Force personnel who have a duty or responsibility in connection with Government property. These other Air Force activities include, but are not limited to, plant clearance (property disposal), quality control, and Auditor General.

(b) The property administrator shall advise the contract administrator in regard to any act of noncompliance by the contractor with regard to the contract requirements and all obligations imposed by the Manual. The contract administrator is responsible for directing the contractor to comply with the contract requirements and the provisions of the Manual.

(c) In maintaining surveillance over the contractor's system of property controls, the property administrator shall give due consideration to the contractor's system of internal controls, and he shall conduct such examinations as shall be necessary to determine the accuracy and completeness of the contractor's records, and adequately protect the interests of the Government. Exhaustive verification and time-consuming analysis shall not be performed in connection with those operations which are considered to be commercially sound. The property administrator shall confer with the resident auditor, or other responsible audit office of the Auditor General, on accounting and audit matters, and he shall ascertain the extent to which the records, data, and reports of such audit activities can be utilized in determining the adequacy of the contractor's property controls. Ordinarily, it shall not be necessary for the property administrator to duplicate any examination or examinations made by the staff of the Auditor General.

(d) The property administrator shall utilize and rely on the assistance of Air Force personnel, such as plant clearance (property disposal), quality control, and Auditor General personnel, to ascertain whether the contractor is using property for the purposes authorized by the contract, and whether the contractor is exercising the necessary degree of care in the handling of the Government property.

(e) The property administrator shall perform only those examinations necessary to determine reasonableness of usage. Records of the contractor and records of other Air Force personnel, including, but not limited to, plant clear

ance (property disposal), quality control, and Auditor General personnel, shall be used at all times to the extent that the property administrator shall not prepare or maintain any records which are obtainable from the contractor or other Air Force personnel indicated above. Work papers shall be kept to a minimum.

(f) The property administrator shall perform his examination of the property records through the evaluation of the contractor's internal controls, and he shall conduct tests to determine whether the contractor's records properly reflect the status of Government property. In this connection, the property administrator will confer with Auditor General personnel to obtain information of any known deficiencies in the contractor's property control system. The property administrator shall review and consider the information and examinations of other Government personnel, and if he determines that such information and examination are adequate to comply with the requirements of the Manual and this subchapter, he shall not duplicate such examinations and the like, but will make appropriate reference thereto in his work papers.

§ 1012.905 Sources from which Government property may be furnished or acquired. [205] In accordance with the policy contained in Part 13 of this title, and the Manual, Government property shall be furnished to a contractor only when specifically provided for by the terms of a written contract. Any deviation from this policy shall be granted only by the prior written approval of the Director of Procurement and Production Engineering, Office, Deputy Chief of Staff, Materiel, Headquarters USAF. When the fact is disclosed that Government property is in the possession of the contractor without contractual coverage, the property administrator shall take immediate action to return the property to the shipping organization or obtain appropriate contractual coverage.

§ 1012.906 Contractor's records. [207] (a) The contractor is obligated by virtue of the provisions of the contract to maintain adequate property control records, which are designated and utilized as the official contract records. Air Force property personnel shall not maintain duplications of the official contract records or any part thereof. [207.1]

(b) The authority to grant exceptions to the policy that the contractor's records shall be designated and used as the official contract records is delegated to the Commander, Air Research and Development Command, or his duly authorized representative: Provided, however, That such representative shall not be an individual below the level of Director or Deputy Director of Procurement, Office, Deputy Chief of Staff, Materiel, Air Research and Development Command. Such exceptions, however, may be authorized, in writing, only in unusual circumstances. Class or group exceptions are not authorized. Each exception authorized must relate to a specific contract, a specific invitation for bid, or specific request for proposals, and must be covered by an adequate provision in the contract clause. [207.1]

memo

(c) Generally, contractors have established procedures, methods, and controls which may be described and set forth in various manuals, documents, randa, and the like, or which may be in the form of a written statement prepared by the contractor all of which serve to prescribe the techniques of property control. These procedures, methods, controls, and techniques comprise the contractor's property control system. If such property control system fulfills the basic requirements of the Manual, it shall be approved in accordance with the provisions of the Manual, and the contractor shall not be required to prepare an additional composite manual solely to obtain the requisite approval. [207.2]

(d) When a contractor has an established property audit unit, whose operations are considered to be adequate for safeguarding the interest of the Government, the contract administrator may advise the property administrator that the selective examination program of the property control system shall be reduced to a minimum.

(e) Individual item records of plant equipment, in accordance with paragraph 207.5 of the Manual, when priced at $100 or under, are not required.

(f) Separate unit prices shall be applied to items of special tooling fabricated by the contractor: Provided, however, That when the costs of establishing or maintaining detailed itemized records for individual items of special tooling are considered to be excessive and not practicable in the light of all the circumstances, then it may be permissible

to utilize "group pricing" for special tooling. Group pricing may be utilized for "work-in-process."

§ 1012.907 Identification and marking. [209] Plant equipment, other than that included within the Industrial Mobilization Program, shall be assigned an identification number and marked in accordance with a system of identification and marking as agreed to by the contractor and the contract administrator: Provided, That such system conforms to the requirements of the Manual. Numbers and tags will be permanent and will not be changed as long as the equipment remains under the control of the Air Force. When plant equipment is provided to contractors, and is marked and identified in substantial compliance with the requirements of the Manual, it shall not be required that such markings be changed or altered.

§ 1012.908 Physical inventories. [211] The contract administrator shall utilize, to the extent possible, the services of other technical Air Force personnel, such as plant clearance (property disposal) personnel, in connection with physical inventories.

§ 1012.909 Records to be maintained by Government personnel. [213] (a) The property administrator shall not be required to duplicate records maintained by other Government personnel but will rely on such records: Provided, That, in connection with those records maintained by other Government personnel, the property administrator has determined that such records comply with the provisions of the Manual, and the personnel responsible for maintaining the records have been informed by the property administrator, in writing, of the requirements of the Manual.

(b) Deviations shall be processed and approved in accordance with § 1000.109 of this subchapter. [213.1 (b) (xi)]

(c) The property administrator shall maintain for each contract a file containing copies of such determinations as are made under the circumstances set forth in paragraph 304 of the Manual, whereby the contract administrator has rendered a determination regarding the liability of the contractor. The property administrator shall not be required to maintain duplicate copies of such instrument or instruments as the contract administrator may issue under the provisions of paragraph 303 of the Manual,

or such other instrument or instruments that are readily available in the files of the contractor or other Government personnel, such as plant clearance, quality control, and Auditor General personnel. § 1012.910 Numbering property accounts. [214] Property accounts shall be assigned the same number as that of the prime contract. However, to expedite and insure proper distribution of documents, each property account assigned to a single property administrator shall be assigned the identification number of the property administrator as a prefix to the contract number.

CONTRACTOR'S OBLIGATIONS

§ 1012.911 Contractor's responsibility. [303] See § 1012.902 (d) concerning the responsibility of the prime contractor with respect to provisions in subcontracts.

§ 1012.912 Identification and marking. [307] (a) The method of marking and identifying Government-owned special tooling shall be agreed to by the contractor and the contract administrator. The contractor will be responsible for determining whether the marking will damage the tooling or is otherwise impracticable. The contractor shall advise the contract administrator, in writing, of any such determination. . (b) Plant equipment, other than that included within the Industrial Mobilization Program, shall be assigned an identication number and marked in accordance with a system of identification and marking as agreed to by the contractor and the contract administrator: Provided, That such system conforms to the requirements of the Manual. Numbers and tags will be permanent and will not be changed as long as the equipment remains under the control of the Air Force. When plant equipment is provided to contractors, and is marked and identified in substantial compliance with the requirements of the Manual, it shall not be required that such markings be changed or altered.

AUTHORITY: §§ 1013.001 to 1013.202 issued under R. S. 161, sec. 202, 61 Stat. 500, as amended; 5 U. S. C. 22, 171a. Interpret or apply 62 Stat. 21; 41 U. S. C. 151-161.

SOURCE: §§ 1013.001 to 1013.202 appear at 18 F. R. 5449, Sept. 10, 1953.

§ 1013.001 Scope of part. This part implements the provisions of Part 14 of this title, and sets forth the procedures pertaining to the inspection of supplies and services by the Department of the Air Force. Nothing in this part will be construed as waiving compliance with Part 14 of this title.

§ 1013.002 General policy-(a) General. All supplies and services procured by the Air Force, including supplies which are procured in accordance with the provisions of Subpart A of Part 4 of this title, "Single Department Procurement," will be inspected and accepted in accordance with the provisions of this part. Inspection will be conducted only when a bonafide contract exists, or when there is reasonable assurance that the supplies inspected will be reserved for delivery on Air Force or other military contracts.

Conform

(b) Quality control policy. ance with contractual requirements of supplies presented to the Air Force will be determined on the basis of objective quality evidence. Such evidence will be obtained by the contractor and will be evaluated and verified by the Air Force quality control representative exercising surveillance over the contractor's facility. Evidence may also be obtained independently by Air Force quality control personnel. Product inspection by Air Force quality control personnel will be used to the extent necessary to verify evidence of quality submitted by the contractor, or it may be used to determine acceptability of supplies on an individual or lot basis. The amount of evidence obtained or verified through product inspection by Air Force quality control personnel will depend upon the nature and intended use of the product and the effectiveness of the contractor's control over quality.

SUBPART A-INSPECTION

§ 1013.101 Responsibility for inspection. The responsibility for inspection (quality control) as defined in § 14.100 of this title or the arrangement therefor is assigned to the Air Materiel Command which will coordinate and issue detailed inspection procedures. Such responsibility includes responsibility for inspection of supplies and services procured outside the continental limits of the United States, its Territories and possessions. Air Materiel Command may further delegate specific areas of responsibility to insure an effective and economical Air Force quality control effort.

(a) Inspection interchange agreements. Interchange agreements may be extended to foreign government agencies where procurements are being made by the Air Force in countries where suitable quality control practices have been established. Air Force quality control procedures will be used when inspection is performed by the Air Force on supplies procured by or for another department or agency.

(b) Exchange of inspection services for procurement inspection of petroleum products. (1) Air Materiel Command is assigned responsibility for procurement inspection and associated administrative functions for all petroleum products procured by the military departments within the geographical area designated as the Midcontinent-Gulf Coast Area. This area is comprised of the States of Montana, North Dakota, South Dakota, Minnesota, Wisconsin, Michigan, Ohio, Indiana, Illinois, Iowa, Nebraska, Wyoming, Colorado, Kansas, Missouri, Kentucky, West Virginia, Tennessee, Mississippi, Alabama, Florida, Louisiana, Arkansas, Oklahoma, Texas, and New Mexico. Responsibility includes the conduct of all quality control and inspection operations incident to tanker or barge movement of petroleum products by the Military Sea Transport Service or commercial transportation, and surveillance inspection and quality control at leased storage at refiners' plants within the assigned area. Surveillance inspection and quality control of petroleum products in depots, terminals, and installation storage remains the responsibility of the owning department.

(2) The Department of the Army (Quartermaster Corps) has been assigned identical responsibilities for petroleum procurement inspection within the New England area composed of the States of Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, New York, and the New Jersey counties of Monmouth, Middlesex, Somerset, Hunterdon, Warren, Sussex, Morris, Passaic, Union, Hudson, Bergen, and Essex.

(3) The Department of the Navy (Chief of Naval Material) has been assigned identical responsibilities for petroleum procurement inspection within the East Coast and West Coast areas composed of the New Jersey counties of Mercer, Burlington, Ocean, Camden, Gloucester, Salem, Cumberland, Atlantic, and Cape May, and the States of Pennsylvania, Delaware, Maryland, Virginia, North Carolina, South Carolina, Georgia, Washington, Oregon, Idaho, Utah, Nevada, California, and Arizona.

(c) Inspection for other Government agencies. "Other Government Agencies" are construed to mean U. S. agencies other than military. Air Force inspection may be performed for other Government agencies when such inspection would not unduly affect military inspection operations.

§ 1013.102 Inspection requirements— (a) General. In accordance with applicable directives, Air Materiel Command will establish inspection requirements sufficient to determine the acceptability of supplies and services presented to the Air Force. The Air Materiel Command may, when the public interest will be served best, prescribe the conditions under which supplies which are subject to Air Force inspection may be shipped without such inspection being performed in connection with each shipment.

(b) Points of inspection. Each Air Force supply contract will specify the place or places at which inspection and/ or acceptance of the supplies are to be made by the Government. The contracting and quality control components of Air Materiel Command will collaborate in establishing categories of items which are subject to either source or destination inspection and acceptance. The contracting organization will also coordinate with quality control any unusual cases needing special consideration concerning the proper place of inspec

tion and acceptance. The inspection facilities of the Air Force depots and laboratories will be utilized to the extent practicable in accomplishing inspections or tests which cannot otherwise be properly accomplished.

§ 1013.103 Inspection under subcontracts. The Air Materiel Command will prescribe the conditions under which Air Force inspection of materiel delivered under subcontracts shall be conducted at the subcontractor's facility. Normally, Air Force subcontract source inspection will be limited to those items which cannot adequately be inspected upon receipt.

§ 1013.104 Contract clauses. Any change to the standard inspection clauses set forth in Part 7 of this title, will be coordinated with the organization responsible for inspection and acceptance or the arrangement therefor. Such changes will be made in accordance with § 1000.109 of this chapter.

SUBPART B-ACCEPTANCE

§ 1013.201 Responsibility for acceptance. Acceptance as defined in § 14.200 of this title, or the arrangement therefor, is the responsibility of the Air Materiel Command which may authorize proper Government agents to perform this function. Acceptance is effected through the execution of the prescribed acceptance documents.

§ 1013.202 Inspection and acceptance markings. Stamps used by Air Force quality control activities to indicate inspection or acceptance of materiel will be of the designs specified in Part 146 of this title.

(a) Inspection stamps. The Air Materiel Command will prescribe the conditions under which inspection stamps shall be used. When the use of inspection stamps is appropriate, the design showing an eagle within a circle will be used to identify materiel which has undergone only a partial inspection but has been found by the inspector to be acceptable to the extent that it has been inspected.

(b) Acceptance stamps. The design showing an eagle within a square will be used to indicate that the items to which it has been applied have been accepted by the inspector as being in conformance with the requirements of the contract or order.

Part 1014-Contract Cost
Principles

§ 1014.101 Interest on advance payments on cost-reimbursement type contracts. Interest on advance payments will not be allowed as a cost under any cost-reimbursement type contract nor cost-reimbursement subcontract thereunder. Hereafter, no such contract or subcontract may provide or be amended to provide for allowance of such interest as an item of cost.

(R. S. 161, sec. 202, 61 Stat. 500, as amended; 5 U. S. C. 22, 171a. Interprets or applies 62 Stat. 21; 41 U. S. C. 151-161) [18 F. R. 6881, Oct. 31, 1953]

Part 1021-Air Force Emergency Facilities Depreciation Board

CROSS REFERENCE: For the Department of Defense Instruction on Treatment of Depreciation on Emergency Facilities Covered by Certificates of Necessity for Contract Pricing Purposes, which this part implements, see Part 81 of this title.

Sec.

1021.1 General.

1021.2 1021.3

Procedures.

Contractor information on true depreciation.

1021.4 Implementation. Appendix A-List of contractor information on true depreciation.

AUTHORITY: §§ 1021.1 to 1021.4 issued under 64 Stat. 798-822, as amended; 50 U. S. C. App., 2061-2166.

SOURCE: §§ 1021.1 to 1021.4 appear at 19 F. R. 5518, Aug. 28, 1954.

§ 1021.1 General (a) Establishment and composition of the Board. The Commander, Air Materiel Command, will establish and appoint a board designated the "Air Force Emergency Facilities Depreciation Board" (hereinafter referred to as the Board). The Board will consist of three members, one of whom will be designated Chairman. Any two members of the Board will constitute a quorum. The concurrence of any two members of the Board will be necessary in arriving at decisions of the Board. Authority to appoint members of the Board and to designate a Chairman may be delegated to the Director of Procurement and Production, Headquarters, Air Materiel Command, with power to redelegate such authority to the Deputy Director, Procurement,