble for secondary utilization purposes, encumber, or otherwise dispose of the aircraft or vessel property, without prior written approval of the Department of Health, Education, and Welfare, in the case of aircraft or vessel property donated for public health or educational purposes, or the Office of Civil Defense, Department of the Army, in the case of aircraft or vessel property donated for civil defense purposes. Any sale, trade, lease, loan, bailment, encumbrance, or other disposal of the aircraft or vessel property, when such action is authorized by the Department of Health, Education, and Welfare, where the property was donated for public health or educational purposes, or the Office of Civil Defense, Department of the Army, in the case of aircraft or vessel property donated for civil defense purposes, shall be for the benefit and account of the United States of America.

(10) In the event, during the period of restriction the aircraft or vessel property is sold, traded, leased, loaned, bailed, cannibalized or be disassembled for secondary utilization purposes, encumbered, or otherwise disposed of without prior approval, or is used for a purpose other than the purpose stated, the donee at the option of the Department of Health, Education, and Welfare, in the case of aircraft or vessel property donated for public health or educational purposes, or the Office of Civil Defense, Department of the Army, in the case of aircraft or vessel property donated for civil defense purposes, shall be liable to the United States of America for the proceeds of the disposal, the fair market value, or the fair rental value of the aircraft or vessel property at the time of such unauthorized transaction or use, as determined by the Department of Health, Education, and Welfare, in the case of aircraft or vessel property donated for public health or educational purposes, or the Office of Civil Defense, Department of the Army, in the case of aircraft or vessel property donated for civil defense purposes.

(11) If, during the period of restriction, the aircraft or vessel property is no longer suitable, usable or further needed by the donee for the purpose for which

acquired, the donee shall promptly notify the Department of Health, Education, and Welfare, in the case of aircraft or vessel property donated for public health or educational purposes, or the Office of Civil Defense, Department of the Army, in the case of aircraft or vessel property donated for civil defense purposes, through the State Agency, and shall, as directed by the Department of Health, Education, and Welfare, in the case of aircraft or vessel property donated for public health or educational purposes, or the Office of Civil Defense, Department of the Army, in the case of aircraft or vessel property donated for civil defense purposes, or the State Agency, retransfer the aircraft or vessel property to another donee, retransfer the aircraft or vessel property to a department or agency of the United States, sell the aircraft or vessel property, or otherwise dispose of the aircraft er vessel property. Any sale shall be for the benefit and account of the United States of America.

(12) At the option of the Department of Health, Education, and Welfare, in the case of aircraft or vessel property donated for public health or educational purposes, or the Office of Civil Defense, Department of the Army, in the case of aircraft or vessel property donated for civil defense purposes, the donee may obtain abrogation of the terms and conditions set forth in subparagraphs (6) through (11) of this paragraph by payment of an amount as determined by the Department of Health, Education, and Welfare, in the case of aircraft or vessel property donated for public health or educational purposes, or the Office of Civil Defense, Department of the Army, in the case of aircraft or vessel property donated for civil defense purposes. Abrogation of restrictions does not apply to combat aircraft.

(13) The Department of Health, Education, and Welfare, in the case of aircraft or vessel property donated for public health or educational purposes, or the Office of Civil Defense, Department of the Army, in the case of aircraft or vessel property donated for civil defense purposes, may terminate all of the above conditions and give unrestricted title to the aircraft or vessel property to the donee whenever such action is determined to be appropriate.

(a) It is not the Department's policy to require State Agencies to carry insurance as a condition of acquiring Federal surplus personal property for distribution to eligible donees. However, where a State Agency carries insurance against damages to or loss of property due to fire or other hazards and where loss of or damage to Federal surplus personal property occurs, the Department will be entitled to reimbursement from the State Agency of the fair value of the damaged or destroyed Federal property, payable from the insurance proceeds, less the State Agency's actual cost of acquiring and rehabilitating the property prior to its damage or destruction.

(b) It is not the Department's policy to require donees to carry insurance as a condition of donation. However, where

a donee carries insurance against damages to or loss of property due to fire or other hazards and where loss of or damage to donated Federal surplus personal property, with unexpired Federal restrictions, occurs, the Department will be entitled to reimbursement by the donee, from the insurance proceeds, of an amount equal to the unamortized portion of the fair value of the damaged or destroyed donated items.

§ 14.1

Definitions.

(a) "Accountability" means the obligation imposed by law or lawful order of regulation on a State agency or individual(s) for keeping accurate records of property and/or funds. The person having this obligation may or may not have actual possession of the property or funds. Accountability is concerned primarily with records, while responsibility is concerned primarily with custody, care, and safekeeping.

(b) "Act" means the Federal Property and Administrative Services Act of 1949, Public Law 152, 81st Congress (63 Stat. 377), as amended (40 U.S.C. 471 et. seq.). Terms defined in the Act and not defined in this section shall have in this part the meaning given to them in the Act.

(c) "Department" means the Department of Health, Education, and Welfare.

(d) "Donable property" means surplus equipment, materials, books, or other supplies under the control of any executive agency (including surplus property in working capital funds established pursuant to 10 U.S.C. 2208 or in similar management-type funds) except:

(1) Such property as may be specified from time to time by the Administrator of General Services;

(2) Surplus agricultural commodities, food, and cotton or woolen goods determined from time to time by the Secretary of Agriculture to be commodities requiring special handling in order to assist him in carrying out his responsibilities with respect to price support or stabilization;

(3) Property in trust funds.

(e) "Need" means a requirement for anything usable and necessary by eligible applicants in the conduct of educational, public health, or civil defense activities.

(f) "Overage" means the excess occurring upon the receipt of a larger number of a specific item or a larger number of items than either (1) approved on an "Application for Donation of Surplus Personal Property," Standard Form 123, or (2) listed on a shipping document. "Overage" also means the larger quantity of a single item or a larger number of items than shown by stock records upon inventory verification.

(g) "Screening" is the process of physically inspecting, and/or reviewing lists or reports of property for the purpose of submitting lists of property with findings and recommendations to the

Department for its information and guidance in determining whether property that is surplus or which is expected to become surplus is usable and necessary for health, educational, or civil defense purposes.

(h) "Service charge" means the fee assessed by a State Agency against the donee when distributing surplus property under section 203 (j) of the Act.

(i) "Shortage" means the deficiency occurring upon the receipt of a smaller number of a specific item or a smaller number of items than either (1) approved on an “Application for Donation of Surplus Personal Property," Standard Form 123, or (2) listed on a shipping document. "Shortage" also means the smaller quantity of a single item or a smaller number of items than shown by stock records upon inventory verification.

(j) "State Agency" means the agency designated by State statute or executive order to make the certifications concerning, and distribution of, donable property to eligible applicants within the State as provided for in section 203(j) of the Act. [32 F.R. 9167, June 28, 1967, as amended at 33 F.R. 17787, Nov. 28, 1968]

§ 14.2 Basic policy.

§ 14.5 Plan of Operation.

(a) Each State Agency shall submit to the appropriate regional office of the Department for its approval at least three signed copies of its Plan of Operation which shall conform to the provisions of this part, and Parts 12 and 13 of this subtitle. Such Plans shall be in effect and shall be binding upon the State Agency beginning with the date of approval by the Department. No allocations of donable property shall be made to such State Agency, and no donable property shall, except as directed by the Department, be distributed by such State Agency under section 203 of the Act, if it is determined by the Department that the State Agency is not operating in conformance with the Department's regulations. No subsequent amendments to, nor modifications of, approved Plans shall be placed in effect without prior approval of the Department. Approval of a Plan of Operation shall not be effective for a period in excess of 5 years from the date of approval. The Department may approve Plans, or parts thereof, for lesser periods of time, as determined by the Department in each case. Each State Agency shall, not later than 90 days following the effective date of any change in the Department's regulations which affects a State Plan, submit to the appropriate regional office for its approval, at least three copies, executed by the responsible official(s), of all sections of its State Plan amended to conform with the changes in the Department's regulations. Sixty days prior to the expiration date of a State Plan of Operation the State Agency shall submit to the appropriate regional office a complete new Plan or supplements as appropriate, or request by letter to the regional office that the existing Plan be approved for an additional 1 to 5 years.

(b) The Plan of Operation shall conform to the State plan format prescribed by the Department in its Surplus Property Utilization Manual and include the following:

(1) Copies of State statutes and/or executive orders establishing the State Agency and its authority to:

(i) Acquire, warehouse, and distribute donable personal property to eligible organizations under section 203 of the Act and to execute the certifications and agreements required by that section of the Act and the Federal Government.

(ii) Assess and collect service charges from eligible participating organizations if such charges are contemplated.

(ii) Enter into cooperative agreements as provided for by section 203 (n) of the Act, if the State Agency contemplates entering into such agreements.

(iv) Where express statutory authority does not exist or is ambiguous, or where authority exists by virtue of executive order, the State Agency Plan shall also include the opinion of the State's Attorney General as to the existence of such authority.

(2) A statement of:

(i) The agency's authority for the deposit and investment of service charge funds;

(ii) The types of depositories and/or investments of such funds;

(iii) Authority for the disbursement of funds and the liquidation of investments;

(iv) The agency's authority for the obligation and expenditure of service charge funds to acquire title to, or make advance rental payments for, distribution center and office facilities;

(v) Provision for the submission of a liquidation plan for the Department's approval when a determination has been made to liquidate the State agency. The plan to be submitted at time of liquidation must include, but not be limited to, the following:

(a) Authority for liquidating the agency;

(b) Time schedule for liquidating the agency, including a date by which the agency shall be completely liquidated;

(c) Method for disposing of Federal surplus property on hand;

(d) Provision for the liquidation of agency assets;

(e) Provision for preparing and submission of accounting records and financial reports showing the receipt and disbursement of funds;

(f) Provision for the maintenance, retention, and retirement of records beyond the date of final liquidation which would be made available for inspection by any authorized Federal official.

(3) (i) [Reserved]

(ii) Chart(s) showing (a) organizational units of the State Agency; (b) functions of such units; and (c) major lines of supervisory authority.

(4) Procedures for accounting for surplus property allocated, received, warehoused, and distributed. These must include the following: (i) Provision for

recording and reporting shortages and overages of property both when it is taken into State Agency custody and at the time of inventory verifications; (ii) provision for periodic verification of property on hand (at least annually); (iii) provision for any necessary adjustments to inventory records and/or stock record cards at least annually and upon written authority by the Agency Director: (a) A file shall be maintained by the State Agencies covering all adjustments with justifications therefore, and be made available for inspection by any authorized Federal official; (b) such justification shall, as a minimum, reflect that all reasonable efforts have been expended to ascertain when, where, how, or why the property is missing, damaged or otherwise unaccounted for; and (c) regional offices shall be furnished a copy of the adjustment to inventory records, with justification, at the time the adjustment is made, on any item of property having an acquisition cost of $2,500 or more; (iv) a means of tracing property from receiving documents to disposal documents; and (v) a system of readily determining the quantity of various types of property donated to individual donees.

(5) An explanation of how service charges are determined. This shall include a maximum charge not in excess of $500 for any single item to cover indirect administrative expenses. In addition to the $500 service charge for any single item, State Agencies for Surplus Property may collect direct expenses for labor in removing installed equipment, packing and crating, loading, transportation, rehabilitation, and delivery of property to the donee. Charges in excess of the above must be justified in writing and be approved by the Department in advance of billing the donee on an individual case basis.

(6) Procedure for ascertaining the eligibility of applicants.

(7) Procedure for establishing the authority of representatives of eligible donees to receive surplus property and execute the required certifications and agreements on behalf of applicants.

(8) Procedure for determining the need and usability of surplus property by eligible organizations and the fair and equitable distribution thereof; such procedure must include: (i) Provisions for visits with at least 25 percent of the donees who are eligible but who have not received any surplus property during