(6) State and local governments.—In the case of sales to State and local governments and instrumentalities thereof, the requirements of bid deposit and payment for property prior to removal may be waived to the extent that compliance therewith is precluded by laws applicable to such governments, or where otherwise deemed in the best interest of the Government.

e. Agricultural commodities, foods processed therefrom, and cotton and woolen goods.—(1) Disposal by holding agencies.-Surplus agricultural commodities, surplus foods processed from agricultural commodities, and surplus cotton or woolen goods may be disposed of by the holding agency in accordance with this section, without reference to the Department. of Agriculture, in the following instances:

(a) Where the quantity of such commodity or product in any one location has an acquisition cost not in excess of $5,000; or

(b) Where such commodity or product must be disposed of immediately to prevent spoilage; or

(c) Where the quantity to be sold during any month has an acquisition cost not in excess of:

(i) Raw cotton, wheat and other grains, flour, leaf tobacco, and cotton or woolen goods-$300,000;

(ii) Meat, poultry and poultry products, peanuts and other fats and oils― $50,000;

(iii) All other agricultural commodities, and foods processed from agricultural commodities-$25 000.

(2) Required reference to the Department of Agriculture.-With respect to quantities of surplus agricultural commodities, surplus foods processed from agricultural commodities, and surplus cotton or woolen goods, in excess of the amounts specified in subparagraph (1) (c) immediately above, holding agencies shall obtain from the Administrator, Production and Marketing Administration, Department of Agriculture (designated for this purpose by the Secretary of Agriculture):

(a) A determination, with appropriate instructions, that the commodities or products should be transferred to the Department of Agriculture for disposition as provided by section 203 (h) of the act; or

(b) A statement setting forth the conditions and prices which should be used by the holding agency in the disposition of the commodities or products. (3) Authorization for transfers to Department of Agriculture.-Authority is hereby delegated, with full power of redelegation, to the heads of all executive agencies to execute transfers without charge to the Department of Agriculture in accordance with paragraph (2) immediately above.

f. Disposal of certain vessels by the Secretary of Commerce.-The act provides that the Secretary of Commerce shall dispose of surplus vessels of 1,500 gross tons or more which the Secretary determines to be merchant vessels or capable of conversion to merchant use, and such vessels shall be disposed of only in accordance with the provisions of the Merchant Marine Act, 1936, as amended, and other laws authorizing the sale of such vessels; therefore, such vessels are excluded from this section.

g. Applicability of antitrust laws.-Whenever any holding agency shall begin negotiations for the disposition to private interests of property which cost the Government $1,000,000 or more, or of patents, processes, techniques, or inventions, irrespective of cost, the agency shall promptly notify the Attorney General and the Administrator of the proposed disposal and the probable terms or conditions thereof; and shall await advice from the Attorney General who will advise both the Administrator and the holding agency whether, insofar as he can determine, the proposed disposition would tend to create or maintain a situation inconsistent with the antitrust laws. In the event that the Attorney General advises that the proposed disposition would tend to create or maintain a situation inconsistent with the antitrust laws, the holding agency shall solicit further instructions from the Administrator before completing any disposition.

h. Proceeds from disposal.-All proceeds from the disposal of surplus personal property shall be covered into the Treasury as miscellaneous receipts, except as otherwise authorized by law enacted subsequent to June 30, 1949, or as provided in paragraphs (1), (2), (3) or (4) below:

(1) Where the property disposed of was acquired by the use of funds either not appropriated from the general fund of the Treasury or appropriated therefrom but by law reimbursable from assessment, tax, or other revenue or receipts, then the net proceeds of the disposition shall be credited to the reimbursable fund or appropriation or paid to the Federal agency which determined such

property to be excess: Provided, That the proceeds shall be credited to miscellaneous receipts in any case when the agency which determined the property to be excess shall deem it uneconomical or impractical to ascertain the amount of net proceeds.

(2) Any Federal agency disposing of surplus property under this regulation (a) may deposit, in a special account with the Treasurer of the United States, such amount of the proceeds of such dispositions as it deems necessary to permit appropriate refunds to purchasers when any disposition is rescinded or does not become final, or payments for breach of any warranty, and (b) may withdraw therefrom amounts so to be refunded or paid, without regard to the origin of the funds withdrawn.

(3) Where any contract entered into by an executive agency or any subcontract under such contract authorizes the proceeds of any sale of property in the custody of the contractor or subcontractor to be credited to the price or cost of the work covered by such contract or subcontract, the proceeds of any such sale shall be credited in accordance with the contract or subcontract.

(4) Subject to approval of the Administrator, any executive agency entitled to receive cash under any contract covering the sale or other disposition of surplus property may in its discretion accept, in lieu of cash, any property determined by the Munitions Board to be strategic or critical material at the prevailing market price thereof at the time the cash payment or payments became or become due.

18. Contractor inventory.—a. General.—Subject to the limitations contained herein any executive agency may:

(1) Authorize any contractor with such agency or subcontractor thereunder to retain or dispose of any contractor inventory under such orders and directives as such agency may prescribe.

(2) Dispose of contractor inventory.

b. Utilization.-Prior to disposal or retention by a contractor, each executive agency shall provide for the use of contractor inventory within such agency to the extent deemed appropriate. In addition, each executive agency shall comply with the utilization requirements and procedures of this regulation with respect to the following types of contractor inventory:

(1) Typewriting machines; office furniture, machines, equipment and supplies; motor vehicles and automotive equipment; printing and binding equipment; construction equipment (except hand tools); and all items included in the Federal Supply Service Stock catalog;

(2) Types of property for which known requirements exist either in the contracting agency or other Federal agencies. Contractors shall be kept currently advised by the contracting agency of such types;

(3) Excess property, the quantity or dollar amount of which is substantially in accordance with criteria established by each agency or as may be directed from time to time by the Administration;

(4) Reserved materials;

(5) Narcotics;

(6) Intangible personal property;

(7) Strategic and critical materials; and

(8) Such other types of property as may, from time to time, be designated by the Administration.

In the case of contractor-owned contractor inventory, compliance with the utilization requirements and procedures of this regulation with respect to the above-enumerated categories should ordinarily occur prior to exercising the applicable option to take over such property. When such compliance discloses that an agency will accept transfer of such property, the appropriate agency shall take the necessary action to acquire title for the Government.

c. Retention or disposal by contractors or subcontractors.-After compliance with any applicable requirements of subsection b, above, the executive agency concerned may authorize the retention or disposal of contractor inventory by a contractor or subcontractor in accordance with orders, directives, procedures, and review prescribed by such agency, subject to the following limitations:

(1) Contractor inventory shall not be sold to persons known to be officers or employees of the Federal Government, except to the extent determined by the heads of the contracting agencies concerned to be in the best interest of the Government, and under procedures and safeguards, prescribed by the heads of such agencies, adequate to preclude fraud and collusion.

(2) Disposals of contractor inventory, except as executive agencies shall otherwise provide, shall be by competitive sales.

(3) Retentions of contractor inventory where such inventory is not offered for competitive sale shall be, subject to the terms of the contract, at prices that are fair and reasonable and not less than the proceeds that could reasonably be expected to be obtained if the property were offered for competitive sale at such time.

(4) Where the original acquisition cost of serviceable material available for sale at any one time at any one location is $25,000 or more the contractor shall publish a notice of proposed sale a reasonable time in advance of such sale in a newspaper of general circulation in the locality in which the property is located.

(5) Retention or disposal of substantial quantities of material by the contractor shall be subject to prior approval by the contracting agency in accordance with criteria established by that agency or, in the absence of such criteria, when the acquisition cost of material available for disposal at any one location is in excess of $50,000.

(6) Whenever a contractor shall begin negotiations for the disposition to private interests of property which cost the Government $1,000,000 or more, or of patents, processes, techniques, or inventions, irrespective of cost, the contracting agency shall comply with the requirements of section 17g of this regulation.

d. Disposals by executive agencies.-When any executive agency authorized to effect disposal of contractor inventory under the provisions of subsection c determines that such disposal or retention by a contractor or subcontractor cannot be effected upon terms which are advantageous to the Government, such property may be disposed of in accordance with the surplus disposal procedures of this regulation: Provided, however, That such property may not be donated in accordance with section 16 of this regulation unless such donation is specifically authorized by regulation or instruction of the executive agency concerned.

e. Proceeds of sale.-The proceeds of the sale of contractor inventory may be credited to the price or cost of the work covered by the applicable contract or subcontract where such contract or subcontract so provides. In the absence of such provision, such proceeds shall, unless otherwise authorized by law, be covered into the Treasury as miscellaneous receipts.

19. Applicability of Federal excise taxes.-Federal manufacturers' and retailers' excise taxes are not applicable to the sale or other disposal by the Government of surplus personal property or the disposal of contractor inventory. Federal manufacturers' excise taxes do not apply to subsequent sales, including uses, by purchasers of Government property and contractor inventory. Federal retailers' excise taxes apply to subsequent sales but not to subsequent uses by the purchasers unless the subsequent sale is made for resale and a certificate of resale is obtained. The foregoing does not apply to gasoline, and holding agencies shall make appropriate arrangements with the Bureau of Internal Revenue with respect to the disposal thereof. Questions relating to the applicability of Federal excise taxes arising from the disposal of surplus property or contractor inventory should be referred to the Bureau of Internal Revenue.

20. Holding agency compliance functions.-Subject to the provisions of subsection a below, requiring referral of criminal matters to the Department of Justice, each holding agency shall perform such investigatory functions as are necessary to insure compliance with the provisions of the act and with the regulations, orders, directives, and policy statements of the Administrator. Nothing in this section should be deemed to affect the jurisdiction of any agency over its own personnel or any existing arrangements with the Department of Justice concerning the handling and prosecution of criminal matters.

a. Extent of investigations.-(1) Referral to other Government agencies.All information indicating violations by any person of Federal criminal statutes, or violations of section 209 of the act, including but not limited to fraud against the Government, mail fraud, bribery, attempted bribery, or criminal collusion, shall be referred immediately to the Department of Justice for further investigation and disposition. Each holding agency shall make available to the Department of Justice, or to such other governmental investigating agency to which the matter may be referred by the Department of Justice, all pertinent information and evidence concerning the indicated violations; shall desist from further investigation of the criminal aspects of such matters except upon the request of the Department of Justice; and shall cooperate fully with the agency assuming final jurisdiction in establishing proof of criminal violations. After making the necessary referral to the Department of Justice, inquiries conducted by the holding agency compliance organizations shall be limited to obtaining information for

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administrative purposes. Where irregularities reported or discovered involve wrongdoing on the part of individuals holding positions in Government agencies other than the agency initiating the investigation, the case shall be reported immediately to the Administrator for an examination in the premises.

(2) Compliance reports.—A written report shall be prepared on all compliance investigations conducted by each agency compliance organization. Each holding agency shall maintain files of all such reports. Until otherwise directed by the Administrator, there shall be transmitted promptly to the Administrator one copy of any such report which contains information indicating criminality on the part of any person or indicating substantial noncompliance with the act or with the regulations, orders, directives, and policy statements of the Administrator. In transmitting such reports to the Administrator the agency shall set forth the action taken or contemplated by the agency to correct the improper conditions disclosed by the investigation. Where any matter is referred to the Department of Justice, a copy of the letter of referral shall be transmitted to the Administrator.

21. Performance report.—A quarterly performance report shall be submitted to the Administrator on Standard Form 121, Quarterly Report of Utilization and Disposal of Excess and Surplus Personal Property, as set forth in appendix F. 22. Records and reports.—Executive agencies shall prepare and maintain such records as will show full compliance with the provisions of this regulation and with the applicable provisions of the act. Reports shall be prepared and filed in such manner and at such times as may be specified by the Administrator.

23. Standard forms.-a. Sales contract forms.-The use of Standard Forms 114 and 114a prescribed by section 17d hereof, shall be permissive. Existing stocks of agency sales contract forms may be used. Agencies are urged, however, to institute the earliest practicable use of these forms in order to obtain the experience on which to base recommendations and suggestions for revision. Such recommendations and suggestions should be submitted to the Administrator prior to the conclusion of 6 months from the effective date of this regulation to permit necessary changes to be made prior to making use of the form mandatory.

b. Report forms.-Standard Forms 120, Report of Excess Personal Property; 120a, continuation sheet; and 121, Quarterly Report of Utilization and Disposal of Excess and Surplus Personal Property, prescribed by sections 7j and 20, respectively, are to be used by all agencies as herein provided. Agencies should submit recommendations and suggestions to the Administrator for revision prior to the expiration of 6 months from the effective date of this regulation. Pending the revision of Standard Form 121, and in order to conform such standard form with section 4 of Public Law 754, Eighty-first Congress, agencies shall include donations to public-health institutions in section 5a of the form. (See appendix F.)

c. Obtaining supplies of standard forms.-The standard forms prescribed by this regulation shall be requisitioned from the Government Printing Office. Such requisitions should be submitted only by or through the office of each agency authorized to order printing for such agency.

24. Authority under other laws.-Actions relating to the utilization of excess, or the donation or other disposal of surplus personal property within the scope of the authority conferred upon the Administrator by the act shall be taken only in accordance with the provisions of this regulation unless otherwise authorized by the Administrator.

25. Rescreening of surplus personal property for defense purposes.—a. Any surplus personal property, other than excepted property specified in section 7g, reported to the Administration by executive agencies (except the Department of Defense) but for which no legal disposal commitment had been consummated prior to August 25, 1950, shall be reported again as excess in accordance with section 7 of this regulation, to permit rescreening for national defense purposes. Each such report should be designated at the top thereof, "Resubmission-Defense Screening"; and shall be submitted in three copies to the Administration, with a copy to the Surplus Materials Procurement Section, as provided by section 7j above. Property so reported shall not be available for disposal as surplus unless released by the Administration in accordance with section 15. Each such executive agency which had in its possession on August 25, 1950, excess personal property of the types described in section 7g, which are not required to be reported to this Administration, shall resolicit, to the fullest extent practicable or economical, the Department of Defense and other agencies known to use

or distribute such property. The remaining property, after such resolicitation, may be disposed of in accordance with the provisions of section 7g.

b. The Department of Defense shall rescreen for its own requirements all surplus property in its possession which became surplus prior to August 25, 1950; and, when such rescreening has been accomplished, the remaining property may be disposed of as surplus.

. 26. Agency regulations.-Each executive agency shall file with the Administrator 25 copies of all regulations, orders, directives, and instructions of general applicability which it may issue in furtherance of the provisions, or any of them, of this regulation.

27. Exceptions and deviations.-Exceptions from any portion of this regulation and deviations from any mandatory forms prescribed hereby shall be permitted only by direction of the Administrator.

28. Rescission of regulations.-Administrator's Temporary Regulation No. 2, dated July 1, 1949, and amendments thereto, Bureau of Federal Supply Circular Letter C-1, Revised, dated July 29, 1948, and supplements thereto, Bureau of Federal Supply Circular Letter C-3, dated July 8, 1949, and General Services Administration Temporary Regulation No. 6, dated September 13, 1949, are hereby rescinded and reference thereto in other regulations or instructions, where applicable, shall be deemed to be references to this regulation. General Regulation No. 1, dated August 18, 1950, insofar as it relates to the disposal of personal property, is hereby superseded.

29. Effective date.-The provisions of this regulation relating to contractor inventory and donations to public health institutions, including research, shall be effective on November 9, 1950. The remaining provisions of the regulation were effective on August 25, 1950, and shall continue in effect.

RUSSELL FORBES, Acting Administrator.