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CFR Citation: 41 CFR Part 102-39

RIN ID: RIN 3090-AI38

FMR ID: [FMR Case 2007-102-1; Docket 2007-0001; Sequence 3]

NOTICE: PROPOSED RULES

ACTION: Federal Management Regulation:

DOCUMENT ACTION: Proposed rule.

SUBJECT CATEGORY: Federal Management Regulation; FMR Case 2007-102-1, Replacement of Personal Property Pursuant to the Exchange/Sale Authority

DATES: Interested parties should submit comments in writing on or before January 10, 2008 to be considered in the formulation of a final rule.

DOCUMENT SUMMARY: The General Services Administration is proposing to amend the Federal Management Regulation (FMR) by updating coverage on the replacement of personal property pursuant to the exchange/sale authority. The proposed changes were prompted by recommendations of the Federal Asset Management Evaluation (FAME) interagency working group led by GSA.

SUMMARY: Personal property replacement pursuant to exchange/sale authority,

SUPPLEMENTAL INFORMATION

The regulations in this part were last substantively updated on September 21, 2001 (66 FR 48614). Early in fiscal year 2005, a project entitled Federal Asset Management Evaluation (FAME) was initiated to identify any and all areas of Federal personal property management needing improvement. An interagency working group, led by GSA, was formed to work on the FAME project. At the conclusion of the FAME project, the working group identified the exchange/sale authority as an area where changes should be made. A team of GSA Office of Governmentwide Policy employees has reviewed all of the provisions in this part and has recommended a number of changes intended to update, streamline, and clarify the part. The most significant changes include:

1. Adding a new section that explains the exchange/sale authority by quoting relevant language from the statute (40 U.S.C. 503).

2. Adding definitions for ``excess property'', ``surplus property ''and ``Service Life Extension Program''.

3. Revising the definitions for ``acquire'', ``replacement'', and ``similar''.

4. Adding a new section that addresses which provisions in this part are subject to deviation.

5. Adding a new section that explains when agencies should consider using the exchange/sale authority.

6. Revising the section that explains why the exchange/sale authority should be used.

7. Amending the restrictions and prohibitions applicable to the exchange/sale of personal property, including the addition of language which: 1) states that under no circumstances will deviations be granted for FSC Class 1005, Guns through 30mm; and 2) clarifies the requirement for the exchange/sale of weapons for Department of Defense property in FSC Group 10, Weapons.

8. Removing the requirement that the number of items acquired must equal the number of items exchanged or sold, as this is not a requirement imposed by 40 U.S.C. 503.

9. Adding a new provision which clarifies that the exchange/sale authority can only be used to acquire property, not services.

10. Revising the requirement for documentation of exchange/sale transactions.

11. Revising the accounting requirements applicable to the exchange/sale authority.

12. Revising the annual reporting requirement.

B. Executive Order 12866

This regulation is excepted from the definition of ``regulation'' or ``rule'' under Section 3(d)(3) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993 and, therefore, was not subject to review under Section 6(b) of that Executive Order. C. Regulatory Flexibility Act

This proposed rule is not required to be published in the Federal Register for notice and comment as per the exemption specified in 5 U.S.C. 553 (a)(2); therefore, the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., does not apply.

D. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the proposed changes to the FMR do not impose information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, et seq.

E. Small Business Regulatory Enforcement Fairness Act

This proposed rule is exempt from Congressional review under 5 U.S.C. 801 since it relates solely to agency management and personnel. List of Subjects in 41 CFR Part 10239

Government property management, Reporting and recordkeeping requirements, and Government property.

Dated: August 28, 2007.
Kevin Messner

Acting Associate Administrator.

Editorial Note: This document was received at the Office of the Federal Register on December 5, 2007.

For the reasons set forth in the preamble, GSA amends 41 CFR part 10239 as set forth below:
PART 10239REPLACEMENT OF PERSONAL PROPERTY PURSUANT TO THE EXCHANGE/SALE AUTHORITY

1. The authority citation for 41 CFR part 10239 is amended to read as follows:

Authority: 40 U.S.C. 121(c); 40 U.S.C. 501; 40 U.S.C. 503 Sec. 10239.50 [Removed]

2. Remove Sec. 10239.50.
Sec. 10239.55 [Removed]

3. Remove Sec. 10239.55.
Sec. Sec. 10239.5, 10239.15, 10239.25, 10239.30, 10239.35, 102 39.40, 10239.45, 10239.60, 10239.65, 10239.70, 102

39.75 [Redesignated]

4. Redesignate Sec. Sec. 10239.5, 10239.15, 10239.25, 102 39.30, 10239.35, 10239.40, 10239.45, 10239.60, 10239.65, 102 39.70, 10239.75 as follows:

Old section New section

10239.5 10239.15

10239.15 10239.40

10239.25 10239.30

10239.30 10239.45

10239.35 10239.50

10239.40 10239.55

10239.45 10239.60

10239.60 10249.70

10239.65 10239.75

10239.70 10239.80

10239.75 10239.85

5. Add new Sec. 10239.5 to read as follows:

Sec. 10239.5 What is the exchange/sale authority?

The exchange/sale authority is a statutory provision, (40 U.S.C. 503), which states in part: ``In acquiring personal property, an executive agency may exchange or sell similar items and may apply the exchange allowance or proceeds of sale in whole or in part payment for the property acquired.''

6. Amend Sec. 10239.20 by revising the definitions of the terms ``Acquire'', ``Replacement'', and ``Similar''; and, by alphabetically adding the terms and definitions ``Excess property'', ``Service Life Extension Program (SLEP)'', and ``Surplus property'' to read as follows:
Sec. 10239.20 What definitions apply to this part?

* * * * *

Acquire means to procure or otherwise obtain personal property, including by lease (sometimes known as rent).

* * * * *

Excess property means any personal property under the control of any Federal agency that is no longer required for that agency's needs or
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responsibilities, as determined by the agency head or designee. * * * * *

Replacement means the process of acquiring personal property to be used in place of personal property that is still needed but: (1) No longer adequately performs the tasks for which it is used; or
(2) Does not meet the agency's need as well as the personal property to be acquired.

Service Life Extension Program (SLEP) means the modification of a personal property item undertaken to extend the life of the item beyond what was previously planned. SLEPs extend capital asset life by retrofit, major modification, remanufacturing, betterment, or enhancement.

Similar means the acquired item(s) and replaced item(s): (1) Are identical; or
(2) Fall within a single Federal Supply Classification (FSC) Group of property (includes any and all forms of property within a single FSC Group); or
(3) Are parts or containers for similar end items; or
(4) Are designed or constructed for the same purpose (includes any and all forms of property regardless of the FSC Group to which they are assigned).

Surplus property means excess personal property not required for the needs of any Federal agency, as determined by GSA under part 10237 of this chapter.

7. Add new Sec. 10239.25 to Subpart A to read as follows: Sec. 10239.25 Which exchange/sale provisions are subject to deviation?

All of the provisions in this part are subject to deviation (upon presentation of adequate justification) except those mandated by statute. See the link on ``Exchange/Sale'' at http://www.gsa.gov/personalpropertypolicy for additional information on requesting

deviations from this part.

8. Revise newly redesignated Sec. 10239.30 to read asfollows: Sec. 10239.30 How do I request a deviation from this part?

See part 1022 of this chapter (41 CFR part 1022) to request a deviation from the requirements of this part.

9. Add new Sec. 10239.35 to Subpart B to read as follows: Sec. 10239.35 When should I consider using the exchange/sale authority?

You should consider using the exchange/sale authority when replacing personal property.

10. Amend newly redesignated Sec. 10239.40 to read as follows: Sec. 10239.40 Why should I use the exchange/sale authority?

You should use the exchange/sale authority to reduce the cost of replacement personal property. When you have personal property that is wearing out or obsolete and must be replaced, you should consider either exchanging or selling that property and using the exchange allowance or sales proceeds to offset the cost of the replacement personal property. Conversely, if you choose not to replace the property using the exchange/sale authority, you may declare it as excess and dispose of it through the normal disposal process as addressed in part 10236 of this chapter. Keep in mind, however, that any net proceeds from the eventual sale of that property as surplus generally must be forwarded to the miscellaneous receipts account at the United States Treasury and thus would not be available to you. You may use the exchange/sale authority in the acquisition of personal property even if the contract is for services as long as the property acquired under the services contract is similar to the property exchanged or sold (e.g., for a SLEP, exchange allowances or sales proceeds would be available for replacement of similar items, but not for services).

11. Amend newly redesignated Sec. 10239.55 by revising the section heading to read as follows:
Sec. 10239.55 When should I offer property I am exchanging or selling under the exchange/sale authority to other Federal agencies or State Agencies for Surplus Property (SASP)?

* * * * *

12. Amend newly redesignated Sec. 10239.60 by revising the section heading, the introductory text, paragraph (a), the note to paragraph (a), and paragraph (i) to read as follows:
Sec. 10239.60 What restrictions and prohibitions apply to the exchange/sale of personal property?

Unless a deviation is requested of and approved by GSA as addressed in part 1022 of this chapter and the provisions of Sec. Sec. 102 39.25 and 10239.30, you must not use the exchange/sale authority for: (a) The following FSC groups of personal property:

10 Weapons.

11 Nuclear ordnance.

12 Fire control equipment.

14 Guided missiles.

15 Aircraft and airframe structural components (except FSC Class 1560 Airframe Structural Components).

42 Firefighting, rescue, and safety equipment.

44 Nuclear reactors (FSC Class 4470 only).

51 Hand tools.

54 Prefabricated structure and scaffolding (FSC Class 5410 Prefabricated and Portable Buildings, FSC Class 5411 Rigid Wall Shelters, and FSC Class 5419 Collective Modular Support System only).

68 Chemicals and chemical products, except medicinal chemicals.

84 Clothing, individual equipment, and insignia.

Note to Sec. 10239.60(a): Under no circumstances will deviations be granted for FSC Class 1005, Guns through 30mm. Deviations are not required for Department of Defense (DoD) property in FSC Groups 10 (for classes other than FSC Class 1005), 12 and 14 for which the applicable DoD demilitarization requirements, and any other applicable regulations and statutes are met.
* * * * *
(i) Flight Safety Critical Aircraft Parts (FSCAP) and Critical Safety Items (CSI) unless you meet the provisions of Sec. 10233.370 of this title.

* * * * *

13. New Sec. 10239.65 is added to Subpart B to read as follows: Sec. 10239.65 What conditions apply to the exchange/sale of personal property?

You may use the exchange/sale authority only if you meet all of the following conditions:
(a) The property exchanged or sold is similar to the property acquired;
(b) The property exchanged or sold is not excess or surplus and you have a continuing need for similar property;
(c) The property exchanged or sold was not acquired for the principal purpose of exchange or sale;
(d) When replacing personal property, the exchange allowance or sales proceeds from the disposition of that property may only be used to offset the cost of the replacement property, not services; and (e) Except for transactions involving books and periodicals in your libraries, you document the basic facts associated with each exchange/ sale transaction. At a minimum, the documentation must include the type, amount, and value of the property to be replaced and the property to be acquired; the date of the transaction(s); the names of the parties involved; and a statement that the transactions comply with the requirements of this part 10239.

Note to Sec. 10239.65: In acquiring items for historical preservation or display at Federal museums, you may exchange historic items in the museum property account without regard to the
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FSC group, provided the exchange transaction is documented and certified by the head of your agency to be in the best interests of the Government and all other provisions of this part are met. The documentation must contain a determination that the item exchanged and the item acquired are historic items.

14. Revise newly redesignated Sec. 10239.80 to read as follows: Sec. 10239.80 What are the accounting requirements for exchange allowances or proceeds of sale?

You must account for exchange allowances or proceeds of sale in accordance with the general finance and accounting rules applicable to you. Except as otherwise authorized by law, all exchange allowances or proceeds of sale under this part will be available during the fiscal year in which the property was sold and for one fiscal year thereafter for the purchase of replacement property. Any proceeds of sale not applied to replacement purchases during this time must be deposited in the United States Treasury as miscellaneous receipts.

15. Amend newly redesignated Sec. 10239.85 by adding paragraph (a)(3) to read as follows:
Sec. 10239.85 What information am I required to report?
* * * * *
(3) A list by Federal Supply Classification Group of property acquired under this part, to include:
(i) Number of items acquired;
(ii) Acquisition cost.
* * * * *
[FR Doc. E723887 Filed 121007; 8:45 am]
BILLING CODE 682014S

FOR FURTHER INFORMATION CONTACT For clarification of content, contact Mr. Robert Holcombe, Office of
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Governmentwide Policy, Office of Travel, Transportation, and Asset Management (MT), (202) 5013828 or email at Robert.Holcombe@gsa.gov. For information pertaining to status or publication schedules contact the Regulatory Secretariat, 1800 F Street, NW, Room 4035, Washington, DC 20405, (202) 5014755. Please cite FMR case 20071021.