5.20 Accounting for Materials on Government Contracts

Last Revised Date
Friday, August 24, 2012 - 11:33 am


To provide direction to university departments on the accounting for stocks of Federal Government-owned materials furnished by the government and/or purchased by a Department as a direct charge to a Government contract administered by Sponsored Projects Services


Powers and duties of the University President, ABOR Policy 3-801 and 3-802
Authority below applies ONLY to Federal Property (acquisition dollars or title):

  • 48 Code of Federal Regulations Part FAR 45 and NASA FAR 1845
  • 45.505-3 Records of Material
  • 45.508-1 Physical Inventories Upon Termination or Completion
  • 45.603 Disposal Methods
  • 45.305-2 Return To Supplier


Material, as used in this document, means property that may be incorporated into or attached to a deliverable end item or that may be consumed or expended in performing a contract. It includes assemblies, components, parts, raw and processed materials, and small tools and supplies that may be consumed in normal use in performing a contract.

POLICY:  The activity on a government contract may involve the stocking of government–furnished materials, and/or material to which title has passed to the Government by reason of purchase by the department on a government contract for use in the fabrication of deliverables or contract activities.

When a Department chooses to establish stocks of Government-owned materials for future use on current or follow-on contracts, the Department is responsible for establishing and maintaining their own accounting procedures that are in compliance with the terms and conditions of the Government contract, these policies, and the procedures setout below.

Departments are directly responsible and accountable for the control, protection, preservation, use and documentation of all Government-owned materials in stock. Departments shall identify all Government-owned materials in stock as Government Property.

Departments are directly responsible and accountable to maintain and make available the records and information required by the Government on the stocking, use and inventory of Government-owned materials.

Departments are directly responsible for shortages, loss, damages or destruction of Government-owned materials, non-contract use of Government-owned materials, and consumption that unreasonably exceeds the allowances provided by the Government.

Departmental records of stocked materials are the Government’s and University’s official records of Government-owned materials for the contract.

Department’s maintaining Government-owned materials in stock may use as a minimum stock record Government invoices or shipping documents, University purchase documents or other evidence of acquisition as adequate property records for stock materials when accompanied with evidence supporting receipt and issue.

Government policy involving contract closeout and residual materials with a fair market value greater than $100 and in returnable quantities is to return these materials to the suppliers for full credit less the cost of restocking charge (not greater than 25%) and the cost of handling and transportation. Any other use or disposition of residual materials must be authorized by the Government in writing.





  1. When a department decides to establish stocks of  Government-owned materials for the performance of their government awards, the department shall notify the Sponsored Projects Services Property Administrator of the Government Contracts applicable to their stocking action.
  2. Prepare written departmental procedures and maintain stocking records pursuant to the terms and conditions of the applicable government award, which at a minimum shall include basic descriptive information on every item of Government-owned materials, purchase documents, receiving documentation, accounting, storing, identification, protecting and issuing Government-owned materials from stock. These procedures shall insure that Government-owned materials will be used for the purposes authorized in the funding contract.
  3. All Government-owned materials shall be identified as Government property. Government material shall be kept physically separate from University-owned materials.
  4. Perform and document at least annually and at closeout, inventories of stocked materials to determine shortages, loses, damage or destruction of Government-owned materials. Report any and all loses to the SPS Property Administrator.
  5. Maintain stock issuing receipts that includes the Government contract number, UA account number, quantities and date issued, the person name receiving item(s), and signature.
  6. Submit timely stock materials inventory valuation reports by Government contract to the SPS Property Administrator when requested for required monthly, quarterly, annual and closeout reports to the government.
  7. Make available and provide all records for purchasing, accounting, receiving, issuing and inventories of Government-owned materials when requested by Federal, State and University Auditors, Financial Services, and Sponsored Projects Services. Maintain these records for 8 years after the contract end date.



  1. For Government contracts identified (see 1 above) by the Responsible Department as having a Stores stocking activity, provide a schedule of dates for the Responsible Department to submit monthly, quarterly, and annual stock valuation reports to the SPS Property Administrator.
  2. Submit monthly, quarterly, annual and final property reports on Government contracts with the stocked materials valuation provided by the Responsible Department.
  3. At contract closeout, request disposition instructions from the Government for contract materials remaining on hand and not used based on the valuation provided by the Responsible Department.


  1. The Government/Sponsor must approve in writing the transfer and use of all residual materials to a follow-on contract, a different contract, donation to the University, order it sold, returned to the vendor for credit, or delivered to the government. 


  1. The  responsible department shall not utilize any residual government-owned materials after the completion, expiration or termination of the government contract, for any reason, unless authorized in writing by the government.