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FAR and DFARS › FAR Part 45: Government Property › Subpart 45.1

FAR 45.104 Responsibility and liability for Government property.

The codified text (eCFR, as of 2026-10-02). Under the Revolutionary FAR Overhaul ↗, agencies follow class deviations with new text for many parts while the formal rules go through the Federal Register: check the solicitation and your contract's clauses, which rule.

In plain English

This section explains when contractors are generally not liable for loss of Government property, such as under cost-reimbursement, time-and-material, labor-hour, and certain fixed-price contracts. It also allows the contracting officer to revoke that protection if the contractor's property management is noncompliant, and describes how liability and recovery are determined. Prime contractors remain responsible for Government property they provide to subcontractors.

Applies to: Contractors holding Government property under the listed contract types, and prime contractors providing Government property to subcontractors.

What it requires

  • Prime contractors providing Government property to subcontractors remain responsible to the Government under the prime contract.
  • Contractors must maintain property management practices compliant with contract requirements to avoid revocation of the Government's assumption of risk.

Key terms: Government property · cost-reimbursement contracts · time-and-material contracts · labor-hour contracts · property administrator

Written by AI from this section's text. A guide, not legal advice: the text below rules.

The text

(a) Generally, contractors are not held liable for loss of Government property under the following types of contracts:

(1) Cost-reimbursement contracts.

(2) Time-and-material contracts.

(3) Labor-hour contracts.

(4) Fixed-price contracts awarded on the basis of submission of certified cost or pricing data.

(b) The contracting officer may revoke the Government's assumption of risk when the property administrator determines that the contractor's property management practices are noncompliant with contract requirements.

(c) A prime contractor that provides Government property to a subcontractor shall not be relieved of any responsibility to the Government that the prime contractor may have under the terms of the prime contract.

(d) With respect to loss of Government property, the contracting officer, in consultation with the property administrator, shall determine—

(1) The extent, if any, of contractor liability based upon the amount of damages corresponding to the associated property loss; and

(2) The appropriate form and method of Government recovery (may include repair, replacement, or other restitution).

(e) Any monies received as financial restitution shall be credited to the Treasury of the United States as miscellaneous receipts, unless otherwise authorized by statute (31 U.S.C. 3302(b)).

Sections that refer to it

  • 28.303 Insurance against loss of or damage to Government property.
  • 31.205-19 Insurance and indemnification.
  • 45.107 Contract clauses.
  • 245.104 Responsibility and liability for Government property.

← 45.103 General. · 45.105 Contractors' property management system compliance. →

Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.

FAR 45.104 Responsibility and liability for Government property · SpendQuery