GFE, CFE, or Mine? Who owns the equipment?
Recently I was asked a question some of us often take for granted. Is the equipment mine or the government? In this case, turns out the equipment was the government’s and became so because how it was purchased. But let’s not get ahead of ourselves.
What is GFE? What is CFE? At the end of the day these are broad terms the are used as a baseline of understanding. We can throw shorthand around just to get the meaning across. The basis for these terms goes to Federal Acquisition Regulation 52.245-1 Government Property. The real terms are Government Furnished Property Contractor Acquired Property, but we’ll set those aside for now.
Bottom-line, the contract matters. What is defined in the contract and how was the equipment purchased? Some possibilities let’s say we’re talking about office equipment. Pens, pencils, or printer paper. Maybe even desks, printers, computers, or office equipment used to perform the work of the contract. This does not mean back-office support. I’m talking about the desks and chairs used by the DIRECT employees on the contract. Well, if the company purchase those pens and pencils and used their own budget, then those would have been paid out of overhead or G&A (general and administrative). Those would be owed by the contractor.
Let’s say we’re talking about computers or more specialized equipment that was bill to the government on contract. Typically, these would be associated with a Contract Line Item Number (CLIN) called Materials or possible Other Direct Costs (ODC). In either case, those items would be the property of the government unless specifically and rarely disposed to the contractor.
Final example, let’s say the contract was firm fixed price and my deliverable was a report. However, to complete the report I needed to buy all sorts of test equipment and other materials. All equipment and materials were paid from the funds received from the firm fixed price contract. Important note here, the deliverable is NOT the equipment but in this situation the report or document generated. In this situation, the equipment is owned by the contractor.
See, piece of cake! Just kidding, this is complicated. Several factors go into determining ownership of equipment. Best practices are to maintain strict expense segmentation and tracking of inventory. Remember, no matter how close your relationship with your government customer, that contract will eventually end, and the equipment will be turned over. If you haven’t kept an inventory, you are likely in violation of your contract terms and conditions, and in extreme situations theft. Be aware of the funding used to purchase the equipment in question and how it was billed, or if it was invoiced to the government.