Presented by: Tom Ruckdaschel Deputy Director, Govt Property April 16, 2013 Understanding and Standardizing Contractual Transfers of Government Property (PCARSS 3.2) Approved for public release

Defining Government “Contract” Property FAR and DFARS requirements on: Providing contract property Transferring contract property from one contract to another Related DoD Procedures, Guidance and Information (“PGI”) New capability within the PCARSS etool to help make property transfers easier Discussion Items

What is PCARSS? DCMA etool: Plant Clearance Automated Reutilization & Screening System Deployed in the late 1990s Allows contractors to electronically report property excess to contract requirements PCARSS

Equipment Special Tooling Material For Repair For “Use” “Contract Property” Special Test Equip. Personal Property 1. Equipment (for use or repair) 2. Special Tooling 3. Special Test Equipment 4. Material Assets Under the FAR, personal property is distilled under four (4) categories

FAR Requirements Federal Acquisition Regulation (FAR) : Contracting officers shall provide property to contractors only when it is clearly demonstrated— “To be in the Government’s best interest; that the overall benefit to the acquisition significantly outweighs the increased cost of administration; that providing the property does not substantially increase the Government’s assumption of risk; and that Government requirements cannot otherwise be met.” DoD Procedures, Guidance and Information provides additional information Furnishing Government property is fundamentally a requiring activity/buying command “pre-award” activity ! !

Background Government “contract” property (reference DoDI ) Furnished to a contractor by the Government (“GFP”) Acquired by a contractor under cost-reimbursement contracts (“CAP”) The requiring activity is the decision point as to whether or not to furnish property to contractors FAR Part (a) (15), Contents of Written Acquisition Plans FAR Parts (Policy on Providing) and (Solicitation Requirements) PGI Contract property must be accountable to a contract—and only one contract at a time ! !

However… DCMA Contracting Officers are frequently called upon to process contract modifications transferring property from one contract to another Often a follow-on contract Sometimes a new procurement Issues: Process tends to be ad-hoc Everyone does it a little differently Property listings manually constructed Variety of non-standard attachments General non adherence to FAR

Background When Govt. property is no longer required on a contract, the FAR clause at requires contractors to: Report property to the plant clearance officer for disposition (DCMA’s etool PCARSS is used for this purpose) or Notify the Contracting Officer that property can be used on another contract In general, these requirements involve two (2) processes: PCARSS reporting: standardized, automated, consistent, well- established Notification/request for property transfer of accountability: ad- hoc, manual, inconsistent Our new process (PCARSS 3.2) collapses everything into one standard automated process

First Principles All Government contract property (whether Government furnished or contractor acquired) must be contractually accountable to a contract – and only one contract at a time Government contract property can only be transferred from one contract to another when firm requirements exist under the new, follow- on or gaining contract. See PGI PGI Contractual transfers of property accountability must be accomplished by contract modification of both gaining and losing contracts; contract modifications shall use the fillable PDF formats prescribed in the “smart” attachments found at PGI PGI

FAR Transferring accountability. “Government property shall be transferred from one contract to another only when firm requirements exist under the gaining contract.” “Such transfers shall be documented by modifications to both gaining and losing contracts. Once transferred, all property shall be considered Government-furnished property to the gaining contract.”

GFP Attachment A new requirement for all DoD contract writing systems (OSD memo April 11, 2012) We’re using the same template for property transfers Required by PGI

Benefits Property will be available on new or follow-on contracts…faster Standardizes the GFP attachment as data (which can then be used and reused via EDA) Demonstrates proper contract structure Less potential for negative audit findings Enhances both data integrity and property accountability Potentially faster contract close out Major DoD effort underway on GFP accountability (tied to FIAR plan)

Accountability of Government Assets is a DoD Strategic Imperative

DUSD AT&L deemed GFP a material weakness in its 2010 annual Statement of Assurance

General Accountability Office (GAO) GAO , Navy Needs to Improve the Management Over Government-Furnished Material Shipped to Its Repair Contractors, July 23, 2004 US Army Audit Agency (USAAA) Report No. A FFE, Management of Government Furnished Property, U.S. Army Garrison, Fort Hood, Texas, dated, Mar 4, 2005 DoD Inspector General (DoD IG) Report No , Internal Controls Over Government Property in the Possession of Contractors at Two Army Locations, dated June 18, 2009 USAAA Report No. A ALL, Audit of Management and Visibility of Government Property Provided to the Contractor Performing Bulk Fuel Operations in Kuwait, dated December 17, 2009 Air Force Audit Agency Report No. F FB3000, Government Furnished Equipment Financial Statement Reporting, dated January 11, 2010 (potential loss of accountability for approximately $22 billion of Government furnished property) Just a few…

How the new process will work The contractor: Identifies a new requirement; requests transfer of accountability to the other contract Reports the property to PCARSS An will be sent to the Contracting Officer (CO) with the “smart attachment” The CO can approve or disapprove the transfer If approved, the CO can create the contract modification through the Modifications and Delivery Orders etool—using the smart attachment. Done! (plant clearance case can closed) If disapproved, the excess property is disposed of like any other excess property Note: Reporting property to PCARSS does not constitute a contractor request for transfer of accountability—contractors must still make a formal request (outside of PCARSS)

If “Yes” is selected for this question, the User must enter a DCMA Contract Number.

What the s will look like “ The contractor [ ABC, Inc.] has requested that the Government Property identified on the attached listing be transferred from contract F D0083 to contract FA877104D0003. Accordingly, consistent with FAR , contract modifications to each contract (both gaining and losing) are required.” “Please note that failure to expeditiously modify these contracts may result in unnecessary property storage costs, impact the timely closeout of contract F D0083, or otherwise impact contract performance on contract FA877104D0003.”

s (cont.) THE FOLLOWING PARAGRAPH SHOULD BE ADDED TO THE MODIFICATION FOR THE LOSING CONTRACT: The purpose of this modification is to transfer accountability of the contract property items listed on the attachment -- from this contract to contract FA877104D0003". THE FOLLOWING PARAGRAPH SHOULD BE ADDED TO THE MODIFICATION FOR THE GAINING CONTRACT: "The purpose of this modification is to transfer accountability of the contract property items listed on the attachment -- from contract F D0083 to contract FA877104D0003".

s (cont.) “This modification does not waive the Contracting Officers’ responsibility to consider any potential unfair competitive advantage resulting from this transfer of accountability. The Contracting Officer may consider applying a rental charge or equivalent as specified in FAR , which is hereby added to this contract, or other form of consideration. The FAR clause and DFARS clauses , , , and are also added to this contract to the extent it may not already contain these clauses.”

Last Step: The Contracting Officer should notify the PLCO after processing the contract modification (future automation)