FAR 45.301—Use and rental.
Plain-English Summary
FAR 45.301 explains when Government property may be used by a contractor and when rent must be charged. It covers the baseline rule that Government property is normally provided rent-free for performance of the contract under which it is accountable, plus the exceptions for rental or other consideration when the property is used on other contracts or for commercial purposes. It also addresses special treatment for property left in place or installed on contractor-owned property for mobilization or future Government production, and it distinguishes between Government and non-Government use of that property. In addition, the section gives contracting officers authority to approve rent-free use by nonprofit organizations for research, development, or educational work when the use is in the national interest, does not directly benefit a profit-making organization, and provides some direct benefit to the Government. Finally, it covers use of Government property under fixed-price contracts, cost-type Government contracts, and commercial use, including the requirement for fair rental or other adequate consideration and the need for Head of the Contracting Activity approval when non-Government use will exceed 25 percent of total use. In practice, this section is about protecting the Government’s property interests while allowing flexible, authorized use when it supports mission needs or produces adequate value in return.
Key Rules
Default rent-free use
Government property is normally provided without rent when used to perform the contract under which it is accountable or otherwise authorized. This is the baseline rule, and any departure from it must be supported by an applicable authorization or consideration.
Property left in place
Rental charges generally do not apply to Government property left in place or installed on contractor-owned property for mobilization or future Government production purposes. However, rent does apply to any portion of the property, or capacity of the property, used for non-Government commercial purposes or other authorized use.
Nonprofit research use
The cognizant contracting officer may authorize rent-free use of Government property by nonprofit organizations for research, development, or educational work. That authority applies only when the use is in the national interest, does not directly benefit a profit-making organization, and provides some direct benefit to the Government.
Fixed-price other-contract use
For fixed-price contracts other than the contract to which the property is accountable, the contractor may use Government property in exchange for consideration determined by the cognizant contracting officer. If the contractor requests the use after award, the contracting officer must obtain fair rental or other adequate consideration if the use is approved.
Cost-type other-contract use
The cognizant contracting officer may authorize rent-free use of Government property on a cost-type Government contract other than the contract to which the property is accountable. This is a discretionary exception and must be affirmatively approved.
Commercial use and approval threshold
Government property may be used for commercial purposes in exchange for consideration determined by the cognizant contracting officer. If non-Government use is expected to exceed 25 percent of the total use of the Government and commercial work performed, prior approval of the Head of the Contracting Activity is required.
Responsibilities
Contracting Officer
Determine whether Government property use is authorized, whether rent-free use is permitted, and what consideration is required. For nonprofit use, verify the national interest, lack of direct benefit to a profit-making organization, and direct Government benefit. For post-award requests, obtain fair rental or other adequate consideration when approving use, and seek Head of the Contracting Activity approval when non-Government use will exceed the 25 percent threshold.
Cognizant Contracting Officer
Exercise the property-use approval authority for property in the Government’s possession or otherwise under the officer’s cognizance. Decide whether rent-free use, rental, or other consideration is appropriate for fixed-price, cost-type, nonprofit, or commercial uses, and ensure the terms protect the Government’s interests.
Contractor
Use Government property only as authorized and pay rent or provide other consideration when required. When requesting use after award, provide the information needed for the contracting officer to determine fair rental or adequate consideration, and track Government versus non-Government use so the 25 percent threshold is not exceeded without approval.
Nonprofit Organization
Use Government property only for approved research, development, or educational work and only when the use meets the national-interest and Government-benefit conditions. Ensure the property is not used for the direct benefit of a profit-making organization.
Head of the Contracting Activity
Provide prior approval when expected non-Government use of Government property will exceed 25 percent of the total use of Government and commercial work performed.
Practical Implications
Contractors should not assume Government property is automatically free to use on every contract; the default is rent-free only for the contract under which the property is accountable or otherwise authorized.
When property is used across contracts or for commercial work, the contractor should expect rental charges or other consideration unless a specific exception applies.
The 25 percent non-Government use threshold is a key compliance trigger; failing to obtain prior HCA approval can create audit findings, billing issues, or property administration problems.
Nonprofit rent-free use is narrow and fact-specific, so contracting officers should document the national-interest determination, the Government benefit, and the absence of direct benefit to a profit-making organization.
Post-award requests for Government property use require careful pricing of fair rental or other adequate consideration, so both parties should document the basis for the approved value and the scope of permitted use.
Official Regulatory Text
This subpart prescribes policies and procedures for contractor use and rental of Government property. (a) Government property shall normally be provided on a rent-free basis in performance of the contract under which it is accountable or otherwise authorized. (b) Rental charges, to the extent authorized do not apply to Government property that is left in place or installed on contractor-owned property for mobilization or future Government production purposes; however, rental charges shall apply to that portion of property or its capacity used for non-government commercial purposes or otherwise authorized for use. (c) The contracting officer cognizant of the Government property may authorize the rent-free use of property in the possession of nonprofit organizations when used for research, development, or educational work and- (1) The use of the property is in the national interest; (2) The property will not be used for the direct benefit of a profit-making organization; and (3) The Government receives some direct benefit, such as rights to use the results of the work without charge, from its use. (d) In exchange for consideration as determined by the cognizant contracting officer(s), the contractor may use Government property under fixed-price contracts other than the contract to which it is accountable. When, after contract award, a contractor requests the use of Government property, the contracting officer shall obtain a fair rental or other adequate consideration if use is authorized. (e) The cognizant contracting officer(s) may authorize the use of Government property on a rent-free basis on a cost type Government contract other than the contract to which it is accountable. (f) In exchange for consideration as determined by the cognizant contracting officer, the contractor may use Government property for commercial use. Prior approval of the Head of the Contracting Activity is required where non-Government use is expected to exceed 25 percent of the total use of Government and commercial work performed.