(1) Contractors authorized to sell inventory may not knowingly sell the inventory to any person or that person's agent, employee, or household member if that person-
(i) Is a civilian employee of the DoD or the U.S. Coast Guard; or
(ii) Is a member of the armed forces of the United States, including the Coast Guard; and
(iii) Has any functional or supervisory responsibilities for or within the Defense Reutilization and Marketing Program, or for the disposal of contractor inventory.
(2)(i) A contractor's authority to approve a subcontractor's sale, purchase, or retention at less than cost, and the subcontractor's authority to sell, purchase, or retain at less than cost if approved by a higher-tier contractor, does not include authority to approve-
(A) A sale by a subcontractor to the next-higher tier contractor or to an affiliate of such contractor or of the subcontractor; or
(B) A sale, purchase, or retention at less than cost, by a subcontractor affiliated with the next higher-tier contractor.
(ii) The written approval of the plant clearance officer is required for each excluded sale, purchase, or retention at less than cost.
(3) Demilitarization. The contractor shall demilitarize contractor inventory possessing offensive or defense characteristics, and not required within the DoD, in accordance with Defense Demilitarization Manual, DoD 4160.21-M-1. In unusual cases the plant clearance officer may authorize the purchaser to perform the demilitarization; however, the purchaser shall not be granted such authorization if the inventory is dangerous.
(4) Classified inventory. Classified contractor inventory shall be disposed of in accordance with applicable security regulations or as directed by the contracting officer.
(5) Dangerous inventory. Contractor inventory dangerous to public health or safety shall not be donated or otherwise disposed of unless rendered innocuous or until adequate safeguards have been provided.
