tion shall include a fully executed copy of the Aircraft Conditional Transfer Document. The donee of a vessel shall obtain documentation of the vessel under the applicable laws of the United States and the applicable laws of the several States and will at all times maintain such documentation, and shall, within sixty days of the receipt of the fully executed Vessel Conditional Transfer Document, record said document with the Collector of Customs at the port of documentation of the vessel.

(4) The aircraft or vessel, together with all engines, appurtenances, and accessories attached thereto and installed therein, hereinafter referred to in this section as the "aircraft or vessel property," shall be placed in use for the purpose stated no later than twelve months after acquisition thereof.

(5) In the event the donee of aircraft property does not apply to the Federal Aviation Agency for registration of the aircraft property, or in the event the donee of vessel property does not record the Vessel Conditional Transfer Document with the Collector of Customs at the port of documentation of the vessel property, or in the event the aircraft or vessel property is not placed in use within twelve months of receipt, the donee in the case of aircraft property, within thirty days after the date on which application for registration should have been made, or in the case of vessel property within thirty days after the date on which the Vessel Conditional Transfer Document should have been recorded, or within thirty days after the expiration of the twelve-month period, shall notify the Department of Health, Education, and Welfare, in the case of aircraft or vessel property donated for public health or educational purposes, or the Office of Civil Defense, Department of the Army, in the case of aircraft or vessel property donated for civil defense purposes, in writing, through the State Agency. Title and right to the possession of the aircraft property on which application for registration has not been made within thirty days, or to the vessel property on which the Vessel Conditional Transfer Document has not been recorded within 60 days, or aircraft or vessel property which has not been placed in use within twelve months, shall at the option of the Department of Health, Education, and Welfare, in the case of aircraft or vessel property donated for public health or

66-097-67- --3

educational purposes, or the Office of Civil Defense, Department of the Army, in the case of aircraft or vessel property donated for civil defense purposes, revert to the United States of America. Upon demand, the donee shall, as directed by the Department of Health, Education, and Welfare, or its designee, in the case of aircraft or vessel property donated for public health or educational purposes, or the Office of Civil Defense, Department of the Army, or its designee, in the case of aircraft or vessel property donated for civil defense purposes, release the aircraft or vessel property to such agency or person as may be designated, sell the aircraft or vessel property, or otherwise dispose of the aircraft or vessel property. Any sale shall be for the benefit and account of the United States of America.

(6) There shall be a period of restriction which will expire after the aircraft or vessel property has been used for the purpose stated for a period of ten years.

(7) During the period of restriction the aircraft or vessel property shall be used only for the purpose stated.

(8) During the period of restriction the donee shall make reports to the State Agency on the use, condition and location of the aircraft or vessel property and on other pertinent matters as may be required from time to time by such State Agency, or the Department of Health, Education, and Welfare, in the case of aircraft or vessel property donated for public health or educational purposes, or the Office of Civil Defense, Department of the Army, in the case of aircraft or vessel property donated for civil defense purposes.

(9) During the period of restriction, the donee shall not sell, trade, lease, lend, bail, encumber, or otherwise dispose of the aircraft or vessel property, without prior written approval of the Department of Health, Education, and Welfare, in the case of aircraft or vessel property donated for public health or educational purposes, or the Office of Civil Defense, Department of the Army, in the case of aircraft or vessel property donated for civil defense purposes. Any sale, trade, lease, loan, bailment, encumbrance, or other disposal of the aircraft or vessel property, when such action is authorized by the Department of Health, Education, and Welfare, where the property was donated for public health or educational purposes, or the Office of Civil Defense, Department of the Army,

in the case of aircraft or vessel property donated for civil defense purposes, shall be for the benefit and account of the United States of America.

(10) In the event, during the period of restriction, the aircraft or vessel property is sold, traded, leased, loaned, bailed, encumbered, or otherwise disposed of without prior approval, or is used for a purpose other than the purpose stated, the donee, at the option of the Department of Health, Education, and Welfare, in the case of aircraft or vessel property donated for public health or educational purposes, or the Office of Civil Defense, Department of the Army, in the case of aircraft or vessel property donated for civil defense purposes, shall be liable to the United States of America for the proceeds of the disposal, the fair market value, or the fair rental value of the aircraft or vessel property at the time of such unauthorized transaction or use, as determined by the Department of Health, Education, and Welfare, in the case of aircraft or vessel property donated for public health or educational purposes, or the Office of Civil Defense, Department of the Army, in the case of aircraft or vessel property donated for civil defense purposes.

(11) If, during the period of restriction, the aircraft or vessel property is no longer suitable, usable or further needed by the donee for the purpose for which acquired, the donee shall promptly notify the Department of Health, Education, and Welfare, in the case of aircraft or vessel property donated for public health or educational purposes, or the Office of Civil Defense, Department of the Army, in the case of aircraft or vessel property donated for civil defense purposes, through the State Agency, and shall, as directed by the Department of Health, Education, and Welfare, in the case of aircraft or vessel property donated for public health or educational purposes, or the Office of Civil Defense, Department of the Army, in the case of aircraft or vessel property donated for civil defense purposes, or the State Agency, retransfer the aircraft or vessel property to another donee, retransfer the aircraft or vessel property to a department or agency of the United States, sell the aircraft or vessel property, or otherwise dispose of the aircraft or vessel property. Any sale

shall be for the benefit and account of the United States of America.

(12) At the option of the Department of Health, Education, and Welfare, in the case of aircraft or vessel property donated for public health or educational purposes, or the Office of Civil Defense, Department of the Army, in the case of aircraft or vessel property donated for civil defense purposes, the donee may obtain abrogation of the terms and conditions set forth in subparagraphs (6) through (11) of this paragraph by payment of an amount as determined by the Department of Health, Education, and Welfare, in the case of aircraft or vessel property donated for public health or educational purposes, or the Office of Civil Defense, Department of the Army, in the case of aircraft or vessel property donated for civil defense purposes.

(13) The Department of Health, Education, and Welfare, in the case of aircraft or vessel property donated for public health or educational purposes, or the Office of Civil Defense, Department of the Army, in the case of aircraft or vessel property donated for civil defense purposes, may terminate all of the above conditions and give unrestricted title to the aircraft or vessel property to the donee whenever such action is determined to be appropriate.

[30 F.R. 2444, Feb. 25, 1965] § 13.11

Additional terms and conditions.

The Department may require the inclusion in the donation document of any additional terms and conditions deemed desirable and appropriate. [29 F.R. 12676, Sept. 9, 1964]

(a) "Act" means the Federal Property and Administrative Services Act of 1949, Public Law 152, 81st Congress (63 Stat. 377), as amended (40 U.S.C. 471 et seq.). Terms defined in the Act and not defined in this section shall have in this part the meaning given to them in the Act.

(b) "Department" means the Department of Health, Education, and Welfare.

(c) "Donable property" means surplus equipment, materials, books or other supplies under the control of any executive agency (including surplus property in working capital funds established pursuant to section 405 of the National Security Act of 1947, as amended, or in similar management-type funds) except:

(1) Such property as may be specified from time to time by the Administrator of General Services;

(2) Surplus agricultural commodities, food, and cotton or woolen goods determined from time to time by the Secretary of Agriculture to be commodities requiring special handling in order to assist him in carrying out his responsibilities with respect to price support or stabilization;

(3) Property in the custody of an agency or an organizational unit thereof which is subject to the Government Corporation Control Act (59 Stat. 597; 31 U.S.C. 841); the donation of which is determined by the holding agency to be inconsistent with its program responsibilities;

(4) Property in trust funds.

(d) "Need" means a requirement for anything usable and necessary by eligible applicants in the conduct of educational, public health, or civil defense activities.

(e) "Overage" means the excess occurring upon the receipt of a larger number of a specific item or a larger number of items than either (1) requested on an "Application for Donation of Surplus Personal Property," Standard

Form 123 or (2) listed on a shipping document.

(f) "Screening" means the act of reviewing and inspecting property which is surplus or which is expected to become surplus for the purpose of determining whether or not such property is usable and necessary for health, educational, or civil defense purposes.

(g) "Service charge" means the fee assessed by a State Agency against the donee when distributing surplus property under section 203 (j) of the Act.

(h) "Shortage" means the deficiency occurring upon the receipt of a smaller number of a specific item or a smaller number of items than either (1) requested on an "Application for Donation of Surplus Personal Property," Standard Form 123 or (2) listed on a shipping document.

(i) "State Agency" means the agency designated by State statute or executive order to make the certifications concerning, and distribution of, donable property to eligible applicants within the State as provided for in section 203 (j) of the Act.

[29 F.R. 8213, June 30, 1964, as amended at 30 F.R. 2445, Feb. 25, 1965]

§ 14.2 Basic policy.

§ 14.5 Plan of operation.

(a) Approvals of all Plans of Operation in effect on the date of this part shall expire on December 31, 1964. Each State Agency shall, not later than 60 days following the effective date of this part, submit to the appropriate regional office of the Department for its approval at least three signed copies of its Plan of Operation which shall conform to the provisions of this part and Parts 12 and 13 of this subtitle. Such Plan shall be in effect and shall be binding upon the State Agency beginning with the date of approval by the Department. No allocations of donable property shall be made to such State Agency, and no donable property shall, except as directed by the Department, be distributed by such State Agency under section 203 of the Act if it is determined by the Department that the State Agency is not operating in conformance with its Plan. No subsequent amendments to, nor modifications of, approved Plans shall be placed in effect without prior approval of the Department. Approval of a Plan of Operation shall not be effective for a period in excess of five years from the date of approval. The Department may approve Plans, or parts thereof, for lesser periods of time, as determined by the Department in the individual case.

(b) The Plan of Operation shall include the following in this order:

(1) Copies of State statutes and/or executive orders establishing the State Agency and its authority to:

(i) Acquire, warehouse, and distribute donable personal property to eligible organizations under section 203 of the Act and to execute the certifications and agreements required by that section of the Act and the Federal Government.

(ii) Assess and collect service charges from eligible participating organizations if such charges are contemplated.

(iii) Enter into cooperate agreements as provided for by section 203 (n) of the Act, if the State Agency contemplates entering into such agreements.

(iv) Where express statutory authority does not exist or is ambiguous, or where authority exists by virtue of executive order, the State Agency Plan shall also include the opinion of the State's Attorney General as to the existence of such authority.

(2) A statement of (i) the Agency's authority for the deposit and investment of service charge funds; (ii) the types

of depositaries and/or investments of such funds; and (iii) authority for the disbursement of funds and the liquidation of investments.

(3) A chart showing (i) organizational units of the State Agency; (ii) functions of such units; and (iii) major lines of supervisory authority.

(4) Procedures for accounting for surplus property allocated, received, warehoused, and distributed. These must include (i) provision for recording and reporting shortages and overages of property both when it is taken into State Agency custody and at the time of inventory verification; (ii) provision for periodic verification of property on hand (at least annually); (iii) provision for any necessary adjustments to inventory records at least annually and upon written authority by the Agency Director; (iv) a means of tracing property from receiving documents to disposal documents, and (v) a system of readily determining the quantity of various types of property donated to individual donees. (5) An explanation of how service charges are determined. This shall include a maximum charge incident to the donation of any single item.

(6) Procedure for ascertaining the eligibility of applicants.

(7) Procedure for establishing the authority of representatives of eligible donees to receive surplus property and execute the required certifications and agreements on behalf of applicants.

(8) Procedure for determining the need and usability of surplus property by eligible organizations and the fair and This equitable distribution thereof. must include provisions for visits with 10 percent of the active donees each year, periodic circularization of information about the donable property program to all eligible participants, and a continuing review of records of property issued to donees.

(9) Procedure for obtaining the certifications and agreements required by §§ 13.6(b) (1), (2) and (3), 13.9 and 13.10 of this subtitle.

(10) Procedure for utilization surveys at educational and health institutions to ascertain that property with a single item acquisition cost of $2,500 or more, donted to them, is being used in accordance with their certifications and agreements. This procedure shall include provision for reports on such surveys.

(a) The fiscal accounting of the State Agency shall be accomplished by a double entry system. The system shall contain a chart of accounts, a general ledger with accounts for all assets, liabilities, income, and expense, and journals, or their equivalent, for the original record of transactions. Accounting records shall be maintained in a manner that will identify and separately account for funds accumulated from service charges against donee institutions and organizations.

(b) Financial records and all other books and records of the State Agency shall be subject to inspection by representatives of the Department.

(c) Each State Agency shall maintain accurate accountability records of all donable property allocated, warehoused, and distributed, except that in those cases where the single item Government Acquisition Cost appearing on the pertinent Standard Form 123 is less than $10.00, such accountability records are not required. Accountability records of all single items having an acquisition cost of $2,500 or more shall be kept separate from those of lesser amount.

(d) Records and documents pertaining to the eligibility of donee institutions and organizations shall be maintained in the form and manner prescribed by the Department.

(e) All official records of the State Agency shall be kept for a minimum period of five years.

[29 F.R. 8213, June 30, 1964, as amended at 30 F.R. 2445, Feb. 25, 1965]

§ 14.7 Service charges and funds.

(a) Service charges, as a whole, for the care and handling of donable surplus property shall be limited to the amount necessary to pay actual expenses of current operations and to purchase necessary equipment, plus the accumulation and maintenance of a working capital reserve. The service charge assessed by a State Agency for the transfer of any single item of donable surplus property shall be reasonable in relation to the costs incident to the transfer.

(b) A State Agency's working capital reserve shall be computed as follows:

(1) Add together the following items of current assets:

(i) Cash on hand and in depositaries (ii) Investments (readily convertible in cash)

(iii) Accounts receivable.

(2) From the total of the above described current assets, deduct all liabilities that are due (including installments that fall due) within one year, and any obligations represented by funds not accumulated from service charges which are required to be returned eventually to the source from which they were derived.

(c) The working capital reserve shall not exceed an amount equivalent to the actual cost of operation during the immediate past fiscal year except with the written approval of the Department.

(d) Integrity of funds accumulated from service charges against donee institutions and organizations, including income accruing from their investment, shall be maintained, and such funds shall be used only for the operation of the surplus property utilization program and shall not be available for any other purpose.

(e) A State Agency shall accept payment of service charges only in the form of warrants, checks, or other official instruments drawn or issued by, and in the name of, the respective donee institutions or organizations.

(f) Funds accumulated by a State Agency from service charges against donee institutions and organizations, over and above the working capital reserve as provided for in this part, shall be refunded to donee institutions and organizations (1) on a pro-rata basis (based upon total charges collected during the preceding fiscal year) or (2) by reduced service charges during the current and the next ensuing fiscal year. § 14.8

Audits.