2 GOVERNMENT PROPERTY FOR CONTRACTING PROFESSIONALS Breakout Session # 804Dr. Douglas N. Goetz, CPPM, CFProfessor of Contract ManagementDefense Acquisition UniversityDate Tuesday April 15th, 2008Time 10:45 – 11:45 AM
3 GOVERNMENT PROPERTY TOPICAL OUTLINE OVERVIEW OF GOVERNMENT PROPERTY FAR Part 45 and Part 52Policy requirements of FAR Part 45The Government Property ClausesContracting Officer RequirementsPre-award ResponsibilitiesPost-award ResponsibilitiesSome DO’S and DON’TS for Contracting Officers
4 GOVERNMENT PROPERTYFAR Part 45 Sets forth Policy and Procedures for Providing Government Property (GP)Definitions peculiar to GP –Policy on Providing –Contractor PMS Compliance –Contract Clauses for GP –Solicitation & Evaluation Procedures re: GP – 45.2Use and Rental of GP – 45.3Title to GP – 45.4Support Property Administration for GP – 45.5Reporting, Reutilization and Disposal of GP – 45.6
5 GOVERNMENT PROPERTY The GP Clauses – Reduced from 19 to 3 ALT I: FP for competitive contracts (Full Risk of Loss)ALT II: CR for the conduct of basic or applied research at nonprofit institutions of higher education or nonprofit organizations for scientific research.GP Installation Operation ServicesUse and Charges
6 SO WHAT?!?!?Contracting Officers play a CRITICAL ROLE in the property management for Government property in the possession of ContractorsIf contracting actions are done improperly at the beginning of the contract – they will haunt and potentially hurt us through out the performance of the contract.
8 DETERMINATION TO PROVIDE GP Overarching Policy –Contractors are ordinarily required to furnish ALL PROPERTY Necessary to perform Government contractsSO WHY IS THERE OVER $150 Billion worth of GPin the hands of DEFENSE contractors?
9 DETERMINATION TO PROVIDE GP FAR(b) CONTRACTING OFFICERS SHALL PROVIDE PROPERTY TO CONTRACTORS ONLY WHEN IT IS CLEARLY DEMONSTRATED--
10 DETERMINATION TO PROVIDE GP To be in the Government’s Best Interest;Examples may include but are not limited to expedited delivery, increased competition, supporting small business, etc.(2) That the overall benefit to the procurement significantly outweighs the increased cost of administration, including ultimate property disposal;COs MUST consider the costs to repair GP over its useful life based upon the age and condition of the GP to be potentially furnished, the potential cost to replace lost, damaged or destroyed GP, and the cost associated with the disposition of the GP INCLUDING items such as HAZARDOUS WASTES, EXPLOSIVES, DEMILITARIZATION, etc.
11 DETERMINATION TO PROVIDE GP (3) That providing the property does not substantially increase the Government’s risk; andCOs may obtain information from the cognizant PA of the potential contractor’s risk assessment rating as it applies to the management of GP(4) That Government requirements cannot otherwise be metFor Example, Sole Source procurements, emergency procurements, contingency contracting, etc.
12 DETERMINATION TO PROVIDE GP Be Careful!!!(c) The contractor’s inability or unwillingness to supply its own resources is not a sufficient reason for the furnishing or acquisition of propertyReal World:Contractorsoften tell theGovernment whatGFP they need.
13 DETERMINATION TO PROVIDE GP Yes, I know – it has always been EASY to FURNISH Government Property (GP).We say, “It’s cheaper if we provide GFP!”But we need to consider ALL of the variables associated with furnishing GFP!But we are trying to REDUCE, to maximum extent practicable, the furnishing of GP!So, ya’ gotta think about it!!!
14 CO DETERMINATION TO PROVIDE GP Providing Government Furnished Property must be a conscious deliberate well thought out ACQUISITION PLANNING Decision!There are Natural Consequences.
15 INCLUSION OF GFP LISTINGS in the Solicitation OK, so you decided to provide GFPLISTINGS, including the following Data:(1) The name, part number and description, manufacturer, model number, and National Stock Number (if needed for additional item identification tracking and/or disposition);(2) Quantity/unit of measure;(3) Unit acquisition cost;(4) Unique-Item Identifier or equivalent (if available and necessary for individual item tracking); and(5) A statement as to whether the property is to be furnished in an “as-is” condition and instructions for physical inspection.
16 CO REQUESTS OF OFFERORS INFORMATION RELATED TO GP ALREADY IN THE OFFEROR’S POSSESSIONPROPERTY MANAGEMENT PLAN
17 CO REQUESTS OF OFFERORS 45.201(c) Submit the following information with their offers—(1) A list or description of all Government property that the offeror or its subcontractors propose to use on a rent-free basis. The list shall identify the accountable contract under which the property is held and the authorization for its use (from the contracting officer having cognizance of the property);(2) The dates during which the property will be available for use (including the first, last, and all intervening months) and, for any property that will be used concurrently in performing two or more contracts, the amounts of the respective uses in sufficient detail to support prorating the rent;(3) The amount of rent that would otherwise be charged in accordance with FAR , Use and Charges; and
18 OFFEROR IS REQUIRED TO SUBMIT THEIR PROPERTY MANAGEMENT PLAN 45 OFFEROR IS REQUIRED TO SUBMIT THEIR PROPERTY MANAGEMENT PLAN (c)(4)CO is required to ask the Contractor for a Property Management Plan (PMP)Note – The FAR Part 45 rewrite should have created a solicitation provision. We’re working on it now.PMPs are to be Executive Level Documents where the contractor BRIEFLY describes its Property Management Processes
19 WHAT MAY BE IN A PMP Offeror may discuss: Status of current Property Management SystemVoluntary Consensus Standards in place or proposed for useIndustry Leading Practices in place or proposed for useOther performance indicators, Metrics, Audit Results, etc.
20 WHAT DO I (THE CO) DO WITH THE PMP? Evaluate it for adequacy in terms of managing GP while in the Contractor’s possessionPast Performance IndicatorREAL WORLD APPLICATIONUse the Services of the Government Property Administrator cognizant of that contractor/offeror
21 Eliminating Competitive Advantage For Fixed Price ContractsUse a Rental Equivalent Evaluation Factor (REEF)Computed through the Use and Charges ClauseReduce Offer by REEF when comparing Contracting WITH GP versus WITHOUTFor Cost Reimbursement typeSorta’ a moot point
22 INCLUSION of the CORRECT CLAUSES 45.107 Where there is GP -- CO MUST USE BOTH:FAR and FARGovernment Property Clause andUse and Charges ClauseBUT/EXCEPT!!!No GP clauses required for property repair contracts/purchase orders with GP below the Simplified Acquisition Threshold
23 CLAUSAL VARIATIONS FULL RISK OF LOSS WITH NON-PROFIT ENTITIES MUST USE THE ALT I to FARFor COMPETITIVE FP ContractsWhen No Cost or Pricing Data is RequiredWITH NON-PROFIT ENTITIESMUST USE THE ALT II to FARProvides Vesting of TITLE to Contractor Acquired Property in the Non-Profit
25 FUNDING FOR ACTIONSWhen the Equitable Adjustment portion of the GP Clause is activatedWhen GFP is:Not suitable for useNot delivered in a Timely basisDecreasedWhen GFP requires repair beyond NORMAL Maintenance
26 FUNDING FOR ACTIONSFunding for replacing LOST, DAMAGED, DESTROYED, or STOLEN Government Property.Yes, contractors DO damage GP!And, in mostCases, theGovernmentActs as aSelf Insurer/INSURANCECOSTS
27 FUNDING FOR ACTIONS FUNDING DISPOSAL ACTIONS FUNDING FOR STORAGE Including:DEMILITARIZATIONDISPOSAL OF HAZARDOUS WASTESNOTE: Contractors are ALREADY REQUIRED by the contract to “prepare for shipment and deliver FOB Origin.”Anything AFTER THIS is the Government’s Responsibility.FUNDING FOR STORAGE“What are you going to do with that GP when the Contract is complete?”
28 (Sometimes in coordination with the PCO) POST AWARD CO ISSUESWHAT THE ACO(Sometimes in coordination with the PCO)needs to knowand do regarding GP!
29 POST AWARD CO RESPONSIBILITIES FAR PART 42 Discusses the Contract Administration Delegation:42.302(a)(26) through (30)PCOACO
30 42.302(a)(26) through (30) (27) [Reserved] (26) Perform property administration (see Part 45).(27) [Reserved](28) Perform necessary screening, redistribution, and disposal of contractor inventory.(29) Issue contract modifications requiring the contractor to provide packing, crating, and handling services on excess Government property. When the ACO determines it to be in the Government’s interests, the services may be secured from a contractor other than the contractor in possession of the property.
31 42.302(a)(26) through (30)(30) When contractors request Government property—(i) Evaluate the contractor’s requests for Government property and for changes to existing Government property and provide appropriate recommendations to the contracting officer;(ii) Ensure required screening of Government property before acquisition by the contractor;(iii) Approve use of Government property on a noninterference basis in accordance with the clause at , Use and Charges;(iv) Ensure payment by the contractor of any rental due; and(v) Ensure reporting of items no longer needed for Government production.
32 ALL of the ACTIONS within FAR PART 45 that require the CO’s AUTHORITY! EMBEDDED WITHIN FAR 42…ALL of the ACTIONS within FAR PART 45 that require the CO’s AUTHORITY!And there are a bunch!
33 POST AWARD CO RESPONSIBILITIES A QUICK LISTING of RESPONSIBILITIESEquitable AdjustmentsPMS ActionsLiability ActionsMaintenance Funding ActionsModification of Contracts for Changing GPModification of Contracts for Authorizing USECollection of Rent
34 ACO Responsibilities Equitable Adjustment IAW (d) “Government Furnished Property” and(i) “Equitable Adjustment”FOR:GFP Not Suitable for Use, Late Delivery, Decrease, or Repair (Beyond normal Maintenance)
35 PMS Actions ACO Responsibilities Correction of the contractor’s PMS FARRequest the contractor to correct any deficiencies in their PMS.Failure may result in revocation of the Government’s Assumption of Risk or other Remedies
36 ACO Responsibilities Liability Actions ONE RESPONSIBILITY & TWO AUTHORITIESFUND for the REPAIR/REPLACEMENT of GP that was LDD&T (PCO/ACO both involved)REVOKE the Government’s Assumption of Risk (FAR and (h)(iii)“HOLD” the contractor Liable for the Loss, Damage, Destruction or Theft of GPIn accordance with the Terms and Conditions of the contract.Full versus Limited Risk of Loss
37 ACO Responsibilities Maintenance Funding Actions 52.245-1(f)(1)(ix) Contractor is responsible for “Normal” maintenance costs.Government is responsible for “Capital” type RehabilitationPCO/ACO both involved
38 ACO ResponsibilitiesModification of Contract for Changing GPTransfer of Accountability FARMODS to BOTH Losing and Gaining ContractsPCO/ACO Both InvolvedModification of Contract when EXISTING GP in Contractor’s possession needs to be Modified
39 ACO ResponsibilitiesModification of Contracts for Authorizing USE (Post Award Utilization Requests)Contractor authorized to USE GP on the instant contractAny other use requires AUTHORIZATION to BOTHACCOUNTABLE ContractRequesting USING Contract
40 ACO Responsibilities Collection of Rent FAR 52.245-9 Must be Authorized by the CO to USERental Requests Submitted to the ACOACO Verifies Rental ComputationACO Collects Rent payable to the “Treasurer of the United States”(Not the ACO)
41 ACO Responsibilities FUND FOR DISPOSAL OF GP Contractor, for GP, is required to:PREPARE FOR SHIPMENTDELIVER FOB ORIGINGovernment MAY have to Pay for the Disposal of GP That May:Be HazardousRequire DemilitarizationExceed Contractually Authorized PROCESSING TIME (120 Days) (Yes, the Government may have to PAY!)
42 Some DO’S and DON’TS for Contracting Officers DO have the Program Manager or Requiring Activity Provide JUSTIFICATION to Support the Providing of GPFAR (b)(1) & (2) & (3) and (4)
43 Some DO’S and DON’TS for Contracting Officers DON’T agree to furnish Government Property unless you meet the policy requirements of FARAnd DOCUMENT the ACTIONThis is a “MONETARY” Decision ($$$)DO Ensure the PROPER LISTING of GFPFurnished WITH Government WarrantiesFurnished “AS IS”Furnished under FARTHREEPOTENTIALLISTS of GFP
44 Some DO’S and DON’TS for Contracting Officers DO Ensure That The GP Clause Is In The Contract (When Applicable)DON’T Direct The Contractor To Acquire Property For The Government That May Normally Be The Contractor’s Responsibility (FAR Part 31 and CAS Issue)DO Mod The Contract When Adding Or Decreasing GP
45 Some DO’S and DON’TS for Contracting Officers DON’T Ask The Contractor To “Ship In Place” Without Establishing Contractual Accountability (Due To Liability Issues)When On Base Or Installation DO Specify DRMO Use Versus GP Clause Disposition Process.
46 Some DO’S and DON’TS for Contracting Officers DON’T “GIVE” GP To The Contractor at Contract Completion Because Your Contract No Longer Needs It…Violation Of Law (Federal Property And Administrative Services Act Of 1949)DON’T Abandon GP To The Contractor When The Contractor Is Performing On A Government Base Or Installation.
47 Some DO’S and DON’TS for Contracting Officers DON’T Direct The Contractor To Retain GP After Contract Completion Because They “MAY” Be Awarded Another Government Contract.Do Contact The Appropriate Government Property Administrator If You Have Technical Questions About GP!
48 Defense Acquisition University Thank you!Dr. Doug Goetz, CPPM, CFDefense Acquisition University3100 Research BoulevardPOD 3, 3rd FloorKettering, OH 45432