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 ------------------------------------------------------------------------                                                                Type II     Shelf-life period (months)          Type I item code      item code------------------------------------------------------------------------1...................................  A.....................  ..........2...................................  B.....................  ..........3...................................  C.....................           14...................................  D.....................  ..........5...................................  E.....................  ..........6...................................  F.....................           29...................................  G.....................           312..................................  H.....................           415..................................  J.....................  ..........18..................................  K.....................           521..................................  L.....................  ..........24..................................  M.....................           627..................................  N.....................  ..........30..................................  P.....................  ..........36..................................  Q.....................           748..................................  R.....................           860..................................  S.....................           9------------------------------------------------------------------------

(b) Code designator 0 is used to identify items not included in a shelf-life program.

(c) Code designator X shall be used to identify critical end-use items, military essential items, and medical items with a shelf life greater than 60 months. Agencies shall establish controls for such materials to prevent issuance of any unserviceable items.

(d) Agencies may also establish controls for materials with a shelf life greater than 60 months that are not identified in paragraph (c) of this section. Such controls should be established only when they are necessary for effective management of the items.

[40 FR 59595, Dec. 29, 1975]

§ 101-27.206   Procurement of shelf-life materials.
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§ 101-27.206-1   General considerations.
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In determining requirements for shelf-life items, the following elements should be taken into consideration:

(a) Assigned storage time periods; and

(b) Appropriate contracting techniques for the particular item involved, including specification requirements, industry practices, and storage and delivery procedures.

[40 FR 59595, Dec. 29, 1975]

§ 101-27.206-2   Identification and shipping requirements.
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Manufacturers shall, whenever practicable, be required to mark the unit or container with the month and year of manufacture or production and the batch number on all shelf-life items (60 months or less) procured from other than GSA sources. Whenever practical, the supplier shall be required to ship or deliver material within a given number of months from the date of manufacture or production. These “age on delivery” requirements should not be imposed in such a manner as to unduly restrict competition at any trade level. The following guidelines are suggested as appropriate for most shelf-life items:

 ------------------------------------------------------------------------             Shelf-life period                     Age on delivery------------------------------------------------------------------------25 mos. or more...........................  6 mos.19 to 24 mos..............................  4 mos.13 to 18 mos..............................  3 mos.7 to 12 mos...............................  2 mos.6 mos. or less............................  1 mo. or less.------------------------------------------------------------------------

[40 FR 59595, Dec. 29, 1975]

§ 101-27.206-3   Packaging.
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To the extent feasible and economical, shelf-life material shall be packaged in such a way as to provide for minimum deterioration.

[40 FR 59595, Dec. 29, 1975]

§ 101-27.207   Control and inspection.
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§ 101-27.207-1   Agency controls.
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Agencies shall establish the necessary controls to identify shelf-life items on their stock records (and in other appropriate elements of their supply system), and shall determine the appropriate shelf life for other than GSA managed items. Shelf-life items shall be stored in such a way as to ensure that the oldest stock on hand is issued first. Agencies shall issue the oldest stock of shelf-life items first except when it is not feasible as in shipments to overseas activities.

[40 FR 59596, Dec. 29, 1975]

§ 101-27.207-2   Inspection.
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Type II items remaining in stock immediately before the end of the designated shelf-life period shall be inspected to determine whether the shelf life can be extended, except items having a line item inventory value of $300 or less, or if the cost of inspection or testing is significant in relation to the value of the item. If the material is found suitable for issue on the date of inspection, the shelf life should be extended for a period equal to 50 percent of the original shelf-life period and the next reinspection date established accordingly. Material should be reinspected before the end of each extended shelf-life period and the shelf life extended again up to 50 percent of the original shelf life as long as the material conforms to the established criteria. Material on which the shelf life has been extended shall not be shipped to overseas activities if the time remaining in the extended shelf-life period is relatively short.

[40 FR 59596, Dec. 29, 1975]

§ 101-27.207-3   Marking material to show extended shelf life.
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When the shelf-life period of Type II material (except for critical end-use items as described below) is extended, only the exterior containers of bulk stocks need be annotated or labeled to indicate the date of inspection and date material is to be reinspected. Individual units of issue not classified as having a critical end-use application are not required to be annotated or labeled as long as controls are established to preclude issuance of unserviceable material to a user. (A critical end-use item is any item which is essential to the preservation of life in emergencies; e.g., parachutes, marine life preservers, and certain drug products, or any item which is essential to the performance of a major system; e.g., aircraft, the failure of which would cause damage to the system or endanger personnel.) At the time of shipment, the date of inspection and date for reinspection shall be affixed by label or marked by other means on each unit of issue of Type II items having a critical end-use application.

[42 FR 61861, Dec. 7, 1977]

§ 101-27.208   Inventory analyses.
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(a) An inventory analysis shall be conducted periodically for each Type I item to determine whether the quantity on hand will be used within the established shelf-life period. If the analysis indicates there are quantities which will not be used within the shelf-life period, arrangements shall be made to ensure use of the item(s) within the holding agency or for redistribution to other agencies.

(b) An inventory analysis shall be conducted periodically for each Type II item with a shelf life of 60 months or less to determine whether issue of the quantity on hand is anticipated prior to the expiration of the designated shelf life. This analysis shall be made as follows:

 ------------------------------------------------------------------------            Shelf-life period                    Date of analysis------------------------------------------------------------------------48 to 60 mos............................  12 to 16 mo. prior to                                           expiration.36 to 48 mos............................  8 to 12 mo. prior to                                           expiration.18 to 36 mos............................  6 to 8 mo. prior to                                           expiration.12 to 18 mos............................  4 to 6 mo. prior to                                           expiration.6 to 12 mos.............................  3 to 4 mo. prior to                                           expiration.Up to 6 mos.............................  No analysis required, but                                           special emphasis should be                                           placed on good requirements                                           determination and proper                                           order quantity.------------------------------------------------------------------------

(1) If the analysis indicates that the quantity on hand will not be issued within the shelf-life period and the cost of inspection or testing is not significant in relation to the line item value, the items shall be inspected to determine if the shelf-life period can be extended.

(2) If the analysis indicates that the quantity on hand will be issued within the shelf-life period, inspection is not required. However, such items shall be viewed again during the last month of the shelf-life period to determine whether quantities are sufficient to warrant inspection. The guidelines in §101–27.207–2 shall be used to determine whether quantities are sufficient to warrant inspection and for extending the shelf-life period.

(3) If an agency does not have an inspection capability and the quantity and value of an indicated overage is sufficiently large to warrant special consideration, arrangements shall be made for qualified inspection or laboratory testing to determine whether the material is suitable for issue.

[40 FR 59596, Dec. 29, 1975]

§ 101-27.209   Utilization and distribution of shelf-life items.
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Where it is determined that specified quantities of both Type I and Type II shelf-life items will not be used within the shelf-life period, such quantities shall be utilized or distributed in accordance with this section.

[35 FR 5010, Mar. 24, 1970]

§ 101-27.209-1   GSA stock items.
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Shelf-life items that meet the criteria for return under the provisions of subpart 101–27.5 of this part may be offered for return to GSA.

[35 FR 12721, Aug. 11, 1970]

§ 101-27.209-2   Items to be reported as excess.
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Shelf-life items which do not meet the criteria in subpart 101–27.5 of this part, which would, if returned to GSA, adversely affect the GSA nationwide stock position, or which are returned to GSA and are determined unsuitable for issue, will be reported as excess under the provisions of part 101–43 of this chapter.

[35 FR 12721, Aug. 11, 1970]

§ 101-27.209-3   Disposition of unneeded property.
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If no transfer is effected and no donation requested, the property shall be assigned for sale, abandonment, or destruction in accordance with part 101–45 of this chapter.

[32 FR 6493, Apr. 27, 1967]

Subpart 101–27.3—Maximizing Use of Inventories
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Source:  32 FR 13456, Sept. 26, 1967, unless otherwise noted.

§ 101-27.300   Scope.
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This subpart prescribes policy and procedures to assure maximum use of inventories based upon recognized economic limitations.

§ 101-27.301   [Reserved]
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§ 101-27.302   Applicability.
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The provisions of this subpart are applicable to all civil executive agencies.

§ 101-27.303   Reducing long supply.
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Through effective interagency matching of material and requirements before the material becomes excess, unnecessary procurements and investment losses can be reduced. Timely action is required to reduce inventories to their normal stock levels by curtailing procurement and by utilizing and redistributing long supply. (The term long supply means the increment of inventory of an item that exceeds the stock level criteria established for that item by the inventory manager, but excludes quantities to be declared excess.) In this connection, requirements for agency managed items should be obtained from long supply inventories offered by agencies rather than by procurement from commercial sources. Because supply requirements usually fluctuate over a period of time, a long supply quantity which is 10 percent or less of the total stock of the item is considered marginal and need not be reduced.

[41 FR 3858, Jan. 27, 1976]

§ 101-27.303-1   Cancellation or transfer.
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When the long supply of an item, including quantities due in from procurement, is greater than 10 percent of the total stock of that item, the inventory manager, or other appropriate official, shall cancel or curtail any outstanding requisitions or procurements on which award has not been made for such items, and may also cancel contracts for such items (if penalty charges would not be incurred) or transfer the long supply, if economical, to other offices within the agency in accordance with agency utilization procedures. In such cases, acquisition of long supply items shall not be made from other sources such as requirements contracts.

§ 101-27.303-2   Redistribution.
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If the long supply of an item remains greater than 10 percent of the total stock of an item despite efforts to cancel or transfer the long supply as provided in §101–27.303–1, the inventory manager shall offer the long supply to another agency or other agencies in accordance with this §101–27.303–2. Before offering a long supply to any agency, the inventory manager shall determine whether the item to be offered is a centrally managed item or an agency managed item. A centrally managed item is an item of supply or equipment which forms part of an inventory of an agency performing a mission of storage and distribution to other Government activities; e.g., GSA and DSA. An agency managed item is a procured item that forms a part of a controlled inventory of an agency and its activities for issue internally for its own use. After determining whether the item to be offered is an agency or centrally managed item, the inventory manager shall:

(a) Offer centrally managed items to the agency managing the item for return and credit in accordance with the procedures established by that agency; and

(b) Offer agency managed items to other agencies which manage the same item. Reimbursement shall be arranged by the agencies effecting the inventory transfer. The responsibility of locating agencies or activities requiring these items shall rest with the agency holding the long supply. However, agencies may receive a list of Government activities using particular national stock numbers by writing to the General Services Administration (FFL), Washington, DC 20406.

[32 FR 13456, Sept. 26, 1967, as amended at 41 FR 3858, Jan. 27, 1976]

§ 101-27.304   Criteria for economic retention limits.
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If a long supply continues to exceed 10 percent of the total stock of an item despite efforts to redistribute the long supply as provided in §101–27.303–2, the inventory manager shall establish an economic retention limit for the item in accordance with the provisions of this §101–27.304. An economic retention limit is the maximum quantity of an item that can be held in stock without incurring greater costs for carrying the stock than the costs for disposal and resulting loss of investment. The economic retention limit shall be used to determine which portion of the inventory may be economically retained and which portion should be disposed of as excess.

[41 FR 3858, Jan. 27, 1976]

§ 101-27.304-1   Establishment of economic retention limit.
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An economic retention limit must be established for inventories so that the Government will not incur any more than the minimum necessary costs to provide stock of an item at the time it is required. Generally, it would be more economical to dispose of stock in excess of the limit and procure stock again at a future time when the need is more proximate rather than incur the cumulative carrying costs.

(a) The agency managing a centrally managed or agency managed item shall establish an economic retention limit so that the total cumulative cost of carrying a stock of the item (including interest on the capital that is tied up in the accumulated carrying costs) will be no greater than the reacquisition cost of the stock (including the procurement or order cost). Consideration should be given to any significant net return that might be realized from present disposal of the stock. Where no information has been issued, the net return from disposal is assumed to be zero. Guidelines for setting stock retention limits are provided in the following table and explanatory remarks that follow:

 ------------------------------------------------------------------------                       Economic retention limit in years of supply_net  Annual carrying         return on disposal as a percentage of item     costs as a                      reacquisition costs percentage of item ----------------------------------------------------reacquisition costs      0          5          10        15        20------------------------------------------------------------------------             10      7\1/4\     6\3/4\     6\1/4\          6    5\1/2\             15      5\1/2\          5     4\3/4\     4\1/4\         4             20      4\1/4\          4     3\3/4\     3\1/2\    3\1/4\             25      3\1/2\     3\1/4\          3          3    2\3/4\             30           3     2\3/4\     2\3/4\     2\1/2\    2\1/4\             35      2\3/4\     2\1/2\     2\1/4\     2\1/4\         2             40      2\1/2\     2\1/4\          2          2    1\3/4\------------------------------------------------------------------------Note: The entries in the tables were calculated by determining how long  an item must be carried in inventory before the total cumulative  carrying costs (including interest on the additional funds that would  be tied up in the accumulated annual carrying costs) would exceed the  acquisition costs of the stock. at that time (reacquisition costs).  For example, assuming no net return from disposal, the accumulated  carrying costs computed at the rate of 25 percent per year on the  reacquisition cost of the stock and compounded annually at 10 percent  (GSA's recommended rate of interest on Government investments) would  be:
 ------------------------------------------------------------------------                        Compounded carrying      Accumulated costs as a       Years         costs as a percentage of        percentage of                           reacquisition         reacquisitioned costs------------------------------------------------------------------------             1                    27.5                       27.5             2                    30.3                       57.8             3                    33.3                       91.1             4                    36.6                      127.7             5                    40.3                      168.0             6                    44.3                      212.3------------------------------------------------------------------------

At 25 percent a year, accumulated carrying costs would be equivalent to the reacquisition costs after 31/2 years. Three and one-half years is, therefore, the economic retention limit for items with a 25 percent annual carrying cost rate. Where an activity has not yet established an estimate of its carrying cost, an annual rate of 10 percent may be used as an interim rate thereby resulting in an economic retention limit of 71/4 years when the net return on disposal is zero. The elements of carrying (holding) cost are given in the GSA Handbook, The Economic Order Quantity Principle and Applications. The handbook is listed in the GSA Supply Catalog and may be ordered in the same manner as other items in the catalog.

(b) The economic retention limit at a user stocking activity can best be determined by the item manager (for centrally managed or agency managed items) on the basis of overall Government requirements and planned procurement. Since stocks in long supply at a user stocking activity are less likely to find utilization outlets, the retention limit at these activities should be relatively small. Generally the economic retention limit at a user stocking activity should be computed in the same manner as in paragraph (a) of this section and then reduced by 70 percent.

[39 FR 27902, Aug. 2, 1974]

§ 101-27.304-2   Factors affecting the economic retention limit.
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(a) The economic retention limit may be increased where:

(1) The item is of special manufacture and relates to an end item of equipment which is expected to be in use beyond the economic retention time limit; or

(2) Costs incident to holding an additional quantity are insignificant and obsolescence and deterioration of an item are unlikely.

(b) The economic retention limit should be reduced under the following conditions:

(1) The related end item of equipment is being phased out or an interchangeable item is available; or

(2) The item has limited storage life, is likely to become obsolete, or the age and condition of the item does not justify the full retention limit.

§ 101-27.305   Disposition of long supply.
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Where efforts to reduce the inventory below the economic retention limit have been unsuccessful, appropriate disposition should be effected in accordance with subpart 101–43.3 of this chapter. Any remaining inventory which is within the economic retention limit shall be retained. However, the item shall be reviewed at least annually and efforts made to reduce the long supply inventory in accordance with §101–27.303.

Subpart 101–27.4—Elimination of Items From Inventory
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Source:  32 FR 12401, Aug. 25, 1967; 32 FR 12721, Sept. 2, 1967, unless otherwise noted.

§ 101-27.400   Scope of subpart.
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This subpart establishes policy and procedures designed to assure that items which can be obtained more economically from readily available sources, Government or commercial, are eliminated from inventory. For items which are not readily available from Government or commercial sources or are being held in inventory for a one time construction project, this subpart shall be applied to the extent feasible by the activity managing or controlling such inventories.

§ 101-27.401   [Reserved]
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§ 101-27.402   Applicability.
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The provisions of this subpart are applicable to all executive agencies in connection with inventory items maintained at stocking activities other than Government wholesale supply sources.

§ 101-27.403   General.
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By eliminating inactive items and slow-moving items which are readily available, when needed, from Government wholesale supply activities or from commercial sources, the costs to the Government in inventory investment and for maintaining the items in inventory can be eliminated. An “inactive item” is an item for which no current or future requirements are recognized by previous users and the item manager. A “slow-moving item” is an item for which there are current or future requirements, but the frequency and quantity of such requirements do not make it economical to stock them in lieu of obtaining requirements from other sources when needed. However, “standby or reserve items” are not to be eliminated from inventories. A “standby or reserve item” is an item for which a reserve stock is held so that the items will be available immediately to meet emergencies for which there is insufficient time to procure or requisition the items without endangering life or causing substantial financial loss to the Government.

[41 FR 3859, Jan. 27, 1976]

§ 101-27.404   Review of items.
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Except for standby or reserve stocks, items in inventory shall be reviewed periodically (at least annually) to identify those which are inactive and slow-moving. This review may be conducted coincidently with the normal replenishment or long supply reviews. The estimate of current or future requirements for an item shall be based on its recent history of recurring requirements. Standby items shall also be reviewed at appropriate intervals to substantiate their qualification for inclusion in that category.

§ 101-27.405   Criteria for elimination.
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Inactive items, items which no longer qualify as standby, and slow-moving items which are readily available, when needed, from Government or commercial sources shall be eliminated from inventory. The determination of a slow-moving item shall be based on a comparison of the costs for continuing to maintain it in stock as opposed to the costs for ordering it from outside sources each time it is requested. This comparison shall also consider any difference in price and transportation costs for each alternative. In the absence of criteria for stockage of an item developed and used by an agency, the desired results will be obtained through application of the following table:

 ------------------------------------------------------------------------                                                               Minimum                                                              number of                                                            requests per    Orders per year under economic order quantity (EOQ)        year to                                                               justify                                                            continuation                                                              in stock------------------------------------------------------------------------12 and over...............................................           2411........................................................           2210........................................................           209.........................................................           188.........................................................           167.........................................................           146.........................................................           125.........................................................           104.........................................................            83 and under...............................................            7------------------------------------------------------------------------Note: Except for the low dollar infrequently ordered item, which  requires a higher minimum, an item should be discontinued from stock  if the number of requests for it is less than twice its order  frequency under EOQ. For example, an item ordered six times per year  under EOQ should have at least 12 requests per year to continue  stockage. For 11 requests, it would cost less to order each time it  was requested.
  --------------------------------------------------------------11 orders at $5  $55 per orderUnder EOQ:  6 orders at    $30   $5 per order  Holding cost   30   (equal to   ordering   cost).......                ------------------------------------------------  Total          60------------------------------------------------------------------------
§ 101-27.406   Disposition of stock.
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Stocks of slow-moving items which are not otherwise determined to be eligible for continued stockage shall be eliminated through normal attrition and shall not be replenished. The successive actions indicated in paragraphs (a) through (c) of this section, shall be taken, as necessary, to remove stocks of inactive items from inventory.

(a) Transfer stock to other offices where needed within the agency.

(b) Transfer stock to other agencies as follows:

(1) Centrally managed items to the agency managing the item for credit; or

(2) Agency program items to agencies requiring them.

(c) Dispose of remaining stocks, as excess, after actions taken in paragraphs (a) and (b) of this section, in accordance with subpart 101–43.3.

Subpart 101–27.5—Return of GSA Stock Items
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Source:  35 FR 12721, Aug. 11, 1970, unless otherwise noted.

§ 101-27.500   Scope and applicability of subpart.
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This subpart sets forth policy and procedures for the return to GSA for credit of items which are in long supply or for which no current or future requirements are anticipated. The provisions of this subpart 101–27.5 are applicable to all executive agencies. Federal agencies other than executive agencies may participate in this program and are encouraged to do so.

§ 101-27.501   Eligibility for return.
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GSA stock items for which no current or future agency requirements are anticipated are eligible for return to GSA for credit. Despite eligibility for return to GSA, consideration should be given to the transportation costs involved as related to the value of the items, and, where excessive, such items shall not be reported to GSA.

§ 101-27.502   Criteria for return.
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Any GSA stock item to be returned to GSA by an agency which has no current or future requirements for that item shall meet the following conditions:

(a) The minimum dollar value per line item, based on the current GSA selling price, shall be:

(1) $130 for hand tools, FSG 51, and measuring tools, FSG 52; and

(2) $450 for items in all other Federal supply groups and classes except for tires and tubes, FSC 2610; tool kits, FSC 5180; laboratory supplies, FSCs 6630 and 6640; Standard forms, FSC 7540; paints, dopes, varnishes, and related products, FSC 8010; preservatives and sealing compounds, FSC 8030; adhesives, FSC 8040; boxes, cartons, and crates, FSC 8115; and subsistence items, FSG 89, which are not returnable and shall be considered excess, and shall be processed in accordance with part 101–43 of this chapter.

(b) The minimum remaining shelf life of this material shall be 12 months at the time of receipt by GSA.

(c) The material shall not be a terminal or discontinued item.

(d) The material shall be in either condition code A or condition code E.

[35 FR 12721, Aug. 11, 1970, as amended at 44 FR 39393, July 6, 1979; 56 FR 11939, Mar. 21, 1991]

§ 101-27.503   Allowable credit.
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Allowable credit for activities returning material that is accepted by GSA will be reflected in billings by GSA and will be commensurate with the condition of the material received.

(a) Credit will be granted at the rate of 80 percent of the current GSA selling price after acceptance by GSA for new, used, repaired, or reconditioned material which is serviceable and issuable to all agencies without limitation or restriction (condition code A).

(b) Credit will be granted at the rate of 60 percent of the current GSA selling price for items which involve limited expenses or effort to restore to serviceable condition, and which is accomplished in the storage activity where the stock is located (e.g., a deficiency in packing or packaging which restricts the issue or requires repacking or repackaging (condition code E)).

(c) No credit will be given for material returned to GSA which does not meet the above criteria or which was returned to GSA without prior approval.

[56 FR 11939, Mar. 21, 1991]

§ 101-27.504   Notice to GSA.
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When an activity elects to offer material to GSA for credit, the activity shall submit offers in accordance with chapter 4 of the FEDSTRIP Operating Guide or chapter 9 of MILSTRIP (DoD 4000.25–1–M).

[56 FR 11939, Mar. 21, 1991]

§ 101-27.505   Notice to activity.
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GSA will provide notice to the offering activity of an acceptance/rejection decision for an offer and verification of material receipt for accepted offers.

(a) Within 20 workdays after receipt of an offer to return material, GSA will notify the offering activity of acceptance or rejection of the offer.

(1) For accepted offers, GSA will inform the offering activity of the GSA material return facility (storage activity) to which the material shall be shipped. Prior to shipment of the material authorized by GSA for return, activities shall verify the declared condition. (If the offering activity considers that the transportation costs of sending the material to the GSA material return facility are excessive in relation to the value of the material and withdraws the offers, the GSA region that was designated to receive the offered material shall be notified accordingly.)

(2) For rejected offers, GSA will so inform the activity offering the material and give the reason for nonacceptance.

(b) Upon receipt of material authorized for return by GSA, the offering activity will be provided verification of receipt and a report of any discrepancies. When the discrepant condition is attributable to carrier negligence, subsequent credit allowed by GSA will be reduced by the amount to be paid the agency by the carrier for any damages incurred. A notice of credit will be provided the offering activity through credit entries on the monthly billing statement from the supporting GSA finance center.

(c) When offers of material that have been authorized by GSA for return are withdrawn, offering activities shall report such cancellation to the GSA region that was designated to receive the offered material.

[41 FR 3859, Jan. 27, 1976, as amended at 44 FR 39394, July 6, 1979; 56 FR 11939, Mar. 21, 1991]

§ 101-27.506   Determination of acceptability for credit.
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Returned material will be examined by GSA upon receipt to determine acceptability for credit. Returned material which is unacceptable for credit will be deemed to have been declared excess by the returning activity, and will be disposed of by GSA as excess or surplus in the name of the activity, in accordance with part 101–43 of this chapter. The returning activity will be officially notified of the disposal action taken by GSA.

§ 101-27.507   Transportation and other costs.
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Transportation costs for the movement of material to GSA and handling costs for preparation and shipment shall be paid by the activity shipping the material to GSA.

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