Government-Furnished Equipment

Government-Furnished Equipment (GFE) refers specifically to equipment items, machinery, vehicles, computers, test equipment, communications gear, and other durable goods, that the government owns and provides to contractors for use in performing a contract, subject to the same custodial obligations that apply to all Government-Furnished Property.

What is Government-Furnished Equipment?

GFE is a subset of the broader Government-Furnished Property (GFP) category defined in FAR Part 45. While GFP encompasses all government-owned property provided to contractors (including materials, facilities, and real property), GFE specifically refers to equipment, capital items that are typically durable, individually trackable by serial number, and provided to enable a contractor capability that the government does not expect the contractor to own commercially.

Common categories of GFE include: test equipment and laboratory instruments provided to contractors who must test products to government-specific standards; specialized vehicles for contractors performing base operations or logistics functions; classified computer systems provided because the contractor must work in classified environments but cannot own classified government systems; government-owned satellites, aircraft, or ships provided to research contractors; and installed building equipment for facilities maintenance contractors.

GFE management under FAR 52.245-1 requires contractors to: accept GFE only through formal receipt processes; record GFE in a property management system; perform periodic physical inventories; conduct required maintenance to prevent deterioration; report any loss, damage, or destruction immediately; and submit the required property reports (such as the DD Form 1342, DoD Personal Property Report, for defense contracts). The Defense Contract Management Agency and contracting officers review contractor property management systems in audits.

Unlike Government-Furnished Information, GFE has a physical form that can be damaged, destroyed, lost, or stolen, creating tangible financial risk for contractors who do not track and protect it rigorously.

Why GFE matters for government contractors

Mismanaging GFE creates liability for the replacement value of lost or damaged equipment. On large defense contracts, a single GFE item might be worth millions, a test article, a specialized sensor, or a government-owned ground support system. Contractors must also account for GFE accurately in cost proposals: using government equipment for contract work means the contractor cannot propose the cost of equivalent contractor-owned equipment in its bid, and mischarging equipment costs when GFE is available may trigger audit findings.

Example

A satellite integration contractor receives five government-owned environmental test chambers (thermal/vacuum chambers worth approximately $8M total) for testing satellite components to NASA specifications. The contractor establishes individual tracking records for each chamber, documents receipt, conducts a baseline condition assessment, and schedules required preventive maintenance. During performance, one chamber requires $90,000 in unplanned repairs due to a compressor failure unrelated to contractor use. The contractor reports the failure immediately, documents that the failure was due to the equipment's age and not contractor negligence, and cooperates with the government's assessment. The government determines the failure was attributable to equipment age and does not assess the contractor for repair costs.

Frequently Asked Questions

Does the contractor have to maintain GFE?

Yes. Contractors are responsible for maintaining GFE in a reasonable condition during the contract performance period, consistent with normal wear and tear. The contractor's property management system should include maintenance schedules and records. Failure to maintain GFE properly can result in liability for damage beyond normal wear and tear.

What if GFE is inadequate for the intended purpose?

If GFE provided by the government is defective, non-functional, or inadequate for the contract's technical requirements, the contractor should immediately notify the contracting officer in writing, document the deficiency, and request either repair, replacement, or an equitable adjustment for the impact on performance. Using defective GFE and absorbing the resulting cost impact without notifying the government is a common and costly mistake.

Can a contractor use GFE after the contract ends?

No. GFE must be returned, transferred, or disposed of according to contracting officer instructions at or before contract completion. Retaining GFE beyond contract completion without authorization is a potential violation of federal property laws and contract terms.

How is GFE tracked in a property management system?

The FAR requires property management systems to record: item description and identification number; acquisition date and cost; location; condition; responsible person; and any transfers or disposals. DoD contractors must also comply with DFARS Part 245 requirements, which include specific electronic reporting through the government's property tracking systems.