FAR 45.6—Subpart 45.6

Scope of subpart.

FAR 45.600 defines the scope of Subpart 45.6 and tells contracting personnel and contractors when its inventory-disposition rules apply. It covers policies and procedures for reporting, reutilization, and disposal of contractor inventory that is excess to contract needs, as well as property that supports a claim against the Government, including termination inventory under fixed-price contracts. In practice, this means the subpart governs how contractors identify and report excess property, how the Government may direct reutilization or disposal, and how claim-related property is handled when a contract ends or is terminated. The section also draws important boundaries: it does not apply to real property, and it does not apply to property where the Government’s lien or title exists only because of advance, progress, or performance-based payments that have already been liquidated. This scope statement is important because it prevents misuse of the subpart and helps parties determine whether property must be managed under these rules or under some other FAR, contract, or property-disposition framework.

[Reserved]

Reutilization of Government property.

FAR 45.602 addresses what happens when Government property is no longer needed for continued performance of a Government contract. It covers reutilization of that property, including transfer and donation, and sets the basic framework for deciding whether excess property should be kept in use on another contract, moved to another Government purpose, or otherwise disposed of. The section is important because it helps the Government avoid unnecessary purchases, reduce waste, and recover value from property already in its possession. It also clarifies the scope of the rule by excluding scrap from most of the section, except for scrap aircraft parts under 45.602-1. In practice, this section is the starting point for determining whether contractor-held Government property can be reassigned, transferred, or donated instead of being treated as surplus or disposed of immediately. It matters to both contracting officers and contractors because it affects property accountability, contract closeout, and the timing and method of disposition decisions.

Abandonment or destruction of personal property.

FAR 45.603 explains when contractor inventory that has not been successfully reused, transferred, or otherwise screened may be abandoned, destroyed, or donated instead of sold or retained. It covers the conditions for direct destruction, abandonment of non-sensitive and sensitive property at the contractor’s or subcontractor’s premises, and the higher-level approval required for abandonment or destruction of other contractor inventory. The section also addresses when property may be donated to public bodies in lieu of abandonment or destruction, and it ties these actions to the Federal Management Regulation (FMR) procedures for public notice and disposal of excess personal property. In practice, this rule is about avoiding unnecessary storage, handling, and sale costs when property has no realistic value or use, while still protecting public health, safeguarding sensitive items, and ensuring proper oversight. Contractors and plant clearance officials must use it carefully because the authority is limited, approval thresholds matter, and public notice requirements can apply unless a specific FMR exception exists.

Sale of surplus personal property.

Inventory disposal reports.

FAR 45.605 explains what happens after government property has been disposed of under an inventory disposal schedule. It requires the plant clearance officer to promptly prepare Standard Form 1424, Inventory Disposal Report, once the property has been disposed of and any related proceeds have been credited. The report must capture important post-schedule information, including any property that is lost or otherwise unaccounted for and any changes in quantity or value that the contractor made after submitting the original inventory disposal schedule. The section also specifies where the report must go: to the administrative contracting officer, or to the termination contracting officer when the disposal involves termination inventory, with a copy to the property administrator. In practice, this section creates the formal record of disposal results, supports accountability for government property, and helps the Government track discrepancies, proceeds, and contractor changes that occurred after the initial schedule was submitted.

Contractor scrap procedures.

FAR 45.606 addresses how contractors and the Government should handle scrap generated under a contract, with a focus on disposal procedures, segregation and special handling of certain scrap streams, and the Government’s ability to abandon removed parts in some maintenance and repair situations. The section is aimed at making scrap disposition efficient, properly controlled, and fully documented in the contractor’s property management procedures. It also recognizes that not all scrap is the same: some scrap may be sensitive, hazardous, contaminated, classified, controlled, valuable because of precious or strategic metals, or dangerous to public health or safety, and those conditions may require separate processing, segregation, or reporting. Finally, it clarifies that unless the contract says otherwise, the Government may abandon parts removed and replaced during normal maintenance or during repair, maintenance, overhaul, or modification work. In practice, this section helps property administrators and plant clearance officers decide how scrap should be managed, what controls are needed, and when special disposition rules apply.