--- title: Introduction to Government Property for Government Contractors description: Explore government property complexities, DoD significance, key contract clauses, and mastering FAR for property management. image: https://info.redstonegci.com/hubfs/RGCI%20-%20Introduction%20to%20Government%20Property%20for%20Government%20Contractors.png --- [ PAY INVOICE](https://redstonegci.com/invoice-payment/) [Call Us Today 256-704-9800](tel:2567049800) [info@redstonegci.com](Mailto:info@redstonegci.com) [![Redstone_Logo](https://info.redstonegci.com/hubfs/redstone%20logo%20version%201%20-%20rgb-1.png)](https://www.redstonegci.com/) # Introduction to Government Property for Government Contractors [Posted by Jonas Clem on Wed, Sep 13, 2023 @ 11:09 AM](https://info.redstonegci.com/blog/author/jonas-clem) - [Tweet](https://twitter.com/share) ![RGCI - Introduction to Government Property for Government Contractors](https://info.redstonegci.com/hs-fs/hubfs/RGCI%20-%20Introduction%20to%20Government%20Property%20for%20Government%20Contractors.png?width=1000&name=RGCI%20-%20Introduction%20to%20Government%20Property%20for%20Government%20Contractors.png) We have discussed recently [how DoD has an increased interest in government property,](https://info.redstonegci.com/blog/is-the-dod-simplifying-government-property-clauses) especially the property that contractor’s control and maintain. RGCI has helped clients with government property issues more in the past four years than the previous ten years combined. ## Common Misunderstandings and the Importance of Contract Clauses We get this often from clients: “*DCMA just emailed me about auditing our government property system, and we didn’t even know we had anything considered government property.*” This is a problem and why we always need to know and understand the clauses inserted in our contracts. So, what is government property? It can be anything the government issues for use on a contract or anything a contractor buys for use or performance on a contract. The contract clauses and contract types determine the contractor’s responsibility for reporting, tracking, and maintaining that property. ## Navigating FAR: Key Sections and Their Implications on Government Property Instruction for government property is found in both [FAR Part 45](https://www.acquisition.gov/far/part-45) and [FAR Part 52](https://www.acquisition.gov/far/part-52) or [52.245-1](https://www.acquisition.gov/far/52.245-1). The difference is that Part 45 gives instruction to the government personnel - contracting officers, and property administrators, while 52.245-1 gives instruction to contractors. This is how [FAR 45.107(a)](https://www.acquisition.gov/far/45.107) gives instruction to contracting officers on when to insert the property clause for contractors – FAR 52.245-1. Since this is an “introduction,” we will concentrate on (1) and the subheadings. The solicitations and contracts mentioned in that section, and primarily in (i) and (ii), form the majority of the government property that contractors acquire. Notice the term “shall” in (1), which means it is imperative and mandatory for contracting officers to insert this clause. There are times when FAR clauses are optional for inclusion and are usually based on dollar thresholds. The contracting officer “may” include some clauses based on dollar thresholds. But in this situation, where “shall” is used, there is no other option, and it is mandatory that the clause (in this case, FAR 52.245-1) is inserted. What does all of this mean? It means we need to read AND understand our contracts and the clauses that are inserted. We should also be able to recognize any clauses that are missing. As an introduction to government property, the first and most important step is recognizing and understanding those clauses that relate to this business system. ## Building and Managing an Effective Property System FAR 52.245-1 outlines all requirements for an adequate government property management system. It is not the only clause that pertains to government property, but it is the main clause. There are two alternatives to this clause, but as this is an introduction, we will just address the main clause because it is the one that most contractors have to deal with. FAR 52.245-1 gives instruction to contractors on exactly what government property is, what is considered loss of this property, how the title of the property passes to the government, and then lists all the outcomes that a property management system must address. The outcomes or areas that your property management system must address are listed below: - **Acquisition** – how do we acquire government property? All possible areas must be covered, from obtaining property from a contract (government-furnished property - GFP) to buying property for use on a contract (contractor-acquired property – CAP). It is easy enough to issue a purchase order and buy CAP. But we also must cover how we acquire GFP. - **Receipt** – how do we receive property? And from above, receiving GFP would be different than receiving CAP. What if there are damaged items? What if items are missing from shipments? We must have a process in place to cover each scenario. - **Records** – the clause lists how we establish records for each piece of property. Those records must be updated and maintained throughout the life of that piece of property – from acquisition to closeout. - **Physical Inventory** – we must conduct a full physical inventory each year. That means we must use our established records to find and verify each piece of Government property we have. - **Subcontractor Control** – do our subs have government property? Have we issued them government property or allowed them to buy property for contract performance? If so, we must ensure each subcontractor has an adequate system. We must also ensure that the proper property clauses are flowed down to each sub. - **Reports** – there are certain reports that are required to be submitted to your property administrator and contracting officer. Reports of loss and/or damage, self-assessments, and inventory results are all required to be submitted. And there may be additional reports required by individual contracts – remember, we need to read and understand all contract clauses and language. - **Relief of Stewardship** – we must have a process to enable the “prompt recognition, investigation, disclosure and reporting of loss of Government property, including losses that occur at subcontractor or alternate site locations.” - **Utilization** – we can only use government property, whether GFP or CAP, for the contract it was acquired for. It is fine to use government property on other contracts, but only if we get written permission from our contracting officers, usually in the form of a contract modification. This outcome also covers consumption, movement, and storage of property. - **Maintenance** – we must maintain or calibrate all property in our possession if required. This can be changing the oil in a van or calibrating a piece of special tooling equipment. We must know the requirements on our property and keep records of each maintenance. - **Contract Closeout** – property is just one small part of contract closeout, but we must have a process in place to ensure all property is closed out and submitted back to the government if required. ## The Importance of Compliant Procedures in Audits Most of the outcomes listed above have several other sub-areas beneath them or areas of property management that must be addressed. Building a property management system takes time and education. The first place to start is your [policies and procedures for government property](https://info.redstonegci.com/blog/is-the-dod-simplifying-government-property-clauses). This will be the first thing DCMA requests when they begin a property audit – formally called a [Property Management System Analysis (PMSA)](https://redstonegci.com/consulting/dfars-business-systems/government-property-management-system/). Our property procedures should be compliant but not so detailed that they can’t be followed in everyday work scenarios. We see more contractors get dinged for having overly detailed procedures they are not following more than we see contractors who do not go into enough detail as to how they perform the required outcomes. Remember the old saying in dealing with audits - it’s better to have no procedures than to have procedures you are not following. Compliant procedures come first, and then we must deal with the requirements of conducting the annual physical inventory and the annual self-assessment or internal audit. All three are vital parts of your property management system. RGCI helps clients every day with [government property issues](https://redstonegci.com/consulting/dfars-business-systems/government-property-management-system/). Often, we get involved after a contractor has [failed or performed very poorly on the PMSA](https://info.redstonegci.com/blog/government-furnished-property-gotchas). If you have property issues or questions, get us involved before that PMSA occurs so we can help out with any issues. [![Learn More About Our Government Property Management System Compliance Services](https://no-cache.hubspot.com/cta/default/203971/interactive-168733436735.png) ](https://info.redstonegci.com/hs/cta/wi/redirect?encryptedPayload=AVxigLKr%2BGJsWfciuVx9cKIh2WiGQhDq3KqN3wNXFRddLYIv2jHNQBx8IS1FeEV1IugpR66v50Or2yOrVCxb%2BwC6gSCyUNDKE91ZbFybQ7F3RCOvqADPo7AOHmBmpOh3tX21Jyl10BS0if8KdwRnbNJg74uM8qjD5Lpa3w6x0Wx0LAtrQX0x1vXcxRYdy27%2FRnyz5MsgmCFhVNghpDzgZ4Gg0pGO9bwW1nmOm3wxdgOTTspRoM541E3fv%2BNxWSZF3CrISUo4yA%3D%3D&webInteractiveContentId=168733436735&portalId=203971) ### Written by [Jonas Clem](https://info.redstonegci.com/blog/author/jonas-clem) ![Jonas Clem](https://info.redstonegci.com/hubfs/images/Staff_/Jonas-Clem-Redstone-Government-Consulting.png) As Director of Compliance Consulting at Redstone Government Consulting, Jonas Clem leads our compliance team in helping government contractors navigate the complexities of federal compliance requirements. With deep expertise in DFARS business systems, cost proposal compliance, and government audits, Jonas provides strategic guidance to our clients facing DCAA and DCMA audits, ensuring compliance at every stage, from pre-audit preparation to post-audit resolution. Jonas is a recognized expert in government property management and purchasing system compliance, having successfully implemented and refined these systems for contractors of all sizes—each passing rigorous government audits. He also delivers targeted training programs, equipping clients with the knowledge needed to maintain compliance with DFARS business systems, FAR 31 cost principles, indirect rate strategies, and cost proposal requirements. With over 20 years of experience in the government contracting industry, Jonas has held senior leadership roles spanning program finance, contracts, accounting, and operations. A significant portion of his career was spent with a small business contractor that expanded into a $100M+ large business prime contractor, where he progressed through leadership positions to ultimately serve as Business Operations Manager for the NASA and Army Programs Division. Additionally, he has served as a Controller for a large NASA prime contractor, strengthening his expertise in financial management, compliance, and audit readiness. Jonas' comprehensive, hands-on experience across the government contracting lifecycle, including DoD and NASA contracts, makes him an invaluable resource to our clients. His proven expertise spans proposal development and pricing, indirect rate structuring, and DCAA/DCMA audit readiness. With an unparalleled blend of accounting, contracts, operations, and regulatory knowledge, Jonas delivers practical, results-driven compliance strategies that help our clients mitigate risk and succeed in today's highly regulated environment. ## About Redstone GCI Redstone GCI is a consulting firm focused on fulfilling the needs of government contractors in all areas of compliance. With a singular mission to help contractors through the multiple layers of “red tape,” we allow contractors to focus on what they do best – support their mission with the U.S. Government. We are home to a group of consultants made up of GovCon industry professionals, CPAs, attorneys, and retired government audit and acquisition professionals. Our focus and knowledge of audit and compliance functions administered by DCAA and DCMA will always be at the heart of what we do. However, for the past decade, we’ve strategically grown to support other areas of the government contractor back-office with that same level of focus and expertise. We’ve added expertise in contracts management, subcontract administration, proposal pricing, various software systems, HR and employment law, property administration, manufacturing, data analytics/reporting, Grant specialists, M&A, and many other areas. When we see a trend in the needs of contractors, we act to ensure we can provide the best expertise in the market to fulfill those needs. One thing our clients can be certain of is that with the Redstone GCI Team in your corner, there is no problem too big and no issue too technical for our team to tackle. Topics: [Contracts & Subcontracts Administration](https://info.redstonegci.com/blog/topic/contracts-subcontracts-administration), [DFARS Business Systems](https://info.redstonegci.com/blog/topic/dfars-business-systems), [Government Property Management](https://info.redstonegci.com/blog/topic/government-property-management) ### Search Posts This is a search field with an auto-suggest feature attached. - There are no suggestions because the search field is empty. ### Subscribe via E-mail ### Latest Posts ### Posts by category - [Accounting System Compliance (282)](https://info.redstonegci.com/blog/topic/accounting-system-compliance) - [Commercial Determination (34)](https://info.redstonegci.com/blog/topic/commercial-determination) - [Contractor Purchasing System Review (CPSR) (85)](https://info.redstonegci.com/blog/topic/contractor-purchasing-system-review-cpsr) - [Contracts & Subcontracts Administration (300)](https://info.redstonegci.com/blog/topic/contracts-subcontracts-administration) - [Cost Accounting Standards (CAS) (60)](https://info.redstonegci.com/blog/topic/cost-accounting-standards-cas) - [COVID-19 (23)](https://info.redstonegci.com/blog/topic/covid-19) - [Customer Success Story (2)](https://info.redstonegci.com/blog/topic/customer-success-story) - [Cybersecurity (28)](https://info.redstonegci.com/blog/topic/cybersecurity) - [DCAA Audit Support (249)](https://info.redstonegci.com/blog/topic/dcaa-audit-support) - [Defense Procurement & Acquisition Policy (DPAP) (7)](https://info.redstonegci.com/blog/topic/defense-procurement-acquisition-policy-dpap) - [Deltek Costpoint (54)](https://info.redstonegci.com/blog/topic/deltek-costpoint) - [DFARS Business Systems (179)](https://info.redstonegci.com/blog/topic/dfars-business-systems) - [DOD IG (10)](https://info.redstonegci.com/blog/topic/dod-ig) - [Employee & Contractor Compensation (22)](https://info.redstonegci.com/blog/topic/employee-contractor-compensation) - [Employers & Unions (8)](https://info.redstonegci.com/blog/topic/employers-unions) - [Estimating System Compliance (18)](https://info.redstonegci.com/blog/topic/estimating-system-compliance) - [Export & Import (19)](https://info.redstonegci.com/blog/topic/export-import) - [Federal Acquisition Regulation (FAR) (187)](https://info.redstonegci.com/blog/topic/federal-acquisition-regulation-far) - [Federal Construction Contracting (4)](https://info.redstonegci.com/blog/topic/federal-construction-contracting) - [Government Compliance Training (59)](https://info.redstonegci.com/blog/topic/government-compliance-training) - [Government Property Management (18)](https://info.redstonegci.com/blog/topic/government-property-management) - [Government Regulations (265)](https://info.redstonegci.com/blog/topic/government-regulations) - [Government Shutdown (9)](https://info.redstonegci.com/blog/topic/government-shutdown) - [Grants & Cooperative Agreements (2 CFR 200) (32)](https://info.redstonegci.com/blog/topic/grants-cooperative-agreements-2-cfr-200) - [Human Resources (118)](https://info.redstonegci.com/blog/topic/human-resources) - [Incurred Cost Proposal Submission (ICP/ICE) (83)](https://info.redstonegci.com/blog/topic/incurred-cost-proposal-submission-icp-ice) - [Litigation Consulting Support (17)](https://info.redstonegci.com/blog/topic/litigation-consulting-support) - [Manufacturing Operations Consulting (26)](https://info.redstonegci.com/blog/topic/manufacturing-operations-consulting) - [Material Management & Accounting System (MMAS) (23)](https://info.redstonegci.com/blog/topic/material-management-accounting-system-mmas) - [Non-US Government Contractor (3)](https://info.redstonegci.com/blog/topic/non-us-government-contractor) - [Office of Federal Contract Compliance Programs (31)](https://info.redstonegci.com/blog/topic/office-of-federal-contract-compliance-programs) - [Organizational Change Management Consulting (17)](https://info.redstonegci.com/blog/topic/organizational-change-management-consulting) - [Paycheck Protection Program (PPP) Loans (8)](https://info.redstonegci.com/blog/topic/paycheck-protection-program-ppp-loans) - [Program Management & Project Cost Control (2)](https://info.redstonegci.com/blog/topic/program-management-project-cost-control) - [Proposal Cost Volume Development & Pricing (79)](https://info.redstonegci.com/blog/topic/proposal-cost-volume-development-pricing) - [Quickbooks (21)](https://info.redstonegci.com/blog/topic/quickbooks) - [REAs, Claims & Terminations (10)](https://info.redstonegci.com/blog/topic/reas-claims-terminations) - [Redstone GCI (50)](https://info.redstonegci.com/blog/topic/redstone-gci) - [Sequestration (4)](https://info.redstonegci.com/blog/topic/sequestration) - [Service Contract Act (14)](https://info.redstonegci.com/blog/topic/service-contract-act) - [Small Business Compliance (121)](https://info.redstonegci.com/blog/topic/small-business-compliance) - [System Award Management (SAM) (9)](https://info.redstonegci.com/blog/topic/system-award-management-sam) - [UKG Ready HR Software Consulting (7)](https://info.redstonegci.com/blog/topic/ukg-ready-hr-software-consulting) - [Unanet (35)](https://info.redstonegci.com/blog/topic/unanet) - [Vlog (41)](https://info.redstonegci.com/blog/topic/vlog) ### Disclaimer ``` Data published on our website, such as our white papers, blogs and other government contracting commentary reflect our interpretations and opinions of current events and regulations, at the time such data is published, and the perspectives/opinions of other professionals in our industry may vary from our own.  Further, our commentary and perspectives do not reflect legal analyses, since we are not attorneys, but rather government contracts and accounting advisors.  We therefore make no representation that the use of our published information will insulate a company from government challenges, nor otherwise ensure a successful defense on any government procurement adverse action.  Readers agree that articles or blog commentary presented within our website shall not be replicated or re-published without requesting before publication in another medium, and our expressed written consent to do so. ``` **Redstone Government Consulting** 501 Madison Street SE, Suite 100 Huntsville, AL 35801 **Phone: ** [256.704.9800](tel:2567049800) **Email Us**[ info@redstonegci.com](mailto:info@redstonegci.com) **[PAY INVOICE](https://redstonegci.com/invoice-payment/)** [PCI DSS compliance documentation](https://redstonegci.com/wp-content/uploads/2016/10/pci_dss_self_assessment_certificate.pdf) © 2026 Redstone Government Consulting | All Rights Reserved | [Privacy Policy](https://redstonegci.com/privacy-policy/) | [Event Refund / Cancellation Policy](https://redstonegci.com/event-refund-cancellation-policy/)