FAR 45.106—Transferring accountability.
Plain-English Summary
FAR 45.106 addresses when and how Government property may be moved from one contract to another, and what happens to that property after the transfer. It covers the threshold requirement that the gaining contract must have a firm need for the property, the need to document the transfer through contract modifications to both the losing and gaining contracts, the change in property status once transferred, and the special rule that certain Government-furnished property warranties do not apply when contractor-acquired property is later transferred to another contract with the same contractor. In practice, this section is meant to prevent casual or unsupported shifting of property between contracts, protect the Government’s accountability records, and ensure the receiving contract has a legitimate requirement for the asset. It also clarifies that once property is transferred, it is treated as Government-furnished property for the gaining contract, which affects administration, accountability, and risk allocation. For contractors and contracting officers, the section is important because it controls how property is reallocated, how records must be updated, and whether warranty protections apply after transfer.
Key Rules
Transfer only for firm need
Government property may be transferred from one contract to another only when the gaining contract has a firm requirement for the property. The transfer must be tied to an actual contractual need, not convenience or inventory balancing.
Document both contracts
Each transfer must be recorded by modifications to both the losing contract and the gaining contract. This ensures the official contract files and property records match the new accountability arrangement.
Property becomes GFP
After transfer, the property is treated as Government-furnished property for the gaining contract. That status change affects how the property is administered, tracked, and accounted for under the receiving contract.
Warranty limits on transferred CAP
If the property was originally contractor-acquired property or contractor-fabricated property and is later transferred to another contract with the same contractor, the usual warranties of suitability for use and timely delivery of Government-furnished property do not apply.
Follow 45.102
The transfer decision must be consistent with the broader Government property policy in FAR 45.102. That means the transfer should support proper management of Government property and not bypass normal acquisition or furnishing decisions.
Responsibilities
Contracting Officer
Verify that the gaining contract has a firm requirement for the property, approve and execute the necessary contract modifications, and ensure the transfer is properly reflected in the contract file and property records.
Contractor
Request or support the transfer only when there is a legitimate contract need, provide accurate property information, and update internal property accountability records to match the modified contracts.
Property Administrator
Help ensure the transfer is properly documented, that accountability is continuous, and that the property records align with the revised contract status and location.
Agency
Maintain controls that prevent unsupported transfers, preserve auditability of Government property, and ensure property management systems reflect the transfer accurately.
Practical Implications
A transfer is not just a bookkeeping move; it requires a real need under the receiving contract. If the requirement is not firm, the transfer can be challenged as improper.
Both contracts must be modified. A common pitfall is updating only one side, which leaves the Government’s records inconsistent and can create audit or property accountability problems.
Once transferred, the property changes status to GFP for the gaining contract. Contractors should adjust their property management, usage controls, and reporting accordingly.
Do not assume GFP warranties carry over when contractor-acquired or contractor-fabricated property is moved to another contract with the same contractor. That warranty protection is specifically excluded.
This section is especially important when the same item is being reused across multiple efforts, because the legal basis for possession and the applicable risk allocation can change depending on how the property was originally acquired and how it is transferred.
Official Regulatory Text
Government property shall be transferred from one contract to another only when firm requirements exist under the gaining contract (see 45.102 ). Such transfers shall be documented by modifications to both gaining and losing contracts. Once transferred, all property shall be considered Government-furnished property to the gaining contract. The warranties of suitability of use and timely delivery of Government-furnished property do not apply to property acquired or fabricated by the contractor as contractor-acquired property that is subsequently transferred to another contract with the same contractor.