National Association of State Military Resource Managers Cooperative Agreements --

1. National Association of State Military Resource Managers Cooperative Agreements -- In Kind Assistance 2005 Conference Monday, June 13th

2. Ms. Shawn D. Fitzgerald Nebraska Military Department Controller Office (402) 309-7140 shawn.d.fitzgerald@ne.ngb.army.mil Introductions

3. To familiarize NASMRM members with IN KIND ASSISTANCE (IKA)… …to provide management insights to help reduce the risk of misuse of federal funds. …to help States maximize all resources available without sacrificing fiscal controls. Purpose

4. Relationships and definitions IKA Problems/History Remedies Nebraska Procedures Questions Agenda

5. Federal provision of goods and services in lieu of dollars provided via a Grant or Cooperative Agreement. Property of the State. Exclusions: If not State property, then not IKA (i.e., equipment, military supplies). TAG requests IKA; USPFO approves. Definition

6. Tangible, nonexpendable, personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit. NOT IKA. Title will remain vested in the Federal Government. Equipment

7. Any item serving an inherently military purpose. Not considered “IKA” or “Equipment”. Title always remains vested with USPFO. State may not assume title. Cooperative Agreement budgeted funds MAY NOT be used Military Equipment/Supplies

8. State always entitled to cash. State must “request” IKA purchase. USPFO “agrees” to IKA and “allows” federal procurement. USPFO accounts for cash value and reduces cash provided by Modification. State accepts property/supplies, i.e., takes ownership. USPFO administers all services. Relationships

9. Allows the State to procure goods and services that are otherwise difficult, cost-prohibitive, or impossible to obtain. May save time by using Federal procedures such as a credit card, GSA supplier, task-order contracting, etc. Increases the accounting burden to Federal officials and decreases burden to State. Increases risk to State in receiving satisfactory value (quality control). Creates need for State to provide reverse oversight of USPFO, with which there is no statutory provision or agreement to comply. Relevance

10. 1998 – 2003 Nebraska Real Property Operations and Maintenance (RPOM) $5,834,000 in IKA ($1.5M in small purchases) State not informed of level of spending. Multiple federal buyers; poor accountability. USPFO reconciliations too far behind speed of spending RESULT: State contracts + IKA exceeded funding. (potential ADA violation) History and Problems

11. FEDSOURCE temporary services State unable to hire employees (hiring freezes, time limits, legislation, etc) Personal services illegal for Feds. Restrictions not enforced or understood by FEDSOURCE users. Temps hired indefinitely nationwide. By law, limited to 120 days (240 by exception). NGB-legal opined that USPFOs nationally were violating time and purpose restrictions. Nebraska enforced NGB findings. Temps cut off after 240 days. No rehires to fill same job. NE’s only remaining options: state hires or contractual service agreements. History and Problems

12. Improve accounting/reconciliation controls Budget IKA by item, not by threshold Keep State involved in every purchase Limit IKA with criteria/scope Solutions

13. Certain restrictions State-ownership State consumption Security guards NGB may insist on execution through Agreement All else is USPFO discretion But Wait! Why Not Keep Money Outside the Agreement?

14. “See Chapter 8” – Nebraska SOP Restrict scope of purchases: Only what the State cannot physically purchase “Timeliness” a justification only by exception Reserve IKA by purchase, not by budget Establish document/approval path TAG requests every IKA purchase USPFO verifies rules and approves in writing Nebraska “Solution”

15. New Rules Flowchart PM SUBMITS STATE PURCHASE ORDER CAN STATE OBTAIN? YES NO IS THERE A STATE COST SHARE? CAN STATE EXECUTE BEFORE 30 SEP? YES NO YES NO WAS THIS A NEW OR UNFUNDED REQUIREMENT? NO YES TAG REQUESTS IKA BY MEMO IS IKA CHEAPER? YES/NO NO IKA ALLOWED USPFO APPROVES IKA

16. Itemized description and cost (same as federal purchase request) Statement: "The State cannot procure ...” OR ...the justification to consider time constraints as a reason to approve IKA. Statement: "This purchase meets the scope of goods and services provided by 100% federal share." NGR 5-1/ANGI 63-101 reference to the authority for 100% federal share for the particular purchase. Copy of PM's original State purchase order/request, denied for lack of ability to procure. TAG Request

17. USPFO approves IKA in writing to TAG PM submits to USPFO: Adjusted Budget Modification Request USPFO/TAG execute CA modification PM initiates federal purchase request USPFO approves purchase USPFO Approval

18. PM Controls • PM requests purchase IAW Federal procedures (DA Form 3953, AF Form 9, etc.) • USPFO approves only if State documentation is attached. • Contracting Officer executes purchase. • PM de-commits unused funds, and returns them for State use. • USPFO queries PM’s IKA transactions; reconciles to approved IKA amount. • Amounts exceeding IKA limit subject PM to disciplinary action.

19. Risk: No control measure to prevent PM’s use of the GPC prior to receiving authority to use IKA. Prevention: Strictly enforce consequences for unauthorized GPC usage. Chink in the Armor: The Government Purchase Card

20. Questions IKA