Government Property Acceptance onto DOD Contracts SITE: NPMA NES DATE: July 2011

1. Government Property Acceptance onto DOD ContractsSITE: NPMA NES DATE: July 2011

2. Agenda • Determine Property transition plan/process and outcomes • Perform a transition physical inventory • Create a contract property transition checklist to assure FAR records requirements are met. • To determine proper transition documentation (DD1149, etc.) • Distinguish acceptable contractual documentation versus government specific (Hand Receipts). • Understand the final contractual documentation required for property acceptance (Contract Mods).

3. Property Transition Plan/Process • Working transition inventories can be exciting and frustrating at the same time. • Working and Partnering with numerous Government GPA’s during transitions is critical and working with out-going contractors can be challenging. • It is critical to set up a transition plan prior to execution with specific time lines and identifiable outcomes. • “Pre” transition meetings and strategy sessions can be very useful and highly recommended. These “pre” meetings provide the perfect opportunity to identify what outcomes are expected during the transition as well as any manpower requirements needed to support transition goals.

4. Property Transition Plan/Process- Continued • As an example, we transitioned a Kuwait Base Operations Contract into our current Warfighter contract. In analyzing the best process to utilize for this transition effort we had to consider the following: • Amount of Property, 10,000 lines valued at over $8m • Condition of current property, large amt of property in SUBK hands with prior contractor having weak records such as lacking record data elements, etc. • Amount of time available for Transition (90 days??). • Type of Property (many vehicles with associated test equip that needed evaluation of past maintenance actions). • Partnering efforts available with Gov’t and prior contractor. • Assure the Property database is set up to accept the data through some kind of flat file or download capability so as to make sure there is no delay in assuming accountability of the property.

5. Property Transition Inventory • In analyzing the above we came to the conclusion that a 100% inventory was required. We developed and partnered a plan with the Government GPA and prior contractor to meet the 100% inventory within the transition time frame. • Remember, once the contractor accepts the property, they also accept any risk associated with the property so it is in their best interests to conduct a thorough inventory. If the prior contractor had at least satisfactory results with their property system and if we had assumed their existing system/database including complete records then we may have considered a random sample type of inventory of only the high value items (usually 80% of the value is buried in 20% of the items).

6. Transition Checklist

7. Transition Plan - Example

8. Purpose – Methods of Property Acceptance Onto DOD Contracts • Government Property Acceptance Onto DOD Contracts: • TRANSITION INVENTORIES • DD1149 • HAND RECEIPTS • CONTRACT LETTERS/MODS • DRIVE-BY-FIELDING

9. Purpose – Methods of Property Acceptance Onto DOD Contracts- Definitions • Definitions: • Transition Inventories: Joint Inventories conducted by Government and Contractor personnel prior to Property acceptance onto contract. • DD1149: Transfer/Shipping document utilized to list all Government Property being provided as GFP to a Contract. • Hand Receipts: Documents utilize by Government personnel to transfer accountability or Stewardship between Government entities. • Contract Mods: Official Contractual documentation that adds Government Property onto a Contractors Records. • Drive-By-Fieldings: Situations where Government Property is dropped off or provided to Contractors without proper Contractual documentation such as DD1149’s or Contract Letters/Mods.

10. Determining Transition Documentation • In discussions with the transition teams we determined that a DD1149 would be the best document to track the transfer of property from the Government to the Warfighter contract. Other documentation like spreadsheets, DD250’s, etc. could be utilized but the DD1149 was the most familiar to all and provided the correct to and from fields as well as providing the areas to capture given item data such as P/N, S/N and cost. • Government HAND-RECEIPTS were not considered as they should only be utilized for transfers between Government entities and not contractors. Hand receipts do not obligate the contractor to be accountable for the property as the Government entity hand receipting the property would still be accountable for the property, not the contractor (be sure that Government property being furnished to contractor flows through contracts channels for proper acceptance).

11. F.A.R. 52.245-1 Records Requirements • Records Requirements: FAR 52.245-1 (f) (iii) (A) requires that the contractors record system provide the following data elements within its database: • The noun /nomenclature, part number, description, manufacturer, model number, and National Stock Number (if needed for additional item identification tracking and/or disposition). • Quantity received (or fabricated), issued, and balance-on-hand. • Unique item identifier or equivalent (tag/bar-code number) • Unit acquisition cost, Unit of measure • Accountable contract number or equivalent code designation • Location • Disposition • Posting Reference and date of transaction • Date placed in service

12. Process for DOD Contractor to accept Government Property onto Contract • Contract in place providing Government Property (GFP) for use on Contract • Transition Joint Inventory with: Losing Contractor Gaining Contractor Government GPA or Delegate • Gaining Contractor must assertain Risk involved to determine type of Inventory to conduct based on discussions with GPA and/or internal. 100% Inventory (depends on type of contract, risk, etc.) Random Inventory (low risk) Selective Inventory of items over a dollar threshold (low risk but bigger bang for your buck)

13. Transition Takeaways • When faced with a similar situation, there are several things one must do: Establish a plan that meets your requirements and is aligned with your company objectives and transition timelines Clearly identify compliance requirements (FAR) Establish a collaborative environment Ensure all input receives proper consideration Establish a plan that reasonably projects expectations to management Update management on progress • There are also several things that you should NOT do: Don't establish a transition schedule that can't be met Don't compromise requirements for a "quick fix" or cost considerations Don't create management expectations that can not be met

14. Process for DOD Contractor to accept Government Property onto Contract • Joint Inventories conducted with gaining/losing contractors with Government REP. Gaining Contractor must assure that all FAR related Records data is provided as part of process as the Gaining Contractor is ultimately at risk with acceptance of property. • A DD1149 is generated (or equivalent document) showing all GFP being transferred to the gaining contractor to include all FAR Records data elements as well as losing and gaining contract numbers and reference to what contractual language authorized the transfer. • GFP not being accepted by gaining contractor is subsequently the responsibility of the losing contractor to get disposition instructions from the Government and dispose of said property. • DD1149 is then flowed through contractual channels for proper acceptance and modification to the gaining and losing contract.

15. DD1149 Document with fields highlighted for Transition Losing and gaining contract numbers must also show on document.

16. Interesting Q+A from Ask A Professor • Background Questions: • After an initial provision of GFP is made under a new contract in the form of a list of that property contained in that contract, how is any additional GFP added to the stewardship responsibility of the contractor?  It should be added via contract modification by the contracting officer as the GFP list constitutes the contracting officer’s official ownership record for accounting and/or financial reporting purposes. • Typically a property administrator does not have the authority to modify contracts as they do not possess contracting authority. What matters is that the contract is formally and officially modified by the contracting officer.

17. Interesting Q+A- Continued • Bottom line - One could spend a great deal of time dealing with the uses of a DD-1149. I would recommend that you do a search of the AAP site -- as I have answered similar questions regarding this form. But, with that said let me try a different approach this time. But let's deal with two issues first: 1. Instructions for the use of a DD-1149 were originally found on the back of the form. For some reason around 1986 or 1987 the instructions dropped off the back of the form. In 1991 under the Department of Defense Manual for the Performance of Contract Property Administration, DOD 4161.2-M we included an appendix, Appendix E, providing instruction for this form. Those are the only printed instructions for the DD 1149 -- though there are numerous DOD sites that address this form and its use. 2. This form is NOT a Federal Acquisition Regulation (FAR) Government Property form. Even more so as it is a DD form. Yes, it has been in use for decades -- yet it is not a CONTRACTUAL REQUIREMENT of the Government Property clauses, as none of the GP clauses references this form. But, please read your contract as agencies have been incorporating lots of requirements that are not in the FAR. • Now, with the above as background you ask, Gaining and Losing Contractors be communicating with one another separate from the Gaining and Losing COs and GPAs? This is not something governed by Regulation. Your question is in regard to basic BUSINESS PROTOCOLS. And my answer is YES!!! Proper communication amongst and between the various parties can help the movement of Government property via a DD149 or any other shipping/transfer document go smoothly -- providing the shipping contractor with supporting documentation of movement, providing the receiving contractor with advance notification that GP is coming their way! There is no regulation that forces good communication between contractor in the process of movement -- rather, that is good business practice

18. Interesting Q+A - Continued How do you transfer property on a government hand receipt to a contractor for use on a contract? • The Scenario— • The Question—How do we transfer equipment that is on a government hand receipt to a contractor for use on a contract? • You do not transfer by hand receipt.  You must authorize the use of the government property under the contract by incorporating the appropriate clause or clauses and listing the exact property to be furnished and receive the necessary “consideration” from the contractor for using the government property instead of providing his own property. 

19. Interesting Q+A - Continued •  Transfer of GFP to Contractor • First, if you are dealing with Government property in the possession of a contractor resulting from the placement of FAR clause 52.245-1 within the contract, I encourage you to take the Defense Acquisition University course, “Defense Contract Property Administration and Disposition Fundamentals,” IND 100.  This two-week course will provide you all you need to manage Government property on defense contracts.   • And now the longer answer.  FAR Part 45 should be helpful to you but I’m afraid you are going to be disappointed because you are confusing Government property clause requirements with the requirements of AR 735-5.  Why do I say this?  Your question and background indicate you are trying to hold contractors personally and totally liable (hand receipt) for that which they have stewardship responsibility and LIMITED LIABILITY (FAR Government property clauses) under the contract.  That would be a conflict.  Hand receipts ARE NOT REQUIRED UNDER THE FAR PROPERTY CLAUSES.  However, what all too often happens is that in addition to the Government Property contract clauses, the Contracting Officer includes AR 735-5 in the contract which is incorrect because contractor personnel cannot be compelled to comply with ARs included in the contract.  If that is happening, you need to pay close attention to what AR 735-5, para 2-5 says relative to FAR part 45 and Government property in the possession of a contractor under the terms of a contract: • In conclusion, when GFP is placed on a contract it is conveyed under FAR clause 52.245-1 and gives the contractor both stewardship responsibility/accountability for the provided property (In contrast to ownership responsibility/accountability which remains with the owner of said property).  Generally speaking, if the property is not listed in the contract, then the contractor does not have stewardship responsibility/accountability for such property.  Therefore the owner of the property remains fully responsible and accountable. References:   AR 735-5, FAR 45, FAR Government Property clauses

20. Conclusion • Remember that although our job is to support the customer, we must assure compliance with regulations that ultimately impact property contract performance. • We are not just protecting the contractor but also protecting the Government against losses of property as well as life cycle aspects. Takeaways: • Property documentation for GFP coming onto contract (DD1149/DD250, etc.) after Transition efforts (Inventories). • Through contractual channels for proper acceptance onto contract (Contract Modifications)

21. Questions ? • QUESTIONS ? Thank You for your Time and Consideration