Proposed Rule2022-03379
Federal Management Regulation; Replacement of Personal Property Pursuant to the Exchange/Sale Authority
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
February 18, 2022
Issuing agencies
General Services Administration
Abstract
GSA is proposing to amend the Federal Management Regulation (FMR) to clarify the exchange/sale provisions to improve the application of this important authority across Federal agencies. The related FMR part Replacement of Personal Property to the Exchange/Sale Authority was last revised November 1, 2011.
Full Text
<html>
<head>
<title>Federal Register, Volume 87 Issue 34 (Friday, February 18, 2022)</title>
</head>
<body><pre>
[Federal Register Volume 87, Number 34 (Friday, February 18, 2022)]
[Proposed Rules]
[Pages 9303-9306]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-03379]
=======================================================================
-----------------------------------------------------------------------
GENERAL SERVICES ADMINISTRATION
41 CFR Part 102-39
[FMR Case 2019-102-01; Docket No. GSA-FMR-2019-0015; Sequence No. 1]
RIN 3090-AK11
Federal Management Regulation; Replacement of Personal Property
Pursuant to the Exchange/Sale Authority
AGENCY: Office of Government-wide Policy, General Services
Administration (GSA).
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: GSA is proposing to amend the Federal Management Regulation
(FMR) to clarify the exchange/sale provisions to improve the
application of this important authority across Federal agencies. The
related FMR part Replacement of Personal Property to the Exchange/Sale
Authority was last revised November 1, 2011.
DATES: Interested parties should submit comments in writing on or
before April 19, 2022.
ADDRESSES: Submit comments in response to FMR Case 2019-102-01 to
<a href="http://Regulations.gov">Regulations.gov</a> at <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Enter ``FMR Case 2019-
102-01'' under the heading ``Enter Keyword or ID'' and select
``Search''. Select the link ``Submit a Comment'' that corresponds with
``FMR Case 2019-102-01''. Follow the instructions provided at the
``Comment Now'' screen. Please include your name, company name (if
any), and ``FMR Case 2019-102-01'' on your attached document.
All comments received will be posted without change, including any
personal and/or business confidential information provided. To confirm
receipt of your comment(s), please check <a href="https://www.regulations.gov">https://www.regulations.gov</a>
approximately two to three days after submission to verify posting.
FOR FURTHER INFORMATION CONTACT: For clarification of content, contact
William Garrett, Director, Personal Property Policy Division, Office of
Government-wide Policy, Office of Asset and Transportation Management
(MA), at 202-368-8163 or <a href="/cdn-cgi/l/email-protection#ea9d838686838b87c48d8b98988f9e9eaa8d998bc48d859c"><span class="__cf_email__" data-cfemail="98eff1f4f4f1f9f5b6fff9eaeafdececd8ffebf9b6fff7ee">[email protected]</span></a>. For information
pertaining to status or publication schedules, contact the Regulatory
Secretariat (MVCB), 202-501-4755. Please cite FMR Case 2019-102-01.
SUPPLEMENTARY INFORMATION:
A. Authority and Background of This Program
Personal property includes a wide variety of Government items such
as computers, office equipment, furniture, and vehicles, as well as
more specialized items specific to agencies, such as medical equipment
for the U.S. Department of Veterans Affairs (VA) and medical
helicopters for the U.S. Army. The Federal Government owns and manages
more than a trillion dollars of personal property. In Fiscal Year (FY)
2020, Federal agencies reported approximately $1.9 trillion in
capitalized personal property assets under their control. Over time,
agencies' personal property may no longer adequately perform the task
for which it was acquired. 40 United States Code (U.S.C.) Sec. 503
authorizes agencies to exchange (trade-in) or sell such property still
needed to meet mission needs and apply the exchange allowance or sale
proceeds to acquire similar replacement property.
Such transactions are known as personal property ``exchange/sale''
transactions. These transactions facilitate the replacement of personal
property by allowing agencies to offset the cost of new, similar
property, resulting in savings to agency funds. Without this authority,
agencies would have to expend the full purchase price of new personal
property from appropriations, while depositing the proceeds from the
disposition of worn property in the U.S. Treasury. Because exchange/
sale transactions provide agencies with opportunities to save costs, it
is important that agencies using this authority establish policies,
processes, and procedures with effective controls, in order to ensure
that they meet applicable requirements and are good stewards of
Government resources.
GSA's regulations at 41 Code of Federal Regulations (CFR) Part 102-
39 describe the terms, conditions, and reporting requirements for
exchanges and sales of personal property. The personal property
exchange/sale authority in FMR Sec. 102-39.60 allows agencies to
replace property that is not excess or surplus, i.e., the property is
still needed to meet the agency's continuing mission. In addition,
[[Page 9304]]
agencies must meet the following requirements to use the exchange/sale
authority:
<bullet> The property exchanged or sold is similar to the property
acquired.
<bullet> The personal property exchanged or sold was not acquired
for the principal purpose of later exchanging it or selling it using
the authority. For example, an agency cannot purchase a more costly
piece of equipment than necessary to meet mission needs for the sole
reason that it will deliver a higher value when sold using this
exchange/sale authority.
<bullet> Proceeds from the sale can only be put toward the purchase
of similar replacement property and cannot be used for services. In
other words, an agency can use proceeds from the sale of a vehicle to
purchase a new vehicle, but it cannot use proceeds to hire a mechanic
to repair an existing vehicle.
<bullet> Proceeds from sale are available during the same fiscal
year (FY) the property was sold and the following FY for replacement
property. This means that for an item sold in FY 2021, an agency has
the rest of FY 2021, as well as FY 2022 to purchase a replacement item.
If agencies do not spend these funds by the end of the next FY, monies
are to be deposited in the U.S. Treasury as miscellaneous receipts,
except as otherwise authorized by law. Such legal authority may, for
example, take the form of an authorized revolving fund where the rules
of the program allow use of funds beyond the restrictions of the FMR.
<bullet> Agencies are prohibited from using the authority to
replace certain types of property as detailed in FMR Sec. 102-39.60
(weapons, nuclear ordinances, etc.).
Agencies may choose between two transaction methods to replace
property, the exchange (trade-in) method or the sale method, but must
determine which method provides the greatest return to the Government,
including factoring in administrative and overhead expenses. A typical
exchange occurs when the original manufacturer delivers a replacement
item to the agency and removes the item being replaced. The
manufacturer applies a trade-in credit (an allowance) for the purchase
of the replacement item. If the sale method is used, the agency
receives the sale proceeds for the sale of the item and applies those
proceeds to the purchase of the replacement personal property.
If contemplating an exchange/sale, agencies are guided to follow a
process similar to the disposal process for excess property by making
it available to other Federal agencies and state agencies by posting it
to GSAXcess at <a href="https://gsaxcess.gov/">https://gsaxcess.gov/</a>. This is GSA's website for
reporting, searching, and selecting property. This process allows other
Federal agencies or state agencies to obtain the property for the price
required by the reporting agency to help fund the acquisition of
replacement property under the exchange/sale authority.
Agencies are required to submit a summary report to GSA through the
GSA Personal Property Reporting Tool (PPRT), <a href="https://www.property.reporting.gov/PPRT/PPRTLogin">https://www.property.reporting.gov/PPRT/PPRTLogin</a>, at the end of each FY on the
type, the quantity, the exchange allowances and/or sale proceeds, as
applicable, and the original acquisition cost of items for both
exchange and sale transactions. Agencies with no transactions during a
FY must submit a negative report. Ultimately, agencies decide whether
to use the exchange/sale authority to replace property in their
inventories.
B. Changes Proposed by This Rule and Expected Impact
In 2018, the Government Accountability Office (GAO) Report 19-33,
``GSA and VA Have Opportunities to Improve the Exchange/Sale Process'',
identified confusion among some agencies on the use of the exchange/
sale authority which could be alleviated by, among other actions,
revising FMR Part 102-39. In addition to amending the exchange/sale
regulations found in FMR Part 102-39 with this rule, GSA published FMR
Bulletin B-48, ``Exchange/Sale Financial Accounting,'' December 18,
2018, and other guidance, frequently asked questions, best practices,
and deviation request procedures all of which can be found at
<a href="http://www.gsa.gov/exchangesale">www.gsa.gov/exchangesale</a>.
<bullet> GSA is proposing to revise the definition of ``similar''
in FMR Sec. 102-39.20 to more narrowly tailor one of the criteria of
``similar'' to require that replacement property fall within a defined
Federal Supply Classification (FSC), which can be found at <a href="https://public.logisticsinformationservice.dla.mil/H2/search.aspx">https://public.logisticsinformationservice.dla.mil/H2/search.aspx</a>, as opposed
to an FSC Group. A FSC Group is a two-digit number that categorizes
types of property, whereas a FSC is a four-digit number that further
categorizes types of property within the FSC Group. For example, FSC
Group 12 is for Fire Control Equipment. Within FSC Group 12, there are
FSCs that further categorize this type of property, e.g., FSC 1210--
Fire Control Directors. GSA observes that not all property within the
same broad FSC Group would reasonably be considered ``similar.''
Further, another criterion to meet the definition of ``similar'' is
being updated to reflect that items will be deemed to be ``similar''
for the purposes of an exchange/sale transaction if the assets are
designed or constructed for the same general purpose, regardless of the
assigned FSC. Only one of the criteria in this definition needs to be
met for the property to be considered ``similar'' and eligible for an
exchange/sale transaction.
<bullet> Amend FMR Sec. 102-39.25 to allow all provisions in this
part to be subject to deviation except for those mandated by statute
and FMR Sec. 102-39.80.
<bullet> Amend the question in FMR Sec. 102-39.40 and clarify the
difference between the exchange/sale authority and the more frequently
used excess/surplus disposal process. The primary difference is that
personal property disposal under the excess/surplus process does not
allow for the use of proceeds or allowances (if any), in acquiring
replacement similar assets. Exchange/sale property is replacement
property that is non-excess and non-surplus, meaning the agency has a
continuing need for the property, but the specific item(s) are no
longer suitable to the need and must be replaced, and therefore are not
reported to GSA as excess or surplus for transfer or donation purposes.
<bullet> Revise the ``prohibited list'' at FMR Sec. 102-39.60 by
removing FSC Groups 42, Firefighting, rescue, and safety equipment; 51,
Hand tools; and 54, Prefabricated structure and scaffolding (FSC 5410
Prefabricated and Portable Buildings, FSC 5411 Rigid Wall Shelters, and
FSC 5419 Collective Modular Support System only). The restrictions
remaining in this section involve assets which are inherently dangerous
or pose a significant public health or safety concern.
<bullet> Remove ``. . . , except medicinal chemicals'' from FMR
Sec. 102-39.60 as these are categorized under FSG 65, not FSG 68.
<bullet> Amend FMR Sec. 102-39.65 to clarify that an exchange or
sale under this FMR part may occur after the acquisition of the
replacement property. For example, if a Magnetic Resonance Imaging
(MRI) machine is needed for use daily, the replacement machine may be
acquired and installed before the existing machine is removed and
exchanged or sold. If the existing machine is sold, in accordance with
agency policy, the funds may be returned to the appropriation used to
acquire the replacement machine. If the existing machine is exchanged,
in accordance with agency policy, the agency agreement with the entity
providing the replacement must document the responsibilities of both
parties to execute this transaction.
[[Page 9305]]
<bullet> Update FMR Sec. 102-39.80 by adding parallel language
from the edits to FMR Sec. 102-39.25 that states that no deviations
will be granted to this section.
<bullet> Update the reporting policy and processes in FMR Sec.
102-39.85 to reflect the use of a new online reporting tool and
reporting requirements.
<bullet> Add FMR Sec. 102-39.90 in accordance with the
recommendations of GAO Report 19-33 to provide additional guidance to
agencies, such as reminding agencies of the publication of Bulletin B-
48 and the guidance available at the GSA website on this exchange/sale
topic.
According to GSA's annual summary data, 27 agencies reported using
the exchange/sale authority and received a total of about $2.8 billion
in exchange allowances or sale proceeds from fiscal year 2016 through
fiscal year 2020. While many agencies used the authority, a few
agencies, particularly GSA, together accounted for about 88 percent of
all allowances and proceeds. Specifically, 5 of 27 agencies reported
nearly all exchange allowances and sale proceeds. GSA accounted for
about $1.5 billion of about $2.8 billion (or about 55 percent) of
reported allowances and proceeds across the federal government. Four
other agencies--the Departments of Homeland Security, Agriculture,
Defense, and the Interior--accounted for about $899 million (or about
32 percent) of the total. The other 22 agencies using the authority
reported about $340 million (or about 12 percent) in exchange
allowances or sales proceeds over the 5-year period. Finally, agencies
reported using the sale method more than the exchange method. Sales by
agencies accounted for about $2.5 billion (or about 91 percent), while
use of the exchange method accounted for about $247 million (or about 9
percent) of total transactions reported, primarily due to GSA's
reporting more use of the sale method over the exchange method.
While some agencies reported hundreds of millions of dollars in
exchange allowances and sale proceeds, the data show that 8 federal
agencies-- including the Department of Labor and the Office of
Personnel Management--reported relatively few transactions, which
totaled less than $200,000 in exchange allowances and sales proceeds.
By using the exchange/sale authority, agencies have an opportunity
to be good stewards of government property by efficiently replacing
needed property, including high-value items, that serves critical and
continuing requirements to meet agency missions. GSA expects these
proposed amendments to increase agency flexibility and understanding of
this program. GSA believes these proposed amendments will help agencies
take better advantage and increase the use of this authority, thereby
becoming more effective stewards of government property and
replenishing property more efficiently.
C. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). E.O.
13563 emphasizes the importance of quantifying both costs and benefits,
of reducing costs, of harmonizing rules, and of promoting flexibility.
This proposed rule is not anticipated to be a significant regulatory
action, and therefore, was not subject to review under Section 6(b) of
E.O. 12866, Regulatory Planning and Review, dated September 30, 1993.
D. Congressional Review Act
OIRA has determined that this rule is not a ``major rule'' as
defined by 5 U.S.C. 804(2). Additionally, this rule is excepted from
Congressional Review Act reporting requirements prescribed under 5
U.S.C. 801 since it relates to agency management or personnel.
E. Regulatory Flexibility Act
This proposed rule will not have a significant economic impact on a
substantial number of entities within the meaning of the Regulatory
Flexibility Act, 5 U.S.C. 601, et seq.
F. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the changes to
the FMR do not impose recordkeeping or information collection
requirements, or the collection of information from offerors,
contractors, or members of the public that require the approval of the
Office of Management and Budget under 44 U.S.C. 3501, et seq. Reporting
requirements are only addressed to Federal agencies regarding their
Federal personal property transactions.
List of Subjects in 41 CFR Part 102-39
Replacement of personal property pursuant to the exchange/sale
authority; Government property management; surplus Government property.
Krystal J. Brumfield,
Associate Administrator, Office of Government-wide Policy.
For the reasons set forth in the preamble, GSA proposes to amend 41
CFR part 102-39 as set forth below:
0
1. The authority for part 102-39 continues to read as follows:
Authority: 40 U.S.C. 121(c); 40 U.S.C. 503.
PART 102-39--REPLACEMENT OF PERSONAL PROPERTY PURSUANT TO THE
EXCHANGE/SALE AUTHORITY
0
2. Amend Sec. 102-39.20, in the definition of ``Similar,'' by revising
paragraphs (2) and (4) to read as follows:
Sec. 102-39.20 What definitions apply to this part?
* * * * *
Similar * * *
(2) Fall within a single Federal Supply Classification (FSC)
(includes any and all forms of property within an FSC); or
* * * * *
(4) Are designed or constructed for the same general purpose
(includes any and all forms of property regardless of the FSC to which
they are assigned).
Note 1 to Sec. 102-39.20: Only one of the criteria in this
definition needs to be met for the property to be considered
``similar'' and eligible for an exchange/sale transaction.
* * * * *
0
3. Revise Sec. 102-39.25 to read as follows:
Sec. 102-39.25 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 for those mandated by
statute, as described in the Note to Sec. 102-39.60(a), and Sec. 102-
39.80. See the link on ``Exchange/Sale'' at <a href="http://www.gsa.gov/personalpropertypolicy">www.gsa.gov/personalpropertypolicy</a> for additional information on requesting
deviations from this part.
0
4. Revise Sec. 102-39.40 to read as follows:
Sec. 102-39.40 How does the exchange/sale authority differ from the
disposal process for excess/surplus personal property?
(a) The primary difference from your perspective is that sales
proceeds or exchange allowances may be used to acquire similar
replacement personal property that is still needed under the exchange/
sale authority as described in this part; whereas under the more
frequently used excess/surplus disposal process, you would not be able
to use sales proceeds or exchange allowances
[[Page 9306]]
to acquire replacement personal property.
(b) Your use of the exchange/sale authority is optional and should
be considered when needed replacement assets may be acquired under the
provisions of this part. If exchange/sale is not practicable (for
example, if conducting an exchange/sale transaction is not cost
effective), you should dispose of the property through the excess/
surplus disposal process by reporting the property as excess, as
addressed in Part 102-36 of this chapter.
(c) In the excess/surplus disposal process, any net proceeds from
the sale of surplus property generally must be forwarded to the
miscellaneous receipts account at the United States Treasury, and thus
would not be available to you for use in acquiring similar replacement
property or for any other purpose. You may use the exchange/sale
authority in the acquisition of personal property even if the
acquisition is under a services contract, as long as the property
acquired under the services contract is similar to the property
exchanged or sold (e.g., for a service life extension program (SLEP),
exchange allowances or sales proceeds would be available for
replacement of similar items, but not for services).
0
5. Amend Sec. 102-39.60 by revising paragraph (a) to read as follows:
Sec. 102-39.60 What restrictions and prohibitions apply to the
exchange/sale of personal property?
* * * * *
(a) The following FSC Groups of personal property:
10 Weapons.
11 Nuclear ordinance.
44 Furnace, Steam Plant, and Drying Equipment; and Nuclear Reactors
(FSC Class 4470, Nuclear Reactors only).
68 Chemical and chemical products.
84 Clothing, individual equipment, and insignia.
Note to 102-39.60(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), or any other FSC Group, for
which the applicable DoD demilitarization requirements and any other
applicable regulations and statutes are met.
* * * * *
0
6. Amend Sec. 102-39.65 by--
0
a. Removing ``and'' at the end of paragraph (d);
0
b. Redesignating paragraph (e) as paragraph (f); and
0
c. Adding a new paragraph (e).
The addition reads as follows:
Sec. 102-39.65 What conditions apply to the exchange/sale of
personal property?
* * * * *
(e) Your agency documents at the time of exchange or sale (or at
the time of acquiring the replacement property if acquisition precedes
the exchange or sale) that the exchange allowance or sale proceeds will
be applied to the acquisition of replacement property; and
* * * * *
0
7. Amend Sec. 102-39.80 by adding a sentence at the end of the section
to read as follows:
Sec. 102-39.80 What are the accounting requirements for exchange
allowances or proceeds of sale?
* * * Under no circumstances will deviations be granted to for
Sec. 102-39.80.
0
8. Revise Sec. 102-39.85 to read as follows:
Sec. 102-39.85 What information am I required to report?
You must submit, within 90 calendar days after the close of each
FY, an exchange/sale report using the online Personal Property
Reporting Tool template found at https://www.property.reporting.gov/
PPRT/PPRTlogin. This template provides the specific information needed
for your agency's report. You can contact the GSA Help Desk at
<a href="/cdn-cgi/l/email-protection#e9818c8599c7b9b9bbbda98e9a88c78e869f"><span class="__cf_email__" data-cfemail="771f121b0759272725233710041659101801">[email protected]</span></a> if you need assistance accessing the online reporting
tool. All reports, including negative reports, must be submitted
electronically through the Personal Property Reporting Tool.
Transactions involving books and periodicals in your libraries need not
be reported.
0
9. Add Sec. 102-39.90 to read as follows:
Sec. 102-39.90 Where do I obtain additional information?
Additional information is provided at the GSA websites <a href="http://www.gsa.gov/bulletin">www.gsa.gov/bulletin</a> and <a href="http://www.gsa.gov/exchangesale">www.gsa.gov/exchangesale</a>.
[FR Doc. 2022-03379 Filed 2-17-22; 8:45 am]
BILLING CODE 6820-14-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on February 18, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.