Contract Property Closeout Standardization

1. Contract Property Closeout Standardization Cinda Brockman, CPPM CF, SAIC Pam McFarland, CPPM CF, Raytheon Technical Services Co., LLC

2. Agenda • Audience Questions • Requirements • Industry Leading Practices • 10-01 • 10-02 • 10-03 • 10-04 • Standardization • Metrics

3. Audience Questions • How many of you in the room have a role in the property closeouts process for your company? • Yes • No • How many of you know the difference between closing Firm Fixed Price Contracts versus Cost Plus or Time & Material Contracts for property? • Yes • No • Clueless!

4. Audience Questions • How many are informed by contracts, or have a way to find out, when a contract’s period of performance is ending in: • 30 Days • 60 Days • 90 Days • Not Informed

5. Audience Questions • How many process property closeouts within: • 30-90 days • 90-120 days • 1 or more years • How many of you perform periodic or annual inventories on property actively being used on a contract where the period of performance has ended: • 30 – 90 days • 90 – 120 days • One or more years

6. Audience Questions • How many of you have closed all of the property issues on a contract; received a final property notification from the customer, and found out later that there is still active property in your property system accountable to this contract? • Yes • No

7. Audience Questions • How many of you have had findings or outcomes rated “inadequate” on a Property Management System Analysis (PMSA) because of using active property on a contract where the period of performance had ended? • Yes • No

8. “The Good” • A. Yes • A. Yes • A. 30 Days • A. 30 – 90 Days after POP ended • A. 30 – 90 Days after POP ended • B. No • B. No

9. “The Bad” • A. Yes • B. No • D. Not Informed • B. 90 – 120 days after POP ended • B. 90 – 120 days after POP ended • A. Yes • B. No

10. “The Ugly” • A. Yes • A. Yes • D. Not Informed • C. One or More Years After POP Ended • C. One or More Years After POP Ended • A. Yes • A. Yes

11. Requirements • Federal Acquisition Regulation (FAR) 52.245-1 (f) (1) (x) Closeout of Property Contractor promptly performs and reports to the Government Property Administrator (GPA) contract property closeout, to include reporting, investigating and securing of all Loss Cases, physically inventorying all property upon termination or completionof the contract and disposing of items at the time they are determined to be excess to contractual needs.

12. Requirements • Although there is NO timeframe requirement, most Property Administrators take this to mean within 30 – 90 days, with the understanding that closeout may exceed 90 days depending on the circumstances: • 1) Contract Type • 2) Delivery Orders, Task Orders, etc. • 3) Numerous Subcontracts • 4) Awaiting Disposition Instructions • 5) Etc.

13. Industry Leading Practices (ILP) Aerospace Industries Association’s (AIA) ILP 10-01 - Establish a contract closeout team consisting of several functional entities: • Property Management • Contracts • Material Personnel • Subcontracts • Program Management • Etc. Team arrangements helps streamline the process and provide quicker responses and actions

14. Standardization 1) Read the Contract a) Type of Contract • Fixed Price • Cost Type • Mixed Line Items1 b) Special Disposition Instructions • Shipping Instructions • Transfer Instructions 1 DCMA treats contracts with mixed line items as cost- reimbursement type contracts per DCMA Portal, Contract Closeout, Revised June 2010, 1.1.1.1.

15. Standardization • Obtain property listings per category: • Material • Equipment • Special Test Equipment (STE) • Special Tooling (ST)

16. Standardization • Perform Final Inventory. • Group property per category • FAR 52.245-1(f)(1)(iv) Physical Inventory, “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).”

17. Industry Leading Practices (ILP) ILP 10-02 Upon completion or termination of a contract, perform a physical inventory, adequate for disposal purposes, of all property applicable to the contract.  A physical inventory at the completion of a contract is not required – • When the property is authorized for use on a follow-on contract; and • Experience has established the adequacy of property controls and an acceptable degree of inventory discrepancies; and

18. Industry Leading Practices (ILP) ILP 10-02 (Cont.) • The contractor provides a statement indicating that record balances have been transferred in lieu of preparing a formal inventory list and that the contractor accepts responsibility and accountability for those balances under the terms of the follow-on contract.

19. Standardization • Research expenditures for acquired property associated with subcontractors and reconcile tangible Government property and material. • All property owned or leased by the Government. Government property includes both Government-furnished and contractor-acquired property. (52.245-1 Definitions) • The contractor is responsible and accountable for all Government property under the provisions of the contract including property located with subcontractors.

20. Standardization • Investigate, report and resolve loss cases • If the contract is DoD DCMA administered, the contractor would need to report the Loss report to the GPA via DCMA eTools and fill out the information listed in FAR 52.245-1 (vi) Reports. • For non-DoD DCMA administered contracts the contractor would need to submit a letter and form to the Contracting Officer requesting relief of accountability for item(s) lost

21. Standardization Recommendation Create a standardized Loss Report

22. Standardization • Perform Relief of Stewardship Actions • Property is disposed in accordance with contractual or contracting officer instructions (non-DCMA administered contracts) • Consumed or expended during contract performance • Processed through an inventory adjustment • Property is delivered or shipped from the Contractor’s plant, under Government instructions; except when shipment is to a subcontractor or other location of the contractor;

23. Standardization • Perform Relief of Stewardship Actions (Cont.) • Relieved of Liability (ROL) through a Loss Report. Some contractors use AIA ILP 7-02 - Electronic reporting for Loss Items. • Processed as production scrap or testing scrap • Abandoned in accordance with contract terms.

24. Standardization • Report Excess/Residual Property • Plant Clearance Automated Reutilization Screening System (PCARSS) • Comply with disposition instructions. • Submit Property Closeout Certification • Upon completion or termination of a subcontract, the subcontractor will be directed by prime contractor to initiate closeout actions for property in their possession.

25. Standardization • Prepare an internal Property Checklist • Ensure all actions have been completed • Create a standardized “Property Closeout Checklist” • Prepare and submit a final property closeout letter to the appropriate Government agency

26. Metrics • Utilize Metrics to track your Closeout Process % of On-Time Closeouts – 85.71% % of Contracts w/Property found After Closeout – 42.86%

27. Metrics

28. Conclusion • Adopt Industry Leading Practices • Form a Contract Closeout Team of Professionals • Read the Contract • Obtain Listings of Property • Perform Inventories • Notify Subcontractors • Investigate and Report Losses • Perform Relief of Stewardship Actions • Report Excess/Residual property

29. Conclusion • Comply with Disposition Instruction • Submit Closeout Certification • Measure the health of the process through metrics • AND VALIDATE, VALIDATE, VALIDATE !!!!

30. And most importantly Standardize! Standardize! Standardize!

31. Questions ?

32. Thank You for Your Time and Participation. Cinda Brockman, CPPM CF, SAIC Pam McFarland, CPPM CF, RTSC