FAR 45.102—Policy.
Plain-English Summary
FAR 45.102 sets the baseline policy for when the Government should, and should not, furnish property to contractors for use in performing federal contracts. It establishes the general rule that contractors are ordinarily expected to provide their own property, then limits Government-furnished property to situations where the contracting officer can clearly show it is in the Government’s best interest, the overall acquisition benefit outweighs the added administrative and disposal costs, the Government’s risk is not materially increased, and the requirement cannot otherwise be met. The section also makes clear that a contractor’s lack of resources or unwillingness to supply them is not, by itself, a valid reason for the Government to provide property. It creates an exception for contracts involving repair, maintenance, overhaul, or modification, where the paragraph (b) justification standard does not apply. Finally, it restricts installing or constructing Government property on contractor-owned real property in a way that makes it nonseverable, unless the head of the contracting activity determines that the action is necessary and in the Government’s interest. In practice, this section is about disciplined use of Government property, avoiding unnecessary Government ownership and management burdens, and ensuring property decisions are justified by mission need rather than convenience.
Key Rules
Contractor normally supplies property
The default rule is that contractors are ordinarily required to furnish all property needed to perform Government contracts. Government-furnished property is the exception, not the norm.
Government property needs clear justification
A contracting officer may provide property only when all four conditions in paragraph (b) are clearly demonstrated: Government best interest, overall acquisition benefit outweighing added administration and disposal costs, no substantial increase in Government risk, and no other way to meet the requirement.
Contractor resource limits are not enough
A contractor’s inability or unwillingness to provide its own resources does not, by itself, justify Government furnishing or acquiring property. The decision must rest on the Government’s needs and the policy factors in paragraph (b).
Repair and maintenance exception
Property provided under contracts for repair, maintenance, overhaul, or modification is exempt from the paragraph (b) justification requirements. Even so, other property management and contract requirements may still apply.
Limits on nonseverable installations
Government property generally may not be installed or constructed on contractor-owned real property in a way that makes it nonseverable. An exception exists only when the head of the contracting activity determines the installation or construction is necessary and in the Government’s interest.
Responsibilities
Contracting Officer
Determine whether Government-furnished property is justified under the four-part standard in paragraph (b), document the rationale, and avoid furnishing property merely because the contractor lacks resources. The contracting officer must also ensure the nonseverable-installation restriction is observed unless the required higher-level determination is obtained.
Contractor
Plan to furnish its own property and resources unless the contract specifically provides otherwise. The contractor should not assume Government property will be supplied because it is convenient or because the contractor prefers not to invest in its own equipment or facilities.
Head of the Contracting Activity
Make the required determination when Government property would be installed or constructed on contractor-owned real property in a way that would become nonseverable, and only when that action is necessary and in the Government’s interest.
Agency
Apply the policy consistently, manage the broader cost and risk implications of furnishing property, and ensure property decisions support acquisition objectives rather than increasing unnecessary administrative burden or disposal liability.
Practical Implications
This section pushes agencies to justify Government-furnished property carefully; if the need can be met by contractor-owned property or other means, the Government generally should not provide its own property.
A common pitfall is treating contractor financial weakness, lack of equipment, or preference as enough reason to furnish property; FAR 45.102 says that is not sufficient.
Contracting officers should think beyond purchase price and consider lifecycle effects, including administration, accountability, maintenance, and eventual disposal costs.
The repair/maintenance/overhaul/modification exception can be easy to overread; it removes the paragraph (b) test, but it does not eliminate all property-management obligations or other approval requirements.
The nonseverable-installation rule is especially important for facilities and special tooling on contractor-owned land, because it can create ownership, access, and disposition complications if the required higher-level determination is not obtained upfront.
Official Regulatory Text
(a) Contractors are ordinarily required to furnish all property necessary to perform Government contracts. (b) Contracting officers shall provide property to contractors only when it is clearly demonstrated- (1) To be in the Government’s best interest; (2) That the overall benefit to the acquisition significantly outweighs the increased cost of administration, including ultimate property disposal; (3) That providing the property does not substantially increase the Government’s assumption of risk; and (4) That Government requirements cannot otherwise be met. (c) The contractor’s inability or unwillingness to supply its own resources is not sufficient reason for the furnishing or acquisition of property. (d) "Exception". Property provided under contracts for repair, maintenance, overhaul, or modification is not subject to the requirements of paragraph (b) of this section. (e) Government property, other than foundations and similar improvements necessary for installing special tooling, special test equipment, or equipment, shall not be installed or constructed on contractor-owned real property in such fashion as to become nonseverable, unless the head of the contracting activity determines that such installation or construction is necessary and in the Government’s interest.