A subcontractor that receives Government property is taking on more than physical custody. The prime may need property records, inventories, loss reporting, access, preservation, and return support to satisfy its own federal obligations.
The risk grows when the subcontract incorporates the prime's property system without providing the procedures or property list needed to comply.
Start with the prime-contract property clause
FAR 52.245-1 establishes the Government property framework for covered contracts, including contractor property-management responsibilities and provisions addressing property provided to subcontractors. The exact risk allocation depends on the contract and the type and cause of loss.
Official source: FAR 52.245-1 — Government Property.
Build a property schedule
- Description, serial number, quantity, and condition at receipt.
- Who owns the property and who has title to replacements or fabricated items.
- Authorized location and permitted use.
- Maintenance, calibration, storage, and security duties.
- Inventory and recordkeeping format.
- Loss, damage, destruction, or theft reporting process.
- Return, disposition, shipping, and closeout responsibilities.
Check what happens when property causes delay
If Government-furnished equipment arrives late, is defective, or differs from the stated condition, the subcontract should explain the notice and adjustment path. Property obligations should therefore be read with changes, schedule, excusable-delay, and continue-performance clauses.
Flowdown can continue below your tier
If a subcontractor provides Government property to its own lower-tier supplier, it may need approval, records, and contractual controls that allow the prime to maintain accountability. Do not send Government property downstream under an ordinary commercial purchase order without checking the governing property requirements.