A Myth-Busting Panel Discussion Urban Legends, Half-Truths, Distortions and Flat-Out Lies in Contract Property Management A Myth-Busting Panel Discussion Dr. Douglas Goetz, CPPM CF, GP Consultants Mary Gonzalez, CPPM Southwest Research Institute Brandon Kriner, CPPM CF, Harris Corporation

RECORDS Contractors need not keep records of Government property when the items original acquisition cost is less than either: $5000 or Their own Capitalization Threshold, as they would for their own property….

RECORDS ANSWER – No, the Contractor is required to keep records of ALL Government property REGARDLESS of Acquisition Cost. (f) Contractor plans and systems. (1) Contractors shall establish and implement property management plans, systems, and procedures at the contract, program, site or entity level to enable the following outcomes: (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.

ALL Government Property must be inventoried ANNUALLY…. PHYSICAL INVENTORY ALL Government Property must be inventoried ANNUALLY….

PHYSICAL INVENTORY ANSWER – MAJOR MISCONCEPTION FAR 52.245-1(f)(1)(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. The Property Administrator may waive this final inventory requirement, depending on the circumstances (e.g., overall reliability of the Contractor's system or the property is to be transferred to a follow-on contract).

USE OF GOVERNMENT PROPERTY If contractors are in possession of GFP under a US Government contract, and they are bidding on ANOTHER US Government contract – they should NOT disclose the GFP in their possession such that, after award, they can request Rent Free Non-interference use on the new contract…

USE OF GOVERNMENT PROPERTY FAR 45.201 (c) The solicitation shall describe the evaluation procedures to be followed, including rental charges or equivalents and other costs or savings to be evaluated, and shall require all offerors to 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 52.245-9, Use and Charges; …. NOTE – IT IS A GOVERNMENT RESPONSIBILITY TO PUT THIS INTO THE RFP!!!

USE OF GOVERNMENT PROPERTY Where Government Property, accountable under a Prime’s US Government contract is to be used by a Subcontractor -- Does the Prime have to ask the Government’s permission?

USE OF GOVERNMENT PROPERTY IT DEPENDS!  There is an interesting technical issue/error in the FAR. FAR 52.245-9 REQUIRES: (b) Use of Government property. The Contractor may use the Government property without charge in the performance of— (1) Contracts with the Government that specifically authorize such use without charge; (2) Subcontracts of any tier under Government prime contracts if the Contracting Officer having cognizance of the prime contract— (i) Approves a subcontract specifically authorizing such use; or (ii) Otherwise authorizes such use in writing; and (3) Other work, if the Contracting Officer specifically authorizes in writing use without charge for such work. Contractors – ask yourself – in your procedures do you ask the Government every time you want to allow a Sub to use GP?

RISK OF LOSS Contractors are to flow down to their subcontractors the SAME Risk of loss Provision for Government property as is contained in their contract….

RISK OF LOSS No! FAR 52.245-1(f)(1) (v) Subcontractor control. (A) The Contractor shall award subcontracts that clearly identify items to be provided and the extent of any restrictions or limitations on their use. The Contractor shall ensure appropriate flow down of contract terms and conditions (e.g., extent of liability for loss of Government property).

DISPOSITION If the Government fails to respond within 120 after acceptance of Inventory Disposal Schedules (Submitted on Paper or through PCARSS) the Government Property is considered to be abandoned through the concept of “Constructive Abandonment.”

DISPOSITION Nope! FAR 52.245-1(j) Contractor inventory disposal. Provides Guidance… (6) Storage. (i) The Contractor shall store the property identified on an inventory disposal schedule pending receipt of disposal instructions. The Government's failure to furnish disposal instructions within 120 days following acceptance of an inventory disposal schedule may entitle the Contractor to an equitable adjustment for costs incurred to store such property on or after the 121st day.

TRANSFER OF ACCOUNTABILITY Contractors can request transfer of property accountability from one contract to another if there is a potential need for the property under the gaining contract.

TRANSFER OF ACCOUNTABILITY The statement is incorrect. In accordance with FAR 45.106, Transferring Accountability, if firm requirements exist under the gaining contract…..

TRANSFER OF ACCOUNTABILITY Once the losing and gaining contracting officers agree with the transfer, the only documentation needed is a letter signed by both parties to effect the transfer.

TRANSFER OF ACCOUNTABILITY The statement is incorrect. In accordance with FAR 45.106, Transferring Accountability, states that when a firm requirement exists on another contract, modifications are issued to the losing contract and to the gaining contract to effect the transfer of accountability.

TRANSFER OF ACCOUNTABILITY When contractor-acquired property is transferred to another Government contract, the classification remains the same until final disposition occurs at the end of the gaining contract.

TRANSFER OF ACCOUNTABILITY The statement is incorrect. In accordance with FAR 45.106, once transferred, all property shall be considered Government-furnished property to the contract

TRANSFER OF ACCOUNTABILITY Under Firm-Fixed Price “Vanilla” Contracts, GFP belongs to the contractor so property would not need to be reviewed for the purpose of reutilization under another Government Contract

TRANSFER OF ACCOUNTABILITY The statement is incorrect. Title to Government-Furnished Property remains vested with Government under all types of contracts which includes “Vanilla” Firm-Fixed Price “Chocolate” and “Strawberry” Firm-Fixed Price contracts are a whole ‘nother story…

IUID REGISTRY (DFARS 252.211-7007) All Government-Furnished Property, Contractor-Acquired Property, and Real Property with an acquisition cost of $5000.00 or more require entry into the IUID Registry under DFARS 252.211-7007

IUID REGISTRY (DFARS 252.211-7007) The statement is incorrect. In accordance with DFARS 252.211-7007(c), Reporting of Government-Furnished Property, the following are the exceptions: Contractor-Acquired Property Real Property Property under any statutory leasing authority Property to which the Government has acquired a lien or title solely because of partial, advance, progress, or performance-based payments Intellectual property or software Property released for work in process

IUID REGISTRY (DFARS 252.211-7007) The statement is incorrect. In accordance with DFARS 252.211-7007(c), Reporting of Government-Furnished Property, the following are the exceptions: Contractor-Acquired Property Real Property Property under any statutory leasing authority Property to which the Government has acquired a lien or title solely because of partial, advance, progress, or performance-based payments Intellectual property or software Property released for work in process

PROPERTY ADMINISTRATION FAR 52.245-1(b)(4) obligates contractors to perform periodic internal reviews, surveillances, self assessments or audits and disclose significant findings or results to the GPA. This means that the Government does not need to do its own audit.

PROPERTY ADMINISTRATION This statement is incorrect. The Government’s interest and obligation in performing its own PMSA is separate from the contractor’s requirement to self-assess. (See FAR 45.105(a)) Sorry….

PROPERTY ADMINISTRATION Under the “Business Systems Rule” (DFARS 252.245-7003), the Government Property Administrator is responsible for approving the contractor’s property management system and issuing a letter to the contractor

PROPERTY ADMINISTRATION This statement is incorrect. The Contracting Officer (usually, the Division Administrative Contracting Officer, or DACO) is responsible for notifying the contractor in writing of the status of the contractor’s property management system. The CO does rely on input from the GPA as the technical expert on property management.

PROPERTY ADMINISTRATION Under the “Business Systems Rule” (DFARS 252.245-7003), any deficiency identified by the GPA during the course of an audit will be considered “significant” and result in disapproval of the system and withholding of payments.

PROPERTY ADMINISTRATION This statement is incorrect. Significant deficiencies are specifically defined in the clause as: “a shortcoming in the system that materially affects the ability of officials of the Department of Defense to rely upon information produced by the system that is needed for management purposes.” All “findings” are not significant in this context- this definition sets a high bar. It is important that contractors, GPAs and COs understand these terms. This concept extends beyond just the world of DoD and the Business Systems rule to audits between Primes and Subs, and audits with other Government agencies. All issues must be appropriately addressed by all parties within the context of their significance, materiality and impact on contract performance.

PLANT CLEARANCE Ms. Alma Casias, DCMA Plant Clearance Officer is present and willing to answer questions regarding the Plant Clearance process under DoD Contracts