To allow a contractor to use an agency-owned vehicle, what must the contract include? What authorizes the contractor to operate the GOV, and what in the contract protects the government?
This answer is based upon the question background and supplemental information provided. 41 CFR 102-34, Motor Vehicle Management, §102-34.215 states that Government contractors may use Government motor vehicles when authorized in accordance with the Federal Acquisition Regulation (FAR), GSA Fleet procedures, and under the following conditions:
Government motor vehicles are used for official purposes only and solely in the performance of the contract;
Government motor vehicles cannot be used for transportation between residence and place of employment, unless authorized in accordance with 31 U.S.C. 1344 and part 102-5 of this chapter; and
Contractors must:
Establish and enforce suitable penalties against employees who use, or authorize the use of, Government motor vehicles for unofficial purposes or for other than in the performance of the contract; and
Pay any expenses or cost, without Government reimbursement, for using Government motor vehicles other than in the performance of the contract.
The contract is used to convey authorization for the Contractor to operate Government motor vehicles (agency-owned and GSA Fleet leased), restrictions, and requirements when the Contracting Officer has determined that contractor operation of Government vehicles is in the Government's best interest.
Your inquiry is based on a fixed-priced contract that exceeds the simplified acquisition threshold and performed on a Government installation. FAR 52.228-5, Insurance-Work on a Government Installation, should be inserted in the contract per FAR 28.310. However, the Contracting Officer should verify this.
FAR 28.310 Contract clause for work on a Government installation.
(a) Insert the clause at 52.228-5, Insurance-Work on a Government Installation, in solicitations and contracts if a fixed-price contract is contemplated, the contract amount is expected to exceed the simplified acquisition threshold, and the contract will require work on a Government installation, unless-
(1) Only a small amount of work is required on the Government installation (e.g.,a few brief visits per month); or
(2) All work on the Government installation will be performed outside the United States and its outlying areas.
(b) The contracting officer may insert the clause at 52.228-5 in solicitations and contracts described in paragraphs (a)(1) and (2) of this section if it is in the Government's interest to do so.
FAR 52.228-5 requires the Contractor, at its own expense, to provide and maintain, at a minimum, the amounts of insurance required in the Schedule or elsewhere in the contract. To see how the Government is protected specifically when contractors are authorized to operate Government vehicles we need to refer to FAR 28.306, which requires the Contracting Officer to ensure the requirements of FAR 28.307 are in the contract. Compliance with FAR 28.306 results in the Contracting Officer having to ensure that the Contractor has automobile liability insurance in special circumstances.
FAR 28.306, Insurance under fixed-price contracts, points out that the Government ordinarily isn't concerned with the contractor's insurance if the contract is fixed-price. However, it further states that in special circumstances agencies may specify insurance requirements under fixed-price contracts. Two of the examples provided are: (1) Government property is involved and (2) The work is to be performed on a Government installation. FAR 28.306(b)(1) states:
"When the clause at 52.228-5, Insurance-Work on a Government Installation, is required to be included in a fixed-price contract by 28.310, the coverage specified in 28.307 is the minimum insurance required and shall be included in the contract Schedule or elsewhere in the contract. The contracting officer may require additional coverage and higher limits."
FAR 28.307-2 Liability.
(c) Automobile liability. The contracting officer shall require automobile liability insurance written on the comprehensive form of policy. The policy shall provide for bodily injury and property damage liability covering the operation of all automobiles used in connection with performing the contract. Policies covering automobiles operated in the United States shall provide coverage of at least $200,000 per person and $500,000 per occurrence for bodily injury and $20,000 per occurrence for property damage. The amount of liability coverage on other policies shall be commensurate with any legal requirements of the locality and sufficient to meet normal and customary claims.
There is a document on GSA's website titled "Contractor-Use of GSA Fleet Vehicles" that is available at https://www.gsa.gov/cdnstatic/Contractor_Eligibility.docx. It provides information about contractor use of GSA Fleet vehicles under cost-reimbursement and fixed-price contracts. It is recommended that you read this document, paying particular attention to Section 4, "Other Issues and Information." It addresses cost-study requirements for fixed-price contracts. For all firm-fixed price contractor use requests, regardless of quantity, send requests and all required supporting documentation to ContractorUseRequests@gsa.gov.
A similar Ask-A-Professor question and answer can be found at https://www.dau.edu/aap/pages/home.aspx#!details%7C17909.