[Code of Federal Regulations] [Title 48, Volume 1] [Revised as of October 1, 2002] From the U.S. Government Printing Office via GPO Access [CITE: 48CFR45] [Page 825-827] TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM CHAPTER 1--FEDERAL ACQUISITION REGULATION PART 45--GOVERNMENT PROPERTY--Table of Contents Subpart 45.5--Management of Government Property in the Possession of Contractors 45.505-3 Records of material. (a) General. All Government material furnished to the contractor, as well as other material to which title has passed to the Government by reason of allocation from contractor-owned stores or purchase by the contractor [[Page 826]] for direct charge to a Government contract or otherwise, shall be recorded in accordance with the contractor's property control system and the requirements of this section. (b) Consolidated stock record. When a contractor has more than one Government contract under which Government material is provided, a consolidated record for materials may be authorized by the property administrator, provided, the total quantity of any item is allocated to each contract by contract number and each requisition of material from contractor-owned stores is charged to the contract on which the material is to be used. The supporting document or issue slip shall show the contract number or equivalent code designation to which the issue is charged. (c) Custodial records. The contractor shall maintain custodial records for tool crib items, guard force items, protective clothing, and other items issued to individuals for use in their work. (d) Use of receipt and issue documents. (Note: This paragraph (d) does not apply to nonprofit organizations.) The property administrator may authorize the contractor to maintain, in lieu of stock records, a file of appropriately cross-referenced documents evidencing receipt, issue, and use of Government-provided material that is issued for immediate consumption and is not entered in the inventory record as a matter of sound business practice. This method of control may be authorized for-- (1) Material charged through overhead; (2) Material under research and development contracts; (3) Subcontracted or outside production items; (4) Nonstock or special items; (5) Items that are produced for direct charge to a contract, or are acquired and issued for installation upon receipt, and involve no spoilage; and (6) Items issued from contractor-owned inventory direct to production or maintenance, etc. (e) Material issued directly upon receipt. (Note: This paragraph (e) applies only to nonprofit organizations.) (1) Under fixed-price contracts, the contractor's documents evidencing receipt and issue will be accepted as property control records for Government-furnished material issued directly by the contractor upon receipt so as to be considered consumed under the contract. (2) Under cost-reimbursement contracts, Government invoices, contractor's purchase documents, or other evidence of acquisition and issue will be accepted as adequate property records for material furnished to or acquired by the contractor and issued directly so as to be considered consumed under the contract. (f) Multicontract cost and material control. (Note: This paragraph (f) does not apply to nonprofit organizations.) (1) Description and scope. A multicontract cost and material control system substitutes a system of financial accounting for the requirements for physical identification of Government material. The system operates as follows: (i) The contractor may acquire, requisition, receive, store, and issue like items of material for the total requirements of all contracts involved in the system without identifying the material to each contract. (ii) The contractor may commingle, during any stage of contract performance, Government-owned and contractor-owned material and work-in- process that was furnished, acquired, or produced for all Government contracts covered by the system, without physical segregation or identification to the individual contracts. (iii) In lieu of physical segregation and identification to individual contracts, periodic calculation of requirements and distribution of costs to all contracts permits the allocation of costs of material to products delivered. This system, by reflecting the material expended to perform each contract at any stage in production, permits usage analysis to determine the reasonableness of consumption and expenditure of Government material. (iv) The system may include all Government contracts of any type that involve common repetitive operations. (v) The system does not require commingling of all common materials under all contracts. For example, items [[Page 827]] of Government-furnished material of high value or in short supply may be excluded from commingling and reserved for use in performing the contract under which furnished. (vi) The contractor shall take physical inventories of material in stores included in the systems (other than work-in-process) at least annually, extend and reconcile prices to the quantitative balance for each item, and record adjustments in the stock record and financial inventory control accounts. Such physical inventories and adjustments, as well as equitable distribution to cost accounts of any inventory losses, shall be reviewed by and are subject to the approval of the property administrator. (2) Criteria. A multicontract cost and material control system may be authorized if-- (i) The contractor demonstrates that adopting the system will result in savings or improved operations or that it will otherwise be in the Government's interest; (ii) The system is applied to existing Government contracts only and excludes materials acquired or costs incurred for non-Government work or in anticipation of future Government work; and (iii) The contractor's accounting system is adequate to-- (A) Provide on a complete and timely basis a clear audit trail from costs of materials acquired for each contract to materials used or disposed of on each contract; (B) Reflect separately for Government-furnished and contractor- acquired material in stores (except work-in-process) the inventory balances as affected by receipts, issues, adjustments, and other dispositions; (C) Determine unit costs for each identifiable part, component, subassembly, assembly, end item, and contract item; (D) Calculate amounts for cost reimbursements and progress payments during the life of the contract by applying or allocating such unit costs developed through each stage of work-in-process to contract items for the requirements of each contract; and (E) Assure that when Government material furnished for use under one contract is authorized for use on another contract, the initial contract receives credit. (3) Authorization. The administrative contracting officer may authorize a contractor who is performing or will perform more than one Government contract to use the multicontract cost and material control system. The property administrator shall approve whatever detailed operating procedures are necessary for each system authorized. (4) Requirement. Whenever a multicontract cost and material control system is authorized, the contractor's financial accounts shall include all material in the system acquired or furnished for Government work and shall satisfy the requirements in subdivision (f)(2)(iii) of 45.505-3 above.