Loss of Laptop

My first thought is that you have gone directly to the FAR for guidance but leaves the question unanswered as to what the contract provides with regard to such "removal" and risk of loss?   And by contract I mean both the parent CPFF contract and/or the task order.

Guest108830 said:

with permission and issuance of a Property Pass from the Navy/Gov't)

Who signed the "pass", a representative of the contractor or the individual who used the laptop?   You may have a situation where the individual is liable, but not the contractor.

I've heard a few discussions concerning this topic since COVID-19 teleworking began.  What does the contract say?  If the PC was incidental, then it technically should have stayed on post.  I'm assuming the contractor was liable for the incidental GP?  Not sure a local unit "Property Pass" takes precedence over the FAR unless it was addressed in the contract.  I know one organization in the USAF did a waiver to allow contractors to take PC's off base as and still keep them as "incidental".  Either way.....good question for legal.

BowtechDan said:

the contract.

The contract is between the government and contractor.  The "pass" may constitute a separate bailment agreement between the government and the individual.  We don't know all the facts and regulations that might apply in this situation.

https://www.reuters.com/article/us-data-breach-texas/records-of-4-9-mln-stolen-from-car-in-texas-data-breach-idUSTRE78S5JG20110929

FAR 52.237-2 Protection of Government Building, Equipment and Vegetation is also present in the Cost Reimbursable Task Order. I would assume if the Laptop was provided by the Gov't for use on base, but due to Corona Virus, allowed to be taken off-base, that if damage / loss occurred on-base, the Contractor would be liable to the Gov't under FAR 52.237-2. The fact the laptop is moveable and taken off-base should not upset that determination. The laptop was not declared Government Furnished Property and therefore not added to the contract as part of GFP listing.

I'm concluding the risk of loss is on the Contractor to repair / replace the laptop unless the Gov't added such as GFP via modification under the contract / Task Order.  If such were added as GFP, the risk of loss should then be reversed and placed upon the Gov't pursuant to FAR 52.245-1 ( h ) ( 1 ).

Guest108830 said:

The laptop was not declared Government Furnished Property and therefore not added to the contract as part of GFP listing.

The definition of Government-furnished property has nothing to do with whether or not an item is on a list.  I think the laptop is GFP.

When I used to provide laptops for contractor employees, I always included a contract clause to offset para. (h)(1) of the contract clause at FAR 52.245-1, Government Property.  That clause clearly put liability for loss on the contractor.  I think loss of the laptop is covered by FAR 52.245-1 rather than 52.237-2.

But this may all be irrelevant -- the contractor employee assumed liability when signing the property pass -- the property pass may be outside the contract relationship -- but if within, then it may act under para. (h)(1) of FAR 52.245-1 to shift liability to the contractor.

I would send the contractor a letter about the loss of the laptop by one of its employees and ask for a check. I wouldn't spend even one minute worrying about whether it was government-furnished property or what clause to invoke. I doubt that the contractor would, either. How much could a government laptop be worth? The contractor would have to be stupid to refuse to pay.

And I wouldn't consult bleeping legal, either.

Guest108830 said:

I'm concluding the risk of loss is on the Contractor to repair / replace the laptop unless the Gov't added such as GFP via modification under the contract / Task Order.  If such were added as GFP, the risk of loss should then be reversed and placed upon the Gov't pursuant to FAR 52.245-1 ( h ) ( 1 ).

If FAR 52.245-1 was included in the contract, I don't see how the contractor is liable for "laptop is stolen or damaged through no fault of the Defense Contractor," as you say in the facts, unless liable through one of the listed exceptions in (h). Vern has suggested a practical solution which would save both parties the trouble of investigating (1) whether it matters if the laptop was formally added to the contract as GFP (2) the impact of the "Pass" (3) contractor's insurance (4) contractor good faith (5) contractor property management practices. That solution should require a change notice that establishes the incurred contractor cost to be unallowable.

On 2/3/2021 at 6:32 AM, Guest108830 said:

According to FAR 45.000(b)(5), computers used incidental to performance of work at an installation are not considered Government Furnished Property (GFP).

And then:

On 2/3/2021 at 6:32 AM, Guest108830 said:

Under 45.000(b)(5), the incidental aspect for computers appears to be solely applicable while on-base, not off-base. If the laptop was considered "incidental" from the onset under FAR 45.000 (b)(5) and thus not GFP, but no risk of loss to the Defense Contractor, why wouldn't that continue even when the laptop is taken off-base and used with teleworking (notwithstanding any language in the Property Pass)? In other words, if incidental while on-base, why not incidental off-base, and thus risk of loss remains with the Government?

That's almost metaphysical reasoning. The exact words of FAR 45.000(b)(5) are:

Quote

Government property that is incidental to the place of performance, when the contract requires contractor personnel to be located on a Government site or installation, and when the property used by the contractor within the location remains accountable to the Government. Items considered to be incidental to the place of performance include, for example, office space, desks, chairs, telephones, computers, and fax machines.

Well, let's get metaphysical: A laptop is not incidental to place. Its very purpose is to be carried about and used from place to place. The whole idea of a laptop is to not be incidental to place, other than one's lap, wherever it happens to be. That's why the contractor's employee asked for permission to take it home. Thus, a laptop, while a computer, it is not a "computer" in the context of FAR 45.000(b)(5).

As for the laptop's status as listed government-furnished property, I'd cite the property pass.

Case closed. Send the contractor a letter: Dear Contractor, One of your people asked permission to take a laptop home, Serial No... . We granted permission in order to be cooperative and facilitate your company's performance under the contract. Your employee _________________ has informed us that the laptop is lost. Our property department says its residual value (or replacement value) is $500. Please send me a check made out to the United States Treasury for $500.

/s/ Contracting Officer

If the contract is cost-reimbursement, time-and-materials, or fixed-price incentive, add a sentence saying that the cost of reimbursing the government will be unallowable for payment purposes.

I would consider it to be beneath a contracting officer's dignity to seek legal review of such a letter. I doubt that the contractor would blink an eye before cutting a check.

45.000 ( b ) ( 5 ) also states "fax machine." The correct terminology should be "facsimile machine" but for one reason or another the Government decided to use the vernacular, but almost everyone knows what's it's pertaining to. While not impossible to place a desktop computer on your lap, it's just a bit more cumbersome. A laptop is a computer, just like a smart phone is also a computer - it runs off of bits and bytes.

Asking the Contractor to write a check without blinking an eye is somewhat antithetical. The contractors I'm familiar with would most certainly question this approach, especially a small business on a $5 million CPFF (base and 4 one year options). Such a loss goes direct to the bottom line as an unbillable against the contract. Not to mention the value of the contents being compromised in the laptop as well. 

Determining risk of loss under a Cost Reimbursable contract / task order appears paramount in determining not only who pays but also, whether insurance is allowable to cover such pursuant to FAR 31.205-19 ( e ) ( 2 ) ( iv ) ( A ).  If risk of loss is on the Contractor for a stolen laptop off-base, then any insurance to cover such should also be allowable. And if the Laptop is indicated as GFP (within PIEE System) and added to the contract via a mod as such, then risk of loss is on the Government pursuant to 52.245-1 ( h ) ( 1 ), and any insurance secured to protect against such would appear to be unallowable, pursuant to FAR 31.205-19 ( e ) ( 2 ) ( iv ) ( A ). In other words, it appears more than just the cost of the laptop at issue.

Seems this is more of a case by case basis where some KO's would classify the laptop such as GFP, while others would not. And in doing so, so goes risk of loss, along with allowability of certain insurance costs. Thanks for all the responses.

Guest108830 said:

Asking the Contractor to write a check without blinking an eye is somewhat antithetical.

Antithetical? Huh?

@Guest108830 You may have posted just to spur conversation. If so, it was a good thing. But if you are serious about this matter I must say that you have tried to make a mountain out of a molehill.

I am a small business contractor, and I tell you that if one of my employees had borrowed a government laptop and lost it, I wouldn't have waited for a letter from the CO. I'd have called him or her and asked how much to send. It's called customer relations. Any contractor, small or otherwise, with a 5 million CPFF contract, would be an absolute idiot, a jackass in fact, to argue with a CO about paying for a laptop that one of its employees had borrowed and lost.

I appreciate your comments. Thank you.

Guest108830 said:

Determining risk of loss under a Cost Reimbursable contract / task order appears paramount in determining not only who pays but also, whether insurance is allowable to cover such pursuant to FAR 31.205-19 ( e ) ( 2 ) ( iv ) ( A ).  If risk of loss is on the Contractor for a stolen laptop off-base, then any insurance to cover such should also be allowable. And if the Laptop is indicated as GFP (within PIEE System) and added to the contract via a mod as such, then risk of loss is on the Government pursuant to 52.245-1 ( h ) ( 1 ), and any insurance secured to protect against such would appear to be unallowable, pursuant to FAR 31.205-19 ( e ) ( 2 ) ( iv ) ( A ). In other words, it appears more than just the cost of the laptop at issue.

Bureaucratic claptrap. You asked about a laptop, not a spacecraft.

I'm more than a bit hesitant to weigh-in here, mostly because Vern doesn't need any white knights to come to his rescue. That said ....

Contractors buy laptops all the time. Prices for new laptops range from $500 up to maybe $3,000 for top-end computers. I don't know how much the government is paying for its bulk purchases of laptops from Dell or whomever, but I would be shocked if the price for a new laptop were outside that corridor. No contractor I know, small business or not, would hesitate a moment to write a check to cover the loss of a government-provided laptop. Most contractors I know would be terrified that they were going to be called negligent for the employee's loss of the laptop

(See the link I posted on February 3rd. Do you have any idea how much that lost laptop cost the contractor? Hint: Double-digit millions; possibly triple digits. Not to mention the $4.9 billion class-action suits (plural) filed against both TRICARE and the contractor. Not the same situation, I know. But still: a single lost laptop.)

Vern is correct. Tell the contractor how much to write the check for, tell them the expense associated with the payment is unallowable as either a direct or indirect cost, and close the file. The contractor will be grateful. If the contractor pushes back at all (which I would find difficult to believe), then send the contractor's representative that link to the story of the lost laptop. That should end the discussion quickly.

I get it. Thanks again for all the responses.

I agree 100%.

I didn't mean to be hard on Guest108830. My point is that not all transactions in a business relationship are handled formally and pursuant to some contract clause. Many day to day matters are handled informally, with a phone call or an email. I think the loss of an ordinary laptop is one of those kinds of matters and, having been a CO on some large (in the day) CPFF contracts, that's how I would have handled the matter in question. In my experience, contractors would have appreciated informality in such a matter.

Now, a lost spacecraft or Predator drone would be another thing entirely.

On 2/12/2021 at 7:42 AM, Vern Edwards said:

I doubt that the contractor would blink an eye before cutting a check.

 Reupping this because I have a contractor that is blinking their eye.  Their employee was working from home due to COVID, was terminated, and is apparently still in possession of the government laptop/piv.  Contractor states that all effort was made to retrieve the equipment but was unsuccessful and states that under FAR 52.245-1 (h)(1), that they are not responsible for reimbursing the gov’t for lost equipment.

It looks like 52.245-1(h)(5) the CO can direct the Contractor to furnish cooperation up to and including the prosecution of suit to recover the laptop, but at the government's expense.  Is there something else I am missing to hold the Contractor liable for this loss of the laptop/piv?

Does the contractor have an acceptable property management system? Did the contractor issue the computer to the employee and did the contractor direct the employee to return the computer or take any other action to get the computer back?

joel hoffman said:

Does the contractor have an acceptable property management system? Did the contractor issue the computer to the employee and did the contractor direct the employee to return the computer or take any other action to get the computer back?

1. I mean, based on how they did not make sure the laptop/piv were returned before the employee left the company it would seem like they don't have an acceptable system.  It's unclear to me whether we have a copy of their property management policies and procedures in the file or requested it at the time of award.  Will be requesting that asap.  It sounds like we can make that determination retroactively and it would then be on the contractor to prove that the loss occurred while they DID have an acceptable property management system?  

2.  Yes, sort of.  The computer is typically used just on-site but with COVID a determination was made to allow employees to work from home.  Upon the termination of employment, a request was apparently made to return the laptop/piv but it sounds like it was limited to a verbal request.  Not even sure at this point a Fedex/UPS box, etc. was sent for the former employee to return it nor  have I received any indication that anyone has gone over to this person's house or calling the police.

Right now I'm hoping the contractor works to get the actual laptop/piv back than just having the contractor reimburse me for a "lost" laptop.  I frankly don't consider this a loss of government property when the contractor knows where it is.

What kind of gold-plated laptop was this? Make and model?

Of course you or the contractor could call the ex employee and tell them that the computer belongs to the government and he/she must return it or it will be considered a theft and that you will pursue criminal action. If they refuse, if you have any buddies in the police department  or sheriff’s Office department, take them with you over to their house and demand that they hand over it over. It has worked before

Vern, once, American Airlines crushed my govt Dell Laptop in the cargo elevator door at the gate. A replacement was $4200. They claimed they weren’t liable for loss of electronic items per the fine print. I told them that wasn’t legally enforceable and that the government would pursue it and demand replacement. They immediately ponied up and sent me a check which endorsed over to the US Treasury and handed it in at our Finance Office.

Some firm discussions often worked.

jjgott said:

Contractor states that all effort was made to retrieve the equipment but was unsuccessful and states that under FAR 52.245-1 (h)(1), that they are not responsible for reimbursing the gov’t for lost equipment.

Did they report the matter to law enforcement?

joel hoffman said:

Vern, once, American Airlines crushed my govt Dell Laptop in the cargo elevator door at the gate. A replacement was $4200.

@Don Mansfield$4,200 for a Dell laptop. A Dell?!

Heck, man, I can buy a top-of-the-line, fully-loaded, 16" MacBook Pro for almost $2,000 less than that! I'd have enough left to buy an Apple watch! One of the good ones!

A strongly-worded letter demanding compensation in a sum certain RIGHT BLEEPING NOW addressed to someone high up in the company should do the trick. That, plus a CPARS threat. And by the way, I'd tell them I was going to notify the FBI, the OSI, the CID, and the NCI. THE 82ND AIRBORNE! THE 75TH RANGERS! THE GREEN BERETS! THE SEALS! DELTA FORCE! The heck with the local fuzz.

What I wouldn't do is ask for the company's property management policies and procedures. I don't want to be insulting, but that just sounds dumb.

You know, our government is just plain incompetent. It's become a threat to life, liberty, and the pursuit of happiness! When I think of all the stuff we need—fire-fighters and equipment in my part of the USA—the idea of paying taxes for somebody to read a company's property management policies and procedures because they lost one of our laptops makes me want to...

Well, I better not say.

Vern Edwards said:

@Don Mansfield$4,200 for a Dell laptop. A Dell?!

Heck, man, I can buy a top-of-the-line, fully-loaded, 16" MacBook Pro for almost $2,000 less than that! I'd have enough left to buy an Apple watch! One of the good ones!

A strongly-worded letter demanding compensation in a sum certain RIGHT BLEEPING NOW addressed to someone high up in the company should do the trick. That, plus a CPARS threat. And by the way, I'd tell them I was going to notify the FBI, the OSI, the CID, and the NCI. THE 82ND AIRBORNE! THE 75TH RANGERS. THE GREEN BERETS! THE SEALS! DELTA FORCE! The heck with the local fuzz.

What I wouldn't do is ask for the company's property management policies and procedures. I don't want to be insulting, but that just sounds dumb.

You know, our government is just plain incompetent. It's become a threat to life, liberty, and the pursuit of happiness! When I think of all the stuff we need—fire-fighters and equipment in my part of the USA—the idea of paying taxes for somebody to read a company's property management policies and procedures because they lost one of our laptops makes me want to...

Well, I better not say.

I don’t disagree.

To me it’s pretty simple. There is a big difference between theft of property by unknown persons and your contractor 1) knowingly issuing government owned property to an employee, 2) knowing exactly where that property is and who has it, and 3) not pursuing action to get it back.

It’s not “lost”. It’s not “stolen by unknown persons”. Contractor and you know where it is and who has it.  Tell Contractor to take action to get it back.

If the holder refuses to give it back, it likely amounts to felony theft of federal government property. State law differentiates felony theft from misdemeanor theft based on the value of the property stolen. The current threshold varies from $500 to $2,500, depending on the state. The ex employee will then be aware that it is in unlawful possession of federal government property and that somebody is going to call the cops if they won’t hand it over.

Contractor can’t avoid accountability for not reasonably maintaining control of property that it has signed for- especially when it knows who it provided the property to and who has it. 

Quit micro researching the contract and use common sense. The law provides  the means to retrieve stolen property.

I wasn’t kidding about the effectiveness of a government employee visiting an employer and bringing along the county sheriff or their deputy.

Scared the hell out of the employer who paid his employees all owed back wages. Of course that was 40 years ago in a small, backwoods town in Alabama. The govt employee was an ex-WWII combat marine, who didn’t care about or know about all the red tape involved in Miller Act enforcement.

He had no faith in the court system. His only two teenage sons were killed by a repeat offender drunk driver, who got off with a few months in jail and a fine. He told me about the Saturday“office visit” after the fact.

Red face test...go get the lap top...bust em!

C Culham said:

Red face test...go get the lap top...bust em!

Amen!

Don Mansfield said:

Did they report the matter to law enforcement?

Not yet.  To be honest it was kind of insulting that they basically said "Eh too bad, the FAR says we're not liable for lost property."  

I agree with you all that this property is not lost if the Contractor knows exactly where it is and has means of recovery.  Thanks for all the replies!

jjgott said:

Not yet.  To be honest it was kind of insulting that they basically said "Eh too bad, the FAR says we're not liable for lost property."  

I agree with you all that this property is not lost if the Contractor knows exactly where it is and has means of recovery.  Thanks for all the replies!

If they want to play that game, then tell them you consider the failure to notify law enforcement a lack of good faith. See FAR 52.245-1(h)(1)(ii).

Echoing what others have said ...

Back in the day, a large trash bin went missing from a military base. You know, the big kind that the trucks pick up and empty? Anyway, it was government property in the possession of a contractor. Properly marked as such.

The missing bin was quickly located on the other side of the fenceline, in a farmer's field. Filled with [I don't recall, if I ever knew. Let's say "hay".]

Our property manager reported it to the base security office as theft of government property. The farmer received a visit from a couple of uniformed security folks.

The bin was back on the right side of the fence, emptied and washed clean, within 24 hours.

here_2_help said:

You know, the big kind that the trucks pick up and empty?

Dumpster. Probably a Dempster.

Great story, H! A stern visit from law enforcement often will “inspire” a satisfactory resolution.

A neighbor boy and I once decided to play “post office” with his rural neighbor’s mailbox being the post office and…the mail inside was conveniently the mail. Of course, we had to examine the contents then put it back in the envelopes. I think we were just old enough to read.

Next thing we knew, our small town’s Chief of Police pulled up and put us in his police car and took us up the driveway to the elderly Perrys’ old, giant three story farmhouse. Then he walked us up the big porch steps to the front door. Mr and Mrs Perry opened the door and we were marched in to their huge parlor to sit on the sofa before the three of them.

Needless to say they were t satisfied with our “innocent” story and we got the full lecture - I especially remember Chief Benson telling us that mail tampering was a Federal Offense. We were sure that we were going to be sent to prison or the dreaded State Reform School 25 miles away.

When they were satisfied with our reaction and contrite apologies, they forgave us and the Chief escorted us out and down the steps to his cop car. He asked if we had learned a lesson - of course we had! Then he let us go.

The neighbor boy lived in the house down from the Perry’s and I walked through their woods and a block home. Chief Benson, of course contacted our parents so we couldn’t hide our guilt and shame. I learned a Life long lesson that evening…

I couldn’t understand why my elderly Aunt told my wife many years later that I was “a little stinker”, growing up. 🤠

That is but one reason why, I become “flustrated” when government employees try to dig through the contract or the FAR to seek a contractual solution, where common sense, informal solutions are available. I hope it is clear to both contractor and government that, if they know who has some government property, they take necessary action to get it back. The contractor can’t hide behind the gobblygook language in the property clause, if it should and does know where the property is.

And the clause must be read as a whole. The contractor must have an accountable property management system and take reasonable actions to retrieve personal property when it knows where it is.

Literally reading the clause to excuse your own accountability for loss by theft when you know who took it and/or where to find it and you make little or no effort to retrieve it makes no sense.  And such is inconsistent with the property management system requirements. In fact, it isn’t “lost” or “stolen” by unknown person or persons.