Government Furnished Material (GFM)

Government Furnished Material (GFM) is physical property, raw materials, components, equipment, or supplies, that the federal government provides to a contractor for incorporation into or use in the performance of a government contract, with title remaining with the government and the contractor assuming responsibility for proper care, custody, and accounting.

What is Government Furnished Material?

GFM is governed by FAR Part 45, which establishes comprehensive requirements for the government's provision of property to contractors and for contractor management of that property. GFM is typically provided when: the government already owns the material (surplus inventory, government-furnished components for integration), the government can procure the material more cost-effectively through its own buying channels, or the material is controlled or restricted and cannot be purchased commercially by the contractor (classified components, export-controlled items, specialized military-grade materials).

Common GFM situations in defense contracting include: the government providing spare engines, avionics, or systems for maintenance and overhaul contracts; providing raw materials for manufacturing contracts where the government leverages its bulk purchasing power; providing government-owned test equipment that a contractor needs for system testing; and providing government-owned facilities or vehicles for construction or maintenance contracts.

Contractors who receive GFM must comply with FAR 52.245-1, the primary GFM clause, which requires: maintaining a formal property management system that tracks the location, condition, and disposition of all GFM; reporting loss, damage, or destruction of GFM; conducting periodic inventories; and returning or properly disposing of GFM at contract completion. The government may conduct audits of the contractor's property management system.

DCAA and Defense Contract Management Agency (DCMA) both play roles in GFM oversight: DCAA audits the financial aspects (ensuring GFM costs are not double-charged to the government); DCMA's property administrators conduct physical verification of GFM custody.

Why GFM matters for government contractors

GFM creates both opportunities (access to government-owned materials reduces contractor procurement costs) and obligations (custodial accountability and liability for GFM loss or damage). Contractors must build robust property management systems to comply with FAR 45 requirements and avoid liability for improperly managed GFM.

Example

An aircraft maintenance depot contractor receives 24 government-furnished jet engines from Air Force inventory for an overhaul contract. The contractor receipts each engine with a formal property record, assigns storage locations in its tracking system, conducts overhaul work, and returns the engines to serviceable condition. At contract end, the contractor's property accounting shows all 24 engines either returned to government custody or documented in end-of-contract reports. DCMA's property administrator verifies the inventory count, closing the GFM account.

Frequently Asked Questions

What is the difference between GFM and Government Furnished Equipment (GFE)?

GFM refers specifically to material (raw materials, components, supplies) provided by the government. GFE refers to equipment (machinery, tools, test equipment) provided for contractor use. Both fall under FAR Part 45 property management requirements. The distinction affects how items are classified in the contractor's property system and how they are valued for accounting purposes.

Is the contractor liable for GFM that is lost or damaged?

Yes, unless the contractor can demonstrate that the loss, damage, or destruction resulted from causes beyond the contractor's control, without fault or negligence, and while using GFM in accordance with contract requirements. The government can assess the contractor for the value of improperly lost or damaged GFM through a demand for payment.

Can a contractor use GFM for work other than the government contract that provided it?

No. GFM may only be used for the specific contract for which it was provided, unless the contract explicitly authorizes other uses. Using GFM on commercial work or on a different government contract without authorization is a misappropriation of government property.

What is a property management system audit?

DCMA conducts periodic reviews (property management system reviews) of contractors' systems for managing government-furnished property. Contractors that fail the review receive a disapproval rating, which can affect their ability to receive additional GFM and may be considered a deficiency in performance evaluations.