1. DCMA’s Property Management System Analysis
Andrew C. Obermeyer, Director, DCMA Business Operations Center

2. Business Operations Center
Ensure that suppliers’ have purchasing systems in place that contribute to effective subcontract management.
Evaluation of the efficiency and effectiveness
with which the contractor spends
Government funds and complies with
Government policy when subcontracting.
The CPSR Group’s recent focus has
been on improving supplier sourcing
practices and promoting intelligent
pricing decisions. Set to conduct
over 130 reviews in FY16.
Ensure that contractors’ property management systems control, use, preserve, protect, repair and maintain the Government property (GP) in their possession.
Perform Property Management System Analysis (PMSA) and investigate Property Loss to determine liability
PMSAs performed FY15 – 1025
Total acquisition cost of GP - $138,121,543,421
CONTRACTOR PURCHASING SYSTEM REVIEW (CPSR) GROUP
PROPERTY
GROUP
DCMA employs 244 of the s in DoD
Total Personnel Authorized: 394
Negotiate settlements for
Contracts terminated for the
convenience of the Government.
Provide technical assistance and
guidance to Buying Activities by
facilitating policy and procedures and
technical support
Conduct post-termination briefings.
Approve contractors’ settlements with subcontractors.
Approve interim payments prior to final settlement.
Currently have over 700 actions valued at $26.6B in process.
Provide timely, cost effective disposal of excess government property in the possession of contractors. 
TERMINATIONS
GROUP
PLANT CLEARANCE
GROUP
Facilitate the reutilization of Government Property saving time and money that might otherwise be expended in re-procurements.
Assure Government Property is disposed of properly and demilitarized when required.
Selling surplus Government Property returning proceeds from sales to the Government
Clearing Plant Clearance cases while maintaining data integrity in our case files and PCARSS. FY15 cleared 17K cases; Acquisition Cost - $5.9B
CPSR Group – travel cost savings of $56k in FY15 as a result of remote access to contractor records
Benefits to DOD Customers
Property Administrators investigate losses of Government property, and when contractually appropriate, recommend that the contractor be held liable. In FY15, this resulted in the recoupment of $2,982,624.
Terminations had negotiated savings of $78.1M in FY15 and has saved $11.8M to date in FY16.
Plant Clearance reutilized $500M in Gov’t Property and returned $6.8M to the U.S. Treasury through sales of Surplus Gov’t Property in FY15. FY16 YTD reutilized $185M and sales $2.3M.

3. What is our Property mission?
The Property Group ensures that Government Property in the possession of contractors is effectively and efficiently managed as required by FAR – Government Property. 3

4. How Do We Perform the Mission?
By performing Property Management System Analyses (PMSAs).
A PMSA is a systematic, objective review and evaluation of a contractor's PMS including the procedures and the implementation of applicable property management processes to determine whether the contractor is complying with contractual terms and conditions relating to property management. 4

5. Corporate IPTs
The Property IPT construct provides a forum in which PAs with oversight of property management systems of a single contractor, regardless of location, can discuss matters affecting those systems in order to achieve consistency in addressing issues and problems, regulatory interpretation and auditing techniques and approaches to ensure the Property Group speaks with one voice to the contractor.
Contractor
DCMA Property Lead
Boeing
Randy Scott (Pensacola, FL)
Raytheon
Deena Day (Denver, CO)
Northrup Grumman
Len Salazar (Carson, CA) 5

6. Low Risk Practice “Low Risk Property” means assets that:
Meet the definition of Equipment, Special Tooling, or Special Test Equipment, as defined at FAR 2.101, FAR and FAR (a).
Have a unit acquisition cost less than $5,000.
Are not:
“material” as defined at FAR and FAR (a).
“sensitive property” as defined at FAR and FAR (a).
classified assets, i.e. assets for which the existence, description or association with a contractor, Government agency, or particular contract is restricted to those with authorized access and a need to know.
computers or other devices capable of storing and transmitting data.
“aircraft” as defined at DFARS (a)(1), or “Flight Safety Critical Aircraft Parts” as defined at 41 CFR
assets identified with demilitarization code G, P, F, C, or D per DoD Manual M-V3 or considered environmentally hazardous or dangerous to public safety.
When low risk practices may be approved
PAs shall make contractors aware of the criteria that will be applied to low risk property. Contractors are responsible for developing their own processes and procedures at their facilities. PAs shall not require contractors to implement low risk practices. 6

7. Government Property Storage
Objective
Determine the costs associated with the storage of Government property at contractor’s facilities as a result of closed contracts/programs, specifically how and by whom the costs are paid.
Pilot sites
Two major Defense contractors with resident Property Administrators.
Initial Findings
Pilot review at two major defense contractors identified no issues with storage of Government property that is not accountable to active contracts.
There are no storage agreements or contracts in place at either facility.
Excess property accountable to active contracts is a continuing concern and is an area of focus for the DCMA Property Group. 7

8. Two Types of PMSAs
Standard PMSAs require entrance and exit conferences, involve plant visits, formal examinations with detailed workpapers generated and formalized conclusions drawn as to the condition of the contractor's system. The depth and detail of review and analysis are far greater for a standard system analysis than for a limited system analysis.
Limited PMSAs or “desk audits” permit less formal testing methods and techniques including contractor responses to a series of questions covering each applicable element of a contractor’s PMS, and interviews of contractor personnel among other methods as appropriate, depending on the risk level, amount and value of property, etc. 8

9. How Does Property Schedule PMSAs?
New contractors:
Identified during contract receipt and review.
Contracts that contain the Government Property (GP) clause and/or GP attachment
Initial PMSA scheduled within one year.
Within six months if there is sensitive property.
Established contractors:
Type and frequency of PMSAs determined IAW risk level of contractor’s PMS.
When sensitive property is involved, PAs perform annual on-site reviews of records, storage, utilization, and physical inventories processes, regardless of the contractor’s risk rating. 9

10. Risk Assessments
Performed immediately after each PMSA and validated annually.
Based on PMSA results and other sources of reliance, PAs
Identify unfavorable future events,
Assess the likelihood or probability of unfavorable future events and
Estimate the consequence or impact of those events. 10

11. Risk Assessments
PAs assign each PMS a risk rating of high, moderate or low.
High Risk – Requires a Standard PMSA at least annually
Moderate Risk - A Standard or Limited PMSA as frequently as conditions warrant, but at least once every 2 years
Low Risk - Standard or Limited PMSA as frequently as conditions warrant, but at least once every 3 years
PMSA schedules are maintained in the Contract Property Administration System (CPAS) eTool. 11

12. PMSA Performance
PAs review all applicable elements and processes of the contractor’s PMS as identified at FAR (f)(1)(i through x) including:
Written procedures Reports
Contractor self-assessment Relief of stewardship
Acquisition Utilization
Receiving Declaration of excess
Discrepancies incident to shipment Consumption
Identification Movement
Records Storage
Receipt and issue system Storage – commingling
Physical inventory Maintenance
Subcontractor awards and flowdown Disposal
Subcontractor reviews Closeout 12

13. Audit Process for Records Process
Define the population i.e, the aggregation of documents, records, assets, or actions selected for review due to common characteristics.
All records of GP in the contractor’s possession
Subject to the judgment and determination of the PA, sampling is used as an efficient and economical method for analyzing a system. One of three different types of sampling may be used:
Statistical- A number of items are selected from the population for analysis so that the sample is representative of the entire population from which it was selected. The most widely used sampling plan will discover defects of 10% or more, if they exist, 90% of the time
Automated tools ( used to ensure randomness
Judgmental- A number of items are selected from the population for analysis without meeting the random selection and sample size criteria of statistical sampling.
Purposeful- Known, suspected, or reported conditions of a critical or substantial nature are used to select items, for review to determine the possible adverse systemic impact.
Alternative statistical sampling plans that will discover defects of 10% or more, if they exist, 95% or 97 % of the time may be used, depending on circumstances. 13

14. Audit Process for Records Process
Determine Sample Size
Determined by the Sampling Plan for statistical samples.
Randomly Select Sample
Using automated tools such as Randomizer.org. to ensure randomness
Review each record sampled to determine whether they are complete, containing the 10 data elements required by FAR (f) (1) (iii) (A)
Trace the records to the items to verify the balances and locations to test whether the records are current and accurate.
Review receiving reports, requisition slips, issue documents, inventory adjustment vouchers, transfer documents, shipping documents, etc. and compare to transactions posted to the record to determine whether there an auditable record of all transactions with posting references supported by documentation.
Take a random selection of property from the floor and find their records to test whether record have been established for all GP
(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). 14

15. Audit Process for Records Process
Record relevant data on workpapers
Analyze the outcome of the sample
Determine the Status of Process and System
Document findings describing and analyzing the quantitative and qualitative information obtained.
Determine if the process is compliant with contractual requirements and explain the rationale for all determinations.
Inform Contracting Officer of findings in a Business System Analysis Summary. Describe any deficiencies in sufficient detail to enable the CO to understand whether they materially affect the ability of DoD officials to rely upon information produced by the system.
(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). 15

16. After the PMSA
If there are any deficiencies, PA indicates whether they materially affect the ability of DoD officials to rely upon information produced by the system.
PA issues Level II CARs for deficiencies determined by the CO to be non-significant.
Findings are reported to the Contracting Officer (CO) who either approves or disapproves the PMS in accordance with DCMA-INST 131.
The CO records the status of the PMS in the Contract Business Analysis Repository (CBAR) eTool.
The CO may implement a payment withhold on an individual contract if the contract contains DFARS , Contractor Business Systems and DFARS Contractor Property Management System Administration.
PA evaluates the adequacy of all corrective action plans, monitors the performance of corrective actions and determines if corrective actions have been implemented and adequately address the deficiency. 17

17. Standard PMSA Timeline
P-30 Notify contractor in writing of PMSA
P-30 Request data and documentation from contractor
P-30 PMSA Planning
PMSA – Entrance Brief, Daily Outbrief, Exit Conference
Exit Conference+30 Management review, Report to CO
Exit Conference+40 CO approval if no deficiencies, or initial determination
Exit Conference+70 Ktr response to initial determination
Ktr Response+30 Final determination
Ktr Response+45 Corrective Action Plan if requested, due to CO 18

18. Subcontractor PMSAs
Prime contractor is responsible for performing periodic reviews to determine the adequacy of the subcontractor's property management system.
DCMA may perform a PMSA for a subcontractor only when the exceptions listed at FAR (e)(2) apply
The Government otherwise would incur undue cost;
Successful completion of the prime contract is threatened; or
If a contracting officer for a major system acquisition designates certain high risk or critical subsystems or components for special surveillance in addition to requesting supporting contract administration.
The prime contractor must also consent to accept the findings.
Prime contractor consent is not required for DCMA to perform a PMSA at an alternate site of the prime contractor. 19

19. Property Who Performs the Property Mission?
DCMA-AQB
Andrew C. Obermeyer
Director
Business Operations Center
Ft. Lee, VA
DCMA-AQBY
Director – Teresa Lardaro
(Ft. Lee, VA)
Deputy – David Ryan
(Philadelphia, PA)
John Conley
Management Analyst
(Ft. Lee, VA)
Michael Karolak
Performance Improvement Officer
(St. Petersburg, FL)
Kitty Olson
Management Assistant
(Arlington Heights, IL)
DCMA-AQBYA
Team Lead – Holli Felch
(Hartford, CT)
DCMA-AQBYF
Team Lead – Steven Abramowitz
(Orlando, FL)
DCMA-AQBYK
Team Lead – Deena Day
(Lakewood, CO)
DCMA-AQBYB
Team Lead – Maura Lachance
(Boston, MA)
DCMA-AQBYG
Team Lead – Duke Montgomery
(Arlington Heights, IL)
DCMA-AQBYL
Team Lead – Derek Urban
(Phoenix, AZ)
DCMA-AQBYC
Team Lead – Jack Pocorobba
(Philadelphia, PA)
DCMA-AQBYH
Team Lead – Randy Scott
(Crestview, FL)
DCMA-AQBYM
Team Lead – Leonardo Salazar
(Carson, CA)
DCMA-AQBYD
Team Lead – Vacant
(Pittsburgh, PA)
DCMA-AQBYI
Team Lead – Carmen Strange
(Dallas, TX)
DCMA-AQBYN
Team Lead – Bridgette Harris
(Los Angeles, CA)
DCMA-AQBYE
Team Lead – Henry Pielaet, Jr.
(Chantilly, VA)
DCMA-AQBYJ
Team Lead – Charles Faircloth
(San Antonio, TX)
DCMA-AQBYO
Team Lead – Edwin Hoenig
(Ft. Lee, VA) 20

20. # of Government Property (GP) Systems
Property Workload Trend Indicator
Data as of October 1, 2016
There was a fiscal year (FY) 12 to 13 inecrease in Government Property Systems due to the DCMA system change from DPADS (MOCAS) to the Contract Property Administration System (CPAS) eTool. The contractors that did not have Government Property and/or no Government Property contracts were not brought into the CPAS eTool.
The Property Group shows a steady increase in Systems/workload over the past 5 years. The increase is due to better oversight of property contracts coming into DCMA. Newer systems such as Contract Property Administration System (CPAS) and Integrated Workload Management System (IWMS) have given Property Administrator’s better oversight of their workload and contracts associated. The continual use of the DCMA systems will assist in identify new workload in the future. FY
2012
2013
2014
2015
2016
# of Government Property (GP) Systems
1,850
2,130
2,131
2,415
2,599
GP Value
$ B
$ B
$ B
$128.9 B
$139.0 B
GP Line Items
41.0 M
43.7 M
65.6 M
78.9 M
61.0 M
Onboard/Authorized
183/185
182/197
174/201
170/199
187/231
Audits Performed
917
1026
1090
1025
980
Audit Target
984
1121
1145
1066
1022
Complete %
93%
92%
95%
96% 21 21

21. Property Systems by Status
Data as of October 1, 2016
The DCMA Property Group went through a FY16 4th Qtr. internal audit that identified potential workload not being reviewed/evaluated by PA’s. This potential workload (350 contractor cages) has contributed to the increase in “Not Evaluated” and “New Contractor” systems. The PA’s will conduct risk reviews at the end of the fiscal year to determine the contractor property status and when to schedule a PMSA.
Total Systems
Approved
Approved w/Def
Disapproved
Pending CO
Not Evaluated
New Contractor
Totals:
2599
1520 85 8
118
269
599
Percentage:
100%
58.5%
3.3%
0.3%
4.5%
10.4%
23.0% 22

22. Property Management Challenges
Audit Quality
Use of appropriate auditing techniques
Improved audit reports
Data Integrity
Accuracy of CPAS has improved but requires constant attention
Contract Receipt and Review
Ensure assignment is taken of all contracts with GP
Ensure contracts contain required property related clauses
Disruption of mission performance due to
CRF positions
OCONUS obligated positions
Aging workforce
Appropriate auditing techniques:
Exercise reasonable judgment based on facts and data
Establish and maintain adequate documentation to support decisions.
Identify appropriate population/universe for sampling purposes
Determine appropriate sampling methodology
Analyze defects from both quantitative and qualitative perspectives 23

23. Property Group Workforce
Property Group personnel eligible for retirement
Today
3 Years
5 Years
On Board
# Elig to Ret
% Elig to Ret
187 49
26.20% 66
35.29% 88
47.06% 24

24. Administration of Government Property Loss
Government typically self-insures against loss.
Exceptions:
The risk is covered by insurance or the contractor is otherwise reimbursed.
The loss is the result of willful misconduct or lack of good faith on the part of the contractor's managerial personnel.
The CO has revoked the Government's assumption of risk for loss of Government property due to a determination that the contractor's property management practices are inadequate, and/or present an undue risk to the Government, and the contractor failed to take timely corrective action. 25

25. PA’s Role in Property Loss Administration
Within 90 days of receipt of a loss report from contractor in the Property Loss eTool, PA shall:
Ensure FAR/DFARS definitions for “loss of Government property are met
Determine whether contract imposes risk of loss on Government or contractor
Evaluate facts and circumstances
Determine if loss was caused by deficiencies in contractor’s PMS 26

26. PA’s Role in Property Loss Administration
Based on the findings and conclusions resulting from the actions described on the previous slide, the PA shall either
Relieve the contractor of responsibility and liability where the Government bears the risk of loss under the contract, or
Recommend the Contracting Officer
Hold the contractor responsible and liable for the item’s acquisition cost (in full or in part)
Authorize the contractor to repair or replace the property or
Determine a form on consideration appropriate for the circumstances. 27

27. Property Loss Administration WorkloadFY
Number of Loss Cases
Acquisition Value
Percentage Recovered 12
3,479
$1,698,645,547
0.3% 13
5,935
$688,848,155
0.4% 14
4,640
$7,245,306,357
0.2% 15
3,775
$1,809,881,019 16
3,003
$1,352,852,537
0.1%
When the loss involved is damage to Government property the acquisition value does not necessarily reflect the amount of loss to the Government. The $7.3 B in acquisition value reflected in FY 14 includes 38 cases of damage to F-2
2 aircraft with an acquisition value of $6.1 B. The total cost of the damage on those 38 cases is $571,
Recovered:
FY12 = $5,715,097
FY13 = $2,599,284
FY14 = $14,268,026
FY15 = $2,830,691
FY16 = $1,621,895 28

28. Priorities as We Look Ahead
Improving PMSA performance via training and assertive performance monitoring
Filling vacancies, CRF and Keystone positions
Improving Data Integrity
Focus Areas
FY15
FY16
FY17
Reporting to IUID Registry
Utilization
Declaration of Excess
Subcontractor Control
Disposition
Contract Receipt and Review 29

29. PMSAs
Questions? 30