FAR 45.604-3—Proceeds from sales of surplus property.
Plain-English Summary
FAR 45.604-3 addresses what happens to money received from the sale of surplus government property. Its core topic is the disposition of sale proceeds: by default, those proceeds must be deposited into the Treasury of the United States as miscellaneous receipts. The section also identifies the limited exceptions to that default rule, including when another statute authorizes a different treatment or when the contract or a subcontract specifically allows the proceeds to be credited to the price or cost of the work. In practical terms, this rule prevents contractors or agencies from treating sale proceeds as available operating funds unless there is clear legal authority to do so. It matters because improper handling of sale proceeds can create fiscal law violations, audit findings, and contract administration problems. The section is short, but it is important because it ties surplus property disposal to federal money-handling rules and the statutory authorities in 40 U.S.C. 571 and 574.
Key Rules
Default to Treasury receipts
Proceeds from any sale of surplus property must be credited to the Treasury of the United States as miscellaneous receipts. This is the normal rule unless a valid exception applies.
Statutory exceptions allowed
If another statute specifically authorizes a different disposition of the proceeds, that statutory authority controls. The default miscellaneous receipts rule does not apply where Congress has provided a different treatment.
Contract-based crediting permitted
A contract may authorize sale proceeds to be credited to the price or cost of the work, and a subcontract may do the same if it contains that authorization. This is an exception to Treasury deposit, but only when the contract language clearly permits it.
No implied authority
The section does not allow proceeds to be retained, offset, or reused unless there is express authority in statute, the contract, or the subcontract. Silence or general property-management authority is not enough.
Applies to surplus property sales
The rule is triggered by proceeds from the sale of surplus property, meaning property no longer needed for the Government’s purposes and disposed of through sale. The key issue is the handling of the money received, not the mechanics of the sale itself.
Responsibilities
Contracting Officer
Ensure the contract clearly states whether sale proceeds may be credited to the price or cost of the work. Verify that any nonstandard treatment of proceeds is supported by statute or contract authority and is consistent with fiscal law requirements.
Contractor
Follow the contract terms governing disposition of sale proceeds and do not retain or apply proceeds unless expressly authorized. If the contract is silent, treat the proceeds as payable to the Treasury through the proper Government process.
Subcontractor
Comply with any subcontract clause that authorizes proceeds to be credited to the price or cost of the work. Do not assume authority to keep or apply proceeds unless the subcontract expressly provides for it.
Agency Property/Contract Administration Personnel
Coordinate the sale of surplus property and ensure proceeds are handled in accordance with the governing authority. Route proceeds to the Treasury as miscellaneous receipts unless a valid exception applies.
Treasury of the United States
Receive sale proceeds as miscellaneous receipts when no statutory or contractual exception authorizes another disposition.
Practical Implications
The default outcome is deposit to miscellaneous receipts, so contractors should not assume they can offset costs with sale proceeds.
If a contract intends proceeds to reduce the price or cost of work, that authority should be explicit; vague language can create disputes and audit issues.
This rule is a common fiscal-law trap: using proceeds without authority can be treated as improper augmentation of appropriations or unauthorized retention of Government funds.
Contracting officers should confirm that any exception is grounded in statute or clearly written into the contract or subcontract before the sale occurs.
Parties should document the authority for the chosen disposition of proceeds and keep records showing how the proceeds were handled.
Official Regulatory Text
Proceeds of any sale are to be credited to the Treasury of the United States as miscellaneous receipts, unless otherwise authorized by statute or the contract or any subcontract thereunder authorizes the proceeds to be credited to the price or cost of the work ( 40 U.S.C. 571 and 574 ).