FAR 52.245-2—Government Property Installation Operation Services.
Plain-English Summary
FAR 52.245-2, Government Property—Installation Operation Services, is a specialized government property clause used when the Government furnishes property for installation operation services contracts. It covers the condition of furnished property, the contractor’s right to inspect it, the Government’s lack of warranty, and the contractor’s responsibility if property is lost or becomes unusable. It also addresses who pays for replacement property, who owns replacement property, how unserviceable and scrap property are handled, and when the standard Government Property clause still applies. In practice, this clause shifts significant risk to the contractor: the contractor accepts the property as-is, must keep performing even if property is lost, and must dispose of scrap at its own expense unless the Contracting Officer says otherwise. The clause is important because it defines the baseline allocation of risk and responsibility for Government-furnished property in this contract type and prevents disputes over condition, replacement, and disposal obligations.
Key Rules
Property Furnished As-Is
The Government property listed in the clause is provided in an "as-is, where is" condition. The Government makes no warranty that the property is suitable for the contractor’s intended use.
Inspection Opportunity Required
The contractor must be given the opportunity to inspect the Government property as identified in the solicitation. This allows the contractor to assess condition and risk before performance begins.
Contractor Replaces Lost Property
If Government property is lost or becomes unusable, the Government has no duty to repair or replace it. The contractor must replace it at its own expense and remains responsible for contract performance.
Replacement Title Vests in Contractor
Any replacement property acquired by the contractor becomes the contractor’s property. Even though the contractor owns the replacement item, it must still meet the contract’s performance requirements.
Scrap and Unserviceable Property
Unless the Contracting Officer decides otherwise, the Government abandons rights and title to unserviceable and scrap property resulting from performance. The contractor must remove and dispose of that property at its own expense after notifying the Contracting Officer.
Residual Property Rules Apply
Except as this clause specifically changes them, Government property furnished under the contract is governed by the contract’s standard Government Property clause. This clause therefore supplements, rather than fully replaces, the broader property management framework.
Responsibilities
Contracting Officer
Identify the Government property to be furnished in paragraph (e); provide or ensure the contractor has an opportunity to inspect the property as stated in the solicitation; decide whether to retain rights and title to unserviceable or scrap property instead of abandoning it; and administer the clause consistently with the contract’s broader Government Property requirements.
Contractor
Inspect the furnished property when given the opportunity; accept the property in its as-is, where-is condition; bear the cost of replacing any lost or unusable property; continue performing the contract despite loss or unusability; take title to replacement property it acquires; notify the Contracting Officer when unserviceable or scrap property results from performance; and remove and dispose of that property at its own expense unless directed otherwise.
Government
Furnish only the property listed in the clause; make no warranty as to suitability; bear no responsibility for repair or replacement of lost property; and, unless the Contracting Officer determines otherwise, abandon rights and title to unserviceable and scrap property resulting from performance.
Practical Implications
Contractors should treat listed Government property as a risk item, not a guaranteed asset, because the Government is not promising that it will work for the intended purpose.
Pre-award or pre-performance inspection is critical; if the contractor does not examine the property carefully, it may later bear the cost of defects, missing items, or unusable equipment.
If property is lost or fails, the contractor still has to perform the contract and pay for replacement, so contractors should plan for contingencies, insurance, and internal controls.
Scrap and unserviceable items can create disposal costs and logistics burdens; contractors should track them, notify the Contracting Officer promptly, and document disposition.
This clause does not stand alone—contractors and contracting officers must read it together with the contract’s standard Government Property clause to understand the full property-management regime.
Official Regulatory Text
As prescribed in 45.107 (b) , insert the following clause: Government Property Installation Operation Services (Apr 2012) (a) This Government Property listed in paragraph (e) of this clause is furnished to the Contractor in an "as-is, where is" condition. The Government makes no warranty regarding the suitability for use of the Government property specified in this contract. The Contractor shall be afforded the opportunity to inspect the Government property as specified in the solicitation. (b) The Government bears no responsibility for repair or replacement of any lost Government property. If any or all of the Government property is lost or becomes no longer usable, the Contractor shall be responsible for replacement of the property at Contractor expense. The Contractor shall have title to all replacement property and shall continue to be responsible for contract performance. (c) Unless the Contracting Officer determines otherwise, the Government abandons all rights and title to unserviceable and scrap property resulting from contract performance. Upon notification to the Contracting Officer, the Contractor shall remove such property from the Government premises and dispose of it at Contractor expense. (d) Except as provided in this clause, Government property furnished under this contract shall be governed by the Government Property clause of this contract. (e) Government property provided under this clause: _________________________________________________________________________________ (End of clause)