FAR 45.103—General.
Plain-English Summary
FAR 45.103 sets the basic policy framework for how agencies should manage Government property in the hands of contractors. It covers six core topics: encouraging the use of voluntary consensus standards and industry-leading practices for property management, reducing any competitive advantage from access to Government property, maximizing reutilization of contractor inventory for Government needs, requiring contractors to use Government property already on hand to the greatest practical extent, charging rent when Government property is used on a non-rent-free basis, and requiring contractors to justify keeping Government property and declare it excess when it is no longer needed. It also addresses how agencies should structure contractor property management systems, stating that agencies generally should not require a separate system just for Government property if the contractor already has established procedures for contractor-owned property. In practice, this section is about efficiency, fairness, and stewardship: it aims to prevent unnecessary Government property accumulation, avoid giving contractors an unfair edge, and make sure property is used, reused, and disposed of responsibly. For contractors, it means they should expect to integrate Government property into their normal property controls rather than build a completely separate compliance structure, unless the contract or circumstances require otherwise. For contracting officers and property administrators, it provides the policy basis for decisions about property use, rental, retention, and excess declarations.
Key Rules
Use industry standards
Agencies should allow and encourage contractors to manage Government property using voluntary consensus standards and industry-leading practices. The policy favors practical, modern property management methods rather than rigid, Government-unique procedures where those are not necessary.
Avoid competitive advantage
Agencies must try to eliminate, to the maximum practical extent, any competitive advantage a prospective contractor may gain from using Government property. This helps preserve fair competition and prevents Government-furnished assets from distorting the procurement process.
Maximize reutilization
Agencies must ensure the maximum practical reutilization of contractor inventory for Government purposes. Before acquiring new property, the Government should consider whether contractor-held inventory can be reused to meet program needs.
Use property already on hand
Contractors are required to use Government property already in their possession to the maximum extent practical when performing Government contracts. This rule promotes efficiency and reduces unnecessary purchases, duplication, and idle assets.
Charge rent when required
When Government property is authorized for use on other than a rent-free basis, agencies must charge appropriate rentals. The Government should recover value when property is used in a way that is not intended to be free of charge.
Justify retention and declare excess
Contractors must justify keeping Government property that is not needed for contract performance and must declare property excess when it is no longer needed. This prevents unnecessary retention and supports timely redistribution, reutilization, or disposal.
Use existing contractor systems
Agencies generally should not require contractors to create a separate property management system for Government property if the contractor already has established procedures, practices, and systems for contractor-owned property. The rule encourages integration and avoids duplicative administrative burdens.
Responsibilities
Agency
Encourage the use of voluntary consensus standards and industry-leading practices for managing Government property; minimize competitive advantages from Government property; promote reutilization of contractor inventory; require use of Government property already in possession when practical; charge rent when property is not authorized rent-free; and require justification and excess declarations for unneeded property.
Contracting Officer
Apply the policy when structuring contracts and property requirements, including deciding when rent applies, ensuring property use expectations are clear, and avoiding unnecessary demands for separate property systems unless justified by the contract or circumstances.
Contractor
Use Government property already in its possession to the maximum practical extent; manage Government property using established property controls where possible; justify retention of Government property not needed for performance; and declare excess property when it is no longer needed.
Property Administrator
Oversee contractor property management practices, verify that Government property is being used efficiently and retained only when justified, and support reutilization and excess property actions consistent with agency policy.
Practical Implications
Contractors should expect their existing property systems to be acceptable in many cases, but those systems still need to reliably track Government property, support accountability, and distinguish Government-owned from contractor-owned assets.
A common pitfall is holding onto Government property after it is no longer needed; contractors should be prepared to document why retention is necessary or move quickly to excess declarations.
Another frequent issue is failing to use Government property already on hand before requesting or purchasing new items, which can create avoidable cost and compliance problems.
Agencies and contracting officers should be careful not to impose separate, duplicative property management systems without a real need, since FAR 45.103 favors integration with established contractor procedures.
Because the section emphasizes fairness and efficiency, property decisions can affect competition, pricing, and contract performance; both sides should document property use, rental decisions, and excess actions clearly.
Official Regulatory Text
(a) Agencies shall- (1) Allow and encourage contractors to use voluntary consensus standards (see FAR 11.101 (b)) and industry-leading practices and standards to manage Government property in their possession; (2) Eliminate to the maximum practical extent any competitive advantage a prospective contractor may have by using Government property; (3) Ensure maximum practical reutilization of contractor inventory for government purposes; (4) Require contractors to use Government property already in their possession to the maximum extent practical in performing Government contracts; (5) Charge appropriate rentals when the property is authorized for use on other than a rent-free basis; and (6) Require contractors to justify retaining Government property not needed for contract performance and to declare property as excess when no longer needed for contract performance. (b) Agencies will not generally require contractors to establish property management systems that are separate from a contractor’s established procedures, practices, and systems used to account for and manage contractor-owned property.