FAR 35.014—Government property and title.
Plain-English Summary
FAR 35.014 explains how title to Government-funded equipment and other tangible personal property is handled in research and development contracts, especially basic and applied scientific research performed by nonprofit institutions of higher education and nonprofit research organizations. It ties those contracts to the Government property control requirements in FAR part 45, so agencies and contractors must still establish and maintain proper property records, accountability, and control. The section then sets out special title rules for equipment purchased with Government funds, including when title may automatically vest in the contractor, when title may vest in the Government, when the Government may later direct transfer of title, and when title need not be transferred because the equipment is still needed at a Government installation. It also addresses the effect of missing title agreements, the prohibition on charging depreciation, amortization, or use charges when title is vested in the contractor, and the civil rights condition that applies before title is vested. In practice, this section matters because it determines who owns expensive research equipment, who bears the risk and administrative burden of tracking it, and whether the contractor can recover costs through future contracts. It also ensures that property disposition decisions support the agency’s research mission while complying with statutory authority and nondiscrimination requirements.
Key Rules
Part 45 controls apply
All R&D contracts are subject to the Government property control requirements in FAR part 45. That means agencies and contractors must establish and maintain proper control, accountability, and records for Government property used in research and development work.
Special title rules for nonprofit research
For nonprofit institutions of higher education and nonprofit organizations whose primary purpose is scientific research, the Government may apply special title policies for equipment and other tangible personal property purchased with Government funds for basic or applied scientific research, unless the agency head provides otherwise.
Small equipment may vest automatically
If the contracting officer gives advance approval, the contractor automatically acquires and retains title to equipment costing less than $5,000, or a lower agency-set threshold, when the item is acquired on a reimbursable basis.
Higher-value equipment needs agreement
For equipment costing $5,000 or more, title may vest only as specifically agreed in the contract. The contract may place title in the contractor immediately, place title in the contractor subject to later Government-directed transfer, or place title in the Government if the contracting officer decides contractor title would not further the agency’s research objectives.
Government may direct later transfer
If title vests in the contractor subject to the Government’s right to direct transfer, the Government may require transfer to itself or to a third party within 12 months after contract completion or termination. The contractor cannot claim compensation merely because title is transferred under this reserved right.
No depreciation or use charges
When title to equipment is vested in the contractor, depreciation, amortization, and use charges are not allowable on that equipment under any current or future Government contract or subcontract.
No transfer needed if Government still needs it
If the work is performed at a Government installation and the equipment is still needed after the contract ends, title does not have to be transferred to the contractor.
Missing agreement does not block vesting
If there is no agreement covering title to equipment costing $1,000 or more, that omission does not prevent the agency from vesting title in the contractor under 31 U.S.C. 6306.
Civil rights condition applies
Any vesting of title under this section is subject to civil rights requirements under 42 U.S.C. 2000d. Before title is vested, the contractor must agree not to discriminate on the basis of race, color, or national origin in the contemplated financial assistance arrangement.
Property clauses implement the policy
The policies on title vesting and the civil rights condition are implemented through the Government property clauses in the contract, so the contract language is the mechanism that makes these rules operational.
Responsibilities
Contracting Officer
Ensure FAR part 45 property controls are applied to R&D contracts; decide whether advance approval is given for small equipment title vesting; negotiate and include the required title terms for equipment costing $5,000 or more; determine whether vesting title in the contractor would further the agency’s research objectives; and ensure the civil rights condition and property clauses are included and enforced.
Contractor
Maintain Government property controls required by FAR part 45; seek advance approval when needed for automatic vesting of small equipment; comply with the specific title terms in the contract; accept that title transfer may be directed within 12 months when that right is reserved; refrain from claiming depreciation, amortization, or use charges on contractor-titled equipment; and agree to the nondiscrimination condition before title is vested.
Agency Head
May provide otherwise from the default policies in this section, meaning the agency head can establish different agency-specific rules for title vesting and related property treatment where authorized.
Government Installation Officials/Program Officials
Coordinate with the contracting officer when equipment is used at a Government installation and there is a continuing need after completion, so title transfer can be avoided when continued Government use is appropriate.
Nonprofit Higher Education or Research Organization
Use Government funds for research equipment only under the applicable title rules, maintain accountability for property, and ensure institutional compliance with the civil rights condition and any agency-specific property requirements.
Practical Implications
Contractors should not assume they own research equipment just because they bought it with Government funds; title depends on the contract language, the dollar threshold, and the type of organization involved.
Contracting officers need to address title up front. If the contract is silent, the agency may still be able to vest title later, but unclear drafting creates disputes and administrative problems.
When title is vested in the contractor, the equipment cannot be depreciated or charged as amortized/use cost on other Government work, so accounting systems must prevent improper cost recovery.
For equipment used at a Government installation, agencies should evaluate whether continued Government need makes title transfer unnecessary, which can avoid needless disposition actions.
The civil rights condition is not optional; title vesting is tied to nondiscrimination compliance, so agencies should ensure the required agreement is in place before finalizing title.
Official Regulatory Text
(a) The requirements in part 45 for establishing and maintaining control over Government property apply to all R&D contracts. (b) In implementing 31 U.S.C.6306 , and unless an agency head provides otherwise, the policies in paragraphs (1) through (4) following, regarding title to equipment (and other tangible personal property) purchased by the contractor using Government funds provided for the conduct of basic or applied scientific research, apply to contracts with nonprofit institutions of higher education and nonprofit organizations whose primary purpose is the conduct of scientific research: (1) If the contractor obtains the contracting officer’s advance approval, the contractor shall automatically acquire and retain title to any item of equipment costing less than $5,000 (or a lesser amount established by agency regulations) acquired on a reimbursable basis. (2) If purchased equipment costs $5,000 (or a lesser amount established by agency regulations) or more, and as the parties specifically agree in the contract, title may- (i) Vest in the contractor upon acquisition without further obligation to the Government; (ii) Vest in the contractor, subject to the Government’s right to direct transfer of the title to the Government or to a third party within 12 months after the contract’s completion or termination (transfer of title to the Government or third party shall not be the basis for any claim by the contractor); or (iii) Vest in the Government, if the contracting officer determines that vesting of title in the contractor would not further the objectives of the agency’s research program. (3) If title to equipment is vested in the contractor, depreciation, amortization, or use charges are not allowable with respect to that equipment under any existing or future Government contract or subcontract. (4) If the contract is performed at a Government installation and there is a continuing need for the equipment following contract completion, title need not be transferred to the contractor. (c) The absence of an agreement covering title to equipment acquired by the contractor with Government funds that cost $1,000 or more does not limit an agency’s right to act to vest title in a contractor as authorized by 31 U.S.C.6306. (d) (1) Vesting title under paragraph (b) of this section is subject to civil rights legislation, 42 U.S.C.2000d. Before title is vested, the contractor must agree that- No person in the United States or its outlying areas shall, on the ground of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be otherwise subjected to discrimination under this contemplated financial assistance (title to equipment). (2) By signing the contract, the contractor accepts and agrees to comply with this requirement. (e) The policies in paragraphs (b)(1) through (b)(3) and paragraph (d) of this section are implemented in the Government Property clauses.