FAR 45.105—Contractors’ property management system compliance.
Plain-English Summary
FAR 45.105 explains how the Government monitors and enforces contractor compliance with a property management system when Government property is involved. It covers the agency’s duty to analyze the contractor’s property management policies, procedures, practices, and systems; how often that analysis must occur; the property administrator’s obligation to notify the contractor in writing when the system does not meet contractual requirements; the requirement to request prompt correction and a contractor corrective action plan with a schedule; and the contracting officer’s role if deficiencies are not corrected. It also addresses the consequences of continued noncompliance, including possible revocation of the Government’s assumption of risk for loss of Government property and other available rights or remedies. Finally, it explains how the property administrator determines whether a reported loss is a Government-assumed risk and, depending on that determination, either grants relief of stewardship responsibility and liability or asks the contracting officer to hold the contractor responsible and liable. In practice, this section is the enforcement bridge between property administration reviews and the legal consequences that follow when a contractor’s property system is weak or when Government property is lost.
Key Rules
Periodic system analysis required
The agency responsible for contract administration must analyze the contractor’s property management policies, procedures, practices, and systems. The review must be performed as often as conditions warrant, following agency procedures, so the frequency depends on risk, performance, and other relevant circumstances.
Written notice of deficiencies
If the property management system does not comply with contractual requirements, the property administrator must notify the contractor in writing. The notice must ask for prompt correction of the deficiencies and require a corrective action plan that includes a schedule for fixing them.
Escalation for missed corrections
If the contractor does not correct the deficiencies according to the agreed schedule, the contracting officer must send written notice that failure to take the required corrective actions may lead to revocation of the Government’s assumption of risk for loss of Government property and/or other available rights or remedies.
Final notice before remedies
If the contractor still does not act after the contracting officer’s notice, the contracting officer must issue written notice of any Government decision to apply the stated remedies. This makes the enforcement action explicit before the Government relies on those remedies.
Government assumption of risk decision
When a reported loss is determined to be a risk assumed by the Government, the property administrator must notify the contractor in writing that stewardship responsibility and liability are relieved under the applicable property clause. If the loss is not a Government-assumed risk, the property administrator must request that the contracting officer hold the contractor responsible and liable.
Responsibilities
Agency responsible for contract administration
Conduct analyses of the contractor’s property management policies, procedures, practices, and systems as frequently as conditions warrant, using agency procedures to determine the timing and scope of reviews.
Property Administrator
Review the contractor’s property management system for compliance; issue written notice of noncompliance; request prompt correction and a corrective action plan with a schedule; determine whether a reported loss is a Government-assumed risk; and either grant relief of stewardship responsibility and liability or request that the contracting officer hold the contractor responsible and liable.
Contractor
Correct identified property management system deficiencies promptly; submit a corrective action plan with a schedule for correction; and implement the corrective actions within the agreed timeframe to avoid escalation and potential remedies.
Contracting Officer
If deficiencies are not corrected, notify the contractor in writing of possible remedies; if the contractor still fails to act, notify the contractor in writing of any Government decision to apply those remedies; and, when requested by the property administrator, hold the contractor responsible and liable for losses not assumed by the Government.
Practical Implications
This section gives the Government a step-by-step enforcement process, so contractors should treat property system findings as time-sensitive and document every corrective action.
A common pitfall is assuming that a verbal discussion or informal email is enough; the rule requires written notices and a written corrective action plan with a schedule.
Contractors should distinguish between fixing the underlying system deficiency and addressing a specific loss event, because the Government may still decide whether the loss is a risk it assumed.
For contracting officers, the key practical issue is escalation: if the contractor misses the correction schedule, the CO must be ready to issue the required written notice and consider remedies.
For both sides, the quality of the property management system matters because repeated deficiencies can affect risk allocation, liability for loss, and the Government’s willingness to continue assuming stewardship risk.
Official Regulatory Text
(a) The agency responsible for contract administration shall conduct an analysis of the contractor’s property management policies, procedures, practices, and systems. This analysis shall be accomplished as frequently as conditions warrant, in accordance with agency procedures. (b) The property administrator shall notify the contractor in writing when the contractor's property management system does not comply with contractual requirements, shall request prompt correction of deficiencies, and shall request from the contractor a corrective action plan, including a schedule for correction of the deficiencies. If the contractor does not correct the deficiencies in accordance with the schedule, the contracting officer shall notify the contractor, in writing, that failure to take the required corrective action(s) may result in- (1) Revocation of the Government’s assumption of risk for loss of Government property; and/or (2) The exercise of other rights or remedies available to the contracting officer. (c) If the contractor fails to take the required corrective action(s) in response to the notification provided by the contracting officer in accordance with paragraph (b) of this section, the contracting officer shall notify the contractor in writing of any Government decision to apply the remedies described in paragraphs (b)(1) and (b)(2) of this section. (d) When the property administrator determines that a reported case of loss of Government property is a risk assumed by the Government, the property administrator shall notify the contractor in writing that it is granted relief of stewardship responsibility and liability in accordance with 52.245-1 (f)(1)(vii). Where the property administrator determines that the risk of loss of Government property is not assumed by the Government, the property administrator shall request that the contracting officer hold the contractor responsible and liable.