Exchange Sale FAQs
Frequently Asked Questions (FAQs) On Exchange/Sale
Q - In a few words, what is meant by “exchange/sale?”
A - You are able to exchange or sell personal property and use the exchange value or sales proceeds to offset the cost of acquiring similar replacement property.
Q - What is the legal and regulatory authority?
A – The legal authority is found in Title 40, United States Code (USC), Section 503. GSA developed implementing policies at 41 Code of Federal Regulations (CFR), Part 102-39 (FMR 102-39). Both these documents have links at our website; gsa.gov/personalpropertypolicy
Q - Am I required to do an exchange AND a sale?
A – No, some property managers, upon first hearing this term (“exchange/sale”) presume that both actions must be taken in the same transaction. Further, you are not required to do either an exchange OR a sale if such transactions do not benefit your agency.
Q - What are general restrictions?
You shouldn’t do an exchange/sale transaction if the estimated proceeds or allowances are small compared to the value of what you are acquiring;
Transactions can’t involve one of the “restricted” commodities in FMR 102-39.60;
Consult FMR 102-39.60 and 102-39.65 for the full list of restrictions and conditions.
Q – How should my agency manage the exchange/sale authority?
A – Your agency should;
Promulgate agency policy and guidance to ensure the effective and controlled use of the exchange/sale authority. This policy should encourage the use of this authority to the greatest extent feasible and put up no barriers, restrictions, and caveats beyond what is required by government-wide policy and the agency need for sound management;
Develop a holistic perspective on use of this authority. For example, the authority is given to your agency; it’s not limited to a geographic location or agency program. Even if your program does not need a replacement asset, another program or location may be looking for a similar replacement asset.
Q - Why is the definition of “similar” items important?
A – As the legal authority for exchange/sale at 40 USC 503 utilizes this term, it is important to define this term in our regulations.
Q - What are “similar” items?
A – FMR § 102-39.20 provides the definition for “similar” items. The four parts of this definition are referred to as the “tests for similarity”.
"Similar" means the acquired item(s) and replaced item(s):
Are identical; or
Fall within a single Federal Supply Classification (FSC) Group of property (includes any and all forms of property within a single FSC Group); or
Are parts or containers for similar end items; or
Are designed or constructed for the same purpose (includes any and all forms of property regardless of the FSC Group to which they are assigned).
Q - Do I have to meet all four of the tests for similarity?
A – No. You just have to meet one of the tests (e.g., one of the four parts of the definition of “similar”).
Sales under exchange/sale
Q - Who may conduct these sales?
A – Sales must be conducted in accordance with FMR 102-38. Generally, all sales must be conducted by one of the OMB- and GSA-approved Sales Centers. Contact the Sales Center your agency has designated for surplus sales to determine if they are also approved to conduct exchange/sale sales.
Q - How do we handle exchange/sale proceeds?
A – For the most part, this operational aspect is left to the agency. Please consult the FMR Bulletin for basic financial accounting guidance. The proceeds must be used to acquire replacement property in the current fiscal year, or in the following fiscal year. Funds not used during that time must be returned to the Treasury as Miscellaneous Receipts unless a deviation is approved to extend the time for use of the funds.
Exchanges under exchange/sale
Q - How do we conduct exchanges?
A – Your agency does the research to obtain the best deal on behalf of the government from among the various vendors and manufacturers. The “best deal” consideration includes the allowance provided, as well as the value and utility of the replacement asset obtained.
Q - How do we account for the exchange allowances?
A - The exchange allowances must be used to acquire replacement property in the current fiscal year, or in the following fiscal year. Allowances not used during that time would be lost, unless a deviation is approved to extend the time period.
Q – What are the reporting requirements following our exchange/sale transactions?
A – Your agency must provide summary level information of exchange/sale transactions within 90 days after the end of each fiscal year. GSA provides access to a data reporting tool. See FMR Bulletin B-27 for more details on annual agency reports. Information on the reporting tool itself may be found at the link below. For questions on reporting, please contact Pat Ferebee at firstname.lastname@example.org
Q - What are some other “good to know” things?
You can e/s scrap material in certain circumstances (FMR § 102-39.60)
Agency sale of scrap is allowed under some circumstances in FMR 102-38 (Subpart H).
FMR 102-39 is being reviewed and revised. We are planning for a revision to be completed by the end of FY2019.
The sale or exchange may occur before or after the acquisition of the similar replacement property.
Exchanged or sold assets should be in use by the agency for one year prior to the exchange or sale. Property should not be acquired solely for use in an e/s transaction.
If you have any questions or comments on the exchange/sale policy or guidance, please don’t hesitate to contact Gary Thompson at email@example.com.