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Western RegionFall Education
Seminar Salt Lake City , Utah
2015
PEAKING YOUR INTEREST IN ASSET MANAGEMENT
Property Administration: What in the World Are We Looking For?
Presented By: Tracy A. Helmick, CPPMNASA, MSFC IPO
• No losses or less than 0% errors• Inventory property coming to you, from
you and for us• Keep the listing current for us in the
contract• Provide your own property to perform
contract• Figure out what we mean not what we
say
Expectations
Realistic Expectations
We want contractors to have an efficient, economic and uniform property management system (PMS) to acquire, control, use, protect and dispose of property required to perform the contract which incorporates Industry Leading Practices (ILPs), Voluntary Consensus Standards (VCS) and Customary Commercial Practices for continuous improvement.
FAR 52.245-1 Property Management System (PMS)FAR 52.245-1 (b)(1) April 2012 The Contractor shall have a system of internal controls to manage (control, use, preserve, protect, repair, and maintain) Government property in its possession. The system shall be adequate to satisfy the requirements of this clause. In doing so, the Contractor shall initiate and maintain the processes, systems, procedures, records, and methodologies necessary for effective and efficient control of Government property. The Contractor shall disclose any significant changes to its property management system to the Property Administrator prior to implementation of the changes. The Contractor may employ customary commercial practices, voluntary consensus standards, or industry-leading practices and standards that provide effective and efficient Government property management that are necessary and appropriate for the performance of this contract (except where inconsistent with law or regulation).
Responsibility of the Contractor
Develop or prepare a PMS which consists of written procedures for all processes which meet FAR 52.245-1 and contractual requirements, to include incorporation of applicable ILP & VCS.
Comply with your PMS and procedures. Disclose significant changes to PMS to the
Property Administrator prior to implementation. Perform self assessments.
FAR 52.245-1( b)(1), Property Management and f. 3 Contractor Plans and Systems. NFS 1852.245-75 Property Management Changes.
VCS & ILPsFAR clause 2007 – to April 2012: The system shall be adequate to satisfy the requirements of this clause. In doing so, the Contractor shall initiate and maintain the processes, systems, procedures, records, and methodologies necessary for effective control of Government property, consistent with voluntary consensus standards and/or industry-leading practices and standards for Government property managementexcept where inconsistent with law or regulation.
Not optional the Contractor SHALL include VCS & ILPs in their property management systems. This was instituted by law.
See next slide for FAR Clause update
April 2012 Update
April 2012 – The Contractor may employ customary commercial practices, voluntary consensus standards or industry leading practices. (Approval of property systems has also come full circle, as DOD now requires business systems approvals)
VCS, ILP, CCP Definitions: VCS: Voluntary Consensus Standards are standards developed or
adopted by voluntary consensus standards bodies (such as ASTM, ISO – although there are many other consensus bodies), both domestic and international made available to all at a minimal or no cost basis.
ILP: Industry Leading Practices are strategies and processes that areboth quantifiably and qualitatively demonstrated tobe top performing.”
CCP: Common commercial practices (CCP) repeatedly recognized, used and performed in like markets and business areas.
Customary: commonly practiced, used or observedCommercial: : designed for a large market ; emphasizing skills and subjects useful in business Practice: to perform or work at repeatedly so as to become proficient
Why do we require VCS, ILP & CCP?
VCS, ILPs and Customary Commercial Practices where specified, qualified and quantified give a good overview and standard by which to evaluate systems, processes and procedures which should assure the Government and reviewing officials that property is safeguarded, tracked and accounted for in at the least an established and best common practice, or in a manner that exceeds the best practices.
Contracting Officer: is responsible for overall management of their contracts, including the management of Government property provided to contractors. Responsibilities include documenting decisions to provide property, including authorization for contractors to purchase property as a direct cost to the Contract IAW FAR 45.102 and NFS 1852.245-70, processing modifications to the contract for adds or deletes of property, and delegating or assigning Property Administration (PA) and Plant Clearance.
Administrative Contracting Officer (ACO): refers to a CO who is administers contracts. New DFARS rule requires CO, or delegated ACO approval of business systems. The Property Management system is one of the defined systems. Note: Overall Property Management oversight is a responsibility of the CO. Reference FAR 42 & DFARS Case 2009–D038
Property Management Roles & Responsibilities of the Government
NASA Industrial Property Officer (IPO): is the individual appointed by the NASA Center Director to have oversight responsibility for all center contract property management. Review RFPs/RFQ, contracts, modifications, proposals for property management responsibilities and regulations, advise CO’s on assignment or delegation of Property Administration or Plant Clearance. Monitor PA and PLCO activities, accept reports of contractor held property.
Property Administrator (PA): is the authorized representative of the Contracting Officer (CO) appointed in accordance with agency procedures, responsible for administering the contract requirements and obligations relating to Government property in the possession of a contractor.
Property Management Roles & Responsibilities of the Government
Role of a Government Property Administrator (GPA) or PA Serves as the Government representative for property
management oversight of contractor held property Advises the CO & IPO of property management issues
and transactions Reviews the Property Plan & PMS Conducts Property Control Systems Analysis (PMSA) or
Property Management Systems Analysis (PMSA) Provides input to Procurement teams for pre-award
document and proposal reviews Grants relief of responsibility where appropriate for
losses
REFERENCES: FAR 45, DFAR 252.245, NFS 1845, FAR 52.245-1, Systems Analysis FAR 52.245-1(g)
Prior to Award ConsiderationsRequest for Proposal/Proposal Evaluation: Full Disclosure – we have to make sure the field is
leveled in respect to furnished gfp. To include use & rents, other gfp to be used on non-rent, non-interference basis.
Government Assumption of Risk – Because the government is assuming the risk of loss it is important that the CO & PA evaluate the contractors property plan and processes prior to award.
PA’s may help provide lists of property or recommend transition activities.
FAR 45.2, NFS 1852.245-80 & 81
Solicitation Clauses1852.245-80 Government Property Management InformationRequires contractor to provide property management system
information, last PMSA/PMSA results, any property they intend to use from other contracts, cost accounting practices for general purpose equipment and property they intend to acquire for the performance of the contract to be provided with proposal.
1852.245-81, List of Available Government PropertySection for property offered under standard FAR
Government Property ClauseSection for property offered under FAR 52.245-2 clause
AS-IS, Where Is
GFP FAR 52.245-1GFP (for NASA primarily off-site contracts):• The Government retains title to both property provided to
or acquired by the contractor in performance of the contract.
• Is normally located at the contractor’s site. Listed in the contract as GFP.
• The contractor is accountable for both GFP and CAP which is reported annually on NF 1018.
• Title does not convey to a Grantee for GFP provided to Grants.
• Property administration and plant clearance for off-site contracts is delegated to DCMA or ONR. This function defaults to the CO if not delegated.
Onsite/Installation Operations Services FAR 52.245-2FAR 52.245-2 – Initial Provisioning only. Onsite operations, fixed price only. Property that becomes unserviceable, or broken becomes property of the Contractor. The contractor is to repair or remove at their expense. If the property remains serviceable throughout the life of the contract or becomes excess to the needs of the contractor, the government retains title. Otherwise title conveys to contractor.
Onsite IAGP NFS 1852.245-71NFS 1852.245-71, Installation Accountable Government Property (IAGP), Property is accountable to the Government, the contractor has user responsibilities. However, “Property not recorded in NASA property systems must be managed in accordance with the requirements of the clause at FAR 52.245–1, as incorporated in this contract.” Property Administration is performed on contracts with large amounts of IAGP which arenot recorded in NASA systems.
PMSA(Audit)2=StressFor the contractor audits or assessments multiplied by x (fill in the blank) can be stressful
For the PA audits can stressful when less prepared and/or where there are deficiencies
Goal is to minimize the stress of the situation, by covering each area.
Know the contract requirements, familiarize yourself with the Property Plan and processes.
Conducting the PMSA
NASA Procedural Requirements (NPR) 4500 Review contract, Property Plan, procedures Review prior PMSA reports/findings Use questionnaire(s) Complete sample worksheets Make sure that PMSA backup provides
adequate information to document records and information reviewed
Create/mark off Checklists
PMSA Documentation Reports should document the process and methods
used to test functional areas/outcomes. The sample population and sets, as well as a summary of findings should be detailed, i.e. x number of x records were reviewed, with no errors/or x number of errors. Where findings require correction and disclosure to the contractor these can be detailed in a separate letter format per functional area/process outcome
Provide results by each segment indicating satisfactory, unsatisfactory or partially satisfactory. Contractor actions should be noted and assessed as to whether or not it is sufficient to correct issues
Areas not reviewed or not applicable should be noted
Findings The PA must determine if a finding is a normal data
entry error, minor discrepancy or anomaly or if the problem is systemic or serious in nature requiring corrective actions.
Random sample checks are designed to be a reasonable assessment of the full population of records and provide expectation that findings will be typical when the sample sets are repeated. Specific or Judgment samples can also be used where warranted, but do not provide a full population review.
When there are findings which are determined to be deficiencies we detail the issue that needs to be corrected, not how to correct it. The contractor then proposes steps and actions to correct, and the PA evaluates the adequacy.
Errors and Deficiencies
Anomalies which are within a normal error rate, should be expected, but should not be repeated with additional sample checks. Errors that are repeated represent a deficient system.
Systemic deficiencies that the PA determines increase significantly risk of loss or repeated loss, mission or schedule delays, safety to personnel or public, or increased cost require immediate correction.
Overall Desired Results of PMSA
The PA wants to be assured that processes, procedures and systems are in place to protect, safeguard, track and account for government property in accordance with policy and contractual requirements.
We will look at the contract, regulatory requirements, property plan, policies, procedures, systems, samples, documentation, and physical inspection to make assessment.
Self Audits Self Audits- encourages contractors to find and correct
deficiencies or identify best practices, before the PMSA.
FAR 52.245-1(b)(4) The Contractor shall establish and maintain procedures necessary to assess its property management system effectiveness, and shall perform periodic internal reviews and audits. Significant findings and/or results of such reviews and audits pertaining to Government property shall be made available to the Property Administrator.
The PA will generally will not assess the same findings as Contractor self assessments, if corrective actions are being worked and are satisfactory to correct issues. Self audits/assessments do not replace PMSA.
Property Management Plan
The PA must review the Property Plan to make sure it covers all areas of Property Management and meets the requirements of the contract, as well as Center policies and procedures outlined in the contract.
Need more emphasis on making sure the contractor’s plan is detailed and comprehensive
Functional Areas/ Process Outcomes
Property Management includes:
Overall Property Management System effectiveness
Policy Procedures Self Audits Property Processes outlined in FAR
52.245-1
FAR 52.245-1(b)(1-4), ASTM Standards: E2279-03, E2135-06, E2452-05e1, and E2379-04
Review of 10 Property Processes:
1. Acquisition2. Receiving
Identification
3. Records4. Physical Inventory5. Subcontractor
Control6. Reporting
7. Relief of Stewardship Responsibilities
Disposal8. Utilization
ConsumptionMovementStorage
9. Maintenance10.Closeout
Acquisition Authority to purchase or acquire (CO or contract
terms & conditions) Existing or on hand inventory screened before
purchase Correct source identified: GFP or contractor
acquired Items ordered for quantities stipulated in the
contract and flowed down to ordering organization
Identification- Property is properly classified and labeled with barcode labels/unique identifiers upon fabrication or receipt
FAR 52.245-1(f)(1)(i), NFS 1852.245-70 Contractor Requests for Government Provided Equipment, NFS 1852.245-74 Identification & Marking, ASTM E2453 and E2495-07
NFS 1852.245-70Contracting officers shall review the contractor’s requests for provision of Government equipment under the clause at 1852.245-70 to determine whether authorizing the provision of Government property is an appropriate business decision according to the policy at 1845.
NFS 1852.245-70 (Requisition/Acquisition of Property):
The Contractor is not to acquire or construct equipment without the Contracting Officer’s written authorization. Only exception is any component of or deliverable end item.
To requisition property the contractor must submit in writing to the CO to:
– 1) Justify the need; 2) Explain why contractor-owned property cannot be utilized;
– 3) Describe in detail sufficient to screen for excess, and 4) Combine items and quantities (as long as under $500K)
Intent is to ensure CO prior approval and to alert Finance.
Receiving of Government Property Property received inspected for
discrepancies Discrepancies segregated/documented
and/or investigated (i.e. partial shipments, shortages/overages).
Carrier signatures obtained Items reconciled against requisition/PO Detailed receiving report
prepared/distributed to appropriate offices FAR 52.245-1(f)(1)(ii)
Additional Receiving Requirements OnsiteNFS 1852.245-71 without the Alternate which requires offsite delivery, requires prior notification to NASA Center Central Receiving of incoming vendor deliveries. Prior to Jan 2011 clause required DD1149 within 5 days of receipt of property onsite. Clause does not specify controlled property threshold for documentation of receipts.
Post Jan 2011 MSFC is giving 15 days for equipment, and 30 days for materials to be documented on MSFC Form 4554, or DD1149.
Records of Government Property
Basic information as required by FAR 52.245-1
Source documentation or references retained (i.e. purchase documents/receiving reports, transfer documents)
Records are accurate and up to date
FAR 52.245-1(f)(1)(iii), NFS 1852.245-74, NFS 1852.245-79 Records and Disposition Reports for Government Property with Potential Historic or Significant Real Value, Standard: ISO VCS 15489, 2001
FAR Elements of Property RecordFAR 52.245-1(f)(1)(iii) Records of Government property. The Contractor shall create and maintain records of all Government property accountable to the contract, including Government-furnished and Contractor-acquired property. (A) Property records shall enable a complete, current, auditable record of all transactions and shall, unless otherwise approved by the Property Administrator, contain the following:(1) The name, part number and description, National Stock Number (if needed for additional item identification tracking and/or disposition), and other data elements as necessary and required in accordance with the terms and conditions of the contract.(2) Quantity received (or fabricated), issued, and balance-on-hand.(3) Unit acquisition cost.(4) Unique-item identifier or equivalent (if available and necessary for individual item tracking).(5) Unit of measure.(6) Accountable contract number or equivalent code designation.(7) Location.(8) Disposition.(9) Posting reference and date of transaction.(10) Date placed in service (if required in accordance with the terms and conditions of the contract).
NFS 1852.245-74 ID and Marking of Government PropertyNFS 1852.245-74 – Identification and Marking of Government
Equipment,Concurrent with equipment delivery or transfer, the Contractor shall
provide the following data in an electronic spreadsheet format:(1) Item Description.(2) Unique Identification Number (License Tag).(3) Unit Price.(4) An explanation of the data used to make the unique
identification number.d) For equipment no longer needed for contract performance and
physically transferred under paragraph (a) of this clause, the following additional data is required:
(1) Date originally placed in service.(2) Item condition
(f) The contractor shall include the substance of this clause, including this paragraph (f), in all
subcontracts that require delivery of equipment.
Physical Inventory
Inventories conducted on frequency agreed to by PA
Inventories taken by personnel other than those having accountability of the property
Inventory results and discrepancies promptly reported to the PA
Property physically touched manually or electronically (verification)
FAR 52.245-1( f)(iv), NFS 1852.245-78 Physical Inventory of Capital Personal Property, ASTM E2132-01 & E2221-02
Physical Inventory ConsiderationsFAR Requirement: FAR 52.245-1(f) (iv) Physical inventory.
The Contractor shall periodically perform, record, and disclose physical inventory results. A final physical inventory shall be performed upon contract completion or termination. (PA may waive final inventory)
Different methods of Physical Inventory: wall to wall, cyclic, inventory by exception.
PA will test stated process and frequency per Property Plan. Assess effectiveness of inventory methods. Completeness of Report. Report should contain: No. of items to be inventoried,
found, not found, discrepancies, and a statement that all records have been reconciled and are accurate.
Contracts with NFS 1852.245-78 require annual inventory of Capitalized assets to be submitted. Method of inventory can be determined by the contractor.
Subcontractor Control Subcontracts contain flow down of property
requirements (not the clauses themselves) and furnished property listings
CO approval of subcontractors relieved of liability or risk of loss
Prime contractor system established to analyze and assess adequacy of sub records, control, protection, preservation & maintenance
Subcontractor reports to prime any losses, damage or destruction
Examine Prime contractor requests for sub-delegations of Subcontractor Property Administration
FAR 52.245-1 (b)(3) and (f)(1)(v)
Evidence of Contractor Flow Down of Requirements Can be an example of contract terms and
conditions Signed acknowledgement by the
subcontractor Consider all requirements of the prime
contract Additionally, the prime contractor must
provide evidence of assessment of their subcontractors property management systems
Reports Discrepancy reports Loss, Damage, Theft or Destruction reported
promptly Physical inventories reports are completed Excess/Disposal reports submitted as required –
SF 1428 Inventory Disposal Schedule Reports of Audits & Self Assessments Any additional Contractual reports accurate and
submitted on time. NFS 1852.245-73 Financial Reporting of NASA
Property in the Custody of Contractors (NF 1018)
FAR 52.245-1(f)(1)(ii)(A), (f)(1)(vi), and (f)(1)(iv).
1018 Reporting Non-CHATS reporting contractors reports are
due by 10/15 for period ending 9/30. CHATS reporting contractors are given an
additional 45 days to complete by 11/30. Bottom line of 1018 should be all property on
hand and any acquisitions received but not transferred as of 9/30. Adjustments should be investigated, documented/foot noted and the contractor should explain what happened and what is being done to prevent future adjustments.
PA Validation & Review of Reports
NF 1018: PA should understand where the contractor is obtaining information for the report. Some PA’s require entire listings, other PA’s require changes to prior period amount reports only
Loss reports require assessment of completeness of the report, determination of Contractor’s managerial personnel involvement, assessment of contractor’s recommended actions to prevent further losses or damage
Discrepancy report reviews require assertion of correction or resolution of discrepancies.
The Contractor must have written procedure or instructions detailing reporting process, which includes error reporting (IPO notification)
Relief of Stewardship Responsibilities Disposition instructions provided by the Plant
Clearance Officer (PLCO) OR CO are obtained before disposition
Disposal of property is IAW contractual requirements and is properly documented
The quantity, condition code and location are reported accurately for property items requiring disposition
ID tags removed, and documentation retained for sale/scrapped items
Relief of responsibility received from PA for Loss, Damage, Theft or Destruction
Proceeds credited or submitted as directed
FAR 52.245-1(f)(vii), (h),(j) & (k)
Evaluation of Relief of Stewardship
The contractor is required to keep records which document relief of stewardship
DD1149 or Form 4554 should be complete with all required signatures (the initiator of the form has the responsibility to obtain final report with all signatures) (challenge MSFC SEMO requires User signature, this is not required by the contractor, only providing the name of the POC/End User)
Pick up or final plant clearance cases should be documented and processed in a timely manner.
Loss Reports (B) Unless otherwise directed by the Property Administrator, the Contractor shall investigate and report to the Government all incidents of property loss as soon as the facts become known. Such reports shall, at a minimum, contain the following information:(1) Date of incident (if known); (2) The data elements required under (f)(1)(iii)(A); (3) Quantity; (2) (4) Accountable contract number; (5) A statement indicating current or future need; (6) Unit
acquisition cost, or if applicable, estimated sales proceeds, estimated repair or replacement costs.(7) All known interests in commingled material of which includes Government material; (8) Cause and corrective action taken or to be taken to prevent recurrence; (9) A statement that the Government will receive compensation covering the loss of Government property, in the event the Contractor was or will be reimbursed or compensated; (10) Copies of all supporting documentation; (11) Last known location; (12) A statement that the property did or did not contain sensitive, export controlled, hazardous, or toxic material, and that the appropriate agencies and authorities were notified.(C) Unless the contract provides otherwise, the Contractor shall be relieved of stewardship responsibility and liability for property when—(1) Such property is consumed or expended, reasonably and properly, or otherwise accounted for, in the performance of the contract, including reasonable inventory adjustments of material as determined by the Property Administrator;(2) Property Administrator grants relief of responsibility and liability for loss of Government property;(3) Property is delivered or shipped from the Contractor's plant, under Government instructions, except when shipment is to a subcontractor or other location of the Contractor; or(4) Property is disposed of in accordance with paragraphs (j) and (k) of this clause.
per FAR 52.245-1(f)(viI)(B)
Loss Reports Generally, the government retains the risk of loss and
contractors are not held liable. Except losses where there is willful misconduct, or lack of good faith on the part of management personnel, where the property is insured or where the full risk of loss has been given to the contractor through FAR 52.245, Alt 1.
Loss reports must contain all required data – per FAR 52.245-1(f)(vii)(B)
PA’s grant relief where appropriate, but only the CO can rescind the governments assumption of risk and/or hold the contractor liable
NFS 1852.245-72 Liability for GP Furnished for Repair or Other Services – liable for LTD&D where they have been negligent in care or diligence in safeguarding
Utilization of Government Property Methods established to insure Government
property is used only for the purposes authorized by the contract
Contractual authorization obtained to use property for other than original authorized purposes (non-interference basis, rental, etc)
System established to review and identify excess property (promptly)
FAR 52.245-1(f)(viii)
Movement Proper authority for movement obtained and
documented System in place to control movement and
location of property System to update records for movement
activities Moved property is protected, preserved and
inspected to prevent loss, damage and the deterioration
FAR 52.245-1(f)(1)(viii)(A), ASTM E2606-08
Utilization continued…
Utilization continued…Consumption Property consumed only under contract performance Stock records system maintained for consumable items Stock records documented with issue information Reasonable consumption rate Process for analysis and investigation of consumption
above to planned use
FAR 52.245-1(f)(iii)(B) Use of a Receipt and Issue System for Government Material. When approved by the Property Administrator, the Contractor may maintain, in lieu of formal property records, a file of appropriately cross-referenced documents evidencing receipt, issue, and use of material that is issued for immediate consumption.
Storage Adequate safeguards in place for securing
government property (safety, security, etc) Access to area controlled Government property segregated from the
contractor property A first/first out system established for stored
items subject to expiration Adequate housekeeping for stored property
Utilization continued…
Maintenance of Government Property Program established consisting of systematic written
procedures for servicing and inspecting equipment Safe, efficient and economical operation of government
property (Preventative care, routine repair, emergency repair or calibration as required)
Records maintained for repairs or calibration Return Maintenance Authorizations (RMA) documented
and tracked, record adjustments processed System capable of identifying high costs for maintenance Maintenance performed within contractual requirements Prior CO approval for major repairs/upgrades
FAR 52.245-1(b), (f)(ix)
Contract Closeout
Proper CO authority to transfer property to another contract
Inventory adjustments and liability determinations completed before closeout
Lists provided for Government disposition instructions
All records complete and reconciled
FAR 52.245-1(f)(1)(x)
Conclusion Know the contract requirements Know your procedures and Property Plan Participate or review Self Assessments Encourage continuous improvement Be active in creating and reviewing standards Work with your PA, organization & program to meet
shared goals. The relationship is a team effort, not us/them. As the PA you are evaluating the effectiveness of system not the person. First and foremost the PA’s responsibility is to make sure GP is tracked, protected and efficiently managed. As a contractor you are tracking, safeguarding and utilizing GP in an efficient manner.
Questions??
