Selling of recovered lead

What does the contract say about that?

The contract has FAR 52.232-16 Progress Payments (d) Title (4) that states The contractor may sell any scrap resulting from production without requesting the contracting officers approval but the proceeds shall be creditied against the costs of performance. But I see this as applicable if we were manufactuing somnething and the process resulted in scrap metal or some suvh thing.

We have a contract with the Air Force that includes recovery of some lead pellets from soil. Is there anything that requires us to credit the Air Force the amount of money that the recovered lead is sold for? Is there a FAR clause that addresses this?

What type of contract do you have, i.e., cost reimbursement, FFP, etc?

If the contract is firm-fixed-price, then the answer is no, unless the contract contains a special provision that provides otherwise. If the contract is cost-reimbursement, then the likely answer is yes.