Rule2023-08549
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
April 27, 2023
Effective
May 30, 2023
Issuing agencies
General Services Administration
Abstract
GSA is issuing a final rule amending the Federal Management Regulation (FMR) to clarify the exchange/sale provisions and improve the application of this important authority across Federal agencies. The related FMR Part, Replacement of Personal Property Pursuant to the Exchange/Sale Authority, was last revised in November of 2011.
Full Text
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<title>Federal Register, Volume 88 Issue 81 (Thursday, April 27, 2023)</title>
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[Federal Register Volume 88, Number 81 (Thursday, April 27, 2023)]
[Rules and Regulations]
[Pages 25508-25511]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-08549]
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GENERAL SERVICES ADMINISTRATION
41 CFR Part 102-39
[FMR Case 2019-102-01; Docket No. GSA-FMR-2019-0015, Sequence No. 2]
RIN 3090-AK11
Federal Management Regulation; Replacement of Personal Property
Pursuant to the Exchange/Sale Authority
AGENCY: Office of Government-wide Policy (OGP), General Services
Administration (GSA).
ACTION: Final rule.
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SUMMARY: GSA is issuing a final rule amending the Federal Management
Regulation (FMR) to clarify the exchange/sale provisions and improve
the application of this important authority across Federal agencies.
The related FMR Part, Replacement of Personal Property Pursuant to the
Exchange/Sale Authority, was last revised in November of 2011.
DATES: Effective: May 30, 2023.
FOR FURTHER INFORMATION 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#45322c29292c24286b22243737203131052236246b222a33"><span class="__cf_email__" data-cfemail="bccbd5d0d0d5ddd192dbddceced9c8c8fcdbcfdd92dbd3ca">[email protected]</span></a> for clarification of content. For information
pertaining to status or publication schedules, contact the Regulatory
Secretariat Division at 202-501-4755 or <a href="/cdn-cgi/l/email-protection#eea9bdafbc8b89bd8b8dae899d8fc0898198"><span class="__cf_email__" data-cfemail="2c6b7f6d7e494b7f494f6c4b5f4d024b435a">[email protected]</span></a>. Please cite
FMR Case 2019-102-01.
SUPPLEMENTARY INFORMATION:
I. Background
This final rule amends the Federal Management Regulation (FMR) to
update current policy and remove outdated and unnecessary information
as proposed with changes published on February 18, 2022 at 87 FR 9303.
These changes, made as a result of public comments, are detailed in
section II.B. of this notice. 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.
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)
2021, 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. Title 40, United States Code (U.S.C.),
section 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
personal property exchanged or sold under this authority. The personal
property exchange/sale authority 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, 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> Exchange allowances and sales proceeds 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> Exchange allowances and sales proceeds are available
during the same fiscal year (FY) the property was exchanged or sold and
the following FY. This means that for an item sold in FY 2023, an
agency has the rest of FY 2023, as well as FY 2024 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,
[[Page 25509]]
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">https://www.property.reporting.gov</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 personal property in their
inventories.
II. Discussion of the Final Rule
A. Summary of Significant Changes
The definition for ``similar'' in FMR Sec. 102-39.20 is revised to
include items designed or constructed for the same general purpose. A
Note is also added to clarify that only one of the criteria in this
definition needs to be met for the property to be considered
``similar'' for an exchange/sale transaction.
FMR Sec. 102-39.25 is revised to allow deviations to the exchange/
sale provisions except for those mandated by statute or otherwise
described in the part, including FMR Sec. 102-39.80, which details the
accounting requirements for exchange allowances and sales proceeds.
FMR Sec. 102-39.40 is revised to clarify the differences between
the use of the exchange/sale authority and the disposal process for
excess/surplus personal property. 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 nonsurplus, 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.
The following Federal Supply Classification (FSC) Groups are
removed from the ``prohibited list'' at FMR Sec. 102-39.60:
<bullet> FSC Group 42: Firefighting, rescue, and safety equipment;
<bullet> FSC Group 51: Hand tools; and
<bullet> FSC Group 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 FMR Sec. 102-39.60 involve assets
which are inherently dangerous or could pose a significant public
health or safety concern, comprising assets in the following FSC Groups
of personal property:
<bullet> 10 Weapons.
<bullet> 11 Nuclear ordnance.
<bullet> 44 Furnace, Steam Plant, and Drying Equipment; and Nuclear
Reactors (FSC Class 4470, Nuclear Reactors only);
<bullet> FSC Group 84: Clothing, individual equipment, and
insignia; and
<bullet> 68 Chemical and chemical products.
This change also removes ``except medicinal chemicals'' from FMR
Sec. 102-39.60 as they are categorized under FSG 65, not FSG 68.
FMR Sec. 102-39.65 is revised to clarify that an exchange or sale
under this 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.
FMR Sec. 102-39.80 is revised to add language that no deviations
will be granted for this section.
FMR Sec. 102-39.85 is revised to update the reporting policy and
process to reflect the use of a new online reporting tool.
FMR Sec. 102-39.90 is added in accordance with the recommendations
of GAO report 19-33 to provide additional guidance to Federal agencies
regarding the publication of GSA Bulletins, including Bulletin B-48,
Guidance on Exchange/Sale Financial Accounting for Personal Property,
and updates to GSA's exchange/sale website.
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
[[Page 25510]]
these amendments to increase agency flexibility and understanding of
this program. GSA believes these 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.
B. Analysis of Public Comments
The proposed rule was published in the Federal Register on February
18, 2022 (87 FR 9303). Comments were received from six respondents,
some of which included multiple questions, comments, or concerns. Of
the comments received, there were five topics germane to and within the
scope of the final rule. An analysis of these public comments follows:
Comment: Five respondents expressed concerns about the proposed
revision to one of the criteria of the definition of ``similar'' in FMR
Sec. 102-39.20 to require that replacement property fall within a
defined Federal Supply Classification (FSC), instead of the current,
broader FSC Group. In particular, many objected that the revision would
negatively impact agency missions and place extensive administrative
and financial burden on their aviation, vehicle, and maritime programs.
Response: Agree. Revising the definition of ``similar'' to more
narrowly tailor one of the criteria of ``similar'' to require that
replacement property fall within a defined 4-digit Federal Supply
Classification is unduly restrictive. The proposed revision to FMR
Sec. 102-39.20(2) was removed and is not included in the final rule.
Comment: In addition to the concern addressed directly above, one
respondent suggested also adding ``capability'' to the definition of
``similar'' in FMR Sec. 102-39.20(4).
Response: Disagree. GSA informed the commenting agency that the
proposed revision to FMR Sec. 102-39.20(2) was removed from the final
rule. The commenting agency still recommended adding capability to FMR
Sec. 102-39.20(4), but does not object to leaving FMR Sec. 102-
39.20(4) as is. As a result, GSA chose to maintain the language of the
proposed rule. Additionally, an item only needs to meet one of the four
criteria of the definition of ``similar.''
Comment: One respondent opposed prohibiting deviations to FMR Sec.
102-39.80, which states exchange allowances or proceeds of sale will be
available during the fiscal year in which the property was exchanged or
sold and for one fiscal year thereafter for the purchase of replacement
property.
Response: Disagree. GSA does not have the authority to alter an
agency's applicable fiscal law constraints as determined by the GAO,
and therefore, cannot extend the availability of funds. Please refer to
the GAO, Principles of Federal Appropriations Law, 3rd ed., 2008 rev.,
ch. 12, sec. A.4, GAO-08-978SP (Washington, DC: Sept. 2008). The
regulation does, however, recognize that agencies may be allowed to
retain allowances or proceeds ``as authorized by law.'' GSA accordingly
recommends that agencies consult their respective Offices of Chief
Financial Officer and Offices of the General Counsel, as well as their
Office of Management and Budget Resource Management Officers, as
necessary, on the use and availability of these funds.
Comment: One respondent suggested that GSA should eliminate the
proposed revision to FMR Sec. 102-39.60, which would remove the
following FSC Groups from the prohibited list: 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).
Response: Disagree. The removal of the aforementioned FSC Groups
will allow agencies to recoup funds for vital programs to support their
agency missions. The remaining restrictions on the prohibited list
involve assets which are inherently dangerous or pose a significant
public health or safety concern.
Comment: One respondent suggested that GSA should add additional
reporting requirements to FMR Sec. 102-39.85. Specifically, the
respondent suggested agencies should be required to include the four-
digit FSC and the item nomenclature as part of the annual exchange/sale
report.
Response: Disagree. As explained above under paragraph A of this
section, the proposed revisions to FMR Sec. 102-39.20(2) were removed
and are not included in the final rule; therefore, collecting data at
the 4-digit FSC Group level is not warranted.
C. Expected Cost Impact to the Public
There is no expected cost to the public from this rule, as this
rule is largely administrative. The changes will clarify the exchange/
sale provisions and improve the application of this important authority
across Federal agencies.
III. 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.
The Office of Information and Regulatory Affairs (OIRA) has determined
that this is not a significant regulatory action and, therefore, was
not subject to review under section 6(b) of Executive Order 12866,
Regulatory Planning and Review, dated September 30, 1993.
IV. 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 under 5
U.S.C. 804(3).
V. Regulatory Flexibility Act
This final rule will not have a significant economic impact on a
substantial number of small entities within the meaning of the
Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because it applies
to agency management or personnel. Therefore, an Initial Regulatory
Flexibility Analysis has not been performed.
VI. 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 (OMB) 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
Excess and surplus Government property, Government property
management.
Robin Carnahan,
Administrator of General Services.
For the reasons set forth in the preamble, GSA amends 41 CFR part
102-39 as set forth below:
[[Page 25511]]
PART 102-39--REPLACEMENT OF PERSONAL PROPERTY PURSUANT TO THE
EXCHANGE/SALE AUTHORITY
0
1. The authority citation for 41 CFR part 102-39 continues to read as
follows:
Authority: 40 U.S.C. 121(c); 40 U.S.C. 503.
0
2. Amend Sec. 102-39.20 in the definition ``Similar'' by revising
paragraph (4) and adding a note to read as follows:
Sec. 102-39.20 What definitions apply to this part?
* * * * *
Similar * * *
(4) Are designed or constructed for the same general purpose
(includes any and all forms of property regardless of the FSC Group to
which they are assigned).
Note 1 to the definition of ``similar'': Only one of the criteria
in this definition needs to be met for the property to be considered
``similar'' for an exchange/sale transaction.
* * * * *
0
3. Amend Sec. 102-39.25 by revising the first sentence 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 note 1 to Sec. 102-39.60(a) and Sec. 102-
39.80. * * *
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 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 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:
(1) 10 Weapons.
(2) 11 Nuclear ordinance.
(3) 44 Furnace, Steam Plant, and Drying Equipment; and Nuclear
Reactors (FSC Class 4470, Nuclear Reactors only).
(4) 68 Chemical and chemical products.
(5) 84 Clothing, individual equipment, and insignia.
Note 1 to paragraph (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'' from the end of paragraph (d);
0
b. Redesignating paragraph (e) as paragraph (f); and
0
c. Adding 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 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 for this
section.
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
fiscal year (FY), an exchange/sale report using the online Personal
Property Reporting Tool template found at <a href="https://www.property.reporting.gov">https://www.property.reporting.gov</a>. 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#c6aea3aab6e89696949286a1b5a7e8a1a9b0"><span class="__cf_email__" data-cfemail="b3dbd6dfc39de3e3e1e7f3d4c0d29dd4dcc5">[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. 2023-08549 Filed 4-26-23; 8:45 am]
BILLING CODE P
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