Efficient Property Administration: Expectations, Systems, and Standards

1. Property Administration: What in the World are We Looking For? Presented By Tracy A. Helmick, CPPM

2. Expectations • No losses or less than 0% errors • Inventory property coming to you, from you and for us • Keep the listing current for us in the contract • Provide your own property to perform contract • Figure out what we mean not what we say Is this Realistic? Reasonable?

3. Expectations Realistically – We want contractors to have an efficient, economic and uniform property management system (PMS): • to acquire, control, use, protect and dispose of property required to perform the contract • which incorporates Industry Leading Practices (ILPs) and Voluntary Consensus Standards (VCS) and Customary Commercial Practices (CCP) for continuous improvement

4. Property Management System (PMS) FAR 52.245-1 FAR 52.245-1 (b)(1) April 2012 The Contractor shall have a system of internal controls to manage (control, use, preserve, protect, repair, and maintain) Government property in its possession. The system shall be adequate to satisfy the requirements of this clause. In doing so, the Contractor shall initiate and maintain the processes, systems, procedures, records, and methodologies necessary for effective and efficient control of Government property.

5. Responsibility of the Contractor • Develop or prepare a PMS which consists of written procedures for all processes which meet FAR 52.245-1 and contractual requirements, to include incorporation of applicable ILP & VCS. • Comply with your PMS and procedures. • Disclose significant changes to PMS to the Property Administrator prior to implementation. • Perform self assessments. FAR 52.245-1( b)(1), Property Management and f. 3 Contractor Plans and Systems. NFS 1852.245-75 Property Management Changes.

6. VCS & ILPs FAR clause 2007 – to April 2012: Contractor shall initiate and maintain the processes, systems, procedures, records, and methodologies necessary for effective control of Government property, consistent with voluntary consensus standards and/or industry-leading practices and standards for Government property management except where inconsistent with law or regulation. Not optional the Contractor SHALL include VCS & ILPs (See next slide for FAR Clause update)

7. April 2012 Update April 2012 – The Contractor may employ customary commercial practices, voluntary consensus standards or industry leading practices. (Approval of property systems has also come full circle, as DOD now requires business systems approvals)

8. Definitions: VCS: Voluntary Consensus Standards are standards developed or adopted by voluntary consensus standards bodies (such as ASTM, ISO) ILP: Industry Leading Practices are processes that are both quantifiably and qualitatively demonstrated to be top performing.” CCP: Customary Commercial Practices (CCP) recognized, used and performed in like markets and business areas. Customary: commonly practiced, used or observed Commercial: : designed for a large market ; emphasizing skills and subjects useful in business Practice: to perform or work at repeatedly so as to become proficient

9. Why do we require VCS, ILP & CCP? VCS, ILPs and Customary Commercial Practices where specified, qualified and quantified give a good overview and standard by which to evaluate systems, processes and procedures which should assure the Government and reviewing officials that property is safeguarded, tracked and accounted for in at the least an established and best common practice, or in a manner that exceeds the best practices.

10. Property Management Roles & Responsibilities of the Government Contracting Officer: is responsible for overall management of their contracts, including the management of Government property provided to contractors. Administrative Contracting Officer (ACO): refers to a CO who is administers contracts. New DFARS rule requires CO, or delegated ACO approval of business systems. The Property Management system is one of the defined systems.

11. Property Management Roles & Responsibilities of the Government NASA Industrial Property Officer (IPO): Appointed by each NASA Center Director to have oversight responsibility for all center contract property management activities, accept reports of contractor held property.Property Administrator (PA): is the authorized representative of the Contracting Officer (CO), responsible for administering the contract requirements and obligations relating to Government property in the possession of a contractor.

12. Role of a Government Property Administrator (GPA) or PA • Serves as the Government representative for property management oversight of contractor held property • Advises the CO & IPO of property management issues and transactions • Reviews the Property Plan & PMS • Conducts Property Control Systems Analysis (PMSA) or Property Management Systems Analysis (PMSA) • Provides input to Procurement teams for pre-award document and proposal reviews • Grants relief of responsibility where appropriate for losses REFERENCES: FAR 45, DFAR 252.245, NFS 1845, FAR 52.245-1, Systems Analysis FAR 52.245-1(g)

13. Prior to Award Considerations Request for Proposal/Proposal Evaluation: • Full Disclosure – we have to make sure the field is leveled in respect to furnished gfp. To include use & rents, other gfp to be used on non-rent, non-interference basis. • Government Assumption of Risk – Because the government is assuming the risk of loss it is important that the CO & PA evaluate the contractors property plan and processes prior to award. FAR 45.2, NFS 1852.245-80 & 81

14. Solicitation Clauses 1852.245-80 Government Property Management Information Requires contractor to provide property management system information, last PMSA/PMSA results, any property they intend to use from other contracts, cost accounting practices for general purpose equipment and property they intend to acquire for the performance of the contract to be provided with proposal. 1852.245-81, List of Available Government Property

15. GFP FAR 52.245-1 GFP (for NASA primarily off-site contracts): • The Government retains title to both property provided to or acquired by the contractor in performance of the contract. • Is normally located at the contractor’s site. Listed in the contract as GFP. • The contractor is accountable for both GFP and CAP which is reported annually on NF 1018. • Title does not convey to a Grantee for GFP provided to Grants. • Property administration and plant clearance for off-site contracts is delegated to DCMA or ONR. This function defaults to the CO if not delegated.

16. Onsite/Installation Operations Services FAR 52.245-2 FAR 52.245-2 – Initial Provisioning only. Onsite operations, fixed price only. Property that becomes unserviceable, or broken becomes property of the Contractor. The contractor is to repair or remove at their expense. If the property remains serviceable throughout the life of the contract or becomes excess to the needs of the contractor, the government retains title. Otherwise title conveys to contractor.

17. Onsite IAGP NFS 1852.245-71 NFS 1852.245-71, Installation Accountable Government Property (IAGP), Property is accountable to the Government, the contractor has user responsibilities. “Property not recorded in NASA property systems must be managed in accordance with the requirements of the clause at FAR 52.245–1, as incorporated in this contract.”

18. Property Management Systems Analysis (PMSA) Systemic process to assess the effectiveness of the contractor’s PMS. The PA will review the Property Plan, PMS, use random sampling and interviews to access all applicable property process outcomes and functions.

19. PMSA(Audit)2=Stress For the contractor audits or assessments multiplied by x (fill in the blank) can be stressful For the PA audits can stressful when less prepared and/or where there are deficiencies My goal is to minimize the stress of the situation, by covering each area. Know the contract requirements, familiarize yourself with the Property Plan and processes.

20. Conducting the PMSA • NASA Procedural Requirements (NPR) 4500 • Review contract, Property Plan, procedures • Review prior PMSA reports/findings • Use questionnaire(s) • Complete sample worksheets • Make sure that PMSA backup provides adequate information to document records and information reviewed • Create/mark off Checklists

21. Errors and Deficiencies • Anomalies which are within a normal error rate, should be expected, but should not be repeated with additional sample checks. Errors that are repeated represent a deficient system. • Systemic deficiencies that the PA determines increase significantly the risk of loss or repeated loss, mission or schedule delays, safety to personnel or public, or increased cost require immediate correction.

22. Overall Desired Results of PMSA • The PA wants to be assured that processes, procedures and systems are in place to protect, safeguard, track and account for government property in accordance with policy and contractual requirements. • We will look at the contract, regulatory requirements, property plan, policies, procedures, systems, samples, documentation, and physical inspection to assess adequacy.

23. Self Audits • Self Audits- encourages contractors to find and correct deficiencies or identify best practices, before the PMSA. • FAR 52.245-1(b)(4) shall perform periodic internal reviews and audits. Significant findings and/or results of such reviews and audits pertaining to Government property shall be made available to the Property Administrator. • The PA will generally will not assess the same findings as Contractor self assessments, if corrective actions are being worked and are satisfactory to correct issues. Self audits/assessments do not replace PMSA.

24. Property Management Plan • The PA must review the Property Plan to make sure it covers all areas of Property Management and meets contractual requirements, as well as other specifications as referenced in the contract. • The contractor’s plan should be detailed and comprehensive. Where non-specified percentages, tolerances, timeframes, etc. are left to PA judgement versus contractors specification.

25. Functional Areas/ Process Outcomes

26. Property Management includes: • Overall Property Management System effectiveness • Policy • Procedures • Self Audits • Property Processes outlined in FAR 52.245-1 FAR 52.245-1(b)(1-4), ASTM Standards: E2279-03, E2135-06, E2452-05e1, and E2379-04

27. Review of 10 Property Outcomes: • Acquisition • Receiving Identification • Records • Physical Inventory • Subcontractor Control • Reporting • Relief of Stewardship Responsibilities Disposal • Utilization Consumption Movement Storage • Maintenance • Property Closeout

28. Acquisition Authority to purchase or acquire (CO or contract terms & conditions) Existing or on hand inventory screened before purchase Correct source identified: GFP or contractor acquired Items ordered for quantities stipulated in the contract and flowed down to ordering organization Identification- Property is properly classified and labeled with barcode labels/unique identifiers upon fabrication or receipt FAR 52.245-1(f)(1)(i), NFS 1852.245-70 Contractor Requests for Government Provided Equipment, NFS 1852.245-74 Identification & Marking, ASTM E2453 and E2495-07

29. NFS 1852.245-70 NFS 1852.245-70 (Requisition/Acquisition of Property): The Contractor is not to acquire or construct equipment without the Contracting Officer’s written authorization. Only exception is any component of or deliverable end item. To requisition property the contractor must submit in writing to the CO to: • 1) Justify the need; • 2) Explain why contractor-owned property cannot be utilized; • 3) Describe in detail sufficient to screen for excess, and • 4) Combine items and quantities (as long as under $500K)

30. Receiving of Government Property Property received inspected for discrepancies Discrepancies segregated, documented and investigated (i.e. partial shipments, shortages/overages). Carrier signatures obtained Items reconciled against PO Detailed receiving report prepared, distributed to appropriate offices FAR 52.245-1(f)(1)(ii)

31. NASA Onsite Receiving NFS 1852.245-71 requires prior notification to NASA Center Central Receiving for any incoming vendor deliveries. Prior to Jan 2011 clause required transfer within 5 days of receipt of property onsite. Post Jan 2011 MSFC requires transfer within15 days for equipment, and 30 days for materials.

32. Records of Government Property Basic information as required by FAR 52.245-1 Source documentation or references retained (i.e. purchase documents/receiving reports, transfer documents) Records are accurate and up to date FAR 52.245-1(f)(1)(iii), NFS 1852.245-74, NFS 1852.245-79 Records and Disposition Reports for Government Property with Potential Historic or Significant Real Value, Standard: ISO VCS 15489, 2001

33. FAR Elements of Property Record FAR 52.245-1(f)(1)(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. (A) Property records shall enable a complete, current, auditable record of all transactions and shall, unless otherwise approved by the Property Administrator, contain the following: (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).

34. NFS 1852.245-74 Identification and Marking of Government Property NFS 1852.245-74 – Identification and Marking of Government Equipment, Concurrent with equipment delivery or transfer, the Contractor shall provide the following data in an electronic spreadsheet format: (1) Item Description. (2) Unique Identification Number (License Tag). (3) Unit Price. (4) An explanation of the data used to make the unique identification number. d) For equipment no longer needed for contract performance and physically transferred under paragraph (a) of this clause, the following additional data is required: (1) Date originally placed in service. (2) Item condition (f) The contractor shall include the substance of this clause, including this paragraph (f), in all subcontracts that require delivery of equipment.

35. Physical Inventory Inventories conducted on frequency agreed to by PA Inventories taken by personnel other than those having accountability of the property Inventory results and discrepancies promptly reported to the PA Property physically touched manually or electronically (verification) FAR 52.245-1( f)(iv), NFS 1852.245-78 Physical Inventory of Capital Personal Property, ASTM E2132-01 & E2221-02

36. Physical Inventory Considerations FAR Requirement: FAR 52.245-1(f) (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. (PA may waive final inventory) Different methods of Physical Inventory: wall to wall, cyclic, inventory by exception. Test stated process and frequency per Property Plan. Assess effectiveness of inventory methods. Completeness of Report. Report should contain: No. of items to be inventoried, found, not found, discrepancies, and a statement that all records have been reconciled and are accurate. Contracts with NFS 1852.245-78 require annual inventory of Capitalized assets to be submitted. Method of inventory can be determined by the contractor.

37. Subcontractor Control Subcontracts contain flow down of property requirements (not the clauses themselves) and furnished property listings CO approval of subcontractors relieved of liability or risk of loss Prime contractor system established to analyze and assess adequacy of sub records, control, protection, preservation & maintenance Subcontractor reports to prime any losses, damage or destruction Examine Prime contractor requests for sub-delegations of Subcontractor Property Administration FAR 52.245-1 (b)(3) and (f)(1)(v)

38. Evidence of Contractor Flow Down of Requirements Can be an example of contract terms and conditions Signed acknowledgement by the subcontractor Consider all requirements of the prime contract Additionally, the prime contractor must provide evidence of assessment of their subcontractors property management systems

39. Reports Discrepancy reports Loss, Damage, Theft or Destruction reported promptly Physical inventories reports are completed Excess or Disposal reports submitted as required – SF 1428 Inventory Disposal Schedule Reports of Audits & Self Assessments Any additional Contractual reports accurate and submitted on time. NFS 1852.245-73 Financial Reporting of NASA Property in the Custody of Contractors (NF 1018) FAR 52.245-1(f)(1)(ii)(A), (f)(1)(vi), and (f)(1)(iv).

40. 1018 Reporting Non-CHATS reporting contractors reports are due by 10/15 for period ending 9/30. CHATS reporting contractors were given an additional 45 days to complete by 11/30. Bottom line of 1018 should be all property on hand and any acquisitions received but not transferred as of 9/30. Adjustments should be investigated, documented or foot noted and the contractor should explain what happened and what is being done to prevent future adjustments.

41. PA Validation & Review of Reports NF 1018: PA should understand where the contractor is obtaining information for the report. Loss reports require assessment of completeness of the report, determination of Contractor’s managerial personnel involvement, assessment actions to prevent further losses or damage Discrepancy report reviews require assertion of correction or resolution of discrepancies. The Contractor must have written procedure or instructions detailing reporting process, which includes error reporting (IPO notification)

42. Relief of Stewardship Responsibilities Disposition instructions provided by the Plant Clearance Officer (PLCO) OR CO are obtained before disposition Disposal of property is IAW contractual requirements and is properly documented The quantity, condition code and location are reported accurately for property items requiring disposition ID tags removed, and documentation retained for sale/scrapped items Relief of responsibility received from PA for Loss Proceeds credited or submitted as directed FAR 52.245-1(f)(vii), (h),(j) & (k)

43. Evaluation of Relief of Stewardship The contractor is required to keep records which document relief of stewardship Transfers need to be complete with all required signatures (the initiator of the form has the responsibility to obtain final report with all signatures) Pick up or final plant clearance cases should be documented and processed in a timely manner.

44. Loss Reports (B) Unless otherwise directed by the Property Administrator, the Contractor shall investigate and report to the Government all incidents of property loss as soon as the facts become known. Such reports shall, at a minimum, contain the following information: (1) Date of incident (if known). (2) The data elements required under (f)(1)(iii)(A). (3) Quantity. (4) Accountable contract number. (5) A statement indicating current or future need. (6) Unit acquisition cost, or if applicable, estimated sales proceeds, estimated repair or replacement costs. (7) All known interests in commingled material of which includes Government material. (8) Cause and corrective action taken or to be taken to prevent recurrence. (9) A statement that the Government will receive compensation covering the loss of Government property, in the event the Contractor was or will be reimbursed or compensated. (10) Copies of all supporting documentation. (11) Last known location. (12) A statement that the property did or did not contain sensitive, export controlled, hazardous, or toxic material, and that the appropriate agencies and authorities were notified. (C) Unless the contract provides otherwise, the Contractor shall be relieved of stewardship responsibility and liability for property when— (1) Such property is consumed or expended, reasonably and properly, or otherwise accounted for, in the performance of the contract, including reasonable inventory adjustments of material as determined by the Property Administrator; (2) Property Administrator grants relief of responsibility and liability for loss of Government property; (3) 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; or (4) Property is disposed of in accordance with paragraphs (j) and (k) of this clause. per FAR 52.245-1(f)(viI)(B)

45. Loss Reports Generally, the government retains the risk of loss and contractors are not held liable. Except losses where there is willful misconduct, or lack of good faith on the part of management personnel, where the property is insured or where the full risk of loss has been given to the contractor through FAR 52.245, Alt 1. Loss reports must contain all required data – per FAR 52.245-1(f)(vii)(B) PA’s grant relief where appropriate, but only the CO can rescind the governments assumption of risk and/or hold the contractor liable NFS 1852.245-72 Liability for GP Furnished for Repair or Other Services – liable for loss where they have been negligent in care or diligence in safeguarding

46. Utilization of Government Property Methods established to insure Government property is used only for the purposes authorized by the contract Contractual authorization obtained to use property for other than original authorized purposes (non-interference basis, rental, etc) System established to review and identify excess property (promptly) FAR 52.245-1(f)(viii)

47. Utilization continued… Movement Proper authority for movement obtained and documented System in place to control movement and location of property System to update records for movement activities Moved property is protected, preserved and inspected to prevent loss, damage and the deterioration FAR 52.245-1(f)(1)(viii)(A), ASTM E2606-08

48. Utilization continued… Consumption Property consumed only under contract performance Stock records system maintained for consumable items Stock records documented with issue information Reasonable consumption rate Process for analysis and investigation of consumption above to planned use FAR 52.245-1(f)(iii)(B) Use of a Receipt and Issue System for Government Material. When approved by the Property Administrator, the Contractor may maintain, in lieu of formal property records, a file of appropriately cross-referenced documents evidencing receipt, issue, and use of material that is issued for immediate consumption.

49. Utilization continued… Storage Adequate safeguards in place for securing government property (safety, security, etc) Access to area controlled Government property segregated from the contractor property A first/first out system established for stored items subject to expiration Adequate housekeeping for stored property

50. Maintenance Program established consisting of systematic written procedures for servicing and inspecting equipment Safe, efficient and economical operation of property (Preventative care, routine repair, emergency repair or calibration as required) Records maintained for repairs or calibration Return Maintenance Authorizations (RMA) documented and tracked, record adjustments processed System capable of identifying high costs for maintenance Maintenance performed within contractual requirements Prior CO/PA approval for major repairs/upgrades FAR 52.245-1(b), (f)(ix)