1. Property Management 101 Part 2: Defense J.E. “Skip” Adolph, CPPM CF

2. Property Management 101: Defense The “Property” Clause 52.245-1 “Government Property (Apr 2012) –Addresses the following (a) Definitions (b) Property Management (c) Use of Government Property (d) Government-furnished Property (e) Title to Government Property (f) Contractor Plans and Systems

3. Property Management 101: Defense The “Property” Clause (cont) 52.245-1 “Government Property (Apr 2012) –Addresses the following (g) System Analysis (h) Contractor Liability for Government Property (i) Equitable Adjustment (j) Contractor Inventory Disposal

4. Property Management 101: Defense The “Property” Clause (cont) 52.245-1 “Government Property (Apr 2012) –Addresses the following (k) Abandonment of Government Property (l) Communications (m) Contracts Outside The United States End of Clause

5. Property Management 101: Defense The “Contract” What is a Contract? –“An agreement between two or more parties, creating obligations to do or not to do something, that are enforceable or otherwise recognizable by law…” Black’s Law…

6. Property Management 101: Defense How to read a contract: From The First Word To The Last Word! –Read The Clause In It’s Entirety –Any other clause referenced… –52.245-1 -- Government Property. As prescribed in (45.107 a), insert the following clause: “Real property.” See Federal Management Regulation 102-71.20 (41 CFR 102-71.20).

7. Property Management 101: Defense Property “Management” or Property “Control”? ASTM Definition (ASTM E 2135) –“Property Control System”: An entity’s internal management program for protecting, preserving, accounting for, and controlling property from acquisition through disposition, including both application and compliance

8. Property Management 101: Defense 52.245-1(b) –The Contractor shall have a system of internal controls to manage (control, use, preserve, protect, repair and maintain) Government property in its possession.

9. Property Management 101: Defense  Property Management is the Management of Data  The effectiveness of that management is a direct reflection on the adequacy of the system  The efficiency of that management is a direct reflection of the level of contribution to the system

10. Property Management 101: Defense 52.245-1(f)(1)(iii) –Records of Government 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:

11. Property Management 101: Defense 52.245-1(f) Contractor plans & systems –(1) Contractors shall establish and implement property management plans, systems, procedures at the contract, program, site or entity level to enable the following outcomes:

12. Property Management 101: Defense Contractor plans & systems –Enabled process outcomes: Acquisition Receipt Records Physical Inventory Subcontractor control Reports Relief of Stewardship Utilization Maintenance Property closeout

13. Property Management 101: Defense Contractor plans & systems –How many process outcomes? Acquisition: 2 each Receipt: 2 each Records: 2 each Subcontractor control: 2 each Relief of stewardship: 2 each Utilization: 2 each

14. Property Management 101: Defense 52.245-1(f)(1)(i) –Establish and implement property management plans, systems, and procedures to enable the following outcome: Acquisition: Contractor shall document that all property was acquired consistent with its engineering, production planning, and property control operations

15. Property Management 101: Defense Acquisition “Source” Documents –Based on “Method”: FURNISHED LOANED PURCHASED FABRICATED LEASE RENTED REUTILIZED TRANSFERRED

16. Property Management 101: Defense Sources of Asset Data: Description; Part # Location Contract # Unit of Measure Acquisition Cost Date Placed in Service Quantity Received Purchasing Receiving / Inspection Warehouse / Using Org P.O. / Receiver Asset Facilities Contracts

17. Property Management 101: Defense Starts with a “Plan” –A written strategic description of how best to manage the government’s property holdings in your possession (“I am the Steward”) while providing the “Best Value” –Establishes performance “outcomes” from acquisition to close out –Using selected VCS and/or ILPs

18. Property Management 101: Defense Your procedures describe how those performance outcomes shall be achieved –A “best practice” is to be simple yet detailed (therein lies a challenge) Purpose (Why) Process (How) Responsibility (Who)

19. Property Management 101: Defense “The Big Three” –The 3 most important Outcomes: Receiving –Establishes the foundation of the asset history Records –The “Ledger” of what the Government’s property in you possession Physical Inventory –A physical accounting of all assets reported in the “Ledger”

20. Property Management 101: Defense It’s About RISK ! –Perform your own assessment –PMSA: LDDT Ratio for past 3 years? Inventory Loss Ration for past 3 years? Last PMSA evaluation for past 3 years? Current “Property Management Plan”? Self-assessment Program In Place?

21. Property Management 101: Defense All You Have To Do Is…

22. Basic Property Federal Rick Price, CPPM

23. Government Policies & Regs. Sources Of Procurement Law Statutes Executive Orders Decisions Decision Process Governed By Regulations FAR Supplements Office Of Federal Procurement Policy (OFPP )

24. Federal Acquisition Regulation (FAR) Public Law 93-400 Office of Federal Procurement Policy (OFPP) Act of 1974 Amended by Public Law 96-83 and OFPP Letter dated August 19, 1985 Our roots are found in LAW!!!

25. More about roots! The basis or roots for all property control systems should be C.P.P.M. Not NPMA’s CPPM, but….. CPPM Control Protect Preserve Maintain Cornerstones of a PM

26. The System Integrator The magnet that draws all functional areas together Security, Purchasing, Subcontracts, Quality, Training, Information Services, Accounting, Production, Planning, and the list goes on The Property Mgmt. System

27. Where it all Begins FPMR Subpart 101-1.101 -- “The FPMR…shall be used by General Services Administration…except procurement and contract matters contained in the FAR.” FAR Section 1.101 -- stipulates that all Executive Agencies will use the FAR contracting system policies and procedures when acquiring supplies and/or services Both allow for supplements to be generated by agencies. FPMR 101-8.108 and FAR 1.103 Who uses What?

28. “Drivers” Every organization, regardless of size or type, has critical business processes that are an integral part of the success of their organizational mission and objectives. NPMA Standard Property Book, July 1999 Fiduciary Responsibility Business Management Enable work efficiencies How is this applied in your organization?….

29. Drivers, cont…. External Auditors, DCMA, DCAA, ONR and other Sponsors Contractual Compliance Financial Accounting Compliance CAS

30. Property’s “Multiple Hats” “Hats” Compliance Business Mgmt/Asset Management Stewardship Potential conflicting priorities Balance and consistency most important

31. Core Team for Property Management Property Management Processes Property Management Office Property Management Office Program Management Program Management IT Staff Custodians and User Custodians and User ????? Sponsors A Winning Combination!

32. Where it all Begins Unless otherwise stated... Property means: Real property, equipment, intangible property and debt instruments. Property Management Definition

33. Stewardship The conducting, supervising, or managing of something The careful and responsible management of something entrusted to one’s care

34. Stewardship Responsibilities Maintain Approved Property System in today’s world and Acceptable in tomorrow’s world Financial Accountability Liability

35. Property Management Now that we have it, what do we have to do and how? Track it Financial Implications Maintenance Reporting Subcontracting Audits You said it LD&D and other liability You said it was where?

36. Definitions Government Furnished Property (GFP) “means property in the possession of or directly acquired by the government and subsequently made available to the contractor. Contractor Acquired Property (CAP) “means property acquired or otherwise provided by the contractor for performing a contract and to which the government has title. Government Property (GP) “means all property owned by or leased to the government or acquired by the government under the terms of the contract.” FAR 45.101

37. Property Management The Overseer -- Very Important Ensures procedures are written, updated and adhered to Provides training Oversees self audits Leads in LDD problems

38. Receiving The process of physically accepting property Item(s) screened against procurement documentation Item(s) identified and tagged Discrepancies noted and acted upon Securing of the property Timely completion of documentation Details often overlooked… Basis for correct records! Critical for damage claims Details often overlooked… Basis for correct records! Critical for damage claims

39. Receiving, cont. Where and by whom? You develop the process What do you check for and document? Confirmation of order Condition Demographic data of asset What if a problem? It depends…let’s discuss

40. Identification Purpose Identify ownership Control number designation Tagging options Who does this? Suggested placement and related benefits Replacement of lost tags Where’s the tag?

41. Records: The Great Communicator Your Property Control System’s Soul Have a record system that will display basic information for each item. Some items have more data, some less.

42. Utilization and Storage Business process needed to protect the company’s and its Sponsor’s property from loss, damage, and destruction while it is not in use and to ensure its availability whenever it is needed in the future Let’s talk about commingling...

43. Physical Inventory Regulatory & Contractual Requirements Good Business Practice Of special importance during acquisitions/mergers of organizations Financial Considerations Measure Health of Property System Utilization Excess Property Indicators “Other Factors”

44. Inventory -- Assessing System “Health ” Unlocated property may be indicator of: Theft Poor security Inadequate documentation of receipts & issues Location discrepancies may indicate: Undocumented movement Untrained property custodians Poor record keeping Improper disposition Unrecorded equipment may indicate: Problems is areas of Procurement Receiving Identification

45. Maintenance What does this mean? Who does it? When? How documented? Decision factor for replacement planning

46. Movement Movement vs. shipping Temporary vs. long-term moves Used as authorized Documented Secured and protected while in transit Update recorded location when move is complete FAR 52.245-1 Records needs location

47. Reports Records Maintenance Use Storage Movement Like records, reports touches all facets of our Property Control System, for example... Like records, reports touches all facets of our Property Control System, for example... Subcontracts ConsumptionIdentification Inventory Receiving

48. Disposal of Property Process by which one disposes of excess property Have approved procedures Must screen in-house Report excess Maintain while in storage Dispose of as instructed Adjust records

49. Reutilization Normally ends up in a transfer of asset to another organization outside of your company or to another contract within your company

50. Property Management 101 Universities - Agreements Research Grants Instrumentation Grants Contracts Coop. Agreements Donations/Gifts Loans RPAs Fellowships Bailments Clinical Trials “Evaluation”

51. Property Management 101 Universities - Agreements Grants – Predominant Type Contracts – More Complex to Manage Coop Agree. – Similar to Grants Instrumentation – Large Asset Acquisition, shared funding Donations – Gifts, Potential Tax Benefits

52. Property Management 101 Universities - Agreements Donations – Gifts, Potential Tax Benefits RPAs – Use of Facility by external users Fellowships – Internal/External; awarded to student Clinical Trials – May involve Human Subjects Evaluation – Prototype testing

53. Property Management 101 Universities - Grants Title to contractor-acquired equipment usually vests with University at time of acquisition May have “exempt” property; no further obligation after title granted to university GFP treated same as GFP on a contract

54. Property Management 101 Universities Shared Instrumentation Grants Provides a cost-effective mechanism for groups of NIH-supported investigators to obtain commercially-available equipment that costs more than $100,000. Instruments in this price range are typically too expensive to be obtained through a research project grant. The maximum SIG award is $600,000.

55. Property Management 101 Universities Shared Instrumentation Grants These grants cover the direct costs of the instruments; the grantee institution must meet costs for maintenance, service contracts, and technical support. Awards are for one year only and are not renewable.

56. Property Management 101 Universities - Contracts Less frequent; challenging to manage For procurement of goods or services that directly benefit the USG Property managed IAW the FAR clauses – Will affect key issues such as title, use and reporting of property

57. Property Management 101 Universities – Coop. Agreements Similar to grants, managed per OMB Circulars Substantial technical involvement is anticipated between the awarding agency and the recipient during the period of performance Title to equipment usually vests with university at time of acquisition; however this is negotiable within each agreement

58. Property Management 101 Universities - RPAs A form of sponsored project Personnel, academic facilities, and/or laboratory equipment are employed on behalf of parties not otherwise affiliated with the University as faculty, staff, or students. Faculty involvement vary Project requirements may be established in detail by the sponsor.

59. Property Management 101 Universities - RPAs A RPA is different in that a significant portion of the responsibility for the intellectual direction, interpretation, and/or outcome of the work rests with the outside user.

60. Property Management 101 Universities - Title Eligible or Qualified Recipients CAP title may vest in University at time of acquisition -- With or without further obligation Title dependent on type of agreement and source of funding

61. Property Management 101 Universities - Utilization Broader ability to use Priority to acquiring agreement “Stepdown” for priotizing Tracking dependent on organization Idle should be excessed

62. Property Management 101 Universities – Inventory Biennial per OMB More often per agreement or policy May vary depending on type of award

63. Property Management 101 Universities - Disposition Have method to identify idle status Preferably single-stream GP per Contracting Officer approval May require remuneration for value of remaining useful life

64. Property Management 101

65. Contact Information Skip Adolph, CPPM CF theunkpm@roadrunner.com Ivonne Bachar, CPPM CF ibachar@stanford.edu Rick Price, CPPM rprice5705@aol.com