FAR 52.247-66—Returnable Cylinders.
Plain-English Summary
FAR 52.247-66, Returnable Cylinders, governs the use, custody, rental, loss, damage, and return of contractor-owned cylinders that are loaned to the Government for delivery of compressed gases or similar contents. The clause defines what counts as a "cylinder," establishes that the cylinders remain the contractor’s property, and sets the loan period during which the Government may use them without charge. It also explains when rental begins if cylinders are not returned on time, how rental is calculated by cylinder type, size, capacity, and delivery point, and the cap that rental cannot exceed the cylinder’s replacement value. The clause further addresses what happens if a cylinder is lost or damaged beyond repair, including payment of replacement value, transfer of ownership to the Government, and the possibility of returning a cylinder later found after payment. In practice, this clause allocates risk and cost between the contractor and the Government, creates a tracking and accountability framework for returnable containers, and gives contracting officers the pricing terms needed to evaluate offers and administer cylinder returns accurately.
Key Rules
Defines covered cylinders
The clause applies to pressure vessels designed for pressures higher than 40 psia with a circular cross section, but excludes portable tanks, multi-tank car tanks, cargo tanks, and tank cars. This definition limits the clause to returnable cylinders and avoids confusion with other container types.
Contractor retains ownership
Returnable cylinders remain the contractor’s property and are only loaned to the Government. The Government receives temporary use rights, not title, unless a cylinder is lost or damaged beyond repair and the replacement-value provisions apply.
Free loan period applies first
The Government may use the cylinders without charge for the stated loan period, which the contracting officer must insert in the clause. The loan period starts on the day of delivery to the FOB point specified in the contract.
Late returns trigger rental
If cylinders are not returned within the loan period, daily rental begins the first day after the loan period ends and continues until the cylinders are returned to the contractor or made available to the contractor’s designated carrier, depending on whether the original delivery was FOB origin or FOB destination.
Rental is priced by cylinder category
Rental is paid at the dollar amount inserted by the contracting officer and is computed separately for cylinders by type, size, capacity, and each delivery point named in the contract. This means the contract should clearly identify the applicable rental rate structure for each cylinder class.
Rental cannot exceed replacement value
No rental may accrue beyond the replacement value of the cylinder specified in paragraph (c). This prevents rental charges from exceeding the amount the contractor would receive if the cylinder were lost or destroyed.
Loss or irreparable damage requires payment
If a cylinder is lost or damaged beyond repair while in the Government’s possession, the Government must pay the replacement value less allocable rental already paid for that cylinder. The listed cylinders then become Government property.
Recovered cylinders may be returned
If a cylinder reported lost is found within the stated number of calendar days after payment, the Government may return it to the contractor. In that case, the contractor must refund the replacement value less rental computed from the end of the loan period through the date the cylinder was delivered back to the contractor.
Responsibilities
Contracting Officer
Insert the loan period, rental rate, replacement values, and recovery period into the clause based on the solicitation and award. Ensure the contract identifies cylinder types, sizes, capacities, and delivery points so rental and replacement-value calculations can be administered correctly.
Contractor
Provide returnable cylinders as contractor-owned property, track them by type and delivery point, and bill rental only as allowed by the clause. Accept returned cylinders, calculate rental and replacement-value charges correctly, and refund or adjust amounts if a cylinder previously paid for as lost is later recovered and returned.
Government/Receiving Activity
Use the cylinders during the free loan period, return them on time, and protect them while in Government possession. If a cylinder is lost or damaged beyond repair, pay the required replacement value less allocable rental, and if a lost cylinder is later found within the stated period, make it available for return and recover the appropriate refund from the contractor.
Designated Carrier
Receive cylinders when the contract uses FOB destination and the cylinders are made available for return. The carrier’s availability date matters because rental continues until the cylinders are delivered or made available to the contractor’s designated carrier.
Practical Implications
Contractors need strong cylinder tracking systems because rental, loss, and replacement-value calculations depend on exact cylinder type, size, capacity, delivery point, and return date. Missing records can lead to billing disputes or under-recovery.
The contracting officer must fill in all blanks carefully; if the loan period, rental rate, replacement values, or recovery period are left vague, the clause becomes hard to administer and may create avoidable disputes.
The FOB term matters operationally because it changes when rental stops: under FOB origin, rental ends when the cylinders are delivered back to the contractor; under FOB destination, it ends when they are delivered or made available to the contractor’s designated carrier.
The replacement-value cap on rental means contractors cannot continue charging daily rental indefinitely once the cap is reached, so they should monitor aging cylinders and pursue loss claims promptly when appropriate.
A cylinder reported lost is not necessarily gone forever; if it is recovered within the stated period, the parties must unwind the loss payment using the clause’s refund formula, which makes timely notice and documentation essential.
Official Regulatory Text
As prescribed in 47.305-17 , insert the following clause: Returnable Cylinders (May 1994) (a) Cylinder, referred to in this clause, is a pressure vessel designed for pressures higher than 40 psia and having a circular cross section excluding a portable tank, multi-tank car tank, cargo tank or tank car. (b) Returnable cylinders shall remain the Contractor’s property but shall be loaned without charge to the Government for a period of ____ days [ Contracting Officer shall insert number of days ] (hereafter referred to as loan period) following the day of delivery to the f.o.b. point specified in the contract. Any cylinder not returned within the loan period shall be charged a daily rental beginning with the firstday after the loan period expires, to and including the day the cylinders are delivered to the Contractor (if the original delivery was f.o.b. origin) or are delivered or made available for delivery to the Contractor’s designated carrier (if the original delivery was f.o.b. destination). The Government shall pay the Contractor a rental of $ ____________ [ Contracting Officer shall insert dollar amount for rental, after evaluation of offers ] per cylinder, perday, computed separately for cylinders by type, size, and capacity and for each point of delivery named in the contract. No rental shall accrue to the Contractor in excess of replacement value per cylinder specified in paragraph (c) of this clause. (c) For each cylinder lost or damaged beyond repair while in the Government’s possession, the Government shall pay to the Contractor the replacement value, less the allocable rental paid for that cylinder as follows: ________________________________________________ ________________________________________________ ________________________________________________ [ Contracting Officer shall insert the cylinder types, sizes, capacities, and associated replacement values .] These cylinders shall become Government property. (d) If any lost cylinder is located within ___________ [ Contracting Officer shall insert number of days ] calendar days after payment by the Government, it may be returned to the Contractor by the Government, and the Contractor shall pay to the Government an amount equal to the replacement value, less rental computed in accordance with paragraph (b) of this clause, beginning at the expiration of the loan period specified in paragraph (b) of this clause, and continuing to the date on which the cylinder was delivered to the Contractor. (End of clause)