B-160086, NOV. 29, 1966

B-160086, NOV. 29, 1966

TO THE SECRETARY OF DEFENSE:

IN A LETTER OF SEPTEMBER 16, 1966, COLONEL REAGAN A. SCURLOCK, CHAIRMAN, ASPR COMMITTEE, REQUESTED OUR COMMENTS ON PROPOSED REVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) WHICH INCORPORATE INTO A NEW SECTION (XXVI) MATERIAL ON THE "DISPOSITION OF PERSONAL PROPERTY IN POSSESSION OF CONTRACTORS.' THE NEW SECTION IS SAID TO CONSIST OF MATERIAL FORMERLY CONTAINED IN PART 5, SECTION VIII OF ASPR,"DISPOSITION OF TERMINATION INVENTORY," AND OF EXISTING DEPARTMENTAL PROCEDURES. COLONEL SCURLOCK FURTHER STATES THAT THE PROPOSED NEW SECTION DOES NOT CONTAIN ANY SUBSTANTIVE CHANGE IN POLICY.

AS YOU KNOW, THE DISPOSITION OF SURPLUS PERSONAL PROPERTY, INCLUDING THE SALE OF CONTRACTOR-INVENTORY, IS SUBJECT TO THE PROVISIONS OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, 40 U.S.C. 471, ET. SEQ., WHICH PROVIDES IN PART:

"SECS. 484. DISPOSAL OF SURPLUS PROPERTY.

(A) SUPERVISION AND DIRECTION.

EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION, THE ADMINISTRATOR SHALL HAVE SUPERVISION AND DIRECTION OVER THE DISPOSITION OF SURPLUS PROPERTY. SUCH PROPERTY SHALL BE DISPOSED OF TO SUCH EXTENT, AT SUCH TIME, IN SUCH AREAS, BY SUCH AGENCIES, AT SUCH TERMS AND CONDITIONS, AND IN SUCH MANNER, AS MAY BE PRESCRIBED IN OR PURSUANT TO THIS CHAPTER, CHAPTER 11C OF TITLE 5, CHAPTER 4 OF TITLE 41, AND CHAPTER 11 OF TITLE 44.

(B) CARE AND HANDLING.

THE CARE AND HANDLING OF SURPLUS PROPERTY, PENDING ITS DISPOSITION, AND THE DISPOSAL OF SURPLUS PROPERTY, MAY BE PERFORMED BY THE GENERAL SERVICES ADMINISTRATION OR, WHEN SO DETERMINED BY THE ADMINISTRATOR, BY THE EXECUTIVE AGENCY IN POSSESSION THEREOF OR BY ANY OTHER EXECUTIVE AGENCY CONSENTING THERETO.

(E) BIDS FOR DISPOSAL; ADVERTISING; PROCEDURE; DISPOSAL BY NEGOTIATION; EXPLANATORY STATEMENT.

(1) ALL DISPOSALS OR CONTRACTS FOR DISPOSAL OF SURPLUS PROPERTY (OTHER THAN BY ABANDONMENT, DESTRUCTION, DONATION, OR THROUGH CONTRACT BROKERS) MADE OR AUTHORIZED BY THE ADMINISTRATOR SHALL BE MADE AFTER PUBLICLY ADVERTISING FOR BIDS, UNDER REGULATIONS PRESCRIBED BY THE ADMINISTRATOR, EXCEPT AS PROVIDED IN PARAGRAPHS (3) AND (5) OF THIS SUBSECTION.

(F) CONTRACTOR INVENTORIES.

SUBJECT TO REGULATIONS OF THE ADMINISTRATOR, ANY EXECUTIVE AGENCY MAY AUTHORIZE ANY CONTRACTOR WITH SUCH AGENCY OR SUBCONTRACTOR THEREUNDER TO RETAIN OR DISPOSE OF ANY CONTRACTOR INVENTORY.'

THE ADMINISTRATOR OF THE GENERAL SERVICES ADMINISTRATION (GSA) HAS ISSUED REGULATIONS REGARDING THE SALE OF PERSONAL PROPERTY, INCLUDING THAT IN THE POSSESSION OF CONTRACTORS. SEE SUBPART 1-8.5 OF THE FEDERAL PROCUREMENT REGULATIONS (FPR),"DISPOSITION OF TERMINATION INVENTORY," AND PART 101-45 OF THE FEDERAL PROPERTY MANAGEMENT REGULATIONS (FPMR),"SALE, ABANDONMENT, OR DESTRUCTION OF PERSONAL PROPERTY.' PARAGRAPH 1-8.507-1 OF THE FPR PROVIDES THAT THE SALE OF SUCH PROPERTY SHALL BE CONSISTENT WITH THE PROVISIONS OF PART 101-45 OF THE FPMR. SUBPARAGRAPH 101-45.105-3 OF THE FPMR PROVIDES:

"THE SALE BY GSA OF PROPERTY (EXCLUDING CONTRACTOR INVENTORY UNDER THE CONTROL OF THE DEPARTMENT OF DEFENSE) AS REQUIRED BY THIS PART 101 45 HAS BEEN DETERMINED AT THIS TIME TO BE ADVANTAGEOUS TO THE GOVERNMENT IN TERMS OF ECONOMY, EFFICIENCY, AND SERVICE WITH DUE REGARD TO THE PROGRAM ACTIVITIES OF THE AGENCIES CONCERNED. EXEMPTIONS FROM THE PROVISIONS OF THIS PART 101-45 MAY BE OBTAINED ONLY UNDER THE FOLLOWING CIRCUMSTANCES: *

WE HAVE BEEN INFORMALLY ADVISED THAT NO EXEMPTIONS FROM THE PROVISIONS OF FPMR 101-45 HAVE BEEN GRANTED TO THE DEPARTMENT OF DEFENSE (DOD), AND THAT THE PARENTHETIC COMMENT IN THE ABOVE QUOTED PROVISION WAS NOT INTENDED TO CONSTITUTE AN EXEMPTION FROM FPMR 101-45, BUT WAS ONLY INTENDED TO RECOGNIZE THAT DOD HAS BEEN AUTHORIZED BY THE ADMINISTRATOR OF GSA TO DISPOSE OF ITS OWN SURPLUS. WE HAVE ALSO BEEN INFORMALLY ADVISED THAT PROPOSED SECTION XXVI HAS NOT BEEN FORWARDED TO GSA FOR ITS CONSIDERATION AND COMMENTS. ON THE BASIS OF THIS INFORMATION, AND IN VIEW OF THE PROVISIONS OF SECTION 484 OF THE 1949 ACT, WE RECOMMEND THAT THE PROPOSED SECTION XXVI BE APPROVED BY GSA PRIOR TO PUBLICATION. IN THIS CONNECTION WE SUGGEST THAT PARTICULAR ATTENTION SHOULD BE GIVEN TO THE CONFORMITY OF PARAGRAPH 26-206 OF ASPR,"SALE OF SURPLUS CONTRACTOR INVENTORY," WITH PARAGRAPH 101-45.304 OF THE FPMR,"SALES METHODS AND PROCEDURES.'

WE NOTE THAT UNDER PROPOSED SUBPARAGRAPH 26-204.4, A CONTRACTOR WITH AN APPROVED SCRAP PROCEDURE MAY DISPOSE OF CERTAIN PROPERTY IN ACCORDANCE WITH THE APPROVED PROCEDURES AND WITHOUT FURTHER REGARD FOR OTHER PARAGRAPHS IN THE PROPOSED SECTION OF ASPR. HOWEVER, SUBPARAGRAPH 26- 404.4 DOES NOT IDENTIFY THE APPROVING AUTHORITY NOR THE METHOD OR CRITERIA UNDER WHICH A CONTRACTOR'S SCRAP PROCEDURE SHALL BE APPROVED. SPECIFICALLY, IT IS NOT CLEAR THAT APPROVAL OF SCRAP PROCEDURES WOULD BE GRANTED ONLY WHERE CONSISTENT WITH PARAGRAPH 26-206 OF ASPR, AND WITH SECTION 203 (E) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, 40 U.S.C. 484 (E). WE ALSO WISH TO POINT OUT WITH RESPECT TO PARAGRAPH 26-206 THAT THE CIRCUMSTANCES ENUMERATED IN SUBPARAGRAPH 26- 206.4 WHICH WOULD JUSTIFY SALES BY NEGOTIATION PROCEDURES APPEAR TO BE CONSIDERABLY BROADER THAN THE SPECIFIC EXCEPTIONS STATED IN SECTION 203 (E) (3), OF THE 1949 ACT, 40 U.S.C. 484 (E) (3). FURTHERMORE, PARAGRAPH 26-206.2 OF THE PROPOSED REGULATIONS DOES NOT APPEAR TO PROVIDE THAT SUBCONTRACTORS IN POSSESSION OF CONTRACTOR INVENTORY WOULD NORMALLY BE GIVEN AN OPPORTUNITY TO SUBMIT A BID OR OFFER FOR SUCH PROPERTY AS RECOMMENDED IN OUR LETTER TO YOU, B-156023, DATED JULY 2, 1965.

FINALLY, IT SHOULD BE NOTED THAT PARAGRAPH 26-208 PERMITS DESTRUCTION OR ABANDONMENT OF SURPLUS CONTRACTOR INVENTORY IN CIRCUMSTANCES OTHER THAN THOSE ENUMERATED IN SECTION 202 (H) OF THE ACT OF 1949, 40 U.S.C. 483 (H).

WE RECOMMEND THAT APPROPRIATE ACTION BE TAKEN TO ASSURE THAT THE ABOVE DISCUSSED PARAGRAPHS OF SECTION XXVI CONFORM WITH THE ACT OF 1949 AND WITH OUR SUGGESTIONS IN B-156023, SUPRA. WE APPRECIATE HAVING HAD THE OPPORTUNITY TO REVIEW THE PROPOSED SECTION OF THE REGULATION.