FAR 45.401—Title to Government-furnished property.
Plain-English Summary
FAR 45.401 addresses a basic but important ownership rule for Government property in federal contracting: title remains with the Government for all Government-furnished property (GFP) until the property is properly disposed of under applicable law or regulation. It also clarifies that property the Government leases and then furnishes to a contractor for use is treated as GFP under the Government Property clause at FAR 52.245-1. In practice, this section establishes who owns the property, which affects custody, accountability, risk management, recordkeeping, maintenance, and disposal decisions. It helps prevent confusion over whether a contractor has acquired ownership simply by receiving, using, or holding Government property. The rule is especially significant for contractors managing equipment, tools, materials, or leased items provided by the Government, because title determines what can be sold, scrapped, transferred, or retained and who must follow the Government property clause requirements.
Key Rules
Government keeps title
The Government retains title to all Government-furnished property. Receipt, use, or possession by the contractor does not transfer ownership unless and until the property is properly disposed of under authorized procedures.
Disposal must be authorized
Title remains with the Government until the property is properly disposed of as authorized by law or regulation. Disposal is not a contractor decision; it must follow the applicable disposal authority and process.
Leased property counts as GFP
If the Government leases property and then furnishes it to the contractor for use, that property is treated as Government-furnished property. The contractor must manage it under FAR 52.245-1, Government Property.
Clause 52.245-1 applies
Leased property furnished to the contractor falls under the Government Property clause, which governs administration, accountability, use, maintenance, and disposition of Government property in contractor possession.
Responsibilities
Government / Agency
Retain title to Government-furnished property, ensure any disposal is properly authorized by law or regulation, and apply the Government Property clause to leased property furnished to contractors.
Contracting Officer
Ensure contracts correctly identify and administer Government-furnished property, including leased property furnished for contractor use, and make sure disposal actions follow the required legal and regulatory authority.
Contractor
Treat Government-furnished property as Government-owned, manage it in accordance with FAR 52.245-1 and contract terms, and avoid assuming ownership or disposing of the property without authorization.
Practical Implications
Contractors should never treat GFP as company property just because it is in their possession or used in performance; ownership stays with the Government unless properly disposed of.
Leased items furnished by the Government can create confusion, so contractors should verify whether equipment is GFP and apply the Government Property clause requirements accordingly.
Improper disposal is a common pitfall: scrapping, selling, cannibalizing, or transferring Government property without authorization can create compliance and liability issues.
Accurate property records matter because title remains with the Government, and contractors may need to account for location, condition, use, and disposition status.
Contracting officers and property administrators should ensure contract files and property systems clearly distinguish Government-owned, contractor-owned, and leased-but-furnished property to avoid disputes and audit findings.
Official Regulatory Text
The Government retains title to all Government-furnished property until properly disposed of, as authorized by law or regulation. Property that is leased by the Government and subsequently furnished to the contractor for use shall be considered Government-furnished property under the clause 52.245-1 , Government Property.